AMERICAN SKANDIA TRUST (Form: 485BPOS, Received: 04/30/2001 16:27:13)

Investment Company No. 811-5186

As filed with the Securities and Exchange Commission on April 30, 2001
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM N-1A

Registration Statement under The Securities Act of 1933

Post-Effective Amendment No. 39

Registration Statement under The Investment Company Act of 1940

Amendment No. 41

AMERICAN SKANDIA TRUST

(Exact Name of Registrant as Specified in Charter)

One Corporate Drive, Shelton, Connecticut 06484
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(Address of Principal Executive Offices) (Zip Code)

(203) 926-1888
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(Registrant's Telephone Number, Including Area Code)

EDWARD P. MACDONALD, ESQ., SECRETARY
AMERICAN SKANDIA TRUST
ONE CORPORATE DRIVE, SHELTON, CONNECTICUT 06484
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(Name and Address of Agent for Service)

Copies to:

ROBERT K. FULTON, ESQ.
STRADLEY RONON STEVENS & YOUNG, LLP
2600 ONE COMMERCE SQUARE, PHILADEPHIA, PA 19103-7098

It is proposed that this filing will become effective (check appropriate space)

_____ immediately upon filing pursuant to paragraph (b).
X on May 1, 2001 pursuant to paragraph (b) of rule 485.
_____ 60 days after filing pursuant to paragraph (a)(1).
_____ on _______ pursuant to paragraph (a)(1).
_____ 75 days after filing pursuant to paragraph (a)(2).
_____ on pursuant to paragraph (a)(2) of rule 485.
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_____ this post-effective amendment designates a new effective
date for a previously filed post-effective amendment.

Shares of Beneficial Interest of the Various Series of American Skandia Trust
(Title of Securities Being Registered)

PROSPECTUS May 1, 2001

AMERICAN SKANDIA TRUST
One Corporate Drive, Shelton, Connecticut 06484
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American Skandia Trust (the "Trust") is an investment company made up of the following 41 separate portfolios ("Portfolios"):

AST Founders Passport Portfolio
AST Scudder Japan Portfolio
AST AIM International Equity Portfolio
AST Janus Overseas Growth Portfolio
AST American Century International Growth Portfolio
AST American Century International Growth Portfolio II
AST MFS Global Equity Portfolio
AST Janus Small-Cap Growth Portfolio
AST Scudder Small-Cap Growth Portfolio
AST Federated Aggressive Growth Portfolio
AST Goldman Sachs Small-Cap Value Portfolio
AST Gabelli Small-Cap Value Portfolio
AST Janus Mid-Cap Growth Portfolio
AST Neuberger Berman Mid-Cap Growth Portfolio
AST Neuberger Berman Mid-Cap Value Portfolio
AST Alger All-Cap Growth Portfolio
AST Gabelli All-Cap Value Portfolio
AST Kinetics Internet Portfolio
AST T. Rowe Price Natural Resources Portfolio
AST Alliance Growth Portfolio
AST MFS Growth Portfolio
AST Marsico Capital Growth Portfolio
AST JanCap Growth Portfolio
AST Janus Strategic Value Portfolio
AST Alliance/Bernstein Growth + Value Portfolio
AST Sanford Bernstein Core Value Portfolio
AST Cohen & Steers Realty Portfolio
AST Sanford Bernstein Managed Index 500 Portfolio
AST American Century Income & Growth Portfolio
AST Alliance Growth and Income Portfolio
AST MFS Growth with Income Portfolio
AST INVESCO Equity Income Portfolio
AST AIM Balanced Portfolio
AST American Century Strategic Balanced Portfolio
AST T. Rowe Price Asset Allocation Portfolio
AST T. Rowe Price Global Bond Portfolio
AST Federated High Yield Portfolio
AST Lord Abbett Bond-Debenture Portfolio
AST PIMCO Total Return Bond Portfolio
AST PIMCO Limited Maturity Bond Portfolio
AST Money Market Portfolio

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

The Trust is an investment vehicle for life insurance companies ("Participating Insurance Companies") writing variable annuity
contracts and variable life insurance policies. Shares of the Trust may also be sold directly to certain tax-deferred retirement
plans. Each variable annuity contract and variable life insurance policy involves fees and expenses not described in this
Prospectus. Please read the Prospectus for the variable annuity contract and variable life insurance policy for information
regarding the contract or policy, including its fees and expenses.

TABLE OF CONTENTS
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Caption Page
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Risk/Return Summary...............................................................................................3
Past Performance.................................................................................................20
Fees and Expenses of the Portfolios..............................................................................36
Investment Objectives and Policies...............................................................................39
AST Founders Passport Portfolio.............................................................................41
AST Scudder Japan Portfolio.................................................................................43
AST AIM International Equity Portfolio......................................................................45
AST Janus Overseas Growth Portfolio.........................................................................46
AST American Century International Growth Portfolio.........................................................48
AST American Century International Growth Portfolio II......................................................50
AST MFS Global Equity Portfolio.............................................................................51
AST Janus Small-Cap Growth Portfolio........................................................................52
AST Scudder Small-Cap Growth Portfolio......................................................................54
AST Federated Aggressive Growth Portfolio...................................................................56
AST Goldman Sachs Small-Cap Value Portfolio.................................................................57
AST Gabelli Small-Cap Value Portfolio.......................................................................59
AST Janus Mid-Cap Growth Portfolio..........................................................................61
AST Neuberger Berman Mid-Cap Growth Portfolio...............................................................63
AST Neuberger Berman Mid-Cap Value Portfolio................................................................64
AST Alger All-Cap Growth Portfolio..........................................................................66
AST Gabelli All-Cap Value Portfolio.........................................................................67
AST Kinetics Internet Portfolio.............................................................................68
AST T. Rowe Price Natural Resources Portfolio...............................................................70
AST Alliance Growth Portfolio...............................................................................71
AST MFS Growth Portfolio....................................................................................73
AST Marsico Capital Growth Portfolio........................................................................74
AST JanCap Growth Portfolio.................................................................................76
AST Janus Strategic Value Portfolio.........................................................................78
AST Alliance/Bernstein Growth + Value Portfolio.............................................................80
AST Sanford Bernstein Core Value Portfolio..................................................................82
AST Cohen & Steers Realty Portfolio.........................................................................84
AST Sanford Bernstein Managed Index 500 Portfolio...........................................................86
AST American Century Income & Growth Portfolio..............................................................88
AST Alliance Growth and Income Portfolio....................................................................89
AST MFS Growth with Income Portfolio........................................................................90
AST INVESCO Equity Income Portfolio.........................................................................91
AST AIM Balanced Portfolio..................................................................................92
AST American Century Strategic Balanced Portfolio...........................................................94
AST T. Rowe Price Asset Allocation Portfolio................................................................96
AST T. Rowe Price Global Bond Portfolio.....................................................................98
AST Federated High Yield Portfolio.........................................................................100
AST Lord Abbett Bond-Debenture Portfolio...................................................................102
AST PIMCO Total Return Bond Portfolio......................................................................103
AST PIMCO Limited Maturity Bond Portfolio..................................................................106
AST Money Market Portfolio.................................................................................109
Portfolio Turnover..............................................................................................111
Net Asset Value.................................................................................................111
Purchase and Redemption of Shares...............................................................................111
Management of the Trust.........................................................................................112
Tax Matters.....................................................................................................120
Financial Highlights............................................................................................122
Certain Risk Factors and Investment Methods.....................................................................132

RISK/RETURN SUMMARY

American Skandia Trust (the "Trust") is comprised of forty-one investment portfolios (the "Portfolios"). The Portfolios are
designed to provide a wide range of investment options. Each Portfolio has its own investment goal and style (and, as a result, its
own level of risk). Some of the Portfolios offer potential for high returns with correspondingly higher risk, while others offer
stable returns with relatively less risk. It is possible to lose money when investing even in the most conservative of the
Portfolios. Investments in the Portfolios are not bank deposits and are not insured or guaranteed by the Federal Deposit Insurance
Corporation or any other government agency.

It is not possible to provide an exact measure of the risk to which a Portfolio is subject, and a Portfolio's risk will vary
based on the securities that it holds at a given time. Nonetheless, based on each Portfolio's investment style and the risks
typically associated with that style, it is possible to assess in a general manner the risks to which a Portfolio will be subject.
The following discussion highlights the investment strategies and risks of each Portfolio. Additional information about each
Portfolio's potential investments and its risks is included in this Prospectus under "Investment Objectives and Policies."

International and Global Portfolios:

Portfolio: Investment Goal: Primary Investments:
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Founders Passport Capital growth The Portfolio invests primarily in equity securities of small
capitalization foreign companies.

Scudder Japan Long-term capital growth The Portfolio invests primarily in securities issued by
Japan-based companies or their affiliates, or by companies
that derive more than half of their revenues from Japan.

AIM International Equity Capital growth The Portfolio invests primarily in equity securities of
foreign companies.

Janus Overseas Growth Long-term capital growth The Portfolio invests primarily in common stocks of foreign
companies.

American Century Int'l Capital growth The Portfolio invests primarily in equity securities of
Growth foreign companies.

American Century Int'l Capital growth The Portfolio invests primarily in equity securities of
Growth II foreign companies.

MFS Global Equity Capital growth The Portfolio invests primarily in common stocks and related
securities of U.S. and foreign issuers.

Principal Investment Strategies:
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The AST Founders Passport Portfolio normally invests primarily in securities issued by foreign companies that have market
capitalizations of $1.5 billion or less. These securities may represent companies in both established and emerging economies
throughout the world. At least 65% of the Portfolio's total assets normally will be invested in foreign securities representing a
minimum of three countries. The Portfolio may invest in larger foreign companies or in U.S.-based companies if, in the Sub-advisor's
opinion, they represent better prospects for capital growth.

The Sub-advisor to the Portfolio looks for companies whose fundamental strengths indicate potential for growth in earnings per
share. The Sub-advisor generally takes a "bottom up" approach to building the Portfolio, which means that the Sub-advisor will
search for individual companies that demonstrate the best potential for significant earnings growth, rather than choose investments
based on broader economic characteristics of countries or industries.

The AST Scudder Japan Portfolio pursues its investment objective by investing at least 80% of net assets in Japanese securities
(those issued by Japan-based companies or their affiliates, or by any company that derives more than half of its revenues from
Japan). The Portfolio may invest in stocks of any size, including up to 30% of its net assets in smaller companies that are traded
over-the-counter.

In choosing stocks, the Sub-advisor uses a combination of three analytical disciplines:

Bottom-up research. The Sub-advisor looks for individual companies with effective management, strong competitive
positioning, active research and development, and sound balance sheets. The Sub-advisor also evaluates fundamentals such as
price-to-earnings ratios.

Growth orientation. The Sub-advisor prefers companies whose revenue or earnings seem likely to grow faster than the average
for their market and whose stock prices appear reasonable in light of their business prospects.

Top-down analysis. The Sub-advisor considers the economic outlooks for various sectors and industries.

The Sub-advisor may favor securities from different industries and companies at different times while still maintaining variety in
terms of the industries and companies represented.

The Portfolio will normally sell a security when it reaches a target price, its fundamentals have changed, the Sub-advisor believes
other investments offer better opportunities, or when adjusting its emphasis on a given industry.

The AST AIM International Equity Portfolio seeks to meet its investment objective by investing, normally, at least 70% of its assets
in marketable equity securities of foreign companies that are listed on a recognized foreign securities exchange or traded in a
foreign over-the-counter market. The Portfolio will normally invest in a diversified portfolio that includes companies located in at
least four countries outside the United States, emphasizing investment in companies in the developed countries of Western Europe and
the Pacific Basin. The Sub-advisor does not intend to invest more than 20% of the Portfolio's total assets in companies located in
developing countries.

The Sub-advisor focuses on companies that have experienced above-average, long-term growth in earnings and have strong prospects for
future growth. In selecting countries in which the Portfolio will invest, the Sub-advisor also considers such factors as the
prospect for relative economic growth among countries or regions, economic or political conditions, currency exchange fluctuations,
tax considerations and the liquidity of a particular security. The Sub-advisor considers whether to sell a particular security when
any of those factors materially changes.

The AST Janus Overseas Growth Portfolio pursues its objective primarily through investments in common stocks of issuers located
outside the United States. The Portfolio has the flexibility to invest on a worldwide basis in companies and organizations of any
size, regardless of country of organization or place of principal business activity. The Portfolio normally invests at least 65% of
its total assets in securities of issuers from at least five different countries, excluding the United States. Although the
Portfolio intends to invest substantially all of its assets in issuers located outside the United States, it may at times invest in
U.S. issuers and it may at times invest all of its assets in fewer than five countries or even a single country.

The Portfolio invests primarily in stocks selected for their growth potential. The Sub-advisor generally takes a "bottom up"
approach to choosing investments for the Portfolio. In other words, the Sub-advisor seeks to identify individual companies with
earnings growth potential that may not be recognized by the market at large, regardless of where the companies are organized or where
they primarily conduct business. Although themes may emerge in the Portfolio, securities are generally selected without regard to
any defined allocation among countries, geographic regions or industry sectors, or other similar selection procedure.

The AST American Century International Growth Portfolio will seek to achieve its investment objective by investing primarily in
equity securities of international companies that the Sub-advisor believes will increase in value over time. The Sub-advisor uses a
growth investment strategy it developed that looks for companies with earnings and revenue growth. Ideally, the Sub-advisor looks
for companies whose earnings and revenues are not only growing, but are growing at an accelerating pace. For purposes of the
Portfolio, equity securities include common stocks, preferred stocks and convertible securities.

The Sub-advisor tracks financial information for thousands of companies to research and select the stocks it believes will be able to
sustain accelerating growth. This strategy is based on the premise that, over the long term, the stocks of companies with
accelerating earnings and revenues have a greater-than-average chance to increase in value.

The Sub-advisor recognizes that, in addition to locating strong companies with accelerating earnings, the allocation of assets among
different countries and regions also is an important factor in managing an international portfolio. For this reason, the Sub-advisor
will consider a number of other factors in making investment selections, including the prospects for relative economic growth among
countries or regions, economic and political conditions, expected inflation rates, currency exchange fluctuations and tax
considerations. Under normal conditions, the Portfolio will invest at least 65% of its assets in equity securities of issuers from
at least three countries outside of the United States. While the Portfolio's focus will be on issuers in developed markets, the
Sub-advisor expects to invest to some degree in issuers in developing countries.

The AST American Century International Growth Portfolio II will seek to achieve its investment objective in the same manner as the
AST American Century International Growth Portfolio as described above.

The AST MFS Global Equity Portfolio invests, under normal market conditions, at least 65% of its total assets in common stocks and
related securities, such as preferred stock, convertible securities and depositary receipts, of U.S. and foreign issuers (including
issuers in developing countries).

The Portfolio focuses on companies that the Sub-advisor believes have favorable growth prospects and attractive valuations based on
current and expected earnings or cash flow. The Portfolio generally seeks to purchase securities of companies with relatively large
market capitalizations relative to the market in which they are traded. The Portfolio's investments may include securities traded in
the over-the-counter markets, rather than on securities exchanges. The Sub-advisor uses a "bottom up," as opposed to "top down,"
investment style in managing the Portfolio. This means that securities are selected based upon fundamental analysis of individual
companies by the Sub-advisor.

Principal Risks:
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o All seven of the international and global portfolios are equity funds, and the primary risk of each is that the value of the
stocks they hold will decline. Stocks can decline for many reasons, including reasons related to the particular company, the
industry of which it is a part, or the securities markets generally.

o The level of risk of the international portfolios will generally be higher than the level of risk associated with domestic
equity funds. Foreign investments involve risks such as fluctuations in currency exchange rates, less liquid and more volatile
securities markets, unstable political and economic structures, reduced availability of information, and lack of uniform
financial reporting and regulatory practices such as those that apply to U.S. issuers. The level of risk of the AST MFS Global
Equity Portfolio, as a global fund that invests in both U.S. and foreign securities, may be lower than that of many international
funds but higher than that of many domestic equity funds. While none of the international and global portfolios invest primarily
in companies located in developing countries, each may invest in those companies to some degree, and the risks of foreign
investment may be accentuated by investment in developing countries.

o As a fund that invests primarily in the securities of smaller foreign issuers, the AST Founders Passport Portfolio may be
subject to a greater level of risk than the other international funds. Securities of smaller companies tend to be subject to
more abrupt and erratic price movements than securities of larger companies, in part because they may have limited product lines,
markets, or financial resources.

o The AST Scudder Japan Portfolio's focus on a single country could give rise to increased risk, as the Portfolio's
investments will not be diversified among countries having varying characteristics and market performance. Also, Japanese
economic growth has weakened after the sharp collapse of the stock market in the 1990's and the current economic condition
remains uncertain.

Capital Growth Portfolios:

Portfolio: Investment Goal: Primary Investments:
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Janus Small-Cap Growth Capital growth The Portfolio invests primarily in common stocks of small
capitalization companies.

Scudder Small-Cap Growth Maximum capital growth The Portfolio invests primarily in equity securities of
small capitalization companies.
Federated Aggressive Growth Capital growth The Portfolio invests primarily in equity securities of
companies offering superior prospects for earnings growth.

Goldman Sachs Small-Cap Long-term capital growth The Portfolio invests primarily in equity securities of
Value small capitalization companies that are believed to be
undervalued.

Gabelli Small-Cap Value Long-term capital growth The Portfolio invests primarily in stocks and equity-related
securities of small capitalization companies that appear to
be undervalued.

Janus Mid-Cap Growth Long-term capital growth The Portfolio invests primarily in common stocks, with
normally at least 65% of the Portfolio's assets invested in
medium-sized companies.

Neuberger Berman Mid-Cap Capital growth The Portfolio invests primarily in common stocks of medium
Growth capitalization companies.

Neuberger Berman Mid-Cap Capital growth The Portfolio invests primarily in common stocks of medium
Value capitalization companies, using a value-oriented investment
approach.

Alger All-Cap Growth Long-term capital growth The Portfolio invests primarily in common and preferred
stocks.

Gabelli All-Cap Value Capital Growth The Portfolio invests primarily in readily marketable equity
securities.

Kinetics Internet Long-term capital growth The Portfolio invests primarily in the equity securities of
companies that are engaged in the Internet and
Internet-related activities.

T. Rowe Price Natural Long-term capital growth The Portfolio invests primarily in common stocks of
Resources companies that own or develop natural resources and other
basic commodities.

Alliance Growth Long-term capital growth The Portfolio invests predominantly in the equity securities
of a limited number of large, high-quality U.S. companies

MFS Growth Long-term capital growth The Portfolio invests primarily in common stocks and related
and future income securities.

Marsico Capital Growth Capital growth The Portfolio invests primarily in common stocks, with the
majority of the Portfolio's assets in large capitalization
stocks.

JanCap Growth Capital growth The Portfolio invests primarily in common stocks.

Janus Strategic Value Long-term capital growth The Portfolio invests primarily in common stocks using a
"value" approach.

Alliance/Bernstein Growth + Capital growth The Portfolio invests approximately 50% of its assets in
Value growth stocks of large companies and 50% of its assets in
value stocks of large companies.

Sanford Bernstein Core Long-term capital growth The Portfolio invests primarily in common stocks of large
Value capitalization companies that appear to be undervalued.

Principal Investment Strategies:
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The AST Janus Small-Cap Growth Portfolio pursues its objective by normally investing at least 65% of its total assets in the common
stocks of small-sized companies. For purposes of the Portfolio, small-sized companies are those that have market capitalizations of
less than $1.5 billion or annual gross revenues of less than $500 million. To a lesser extent, the Portfolio may also invest in
stocks of larger companies with potential for capital appreciation.

The Sub-advisor generally takes a "bottom up" approach to building the Portfolio. In other words, it seeks to identify individual
companies with earnings growth potential that may not be recognized by the market at large. Although themes may emerge in the
Portfolio, securities are generally selected without regard to any defined industry sector or other similar selection procedure.

At least 65% of the AST Scudder Small-Cap Growth Portfolio's total assets normally will be invested in the equity securities of
smaller companies, i.e., those having a market capitalization of $2 billion or less at the time of investment, many of which would be
in the early stages of their life cycle. Equity securities include common stocks and securities convertible into or exchangeable for
common stocks, including warrants and rights. The Portfolio intends to invest primarily in stocks of companies whose earnings per
share are expected by the Sub-advisor to grow faster than the market average ("growth stocks").

In managing the Portfolio, the Sub-advisor emphasizes stock selection and fundamental research. The Sub-advisor considers a number
of factors in considering whether to invest in a growth stock, including high return on equity and earnings growth rate, low level of
debt, strong balance sheet, good management and industry leadership. Other factors are patterns of increasing sales growth, the
development of new or improved products or services, favorable outlooks for growth in the industry, the probability of increased
operating efficiencies, emphasis on research and development, cyclical conditions, or other signs that a company may grow rapidly.
The Portfolio seeks attractive areas for investment that arise from factors such as technological advances, new marketing methods,
and changes in the economy and population.

The AST Federated Aggressive Growth Portfolio pursues its investment objective by investing in equity securities of companies
offering superior prospects for earnings growth. The Portfolio focuses its investments on the equity securities of smaller
companies, but it is not subject to any specific market capitalization requirements. The Portfolio may invest in foreign issuers
through American Depositary Receipts.

Using its own quantitative process, the Sub-advisor rates the future performance potential of companies. The Sub-advisor evaluates
each company's earnings quality in light of its current valuation to narrow the list of attractive companies. The Sub-advisor then
evaluates product positioning, management quality and sustainability of current growth trends of those companies. Using this type of
fundamental analysis, the Sub-advisor selects the most promising companies for the Portfolio.

In determining the amount to invest in a security, the Sub-advisor limits the Portfolio's exposure to each business sector that
comprises the S&P 500 Index. The Portfolio's allocation to a sector will be no more than 300% of the Index's allocation to that
sector or 30% of the total portfolio, whichever is greater. The Portfolio's strategies with respect to security analysis, market
capitalization, and sector allocation are designed to produce a portfolio of stocks whose long-term growth prospects are
significantly above those of the S&P 500 Index.

The AST Goldman Sachs Small-Cap Value Portfolio (formerly, the AST Lord Abbett Small Cap Value Portfolio) will seek its objective
through investments primarily in equity securities of small capitalization companies that are believed to be undervalued in the
marketplace. Typically, in choosing stocks, the Sub-advisor looks for companies using the Sub-advisor's value investment philosophy.
The Sub-advisor seeks to identify:

(1) Well-positioned businesses that have:
o Attractive returns on capital;
o Sustainable earnings and cash flow;
o Strong company management focused on long-term returns to shareholders.

(2) Attractive valuation opportunities where:
o The intrinsic value of the business is not reflected in the stock price.

Usually, at least 65% of the Portfolio's total assets will be invested in common stocks issued by smaller, less well-known companies
(with market capitalizations of less than $4 billion at the time of investment). The Portfolio may invest up to 25% of its assets in
foreign securities.

The stocks in which the Portfolio generally invests are those which, in the Sub-advisor's judgment, are selling below their intrinsic
value and at prices that do not adequately reflect their long-term business potential. Selected smaller stocks may be undervalued
because they are often overlooked by many investors, or because the public is overly pessimistic about a company's prospects.
Accordingly, their prices can rise either as a result of improved business fundamentals, particularly when earnings grow faster than
general expectations, or as more investors come to recognize the company's underlying potential. The price of shares in relation to
book value, sales, asset value, earnings, dividends and cash flow, both historical and prospective, are key determinants in the
security selection process. These criteria are not rigid, and other stocks may be included in the Portfolio if they are expected to
help it attain its objective.

The AST Gabelli Small-Cap Value Portfolio (formerly, the AST T. Rowe Price Small Company Value Portfolio) will invest at least 65% of
its total assets in stocks and equity-related securities of small companies ($1 billion or less in market capitalization). Reflecting
a value approach to investing, the Portfolio will seek the stocks of companies whose current stock prices do not appear to adequately
reflect their underlying value as measured by assets, earnings, cash flow or business franchises. The Sub-advisor's research team
seeks to identify companies that appear to be undervalued by various measures, and may be temporarily out of favor, but have good
prospects for capital appreciation. In selecting investments, the Sub-advisor generally looks to the following:

(1) Low price/earnings, price/book value or price/cash flow ratios relative to the company's peers.

(2) Low stock price relative to a company's underlying asset values.

(3) A sound balance sheet and other positive financial characteristics.

The Sub-advisor then determines whether there is an emerging catalyst that will focus investor attention on the underlying assets of
the company, such as takeover efforts, a change in management, or a plan to improve the business through restructuring or other
means. The Portfolio may sell securities for a variety of reasons, such as to secure gains, limit losses or re-deploy assets into
more promising opportunities. The Portfolio will not sell a stock just because the company has grown to a market capitalization of
more than $1 billion, and it may on occasion purchase companies with a market cap of more than $1 billion.

The AST Janus Mid-Cap Growth Portfolio pursues its objective by investing primarily in common stocks selected for their growth
potential, and normally invests at least 65% of its equity assets in medium-sized companies. For purposes of the Portfolio,
medium-sized companies are those whose market capitalizations (measured at the time of investment) fall within the range of companies
in the Standard & Poor's MidCap 400 Index (the "S&P 400"). The Sub-advisor generally takes a "bottom up" approach to choosing
investments for the Portfolio. In other words, the Sub-advisor seeks to identify individual companies with earnings growth potential
that may not be recognized by the market at large. The Sub-advisor makes this assessment by looking at companies one at a time,
regardless of size, country of organization, place of principal business activity, or other similar selection criteria.

To pursue its objective, the AST Neuberger Berman Mid-Cap Growth Portfolio primarily invests in the common stocks of mid-cap
companies. Companies with equity market capitalizations from $300 million to $10 billion at the time of investment are considered
mid-cap companies for purposes of the Portfolio. Some of the Portfolio's assets may be invested in the securities of large-cap
companies as well as in small-cap companies. The Portfolio seeks to reduce risk by diversifying among many companies and
industries.

The Portfolio is normally managed using a growth-oriented investment approach. The Sub-advisor looks for fast-growing companies that
are in new or rapidly evolving industries. Factors in identifying these companies may include above-average growth of earnings or
earnings that exceed analysts' expectations. The Sub-advisor may also look for other characteristics in a company, such as financial
strength, a strong position relative to competitors and a stock price that is reasonable in light of its growth rate.

The Sub-advisor follows a disciplined selling strategy, and may sell a stock when it reaches a target price, fails to perform as
expected, or appears substantially less desirable than another stock.

To pursue its objective, the AST Neuberger Berman Mid-Cap Value Portfolio primarily invests in the common stocks of mid-cap
companies. Some of the Portfolio's assets may be invested in the securities of large-cap companies as well as in small-cap
companies. The Portfolio seeks to reduce risk by diversifying among many companies and industries.

Under the Portfolio's value-oriented investment approach, the Sub-advisor looks for well-managed companies whose stock prices are
undervalued and that may rise in price when other investors realize their worth. Factors that the Sub-advisor may use to identify
these companies include strong fundamentals, such as a low price-to-earnings ratio, consistent cash flow, and a sound track record
through all phases of the market cycle. The Sub-advisor may also look for other characteristics in a company, such as a strong
position relative to competitors, a high level of stock ownership among management, or a recent sharp decline in stock price that
appears to be the result of a short-term market overreaction to negative news.

The Sub-advisor generally considers selling a stock when it reaches a target price, when it fails to perform as expected, or when
other opportunities appear more attractive.

The AST Alger All-Cap Growth Portfolio invests primarily in equity securities, such as common or preferred stocks, that are listed on
U.S. exchanges or in the over-the-counter market. The Portfolio may invest in the equity securities of companies of all sizes, and
may emphasize either larger or smaller companies at a given time based on the Sub-advisor's assessment of particular companies and
market conditions.

The Portfolio invests primarily in growth stocks. The Sub-advisor believes that these stocks are those of two types of companies:

o High Unit Volume Growth Companies. Vital creative companies that offer goods or services to a rapidly expanding
marketplace. They include both established and emerging firms, offering new or improved products, or firms simply fulfilling an
increased demand for an existing product line.

o Positive Life Cycle Change Companies. Companies experiencing a major change that is expected to produce advantageous
results. These changes may be as varied as new management, products or technologies, restructurings or reorganizations, or
mergers and acquisitions.

The AST Gabelli All-Cap Value Portfolio will primarily invest in readily marketable equity securities including common stocks,
preferred stocks and securities that may be converted at a later time into common stock. The Portfolio may invest in the securities
of companies of all sizes, and may emphasize either larger or smaller companies at a given time based on the Sub-advisor's assessment
of particular companies and market conditions.

In making stock selections, the Portfolio strives to earn a 10% real rate of return. The Portfolio focuses on companies that appear
underpriced relative to the value that the Portfolio's Sub-Advisor believes informed investors would be willing to pay for the
company. The Sub-advisor considers factors such as price, earnings expectations, earnings and price histories, balance sheet
characteristics and perceived management skills. The Sub-advisor also considers changes in economic and political outlooks as well
as individual corporate developments. The Sub-Advisor will sell any Portfolio investments that lose their perceived value relative
to other investments.

Under normal circumstances, the AST Kinetics Internet Portfolio invests at least 65% of its total assets in common stocks,
convertible securities, warrants and other equity securities having the characteristics of common stocks, such as American Depositary
Receipts and International Depositary Receipts, of domestic and foreign companies that are engaged in the Internet and
Internet-related activities. The Internet is a collection of connected computers that allows commercial and professional
organizations, educational institutions, government agencies and consumers to communicate electronically, access and share
information and conduct business around the world.

Portfolio securities will be selected by the Sub-advisor from companies that are engaged in the development of hardware, software and
telecommunications solutions that enable the transaction of business on the Internet by individuals and companies, as well as
companies that offer products and services primarily via the Internet. Accordingly, the Portfolio seeks to invest in the equity
securities of companies whose research and development efforts may result in higher stock values. These companies may be large,
medium or small in size if, in the Sub-advisor's opinion, they meet the Portfolio's investment criteria.

The Sub-advisor selects portfolio securities by evaluating a company's positioning and business model as well as its ability to grow
and expand its activities via the Internet or achieve a competitive advantage in cost/profitability and brand image leveraging via
use of the Internet. The Sub-advisor also considers a company's fundamentals by reviewing its balance sheets, corporate revenues,
earnings and dividends. Furthermore, the Sub-advisor looks at the amount of capital a company currently expends on research and
development.

The AST T. Rowe Price Natural Resources Portfolio normally invests at least 65% of its total assets in the common stocks of natural
resource companies whose earnings and tangible assets could benefit from accelerating inflation. The Portfolio also may invest in
non-resource companies with the potential for growth. When selecting stocks, we look for companies that have the ability to expand
production, to maintain superior exploration programs and production facilities, and the potential to accumulate new resources.
Natural resource companies in which the Portfolio invests generally own or develop energy sources, precious metals, nonferrous
metals, forest products, real estate, diversified resources and other basic commodities that can be produced and marketed profitably
when both labor costs and prices are rising.

The Portfolio may sell securities for a variety of reasons, such as to secure gains, limit losses or re-deploy assets into more
promising opportunities.

The AST Alliance Growth Portfolio normally invests at least 80% of its total assets in the equity securities of U.S. companies. A
U.S. company is a company that is organized under United States law, has its principal office in the United States and issues equity
securities that are traded principally in the United States. For purposes of the Portfolio, a non-U.S. company is a company that (i)
is organized outside the United States, (ii) has its principal place of business outside the United States, and (iii) issues
securities that are traded principally in foreign countries. Companies that do not fall within this definition are deemed to be U.S.
companies. Normally, about 40-60 companies will be represented in the Portfolio, with the 25 companies most highly regarded by the
Sub-advisor usually constituting approximately 70% of the Portfolio's net assets. The Portfolio is thus atypical from many equity
mutual funds in its focus on a relatively small number of intensively researched companies.

The Sub-advisor relies heavily upon the fundamental analysis and research of its internal research staff, which generally follows a
primary research universe of more than 500 companies that have strong management, superior industry positions, excellent balance
sheets and superior earnings growth prospects. An emphasis is placed on identifying companies whose substantially above average
prospective earnings growth is not fully reflected in current market valuations.

During market declines, while adding to positions in favored stocks, the Portfolio becomes somewhat more aggressive, gradually
reducing the number of companies represented in its portfolio. Conversely, in rising markets, while reducing or eliminating fully
valued positions, the Portfolio becomes somewhat more conservative, gradually increasing the number of companies represented in its
portfolio. The Sub-advisor therefore seeks to gain positive returns in good markets while providing some measure of protection in
poor markets.

The AST MFS Growth Portfolio invests, under normal market conditions, at least 80% of its total assets in common stocks and related
securities, such as preferred stocks, convertible securities and depositary receipts, of companies that the Sub-advisor believes
offer better than average prospects for long-term growth. The Sub-advisor uses a "bottom up," as opposed to "top down," investment
style in managing the Portfolio. This means that securities are selected based upon fundamental analysis of individual companies by
the Sub-advisor.

In managing the Portfolio, the Sub-advisor seeks to purchase securities of companies that it considers well-run and poised for
growth. The Sub-advisor looks particularly for companies with the following qualities:

o a strong franchise, strong cash flows and a recurring revenue stream
o a strong industry position, where there is potential for high profit margins or substantial barriers to new entry into the
industry
o a strong management with a clearly defined strategy
o new products or services.

The Portfolio may invest up to 35% of its net assets in foreign securities.

The AST Marsico Capital Growth Portfolio will pursue its objective by investing primarily in common stocks. The Sub-advisor expects
that the majority of the Portfolio's assets will be invested in the common stocks of larger, more established companies.

In selecting investments for the Portfolio, the Sub-advisor uses an approach that combines "top down" economic analysis with "bottom
up" stock selection. The "top-down" approach takes into consideration such macro-economic factors as interest rates, inflation, the
regulatory environment, and the global competitive landscape. In addition, the Sub-advisor examines such factors as the most
attractive global investment opportunities, industry consolidation, and the sustainability of economic trends. As a result of this
"top down" analysis, the Sub-advisor identifies sectors, industries and companies that should benefit from the trends the Sub-advisor
has observed.

The Sub-advisor then looks for individual companies with earnings growth potential that may not be recognized by the market at
large. In determining whether a particular company is appropriate for investment by the Portfolio, the Sub-advisor focuses on a
number of different attributes, including the company's specific market expertise or dominance, its franchise durability and pricing
power, solid fundamentals (e.g., a strong balance sheet, improving returns on equity, and the ability to generate free cash flow),
strong management, and reasonable valuations in the context of projected growth rates.

The AST JanCap Growth Portfolio will pursue its objective by investing primarily in common stocks. Common stock investments will be
in companies that the Sub-advisor believes are experiencing favorable demand for their products and services, and which operate in a
favorable competitive and regulatory environment. The Sub-advisor generally takes a "bottom up" approach to choosing investments for
the Portfolio. In other words, the Sub-advisor seeks to identify individual companies with earnings growth potential that may not be
recognized by the market at large.

The AST Janus Strategic Value Portfolio pursues its objective by investing primarily in common stocks with the potential for
long-term growth of capital using a "value" approach. The value approach the Sub-advisor uses emphasizes investments in companies it
believes are undervalued relative to their intrinsic worth. A company may be undervalued due to market or economic conditions,
temporary earnings declines, unfavorable developments affecting the company or other factors.

The Sub-advisor measures value as a function of price/earnings (P/E) ratios and price/free cash flow. A P/E ratio is the
relationship between the price of a stock and its earnings per share. This figure is determined by dividing a stock's market price
by the company's earnings per share amount. Price/free cash flow is the relationship between the price of a stock and the company's
available cash from operations minus capital expenditures. The Sub-advisor will typically seek attractively valued companies that
are improving their free cash flow and improving their returns on invested capital.

The AST Alliance/Bernstein Growth + Value Portfolio will invest primarily in common stocks of large U.S. companies included in the
Russell 1000 Index (the "Russell 1000"). The Russell 1000 is a market capitalization-weighted index that measures the performance of
the 1,000 largest U.S. companies. As of June 30, 2000, the average market capitalization of the companies in the Russell 1000 index
was approximately $14.1 billion.

Normally, about 60-85 companies will be represented in the Portfolio, with 25-35 companies primarily from the Russell 1000 Growth
Index (the "Growth Index") constituting approximately 50% of the Portfolio's net assets, and 35-50 companies primarily from the
Russell 1000 Value Index (the "Value Index") constituting the remainder of the Portfolio's net assets. Daily cash flows (that is,
purchases and reinvested distributions) and outflows (that is, redemptions and expense items) will be divided between the two
portfolio segments for purposes of maintaining the targeted allocation between growth and value stocks (the "Target Allocation").
Normally, while it is not expected that the allocation of assets between portfolio segments will deviate more than 10% from the
Target Allocation, it is possible that this deviation may be higher. Factors such as market fluctuation, economic conditions,
corporate transactions and declaration of dividends may result in deviations from the Target Allocation. In the event the allocation
of assets to the portfolio segments differs by more than 10% from the Target Allocation (e.g., 60% of the Portfolio's net assets
invested in growth stocks and 40% of the Portfolio's net assets invested in value stocks), the Sub-advisors will rebalance each
portfolio segment's assets in order to maintain the Target Allocation. As a consequence, assets may be allocated from the portfolio
segment that has appreciated more or depreciated less to the other. Rebalancing may entail transaction costs which over time may be
significant.

The AST Sanford Bernstein Core Value Portfolio will pursue its objective by investing primarily in common stocks. The Sub-advisor
expects that the majority of the Portfolio's assets will be invested in the common stocks of large companies that appear to be
undervalued. Among other things, the Portfolio seeks to identify compelling buying opportunities created when companies are
undervalued on the basis of investor reactions to near-term problems or circumstances even though their long-term prospects remain
sound. The Sub-advisor's investment approach is value-based and price-driven, and it relies on the intensive fundamental research of
its internal research staff to identify these buying opportunities in the marketplace.

Portfolio investments are selected by the Sub-advisor based upon a model portfolio of 125-175 stocks constructed by the Sub-advisor.
In selecting investments for the model portfolio, the Sub-advisor takes a "bottom-up" approach. In other words, the Sub-advisor
seeks to identify individual companies with earnings growth potential that may not be recognized by the market at large. The
Sub-advisor relates present value of each company's forecasted future cash flow to the current price of its stock. The Sub-advisor
ranks companies from the highest expected return to the lowest, with the companies at the top of the ranking being the most
undervalued.

Principal Risks:
---------------

o All of the capital growth portfolios are equity funds, and the primary risk of each is that the value of the stocks they
hold will decline. Stocks can decline for many reasons, including reasons related to the particular company, the industry of
which it is a part, or the securities markets generally. These declines can be substantial.

o The risk to which the capital growth portfolios are subject depends in part on the size of the companies in which the
particular portfolio invests. Securities of smaller companies tend to be subject to more abrupt and erratic price movements than
securities of larger companies, in part because they may have limited product lines, markets, or financial resources. Market
capitalization, which is the total market value of a company's outstanding stock, is often used to classify companies based on
size. Therefore, the AST Janus Small-Cap Growth Portfolio, the AST Scudder Small-Cap Growth Portfolio, the AST Federated
Aggressive Growth Portfolio, the AST Goldman Sachs Small-Cap Value Portfolio, and the AST Gabelli Small-Cap Value Portfolio can
be expected to be subject to the highest degree of risk relative to the other capital growth funds. The AST Janus Mid-Cap Growth
Portfolio, the AST Neuberger Berman Mid-Cap Growth Portfolio and the AST Neuberger Berman Mid-Cap Value Portfolio can be expected
to be subject to somewhat less risk, and the AST Alliance Growth Portfolio, the AST MFS Growth Portfolio, the AST Marsico Capital
Growth Portfolio, the AST JanCap Growth Portfolio, the AST Janus Strategic Value Portfolio, the AST Alliance/Bernstein Growth +
Value Portfolio and the AST Sanford Bernstein Core Value Portfolio to somewhat less risk than the mid-cap funds. The AST Alger
All-Cap Growth Portfolio, the Gabelli All-Cap Value Portfolio and the AST Kinetics Internet Portfolio may invest in equity
securities of companies without regard to capitalization, and may include large and small companies at the same time. The AST T.
Rowe Price Natural Resources Portfolio invests in companies of all sizes in order to take advantage of the opportunities in the
natural resources sector, but generally invests mostly in large and medium-sized companies.

o The AST Janus Small-Cap Growth Portfolio, the AST Scudder Small-Cap Growth Portfolio, the AST Federated Aggressive Growth
Portfolio, the AST Janus Mid-Cap Growth Portfolio, the AST Neuberger Berman Mid-Cap Growth Portfolio, the AST Alger All-Cap
Growth Portfolio, the AST Alliance Growth Portfolio, the AST MFS Growth Portfolio, the AST Marsico Capital Growth Portfolio and
the AST JanCap Growth Portfolio generally take a growth approach to investing, while the AST Goldman Sachs Small-Cap Value
Portfolio, the AST Gabelli Small-Cap Value Portfolio, the AST Neuberger Berman Mid-Cap Value Portfolio, the AST Gabelli All-Cap
Value Portfolio, the AST Janus Strategic Value Portfolio, and the AST Sanford Bernstein Core Value Portfolio generally take a
value approach. Value stocks are believed to be selling at prices lower than what they are actually worth, while growth stocks
are those of companies that are expected to grow at above-average rates. A portfolio investing primarily in growth stocks will
tend to be subject to more risk than a value fund, although this will not always be the case. Value stocks are subject to the
risks that the market may not recognize the stock's actual value or that the market actually valued the stock appropriately. The
AST Alliance/Bernstein Growth + Value Portfolio will invest almost equally in both value and growth stocks.

o The AST Kinetics Internet Portfolio and the AST T. Rowe Price Natural Resources Portfolio are subject to an additional risk
factor because they are less diversified than most equity funds and could therefore experience sharp price declines when
conditions are unfavorable in the sector in which they invest. Internet companies are especially sensitive to the risk of
product obsolescence, and may be affected by heightened regulatory scrutiny and impending changes in government policies. The
rate of earnings growth of natural resource companies may be irregular because these companies are strongly affected by natural
forces, global economic cycles and international politics.

o The AST Janus Mid-Cap Growth Portfolio, the AST Kinetics Internet Portfolio and the AST Janus Strategic Value Portfolio are
non-diversified funds in that they may hold larger positions in a smaller number of securities. As a result, a single security's
increase or decrease in value may have a greater impact on a Portfolio's share price and total return.

Growth and Income Portfolios:

Portfolio: Investment Goal: Primary Investments:
--------- --------------- -------------------

Cohen & Steers Realty Maximize total return The Portfolio invests primarily in equity securities of real
estate companies.

Sanford Bernstein Managed To outperform the S&P 500 The Portfolio invests primarily in common stocks included in
Index 500 Stock Index the S&P 500.

American Century Income & Capital growth and, The Portfolio invests primarily in stocks of large U.S.
Growth secondarily, current income companies selected through quantitative investment techniques.

Alliance Growth and Income Long term capital growth The Portfolio invests primarily in common stocks that are
and income believed to be selling at reasonable valuations in relation
to their fundamental business prospects.

MFS Growth with Income Reasonable current income The Portfolio invests primarily in common stocks and related
and long-term capital securities.
growth and income.

INVESCO Equity Income Capital growth and current The Portfolio invests primarily in dividend-paying common and
income preferred stocks, and to a lesser extent in fixed income
securities.

AIM Balanced Capital growth and current The Portfolio normally invests 30-70% of its total assets in
income equity securities and 30-70% in debt securities.

American Century Strategic Capital growth and current The Portfolio normally invests approximately 60% of its
Balanced income assets in equity securities and the remainder in bonds and
other fixed income securities.

T. Rowe Price Asset A high level of total The Portfolio normally invests 50-70% of its total assets in
Allocation return equity securities and 30-50% in fixed income securities.

Principal Investment Strategies:
-------------------------------

The AST Cohen & Steers Realty Portfolio pursues its investment objective of maximizing total return by seeking, with approximately
equal emphasis, capital growth and current income. Under normal circumstances, the Portfolio will invest substantially all of its
assets in the equity securities of real estate companies. Such equity securities will consist of common stocks, rights or warrants
to purchase common stocks, securities convertible into common stocks where the conversion feature represents, in the Sub-advisor's
view, a significant element of the securities' value, and preferred stocks.

For purposes of the Portfolio's investment policies, a "real estate company" is one that derives at least 50% of its revenues from
the ownership, construction, financing, management or sale of real estate or that has at least 50% of its assets in real estate. The
Portfolio may invest up to 10% of its total assets in securities of foreign real estate companies. Real estate companies may include
real estate investment trusts ("REITs"). REITs pool investors' funds for investment primarily in income producing real estate or
real estate related loans or interests.

The AST Sanford Bernstein Managed Index 500 Portfolio seeks to outperform the Standard & Poor's 500 Composite Stock Price Index (the
"S&P 500(R)") through stock selection resulting in different weightings of common stocks relative to the index. The S&P 500 is an index
of 500 common stocks, most of which trade on the New York Stock Exchange Inc. (the "NYSE").

In seeking to outperform the S&P 500, the Sub-advisor starts with a portfolio of stocks representative of the holdings of the index.
It then uses a set of quantitative criteria that are designed to indicate whether a particular stock will predictably perform better
or worse than the S&P 500. Based on these criteria, the Sub-advisor determines whether the Portfolio should over-weight,
under-weight or hold a neutral position in the stock relative to the proportion of the S&P 500 that the stock represents. In
addition, the Sub-advisor may determine based on the quantitative criteria that (1) certain S&P 500 stocks should not be held by the
Portfolio in any amount, and (2) certain equity securities that are not included in the S&P 500 should be held by the Portfolio. The
Portfolio may invest up to 15% of its total assets in equity securities not included in the S&P 500.

While the Portfolio attempts to outperform the S&P 500, it is not expected that any outperformance will be substantial. The
Portfolio also may underperform the S&P 500 over short or extended periods.

The AST American Century Income & Growth Portfolio's investment strategy utilizes quantitative management techniques in a two-step
process that draws heavily on computer technology. In the first step, the Sub-advisor ranks stocks, primarily the 1,500 largest
publicly traded U.S. companies (measured by market capitalization), from most attractive to least attractive. These rankings are
determined by using a computer model that combines measures of a stock's value and measures of its growth potential. To measure
value, the Sub-advisor uses ratios of stock price to book value and stock price to cash flow, among others. To measure growth, the
Sub-advisor uses, among others, the rate of growth in a company's earnings and changes in its earnings estimates.

In the second step, the Sub-advisor uses a technique called portfolio optimization. In portfolio optimization, the Sub-advisor uses
a computer to build a portfolio of stocks from the ranking described earlier that it thinks will provide the best balance between
risk and expected return. The goal is to create an equity portfolio that provides better returns than the S&P 500 Index without
taking on significant additional risk. The Sub-advisor attempts to create a dividend yield for the Portfolio that will be greater
than that of the S&P 500.

The AST Alliance Growth and Income Portfolio normally will invest in common stocks (and securities convertible into common stocks).

The Sub-advisor will take a value-oriented approach, in that it will try to keep the Portfolio's assets invested in securities that
are selling at reasonable valuations in relation to their fundamental business prospects. In doing so, the Portfolio may forgo some
opportunities for gains when, in the judgement of the Sub-advisor, they are too risky.

In seeking to achieve its objective, the Portfolio invests primarily in the equity securities of U.S. companies that the Sub-advisor
believes are undervalued. The Sub-advisor believes that, over time, stock prices (of companies in which the Portfolio invests) will
come to reflect the companies' intrinsic economic values. The Sub-advisor uses a disciplined investment process to evaluate the
companies in its extensive research universe. Through this process, the Sub-advisor seeks to identify the stocks of companies that
offer the best combination of value and potential for price appreciation.

The Sub-advisor's analysts prepare their own earnings estimates and financial models for each company followed. The Sub-advisor
employs these models to identify equity securities whose current market prices do not reflect what it considers to be their intrinsic
economic value. In determining a company's intrinsic economic value, the Sub-advisor takes into account any factors it believes bear
on the ability of the company to perform in the future, including earnings growth, prospective cash flows, dividend growth and growth
in book value. The Sub-advisor then ranks, at least weekly, each of the companies in its research universe in the relative order of
disparity between their stock prices and their intrinsic economic values, with companies with the greatest disparities receiving the
highest ranking (i.e. being considered the most undervalued).

The AST MFS Growth with Income Portfolio invests, under normal market conditions, at least 65% of its total assets in common stocks
and related securities, such as preferred stocks, convertible securities and depositary receipts. The stocks in which the Portfolio
invests generally will pay dividends. While the Portfolio may invest in companies of any size, the Portfolio generally focuses on
companies with larger market capitalizations that the Sub-advisor believes have sustainable growth prospects and attractive
valuations based on current and expected earnings or cash flow. The Sub-advisor uses a "bottom up," as opposed to "top down,"
investment style in managing the Portfolio. This means that securities are selected based upon fundamental analysis of individual
companies by the Sub-advisor.

The Portfolio may invest up to 20% of its net assets in foreign securities.

The AST INVESCO Equity Income Portfolio seeks to achieve its objective by investing in securities that are expected to produce
relatively high levels of income and consistent, stable returns. The Portfolio normally will invest at least 65% of its assets in
dividend-paying common and preferred stocks of domestic and foreign issuers. Up to 30% of the Portfolio's assets may be invested in
equity securities that do not pay regular dividends. In addition, the Portfolio normally will have some portion of its assets
invested in debt securities or convertible bonds.

The AST AIM Balanced Portfolio attempts to meet its objective by investing, normally, a minimum of 30% and a maximum of 70% of its
total assets in equity securities and a minimum of 30% and a maximum of 70% of its total assets in non-convertible debt securities.
The Portfolio may invest up to 25% of its total assets in convertible securities. The Portfolio may invest up to 10% of its total
assets in high-yield debt securities rated below investment grade or deemed to be of comparable quality ("junk bonds"). The
Portfolio may also invest up to 20% of its total assets in foreign securities.

In selecting the percentages of assets to be invested in equity or debt securities, the Sub-advisor considers such factors as general
market and economic conditions, as well as market, economic and industry trends, yields, interest rates and changes in fiscal and
monetary policies. The Sub-advisor will primarily purchase equity securities for growth of capital and debt securities for income
purposes. However, the Sub-advisor will focus on companies whose securities have the potential for both capital appreciation and
income generation. The Sub-advisor considers whether to sell a security when it believes that the security no longer has that
potential.

The Sub-advisor to the AST American Century Strategic Balanced Portfolio intends to maintain approximately 60% of the Portfolio's
assets in equity securities and the remainder in bonds and other fixed income securities. With the equity portion of the Portfolio,
the Sub-advisor utilizes quantitative management techniques in a two-step process that draws heavily on computer technology. In the
first step, the Sub-advisor ranks stocks, primarily the 1,500 largest publicly traded U.S. companies (measured by the value of their
stock) from most attractive to least attractive. These rankings are determined by using a computer model that combines measures of a
stock's value and measures of its growth potential. To measure value, the Sub-advisor uses ratios of stock price to book value and
stock price to cash flow, among others. To measure growth, the Sub-advisor uses the rate of growth in a company's earnings and
changes in its earnings estimates, as well as other factors.

The Sub-advisor intends to maintain approximately 40% of the Portfolio's assets in fixed income securities. Up to 20% of the
Portfolio's fixed income securities will be invested in foreign fixed income securities. These percentages will fluctuate and may be
higher or lower depending on the mix the Sub-advisor believes will be most appropriate for achieving the Portfolio's objectives. The
fixed income portion of the Portfolio is invested in a diversified portfolio of government securities, corporate fixed income
securities, mortgage-backed and asset-backed securities, and similar securities. The Sub-advisor's strategy is to actively manage
the Portfolio by investing the Portfolio's fixed income assets in sectors it believes are undervalued (relative to the other sectors)
and which represent better relative long-term investment opportunities.

The AST T. Rowe Price Asset Allocation Portfolio normally invests approximately 60% of its total assets in equity securities and 40%
in fixed income securities. This mix may vary over shorter time periods; the equity portion may range between 50-70% and the fixed
income portion between 30-50%.

The Sub-advisor concentrates common stock investments in larger, more established companies, but the Portfolio may include small and
medium-sized companies with good growth prospects. The Portfolio's exposure to smaller companies is not expected to be substantial,
and will not constitute more than 30% of the equity portion of the Portfolio. Up to 35% of the equity portion may be invested in
foreign (non-U.S. dollar denominated) equity securities. The fixed income portion of the Portfolio will be allocated among
investment grade securities (50-100% of the fixed income portion); high yield or "junk" bonds (up to 30%); foreign (non-U.S. dollar
denominated) high quality debt securities (up to 30%); and cash reserves (up to 20%).

Bond investments may include U.S. Treasury and agency issues, corporate debt securities, mortgage-backed securities (including
derivatives such as collateralized mortgage obligations and stripped mortgage-backed securities) and asset-backed securities. While
the weighted average maturities of each component of the fixed income portion (i.e., investment grade, high yield, etc.) of the
Portfolio will differ, the weighted average maturity of the fixed income portion as a whole (except for the cash reserves component)
is expected to be in the range of 7 to 12 years.

The precise mix of equity and fixed income investments will depend on the Sub-advisor's outlook for the markets. The Portfolio's
investments in foreign equity and debt securities are intended to provide additional diversification, and the Sub-advisor will
normally have at least three different countries represented in both the foreign equity and foreign debt portions of the Portfolio.

Securities may be sold for a variety of reasons, such as to effect a change in asset allocation, to secure gains or limit losses, or
to re-deploy assets to more promising opportunities.

Principal Risks:
---------------

o Both equity securities (e.g., stocks) and fixed income securities (e.g., bonds) can decline in value, and the primary risk
of each of the growth and income portfolios is that the value of the securities they hold will decline. The degree of risk to
which the growth and income portfolios are subject is likely to be somewhat less than a portfolio investing exclusively for
capital growth. Nonetheless, the share prices of the growth and income portfolios can decline substantially.

o The AST Cohen & Steers Realty Portfolio, the AST Sanford Bernstein Managed Index 500 Portfolio, the AST MFS Growth with
Income Portfolio, the AST American Century Income & Growth Portfolio, and the AST Alliance Growth and Income Portfolio invest
primarily in equity securities. The AST INVESCO Equity Income Portfolio invests primarily in equity securities, but will
normally invest some of its assets in fixed income securities. The AST AIM Balanced Portfolio, the AST American Century
Strategic Balanced Portfolio, and the AST T. Rowe Price Asset Allocation Portfolio generally invest in both equity and fixed
income securities. The values of equity securities tend to fluctuate more widely than the values of fixed income securities.
Therefore, those growth and income portfolios that invest primarily in equity securities will likely be subject to somewhat
higher risk than those portfolios that invest in both equity and fixed income securities.

o Each of the Portfolios that makes significant investments in fixed income securities may invest to some degree in
lower-quality fixed income securities, which are subject to greater risk that the issuer may fail to make interest and principal
payments on the securities when due. Each of these Portfolios generally invests in intermediate- to long-term fixed income
securities. Fixed income securities with longer maturities are generally subject to greater risk than fixed income securities
with shorter maturities, in that their values will fluctuate more in response to changes in market interest rates.

o The AST Cohen & Steers Realty Portfolio is subject to an additional risk factor because it is less diversified than most
equity funds and could therefore experience sharp price declines when conditions are unfavorable in the real estate sector. Real
estate securities may be subject to risks similar to those associated with direct ownership of real estate. These include risks
related to economic conditions, heavy cash flow dependency, overbuilding, extended vacancies of properties, changes in
neighborhood values, and zoning, environmental and housing regulations.

o Because the AST Sanford Bernstein Managed Index 500 Portfolio invests primarily in equity securities included in the S&P
500, and some of these securities do not produce income, the Portfolio may be subject to a greater level of risk than a fund that
invests primarily in income-producing securities.

Fixed Income Portfolios:

Portfolio: Investment Goal: Primary Investments:
--------- --------------- -------------------

T. Rowe Price Global Bond High current income and The Portfolio invests primarily in high-quality foreign and
capital growth U.S. government bonds.

Lord Abbett Bond-Debenture High current income and The Portfolio invests primarily in high yield and investment
the opportunity for grade debt securities, securities convertible into common
capital appreciation to stock and preferred stocks.
produce a high total
return.

Federated High Yield High current income The Portfolio invests primarily in lower-quality fixed income
securities.

PIMCO Total Return Bond Maximize total return, The Portfolio invests primarily in higher-quality fixed
consistent with income securities of varying maturities, so that the
preservation of capital Portfolio's expected average duration will be from three to
six years.

PIMCO Limited Maturity Bond Maximize total return, The Portfolio invests primarily in higher-quality fixed
consistent with income securities of varying maturities, so that the
preservation of capital Portfolio's expected average duration will be from one to
three years.
Money Market Maximize current income The Portfolio invests in high-quality, short-term, U.S.
and maintain high levels dollar-denominated instruments.
of liquidity

Principal Investment Strategies:
-------------------------------

To achieve its objectives, the AST T. Rowe Price Global Bond Portfolio (formerly, the AST T. Rowe Price International Bond Portfolio)
will invest at least 65% of its total assets in bonds issued or guaranteed by the U.S. or foreign governments or their agencies and
by foreign authorities, provinces and municipalities. Corporate bonds, mortgage- and asset-backed securities may also be purchased.
The Portfolio seeks to moderate price fluctuation by actively managing its maturity structure and currency exposure. The Sub-advisor
bases its investment decisions on fundamental market factors, currency trends, and credit quality. The Portfolio generally invests
in countries where the combination of fixed-income returns and currency exchange rates appears attractive, or, if the currency trend
is unfavorable, where the Sub-advisor believes that the currency risk can be minimized through hedging.

Although the Portfolio expects to maintain an intermediate-to-long weighted average maturity, there are no maturity restrictions on
the overall portfolio or on individual securities. The Portfolio may and frequently does engage in foreign currency transactions
such as forward foreign currency exchange contracts, hedging its foreign currency exposure back to the dollar or against other
foreign currencies ("cross-hedging"). The Sub-advisor also attempts to reduce currency risks through diversification among foreign
securities and active management of maturities and currency exposures.

The Portfolio may also invest up to 20% of its assets in the aggregate in below investment-grade, high-risk bonds ("junk bonds") and
emerging market bonds. Some emerging market bonds, such as Brady Bonds, may be denominated in U.S. dollars. In addition, the
Portfolio may invest up to 30% of its assets in mortgage-backed (including derivatives, such as collateralized mortgage obligations
and stripped mortgage securities) and asset-backed securities.

The AST Federated High Yield Portfolio will invest at least 65% of its assets in lower-rated corporate fixed income securities ("junk
bonds"). These fixed income securities may include preferred stocks, convertible securities, bonds, debentures, notes, equipment
lease certificates and equipment trust certificates. The securities in which the Portfolio invests usually will be rated below the
three highest rating categories of a nationally recognized rating organization (AAA, AA, or A for Standard & Poor's Corporation
("Standard & Poor's") and Aaa, Aa or A for Moody's Investors Service, Inc. ("Moody's")) or, if unrated, are of comparable quality.
There is no lower limit on the rating of securities in which the Portfolio may invest.

Methods by which the Sub-advisor attempts to reduce the risks involved in lower-rated securities include:

Credit Research. The Sub-advisor will perform its own credit analysis in addition to using rating organizations and other
sources, and may have discussions with the issuer's management or other investment analysts regarding issuers. The Sub-advisor's
credit analysis will consider the issuer's financial soundness, its responsiveness to changing business and market conditions, and
its anticipated cash flow and earnings. In evaluating an issuer, the Sub-advisor places special emphasis on the estimated current
value of the issuer's assets rather than their historical cost.

Diversification. The Sub-advisor invests in securities of many different issuers, industries, and economic sectors.

Economic Analysis. The Sub-advisor will analyze current developments and trends in the economy and in the financial
markets.

To pursue its objective, the AST Lord Abbett Bond-Debenture Portfolio normally invests in high yield and investment grade debt
securities, securities convertible into common stock and preferred stocks. Under normal circumstances, the Portfolio invests at
least 65% of its total assets in fixed income securities of various types. At least 20% of the Portfolio's assets must be invested
in any combination of investment grade securities, U.S. Government securities and cash equivalents.

The Sub-advisor believes that a high total return (current income and capital growth) may be derived from an actively managed,
diversified portfolio of investments. Through portfolio diversification, credit analysis and attention to current developments and
trends in interest rates and economic conditions, the Sub-advisor attempts to reduce the Portfolio's risks. The Sub-advisor seeks
unusual values, using fundamental, "bottom-up" research (i.e., research on individual companies rather than the economy as a whole)
to identify undervalued securities. The Portfolio may find good value in high yield securities, sometimes called "lower-rated bonds"
or "junk bonds," and frequently may have more than half of its assets invested in those securities. The Portfolio may also make
significant investments in mortgage-backed securities. Although the Portfolio expects to maintain a weighted average maturity in the
range of seven to nine years, there are no maturity restrictions on the overall portfolio or on individual securities.

The AST PIMCO Total Return Bond Portfolio will invest at least 65% of its assets in the following types of fixed income securities:

(1) securities issued or guaranteed by the U.S. Government, its agencies or government-sponsored enterprises;
(2) corporate debt securities of U.S. and non-U.S. issuers, including convertible securities and corporate commercial paper;
(3) mortgage and other asset-backed securities;
(4) inflation-indexed bonds issued by both governments and corporations;
(5) structured notes, including hybrid or "indexed" securities, event-linked bonds and loan participations;
(6) delayed funding loans and revolving credit securities;
(7) bank certificates of deposit, fixed time deposits and bankers' acceptances;
(8) repurchase agreements and reverse repurchase agreements;
(9) debt securities issued by state or local governments and their agencies and government-sponsored enterprises;
(10) obligations of foreign governments or their subdivisions, agencies and government-sponsored enterprises; and
(11) obligations of international agencies or supranational entities.

Portfolio holdings will be concentrated in areas of the bond market that the Sub-advisor believes to be relatively undervalued. In
selecting fixed income securities, the Sub-advisor uses economic forecasting, interest rate anticipation, credit and call risk
analysis, foreign currency exchange rate forecasting, and other securities selection techniques. The proportion of the Portfolio's
assets committed to investment in securities with particular characteristics (such as maturity, type and coupon rate) will vary based
on the Sub-advisor's outlook for the U.S. and foreign economies, the financial markets, and other factors. The management of
duration is one of the fundamental tools used by the Sub-advisor.

The Portfolio will invest in fixed-income securities of varying maturities. The average portfolio duration of the Portfolio
generally will vary within a three- to six-year time frame based on the Sub-advisor's forecast for interest rates. The Portfolio can
and routinely does invest in certain complex fixed income securities (including mortgage-backed and asset-backed securities) and
engage in a number of investment practices (including futures, swaps and dollar rolls) that many other fixed income funds do not
utilize. The Portfolio may invest up to 10% of its assets in fixed income securities that are rated below investment grade ("junk
bonds") (or, if unrated, determined by the Sub-advisor to be of comparable quality).

The AST PIMCO Limited Maturity Bond Portfolio will invest at least 65% of its assets in the following types of fixed income
securities:

The Portfolio will invest in fixed-income securities of varying maturities. The average portfolio duration of the Portfolio
generally will vary within a one- to three-year time frame based on the Sub-advisor's forecast for interest rates. The Portfolio can
and routinely does invest in certain complex fixed income securities (including mortgage-backed and asset-backed securities) and
engage in a number of investment practices (including futures, swaps and dollar rolls) that many other fixed income funds do not
utilize. The Portfolio may invest up to 10% of its assets in fixed income securities that are rated below investment grade ("junk
bonds") (or, if unrated, determined by the Sub-advisor to be of comparable quality).

The AST Money Market Portfolio will invest in high-quality, short-term, U.S. dollar denominated corporate, bank and government
obligations. Under the regulatory requirements applicable to money market funds, the Portfolio must maintain a weighted average
portfolio maturity of not more than 90 days and invest in securities that have effective maturities of not more than 397 days. In
addition, the Portfolio will limit its investments to those securities that, in accordance with guidelines adopted by the Directors
of the Company, present minimal credit risks. The Portfolio will not purchase any security (other than a United States Government
security) unless:

(1) if rated by only one nationally recognized statistical rating organization (such as Moody's and Standard & Poor's), such
organization has rated it with the highest rating assigned to short-term debt securities;

(2) if rated by more than one nationally recognized statistical rating organization, at least two rating organizations have
rated it with the highest rating assigned to short-term debt securities; or

(3) it is not rated, but is determined to be of comparable quality in accordance with the guidelines noted above.

Principal Risks:
---------------

o The risk of a fund or portfolio investing primarily in fixed income securities is determined largely by the quality and
maturity characteristics of its portfolio securities. Lower-quality fixed income securities are subject to greater risk that the
company may fail to make interest and principal payments on the securities when due. Fixed income securities with longer
maturities (or durations) are generally subject to greater risk than securities with shorter maturities, in that their values
will fluctuate more in response to changes in market interest rates.

o While the AST T. Rowe Price Global Bond Portfolio invests primarily in high-quality fixed income securities, its substantial
investments in foreign fixed income securities and relatively long average maturity will tend to increase its level of risk. Like
foreign equity investments, foreign fixed income investments involve risks such as fluctuations in currency exchange rates,
unstable political and economic structures, reduced availability of information, and lack of uniform financial reporting and
regulatory practices such as those that apply to U.S. issuers. The AST T. Rowe Price Global Bond Portfolio can invest to some
degree in securities of issuers in developing countries and in lower-quality fixed income securities, and the risks of the
Portfolio may be accentuated by these holdings.

o As a fund that invests primarily in lower-quality fixed income securities, the AST Federated High Yield Portfolio will be
subject to a level of risk that is high relative to other fixed income funds, and which may be comparable to or higher than some
equity funds. The level of risk of the AST Lord Abbett Bond-Debenture Portfolio may be higher than many other fixed income funds
because it will often have significant investments in lower-quality fixed income securities. Like equity securities,
lower-quality fixed income securities tend to reflect short-term market developments to a greater extent than higher-quality
fixed income securities. An economic downturn may adversely affect the value of lower-quality securities, and the trading market
for such securities is generally less liquid than the market for higher-quality securities.

o The average duration or maturity of the AST Lord Abbett Bond-Debenture Portfolio generally will be longer than that of the
AST PIMCO Total Return Bond Portfolio, which in turn will be longer than that of the AST PIMCO Limited Maturity Bond Portfolio,
and funds having longer average maturities or durations can be expected to be subject to a greater level of risk than
shorter-term funds. As funds that invest primarily in high-quality fixed income securities, the level of risk to which the AST
PIMCO Total Return Bond Portfolio and AST PIMCO Limited Maturity Bond Portfolio are subject can be expected to be less than most
equity funds. Nonetheless, the fixed income securities held by these Portfolios can decline in value because of changes in their
quality, in market interest rates, or for other reasons. While the complex fixed income securities invested in and investment
practices engaged in by the AST PIMCO Total Return Bond Portfolio and AST PIMCO Limited Maturity Portfolio are designed to
increase their return or hedge their investments, these securities and practices may increase the risk to which the Portfolios
are subject.

o The AST Money Market Portfolio seeks to preserve the value of your investment at $1.00 per share, but it is still possible
to lose money by investing in the Portfolio. An investment in the Portfolio is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency. In addition, the income earned by the Portfolio will fluctuate based on
market conditions and other factors.

Past Performance

The bar charts show the performance of each Portfolio for each full calendar year the Portfolio has been in operation.
The tables below each bar chart show each such Portfolio's best and worst quarters during the periods included in the bar chart, as
well as average annual total returns for each Portfolio since inception. This information may help provide an indication of each
Portfolio's risks by showing changes in performance from year to year and by comparing the Portfolio's performance with that of a
broad-based securities index. The performance figures do not reflect any charges associated with the variable insurance contracts
through which Portfolio shares are purchased; and would be lower if they did. All figures assume reinvestment of dividends. Past
performance does not necessarily indicate how a Portfolio will perform in the future. No performance information is included for
those Portfolios that commenced operations after January, 2000 (the AST Scudder Japan Portfolio, the AST Federated Aggressive Growth
Portfolio, the AST Janus Mid-Cap Growth Portfolio, the AST Gabelli All-Cap Value Portfolio, the AST Kinetics Internet Portfolio, the
AST Janus Strategic Value Portfolio, the AST Alliance/Bernstein Growth + Value Portfolio, the AST Sanford Bernstein Core Value
Portfolio and the AST Lord Abbett Bond-Debenture Portfolio).

FEES AND EXPENSES OF THE PORTFOLIOS: The table below describes the fees and expenses that you may pay if you buy and hold shares of
the Portfolios. Unless otherwise indicated, the expenses shown below are for the year ending December 31, 2000.

SHAREHOLDER TRANSACTION EXPENSES (fees paid directly from your investment):

Maximum Sales Charge (Load) Imposed on Purchases NONE*
Maximum Deferred Sales Charge (Load) NONE*
Maximum Sales Charge (Load) Imposed on Reinvested Dividends NONE*
Redemption Fees NONE*
Exchange Fee NONE*

* Because shares of the Portfolios may be purchased through variable insurance products, the prospectus of the relevant product
should be carefully reviewed for information on the charges and expenses of those products. This table does not reflect any such
charges.

ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from Portfolio assets, in %):

Management Distribution Other Total Annual Fee Waivers Net
Fees and Service Expenses Portfolio and Expense Annual
(12b-1) Operating Reimbursement(5) Fund
Portfolio: Fees(4) Expenses Operating
Expenses
------------------------------------------ ------------ -------------- ------------ -------------- ---------------- ------------
AST Founders Passport 1.00 0.00 0.38 1.38 N/A 1.38
AST Scudder Japan(1) 1.00 0.00 1.78 2.78 1.03 1.75
AST AIM International Equity 0.86 0.06 0.24 1.16 N/A 1.16
AST Janus Overseas Growth 1.00 0.01 0.18 1.19 N/A 1.19
AST American Century International Growth 1.00 0.00 0.27 1.27 N/A 1.27
AST American Century International 1.00 0.00 0.26 1.26 N/A 1.26
Growth II
AST MFS Global Equity 1.00 0.00 0.87 1.87 0.12 1.75
AST Janus Small-Cap Growth 0.90 0.01 0.16 1.07 N/A 1.07
AST Scudder Small-Cap Growth 0.95 0.02 0.16 1.13 N/A 1.13
AST Federated Aggressive Growth(1) 0.95 0.00 6.27 7.22 5.87 1.35
AST Goldman Sachs Small-Cap Value 0.95 0.00 0.20 1.15 N/A 1.15
AST Gabelli Small-Cap Value 0.90 0.01 0.21 1.12 N/A 1.12
AST Janus Mid-Cap Growth(2) 1.00 0.00 0.28 1.28 N/A 1.28
AST Neuberger Berman Mid-Cap Growth 0.90 0.03 0.16 1.09 N/A 1.09
AST Neuberger Berman Mid-Cap Value 0.90 0.16 0.18 1.24 N/A 1.24
AST Alger All-Cap Growth 0.95 0.05 0.24 1.24 N/A 1.24
AST Gabelli All-Cap Value(1) 0.95 0.00 0.64 1.59 0.14 1.45
AST Kinetics Internet(1) 1.00 0.00 4.34 5.34 3.94 1.40
AST T. Rowe Price Natural Resources 0.90 0.06 0.24 1.20 N/A 1.20
AST Alliance Growth 0.90 0.07 0.19 1.16 N/A 1.16
AST MFS Growth 0.90 0.00 0.30 1.20 N/A 1.20
AST Marsico Capital Growth 0.90 0.02 0.14 1.06 0.02 1.04
AST JanCap Growth 0.90 0.01 0.13 1.04 0.04 1.00
AST Janus Strategic Value(1) 1.00 0.00 1.41 2.41 1.06 1.35
AST Alliance/Bernstein Growth + Value(3) 0.90 0.03 0.24 1.17 N/A 1.17
AST Sanford Bernstein Core Value(3) 0.75 0.03 0.24 1.02 N/A 1.02
AST Cohen & Steers Realty 1.00 0.06 0.22 1.28 N/A 1.28
AST Sanford Bernstein Managed Index 500 0.60 0.02 0.16 0.78 N/A 0.78
AST American Century Income & Growth 0.75 0.00 0.19 0.94 N/A 0.94
AST Alliance Growth and Income 0.75 0.16 0.15 1.06 0.01 1.05
AST MFS Growth with Income 0.90 0.00 0.33 1.23 N/A 1.23
AST INVESCO Equity Income 0.75 0.03 0.17 0.95 0.01 0.94
AST AIM Balanced 0.73 0.00 0.22 0.95 N/A 0.95
AST American Century Strategic Balanced 0.85 0.00 0.25 1.10 N/A 1.10
AST T. Rowe Price Asset Allocation 0.85 0.00 0.23 1.08 N/A 1.08
AST T. Rowe Price Global Bond 0.80 0.00 0.32 1.12 N/A 1.12
AST Federated High Yield 0.75 0.00 0.21 0.96 N/A 0.96
AST Lord Abbett Bond-Debenture(1) 0.80 0.00 2.27 3.07 1.87 1.20
AST PIMCO Total Return Bond 0.65 0.00 0.17 0.82 N/A 0.82
AST PIMCO Limited Maturity Bond 0.65 0.00 0.22 0.87 N/A 0.87
AST Money Market 0.50 0.00 0.15 0.65 0.05 0.60

(1) These Portfolios commenced operations in October 2000. "Other Expenses" and "Distribution and Service Fees" shown are based on
estimated amounts for the fiscal year ending December 31, 2001.
(2) This Portfolio commenced operations in May 2000. "Other Expenses" and "Distribution and Service Fees" shown are based on
estimated amounts for the fiscal year ending December 31, 2001.
(3) This Portfolio had not commenced operations prior to the date of this Prospectus. "Other Expenses" and "Distribution and
Service Fees" shown are based on estimated amounts for the fiscal year ending December 31, 2001.
(4) As discussed below under "Management of the Trust - Fees and Expenses, the Trustees adopted a Distribution Plan (the
"Distribution Plan") under Rule 12b-1 to permit an affiliate of the Trust's Investment Manager to receive brokerage commissions in
connection with purchases and sales of securities held by the Portfolios, and to use these commissions to promote the sale of shares
of the Portfolio. While the brokerage commission rates and amounts paid by the various Portfolios are not expected to increase as a
result of the Distribution Plan, the staff of the Securities and Exchange Commission takes the position that commission amounts
received under the Distribution Plan should be reflected as distribution expenses of the Portfolios. The Distribution Fees are
derived and annualized from data regarding commission amounts directed to the affiliate under the Distribution Plan. Although there
are no maximum amounts allowable, actual commission amounts directed under the Distribution Plan will vary and the amounts directed
during the last full fiscal year of the Plan's operations may differ from the amounts listed in the above chart.
(5) The Investment Manager has agreed to reimburse and/or waive fees for certain Portfolios until at least April 30, 2002. The
caption "Total Annual Fund Operating Expenses" reflects the Portfolios' fees and expenses before such waivers and reimbursements,
while the caption "Net Annual Fund Operating Expenses" reflects the effect of such waivers and reimbursements.

EXPENSE EXAMPLES:

This example is intended to help you compare the cost of investing in the Portfolios with the cost of investing in other
mutual funds.

The Example assumes that you invest $10,000 in a Portfolio for the time periods indicated. The Example also assumes that
your investment has a 5% return each year, that the Portfolios' total operating expenses remain the same, and that any expense
waivers and reimbursements remain in effect only for the periods during which they are binding. Although your actual costs may be
higher or lower, based on these assumptions your costs would be:

After:
Portfolio: 1 yr. 3 yrs. 5 yrs. 10 yrs.
--------- ------------------------------------------------------------

AST Founders Passport $141 $437 $755 $1,657
AST Scudder Japan 178 551 N/A N/A
AST AIM International Equity 118 368 638 1,409
AST Janus Overseas Growth 121 378 654 1,443
AST American Century International Growth 129 403 697 1,534
AST American Century International Growth II 128 400 692 1,523
AST MFS Global Equity 178 551 949 2,062
AST Janus Small-Cap Growth 109 340 590 1,306
AST Scudder Small-Cap Growth 115 359 622 1,375
AST Federated Aggressive Growth 137 428 N/A N/A
AST Goldman Sachs Small-Cap Value 117 365 633 1,398
AST Gabelli Small-Cap Value 114 356 617 1,363
AST Janus Mid-Cap Growth 130 406 702 1,545
AST Neuberger Berman Mid-Cap Growth 111 347 601 1,329
AST Neuberger Berman Mid-Cap Value 126 393 681 1,500
AST Alger All-Cap Growth 126 393 681 1,500
AST Gabelli All-Cap Value 148 459 N/A N/A
AST Kinetics Internet 143 443 N/A N/A
AST T. Rowe Price Natural Resources 122 381 660 1,455
AST Alliance Growth 118 368 638 1,409
AST MFS Growth 122 381 660 1,455
AST Marsico Capital Growth 106 331 574 1,271
AST JanCap Growth 102 318 552 1,225
AST Janus Strategic Value 137 428 N/A N/A
AST Alliance/Bernstein Growth + Value 119 372 N/A N/A
AST Sanford Bernstein Core Value 104 325 N/A N/A
AST Cohen & Steers Realty 130 406 702 1,545
AST Sanford Bernstein Managed Index 500 80 249 433 966
AST American Century Income & Growth 96 300 520 1,155
AST Alliance Growth and Income 107 334 579 1,283
AST MFS Growth with Income 125 390 676 1,489
AST INVESCO Equity Income 96 300 520 1,155
AST AIM Balanced 97 303 526 1,166
AST American Century Strategic Balanced 112 350 606 1,340
AST T. Rowe Price Asset Allocation 110 343 595 1,317
AST T. Rowe Price Global Bond 114 356 617 1,363
AST Federated High Yield 98 306 531 1,178
AST Lord Abbett Bond-Debenture 122 381 N/A N/A
AST PIMCO Total Return Bond 84 262 455 1,014
AST PIMCO Limited Maturity Bond 89 278 482 1,073
AST Money Market 61 192 335 750

INVESTMENT OBJECTIVES AND POLICIES:

The investment objective, policies and limitations for each of the Portfolios are described below. While certain policies
apply to all Portfolios, generally each Portfolio has a different investment objective and investment focus. As a result, the risks,
opportunities and returns of investing in each Portfolio will differ. The investment objectives and policies of the Portfolios
generally are not fundamental policies and may be changed by the Trustees without shareholder approval.

There can be no assurance that the investment objective of any Portfolio will be achieved. Risks relating to certain types
of securities and instruments in which the Portfolios may invest are described in this Prospectus under "Certain Risk Factors and
Investment Methods."

If approved by the Trustees, the Trust may add more Portfolios and may cease to offer any existing Portfolios in the future.

AST FOUNDERS PASSPORT PORTFOLIO:

Investment Objective: The investment objective of the Portfolio is to seek capital growth.

Principal Investment Policies and Risks:

To achieve its objective, the Portfolio normally invests primarily in securities issued by foreign companies that have
market capitalizations of $1.5 billion or less (this maximum may be revised from time to time based on stock market valuations and
industry standards). These securities may represent companies in both established and emerging economies throughout the world.

At least 65% of the Portfolio's total assets normally will be invested in foreign securities representing a minimum of three
countries. The Portfolio may invest in larger foreign companies or in U.S.-based companies if, in the Sub-advisor's opinion, they
represent better prospects for capital appreciation. The Sub-advisor looks for companies whose fundamental strengths indicate
potential for growth in earnings per share. The Sub-advisor generally takes a "bottom up" approach to building the Portfolio,
searching for individual companies that demonstrate the best potential for significant earnings growth, rather than choose
investments based on broader economic characteristics of countries or industries.

As discussed below, foreign securities are generally considered to involve more risk than those of U.S. companies, and
securities of smaller companies are generally considered to be riskier than those of larger companies. Therefore, because the
Portfolio's investment focus is on securities of small and medium-sized foreign companies, the risk of loss and share price
fluctuation of this Portfolio likely will be high relative to most of the other Portfolios of the Trust and popular market averages.

Foreign Securities. For purposes of the Portfolio, the term "foreign securities" refers to securities of issuers, that, in
the judgment of the Sub-advisor, have their principal business activities outside of the United States, and may include American
Depositary Receipts. The determination of whether an issuer's principal activities are outside of the United States will be based on
the location of the issuer's assets, personnel, sales, and earnings (specifically on whether more than 50% of the issuer's assets are
located, or more than 50% of the issuer's gross income is earned, outside of the United States) or on whether the issuer's sole or
principal stock exchange listing is outside of the United States. The foreign securities in which the Portfolio will invest
typically will be traded on the applicable country's principal stock exchange but may also be traded on regional exchanges or
over-the-counter.

Investments in foreign securities involve different risks than U.S. investments, including fluctuations in currency exchange
rates, unstable political and economic structures, reduced availability of public information, and lack of uniform financial
reporting and regulatory practices such as those that apply to U.S. issuers. Foreign investments of the Portfolio may include
securities issued by companies located in developing countries. Developing countries are subject to more economic, political and
business risk than major industrialized nations, and the securities they issue are expected to be more volatile and more uncertain as
to payment of interest and principal. The Portfolio is permitted to use forward foreign currency contracts in connection with the
purchase or sale of a specific security or for hedging purposes.

For an additional discussion of the risks involved in foreign securities, see this Prospectus under "Certain Risk Factors
and Investment Methods."

Small and Medium-Sized Companies. Investments in small and medium-sized companies involve greater risk than is customarily
associated with more established companies. Generally, small and medium-sized companies are still in the developing stages of their
life cycles and are attempting to achieve rapid growth in both sales and earnings. While these companies often have growth rates
that exceed those of large companies, smaller companies often have limited operating histories, product lines, markets, or financial
resources, and they may be dependent upon one-person management. These companies may be subject to intense competition from larger
entities, and the securities of such companies may have a limited market and may be subject to more abrupt or erratic movements in
price.

Other Investments:

In addition to investing in common stocks, the Portfolio may invest in other types of securities and may engage in certain
investment practices. The Portfolio may invest in convertible securities, preferred stocks, bonds, debentures, and other corporate
obligations when the Sub-advisor believes that these investments offer opportunities for capital appreciation. Current income will
not be a substantial factor in the selection of these securities.

The Portfolio will only invest in bonds, debentures, and corporate obligations (other than convertible securities and
preferred stock) rated investment grade at the time of purchase. Convertible securities and preferred stocks purchased by the
Portfolio may be rated in medium and lower categories by Moody's or S&P, but will not be rated lower than B. The Portfolio may also
invest in unrated convertible securities and preferred stocks if the Sub-advisor believes that the financial condition of the issuer
or the terms of the securities limits risk to a level similar to that of securities rated B or above.

In addition, the Portfolio may enter into stock index, interest rate and foreign currency futures contracts (or options
thereon) for hedging purposes. The Portfolio may write covered call options on any or all of its portfolio securities as the
Sub-advisor considers appropriate. The Portfolio also may purchase options on securities and stock indices for hedging purposes.
The Portfolio may buy and sell options on foreign currencies for hedging purposes in a manner similar to that in which futures on
foreign currencies would be utilized.

For more information on these securities and investment practices and their risks, see this Prospectus under "Certain Risk
Factors and Investment Methods."

Temporary Investments. Up to 100% of the assets of the Portfolio may be invested temporarily in cash or cash equivalents if
the Sub-advisor determines that it would be appropriate for purposes of increasing liquidity or preserving capital in light of market
or economic conditions. Temporary investments may include U.S. government obligations, commercial paper, bank obligations, and
repurchase agreements. While the Portfolio is in a defensive position, the opportunity to achieve its investment objective of
capital growth will be limited.

AST SCUDDER JAPAN PORTFOLIO:

Investment Objective: The investment objective of the Portfolio is to seek long-term capital growth.

Principal Investment Policies and Risks:

The Portfolio pursues its investment objective by investing at least 80% of net assets in Japanese securities (those issued
by Japan-based companies or their affiliates, or by any company that derives more than half of its revenues from Japan). The
Portfolio may invest in stocks of any size, including up to 30% of its net assets in smaller companies that are traded
over-the-counter.

In choosing stocks, the Sub-advisor uses a combination of three analytical disciplines:

Top-down analysis. The Sub-advisor considers the economic outlooks for various sectors and industries in Japan.

The Sub-advisor may favor securities from different industries and companies at different times while still maintaining
variety in terms of the industries and companies represented.

The Portfolio will normally sell a security when it reaches a target price, its fundamentals have changed, the Sub-advisor
believes other investments offer better opportunities, or when adjusting its emphasis on a given industry.

As with any stock fund, the fundamental risk associated with the Portfolio is the risk that the value of the stocks it holds
might decrease. Stock values fluctuate in response to factors affecting particular companies (e.g., poor management or shrinking
product demand) or to overall stock market performance (in this case, the performance of the Japanese market).

Because the Portfolio invests primarily in foreign securities, its level of risk and share price fluctuation may be greater
than a fund investing primarily in domestic securities. Japanese stocks tend to be more volatile than their U.S. counterparts, for
reasons ranging from political and economic uncertainties to a higher risk that essential information may be incomplete or wrong.
Japanese economic growth has weakened after the sharp collapse of the stock market in the 1990's and the current economic condition
remains uncertain. In addition, changing currency rates could add to investment losses or reduce investment gains.

The Portfolio's focus on a single country could also give rise to increased risk, as the Portfolio's investments will not be
diversified among countries having varying characteristics and market performance. In addition, the Portfolio level of risk will
likely increase to the extent that it invests in the securities of smaller companies, which may have limited business lines and
financial resources, and therefore be especially vulnerable to business risks and economic downturns. Also, the growth stocks in
which the Portfolio generally invests may be out of favor for certain periods.

Other Investments:

While most of the Portfolio's investments are common stocks, the Portfolio may also invest in other types of equities, such
as convertible securities, depositary receipts and preferred stocks. The Portfolio may also invest in debt securities rated in the
top four credit quality categories, including those issued by the Japanese government or Japanese companies, if the Sub-advisor
believes they offer greater potential for capital growth.

The Portfolio may invest in various types of derivatives (contracts whose value is based on, for example, indices,
currencies or securities), including futures contracts based on Japanese stock indices.

Additional information on the types of securities in which the Portfolio may invest is included in this Prospectus under
"Certain Risk Factors and Investment Methods."
Temporary Investments. As a temporary defensive measure, the Portfolio could shift up to 100% of its assets into investments
such as money market securities. While taking a defensive position could prevent losses, the opportunity for the Portfolio to
achieve its investment objective of capital growth may be limited.

AST AIM INTERNATIONAL EQUITY PORTFOLIO:

Investment Objective: The investment objective of the Portfolio is to seek capital growth.

Principal Investment Objectives and Risks:

The Portfolio seeks to meet its investment objective by investing, normally, at least 70% of its assets in marketable equity
securities of foreign companies that are listed on a recognized foreign securities exchange or traded in a foreign over-the-counter
market. The Portfolio will normally invest in a diversified portfolio that includes companies located in at least four countries
outside the United States, emphasizing investment in companies in the developed countries of Western Europe and the Pacific Basin.
The Sub-advisor does not intend to invest more than 20% of the Portfolio's total assets in companies located in developing countries
(i.e., those that are in the initial stages of their industrial cycles).

The Sub-advisor focuses on companies that have experienced above-average, long-term growth in earnings and have strong
prospects for future growth. In selecting countries in which the Portfolio will invest, the Sub-advisor also considers such factors
as the prospect for relative economic growth among countries or regions, economic or political conditions, currency exchange
fluctuations, tax considerations and the liquidity of a particular security. The Sub-advisor considers whether to sell a particular
security when any of those factors materially changes.

As with any equity fund, the fundamental risk associated with the Portfolio is the risk that the value of the securities it
holds might decrease. The prices of equity securities change in response to many factors, including the historical and prospective
earnings of the issuer, the value of its assets, general economic conditions, interest rates, investor perceptions and market
liquidity.

As a fund that invests primarily in the securities of foreign issuers, the risk and degree of share price fluctuation of the
Portfolio may be greater than a fund investing primarily in domestic securities. The risks of investing in foreign securities, which
are described in more detail below under "Certain Risk Factors and Investment Methods," include political and economic conditions and
instability in foreign countries, less available information about foreign companies, lack of strict financial and accounting
controls and standards, less liquid and more volatile securities markets, and fluctuations in currency exchange rates. While the
Portfolio may engage in transactions intended to hedge its exposure to fluctuations in foreign currencies, it does not normally do
so. To the extent the Portfolio invests in securities of issuers in developing countries, the Portfolio may be subject to even
greater levels of risk and share price fluctuation. Transaction costs are often higher in developing countries and there may be
delays in settlement of transactions.

Other Investments:

The Portfolio may invest up to 20% of its total assets in debt or preferred equity securities exchangeable for or
convertible into marketable equity securities of foreign companies. In addition, the Portfolio may regularly invest up to 20% of its
total assets in high-grade short-term debt securities, including U.S. Government obligations, investment grade corporate bonds or
taxable municipal securities, whether denominated in U.S. dollars or foreign currencies. The Portfolio also may purchase and write
(sell) covered call and put options on securities and stock indices. The Portfolio may also purchase and sell stock and interest
rate futures contracts and options on these futures contracts. The purpose of these transactions is to hedge against changes in the
market value of the Portfolio's portfolio securities caused by changing interest rates and market conditions, and to close out or
offset existing positions in options or futures contracts. The Portfolio may from time to time make short sales "against the box."

Additional information about convertible securities, options, futures contracts and other investments that the Portfolio may
make is included in this Prospectus under "Certain Risk Factors and Investment Methods."

Temporary Investments. In addition to regularly investing up to 20% of its total assets in short-term debt securities as
noted above, the Portfolio may hold all or a significant portion of its assets in cash, money market instruments, bonds or other debt
securities in anticipation of or in response to adverse market conditions or for cash management purposes. While the Portfolio is in
such a defensive position, the opportunity to achieve its investment objective of capital growth may be limited.

AST JANUS OVERSEAS GROWTH PORTFOLIO:

Investment Objective: The investment objective of the Portfolio is to seek long-term growth of capital.

Principal Investment Policies and Risks:

The Portfolio pursues its objective primarily through investments in common stocks of issuers located outside the United
States. The Portfolio has the flexibility to invest on a worldwide basis in companies and organizations of any size, regardless of
country of organization or place of principal business activity.

The Portfolio normally invests at least 65% of its total assets in securities of issuers from at least five different
countries, excluding the United States. Although the Portfolio intends to invest substantially all of its assets in issuers located
outside the United States, it may at times invest in U.S. issuers and it may at times invest all of its assets in fewer than five
countries or even a single country.

The Portfolio invests primarily in stocks selected for their growth potential. The Sub-advisor generally takes a "bottom
up" approach to choosing investments for the Portfolio. In other words, the Sub-advisor seeks to identify individual companies with
earnings growth potential that may not be recognized by the market at large, regardless of where the companies are organized or where
they primarily conduct business. Although themes may emerge in the Portfolio, securities are generally selected without regard to
any defined allocation among countries, geographic regions or industry sectors, or other similar selection procedure. Current income
is not a significant factor in choosing investments, and any income realized by the Portfolio will be incidental to its objective.

As with any common stock fund, the fundamental risk associated with the Portfolio is the risk that the value of the stocks
it holds might decrease. Stock values may fluctuate in response to the activities of an individual company or in response to general
market and/or economic conditions. As a fund that invests primarily in the securities of foreign issuers, the risk associated with
the Portfolio may be greater than a fund investing primarily in domestic securities. For a further discussion of the risks involved
in investing in foreign securities, see this Prospectus under "Certain Risk Factors and Investment Methods." In addition, the
Portfolio may invest to some degree in smaller or newer issuers, which are more likely to realize substantial growth as well as
suffer significant losses than larger or more established issuers.

The Portfolio generally intends to purchase securities for long-term investment rather than short-term gains. However,
short-term transactions may occur as the result of liquidity needs, securities having reached a desired price or yield, anticipated
changes in interest rates or the credit standing of an issuer, or by reason of economic or other developments not foreseen at the
time the investment was made. To a limited extent, the Portfolio may purchase securities in anticipation of relatively short-term
price gains. The Portfolio may also sell one security and simultaneously purchase the same or a comparable security to take
advantage of short-term differentials in bond yields or securities prices.

Special Situations. The Portfolio may invest in "special situations" from time to time. A special situation arises when,
in the opinion of the Sub-advisor, the securities of a particular issuer will be recognized and increase in value due to a specific
development with respect to that issuer. Developments creating a special situation might include a new product or process, a
technological breakthrough, a management change or other extraordinary corporate event, or differences in market supply of and demand
for the security. Investment in special situations may carry an additional risk of loss in the event that the anticipated
development does not occur or does not attract the expected attention.

Other Investments:

The Portfolio may invest to a lesser degree in types of securities other than common stocks, including preferred stocks,
warrants, convertible securities and debt securities. The Portfolio is subject to the following percentage limitations on investing
in certain types of debt securities:

-- 35% of its assets in bonds rated below investment grade ("junk" bonds).
-- 25% of its assets in mortgage- and asset-backed securities.
-- 10% of its assets in zero coupon, pay-in-kind and step coupon securities (securities that do not, or may not under
certain circumstances, make regular interest payments).

The Portfolio may make short sales "against the box." In addition, the Portfolio may invest in the following types of securities and
engage in the following investment techniques:

Futures, Options and Other Derivative Instruments. The Portfolio may enter into futures contracts on securities, financial
indices and foreign currencies and options on such contracts and may invest in options on securities, financial indices and foreign
currencies, forward contracts and interest rate swaps and swap-related products (collectively "derivative instruments"). The
Portfolio intends to use most derivative instruments primarily to hedge the value of its portfolio against potential adverse
movements in securities prices, foreign currency markets or interest rates. To a limited extent, the Portfolio may also use
derivative instruments for non-hedging purposes such as seeking to increase income. The Portfolio may also use a variety of currency
hedging techniques, including forward currency contracts, to manage exchange rate risk with respect to investments exposed to foreign
currency fluctuations.

Index/structured Securities. The Portfolio may invest in indexed/structured securities, which typically are short- to
intermediate-term debt securities whose value at maturity or interest rate is linked to currencies, interest rates, equity
securities, indices, commodity prices or other financial indicators. Such securities may offer growth potential because of
anticipated changes in interest rates, credit standing, currency relationships or other factors

For more information on the types of securities and instruments other than common stocks in which the Portfolio may invest
and their risks, see this Prospectus under "Certain Risk Factors and Investment Methods."

Temporary Investments. When the Sub-advisor believes that market conditions are not favorable for profitable investing or
when the Sub-advisor is otherwise unable to locate favorable investment opportunities, the Portfolio's investments may be hedged to a
greater degree and/or its cash or similar investments may increase. In other words, the Portfolio does not always stay fully
invested in stocks and bonds. The Portfolio's cash and similar investments may include high-grade commercial paper, certificates of
deposit, repurchase agreements and money market funds managed by the Sub-advisor. While the Portfolio is in a defensive position,
the opportunity to achieve its investment objective of long-term growth of capital will be limited.

AST AMERICAN CENTURY INTERNATIONAL GROWTH PORTFOLIO:

Investment Objective: The investment objective of the Portfolio is to seek capital growth.

Principal Investment Policies and Risks:

The Portfolio will seek to achieve its investment objective by investing primarily in equity securities of international
companies that the Sub-advisor believes will increase in value over time. The Sub-advisor uses a growth investment strategy it
developed that looks for companies with earnings and revenue growth. Ideally, the Sub-advisor looks for companies whose earnings and
revenues are not only growing, but are growing at an accelerating pace. Accelerating growth is shown, for example, by growth that is
faster this quarter than last or faster this year than the year before. For purposes of the Portfolio, equity securities include
common stocks, preferred stocks and convertible securities.

The Sub-advisor tracks financial information for thousands of companies to research and select the stocks it believes will
be able to sustain accelerating growth. This strategy is based on the premise that, over the long term, the stocks of companies with
accelerating earnings and revenues have a greater-than-average chance to increase in value.

The Sub-advisor recognizes that, in addition to locating strong companies with accelerating earnings, the allocation of
assets among different countries and regions also is an important factor in managing an international portfolio. For this reason,
the Sub-advisor will consider a number of other factors in making investment selections, including the prospects for relative
economic growth among countries or regions, economic and political conditions, expected inflation rates, currency exchange
fluctuations and tax considerations. Under normal conditions, the Portfolio will invest at least 65% of its assets in equity
securities of issuers from at least three countries outside of the United States. In order to maintain investment flexibility, the
Portfolio has not otherwise established geographic requirements for asset distribution.

While the Portfolio's focus will be on issuers in developed markets, the Sub-advisor expects to invest to some degree in
issuers in developing countries. The Portfolio may make foreign investments either directly in foreign securities, or indirectly by
purchasing depositary receipts. Securities purchased in foreign markets may either be traded on foreign securities exchanges or in
the over-the-counter markets.

As with all stocks, the value of the stocks held by the Portfolio can decrease as well as increase. As a fund investing
primarily in equity securities of foreign issuers, the Portfolio may be subject to a level of risk and share price fluctuation higher
than most funds that invest primarily in domestic equities. Foreign companies may be subject to greater economic risks than domestic
companies, and foreign securities are subject to certain risks relating to political, regulatory and market structures and events
that domestic securities are not subject to. To the extent the Portfolio invests in securities of issuers in developing counties,
the Portfolio may be subject to even greater levels of risk and share price fluctuation.

Other Investments:

Securities of U.S. issuers may be included in the Portfolio from time to time. The Portfolio also may invest in bonds,
notes and debt securities of companies and obligations of domestic or foreign governments and their agencies. The Portfolio will
limit its purchases of debt securities to investment grade obligations. The Portfolio may enter into non-leveraged stock index
futures contracts and may make short sales "against the box."

Derivative Securities. The Portfolio may invest in derivative securities. Certain of these derivative securities may be
described as "index/structured" securities, which are securities whose value or performance is linked to other equity securities (as
in the case of depositary receipts), currencies, interest rates, securities indices or other financial indicators ("reference
indices"). The Portfolio may not invest in a derivative security unless the reference index or the instrument to which it relates is
an eligible investment for the Portfolio. For example, a security whose underlying value is linked to the price of oil would not be
a permissible investment because the Portfolio may not invest in oil and gas leases or futures. The Portfolio may make short sales
"against the box."

Forward Currency Exchange Contracts. As a fund investing primarily in foreign securities, the value of the Portfolio will
be affected by changes in the exchange rates between foreign currencies and the U.S. dollar. To protect against adverse movements in
exchange rates, the Portfolio may, for hedging purposes only, enter into forward foreign currency exchange contracts. The Portfolio
may enter into a forward contract to "lock-in" an exchange rate for a specific purchase or sale of a security. Less frequently, the
Portfolio may enter into a forward contract to seek to protect its holdings in a particular currency from a decline in that
currency. Predicting the relative future values of currencies is very difficult, and there is no assurance that any attempt to
reduce the risk of adverse currency movements through the use of forward contracts will be successful.

Indirect Foreign Investments. The Portfolio may invest up to 10% of its assets in certain foreign countries indirectly
through investment funds and registered investment companies that invest in those countries. If the Portfolio invests in investment
companies, it will bear its proportionate share of the costs incurred by such companies, including any investment advisory fees.

Additional information about the securities that the Portfolio may invest in and their risks is included below under
"Certain Risk Factors and Investment Methods."

Temporary Investments. Under exceptional market or economic conditions, the Portfolio may temporarily invest all or a
substantial portion of its assets in cash or investment-grade short-term securities. While the Portfolio is in a defensive position,
the ability to achieve its investment objective of capital growth may be limited.

AST AMERICAN CENTURY INTERNATIONAL GROWTH PORTFOLIO II:

The investment objective, policies and risks of the Portfolio are substantially identical to those of the AST American Century
International Growth Portfolio as described immediately above.

AST MFS GLOBAL EQUITY PORTFOLIO:

Investment Objective: The investment objective of the Portfolio is to seek capital growth.

Principal Investment Policies and Risks:

The Portfolio invests, under normal market conditions, at least 65% of its total assets in common stocks and related
securities, such as preferred stock, convertible securities and depositary receipts, of U.S. and foreign issuers (including issuers
in developing countries).

The Sub-advisor uses a "bottom up," as opposed to "top down," investment style in managing the Portfolio. This means that
securities are selected based upon fundamental analysis of individual companies (such as analysis of the companies' earnings, cash
flows, competitive position and management abilities) by the Sub-advisor.

As a fund that invests primarily in common stocks, the value of the securities held by the Portfolio may decline, either
because of changing economic, political or market conditions, or because of the economic condition of the company that issued the
security. As a global fund that invests in both U.S. and foreign securities, the Portfolio's level of risk may be lower than that of
many international funds but higher than that of many domestic equity funds. The Portfolio's investments in foreign stocks may cause
the risk and degree of share price fluctuation of the Portfolio to be greater than a fund investing primarily in domestic
securities. The risks of investing in foreign securities, which are described in more detail below under "Certain Risk Factors and
Investment Methods," include risks relating to political, social and economic conditions abroad, risks resulting from differing
regulatory standards in non-U.S. markets, and fluctuations in currency exchange rates. To the extent the Portfolio invests in the
securities of issuers in developing countries, the risks relating to investing in foreign securities likely will be accentuated. The
Portfolio may also be subject to increased risk if it makes significant investments in securities traded over-the-counter, because
such securities are frequently those of smaller companies that generally trade less frequently and are more volatile than the
securities of larger companies.

Other Investments:

Although the Portfolio will invest primarily in common stocks and related securities, the Portfolio may purchase and sell
futures contracts and related options on securities indices, foreign currencies and interest rates for hedging and non-hedging
purposes. The Portfolio may also enter into forward contracts for the purchase or sale of foreign currencies for hedging and
non-hedging purposes. The Portfolio may purchase and write (sell) options on securities, stock indices and foreign currencies. The
Portfolio may also purchase warrants.

For more information on some of the types of securities other than common stocks in which the Portfolio may invest, see this
Prospectus under "Certain Risk Factors and Investment Methods."

Temporary Investments. The Portfolio may depart from its principal investment strategy by temporarily investing for
defensive purposes when adverse market, economic or political conditions exist. When investing for defensive purposes, the Portfolio
may hold cash or invest in cash equivalents, such as short-term U.S. government securities, commercial paper and bank instruments.
While the Portfolio is in a defensive position, the opportunity to achieve its investment objective will be limited.

AST JANUS SMALL-CAP GROWTH PORTFOLIO:

Investment Objective: The investment objective of the Portfolio is capital growth.

Principal Investment Policies and Risks:

The Portfolio pursues its objective by normally investing at least 65% of its total assets in the common stocks of
small-sized companies. For purposes of the Portfolio, small-sized companies are those that have market capitalizations of less than
$1.5 billion or annual gross revenues of less than $500 million. To a lesser extent, the Portfolio may also invest in stocks of
larger companies with potential for capital growth.

The Sub-advisor generally takes a "bottom up" approach to building the Portfolio. In other words, it seeks to identify
individual companies with earnings growth potential that may not be recognized by the market at large. Although themes may emerge in
the Portfolio, securities are generally selected without regard to any defined industry sector or other similar selection procedure.
Current income is not a significant factor in choosing investments.

Because the Portfolio invests primarily in common stocks, the fundamental risk of investing in the Portfolio is that the
value of the stocks it holds might decrease. Stock values may fluctuate in response to the activities of an individual company or in
response to general market or economic conditions. As a Portfolio that invests primarily in smaller or newer issuers, the Portfolio
may be subject to greater risk of loss and share price fluctuation than funds investing primarily in larger or more established
issuers. Smaller companies are more likely to realize substantial growth as well as suffer significant losses than larger issuers.
Smaller companies may lack depth of management, they may be unable to generate funds necessary for growth or potential development
internally or to generate such funds through external financing on favorable terms, or they may be developing or marketing products
or services for which there are not yet, and may never be, established markets. In addition, such companies may be subject to
intense competition from larger competitors, and may have more limited trading markets than the markets for securities of larger
issuers.

While the Sub-advisor tries to reduce the risk of the Portfolio by diversifying its assets among issuers (so that the effect
of any single holding is reduced), and by not concentrating its assets in any particular industry, there is no assurance that these
effort will be successful in reducing the risks to which the Portfolio is subject.

Other Investments:

-- 35% of its assets in bonds rated below investment grade by the primary rating agencies ("junk" bonds).
-- 25% of its assets in mortgage- and asset-backed securities.
-- 10% of its assets in zero coupon, pay-in-kind and step coupon securities (securities that do not, or may not under
certain circumstances, make regular interest payments).

The Portfolio may make short sales "against the box." In addition, the Portfolio may invest in the following types of securities and
engage in the following investment techniques:

Foreign Securities. The Portfolio may invest without limit in foreign equity and debt securities. The Portfolio may invest
directly in foreign securities denominated in foreign currencies, or may invest through depositary receipts or passive foreign
investment companies. Generally, the same criteria are used to select foreign securities as domestic securities. The Sub-advisor
seeks companies that meet these criteria regardless of country of organization or principal business activity. However, certain
factors such as expected inflation and currency exchange rates, government policies affecting businesses, and a country's prospects
for economic growth may warrant consideration in selecting foreign securities.

Futures, Options and Other Derivative Instruments. The Portfolio may enter into futures contracts on securities, financial
indices and foreign currencies and options on such contracts, and may invest in options on securities, financial indices and foreign
currencies, forward contracts and interest rate swaps and swap-related products (collectively "derivative instruments"). The
Portfolio intends to use most derivative instruments primarily to hedge the value of its portfolio against potential adverse
movements in securities prices, currency exchange rates or interest rates. To a limited extent, the Portfolio may also use
derivative instruments for non-hedging purposes such as seeking to increase income.

For more information on the types of securities other than common stocks in which the Portfolio may invest, see this
Prospectus under "Certain Risk Factors and Investment Methods."

AST SCUDDER SMALL-CAP GROWTH PORTFOLIO:

Investment Objective: The investment objective of the Portfolio is to seek maximum growth of investors' capital from a portfolio
primarily of growth stocks of smaller companies.

Principal Investment Policies and Risks:

At least 65% of the Portfolio's total assets normally will be invested in the equity securities of smaller companies, i.e.,
those having a market capitalization of $2 billion or less at the time of investment, many of which would be in the early stages of
their life cycle. Equity securities include common stocks and securities convertible into or exchangeable for common stocks,
including warrants and rights.

The Portfolio intends to invest primarily in stocks of companies whose earnings per share are expected by the Sub-advisor to
grow faster than the market average ("growth stocks"). Growth stocks tend to trade at higher price to earnings (P/E) ratios than the
general market, but the Sub-advisor believes that the potential for above average earnings of the stocks in which the Portfolio
invests more than justifies their price.

In managing the Portfolio, the Sub-advisor emphasizes stock selection and fundamental research. The Sub-advisor considers a
number of factors in considering whether to invest in a growth stock, including high return on equity and earnings growth rate, low
level of debt, strong balance sheet, good management and industry leadership. Other factors are patterns of increasing sales growth,
the development of new or improved products or services, favorable outlooks for growth in the industry, the probability of increased
operating efficiencies, emphasis on research and development, cyclical conditions, or other signs that a company may grow rapidly.

The Portfolio seeks attractive areas for investment that arise from factors such as technological advances, new marketing
methods, and changes in the economy and population. Currently, the Sub-advisor believes that such investment opportunities may be
found among:

o companies engaged in high technology fields such as electronics, medical technology and computer software and specialty
retailing;
o companies whose earnings outlooks have improved as the result of changes in the economy, acquisitions, mergers, new
management, changes in corporate strategy or product innovation;
o companies supplying new or rapidly growing services to consumers and businesses in such fields as automation, data
processing, communications, and marketing and finance; and
o companies that have innovative concepts or ideas.

In the selection of investments, long-term capital appreciation will take precedence over short range market fluctuations.
However, the Portfolio may occasionally make investments for short-term capital appreciation. Current income will not be a
significant factor in selecting investments.

Like all common stocks, the market values of the common stocks held by the Portfolio can fluctuate significantly, reflecting
the business performance of the issuing company, investor perception or general economic or financial market movements. Because of
the Portfolio's focus on the stocks of smaller growth companies, investment in the Portfolio may involve substantially greater than
average share price fluctuation and investment risk. A fund focusing on growth stocks will generally involve greater risk and share
price fluctuation than a fund investing primarily in value stocks.

In addition, investments in securities of smaller companies are generally considered to offer greater opportunity for
appreciation and to involve greater risk of depreciation than securities of larger companies. Smaller companies often have limited
product lines, markets or financial resources, and they may be dependent upon one or a few key people for management. Because the
securities of small-cap companies are not as broadly traded as those of larger companies, they are often subject to wider and more
abrupt fluctuations in market price. Additional reasons for the greater price fluctuations of these securities include the less
certain growth prospects of smaller firms and the greater sensitivity of small companies to changing economic conditions.

Other Investments:

In addition to investing in common stocks, the Portfolio may also invest to a limited degree in preferred stocks and debt
securities when they are believed by the Sub-advisor to offer opportunities for capital growth. Other types of securities in which
the Portfolio may invest include:

Foreign Securities. The Portfolio may invest in securities of foreign issuers in the form of depositary receipts or that
are denominated in U.S. dollars. Foreign securities in which the Portfolio may invest include any type of security consistent with
its investment objective and policies. The prices of foreign securities may be more volatile than those of domestic securities.

Options, Financial Futures and Other Derivatives. The Portfolio may deal in options on securities and securities indices,
which options may be listed for trading on a national securities exchange or traded over-the-counter. Options transactions may be
used to pursue the Portfolio's investment objective and also to hedge against currency and market risks, but are not intended for
speculation. The Portfolio may engage in financial futures transactions on commodities exchanges or boards of trade in an attempt to
hedge against market risks.

In addition to options and financial futures, the Portfolio may invest in a broad array of other "derivative" instruments in
an effort to manage investment risk, to increase or decrease exposure to an asset class or benchmark (as a hedge or to enhance
return), or to create an investment position indirectly. The types of derivatives and techniques used by the Portfolio may change
over time as new derivatives and strategies are developed or as regulatory changes occur.

Additional information about the other investments that the Portfolio may make and their risks is included below under
"Certain Risk Factors and Investment Methods."

Temporary Investments. When a defensive position is deemed advisable because of prevailing market conditions, the Portfolio
may invest without limit in high grade debt securities, commercial paper, U.S. Government securities or cash or cash equivalents,
including repurchase agreements. While the Portfolio is in a defensive position, the opportunity to achieve its investment objective
of maximum capital growth will be limited.

AST FEDERATED AGGRESSIVE GROWTH PORTFOLIO:

Investment Objective: The investment objective of the Portfolio is to seek capital growth.

Principal Investment Policies and Risks:

The Portfolio pursues its investment objective by investing in equity securities of companies offering superior prospects
for earnings growth. The Portfolio focuses its investments on the equity securities of smaller companies, but it is not subject to
any specific market capitalization requirements. The Portfolio may invest in foreign issuers through American Depositary Receipts.

Using its own quantitative process, the Sub-advisor rates the future performance potential of companies. The Sub-advisor
evaluates each company's earnings quality in light of its current valuation to narrow the list of attractive companies. The
Sub-advisor then evaluates product positioning, management quality and sustainability of current growth trends of those companies.
Using this type of fundamental analysis, the Sub-advisor selects the most promising companies for the Portfolio.

Companies with similar characteristics may be grouped together in broad categories called sectors. In determining the
amount to invest in a security, the Sub-advisor limits the Portfolio's exposure to each business sector that comprises the S&P 500
Index. The Portfolio's allocation to a sector will be no more than 300% of the Index's allocation to that sector or 30% of the total
portfolio, whichever is greater. As the Sub-advisor allocates more of the Portfolio's holdings to a particular sector, the
Portfolio's performance will be more susceptible to the economic, business or other developments that generally affect that sector.

The Portfolio's strategies with respect to security analysis, market capitalization, and sector allocation are designed to
produce a portfolio of stocks whose long-term growth prospects are significantly above those of the S&P 500 Index.

As with any fund investing primarily in equity securities, the Portfolio is subject to the risk that the value of equity
securities in the Portfolio will decline. These declines may occur in the form of a sustained trend or a drastic movement. The
prices of individual portfolio stocks will fluctuate because of factors specific to that company or because of changes in stock
valuations generally.

Because of the Portfolio's emphasis on small company growth stocks, the Portfolio will likely be subject to a degree of risk
and share price fluctuation greater than that of many other equity funds. Generally, the smaller the market capitalization of a
company, the fewer the number of shares traded daily, the less liquid its stock and the more volatile its price. Companies with
smaller market capitalizations also tend to have unproven track records, a limited product or service base and limited access to
capital.

Due to their relatively high valuations, growth stocks are typically more volatile than value stocks. For instance, the
price of a growth stock may experience a larger decline on a forecast of lower earnings, a negative fundamental development, or an
adverse market development. Further, growth stocks may not pay dividends or may pay lower dividends than value stocks. This means
they depend more on price changes for returns and may be more adversely affected in a down market compared to value stocks that pay
higher dividends. In addition, the Portfolio's level of risk and share price fluctuation may increase to the extent it emphasizes
investments in the securities of foreign companies.

Other Investments:

The Portfolio may attempt to manage market risk by buying and selling financial futures contracts and options. This may
include the purchase of futures contracts as a substitute for direct investments in stocks. It may also include the purchase and
sale of options to protect against general declines in stock prices.

Additional information on the types of securities in which the Portfolio may invest, including futures contracts, options
and American Depositary Receipts, is included in this Prospectus under "Certain Risk Factors and Investment Methods."

Temporary Investments. The Portfolio may temporarily depart from its principal investment strategies by investing its
assets in cash and short-term debt securities and similar obligations. It may do this to minimize potential losses and maintain
liquidity to meet shareholder redemptions during adverse market conditions. When the Portfolio is in such a defensive position, the
ability to achieve its investment objective of capital growth may be limited.

AST GOLDMAN SACHS SMALL-CAP VALUE PORTFOLIO:

Investment Objective: The investment objective of the Portfolio (formerly, the AST Lord Abbett Small Cap Value Portfolio) is to seek
long-term capital growth.

Principal Investment Policies and Risks:

The Portfolio will seek its objective through investments primarily in equity securities of small capitalization companies
that are believed to be undervalued in the marketplace. Typically, in choosing stocks, the Sub-advisor looks for companies using the
Sub-advisor's value investment philosophy. The Sub-advisor seeks to identify:

(1) Well-positioned businesses that have:
o Attractive returns on capital;
o Sustainable earnings and cash flow;
o Strong company management focused on long-term returns to shareholders.

(2) Attractive valuation opportunities where:
o The intrinsic value of the business is not reflected in the stock price.

The stocks in which the Portfolio generally invests are those which, in the Sub-advisor's judgment, are selling below their
intrinsic value and at prices that do not adequately reflect their long-term business potential. Selected smaller stocks may be
undervalued because they are often overlooked by many investors, or because the public is overly pessimistic about a company's
prospects. Accordingly, their prices can rise either as a result of improved business fundamentals, particularly when earnings grow
faster than general expectations, or as more investors come to recognize the company's underlying potential. The price of shares in
relation to book value, sales, asset value, earnings, dividends and cash flow, both historical and prospective, are key determinants
in the security selection process. These criteria are not rigid, and other stocks may be included in the Portfolio if they are
expected to help it attain its objective. Dividend and investment income is of incidental importance.

Although the Portfolio typically will hold a large number of securities and follow a relatively conservative value-driven
investment strategy, the Portfolio does entail above-average investment risk and share price fluctuation compared to the overall U.S.
stock market. The small capitalization companies in which the Portfolio primarily invests may offer significant appreciation
potential. However, smaller companies may carry more risk than larger companies. Generally, small companies rely on limited product
lines, markets and financial resources, and these and other factors may make them more susceptible to setbacks or economic
downturns. Smaller companies normally have fewer shares outstanding and trade less frequently than large companies. Therefore, the
securities of smaller companies may be subject to wider price fluctuations.

Other Investments:

The Portfolio may engage in various portfolio strategies to reduce certain risks of its investments and to enhance income,
but not for speculation. The Portfolio may purchase and write (sell) put and covered call options on equity securities or stock
indices that are traded on national securities exchanges. The Portfolio may purchase and sell stock index futures for certain
hedging and risk management purposes. New financial products and risk management techniques continue to be developed and the
Portfolio may use these new investments and techniques to the extent consistent with its investment objective and policies.

The Portfolio may invest up to 25% of its net assets (at the time of investment) in securities (of the type described above)
that are primarily traded in foreign countries. The Portfolio may enter into forward foreign currency exchange contracts in
connection with its investments in foreign securities. The Portfolio also may purchase foreign currency put options and write
foreign currency call options on U.S. exchanges or U.S. over-the-counter markets. The Portfolio may write a call option on a foreign
currency only in conjunction with a purchase of a put option on that currency.

The Portfolio also may invest in preferred stocks and bonds that either have attached warrants or are convertible into
common stocks.

Additional information about these investments and investment techniques and their risks is included below under "Certain
Risk Factors and Investment Methods."

Temporary Investments. For temporary defensive purposes or pending other investments, the Portfolio may invest in
high-quality, short-term debt obligations of banks, corporations or the U.S. Government. While the Portfolio is in a defensive
position, its ability to achieve its investment objective of long-term capital growth will be limited.

AST Gabelli SMALL-Cap Value PORTFOLIO:

Investment Objective: The investment objective of the Portfolio (formerly, the AST T. Rowe Price Small Company Value Portfolio) is
to provide long-term capital growth by investing primarily in small-capitalization stocks that appear to be undervalued.

Principal Investment Policies and Risks:

The Portfolio will normally invest at least 65% of its total assets in stocks and equity-related securities of small
companies ($1 billion or less in market capitalization). Reflecting a value approach to investing, the Portfolio will seek the
stocks of companies whose current stock prices do not appear to adequately reflect their underlying value as measured by assets,
earnings, cash flow or business franchises. The Sub-advisor's research team seeks to identify companies that appear to be
undervalued by various measures, and may be temporarily out of favor, but have good prospects for capital appreciation. In selecting
investments, the Sub-advisor generally looks to the following:

(1) Low price/earnings, price/book value or price/cash flow ratios relative to the company's peers.

(2) Low stock price relative to a company's underlying asset values.

(3) A sound balance sheet and other positive financial characteristics.

The Portfolio may sell securities for a variety of reasons, such as to secure gains, limit losses or re-deploy assets into
more promising opportunities. The Portfolio will not sell a stock just because the company has grown to a market capitalization of
more than $1 billion, and it may on occasion purchase companies with a market cap of more than $1 billion.

As with all stock funds, the Portfolio's share price can fall because of weakness in the securities market as a whole, in
particular industries or in specific holdings. Investing in small companies involves greater risk of loss than is customarily
associated with more established companies. Stocks of small companies may be subject to more abrupt or erratic price movements than
larger company stocks. Small companies often have limited product lines, markets, or financial resources, and their management may
lack depth and experience. While a value approach to investing is generally considered to involve less risk than a growth approach,
investing in value stocks carries the risks that the market will not recognize the stock's intrinsic value for a long time, or that a
stock judged to be undervalued may actually be appropriately priced.

Other Investments:

Although the Portfolio will invest primarily in U.S. common stocks, it may also purchase other types of securities, for
example, preferred stocks, convertible securities, warrants and bonds when considered consistent with the Portfolio's investment
objective and policies. The Portfolio may purchase preferred stock for capital appreciation where the issuer has omitted, or is in
danger of omitting, payment of the dividend on the stock. Debt securities would be purchased in companies that meet the investment
criteria for the Portfolio.

The Portfolio may invest up to 20% of its total assets in foreign securities, including American Depositary Receipts and
securities of companies in developing countries, and may enter into forward foreign currency exchange contracts. (The Portfolio may
invest in foreign cash items as described below in excess of this 20% limit.) The Portfolio may enter into stock index or currency
futures contracts (or options thereon) for hedging purposes or to provide an efficient means of regulating the Portfolio's exposure
to the equity markets. The Portfolio may also write (sell) call and put options and purchase put and call options on securities,
financial indices, and currencies. The Portfolio may invest up to 10% of its total assets in hybrid instruments, which combine the
characteristics of futures, options and securities. For additional information about these investments and their risks, see this
Prospectus under "Certain Risk Factors and Investment Methods."

Temporary Investments. The Portfolio may establish and maintain cash reserves without limitation for temporary defensive
purposes. The Portfolio's reserves may be invested in high-quality domestic and foreign money market instruments, including
repurchase agreements and money market mutual funds managed by the Sub-advisor. Cash reserves also provide flexibility in meeting
redemptions and paying expenses. While the Portfolio is in a defensive position, the opportunity to achieve its investment objective
of long-term capital growth may be limited.

AST JANUS MID-CAP GROWTH PORTFOLIO:

Investment Objective: The investment objective of the Portfolio is to seek long-term growth of capital.

Principal Investment Policies and Risks:

The Portfolio pursues its objective by investing primarily in common stocks selected for their growth potential, and
normally invests at least 65% of its equity assets in medium-sized companies. For purposes of the Portfolio, medium-sized companies
are those whose market capitalizations (measured at the time of investment) fall within the range of companies in the Standard &
Poor's MidCap 400 Index (the "S&P 400"). The market capitalizations within the S&P 400 will vary, but as of December 31, 2000, they
ranged from approximately $102 million to $13.150 billion. The Sub-advisor generally takes a "bottom up" approach to choosing
investments for the Portfolio. In other words, the Sub-advisor seeks to identify individual companies with earnings growth potential
that may not be recognized by the market at large. The Sub-advisor makes this assessment by looking at companies one at a time,
regardless of size, country of organization, place of principal business activity, or other similar selection criteria.

Because the Portfolio may invest substantially all of its assets in common stocks, the main risk of investing in the
Portfolio is that the value of the stocks it holds might decrease. Stock values may fluctuate in response to the activities of an
individual company or in response to general market or economic conditions. As a fund that invests primarily in mid-cap companies,
the Portfolio's risk and share price fluctuation can be expected to be more than that of many funds investing primarily in large-cap
companies, but less than that of many funds investing primarily in small-cap companies. In general, the smaller the company, the
more likely it is to suffer significant losses as well as to realize substantial growth. Smaller companies may lack depth of
management, they may be unable to generate funds necessary for growth or potential development, or they may be developing or
marketing products or services for which there are not yet, and may never be, established markets. In addition, such companies may
be subject to intense competition from larger companies, and may have more limited trading markets than the markets for securities of
larger issuers.

The Portfolio is non-diversified. In other words, it may hold larger positions in a smaller number of securities than a
diversified fund. As a result, a single security's increase or decrease in value may have a greater impact on the Portfolio's share
price and total return. Because of this, the Portfolio's share price can be expected to fluctuate more than a comparable diversified
fund.

Special Situations. The Portfolio may invest in "special situations". A "special situation" arises when, in the opinion of
the Sub-advisor, the securities of a particular company will be recognized and appreciate in value due to a specific development,
such as a technological breakthrough, management change or new product at that company. Investment in "special situations" carries
an additional risk of loss in the event that the anticipated development does not occur or does not attract the expected attention.

Other Investments:

Although the Sub-advisor expects to invest primarily in domestic and foreign equity securities, which may include preferred
stocks, common stocks, warrants and securities convertible into common or preferred stocks, the Portfolio may also invest to a lesser
degree in other types of securities, such as debt securities. The Portfolio is subject to the following percentage limitations on
investing in certain types of debt securities:

-- 35% of its assets in bonds rated below investment grade ("junk" bonds).
-- 10% of its assets in zero coupon, pay-in-kind and step coupon securities (securities that do not, or may not under
certain circumstances, make regular interest payments).

The Portfolio may make short sales "against the box." In addition, the Portfolio may invest in the following types of securities and
engage in the following investment techniques:

Index/structured Securities. The Portfolio may invest in indexed/structured securities, which typically are short- to
intermediate-term debt securities whose value at maturity or interest rate is linked to currencies, interest rates, equity
securities, indices, commodity prices or other financial indicators. Such securities may be positively or negatively indexed (i.e.,
their value increase or decrease if the reference index or instrument appreciates).

Foreign Securities. The Portfolio may invest up to 25% of its net assets in foreign securities denominated in foreign
currencies and not publicly traded in the United States. The Portfolio may invest directly in foreign securities denominated in a
foreign currency, or may invest through depositary receipts or passive foreign investment companies. Generally, the same criteria
are used to select foreign securities as domestic securities. Foreign securities are generally selected on a stock-by-stock basis
without regard to any defined allocation among countries or geographic regions. However, certain factors such as expected levels of
inflation, government policies influencing business conditions, the outlook for currency relationships, and prospects for economic
growth among countries, regions or geographic areas may warrant greater consideration in selecting foreign securities.

For more information on foreign securities and their risks, see this Prospectus under "Certain Risk Factors and Investment
Methods."

Futures, Options and Other Derivative Instruments. The Portfolio may enter into futures contracts on securities, financial
indices and foreign currencies and options on such contracts and may invest in options on securities, financial indices and foreign
currencies, forward contracts and interest rate swaps and swap-related products (collectively "derivative instruments"). The
Portfolio may use derivative instruments to hedge or protect its portfolio from adverse movements in securities prices, currency
exchange rates, and interest rates. To a limited extent, the Portfolio may also use derivative instruments for non-hedging purposes
such as seeking to enhance return.

For more information on the types of securities other than common stocks in which the Portfolio may invest, see this
Prospectus under "Certain Risk Factors and Investment Methods."

Temporary Investments. When the Sub-advisor believes that market conditions are unfavorable for profitable investing, or
when the Sub-advisor is otherwise unable to locate attractive investment opportunities, the Portfolio's cash or similar investments
may increase. In other words, the Portfolio does not always stay fully invested in stocks. Even when the Portfolio is essentially
fully invested, some residual amount of Portfolio assets will remain in cash and similar investments. These investments may include
commercial paper, certificates of deposit, repurchase agreements, short-term debt obligations, and money market funds (including
funds managed by the Sub-advisor). When the Portfolio's investments in cash or similar investments increase, the opportunity to
achieve its investment objective of long-term growth of capital may be limited.

AST NEUBERGER BERMAN MID-CAP GROWTH PORTFOLIO:

Investment Objective: The investment objective of the Portfolio is to seek capital growth.

Principal Investment Policies and Risks:

To pursue its objective, the Portfolio primarily invests in the common stocks of mid-cap companies. Companies with equity
market capitalizations from $300 million to $10 billion at the time of investment are considered mid-cap companies for purposes of
the Portfolio. The Trust may revise this definition based on market conditions. Some of the Portfolio's assets may be invested in
the securities of large-cap companies as well as in small-cap companies. The Portfolio seeks to reduce risk by diversifying among
many companies and industries. The Portfolio does not seek to invest in securities that pay dividends or interest, and any such
income is incidental.

The Portfolio is normally managed using a growth-oriented investment approach. For growth investors, the aim is to invest
in companies that are already successful but could be even more so. The Sub-advisor looks for fast-growing companies that are in new
or rapidly evolving industries. Factors in identifying these companies may include above-average growth of earnings or earnings that
exceed analysts' expectations. The Sub-advisor may also look for other characteristics in a company, such as financial strength, a
strong position relative to competitors and a stock price that is reasonable in light of its growth rate.

The Sub-advisor follows a disciplined selling strategy, and may sell a stock when it reaches a target price, fails to
perform as expected, or appears substantially less desirable than another stock.

As a fund that invests primarily in mid-cap companies, the Portfolio's risk and share price fluctuation can be expected to
be more than that of many funds investing primarily in large-cap companies, but less than that of many funds investing primarily in
small-cap companies. Mid-cap stocks may fluctuate more widely in price than the market as a whole, may underperform other types of
stocks when the market or the economy is not robust, or fall in price or be difficult to sell during market downturns. In addition,
the Portfolio's growth investment program will generally involve greater risk and price fluctuation than funds that invest in more
undervalued securities. Because the prices of growth stocks tend to be based largely on future expectations, these stocks
historically have been more sensitive than value stocks to bad economic news and negative earnings surprises.

Other Investments:

Although equity securities are normally the Portfolio's primary investments, it may invest in preferred stocks and
convertible securities, as well as the types of securities described below. Additional information about these investments and the
special risk factors that apply to them is included in this Prospectus under "Certain Risk Factors and Investment Methods."

Fixed Income Securities. The Portfolio may invest up to 35% of its total assets, measured at the time of investment, in
investment grade fixed income or debt securities. If the quality of any fixed income securities held by the Portfolio deteriorates
so that they are no longer investment grade, the Portfolio will sell such securities in an orderly manner so that its holdings of
such securities do not exceed 5% of its net assets.

Foreign Securities. The Portfolio may invest up to 10% of the value of its total assets, measured at the time of
investment, in equity and debt securities that are denominated in foreign currencies. There is no limitation on the percentage of
the Portfolio's assets that may be invested in securities of foreign companies that are denominated in U.S. dollars. In addition,
the Portfolio may enter into foreign currency transactions, including forward foreign currency contracts and options on foreign
currencies, to manage currency risks, to facilitate transactions in foreign securities, and to repatriate dividend or interest income
received in foreign currencies.

Covered Call Options. The Portfolio may try to reduce the risk of securities price or exchange rate changes (hedge) or
generate income by writing (selling) covered call options against securities held in its portfolio, and may purchase call options in
related closing transactions.

Temporary Investments. When the Portfolio anticipates unusual market or other conditions, it may temporarily depart from
its objective of capital growth and invest substantially in high-quality short-term investments. This could help the Portfolio avoid
losses but may mean lost opportunities.

AST NEUBERGER BERMAN MID-CAP VALUE PORTFOLIO:

Investment Objective: The investment objective of the Portfolio is to seek capital growth.

Principal Investment Policies and Risks:

To pursue its objective, the Portfolio primarily invests in the common stocks of mid-cap companies. Some of the Portfolio's
assets may be invested in the securities of large-cap companies as well as in small-cap companies. The Portfolio seeks to reduce
risk by diversifying among many companies and industries.

Under the Portfolio's value-oriented investment approach, the Sub-advisor looks for well-managed companies whose stock
prices are undervalued and that may rise in price before other investors realize their worth. The Sub-advisor may identify value
stocks in several ways, including based on earnings, book value or other financial measures. Factors that the Sub-advisor may use to
identify these companies include strong fundamentals, including a low price-to-earnings ratio, consistent cash flow, and a sound
track record through all phases of the market cycle.

The Sub-advisor may also look for other characteristics in a company, such as a strong position relative to competitors, a
high level of stock ownership among management, or a recent sharp decline in stock price that appears to be the result of a
short-term market overreaction to negative news.

The Sub-advisor generally considers selling a stock when it reaches a target price, when it fails to perform as expected, or
when other opportunities appear more attractive.

As a fund that invests primarily in mid-cap companies, the Portfolio's risk and share price fluctuation can be expected to
be more than that of many funds investing primarily in large-cap companies, but less than that of many funds investing primarily in
small-cap companies. Mid-cap stocks may fluctuate more widely in price than the market as a whole, may underperform other types of
stocks when the market or the economy is not robust, or fall in price or be difficult to sell during market downturns. While value
investing historically has involved less risk than investing in growth companies, the stocks purchased by the Portfolio will remain
undervalued during a short or extended period of time. This may happen because value stocks as a category lose favor with investors
compared to growth stocks, or because the Sub-advisor failed to anticipate which stocks or industries would benefit from changing
market or economic conditions.

Other Investments:

Although equity securities are normally the Portfolio's primary investment, it may invest in preferred stocks and
convertible securities, as well as the types of securities described below. Additional information about these investments and the
special risk factors that apply to them is included in this Prospectus under "Certain Risk Factors and Investment Methods."

Fixed Income Securities. The Portfolio may invest up to 35% of its total assets, measured at the time of investment, in
fixed income or debt securities. The Portfolio may invest up to 15% of its total assets, measured at the time of investment, in debt
securities that are rated below investment grade or comparable unrated securities. There is no minimum rating on the fixed income
securities in which the Portfolio may invest.

Covered Call Options. The Portfolio may try to reduce the risk of securities price changes (hedge) or generate income by
writing (selling) covered call options against securities held in its portfolio, and may purchase call options in related closing
transactions. The value of securities against which options will be written will not exceed 10% of the Portfolio's net assets.

AST ALGER ALL-CAP GROWTH portfolio:

Investment Objective: The investment objective of the Portfolio is to seek long-term capital growth.

Principal Investment Policies and Risks:

The Portfolio invests primarily in equity securities, such as common or preferred stocks, that are listed on U.S. exchanges
or in the over-the-counter market. The Portfolio may invest in the equity securities of companies of all sizes, and may emphasize
either larger or smaller companies at a given time based on the Sub-advisor's assessment of particular companies and market
conditions.

The Portfolio invests primarily in growth stocks. The Sub-advisor believes that these stocks are those of two types of
companies:

High Unit Volume Growth Companies. These are vital, creative companies that offer goods or services to a rapidly expanding
marketplace. They include both established and emerging firms, offering new or improved products, or firms simply fulfilling an
increased demand for an existing product line.

Positive Life Cycle Change Companies. These are companies experiencing a major change that is expected to produce
advantageous results. These changes may be as varied as new management, products or technologies, restructurings or reorganizations,
or mergers and acquisitions.

As with any fund investing primarily in equity securities, the value of the securities held by the Portfolio may decline.
These declines can be substantial. In addition, the growth stocks in which the Portfolio invests primarily tend to fluctuate in
price more than other types of stocks. Prices of growth stocks tend to be higher in relation to their companies' earnings, and may
be more sensitive to market, political and economic developments than other stocks. The Portfolio's level of risk will vary based
upon the size of the companies it invests in at a given time. To the extent that the Portfolio emphasizes small-cap stocks, it will
be subject to a level of risk higher than a fund investing primarily in more conservative "large-cap" stocks.

Other Investments:

In addition to investing in common and preferred stocks, the Portfolio may invest in securities convertible into or
exchangeable for equity securities, including warrants and rights. The Portfolio may invest up to 20% of its total assets in foreign
securities. (American Depositary Receipts or other U.S. dollar denominated securities of foreign issuers are not subject to the 20%
limitation.)

The Portfoliomay purchase put and call options and write (sell) put and covered call options on securities and securities
indices to increase gain or to hedge against the risk of unfavorable price movements. However, the Sub-advisor does not currently
intend to rely on these option strategies extensively, if at all. The Portfolio may purchase and sell stock index futures contracts
and options on stock index futures contracts. The Portfolio may sell securities "short against the box."

An additional discussion of these types of investments and their risks is included in this Prospectus under "Certain Risk
Factors and Investment Methods."

Temporary Investments. The Portfolio may invest up to 100% of its assets in cash, commercial paper, high-grade bonds or
cash equivalents for temporary defensive reasons if the Sub-advisor believes that adverse market or other conditions warrant. This
is to attempt to protect the Portfolio from a temporary unacceptable risk of loss. However, while the Portfolio is in a defensive
position, the opportunity to achieve its investment objective of long-term capital growth will be limited.

AST GABELLI ALL-CAP VALUE PORTFOLIO:

Investment Objective: The investment objective of the Portfolio is to seek capital growth.

Principal Investment Strategies and Risks:

The Portfolio will invest primarily in readily marketable equity securities including common stocks, preferred stocks and
securities that may be converted at a later time into common stock. The Portfolio may invest in the securities of companies of all
sizes, and may emphasize either larger or smaller companies at a given time based on the Sub-advisor's assessment of particular
companies and market conditions.

In making stock selections, the Portfolio strives to earn a 10% real rate of return. The Portfolio focuses on companies
that appear underpriced relative to their private market value ("PMV"). PMV is the value that the Portfolio's Sub-advisor believes
informed investors would be willing to pay for a company. The Sub-advisor considers factors such as price, earnings expectations,
earnings and price histories, balance sheet characteristics and perceived management skills. The Sub-advisor also considers changes
in economic and political outlooks as well as individual corporate developments. The Sub-advisor will sell any Portfolio investments
that lose their perceived value relative to other investments.

Investments will be made based on the Sub-advisor's perception of their potential for capital growth. Current income may
also be considered. However, many of the common stocks the Portfolio will buy will not pay dividends.

As a Portfolio that invests primarily in equity securities, the principal risk to which the Portfolio is subject is that the
value of the securities held by the Portfolio will decline. The value of equity securities will fluctuate due to many factors,
including the past and predicted earnings of the issuer, the quality of the issuer's management, general market conditions, the
forecasts for the issuer's industry and the value of the issuer's assets. While value investing historically has involved less risk
that investing in growth companies, the Portfolio is subject to the risks that the PMVs of the stocks purchased by the Portfolio may
never be realized by the market, or that the Sub-advisor may be incorrect in its assessment of the PMVs.

In addition, the Portfolio's level of risk will vary based upon the size of the companies it invests in at a given time. To
the extent the Portfolio emphasizes small-cap stocks, it will be subject to a level of risk higher than a Portfolio investing
primarily in more conservative "large-cap" stocks. The Portfolio may be subject to additional risks as a result of its investments
in foreign securities, including unfavorable foreign government actions, political instability, the absence of accurate information
about foreign issuers, and exposure to foreign currencies that may decline in value relative to the U.S. dollar.

Other Investments:

The Portfolio may invest up to 25% of its total assets in securities of non-U.S. issuers. While the Portfolio does not
intend to do so to a significant degree, the Portfolio may enter into futures contracts and related options, and may purchase and
sell call and put options on securities and securities indices. The Portfolio also may invest in warrants to purchase securities,
and may engage in short sales "against the box". For additional information on the types of securities in which the Portfolio may
invest, see this Prospectus under "Certain Risk Factors and Investment Methods."

Temporary Investments. When adverse market or economic conditions occur, the Portfolio may temporarily invest all or a
portion of its assets in defensive investments. Such investments may include high grade debt securities, obligations of the U.S.
Government and its agencies and instrumentalities, and short-term money market instruments. While the Portfolio is in a defensive
position, the opportunity to achieve its investment objective will be limited.

AST KINETICS INTERNET PORTFOLIO:

Investment Objective: The investment objective of the Portfolio is to seek long-term growth of capital.

Principal Investment Policies and Risks:

Under normal circumstances, the Portfolio invests at least 65% of its total assets in common stocks, convertible securities,
warrants and other equity securities having the characteristics of common stocks, such as American Depositary Receipts and
International Depositary Receipts, of domestic and foreign companies that are engaged in the Internet and Internet-related
activities. The Internet is a collection of connected computers that allows commercial and professional organizations, educational
institutions, government agencies and consumers to communicate electronically, access and share information and conduct business
around the world.

Portfolio securities will be selected by the Sub-advisor from companies that are engaged in the development of hardware,
software and telecommunications solutions that enable the transaction of business on the Internet by individuals and companies, as
well as companies that offer products and services primarily via the Internet. Accordingly, the Portfolio seeks to invest in the
equity securities of companies whose research and development efforts may result in higher stock values. These companies may be
large, medium or small in size if, in the Sub-advisor's opinion, they meet the Portfolio's investment criteria. Such companies
include, but are not limited to, the following:

Internet Service Providers: Companies that provide users with access to the Internet.

Computer Software Companies: Companies that produce, manufacture and develop tools to access the Internet, enable Internet
users to enhance the speed, integrity and storage of data on the Internet, facilitate information distribution and gathering on the
Internet, or secure Internet-based transactions.

Computer Hardware Companies: Companies that develop and produce computer and network hardware such as modems, switchers and
routers, and those that develop and manufacture workstations and personal communications systems used to access the Internet and
provide Internet services.

E-Commerce: Companies that derive a substantial portion of their revenue from sales of products and services conducted via
the Internet.

Content Developers: Companies that supply proprietary information and entertainment content, such as games, music, video,
graphics, news, etc. on the Internet.

The Sub-advisor selects portfolio securities by evaluating a company's positioning and business model as well as its ability
to grow and expand its activities via the Internet or achieve a competitive advantage in cost/profitability and brand image
leveraging via use of the Internet. The Sub-advisor also considers a company's fundamentals by reviewing its balance sheets,
corporate revenues, earnings and dividends. Furthermore, the Sub-advisor looks at the amount of capital a company currently expends
on research and development. The Sub-adviser believes that money invested in research and development today frequently has
significant bearing on future growth.

As with any fund that invests primarily in equity securities, fluctuations in the value of the securities held by the
Portfolio will cause the share price of the Portfolio to fluctuate. Market prices of the Portfolio's holdings may be adversely
affected by the issuer having experienced losses or by the issuer's lack of earnings or failure to meet the market's expectations
with respect to new products or services, or even by market factors wholly unrelated to the condition of the issuer.

The Portfolio may be subject to greater risk and share price fluctuation than other equity funds because of the
concentration of its investments in a single industry. Securities of Internet companies tend to be more volatile than securities of
companies in other industries. These companies are especially sensitive to the risk of product obsolescence, and may be affected by
heightened regulatory scrutiny and impending changes in government policies. In addition, the Portfolio's investments in the
securities of small and medium-sized companies and in foreign securities may increase the degree of risk to which the Portfolio is
subject.

Non-Diversified Status. The Portfolio is classified as "non-diversified" under the 1940 Act, which means that one-half of
the Portfolio's assets may be invested in two or more stocks while the other half must be spread out among various investments each
not exceeding 5% of the Portfolio's total assets. As a result of this lesser diversification, the value of the Portfolio's shares
may be more susceptible to adverse changes in the value of a particular company's securities than would be the shares of a
diversified investment company.

Other Investments:

The Portfolio may purchase and write (sell) options on securities in which it invests and may buy and sell financial futures
contracts and related options for hedging purposes and/or as a substitute for direct investment.

Temporary Investments. To respond to adverse market, economic, political or other conditions, the Portfolio may invest up
to 100% of its assets in high quality U.S. short-term debt securities and money market instruments. The Portfolio may invest up to
35% of its assets in these securities to maintain liquidity. Some of these short-term instruments include commercial paper,
certificates of deposit, demand and time deposits and banker's acceptances, U.S. Government securities (e.g., U.S. Treasury
obligations), and repurchase agreements. While the Portfolio is in a defensive position, the opportunity to achieve its investment
objective of long-term capital growth will be limited.

AST T. ROWE PRICE NATURAL RESOURCES PORTFOLIO:

Investment Objective: The investment objective of the Portfolio is to seek long-term capital growth primarily through the common
stocks of companies that own or develop natural resources (such as energy products, precious metals, and forest products) and other
basic commodities.

Principal Investment Policies and Risks:

The Portfolio normally invests primarily (at least 65% of its total assets) in the common stocks of natural resource
companies whose earnings and tangible assets could benefit from accelerating inflation. The Portfolio also may invest in
non-resource companies with the potential for growth. When selecting stocks, the Sub-advisor looks for companies that have the
ability to expand production, to maintain superior exploration programs and production facilities, and the potential to accumulate
new resources. Natural resource companies in which the Portfolio invests generally own or develop energy sources, precious metals,
nonferrous metals, forest products, real estate, diversified resources and other basic commodities that can be produced and marketed
profitably when both labor costs and prices are rising.

The Portfolio may sell securities for a variety of reasons, such as to secure gains, limit losses or re-deploy assets into
more promising opportunities.

As with all stock funds, the Portfolio's share price can fall because of weakness in one or more securities markets,
particular industries or specific holdings. In addition, the Portfolio is less diversified than most stock funds and could therefore
experience sharp price declines when conditions are unfavorable in the natural resources sector. For instance, while the Portfolio
attempts to invest in companies that may benefit from accelerating inflation, inflation has slowed considerably in recent years. The
rate of earnings growth of natural resource companies may be irregular because these companies are strongly affected by natural
forces, global economic cycles and international politics. For example, stock prices of energy companies can fall sharply when oil
prices fall. Real estate companies are influenced by interest rates and other factors.

Other Investments:

Although the Portfolio will invest primarily in U.S. common stocks, it may also purchase other types of securities, for
example, preferred stocks, convertible securities and warrants, when considered consistent with the Portfolio's investment objective
and policies. The Portfolio may purchase preferred stock for capital appreciation where the issuer has omitted, or is in danger of
omitting, payment of the dividend on the stock. The Portfolio may invest in debt securities, including up to 10% of its total assets
in debt securities rated below investment grade. The Portfolio may invest in mortgage-backed securities, including stripped
mortgage-backed securities. The Portfolio may invest up to 10% of its total assets in hybrid instruments, which combine the
characteristics of futures, options and securities.

Foreign Securities. The Portfolio may invest up to 50% of its total assets in foreign securities, including American
Depositary Receipts and securities of companies in developing countries, which offer increasing opportunities for natural
resource-related growth. The Portfolio may enter into forward foreign currency exchange contracts in connection with its foreign
investments. The Portfolio's investments in foreign securities, or even in U.S. companies with significant overseas investments, may
decline in value because of declining foreign currencies or adverse political and economic events overseas, although currency risk
may be somewhat reduced because many commodities markets are dollar based.

Futures and Options. The Portfolio may enter into stock index or currency futures contracts (or options thereon) for
hedging purposes or to provide an efficient means of regulating the Portfolio's exposure to the equity markets. The Portfolio may
write covered call options and purchase put and call options on foreign currencies, securities, and stock indices.

For additional information about these investments and their risks, see this Prospectus under "Certain Risk Factors and
Investment Methods."

AST ALLIANCE GROWTH PORTFOLIO:

Investment Objective: The investment objective of the Portfolio is to seek long-term growth of capital by investing predominantly in
the equity securities of a limited number of large, carefully selected, high-quality U.S. companies that are judged likely to achieve
superior earnings growth.

Principal Investment Policies and Risks:

The Portfolio normally invests at least 80% of its total assets in the equity securities of U.S. companies. A U.S. company
is a company that is organized under United States law, has its principal office in the United States and issues equity securities
that are traded principally in the United States. For purposes of the Portfolio, a non-U.S. company is a company that (i) is
organized outside the United States, (ii) has its principal place of business outside the United States, and (iii) issues securities
that are traded principally in foreign countries. Companies that do not fall within this definition are deemed to be U.S.
companies. Normally, about 40-60 companies will be represented in the Portfolio, with the 25 companies most highly regarded by the
Sub-advisor usually constituting approximately 70% of the Portfolio's net assets. The Portfolio is thus atypical from many equity
mutual funds in its focus on a relatively small number of intensively researched companies.

The Sub-advisor's investment strategy for the Portfolio emphasizes stock selection. The Sub-advisor relies heavily upon the
fundamental analysis and research of its internal research staff, which generally follows a primary research universe of more than
500 companies that have strong management, superior industry positions, excellent balance sheets and superior earnings growth
prospects. An emphasis is placed on identifying companies whose substantially above average prospective earnings growth is not fully
reflected in current market valuations.

In managing the Portfolio, the Sub-advisor seeks to utilize market volatility judiciously (assuming no change in company
fundamentals), striving to capitalize on apparently unwarranted price fluctuations, both to purchase or increase positions on
weakness and to sell or reduce overpriced holdings. The Portfolio normally remains nearly fully invested and does not take
significant cash positions for market timing purposes. During market declines, while adding to positions in favored stocks, the
Portfolio becomes somewhat more aggressive, gradually reducing the number of companies represented in its portfolio.

Conversely, in rising markets, while reducing or eliminating fully valued positions, the Portfolio becomes somewhat more
conservative, gradually increasing the number of companies represented in its portfolio. The Sub-advisor therefore seeks to gain
positive returns in good markets while providing some measure of protection in poor markets.

The Sub-advisor expects the average market capitalization of companies represented in the Portfolio normally to be in the
range, or in excess, of the average market capitalization of companies included in the S&P 500 Index.

Because the Portfolio invests primarily in stocks, the Portfolio is subject to the risks associated with stock investments,
and the Portfolio's share price therefore may fluctuate substantially. The Portfolio's share price will be affected by changes in
the stock markets generally, and factors specific to a company or an industry will affect the prices of particular stocks held by the
Portfolio (for example, poor earnings, loss of major customers, availability of basic resources or supplies, major litigation against
a company, or changes in governmental regulation affecting an industry). The Portfolio's focus on large, more-established companies
may mean that its level of risk is lower than a fund investing primarily in smaller companies. Because the Portfolio invests in a
smaller number of securities than many other funds, changes in the value of a single security may have a more significant effect,
either negative or positive, on the Portfolio's share price.

Other Investments:

In addition to investing in equity securities, the Portfolio also may:

-- invest up to 20% of its net assets in convertible securities;
-- invest up to 5% of its net assets in rights or warrants;
-- invest up to 15% of its total assets in foreign securities;
-- purchase and sell exchange-traded index options and stock index futures contracts; and
-- write covered exchange-traded call options on its securities up to 15% of its total assets, and purchase exchange-traded
call and put options on common stocks up to, for all options, 10% of its total assets.

American Depositary Receipts (ADRs) are not considered foreign securities for purposes of the 15% limitation set forth above
and may be purchased by the Portfolio.

For additional information on the types of investments other than common stocks in which the Portfolio may invest, see this
Prospectus under "Certain Risk Factors and Investment Methods."

Temporary Investments. Although it does not expect to do so ordinarily, when business or financial conditions warrant the
Portfolio may assume a temporary defensive position and invest in high-grade, short-term, fixed-income securities (which may include
U.S. Government securities) or hold its assets in cash. While the Portfolio is in a defensive position, the opportunity to achieve
its investment objective will be limited.

AST MFS GROWTH PORTFOLIO:

Investment Objective: The investment objective of the Portfolio is to provide long-term growth of capital and future, rather than
current, income.

Principal Investment Policies and Risks:

The Portfolio invests, under normal market conditions, at least 80% of its total assets in common stocks and related
securities, such as preferred stocks, convertible securities and depositary receipts, of companies that the Sub-advisor believes
offer better than average prospects for long-term growth.

In managing the Portfolio, the Sub-advisor seeks to purchase securities of companies that it considers well-run and poised
for growth. The Sub-advisor looks particularly for companies with the following qualities:

The Portfolio may invest up to 35% of its net assets in foreign securities.

As with any fund investing primarily in common stocks, the value of the securities held by the Portfolio may decline in
value, either because of changing economic, political or market conditions or because of the economic condition of the company that
issued the security. These declines may be substantial. In addition, the prices of the growth company stocks in which the Portfolio
invests may fluctuate to a greater extent than other equity securities due to changing market conditions or disappointing earnings
results. The Portfolio may invest in foreign companies, including companies located in developing countries, and it therefore will
be subject to risks relating to political, social and economic conditions abroad, risks resulting from differing regulatory standards
in non-U.S. markets, and fluctuations in currency exchange rates.

Other Investments:

Although the Portfolio will invest primarily in common stocks and related securities, the Portfolio may also invest in
variable and floating rate debt securities. The Portfolio may purchase and sell futures contracts and related options on securities
indices, foreign currencies and interest rates for hedging and non-hedging purposes. The Portfolio may also enter into forward
contracts for the purchase or sale of foreign currencies for hedging and non-hedging purposes. The Portfolio may purchase and write
(sell) options on securities, stock indices and foreign currencies.

For more information on some of the types of securities other than common stocks in which the Portfolio may invest, see this
Prospectus under "Certain Risk Factors and Investment Methods."

AST MARSICO CAPITAL GROWTH PORTFOLIO:

Investment Objective: The investment objective of the Portfolio is to seek capital growth. Income is not an investment objective
and any income realized on the Portfolio's investments, therefore, will be incidental to the Portfolio's objective.

Principal Investment Policies and Risks:

In selecting investments for the Portfolio, the Sub-advisor uses an approach that combines "top down" economic analysis with
"bottom up" stock selection. The "top down" approach takes into consideration such macro-economic factors as interest rates,
inflation, the regulatory environment, and the global competitive landscape. In addition, the Sub-advisor examines such factors as
the most attractive global investment opportunities, industry consolidation, and the sustainability of economic trends. As a result
of this "top down" analysis, the Sub-advisor identifies sectors, industries and companies that should benefit from the trends the
Sub-advisor has observed.

The Sub-advisor then looks for individual companies with earnings growth potential that may not be recognized by the market
at large. In determining whether a particular company is appropriate for investment by the Portfolio, the Sub-advisor focuses on a
number of different attributes, including the company's specific market expertise or dominance, its franchise durability and pricing
power, solid fundamentals (e.g., a strong balance sheet, improving returns on equity, and the ability to generate free cash flow),
strong management, and reasonable valuations in the context of projected growth rates. This is called "bottom up" stock selection.

The primary risk associated with investment in the Portfolio will be the risk that the equity securities held by the
Portfolio will decline in value. The risk of the Portfolio is expected to be commensurate with that of other funds using a growth
strategy to invest in the stocks of large and medium-sized companies.

Although it is the general policy of the Portfolio to purchase and hold securities for capital growth, changes in the
Portfolio will be made as the Sub-advisor deems advisable. For example, portfolio changes may result from liquidity needs,
securities having reached a desired price, or by reason of developments not foreseen at the time of the investment was made.

Special Situations. The Portfolio may invest in "special situations" from time to time. A "special situation" arises when,
in the opinion of the Sub-advisor, the securities of a particular company will be recognized and increase in value due to a specific
development, such as a technological breakthrough, management change or new product at that company. Investment in "special
situations" carries an additional risk of loss in the event that the anticipated development does not occur or does not attract the
expected attention.

Other Investments:

The Portfolio may also invest to a lesser degree in preferred stocks, convertible securities, warrants, and debt securities
when the Portfolio perceives an opportunity for capital growth from such securities. The Portfolio may invest up to 10% of its total
assets in debt securities, which may include corporate bonds and debentures and government securities.

The Portfolio may also purchase securities of foreign issuers, including foreign equity and debt securities and depositary
receipts. Foreign securities are selected primarily on a stock-by-stock basis without regard to any defined allocation among
countries or geographic regions. The Portfolio may also use a variety of currency hedging techniques, including forward currency
contracts, to manage exchange rate risk with respect to investments exposed to foreign currency fluctuations.

Index/structured Securities. The Portfolio may invest without limit in index/structured securities, which are debt
securities whose value at maturity or interest rate is linked to currencies, interest rates, equity securities, indices, commodity
prices or other financial indicators. Such securities may be positively or negatively indexed (i.e., their value may increase or
decrease if the reference index or instrument appreciates). Index/structured securities may have return characteristics similar to
direct investments in the underlying instruments, but may be more volatile than the underlying instruments. The Portfolio bears the
market risk of an investment in the underlying instruments, as well as the credit risk of the issuer of the index/structured security.

Futures, Options and Other Derivative Instruments. The Portfolio may purchase and write (sell) options on securities,
financial indices, and foreign currencies, and may invest in futures contracts on securities, financial indices, and foreign
currencies, options on futures contracts, forward contracts and swaps and swap-related products. These instruments will be used
primarily to hedge the Portfolio's positions against potential adverse movements in securities prices, foreign currency markets or
interest rates. To a limited extent, the Portfolio may also use derivative instruments for non-hedging purposes such as increasing
the Portfolio's income or otherwise enhancing return.

For an additional discussion of many of these types of securities and their risks, see this Prospectus under "Certain Risk
Factors and Investment Methods."

Temporary Investments. Although the Sub-advisor expects to invest primarily in equity securities, the Sub-advisor may
increase the Portfolio's cash position without limitation when the Sub-advisor believes that appropriate investment opportunities for
capital growth with desirable risk/reward characteristics are unavailable. Cash and similar investments (whether made for defensive
purposes or to receive a return on idle cash) will include high-grade commercial paper, certificates of deposit and repurchase
agreements. While the Portfolio is in a defensive position, the opportunity to achieve its investment objective of capital growth
will be limited.

AST JANCAP GROWTH PORTFOLIO:

Investment Objective: The investment objective of the Portfolio is to seek growth of capital in a manner consistent with the
preservation of capital. Realization of income is not a significant investment consideration and any income realized on the
Portfolio's investments, therefore, will be incidental to the Portfolio's objective.

Principal Investment Policies and Risks:

The Portfolio will pursue its objective by investing primarily in common stocks. Common stock investments will be in
companies that the Sub-advisor believes are experiencing favorable demand for their products and services, and which operate in a
favorable competitive and regulatory environment. The Sub-advisor generally takes a "bottom up" approach to choosing investments for
the Portfolio. In other words, the Sub-advisor seeks to identify individual companies with earnings growth potential that may not be
recognized by the market at large.

Because the Portfolio invests a substantial portion (or all) of its assets in stocks, the Portfolio is subject to the risks
associated with stock investments, and the Portfolio's share price therefore may fluctuate substantially. This is true despite the
Portfolio's focus on the stocks of larger more-established companies. The Portfolio's share price will be affected by changes in the
stock markets generally, and factors specific to a company or an industry will affect the prices of particular stocks held by the
Portfolio (for example, poor earnings, loss of major customers, major litigation against an issuer, or changes in government
regulations affecting an industry). Because of the types of securities it invests in, the Portfolio is designed for those who are
investing for the long term.

Special Situations. The Portfolio may invest in "special situations" from time to time. A "special situation" arises when,
in the opinion of the Sub-advisor, the securities of a particular company will be recognized and appreciate in value due to a
specific development, such as a technological breakthrough, management change or new product at that company. Investment in "special
situations" carries an additional risk of loss in the event that the anticipated development does not occur or does not attract the
expected attention.

Other Investments:

Although the Sub-advisor expects to invest primarily in equity securities, the Portfolio may also invest to a lesser degree
in preferred stocks, convertible securities, warrants, and debt securities when the Portfolio perceives an opportunity for capital
growth from such securities. The Portfolio is subject to the following percentage limitations on investing in certain types of debt
securities:

The Portfolio may make short sales "against the box." In addition, the Portfolio may invest in the following types of securities and
engage in the following investment techniques:

Foreign Securities. The Portfolio may also purchase securities of foreign issuers, including foreign equity and debt
securities and depositary receipts. Foreign securities are selected primarily on a stock-by-stock basis without regard to any
defined allocation among countries or geographic regions. No more than 25% of the Portfolio's assets may be invested in foreign
securities denominated in foreign currencies and not publicly traded in the United States.

Futures, Options and Other Derivative Instruments. The Portfolio may enter into futures contracts on securities, financial
indices and foreign currencies and options on such contracts and may invest in options on securities, financial indices and foreign
currencies, forward contracts and interest rate swaps and swap-related products (collectively "derivative instruments"). The
Portfolio intends to use most derivative instruments primarily to hedge the value of its portfolio against potential adverse
movements in securities prices, foreign currency markets or interest rates. To a limited extent, the Portfolio may also use
derivative instruments for non-hedging purposes such as seeking to increase income. The Portfolio may also use a variety of currency
hedging techniques, including forward foreign currency exchange contracts, to manage exchange rate risk with respect to investments
exposed to foreign currency fluctuations.

For more information on the types of securities other than common stocks in which the Portfolio may invest, see this
Prospectus under "Certain Risk Factors and Investment Methods."

Temporary Investments. The Sub-advisor may increase the Portfolio's cash position without limitation when the Sub-advisor
is of the opinion that appropriate investment opportunities for capital growth with desirable risk/reward characteristics are
unavailable. Cash and similar investments (whether made for defensive purposes or to receive a return on idle cash) will include
high-grade commercial paper, certificates of deposit, repurchase agreements and money market funds managed by the Sub-advisor. While
the Portfolio is in a defensive position, the opportunity to achieve its investment objective of capital growth will be limited.

AST JANUS STRATEGIC VALUE PORTFOLIO:

Investment Objective: The investment objective of the Portfolio is to seek long-term growth of capital.

Principal Investment Policies and Risks:

The Portfolio pursues its objective by investing primarily in common stocks with the potential for long-term growth of
capital using a "value" approach. The value approach the Sub-advisor uses emphasizes investments in companies it believes are
undervalued relative to their intrinsic worth. A company may be undervalued due to market or economic conditions, temporary earnings
declines, unfavorable developments affecting the company or other factors.

The Sub-advisor generally takes a "bottom up" approach in choosing investments for the Portfolio. In other words, the
Sub-advisor seeks to identify companies that are undervalued by looking at companies one at a time, regardless of size, country of
organization, place of principal business activity, or other similar selection criteria. Realization of income is not a significant
consideration when choosing investments for the Portfolios. Income realized on the Portfolio's investments is incidental to its
objective.

As a fund that invests primarily in common stocks, the main risk of the Portfolio is the risk that the value of the stocks
it holds might decrease, either in response to factors relating to an individual company or in response to general market and/or
economic conditions. If this occurs, the Portfolio's share price may also decrease. While a fund that focuses on value stocks may
be subject to less risk than a fund investing in stocks of growth companies, the Portfolio is subject to the risk that the
Sub-advisor's belief about a company's intrinsic worth will be incorrect or will not be realized by the market in the time frame
expected.

While the Portfolio will generally focus on the securities of larger companies, the Portfolio may invest in the securities
of smaller companies, including start-up companies offering emerging products or services. Smaller or newer companies may suffer
more significant losses as well as realize more substantial growth than larger or more established issuers because they may lack
depth of management, be unable to generate funds necessary for growth or potential development, or be developing or marketing new
products or services for which markets are not yet established and may never become established. The Portfolio's level of risk may
also be affected if it invests as described below in certain types of investments other than domestic equities, such as foreign
securities, derivative investments, non-investment grade debt securities, and initial public offerings (IPOs).

The Portfolio generally intends to purchase securities for long-term investment although, to a limited extent, the Portfolio
may purchase securities in anticipation of relatively short-term price gains. Short-term transactions may also result from liquidity
needs, securities having reached a price or yield objective, changes in interest rates or the credit standing of an issuer, or by
reason of economic or other developments not foreseen at the time the investment was made. The Portfolio may also sell one security
and simultaneously purchase the same or a comparable security to take advantage of short-term differentials in bond yields or
securities prices.

Non-Diversified Status. The Portfolio is classified as a non-diversified investment company. In other words, it may hold
larger positions in a smaller number of securities than a diversified fund. As a result, a single security's increase or decrease in
value may have a greater impact on the Portfolio's share price and total return. Because of this, the Portfolio's share price can be
expected to fluctuate more than a comparable diversified fund.

Special Situations. The Portfolio may invest in special situations. A special situation arises when the Sub-advisor
believes that the securities of an issuer will be recognized and appreciate in value due to a specific development with respect to
that issuer. Special situations may include significant changes in a company's allocation of its existing capital, a restructuring
of assets, or a redirection of free cash flows. For example, issuers undergoing significant capital changes may include companies
involved in spin-offs, sales of divisions, mergers or acquisitions, companies emerging from bankruptcy, or companies initiating large
changes in their debt to equity ratio. Companies that are redirecting cash flows may be reducing debt, repurchasing shares or paying
dividends. Special situations may also result from (1) significant changes in industry structure through regulatory developments or
shifts in competition, (2) a new or improved product, service, operation or technological advance, (3) changes in senior management,
or (4) significant changes in cost structure. The Portfolio's performance could suffer if the anticipated development in a "special
situation" investment does not occur or does not attract the expected attention.

Other Investments:

While the Portfolio will invest primarily in common stocks, the Portfolio may also invest to a lesser degree in other types
of securities, such as preferred stocks, warrants, securities convertible into common or preferred stocks, and debt securities. The
Portfolio will not invest more than 35% of its assets in bonds rated below investment grade ("junk" bonds).

In addition, the Portfolio may invest in the following types of securities and engage in the following investment techniques:

Indexed/Structured Securities. The Portfolio may invest in indexed/structured securities, which typically are short- to
intermediate-term debt securities whose value at maturity or interest rate is linked to currencies, interest rates, equity
securities, indices, commodity prices or other financial indicators. Such securities may be positively or negatively indexed (i.e.,
their value may increase or decrease if the reference index or instrument appreciates). Indexed/structured securities may have
return characteristics similar to direct investments in the underlying instruments, but may be more volatile than the underlying
instruments.

Foreign Securities. The Portfolio may invest up to 25% of its net assets in foreign securities denominated in foreign
currencies and not publicly traded in the United States. The Portfolio may also invest in foreign companies through depositary
receipts or passive foreign investment companies. Generally, the same criteria are used to select foreign securities as are used to
select domestic securities. Foreign securities are generally selected on a stock-by-stock basis without regard to any defined
allocation among countries or geographic regions. However, certain factors such as expected levels of inflation, government policies
influencing business conditions, the outlook for currency relationships, and prospects for economic growth among countries, regions
or geographic areas may warrant greater consideration in selecting foreign securities. There are no limitations on the countries in
which the Portfolio may invest and the Portfolio may at times have significant foreign exposure.

Futures, Options and Other Derivative Instruments. The Portfolio may buy and sell futures contracts on foreign currencies,
securities and financial indices and options on such contracts. The Portfolio may also purchase and write put and call options on
securities, securities indices and foreign currencies. The Portfolio may enter into forward foreign currency exchange contracts,
swaps and other derivative instruments. The Portfolio may use these instruments to hedge or protect its portfolio from adverse
movements in securities prices, currency exchange rates, and interest rates. To a limited extent, the Portfolio may also use
derivative instruments for non-hedging purposes such as seeking to enhance return.

Additional information on the types of securities other than common stocks in which the Portfolio may invest is included in
this Prospectus under "Certain Risk Factors and Investment Methods."

Temporary Investments. When the Sub-advisor believes that market conditions are unfavorable for profitable investing, or
when the Sub-advisor is otherwise unable to locate attractive investment opportunities, the Portfolio's cash or similar investments
may increase. In other words, the Portfolio does not always stay fully invested in stocks. Even when the Portfolio is essentially
fully invested, some residual amount of Portfolio assets will remain in cash or similar investments. These investments may include
commercial paper, certificates of deposit, repurchase agreements, short-term debt obligations, and money market funds (including
funds managed by the Sub-advisor). When the Portfolio's investments in cash or similar investments increase, the opportunity to
achieve its investment objective of long-term capital growth may be limited.

AST ALLIANCE/BERNSTEIN GROWTH + VALUE PORTFOLIO:

Investment Objective: The investment objective of the Portfolio is to seek capital growth by investing approximately 50% of its
assets in growth stocks of large companies and approximately 50% of its assets in value stocks of large companies.

Principal Investment Policies and Risks:

The Portfolio will invest primarily in common stocks of large U.S. companies included in the Russell 1000 Index (the
"Russell 1000"). The Russell 1000 is a market capitalization-weighted index that measures the performance of the 1,000 largest U.S.
companies. As of June 30, 2000, the average market capitalization of the companies in the Russell 1000 index was approximately $14.1
billion.

Normally, about 60-85 companies will be represented in the Portfolio, with 25-35 companies primarily from the Russell 1000
Growth Index (the "Growth Index") constituting approximately 50% of the Portfolio's net assets, and 35-50 companies primarily from
the Russell 1000 Value Index (the "Value Index") constituting the remainder of the Portfolio's net assets. Daily cash flows (that
is, purchases and reinvested distributions) and outflows (that is, redemptions and expense items) will be divided between the two
portfolio segments for purposes of maintaining the targeted allocation between growth and value stocks (the "Target Allocation").
Normally, while it is not expected that the allocation of assets between portfolio segments will deviate more than 10% from the
Target Allocation, it is possible that this deviation may be higher. Factors such as market fluctuation, economic conditions,
corporate transactions and declaration of dividends may result in deviations from the Target Allocation. In the event the allocation
of assets to the portfolio segments differs by more than 10% from the Target Allocation (e.g., 60% of the Portfolio's net assets
invested in growth stocks and 40% of the Portfolio's net assets invested in value stocks), the Sub-Advisers will rebalance each
portfolio segment's assets in order to maintain the Target Allocation. As a consequence, assets may be allocated from the portfolio
segment that has appreciated more or depreciated less to the other. Rebalancing may entail transaction costs which over time may be
significant.

The Growth Index measures the performance of the Russell 1000 companies with higher price-to-book ratios and higher
forecasted growth values. The Value Index measures the performance of the Russell 1000 companies with lower price-to-book ratios and
lower forecasted growth values. This combination of growth stocks and value stocks is intended to enhance performance of the
Portfolio over time, and reduce the Portfolio's overall risk in comparison to funds which invest exclusively in growth or value
stocks. During particular periods, the Portfolio may outperform or underperform funds which invest exclusively in growth or in value
stocks.

The investment strategy of the Sub-advisor responsible for the portion of the Portfolio's assets invested in growth stocks
emphasizes stock selection. The Sub-advisor relies heavily upon the fundamental analysis and rigorous research of its internal
research staff. The Sub-advisor selects investments based on strong management, superior industry positions, excellent balance
sheets and superior earnings growth; where all of these strengths have not been reflected in the company's stock price. In managing
the Portfolio, the Sub-advisor seeks to take advantage of market volatility. During market declines, the Sub-advisor will add to
positions, causing the Portfolio to become somewhat more aggressive. Conversely, in rising markets, the Sub-advisor will trim or
eliminate positions and as a result the Portfolio will become more conservative.

The method of selecting the investments used by the Sub-advisor responsible for the portion of the Portfolio's assets
invested in value stocks is to measure each stock's long-term expected return by comparing the price of the security to the company's
long-term cash flows. The Sub-advisor will only purchase those stocks that it has above-average confidence in the reliability of its
analysts' forecasts. The Sub-advisor may delay its purchase of securities if recent weakness in the stock or negative earnings
revisions by analysts indicate that the stock price is likely to decline in the near future, and it may delay its sale of securities
if recent strength in the stock or upward earnings revisions indicate the stock is likely to rise soon. The Sub-advisor will control
risk within the value portion of the Portfolio by reviewing whether there is undue portfolio exposure to industry sector and other
risk factors. The Sub-advisor will take more risk when unusually large value distortions within the value realm create unusually
large opportunities to add returns, and it will take less risk when the opportunities are limited.

In addition to investing in equity securities, the Portfolio also may:

o invest up to 20% of the growth portion of its net assets in convertible securities;
o invest up to 5% of the growth portion of its net assets in rights or warrants;
o invest up to 15% of its total assets in foreign securities
o purchase and sell exchange-traded index options and stock index futures contracts; and
o write covered exchange-traded call options on its securities up to 15% of the growth portion of its total assets, and
purchase exchange-traded call and put options on common stocks up to, for all options, 10% of the growth portion of its
total assets.

For purposes of the Portfolio a foreign security is a security issued by a non-U.S. company, which is defined as a company
that: (1) is organized outside the United States; (ii) has its principal place of business outside the United States; and (iii)
issues securities traded principally in a foreign country. Companies that do not fall within the definition of a non-U.S. company
would be considered a U.S. company and therefore not subject to the above limitation on foreign securities.

American Depositary Receipts (ADRs) are not considered foreign securities for purposes of the 15% limitation set forth above
and may be purchased by the Portfolio.

For additional information about these investments and risks, see this Prospectus under "Certain Risk Factors and Investment
Methods."

Temporary Investments. Although it does not expect to do so ordinarily, when business or financial conditions warrant, the
Portfolio may assume a temporary defensive position and invest in high-grade, short-term, fixed-income securities (which may include
U.S. Government securities) or hold its assets in cash. While the Portfolio is in a defensive position, the opportunity to achieve
its investment objective will be limited.

AST SANFORD BERNSTEIN CORE VALUE PORTFOLIO:

Investment Objective: The investment objective of the Portfolio is to seek long-term capital growth.

Principal Investment Policies and Risks:

The Portfolio will pursue its objective by investing primarily in common stocks. The Sub-advisor expects that the majority
of the Portfolio's assets will be invested in the common stocks of large companies that appear to be undervalued. Among other
things, the Portfolio seeks to identify compelling buying opportunities created when companies are undervalued on the basis of
investor reactions to near-term problems or circumstances even though their long-term prospects remain sound. The Sub-advisor's
investment approach is value-based and price-driven, and it relies on the intensive fundamental research of its internal research
staff to identify these buying opportunities in the marketplace.

Portfolio investments are selected by the Sub-advisor based upon a model portfolio of 125-175 stocks constructed by the
Sub-advisor. In selecting investments for the model portfolio, the Sub-advisor takes a "bottom-up" approach. In other words, the
Sub-advisor seeks to identify individual companies with earnings growth potential that may not be recognized by the market at large.
The Sub-advisor relates present value of each company's forecasted future cash flow to the current price of its stock. The
Sub-advisor ranks companies from the highest expected return to the lowest, with the companies at the top of the ranking being the
most undervalued.

Once the expected return for each stock is calculated, the Sub-advisor adjusts for timing and concentration risks.
Securities are ranked by risk-adjusted expected returns. Securities ranked in the top third of its valuation universe, if selected,
are over-weighted in the Portfolio because they represent the most undervalued stocks in its universe. The Sub-advisor market
weights securities ranked in the middle third of its universe, if selected, to add diversification to the Portfolio. To control
variability in premium, the Sub-advisor also holds the largest capitalization securities (at under-weighted positions) even when they
rank in bottom third of the universe. If a security falls in the ranking from the top third of the Sub-advisor's valuation universe
to the middle third, the Sub-advisor may reduce the Portfolio's position to market weight. If the security's ranking continues to
fall into the bottom third of its universe, the Sub-advisor may either sell it or, if it is a very large capitalization stock, will
underweight it. The Sub-advisor may from time to time deviate from the foregoing process with respect to the weighting of individual
securities in the Portfolio when determined appropriate by the Sub-advisor.

The Sub-advisor may delay the Portfolio's purchase of securities if recent weakness in the stock or negative earnings
revisions by analysts indicate that the stock price is likely to decline in the near future, and it may delay the Portfolio's sale of
securities if recent strength in the stock or upward earnings revisions indicate the stock is likely to rise soon. The Sub-advisor
will control risk by reviewing whether there is undue portfolio exposure to industry sector and other risk factors. The Sub-advisor
will take more risk when unusually large value distortions within the value realm create unusually large opportunities to add
returns, and it will take less risk when the opportunities are limited.

The Sub-advisor also seeks to control risks by correlating the size of initial purchases by the Portfolio to the security's
benchmark weighting, within plus or minus 0.5%. If market appreciation of a security brings the security's weighting to 1.0% above
or below its benchmark weighting (at the time), the size of the holding is generally increased or reduced accordingly. Because the
Portfolio invests primarily in stocks, the Portfolio is subject to the risks associated with stock investments, and the Portfolio's
share price therefore may fluctuate substantially. The Portfolio's share price will be affected by changes in the stock markets
generally, and factors specific to a company or an industry will affect the prices of particular stocks held by the Portfolio (for
example, poor earnings, loss of major customers, availability of basic resources or supplies, major litigation against a company, or
changes in governmental regulation affecting an industry). The Portfolio's focus on large, more-established companies may mean that
its level of risk is lower than a fund investing primarily in smaller companies. While the Portfolio's value investing historically
has involved less risk than investing in growth companies, investing in value stocks carries the risks that the market will not
recognize the stock's intrinsic value for a long time or that a stock judged to be undervalued may actually be appropriately priced.

Other Investments:

Derivatives. The Portfolio may invest in various instruments that are or may be considered derivatives, including
securities index futures contracts and related options. These instruments may be used for several reasons: to simulate full
investment in equities while retaining cash for fund management purposes, to facilitate trading, or to reduce transaction costs. The
Portfolio will not use derivatives for speculative purposes or to leverage its assets. The Portfolio will limit its use of
securities index futures contracts and related options so that, at all times, margin deposits for futures contracts and premiums on
related options do not exceed 5% of the Portfolio's assets and the percentage of the Portfolio's assets being used to cover its
obligations under futures and options does not exceed 50%.

Additional information about these derivative instruments and their risks is included in this Prospectus under "Certain Risk
Factors and Investment Methods."

Temporary Investments. The Portfolio may maintain up to 25% of its assets in short-term debt securities and money market
instruments to meet redemption requests. These securities include obligations issued or guaranteed by the U.S. Government or its
agencies or instrumentalities or by any of the states, repurchase agreements, commercial paper, and certain bank obligations. The
Portfolio will not invest in these securities as part of a temporary defensive strategy to protect against potential market declines.

AST COHEN & STEERS REALTY PORTFOLIO:

Investment Objective: The investment objective of the Portfolio is to maximize total return through investment in real estate
securities.

Principal Investment Policies and Risks:

The Portfolio pursues its investment objective of maximizing total return by seeking, with approximately equal emphasis, capital
growth and current income. Under normal circumstances, the Portfolio will invest substantially all of its assets in the equity
securities of real estate companies. Such equity securities will consist of:

o common stocks (including shares in real estate investment trusts),
o rights or warrants to purchase common stocks,
o securities convertible into common stocks where the conversion feature represents, in the Sub-advisor's view, a significant
element of the securities' value, and
o preferred stocks.

Real estate companies may include real estate investment trusts ("REITs"). REITs pool investors' funds for investment
primarily in income producing real estate or real estate related loans or interests. REITs can generally be classified as Equity
REITs, Mortgage REITs and Hybrid REITs. Equity REITs, which invest the majority of their assets directly in real property, derive
their income primarily from rents. Equity REITs can also realize capital gains or losses by selling properties. Mortgage REITs,
which invest the majority of their assets in real estate mortgages, derive their income primarily from interest payments. Hybrid
REITs combine the characteristics of both Equity REITs and Mortgage REITs.

As a fund that invests primarily in equity securities, the Portfolio will be subject to many of the same risks as other
equity funds. The Portfolio also will be subject to certain risks related specifically to real estate securities, and may be subject
to greater risk and share price fluctuation than other equity funds because of the concentration of its investments in a single
industry.

While the Portfolio will not invest in real estate directly, securities of real estate companies may be subject to risks
similar to those associated with the direct ownership of real estate. These include risks related to general and local economic
conditions, dependence on management skill, heavy cash flow dependency, possible lack of available mortgage funds, overbuilding,
extended vacancies of properties, increases in property taxes and operating expenses, changes in zoning laws, losses due to costs
resulting from environmental problems, casualty or condemnation losses, limitations on rents, and changes in neighborhood values, the
appeal of properties to tenants and interest rates.

In general, Equity REITs may be affected by changes in the value of the underlying property owned by the trusts, while
Mortgage REITs may be affected by the quality of any credit extended. In the event of a default by a borrower or lessee, a REIT may
experience delays and may incur substantial costs in enforcing its rights as a mortgagee or lessor.

Other Investments:

The Portfolio may write (sell) put and covered call options and purchase put and call options on securities or stock indices
that are listed on a national securities or commodities exchange. The Portfolio may buy and sell financial futures contracts, stock
and bond index futures contracts, foreign currency futures contracts and options on the foregoing. The Portfolio may enter into
forward foreign currency exchange contracts in connection with its investments in foreign securities. The Portfolio may also enter
into short sales, which are transactions in which the Portfolio sells a security it does not own at the time of the sale in
anticipation that the market price of the security will decline. The Sub-advisor expects that the Portfolio will use these
techniques on a relatively infrequent basis.

Additional information about these techniques and their risks is included below under "Certain Risk Factors and Investment
Methods."

Temporary Investments. When the Sub-advisor believes that market or general economic conditions justify a temporary
defensive position, the Portfolio will invest all or a portion of its assets in high-grade debt securities, including corporate debt
securities, U.S. government securities, and short-term money market instruments, without regard to whether the issuer is a real
estate company. While the Portfolio is in a defensive position, the opportunity to achieve its investment objective of maximum total
return will be limited. The Portfolio may also invest funds awaiting investment or funds held to satisfy redemption requests or to
pay dividends and other distributions to shareholders in short-term money market instruments.

AST SANFORD BERNSTEIN MANAGED INDEX 500 PORTFOLIO:

Investment Objective: The investment objective of the Portfolio is to outperform the Standard & Poor's 500 Composite Stock Price
Index (the "S&P 500(R)") through stock selection resulting in different weightings of common stocks relative to the index.

Principal Investment Policies and Risks:

The Portfolio will invest primarily in the common stocks of companies included in the S&P 500. The S&P 500 is an index of
500 common stocks, most of which trade on the New York Stock Exchange Inc. (the "NYSE"). The Sub-advisor believes that the S&P 500
is representative of the performance of publicly traded common stocks in the U.S. in general.

In seeking to outperform the S&P 500, the Sub-advisor starts with a portfolio of stocks representative of the holdings of
the index. It then uses a set of fundamental, quantitative criteria that are designed to indicate whether a particular stock will
predictably perform better or worse than the S&P 500. Based on these criteria, the Sub-advisor determines whether the Portfolio
should over-weight, under-weight or hold a neutral position in the stock relative to the proportion of the S&P 500 that the stock
represents. In addition, the Sub-advisor may determine based on the quantitative criteria that (1) certain S&P 500 stocks should not
be held by the Portfolio in any amount, and (2) certain equity securities that are not included in the S&P 500 should be held by the
Portfolio. The Portfolio may invest up to 15% of its total assets in equity securities not included in the S&P 500.

As a mutual fund investing primarily in common stocks, the Portfolio is subject to the risk that common stock prices will
decline over short or even extended periods. The U.S. stock market tends to be cyclical, with periods when stock prices generally
rise and periods when prices generally decline. The Sub-advisor believes that the various quantitative criteria used to determine
which stocks to over- or under-weight will balance each other so that the overall risk of the Portfolio is not likely to differ
materially from the risk of the S&P 500 itself. While the Portfolio attempts to outperform the S&P 500, it is not expected that any
outperformance will be substantial. The Portfolio also may underperform the S&P 500 over short or extended periods.

About the S&P 500. The S&P 500 is a well-known stock market index that includes common stocks of 500 companies from several
industrial sectors representing a significant portion of the market value of all common stocks publicly traded in the United States.
Stocks in the S&P 500 are weighted according to their market capitalization (the number of shares outstanding multiplied by the
stock's current price). The composition of the S&P 500 is determined by S&P based on such factors as market capitalization, trading
activity, and whether the stock is representative of stocks in a particular industry group. The composition of the S&P 500 may be
changed from time to time. "Standard & Poor's(R)", "S&P 500(R)", "Standard & Poor's 500", and "500" are trademarks of The McGraw-Hill
Companies, Inc. and have been licensed for use by the Investment Manager.

The Portfolio is not sponsored, endorsed, sold or promoted by Standard &Poor's, a division of The McGraw-Hill Companies,
Inc. ("S&P"). S&P makes no representation or warranty, express or implied, to the shareholders of the Portfolio or any member of the
public regarding the advisability of investing in securities generally or in the Portfolio particularly or the ability of the S&P 500
to track general stock market performance. S&P's only relationship to the Investment Manager or the Sub-advisor is a license
provided to the Investment Manager of certain trademarks and trade names of S&P and of the S&P 500, which is determined, composed and
calculated by S&P without regard to the Investment Manager, Sub-advisor, or Portfolio. S&P has no obligation to take the needs of
the Investment Manager, Sub-advisor or the shareholders of the Portfolio into consideration in determining, composing or calculating
the S&P 500. S&P is not responsible for and has not participated in the determination of the prices and amount of the Portfolio or
the timing of the issuance or sale of the Portfolio, or in the determination or calculation of the Portfolio's net asset value. S&P
has no obligation or liability in connection with the administration, marketing or trading of the Portfolio.

S&P does not guarantee the accuracy and/or the completeness of the S&P 500 or any data included therein and shall have no
liability for any errors, omissions, or interruptions therein. S&P makes no warranty, express or implied, as to the results to be
obtained by the Portfolio, shareholders of the Portfolio, or any other person or entity from the use of the S&P 500 or any data
included therein. S&P makes no express or implied warranties and expressly disclaims all warranties of merchantability or fitness
for a particular purpose or use with respect to the S&P 500 or any data included therein. Without limiting any of the foregoing, in
no event shall S&P have any liability for any special, punitive, indirect or consequential damages (including lost profits), even if
notified of the possibility of such damages.

Other Investments:

Derivatives. The Portfolio may invest in various instruments that are or may be considered derivatives, including
securities index futures contracts and related options, warrants and convertible securities. These instruments may be used for
several reasons: to simulate full investment in the S&P 500 while retaining cash for fund management purposes, to facilitate
trading, to reduce transaction costs or to seek higher investment returns when the futures contract, option, warrant or convertible
security is priced more attractively than the underlying equity security or the S&P 500. The Portfolio will not use derivatives for
speculative purposes or to leverage its assets. The Portfolio will limit its use of securities index futures contracts and related
options so that, at all times, margin deposits for futures contracts and premiums on related options do not exceed 5% of the
Portfolio's assets and provided that the percentage of the Portfolio's assets being used to cover its obligations under futures and
options does not exceed 50%.

Additional information about these derivative instruments and their risks is included in this Prospectus under "Certain Risk
Factors and Investment Methods."

Temporary Investments. The Portfolio may maintain up to 25% of its assets in short-term debt securities and money market
instruments to meet redemption requests or to facilitate investment in the securities of the S&P 500. These securities include
obligations issued or guaranteed by the U.S. Government or its agencies or instrumentalities or by any of the states, repurchase
agreements, commercial paper, and certain bank obligations. The Portfolio will not invest in these securities as part of a temporary
defensive strategy to protect against potential market declines.

AST AMERICAN CENTURY INCOME & GROWTH PORTFOLIO:

Investment Objective: The primary investment objective of the Portfolio is to seek capital growth. Current income is a secondary
investment objective.

Principal Investment Policies and Risks:

The Portfolio's investment strategy utilizes quantitative management techniques in a two-step process that draws heavily on
computer technology. In the first step, the Sub-advisor ranks stocks, primarily the 1,500 largest publicly traded U.S. companies
(measured by market capitalization), from most attractive to least attractive. These rankings are determined by using a computer
model that combines measures of a stock's value and measures of its growth potential. To measure value, the Sub-advisor uses ratios
of stock price to book value and stock price to cash flow, among others. To measure growth, the Sub-advisor uses, among others, the
rate of growth in a company's earnings and changes in its earnings estimates.

In the second step, the Sub-advisor uses a technique called portfolio optimization. In portfolio optimization, the
Sub-advisor uses a computer to build a portfolio of stocks from the ranking described earlier that it thinks will provide the best
balance between risk and expected return. The goal is to create an equity portfolio that provides better returns than the S&P 500
Index without taking on significant additional risk. The Sub-advisor attempts to create a dividend yield for the Portfolio that will
be greater than that of the S&P 500.

The Sub-advisor does not attempt to time the market. Instead, it intends to keep the Portfolio essentially fully invested
in stocks regardless of the movement of stock prices generally.

Like any fund investing primarily in common stocks, the Portfolio is subject to the risk that the value of the stocks it
invests in will decline. These declines could be substantial.

Because the Portfolio is managed to an index (the S&P 500), its performance will be closely tied to the performance of the
index. If the S&P 500 goes down, it is likely that the Portfolio's share price will also go down. The Portfolio's investments in
income-producing stocks may reduce to some degree the Portfolio's level of risk and share price fluctuation (and its potential for
gain) relative to the S&P 500. However, if the stocks that make up the S&P 500 do not have a high dividend yield at a given time,
then the Portfolio's dividend yield also will not be high.

Other Investments:

When the Sub-advisor believes that it is prudent, the Portfolio may invest in securities other than stocks, such as
convertible securities, foreign securities, short-term instruments and non-leveraged stock index futures contracts. Stock index
futures contracts can help the Portfolio's cash assets remain liquid while performing more like stocks. The Portfolio also may short
sales "against the box." Additional information on these types of investments is included in this Prospectus under "Certain Risk
Factors and Investment Methods."

AST ALLIANCE GROWTH AND INCOME PORTFOLIO:

Investment Objective: The investment objective of the Portfolio (formerly, the AST Lord Abbett Growth and Income Portfolio) is
long-term growth of capital and income while attempting to avoid excessive fluctuations in market value.

Principal Investment Policies and Risks:

The Portfolio normally will invest in common stocks (and securities convertible into common stocks).

The Sub-advisor will take a value-oriented approach, in that it will try to keep the Portfolio's assets invested in
securities that are selling at reasonable valuations in relation to their fundamental business prospects. In doing so, the Portfolio
may forgo some opportunities for gains when, in the judgement of the Sub-advisor, they are too risky.

In seeking to achieve its objective, the Portfolio invests primarily in the equity securities of U.S. companies that the
Sub-advisor believes are undervalued. The Sub-advisor believes that, over time, stock prices (of companies in which the Portfolio
invests) will come to reflect the companies' intrinsic economic values. The Sub-advisor uses a disciplined investment process to
evaluate the companies in its extensive research universe. Through this process, the Sub-advisor seeks to identify the stocks of
companies that offer the best combination of value and potential for price appreciation.

The Sub-advisor's analysts prepare their own earnings estimates and financial models for each company followed. The
Sub-advisor employs these models to identify equity securities whose current market prices do not reflect what it considers to be
their intrinsic economic value. In determining a company's intrinsic economic value, the Sub-advisor takes into account any factors
it believes bear on the ability of the company to perform in the future, including earnings growth, prospective cash flows, dividend
growth and growth in book value. The Sub-advisor then ranks, at least weekly, each of the companies in its research universe in the
relative order of disparity between their stock prices and their intrinsic economic values, with companies with the greatest
disparities receiving the highest ranking (i.e. being considered the most undervalued).

The prices of the common stocks that the Portfolio invests in will fluctuate. Therefore, the Portfolio's share price will
also fluctuate, and may decline substantially. While there is the risk that an investment will never reach what the Sub-advisor
believes is its full value, or may go down in value, the Portfolio's risk and share price fluctuation (and potential for gain) may be
less than many other stock funds because of the Portfolio's emphasis on large, seasoned company value stocks.

Other Investments:

The Portfolio, in addition to investing in common stocks and convertible securities, may write covered call options listed
on domestic securities exchanges with respect to securities in the Portfolio. It is not intended for the Portfolio to write covered
call options with respect to securities with an aggregate market value of more than 10% of the Portfolio's net assets at the time an
option is written. The Portfolio also may purchase and sell forward and futures contracts and related options for hedging purposes.
The Portfolio may also invest up to 10% of its net assets (at the time of investment) in foreign securities, and invest in straight
bonds and other debt securities.

Temporary Investments. The Portfolio may invest in short-term debt and other high quality fixed-income securities to create
reserve purchasing power and also for temporary defensive purposes. While the Portfolio is in a defensive position, the opportunity
to achieve its investment objective may be limited.

AST MFS GROWTH WITH INCOME PORTFOLIO:

Investment Objective: The investment objective of the Portfolio is to seek to provide reasonable current income and long-term
capital growth and income.

Principal Investment Policies and Risks:

The Portfolio invests, under normal market conditions, at least 65% of its total assets in common stocks and related
securities, such as preferred stocks, convertible securities and depositary receipts. The stocks in which the Portfolio invests
generally will pay dividends. While the Portfolio may invest in companies of any size, the Portfolio generally focuses on companies
with larger market capitalizations that the Sub-advisor believes have sustainable growth prospects and attractive valuations based on
current and expected earnings or cash flow.

The Portfolio may invest up to 20% of its net assets in foreign securities.

As with any fund investing primarily in common stocks, the value of the securities held by the Portfolio may decline in
value, either because of changing economic, political or market conditions or because of the economic condition of the company that
issued the security. These declines may be substantial. In light of the Portfolio's focus on income-producing large-cap stocks, the
risk and share price fluctuations of the Portfolio (and its potential for gain) may be less than many other stock funds. The
Portfolio may invest in foreign companies, including companies located in developing countries, and it therefore will be subject to
risks relating to political, social and economic conditions abroad, risks resulting from differing regulatory standards in non-U.S.
markets, and fluctuations in currency exchange rates.

Other Investments:

Although the Portfolio will invest primarily in common stocks and related securities, the Portfolio may also invest in debt
securities, including variable and floating rate securities and zero coupon, deferred interest and pay-in-kind bonds. The Portfolio
may also purchase warrants and make short sales "against the box."

Futures and Forward Contracts. The Portfolio may purchase and sell futures contracts on securities indices, foreign
currencies and interest rates for hedging and non-hedging purposes. The Portfolio may also enter into forward contracts for the
purchase or sale of foreign currencies for hedging and non-hedging purposes.

For more information on some of the types of securities other than common stocks in which the Portfolio may invest, see this
Prospectus under "Certain Risk Factors and Investment Methods."

AST INVESCO EQUITY INCOME PORTFOLIO:

Investment Objective: The investment objective of the Portfolio is to seek capital growth and current income while following sound
investment practices.

Principal Investment Policies and Risks:

The Portfolio seeks to achieve its objective by investing in securities that are expected to produce relatively high levels
of income and consistent, stable returns. The Portfolio normally will invest at least 65% of its assets in dividend-paying common
and preferred stocks of domestic and foreign issuers. Up to 30% of the Portfolio's assets may be invested in equity securities that
do not pay regular dividends. In addition, the Portfolio normally will have some portion of its assets invested in debt securities
or convertible bonds. The Portfolio may invest up to 25% of its total assets in foreign securities, including securities of issuers
in countries considered to be developing. These foreign investments may serve to increase the overall risks of the Portfolio.

The Portfolio's investments in common stocks may, of course, decline in value, which will result in declines in the
Portfolio's share price. Such declines could be substantial. To minimize the risk this presents, the Sub-advisor will not invest,
with respect to 75% of the value of its total assets, more than 5% of the Portfolio's assets in the securities of any one company or
more than 25% of the Portfolio's assets in any one industry. In light of the Portfolio's focus on income producing stocks, its risk
and share price fluctuation (and potential for gain) may be less than many other stock funds.

Debt Securities. The Portfolio's investments in debt securities will generally be subject to both credit risk and market
risk. Credit risk relates to the ability of the issuer to meet interest or principal payments, or both, as they come due. Market
risk relates to the fact that the market values of debt securities in which the Portfolio invests generally will be affected by
changes in the level of interest rates. An increase in interest rates will tend to reduce the market values of debt securities,
whereas a decline in interest rates will tend to increase their values. Although the Sub-advisor will limit the Portfolio's debt
security investments to securities it believes are not highly speculative, both kinds of risk are increased by investing in debt
securities rated below the top four grades by Standard & Poor's Corporation or Moody's Investors Services, Inc., or equivalent
unrated debt securities ("junk bonds").

In order to decrease its risk in investing in debt securities, the Portfolio will invest no more than 15% of its assets in
junk bonds, and in no event will the Portfolio ever invest in a debt security rated below Caa by Moody's or CCC by Standard &
Poor's. While the Sub-advisor will monitor all of the debt securities in the Portfolio for the issuers' ability to make required
principal and interest payments and other quality factors, the Sub-advisor may retain in the Portfolio a debt security whose rating
is changed to one below the minimum rating required for purchase of such a security. For a discussion of the special risks involved
in lower-rated bonds, see this Prospectus under "Certain Risk Factors and Investment Methods."

Temporary Investments:

In periods of uncertain market and economic conditions, the Portfolio may assume a defensive position with up to 100% of its
assets temporarily invested in high quality corporate bonds or notes or government securities, or held in cash. While the Portfolio
is in a defensive position, the opportunity to achieve its investment objective may be limited.

AST AIM BALANCED PORTFOLIO:

Investment Objective: The investment objective of the Portfolio is to provide a well-diversified portfolio of stocks that will
produce both capital growth and current income.

Principal Investment Policies and Risks:

The Portfolio attempts to meet its objective by investing, normally, a minimum of 30% and a maximum of 70% of its total
assets in equity securities and a minimum of 30% and a maximum of 70% of its total assets in non-convertible debt securities. The
Portfolio may invest up to 25% of its total assets in convertible securities (which, depending on the nature of the convertible
security, may be considered equity securities for purposes of the Portfolio's 30-70% range for investments in equity securities).
The Portfolio may invest up to 10% of its total assets in high-yield debt securities rated below investment grade or non-rated debt
securities deemed to be of comparable quality ("junk bonds"). The Portfolio may also invest up to 20% of its total assets in foreign
securities.

In selecting the percentages of assets to be invested in equity or debt securities, the Sub-advisor considers such factors
as general market and economic conditions, as well as market, economic, industry and company trends, yields, interest rates and
changes in fiscal and monetary policies. The Sub-advisor will primarily purchase equity securities for growth of capital and debt
securities for income purposes. However, the Sub-advisor will focus on companies whose securities have the potential for both
capital appreciation and income generation. The Sub-advisor considers whether to sell a security when it believes that the security
no longer has that potential.

As a fund that invests both in equity and debt securities, the Portfolio's risk of loss and share price fluctuation (and
potential for gain) may be less than funds investing primarily in equity securities and more than funds investing in primarily in
debt securities. Of course, both equity and debt securities may decline in value. Prices of equity securities fluctuate in response
to many factors, including the historical and prospective earnings of the issuer, the value of its assets, general economic
conditions, interest rates, investor perceptions and market liquidity. Prices of debt securities fluctuate in response to market
factors such as changes in interest rates and in response to changes in the credit quality of specific issuers. The Portfolio's
level of risk will increase to the extent it invests more heavily in long-term debt securities or lower-rated debt securities.

The values of the convertible securities in which the Portfolio may invest will be affected by market interest rates, the
risk that the issuer may default on interest or principal payments, and the value of the underlying common stock into which these
securities may be converted. Specifically, because the convertible securities the Portfolio purchases typically pay fixed interest
and dividends, their values may fall if market interest rates rise and rise if market interest rates fall. Additionally, an issuer
may have the right to buy back convertible securities at a time and price that is unfavorable to the Portfolio.

Foreign securities have additional risks, including exchange rate changes, political and economic upheaval, the relative
lace of information about these companies, relatively low market liquidity and the potential lack of strict financial and accounting
controls and standards.

Other Investments:

The Portfolio may write call options on securities, but only on a covered basis; that is, the Portfolio will own the
underlying security. In addition, the Portfolio may purchase put options or write call options on securities indices for the purpose
of providing a partial hedge against a decline in the value of its portfolio securities. The Portfolio may purchase and sell stock
index and interest rate futures contracts and related options in order to hedge the value of its investments against changes in
market conditions. The Portfolio may also engage in various types of foreign currency hedging transactions in connection with its
foreign investments. The Portfolio may from time to time make short sales "against the box."

Additional information about options, futures contracts, convertible securities, lower-rated debt securities, foreign
securities and other investments that the Portfolio may make is included in this Prospectus under "Certain Risk Factors and
Investment Methods."

Temporary Investments. In anticipation of or in response to adverse market conditions or for cash management purposes, the
Portfolio may hold all or a portion of its assets in cash, money market instruments, bonds or other debt securities. While the
Portfolio is in such a defensive position, the opportunity to achieve its investment objective of both capital growth and current
income may be limited.

AST AMERICAN CENTURY STRATEGIC BALANCED PORTFOLIO:

Investment Objective: The investment objective of the Portfolio is to seek capital growth and current income.

Principal Investment Policies and Risks:

The Sub-advisor intends to maintain approximately 60% of the Portfolio's assets in equity securities and the remainder in
bonds and other fixed income securities. Both the Portfolio's equity and fixed income investments will fluctuate in value. The
equity securities will fluctuate depending on the performance of the companies that issued them, general market and economic
conditions, and investor confidence. The fixed income investments will be affected primarily by rising or falling interest rates and
the credit quality of the issuers. As a fund that invests both in equity and fixed income securities, the Portfolio's risk of loss
and share price fluctuation will tend to be less than funds investing primarily in equity securities and more than funds investing
primarily in fixed income securities.

Equity Investments. With the equity portion of the Portfolio, the Sub-advisor utilizes quantitative management techniques
in a two-step process that draws heavily on computer technology. In the first step, the Sub-advisor ranks stocks, primarily the
1,500 largest publicly traded U.S. companies (measured by the value of their stock) from most attractive to least attractive. These
rankings are determined by using a computer model that combines measures of a stock's value and measures of its growth potential. To
measure value, the Sub-advisor uses ratios of stock price to book value and stock price to cash flow, among others. To measure
growth, the manager uses the rate of growth in a company's earnings and changes in its earnings estimates, as well as other factors.

In the second step, the Sub-advisor uses a technique called portfolio optimization. In portfolio optimization, the
Sub-advisor uses a computer to build a portfolio of stocks from the ranking described earlier that it thinks will provide the best
balance between risk and expected return. The goal is to create an equity portfolio that provides better returns than the S&P 500
Index without taking on significant additional risk.

Fixed Income Investments. The Sub-advisor intends to maintain approximately 40% of the Portfolio's assets in fixed income
securities. Up to 20% of the Portfolio's fixed income securities will be invested in foreign fixed income securities. These
percentages will fluctuate and may be higher or lower depending on the mix the Sub-advisor believes will be most appropriate for
achieving the Portfolio's objectives.

The fixed income portion of the Portfolio is invested in a diversified portfolio of government securities, corporate fixed
income securities, mortgage-backed and asset-backed securities, and similar securities. The Sub-advisor's strategy is to actively
manage the Portfolio by investing the Portfolio's fixed income assets in sectors it believes are undervalued (relative to the other
sectors) and which represent better relative long-term investment opportunities.

The Sub-advisor will adjust the weighted average portfolio maturity in response to expected changes in interest rates.
Under normal market conditions, the weighted average maturity of the fixed income portion of the Portfolio will be in the 3- to
10-year range. During periods of rising interest rates, the weighted average maturity may be reduced in order to reduce the effect
of bond price declines on the Portfolio's net asset value. When interest rates are falling and bond prices are rising, the Portfolio
may be moved toward the longer end of its maturity range.

Debt securities that comprise the Portfolio's fixed income portfolio will primarily be investment grade obligations.
However, the Portfolio may invest up to 15% of its fixed income assets in high-yield securities or "junk bonds." Regardless of
rating levels, all debt securities considered for purchase by the Portfolio are analyzed by the Sub-advisor to determine, to the
extent reasonably possible, that the planned investment is sound, given the investment objective of the Portfolio. For an additional
discussion of lower-rated securities and their risks, see this Prospectus under "Certain Risk Factors and Investment Methods."

In determining the allocation of assets among U.S. and foreign capital markets, the Sub-advisor considers the condition and
growth potential of the various economies; the relative valuations of the markets; and social, political, and economic factors that
may affect the markets. The Sub-advisor also considers the impact of foreign exchange rates in selecting securities denominated in
foreign currencies.

Foreign Securities. The Portfolio may invest up to 25% of its total assets in equity and debt securities of foreign
issuers, including foreign governments and their agencies, when these securities meet its standards of selection. (As noted above,
up to 20% of the fixed income portion of the Portfolio normally will be invested in foreign securities.) These investments will be
made primarily in issuers in developed markets. The Portfolio may make such investments either directly in foreign securities, or by
purchasing depositary receipts for foreign securities. To protect against adverse movements in exchange rates between currencies,
the Portfolio may, for hedging purposes only, enter into forward currency exchange contracts and buy put and call options relating to
currency futures contracts.

Other Investments:

The Portfolio may invest in derivative securities. Certain of these derivative securities may be described as
"index/structured" securities, which are securities whose value or performance is linked to other equity securities (as in the case
of depositary receipts), currencies, interest rates, securities indices or other financial indicators ("reference indices"). The
Portfolio may not invest in a derivative security unless the reference index or the instrument to which it relates is an eligible
investment for the Portfolio. For example, a security whose underlying value is linked to the price of oil would not be a
permissible investment because the Portfolio may not invest in oil and gas leases or futures. The Portfolio may make short sales
"against the box."

For further information on these securities and investment practices, see this Prospectus under "Certain Risk Factors and
Investment Methods."

AST T. ROWE PRICE ASSET ALLOCATION PORTFOLIO:

Investment Objective: The investment objective of the Portfolio is to seek a high level of total return by investing primarily in a
diversified portfolio of fixed income and equity securities.

Principal Investment Policies and Risks:

The Portfolio normally invests approximately 60% of its total assets in equity securities and 40% in fixed income
securities. This mix may vary over shorter time periods; the equity portion may range between 50-70% and the fixed income portion
between 30-50%.

The Sub-advisor concentrates common stock investments in larger, more established companies, but the Portfolio may include
small and medium-sized companies with good growth prospects. The Portfolio's exposure to smaller companies is not expected to be
substantial, and will not constitute more than 30% of the equity portion of the Portfolio. Up to 35% of the equity portion may be
invested in foreign (non-U.S. dollar denominated) equity securities. The fixed income portion of the Portfolio will be allocated
among investment grade securities (50-100% of the fixed income portion); high yield or "junk" bonds (up to 30%); foreign (non-U.S.
dollar denominated) high quality debt securities (up to 30%); and cash reserves (up to 20%).

The precise mix of equity and fixed income investments will depend on the Sub-advisor's outlook for the markets. Shifts
between stocks and bonds will normally be done gradually and the Sub-advisor will not attempt to precisely "time" the market. The
Portfolio's investments in foreign equity and debt securities are intended to provide additional diversification, and the Sub-advisor
will normally have at least three different countries represented in both the foreign equity and foreign debt portions of the
Portfolio.

Securities may be sold for a variety of reasons, such as to effect a change in asset allocation, to secure gains or limit
losses, or to re-deploy assets to more promising opportunities.

As a fund that invests both in equity and fixed income securities, the Portfolio risk of loss and share price fluctuation
(and potential for gain) will tend to be less than funds investing primarily in equity securities and more than funds investing
primarily in fixed income securities. Of course, both equity and fixed income securities may decline in value.

Equity securities may decline because the stock market as a whole declines, or because of reasons specific to the company,
such as disappointing earnings or changes in its competitive environment. The Portfolio's level of risk will increase if a
significant portion of the Portfolio is invested in securities of small-cap companies. Like other fixed income funds, the fixed
income portion of the Portfolio is subject to changes in market interest rates and changes in the credit quality of specific
issuers. Because of the Portfolio's focus on fixed income securities with intermediate to long maturities, changes in market
interest rates may cause substantial declines in the Portfolio's share price. The Portfolio's level of risk will increase if a
significant portion of the Portfolio is invested in lower-rated high yield bonds or in foreign securities. The Portfolio's
investments in mortgage-backed and asset-backed securities carry special risks in the event of declining interest rates which would
cause prepayments to increase, and the value of the securities to decrease.

Equity Securities. Investments in non-U.S. dollar denominated stocks may be made solely for capital appreciation or solely
for income or any combination of both for the purpose of achieving a higher overall return. Stocks of companies in developing
countries may be included. The equity portion of the Portfolio also may include convertible securities, preferred stocks and
warrants.

Investments in small companies involve both higher risk and greater potential for appreciation. These companies may have
limited product lines, markets and financial resources, or they may be dependent on a small or inexperienced management group. In
addition, their securities may trade less frequently and move more abruptly than securities of larger companies.

Fixed Income Securities. Bond investments may include U.S. Treasury and agency issues, corporate debt securities (including
non-investment grade "junk" bonds), mortgage-backed securities (including derivatives such as collateralized mortgage obligations and
stripped mortgage-backed securities) and asset-backed securities. While the weighted average maturities of each component of the
fixed income portion (i.e., investment grade, high yield, etc.) of the Portfolio will differ based on the Sub-advisor's view of
market conditions, the weighted average maturity of the fixed income portion as a whole (except for the cash reserves component) is
expected to be in the range of 7 to 12 years. The cash reserves component will consist of liquid short-term investments of one year
or less rated within the top two credit categories by at least one established rating organization or, if unrated, of equivalent
investment quality as determined by the Sub-advisor. In addition, the Sub-advisor may invest the Portfolio's cash reserves in money
market mutual funds that it manages.

Other Investments:

The Portfolio may enter into stock index, interest rate or currency futures contracts (or options thereon) for hedging
purposes or to provide an efficient means of adjusting the Portfolio's exposure to the equity markets. The Portfolio may write
covered call options and purchase put and call options on foreign currencies, securities, and financial indices. The Portfolio may
invest up to 10% of its total assets in hybrid instruments, which combine the characteristics of futures, options and securities. To
the extent the Portfolio uses these investments, it will be exposed to additional volatility and potential losses. The Portfolio may
enter into forward foreign currency exchange contracts in connection with its foreign investments.

For an additional discussion of these other investments and their risks, see this Prospectus under "Certain Risk Factors and
Investment Methods."

Temporary Investments. As noted above, up to 20% of the fixed income portion of the Portfolio normally may consist of cash
reserves. In addition, the Portfolio may maintain cash reserves without limitation for temporary defensive purposes. While the
Portfolio is in a defensive position, the opportunity to achieve its investment objective of a high level of total return may be
limited. Cash reserves also provide flexibility in meeting redemptions and paying expenses.

AST T. ROWE PRICE GLOBAL BOND PORTFOLIO:

Investment Objective: The investment objective of the Portfolio is to provide high current income and capital growth by investing in
high-quality, foreign and U.S. government bonds.

Principal Investment Policies and Risks:

To achieve its objectives, the Portfolio will invest at least 65% of its total assets in bonds issued or guaranteed by the
U.S. or foreign governments or their agencies and by foreign authorities, provinces and municipalities. Corporate bonds, mortgage
and asset-backed securities of U.S. and foreign issuers may also be purchased. The Portfolio seeks to moderate price fluctuation by
actively managing its maturity structure and currency exposure. The Sub-advisor bases its investment decisions on fundamental market
factors, currency trends, and credit quality. The Portfolio generally invests in countries where the combination of fixed-income
returns and currency exchange rates appears attractive, or, if the currency trend is unfavorable, where the Sub-advisor believes that
the currency risk can be minimized through hedging.

Although the Portfolio expects to maintain an intermediate-to-long weighted average maturity, there are no maturity
restrictions on the overall portfolio or on individual securities. The Portfolio may and frequently does engage in foreign currency
transactions such as forward foreign currency exchange contracts, hedging its foreign currency exposure back to the dollar or against
other foreign currencies ("cross-hedging"). The Sub-advisor also attempts to reduce currency risks through diversification among
foreign securities and active management of currency exposures.

The Portfolio may also invest up to 20% of its assets in the aggregate in below investment-grade, high-risk bonds ("junk
bonds") and emerging market bonds. Some emerging market bonds, such as Brady Bonds, may be denominated in U.S. dollars. In
addition, the Portfolio may invest up to 30% of its assets in mortgage-backed (including derivatives, such as collateralized mortgage
obligations and stripped mortgage securities) and asset-backed securities.

Like any fixed income fund, the value of the Portfolio will fluctuate in response to changes in market interest rates and
the credit quality of particular companies. International fixed income investing, however, involves additional risks that can
increase the potential for losses. These additional risks include varying stages of economic and political development of foreign
countries, differing regulatory and accounting standards in non-U.S. markets, and higher transaction costs. Because a substantial
portion of the Portfolio's investments are denominated in foreign currencies, exchange rates are also likely to have a significant
impact on total Portfolio performance. For example, a rise in the U.S. dollar's value relative to the Japanese yen will decrease the
U.S. dollar value of a Japanese bond held in the Portfolio, even though the price of that bond in yen remains unchanged. Therefore,
because of these currency risks and the risks of investing in foreign securities generally, the Portfolio will involve a greater
degree of risk and share price fluctuation than a fund investing primarily in domestic fixed income securities, but ordinarily will
involve less risk than a fund investing exclusively in foreign fixed income securities. In addition, the Portfolio's focus on longer
maturity bonds will tend to cause greater fluctuations in value when interest rates change. The Portfolio's investments in
mortgage-backed and asset-backed securities could further result in increased volatility, as these securities are sensitive to
interest rate changes. Further, these securities carry special risks in the event of declining interest rates, which would cause
prepayments to increase, and the value of the securities to decrease.

Types of Debt Securities. The Portfolio's investments in debt securities may include securities issued or guaranteed by the
U.S. and foreign governments, their agencies, instrumentalities or political subdivisions, securities issued or guaranteed by
supranational organizations (e.g., European Investment Bank, InterAmerican Development Bank or the World Bank), bank or bank holding
company securities, foreign and domestic corporate debt securities, and commercial paper.

The Portfolio may invest in zero coupon securities, which are securities that are purchased at a discount from their face
value, but that do not make cash interest payments. Zero coupon securities are subject to greater fluctuation in market value as a
result of changing interest rates than debt obligations that make current cash interest payments.

The Portfolio may invest in Brady Bonds, which are used as a means of restructuring the external debt burden of certain
emerging countries. Even if the bonds are collateralized, they are often considered speculative investments because of the country's
credit history or other factors. The Portfolio may purchase the securities of certain foreign investment funds or trusts called
passive foreign investment companies. Such trusts have been the only or primary way to invest in certain countries. In addition to
bearing their proportionate share of the Trust's expenses, shareholders will also indirectly bear similar expenses of such trusts.

The Portfolio from time to time may invest in debt securities convertible into equities.

Nondiversified Investment Company. The Portfolio intends to select its investments from a number of country and market
sectors, and intends to have investments in securities of issuers from a minimum of three different countries (including the United
States). However, the Portfolio is considered a "nondiversified" investment company for purposes of the Investment Company Act of
1940. As such, the Portfolio may invest more than 5% of its assets in the fixed-income securities of individual foreign
governments. The Portfolio generally will not invest more than 5% of its assets in any individual corporate issuer, except with
respect to certain short-term investments. As a nondiversified fund, a price decline in any one of the Portfolio's holdings may have
a greater effect on the Portfolio's value than on the value of a fund that is more broadly diversified.

Other Investments:

The Portfolio may buy and sell futures contracts (and related options) for a number of reasons including: to manage exposure
to changes in interest rates, securities prices and currency exchange rates; as an efficient means of adjusting overall exposure to
certain markets; to earn income; to protect the value of portfolio securities; and to adjust the portfolio's duration. The Portfolio
may purchase or write call and put options on securities, financial indices, and foreign currencies. The Portfolio may invest up to
10% of its total assets in hybrid instruments, which combine the characteristics of futures, options and securities.

Additional information on the securities in which the Portfolio may invest and their risks in included below under "Certain
Risk Factors and Investment Methods."

Temporary Investments. To protect against adverse movements of interest rates, the Portfolio may invest without limit in
short-term obligations denominated in U.S. and foreign currencies such as certain bank obligations, commercial paper, short-term
government and corporate obligations, repurchase agreements and money market mutual funds managed by the Sub-advisor. Cash reserves
also provide flexibility in meeting redemptions and paying expenses. While the Portfolio is in a defensive position, the opportunity
to achieve its investment objective of high current income and capital growth may be limited.

AST FEDERATED HIGH YIELD PORTFOLIO:

Investment Objective: The investment objective of the Portfolio is to seek high current income by investing primarily in a
diversified portfolio of fixed income securities. The fixed income securities in which the Portfolio intends to invest are
lower-rated corporate debt obligations.

Principal Investment Policies and Risks:

The Portfolio will invest at least 65% of its assets in lower-rated corporate fixed income securities ("junk bonds"). These
fixed income securities may include preferred stocks, convertible securities, bonds, debentures, notes, equipment lease certificates
and equipment trust certificates. The securities in which the Portfolio invests usually will be rated below the three highest rating
categories of a nationally recognized rating organization (AAA, AA, or A for Standard & Poor's Corporation ("Standard & Poor's") and
Aaa, Aa or A for Moody's Investors Service, Inc. ("Moody's")) or, if unrated, are of comparable quality. There is no lower limit on
the rating of securities in which the Portfolio may invest. The Portfolio may purchase or hold securities rated in the lowest rating
category or securities in default.

A fund that invests primarily in lower-rated fixed income securities will be subject to greater risk and share price
fluctuation than a typical fixed income fund, and may be subject to an amount of risk that is comparable to or greater than many
equity funds. Lower-rated securities will usually offer higher yields than higher-rated securities, but with more risk of loss of
principal and interest. This is because of the reduced creditworthiness of the securities and the increased risk of default. Like
equity securities, lower-rated fixed income securities tend to reflect short-term corporate and market developments to a greater
extent than higher-rated fixed income securities, which tend to react primarily to fluctuations in market interest rates.

An economic downturn may adversely affect the value of some lower-rated bonds. Such a downturn may especially affect highly
leveraged companies or companies in industries sensitive to market cycles, where deterioration in a company's cash flow may impair
its ability to meet its obligations under the bonds. From time to time, issuers of lower-rated bonds may seek or may be required to
restructure the terms and conditions of the securities they have issued. As a result of these restructurings, the value of the
securities may fall, and the Portfolio may bear legal or administrative expenses in order to maximize recovery from an issuer.

The secondary trading market for lower-rated bonds is generally less liquid than the secondary trading market for
higher-rated bonds. Adverse publicity and the perception of investors relating to these securities and their issuers, whether or not
warranted, may also affect the price or liquidity of lower-rated bonds. For an additional discussion of the risks involved in
lower-rated securities, see this Prospectus under "Certain Risk Factors and Investment Methods."

Methods by which the Sub-advisor attempts to reduce the risks involved in lower-rated securities include:

Credit Research. The Sub-advisor will perform its own credit analysis in addition to using rating organizations and
other sources, and may have discussions with the issuer's management or other investment analysts regarding issuers. The
Sub-advisor's credit analysis will consider the issuer's financial soundness, its responsiveness to changing business and market
conditions, and its anticipated cash flow and earnings. In evaluating an issuer, the Sub-advisor places special emphasis on the
estimated current value of the issuer's assets rather than their historical cost.

Diversification. The Sub-advisor invests in securities of many different issuers, industries, and economic sectors
to reduce portfolio risk.

Economic Analysis. The Sub-advisor will analyze current developments and trends in the economy and in the financial
markets.

Other Investments:

Under normal circumstances, the Portfolio will not invest more than 10% of its total assets in equity securities. The
Portfolio may own zero coupon bonds or pay-in-kind securities, which are fixed income securities that do not make regular cash
interest payments. The prices of these securities are generally more sensitive to changes in market interest rates than are
conventional bonds. Additionally, interest on zero coupon bonds and pay-in-kind securities must be reported as taxable income to
the Portfolio even though it receives no cash interest until the maturity of such securities.

The Portfolio may invest in securities issued by real estate investment trusts, which are companies that hold real estate or
mortgage investments. Usually, real estate investment trusts are not diversified, and, therefore, are subject to the risks of a
single project or a small number of projects. They also may be heavily dependent on cash flows from the property they own, may bear
the risk of defaults on mortgages, and may be affected by changes in the value of the underlying property.

Temporary Investments. The Portfolio may also invest all or a part of its assets temporarily in cash or cash items for
defensive purposes during times of unusual market conditions or to maintain liquidity. Cash items may include certificates of
deposit and other bank obligations; commercial paper (generally lower-rated); short-term notes; obligations issued or guaranteed by
the U.S. government or its agencies or instrumentalities; and repurchase agreements. While the Portfolio is in a defensive position,
the opportunity to achieve its investment objective of high current income will be limited.

AST LORD ABBETT BOND-DEBENTURE PORTFOLIO:

Investment Objective: The investment objective of the Portfolio is to seek high current income and the opportunity for capital
appreciation to produce a high total return.

Principal Investment Policies and Risks:

To pursue its objective, the Portfolio normally invests in high yield and investment grade debt securities, securities
convertible into common stock and preferred stocks. Under normal circumstances, the Portfolio invests at least 65% of its total
assets in fixed income securities of various types. At least 20% of the Portfolio's assets must be invested in any combination of
investment grade debt securities, U.S. Government securities and cash equivalents.

The Sub-advisor believes that a high total return (current income and capital growth) may be derived from an actively
managed, diversified portfolio of investments. Through portfolio diversification, credit analysis and attention to current
developments and trends in interest rates and economic conditions, the Sub-advisor attempts to reduce the Portfolio's risks. The
Sub-advisor seeks unusual values, using fundamental, "bottom-up" research (i.e., research on individual companies rather than the
economy as a whole) to identify undervalued securities. The Portfolio may find good value in high yield securities, sometimes called
"lower-rated bonds" or "junk bonds," and frequently may have more than half of its assets invested in those securities. Higher yield
on debt securities can occur during periods of high inflation when the demand for borrowed money is high. Also, buying lower-rated
bonds when the Sub-advisor believes their credit risk is likely to decrease may generate higher returns.

The Portfolio may also make significant investments in mortgage-backed securities. Although the Portfolio expects to
maintain a weighted average maturity in the range of seven to nine years, there are no maturity restrictions on the overall portfolio
or on individual securities.

As a fund that invests primarily in fixed income securities, the Portfolio is subject to the general risks and
considerations associated with investing in such securities. The value of an investment in the Portfolio will change as market
interest rates fluctuate. When interest rates rise, the prices of debt securities are likely to decline, and when interest rates
fall, the prices of debt securities tend to rise. The Portfolio generally maintains a relatively long average maturity, and
longer-term debt securities are usually more sensitive to interest rate changes. Put another way, the longer the maturity of a
security, the greater the effect a change in interest rates is likely to have on its price.

There is also the risk that an issuer of a debt security will fail to make timely payments of principal or interest to the
Portfolio, a risk that will be relatively high because the Portfolio will likely have substantial junk bond investments. The
Portfolio may sustain losses if an issuer defaults as to principal and/or interest payments after the Portfolio purchases its
securities. In addition, the market for high yield securities generally is less liquid than the market for higher-rated securities.
In addition, the risk to which the Portfolio is subject may be high relative to other fixed income funds because of the Portfolio's
investment in convertible securities, which tend to be more volatile than non-convertible debt securities. In addition to the risks
associated with fixed income securities generally, mortgage-backed securities are subject to the additional risk that early
repayments will reduce the Portfolio's return on such securities.

Other Investments:

The Portfolio may invest up to 20% of its net assets in foreign securities (securities primarily traded in countries outside
the United States), and may enter into forward foreign currency contracts in connection with these foreign investments.

Additional information on the types of securities and instruments in which the Portfolio may invest and their risks in
included in this Prospectus under "Certain Risk Factors and Investment Methods."

Temporary Investments. While typically fully invested, the Portfolio may at times increase its investments in cash and
short-term debt securities for defensive purposes. The Portfolio may also invest in short-term fixed income securities to invest
uncommitted cash balances or to maintain liquidity to meet shareholder redemptions. Short-term securities include obligations of the
U.S. Government and its agencies and instrumentalities, commercial paper, and bank certificates of deposit and bankers' acceptances.
When the Portfolio increases its cash position, the opportunity to achieve its investment objective of high total return will be
limited.

AST PIMCO TOTAL RETURN BOND PORTFOLIO:

Investment Objective: The investment objective of the Portfolio is to seek to maximize total return, consistent with preservation of
capital and prudent investment management.

Principal Investment Policies and Risks:

The Portfolio will invest at least 65% of its assets in the following types of fixed income securities;

o securities issued or guaranteed by the U.S. Government, its agencies or government-sponsored enterprises;
o corporate debt securities of U.S. and non-U.S. issuers, including convertible securities and corporate commercial paper;
o mortgage and other asset-backed securities;
o inflation-indexed bonds issued by both governments and corporations;
o structured notes, including hybrid or "indexed" securities, event-linked bonds and loan participations;
o delayed funding loans and revolving credit securities;
o bank certificates of deposit, fixed time deposits and bankers' acceptances;
o repurchase agreements and reverse repurchase agreements;
o debt securities issued by state or local governments and their agencies and government-sponsored enterprises;
o obligations of foreign governments or their subdivisions, agencies and government-sponsored enterprises; and
obligations of international agencies or supranational entities.

Portfolio holdings will be concentrated in areas of the bond market (based on quality, sector, interest rate or maturity) that the
Sub-advisor believes to be relatively undervalued. In selecting fixed income securities, the Sub-advisor uses economic forecasting,
interest rate anticipation, credit and call risk analysis, foreign currency exchange rate forecasting, and other securities selection
techniques. The proportion of the Portfolio's assets committed to investment in securities with particular characteristics (such as
maturity, type and coupon rate) will vary based on the Sub-advisor's outlook for the U.S. and foreign economies, the financial
markets, and other factors. The management of duration (a measure of a fixed income security's expected life that incorporates its
yield, coupon interest payments, final maturity and call features into one measure) is one of the fundamental tools used by the
Sub-advisor.

The Portfolio will invest in fixed-income securities of varying maturities. The average portfolio duration of the Portfolio
generally will vary within a three- to six-year time frame based on the Sub-advisor's forecast for interest rates. The Portfolio may
invest up to 10% of its assets in fixed income securities that are rated below investment grade ("junk bonds") but are rated B or
higher by Moody's Investors Services, Inc. ("Moody's") or Standard & Poor's Corporation ("S&P") (or, if unrated, determined by the
Sub-advisor to be of comparable quality).

Generally, over the long term, the return obtained by a portfolio investing primarily in fixed income securities such as the
Portfolio is not expected to be as great as that obtained by a portfolio investing in equity securities. At the same time, the risk
and price fluctuation of a fixed income fund is expected to be less than that of an equity portfolio, so that a fixed income
portfolio is generally considered to be a more conservative investment. However, the Portfolio can and routinely does invest in
certain complex fixed income securities (including various types of mortgage-backed and asset-backed securities) and engage in a
number of investment practices (including futures, options, swaps and dollar rolls) as described below, that many other fixed income
funds do not utilize. These investments and practices are designed to increase the Portfolio's return or hedge its investments, but
may increase the risk to which the Portfolio is subject.

Like other fixed income funds, the Portfolio is subject to market risk. Bond values fluctuate based on changes in interest
rates, market conditions, investor confidence and announcements of economic, political or financial information. Generally, the
value of fixed income securities will change inversely with changes in market interest rates. As interest rates rise, market value
tends to decrease. This risk will be greater for long-term securities than for short-term securities. Certain mortgage-backed and
asset-backed securities and derivative instruments in which the Portfolio may invest may be particularly sensitive to changes in
interest rates. The Portfolio is also subject to credit risk, which is the possibility that an issuer of a security (or a
counterparty to a derivative contract) will default or become unable to meet its obligation. Generally, the lower the rating of a
security, the higher its degree of credit risk.

The following paragraphs describe some specific types of fixed-income investments that the Portfolio may invest in, and some
of the investment practices that the Portfolio will engage in. More information about some of these investments, including futures,
options and mortgage-backed and asset-backed securities, is included below under "Certain Risk Factors and Investment Methods."

U.S. Government Securities. The Portfolio may invest in various types of U.S. Government securities, including those that
are supported by the full faith and credit of the United States; those that are supported by the right of the issuing agency to
borrow from the U.S. Treasury; those that are supported by the discretionary authority of the U.S. Government to purchase the
agency's obligations; and still others that are supported only by the credit of the instrumentality.

Corporate Debt Securities. Corporate debt securities include corporate bonds, debentures, notes and other similar
instruments, including convertible securities and preferred stock. Debt securities may be acquired with warrants attached. The rate
of return or return of principal on some debt obligations may be linked or indexed to exchange rates between the U.S. dollar and a
foreign currency or currencies.

While the Sub-advisor may regard some countries or companies as favorable investments, pure fixed income opportunities may
be unattractive or limited due to insufficient supply or legal or technical restrictions. In such cases, the Portfolio may consider
equity securities or convertible bonds to gain exposure to such investments.

Variable and Floating Rate Securities. Variable and floating rate securities provide for a periodic adjustment in the
interest rate paid on the obligations. The interest rates on these securities are tied to other interest rates, such as money-market
indices or Treasury bill rates, and reset periodically. While these securities provide the Portfolio with a certain degree of
protection against losses caused by rising interest rates, they will cause the Portfolio's interest income to decline if market
interest rates decline.

Inflation-Indexed Bonds. Inflation-indexed bonds are fixed income securities whose principal value is periodically adjusted
according to the rate of inflation. The interest rate on these bonds is fixed at issuance, and is generally lower than the interest
rate on typical bonds. Over the life of the bond, however, this interest will be paid based on a principal value that has been
adjusted for inflation. Repayment of the adjusted principal upon maturity may be guaranteed, but the market value of the bonds is
not guaranteed, and will fluctuate. The Portfolio may invest in inflation-indexed bonds that do not provide a repayment guarantee.
While these securities are expected to be protected from long-term inflationary trends, short-term increases in inflation may lead to
losses.

Event-Linked Bonds. Event-linked bonds are fixed income securities for which the return of principal and payment of
interest is contingent upon the non-occurrence of a specific "trigger" event, such as a hurricane, earthquake or other physical or
weather-related phenomenon. Some event-linked bonds are commonly referred to as "catastrophe bonds." If the trigger event occurs,
the Portfolio may lose all or a portion of the amount it invested in the bond. Event-linked bonds often provide for an extension of
maturity to process and audit loss claims where a trigger event has, or possibly has, occurred. An extension of maturity may
increase volatility. Event-linked bonds may also expose the Portfolio to certain unanticipated risks including credit risk, adverse
regulatory or jurisdictional interpretations, and adverse tax consequences. Event-linked bonds may also be subject to liquidity risk.

Mortgage-Related and Other Asset-Backed Securities. The Portfolio may invest all of its assets in mortgage-backed and other
asset-backed securities, including collateralized mortgage obligations. The value of some mortgage-backed and asset-backed
securities in which the Portfolio invests may be particularly sensitive to changes in market interest rates.

Reverse Repurchase Agreements and Dollar Rolls. In addition to entering into reverse repurchase agreements (as described
below under "Certain Risk Factors and Investment Methods"), the Portfolio may also enter into dollar rolls. In a dollar roll, the
Portfolio sells mortgage-backed or other securities for delivery in the current month and simultaneously contracts to purchase
substantially similar securities on a specified future date. The Portfolio forgoes principal and interest paid on the securities
sold in a dollar roll, but the Portfolio is compensated by the difference between the sales price and the lower price for the future
purchase, as well as by any interest earned on the proceeds of the securities sold. The Portfolio also could be compensated through
the receipt of fee income. Reverse repurchase agreements and dollar rolls can be viewed as collateralized borrowings and, like other
borrowings, will tend to exaggerate fluctuations in Portfolio's share price and may cause the Portfolio to need to sell portfolio
securities at times when it would otherwise not wish to do so.

Foreign Securities. The Portfolio may invest up to 20% of its assets in securities denominated in foreign currencies and
may invest beyond this limit in U.S. dollar-denominated securities of foreign issuers. The Portfolio may invest up to 10% of its
assets in securities of issuers based in developing countries (as determined by the Sub-advisor). The Portfolio may buy and sell
foreign currency futures contracts and options on foreign currencies and foreign currency futures contracts, and enter into forward
foreign currency exchange contracts for the purpose of hedging currency exchange risks arising from the Portfolio's investment or
anticipated investment in securities denominated in foreign currencies.

Short Sales "Against the Box." The Portfolio may sell securities short "against the box." For a discussion of this
practice, see this Prospectus under "Certain Risk Factors and Investment Methods."

Derivative Instruments. The Portfolio may purchase and write call and put options on securities, securities indices and on
foreign currencies. The Portfolio may invest in interest rate futures contracts, stock index futures contracts and foreign currency
futures contracts and options thereon that are traded on U.S. or foreign exchanges or boards of trade. The Portfolio may also enter
into swap agreements with respect to foreign currencies, interest rates and securities indices. The Portfolio may use these
techniques to hedge against changes in interest rates, currency exchange rates or securities prices or as part of its overall
investment strategy.

For a discussion of futures and options and their risks, see this Prospectus under "Certain Risk Factors and Investment
Methods." The Portfolio's investments in swap agreements are described directly below.

Swap Agreements. The Portfolio may enter into interest rate, index and currency exchange rate swap agreements for the
purposes of attempting to obtain a desired return at a lower cost than if the Portfolio had invested directly in an instrument that
yielded the desired return. Swap agreements are two-party contracts entered into primarily by institutional investors for periods
ranging from a few weeks to more than one year. In a standard "swap" transaction, the two parties agree to exchange the returns (or
differentials in rates of return) earned or realized on particular investments or instruments. The returns to be exchanged between
the parties are calculated with respect to a "notional amount," i.e., a specified dollar amount that is hypothetically invested at a
particular interest rate, in a particular foreign currency, or in a "basket" of securities representing a particular index. Commonly
used swap agreements include interest rate caps, under which, in return for a premium, one party agrees to make payments to the other
to the extent that interest rates exceed a specified rate or "cap"; interest floors, under which, in return for a premium, one party
agrees to make payments to the other to the extent that interest rates fall below a specified level or "floor"; and interest rate
collars, under which a party sells a cap and purchases a floor or vice versa in an attempt to protect itself against interest rate
movements exceeding given minimum or maximum levels.

Under most swap agreements entered into by the Portfolio, the parties' obligations are determined on a "net basis."
Consequently, the Portfolio's obligations (or rights) under a swap agreement will generally be equal only to a net amount based on
the relative values of the positions held by each party.

Whether the Portfolio's use of swap agreements will be successful will depend on the sub-advisor's ability to predict that
certain types of investments are likely to produce greater returns than other investments. Moreover, the Portfolio may not receive
the expected amount under a swap agreement if the other party to the agreement defaults or becomes bankrupt. The swaps market is
relatively new and is largely unregulated.

AST PIMCO LIMITED MATURITY BOND PORTFOLIO:

Investment Objective: The investment objective of the Portfolio is to seek to maximize total return, consistent with preservation of
capital and prudent investment management.

Principal Investment Policies and Risks:

The Portfolio will invest at least 65% of its assets in the following types of fixed income securities;

Portfolio holdings will be concentrated in areas of the bond market (based on quality, sector, interest rate or maturity)
that the Sub-advisor believes to be relatively undervalued. In selecting fixed income securities, the Sub-advisor uses economic
forecasting, interest rate anticipation, credit and call risk analysis, foreign currency exchange rate forecasting, and other
securities selection techniques. The proportion of the Portfolio's assets committed to investment in securities with particular
characteristics (such as maturity, type and coupon rate) will vary based on the Sub-advisor's outlook for the U.S. and foreign
economies, the financial markets, and other factors. The management of duration (a measure of a fixed income security's expected
life that incorporates its yield, coupon interest payments, final maturity and call features into one measure) is one of the
fundamental tools used by the Sub-advisor.

The Portfolio will invest in fixed-income securities of varying maturities. The average portfolio duration of the Portfolio
generally will vary within a one- to three-year time frame based on the Sub-advisor's forecast for interest rates. The Portfolio may
invest up to 10% of its assets in fixed income securities that are rated below investment grade ("junk bonds") but are rated B or
higher by Moody's Investors Services, Inc. ("Moody's") or Standard & Poor's Corporation ("S&P") (or, if unrated, determined by the
Sub-advisor to be of comparable quality).

Generally, over the long term, the return obtained by a portfolio investing primarily in fixed income securities such as the
Portfolio is not expected to be as great as that obtained by a portfolio investing in equity securities. At the same time, the risk
and price fluctuation of a fixed income fund is expected to be less than that of an equity portfolio, so that a fixed income
portfolio is generally considered to be a more conservative investment. However, the Portfolio can and routinely does invest in
certain complex fixed income securities (including various types of mortgage-backed and asset-backed securities) and engage in a
number of investment practices (including futures, swaps and dollar rolls) as described below, that many other fixed income funds do
not utilize. These investments and practices are designed to increase the Portfolio's return or hedge its investments, but may
increase the risk to which the Portfolio is subject.

Like other fixed income funds, the Portfolio is subject to market risk. Bond values fluctuate based on changes in interest
rates, market conditions, investor confidence and announcements of economic, political or financial information. Generally, the
value of fixed income securities will change inversely with changes in market interest rates. As interest rates rise, market value
tends to decrease. This risk will be greater for long-term securities than for short-term securities. Therefore, the Portfolio's
share price is expected to fluctuate less than the AST PIMCO Total Return Bond Portfolio, because its average duration will be
shorter. Certain mortgage-backed and asset-backed securities and derivative instruments in which the Portfolio may invest may be
particularly sensitive to changes in interest rates. The Portfolio is also subject to credit risk, which is the possibility that an
issuer of a security (or a counterparty to a derivative contract) will default or become unable to meet its obligation. Generally,
the lower the rating of a security, the higher its degree of credit risk.

Catastrophe Bonds. Catastrophe bonds are fixed income securities for which the return of principal and payment of interest
is contingent upon the non-occurrence of a specific "trigger" event. The trigger event may be, for example, a hurricane or an
earthquake in a specific geographic region that causes losses exceeding a specific amount. If the trigger event occurs, the
Portfolio may lose all or a portion of the amount it invested in the bond. Catastrophe bonds may also expose the Portfolio to
certain other risks, including default, adverse regulatory interpretation, and adverse tax consequences.

Mortgage-Related and Other Asset-Backed Securities. The Portfolio may invest all of its assets in mortgage-backed and other
asset-backed securities, including collateralized mortgage obligations and stripped mortgage-backed securities. The value of some
mortgage-backed and asset-backed securities in which the Portfolio invests may be particularly sensitive to changes in market
interest rates.

Foreign Securities. The Portfolio may invest up to 20% of its assets in securities denominated in foreign currencies and
may invest beyond this limit in U.S. dollar-denominated securities of foreign issuers. The Portfolio may buy and sell foreign
currency futures contracts and options on foreign currencies and foreign currency futures contracts, and enter into forward foreign
currency exchange contracts for the purpose of hedging currency exchange risks arising from the Portfolio's investment or anticipated
investment in securities denominated in foreign currencies.

Short Sales "Against the Box." The Portfolio may sell securities short "against the box." For a discussion of this
practice, see this Prospectus under "Certain Risk Factors and Investment Methods."

AST Money Market Portfolio:

Investment Objective: The investment objective of the Portfolio is to seek high current income and maintain high levels of liquidity.

Principal Investment Policies and Risks:

As a money market fund, the Portfolio seeks to maintain a stable net asset value of $1.00 per share. In other words, the
Portfolio attempts to operate so that shareholders do not lose any of the principal amount they invest in the Portfolio. Of course,
there can be no assurance that the Portfolio will achieve its goal of a stable net asset value, and shares of the Portfolio are
neither insured nor guaranteed by the U.S. government or any other entity. For instance, the issuer or guarantor of a portfolio
security or the other party to a contract could default on its obligation, and this could cause the Portfolio's net asset value to
fall below $1. In addition, the income earned by the Portfolio will fluctuate based on market conditions and other factors.

Under the regulatory requirements applicable to money market funds, the Portfolio must maintain a weighted average portfolio
maturity of not more than 90 days and invest in high quality U.S. dollar-denominated securities that have effective maturities of not
more than 397 days. In addition, the Portfolio will limit its investments to those securities that, in accordance with guidelines
adopted by the Trustees of the Trust, present minimal credit risks. The Portfolio will not purchase any security (other than a
United States Government security) unless:

o if rated by only one nationally recognized statistical rating organization (such as Moody's and Standard & Poor's), such
organization has rated it with the highest rating assigned to short-term debt securities;
o if rated by more than one nationally recognized statistical rating organization, at least two rating organizations have
rated it with the highest rating assigned to short-term debt securities; or
o it is not rated, but is determined to be of comparable quality in accordance with procedures noted above.

These standards must be satisfied at the time an investment is made. If the quality of the investment later declines, the Portfolio
may continue to hold the investment, subject in certain circumstances to a finding by the Directors that disposing of the investment
would not be in the Portfolio's best interest.

Subject to the above requirements, the Portfolio will invest in one or more of the types of investments described below.

United States Government Obligations. The Portfolio may invest in obligations of the U.S. Government and its agencies and
instrumentalities either directly or through repurchase agreements. U.S. Government obligations include: (i) direct obligations
issued by the United States Treasury such as Treasury bills, notes and bonds; and (ii) instruments issued or guaranteed by
government-sponsored agencies acting under authority of Congress. Some U.S. Government Obligations are supported by the full faith
and credit of the U.S. Treasury; others are supported by the right of the issuer to borrow from the Treasury; others are supported by
the discretionary authority of the U.S. Government to purchase the agency's obligations; still others are supported only by the
credit of the agency. There is no assurance that the U.S. Government will provide financial support to one of its agencies if it is
not obligated to do so by law.

Bank Obligations. The Portfolio may invest in high quality United States dollar-denominated negotiable certificates of
deposit, time deposits and bankers' acceptances of U.S. and foreign banks, savings and loan associations and savings banks meeting
certain total asset minimums. The Portfolio may also invest in obligations of international banking institutions designated or
supported by national governments to promote economic reconstruction, development or trade between nations (e.g., the European
Investment Bank, the Inter-American Development Bank, or the World Bank). These obligations may be supported by commitments of their
member countries, and there is no assurance these commitments will be undertaken or met.

Commercial Paper; Bonds. The Portfolio may invest in high quality commercial paper and corporate bonds issued by United
States corporations. The Portfolio may also invest in bonds and commercial paper of foreign issuers if the obligation is U.S.
dollar-denominated and is not subject to foreign withholding tax.

Asset-Backed Securities. As may be permitted by current laws and regulations, the Portfolio may invest in asset-backed
securities up to 10% of its net assets.

Synthetic Instruments. As may be permitted by current laws and regulations and if expressly permitted by the Directors of
the Company, the Portfolio may invest in certain synthetic instruments. Such instruments generally involve the deposit of
asset-backed securities in a trust arrangement and the issuance of certificates evidencing interests in the trust. The Sub-advisor
will review the structure of synthetic instruments to identify credit and liquidity risks and will monitor such risks.

Foreign Securities. Foreign investments must be denominated in U.S. dollars and may be made directly in securities of
foreign issuers or in the form of American Depositary Receipts and European Depositary Receipts.

For more information on certain of these investments, see this Prospectus under "Certain Risk Factors and Investment
Methods."

PORTFOLIO TURNOVER:

Each Portfolio may sell its portfolio securities, regardless of the length of time that they have been held, if the
Sub-advisor and/or the Investment Manager determines that it would be in the Portfolio's best interest to do so. It may be
appropriate to buy or sell portfolio securities due to economic, market, or other factors that are not within the Sub-advisor's or
Investment Manager's control. Such transactions will increase a Portfolio's "portfolio turnover." A 100% portfolio turnover rate
would occur if all of the securities in a portfolio of investments were replaced during a given period.

Although turnover rates may vary substantially from year to year, it is anticipated that the following Portfolios may
regularly have annual rates of turnover exceeding 100%:

AST Founders Passport Portfolio
AST Scudder Japan Portfolio
AST Janus Overseas Growth Portfolio
AST American Century International Growth Portfolio
AST American Century International Growth Portfolio II
AST Janus Small-Cap Growth Portfolio
AST Scudder Small-Cap Growth Portfolio
AST Goldman Sachs Small-Cap Value Portfolio
AST Janus Mid-Cap Growth Portfolio
AST Neuberger Berman Mid-Cap Growth Portfolio
AST Neuberger Berman Mid-Cap Value Portfolio
AST Alliance Growth Portfolio
AST Marsico Capital Growth Portfolio
AST JanCap Growth Portfolio
AST Janus Strategic Value Portfolio
AST Alliance/Bernstein Growth + Value Portfolio*
AST Cohen & Steers Realty Portfolio
AST T. Rowe Price Global Bond Portfolio
AST Lord Abbett Bond-Debenture Portfolio
AST PIMCO Total Return Bond Portfolio
AST PIMCO Limited Maturity Bond Portfolio

A high rate of portfolio turnover involves correspondingly higher brokerage commission expenses and other transaction costs,
which are borne by a Portfolio and will reduce its performance.

*Portfolio turnover for the growth portion of the Portfolio may exceed 100%.

NET ASSET VALUE:

The net asset value per share ("NAV") of each Portfolio is determined as of the close of the New York Stock Exchange (the
"NYSE") (normally 4:00 p.m. Eastern Time) on each day that the NYSE is open for business. NAV is determined by dividing the value of
a Portfolio's total assets, less any liabilities, by the number of total shares of that Portfolio outstanding. In general, the
assets of each Portfolio (except the AST Money Market Portfolio) are valued on the basis of market quotations. However, in certain
circumstances where market quotations are not readily available or are believed to be inaccurate, assets are valued by methods that
are believed to accurately reflect their fair value. The assets of the AST Money Market Portfolio are valued by the amortized cost
method, which is intended to approximate market value. Because NAV is calculated and purchases may be made only on business days,
and because securities traded on foreign exchanges may trade on other days, the value of a Portfolio's investments may change on days
when shares cannot be purchased or redeemed.

PURCHASE AND REDEMPTION OF SHARES:

Purchases of shares of the Portfolios may be made only by separate accounts of Participating Insurance Companies for the
purpose of investing assets attributable to variable annuity contracts and variable life insurance policies ("contractholders"), or
by qualified plans. The separate accounts of the Participating Insurance Companies place orders to purchase and redeem shares of the
Trust based on, among other things, the amount of premium payments to be invested and the amount of surrender and transfer requests
to be effected on that day under the variable annuity contracts and variable life insurance policies. Orders are effected on days on
which the NYSE is open for trading. Orders received before 4:00 P.M. Eastern time are effected at the NAV determined as of 4:00 P.M.
Eastern Time on that same day. Orders received after 4:00 P.M. Eastern Time are effected at the NAV calculated the next business
day. Payment for redemptions will be made within seven days after the request is received. The Trust does not assess any fees,
either when it sells or when it redeems its securities. However, surrender charges, mortality and expense risk fees and other
charges may be assessed by Participating Insurance Companies under the variable annuity contracts or variable life insurance
policies. Please refer to the prospectuses for the variable annuity contracts and variable insurance policies for further
information on these fees.

As of the date of this Prospectus, American Skandia Life Assurance Corporation ("ASLAC") and Kemper Investors Life Insurance
Company are the only Participating Insurance Companies. The profit sharing plan covering employees of ASLAC and its affiliates,
which is a retirement plan qualified under Section 401(a) of the Internal Revenue Code of 1986, as amended, also may directly own
shares of the Trust. Certain conflicts of interest may arise as a result of investment in the Trust by various insurance companies
for the benefit of their contractholders and by various qualified plans. These conflicts could arise because of differences in the
tax treatment of the various investors, because of actions of the Participating Insurance Companies and/or the qualified plans, or
other reasons. The Trust does not currently expect that any material conflicts of interest will arise. Nevertheless, the Trustees
intend to monitor events in order to identify any material irreconcilable conflicts and to determine what action, if any, should be
taken in response to such conflicts. Should any conflict arise that would require a substantial amount of assets to be withdrawn
from the Trust, orderly portfolio management could be disrupted.

MANAGEMENT OF THE TRUST:

Investment Manager: American Skandia Investment Services, Incorporated ("ASISI"), One Corporate Drive, Shelton, Connecticut, acts as
Investment Manager to the Trust. ASISI has served as Investment Manager since 1992, and currently serves as Investment Manager to a
total of 73 investment company portfolios (including the Portfolios of the Trust). ASISI is an indirect wholly-owned subsidiary of
Skandia Insurance Company Ltd. ("Skandia"). Skandia is a Swedish company that owns, directly or indirectly, a number of insurance
companies in many countries. The predecessor to Skandia commenced operations in 1855.

The Trust's Investment Management Agreements with ASISI (the "Management Agreements") provide that ASISI will furnish each
applicable Portfolio with investment advice and administrative services subject to the supervision of the Board of Trustees and in
conformity with the stated policies of the applicable Portfolio. The Investment Manager has engaged Sub-advisors to conduct the
investment programs of each Portfolio, including the purchase, retention and sale of portfolio securities. The Investment Manager is
responsible for monitoring the activities of the Sub-advisors and reporting on such activities to the Trustees. The Investment
Manager must also provide, or obtain and supervise, the executive, administrative, accounting, custody, transfer agent and
shareholder servicing services that are deemed advisable by the Trustees.

The Trust has obtained an exemption from the Securities and Exchange Commission that permits ASISI, subject to approval by
the Board of Trustees of the Trust, to change sub-advisors for a Portfolio and to enter into new sub-advisory agreements, without
obtaining shareholder approval of the changes. This exemption (which is similar to exemptions granted to other investment companies
that are organized in a similar manner as the Trust) is intended to facilitate the efficient supervision and management of the
sub-advisors by ASISI and the Trustees.

Sub-advisors:

Founders Asset Management LLC ("Founders"), Founders Financial Center, 2930 East Third Avenue, Denver, Colorado 80206,
serves as Sub-advisor for the AST Founders Passport Portfolio. Founders and its predecessor companies have acted as investment
advisors since 1938, and serves as investment advisor to a number of other investment companies and private accounts. Founders
managed assets aggregating approximately $7.2 billion as of December 31, 2000.

Tracy P. Stouffer, a Vice President of Investments of Founders and a Chartered Financial Analyst, has been responsible for
the management of the AST Founders Passport Portfolio since July 1999. Before joining Founders, Ms. Stouffer was a vice president
and portfolio manager with Federated Global, Inc. from 1995 until July 1999.

Zurich Scudder Investments, Inc. ("Zurich Scudder") (formerly, Scudder Kemper Investments, Inc) , 345 Park Avenue, New York,
New York, serves as Sub-advisor of the AST Scudder Small-Cap Growth Portfolio and the AST Scudder Japan Portfolio. Zurich Scudder is
one of the largest investment managers in the country with more than $370 billion under management as of December 31, 2000 and has
been engaged in the management of investment funds for more than eighty years.

Peter Chin, CFA is the lead portfolio manager for the AST Scudder Small-Cap Growth Portfolio, and Roy C. McKay, CFA is the
other portfolio manager. Both have managed the Portfolio since June 1999. Mr. Chin is a Managing Director of Zurich Scudder and has
been with the firm since 1973. Mr. McKay is a Manager Director of Zurich Scudder and has been with the firm since 1988.

The day-to-day management of the AST Scudder Japan Portfolio is handled by Seung Kwak, lead portfolio manager, and Elizabeth
J. Allan, both of whom have managed the Portfolio since its inception in October 2000. Mr. Kwak began his investment career in 1985,
has been with Zurich Scudder since 1988, and is a Managing Director of Zurich Scudder. Ms. Allan began her investment career in
1982, joined Zurich Scudder in 1987, and is a Senior Vice President of Zurich Scudder.

A I M Capital Management, Inc. ("AIM"), 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173, serves as Sub-advisor for
the AST AIM International Equity Portfolio and the AST AIM Balanced Portfolio. AIM has acted as an investment advisor since 1986
and, together with its parent, A I M Advisors, Inc., advises or manages over 130 investment portfolios encompassing a broad range of
investment objectives. As of December 31, 2000, AIM managed approximately $170 billion in assets.

AIM uses a team approach to investment management. The members of the team responsible for the management of the AST AIM
International Equity Portfolio are A. Dale Griffin, III, Clas G. Olsson, Barrett K. Sides, and Jason Holzer. The members of the team
have managed the Portfolio since AIM became the Portfolio's Sub-Advisor in May 1999 (except for Mr. Holzer, who has been a manager of
the Portfolio since October 1999), and all (except for Mr. Holzer) are officers of AIM. Mr. Griffin, Senior Portfolio Manager, has
been associated with AIM and/or its affiliates since 1989. Mr. Olsson, Senior Portfolio Manager, has been associated with AIM and/or
its affiliates since 1994. Mr. Sides, Senior Portfolio Manager, has been associated with AIM and/or its affiliates since 1990. Mr.
Holzer, Senior Portfolio Manager, has been associated with AIM and/or its affiliates since 1996.

The members of the team responsible for the management of the AST AIM Balanced Portfolio are Claude C. Cody IV, Robert G.
Alley, Craig A. Smith, Meggan M. Walsh and Jan Friedli. The members of the team have managed the Portfolio since AIM became the
Portfolio's Sub-advisor in May 1999 (except for Mr. Friedli, who has been a manager of the Portfolio since October 1999), and all
(except for Mr. Friedli) are officers of AIM. Mr. Cody and Mr. Alley, Senior Portfolio Managers, have been associated with AIM
and/or its affiliates since 1992. Mr. Smith, Senior Portfolio Manager, has been associated with AIM and/or its affiliates since
1989. Ms. Walsh, Senior Portfolio Manager, has been associated with AIM and/or its affiliates since 1991. Mr. Friedli, Portfolio
Manager, has been associated with AIM and/or its affiliate since 1999. From 1997 to 1999, he was a global fixed-income portfolio
manager for Nicholas-Applegate Capital Management, and from 1994 to 1997, he was an international fixed-income trader and analyst for
Strong Capital Management.

Janus Capital Corporation ("Janus"), 100 Fillmore Street, Denver, Colorado 80206-4923, serves as Sub-advisor for the AST
Janus Overseas Growth Portfolio, the AST Janus Small-Cap Growth Portfolio, the AST Janus Mid-Cap Growth Portfolio, the AST JanCap
Growth Portfolio, and the AST Janus Strategic Value Portfolio. Janus serves as investment advisor to the Janus Funds, as well as
advisor or sub-advisor to several other mutual funds and individual, corporate, charitable and retirement accounts. As of December
31, 2000, Janus managed assets worth approximately $248.8 billion.

The portfolio managers responsible for management of the AST Janus Overseas Growth Portfolio are Helen Young Hayes, CFA and
Brent A. Lynn, CFA. Ms. Hayes has been managing the Portfolio since its inception, while Mr. Lynn has been managing the Portfolio
since January 2001. Ms. Hayes is an Executive Vice President of Janus and joined Janus in 1987. Mr. Lynn is a Vice President of
Janus and joined Janus in 1991.

The AST Janus Small-Cap Growth Portfolio is managed by William H. Bales. Mr. Bales has managed the Portfolio since Janus
became the Portfolio's Sub-advisor in January, 1999. Mr. Bales has been a Portfolio Manager with Janus since 1997 and a research
analyst since 1993. He joined Janus in 1991.

The portfolio manager responsible for management of the AST Janus Mid-Cap Growth Portfolio is Matthew A. Ankrum, CFA. Mr.
Ankrum, who has managed the Portfolio since its inception, joined Janus as an intern in June 1996 and became an equity research
analyst in August 1997.

The portfolio manager responsible for management of the AST JanCap Growth Portfolio is Scott W. Schoelzel. Mr. Schoelzel, a
Senior Portfolio Manager at Janus who has managed the Portfolio since August, 1997, joined Janus in January, 1994 as Vice President
of Investments.

The portfolio manager responsible for management of the AST Janus Strategic Value Portfolio is David C. Decker. Mr. Decker
has managed the Portfolio since its inception in October 2000. He joined Janus in 1992 as a research analyst and focused on
companies in the automotive and defense industries prior to becoming a portfolio manager in 1996.

American Century Investment Management, Inc. ("American Century"), American Century Tower, 4500 Main Street, Kansas City,
Missouri 64111, serves as Sub-advisor for the AST American Century International Growth Portfolio, the AST American Century
International Growth Portfolio II, the AST American Century Income & Growth Portfolio and the AST American Century Strategic Balanced
Portfolio. American Century has been providing investment advisory services to investment companies and institutional clients since
1958. As of December 31, 2000, American Century and its affiliates managed assets totaling approximately $103 billion.

American Century utilizes a team of portfolio managers, assistant portfolio managers and analysts acting together to manage
the assets of the Portfolios.

The portfolio manager members of the portfolio team responsible for management of the AST American Century International
Growth Portfolio and the AST American Century International Growth Portfolio II are Henrik Strabo and Mark S. Kopinski. Henrik
Strabo joined American Century in 1993 as an investment analyst, has been a portfolio manager member of the international team since
1994 and has managed the AST American Century International Growth Portfolio since its inception and the AST American Century
International Growth Portfolio II since American Century became the Portfolio's Sub-advisor in May 2000. Mark S. Kopinski, Vice
President and Portfolio Manager for American Century, rejoined American Century in April 1997 and has co-managed the AST American
Century International Growth Portfolio since that time and the AST American Century International Growth Portfolio II since American
Century became the Portfolio's Sub-advisor. From June 1995 to March 1997, Mr. Kopinski served as Vice President and Portfolio
Manager for Federated Investors, Inc.

The portfolio manager members of the portfolio team responsible for the day-to-day management of the AST American Century
Income & Growth Portfolio are John Schniedwind, Kurt Borgwardt, Jeffrey R. Tyler and William Martin. Mr. Schniedwind is Senior Vice
President and Group Leader -- Quantitative Equity for American Century, and has been with American Century since 1982. Mr. Borgwardt
is Vice President, Portfolio Manager and Director of Quantitative Equity Research for American Century, and has been with American
Century since 1990. Mr. Tyler, Senior Vice President and Portfolio Manager, joined American Century in 1988. Mr. Martin, Vice
President and Senior Portfolio Manager, joined American Century in 1989.

The portfolio manager members of the team responsible for the day-to-day management of the equity portion of the AST
American Century Strategic Balanced Portfolio are the same as the individuals noted above who manage the AST American Century Income
& Growth Portfolio. The fixed income portion of the AST American Century Strategic Balanced Portfolio is managed by a team of
portfolio managers with expertise in different areas of fixed income investing. The portfolio manager leader of the team responsible
for the day-to-day management of the fixed income portion of the Portfolio is Brian Howell. Mr. Howell joined American Century in
1987 as a research analyst and was promoted to his current position as portfolio manager in January 1994.

Massachusetts Financial Services Company ("MFS"), which is located at 500 Boylston Street, Boston, Massachusetts 02116,
serves as Sub-advisor for the AST MFS Global Equity Portfolio, the AST MFS Growth Portfolio, and the AST MFS Growth with Income
Portfolio. MFS and its predecessor organizations have a history of money management dating from 1924. As of December 31, 2000, the
net assets under the management of the MFS organization were approximately $140 billion.

The portfolio manager responsible for the management of the AST MFS Global Equity Portfolio is David R. Mannheim. Mr.
Mannheim, a Senior Vice President of MFS, has managed the Portfolio since its inception and has been employed by MFS in the
investment management area since 1988.

The portfolio managers responsible for the management of the AST MFS Growth Portfolio are Stephen Pesek and Thomas D.
Barrett. Mr. Pesek, a Senior Vice President of MFS, has managed the Portfolio since its inception and has been employed by MFS as a
portfolio manager since 1994. Mr. Barrett has managed the Portfolio since May 2000 and has been employed by MFS in the investment
management area since 1996.

The AST MFS Growth with Income Portfolio is managed by John D. Laupheimer and Mitchell D. Dynan. Both have managed the
Portfolio since its inception. Mr. Laupheimer is a Senior Vice President of MFS, and has been employed by MFS in the investment
management area since 1981. Mr. Dynan is also a Senior Vice President of MFS, and has been employed by MFS in the investment
management area since 1986.

Federated Investment Counseling ("Federated Investment"), Federated Investors Tower, Pittsburgh, Pennsylvania 15222-3779,
serves as Sub-advisor for the AST Federated Aggressive Growth Portfolio and the AST Federated High Yield Portfolio. Federated was
organized in 1989, and Federated and its affiliates serve as investment advisors to a number of investment companies and private
accounts. Total assets under management or administration by Federated and its affiliates as of December 31, 2000 were approximately
$179 billion.

Mark E. Durbiano is primarily responsible for the day-to-day management of the AST Federated High Yield Portfolio. Mr.
Durbiano, who has managed the Portfolio since it commenced operations in 1994, joined Federated Investment's parent company in 1982
and has been a Senior Vice President of an affiliate of Federated Investment since January 1996.

The portfolio managers responsible for management of the AST Federated Aggressive Growth Portfolio are Keith J. Sabol, Aash
M. Shah and James E. Grefenstette. Each has managed the Portfolio since its inception in October, 2000. Mr. Sabol joined Federated
Investment's parent company in 1994. He has been a Portfolio Manager since 1996 and served as an Assistant Vice President of the
parent company from January 1997 to July 1998. He has been a Vice President of the parent company since July 1998. Mr. Shah joined
Federated Investment's parent company in 1993, has been a Portfolio Manager since 1995, and has been a Vice President of the parent
company since January 1997. Mr. Shah served as an Assistant Vice President of the parent company from 1995 through 1996. Mr.
Grefenstette has been a Senior Vice President of Federated Investment's parent company since January 2000. He served as a Vice
President from 1996 through 1999.

Goldman Sachs Asset Management ("Goldman Sachs"), a unit of Investment Management Division ("IMD") of Goldman, Sachs & Co.,
32 Old Slip, New York, New York 10005, serves as Sub-advisor for the AST Goldman Sachs Small-Cap Value Portfolio (formerly, the AST
Lord Abbett Small Cap Value Portfolio). Goldman Sachs, along with other units of IMD, managed approximately $281.7 billion in assets
as of December 31, 2000.

The portfolio managers responsible for management of the AST Goldman Sachs Small-Cap Value Portfolio are Eileen Rominger,
Chip Otness and Eileen Aptman. Ms. Rominger, Managing Director, joined Goldman Sachs as senior portfolio manager and Chief
Investment Officer of the Value Equity team in 1999. From 1981 to 1999, she worked at Oppenheimer Capital, most recently as
portfolio manager. Mr. Otness, Vice President, joined Goldman Sachs as a senior portfolio manager in 2000. From 1998 to 2000, he
headed Dolphin Asset Management. From 1970 to 1998, Mr. Otness worked at J.P. Morgan, most recently as a managing director and
senior portfolio manager responsible for small-cap institutional equity investments. Ms. Aptman, Vice President, joined Goldman
Sachs as a research analyst in 1993. She became a portfolio manager in 1996.

GAMCO Investors, Inc., ("GAMCO") with principal offices located at One Corporate Center, Rye, New York 10580-1434, serves as
Sub-advisor to the AST Gabelli Small-Cap Growth Portfolio and the AST Gabelli All-Cap Value Portfolio. GAMCO managed approximately
$10.1 billion in assets as of December 31, 2000 and is a wholly owned subsidiary of Gabelli Asset Management Inc.

Mario J. Gabelli, CFA, is primarily responsible for the day-to-day management of the AST Gabelli Small-Cap Value Portfolio
and the AST Gabelli All-Cap Value Portfolio. Mr. Gabelli has managed the AST Gabelli Small-Cap Value Portfolio since GAMCO became
the Portfolio's Sub-advisor and has managed the AST Gabelli All-Cap Value Portfolio since its inception. Mr. Gabelli has been Chief
Executive Officer and Chief Investment Officer of GAMCO and its predecessor since the predecessor's inception in 1978.

Fred Alger Management, Inc. ("Alger"), One World Trade Center, Suite 9333, New York, New York 10048, serves as Sub-advisor
for the AST Alger All-Cap Growth Portfolio. Alger has been an investment advisor since 1964, and as of December 31, 2000 managed
mutual fund and other assets totaling approximately $18.4 billion.

The portfolio managers responsible for the management of the AST Alger All-Cap Growth Portfolio are David Alger and Seilai
Khoo. Mr. Alger has managed the Portfolio since its inception, while Ms. Khoo has been managing the Portfolio since June 2000. Mr.
Alger has been employed by Alger since 1971 and served as Executive Vice President and Director of Research prior to being named
President in 1995. Ms. Khoo has been employed by Alger since 1989, and has been a Senior Vice President and Portfolio Manager since
1995.

Neuberger Berman Management Inc. ("NB Management"), 605 Third Avenue, New York, NY 10158, serves as sub-advisor for the AST
Neuberger Berman Mid-Cap Growth Portfolio and the AST Neuberger Berman Mid-Cap Value Portfolio. NB Management and its predecessor
firms have specialized in the management of mutual funds since 1950. Neuberger Berman, LLC, an affiliate of NB Management, acts as a
principal broker in the purchase and sale of portfolio securities for the Portfolios for which it serves as Sub-advisor, and provides
NB Management with certain assistance in the management of the Portfolios without added cost to the Portfolios or ASISI. NB
Management and its affiliates manage securities accounts, including mutual funds, that had approximately $55.5 billion of assets as
of December 31, 2000.

Jennifer K. Silver and Brooke A. Cobb have been primarily responsible for the day-to-day management of the AST Neuberger
Berman Mid-Cap Growth Portfolio since NB Management became the Portfolio's Sub-advisor in May 1998. Ms. Silver is Director of the
Neuberger Berman Growth Equity Group, and both she and Mr. Cobb are Vice Presidents of NB Management. Prior to joining NB Management
in 1997, Ms. Silver was a portfolio manager for several large mutual funds managed by a prominent investment adviser. Prior to
joining NB Management, Mr. Cobb was the chief investment officer for an investment advisory firm managing individual accounts from
1995 to 1997.

The portfolio manager responsible for the day-to-day management of the AST Neuberger Berman Mid-Cap Value Portfolio is
Robert I. Gendelman. Mr. Gendelman has been managing the Portfolio since NB Management became the Portfolio's Sub-advisor in May
1998. Mr. Gendelman has been with NB Management since 1994, where he is currently a Vice President.

Kinetics Asset Management, Inc. ("Kinetics"), 1311 Mamaroneck Avenue, Suite 130, White Plains, New York, 10605, serves as
Sub-advisor for the AST Kinetics Internet Portfolio. Kinetics was founded in 1996 and managed assets totaling approximately $625
million as of December 31, 2000.

The portfolio managers responsible for the management of the Portfolio are Peter B. Doyle and Steven Tuen, CFA. Mr. Doyle,
who is the Chief Investment Strategist for the Portfolio, co-founded Kinetics in early 1996 and is the Chairman of its Board of
Directors. Mr. Doyle also co-founded and has been a Managing Director of Horizon Asset Management, Inc. since 1994. Mr. Tuen is
Co-Portfolio Manager of and Executive Adviser to the Portfolio. Mr. Tuen's primary duties include research and analysis of equity
securities for investment. From 1996 to 1999, Mr. Tuen was an Analyst and the Director of Research of IPO Value Monitor, a research
service that focuses on initial public offerings.

T. Rowe Price Associates, Inc. ("T. Rowe Price"), 100 East Pratt Street, Baltimore, Maryland 21202, serves as Sub-advisor
for the AST T. Rowe Price Natural Resources Portfolio and the AST T. Rowe Price Asset Allocation Portfolio. T. Rowe Price was
founded in 1937 by the late Thomas Rowe Price, Jr. As of December 31, 2000, the firm and its affiliates managed approximately $166.7
billion for approximately eight million individual and institutional accounts.

T. Rowe Price manages each Portfolio through an Investment Advisory Committee. The Committee Chairman has day-to-day
responsibility for managing the Portfolio and works with the Committee in developing and executing the Portfolio's investment program.

The Investment Advisory Committee for the AST T. Rowe Price Natural Resources Portfolio is composed of the following
members: Charles M. Ober, Chairman, David M. Lee, Hugh M. Evans III, Richard P. Howard and James A.C. Kennedy and David J. Wallack.
Mr. Ober joined T. Rowe Price in 1980, is a Vice President of T. Rowe Price and an Investment Analyst specializing in the area of
energy and has been Chairman of the Portfolio's Investment Advisory Committee since May 2001.

The Investment Advisory Committee for the AST T. Rowe Price Asset Allocation Portfolio is composed of the following members:
Edmund M. Notzon, Chairman, James M. McDonald, Jerome Clark, M. David Testa and Richard T. Whitney. Mr. Notzon joined T. Rowe Price
in 1989, has been managing investments since 1991 and has been Chairman of the Portfolio's Investment Advisory Committee since the
Portfolio's inception.

Alliance Capital Management, L.P. ("Alliance"), 1345 Avenue of the Americas, New York, NY 10105, serves as Sub-advisor for
the AST Alliance Growth Portfolio and AST Alliance Growth and Income Portfolio and for the portion of the AST Alliance/Bernstein
Growth + Value Portfolio invested in growth stocks. Alliance is a leading international investment adviser supervising client
accounts with assets as of December 31, 2000 totaling more than $454 billion (of which more than $175 billion represented assets of
investment companies).

Alfred Harrison and James G. Reilly have been the individuals primarily responsible for the management of the AST Alliance
Growth Portfolio since Alliance became the Portfolio's Sub-advisor in May 2000. Mr. Harrison is Vice Chairman of Alliance Capital
Management Corporation ("ACMC"), the sole general partner of Alliance, and has been associated with Alliance since 1978. Mr. Reilly
is Executive Vice President of ACMC and has been associated with Alliance since 1984.

Paul Rissman and Frank Caruso have been primarily responsible for the management of the AST Alliance Growth and Income
Portfolio since Alliance became the Portfolio's Sub-advisor in May 2000. Mr. Rissman has been Senior Vice President of ACMC since
1994 and has been associated with Alliance since 1989. Mr. Caruso is a Senior Vice President of ACMC and has been associated with
Alliance since 1994.

Day to day investment decisions for the growth portion of the AST Alliance/Bernstein Growth +Value Portfolio will be made by
Alfred Harrison and Stephanie Simon. Ms. Simon is Vice President and Large Cap Portfolio Manager and joined ACMC in 1998 after
serving as Chief Investment Officer for Sargent Management Company from 1996 to 1998.

Marsico Capital Management, LLC ("Marsico Capital"), 1200 17th Street, Suite 1300, Denver, CO 80202, serves as Sub-advisor
for the AST Marsico Capital Growth Portfolio. Thomas F. Marsico, Chairman and Chief Executive Officer of Marsico Capital, has had
primary responsibility for management of the Portfolio since its inception. Prior to forming Marsico Capital in September, 1997, Mr.
Marsico served as Executive Vice President and Portfolio Manager at Janus Capital Corporation ("Janus"). Mr. Marsico joined Janus in
March, 1986. As of December 31, 2000, Marsico Capital managed approximately $14.9 billion in assets.

Cohen & Steers Capital Management, Inc. ("Cohen & Steers"), 757 Third Avenue, New York, New York 10017, acts as the
Sub-advisor for the AST Cohen & Steers Realty Portfolio. Cohen & Steers is the leading U.S. manager of portfolios dedicated to
investments in real estate investment trusts ("REITS"). As of December 31, 2000, Cohen & Steers managed approximately $4.8 billion
in assets.

Robert H. Steers, Chairman, and Martin Cohen, President formed Cohen & Steers in 1986 and have been responsible for the
day-to-day management of the AST Cohen & Steers Realty Portfolio since its inception.

Sanford C. Bernstein & Co., LLC ("Bernstein"), 767 Fifth Avenue, New York, New York 10153, serves as Sub-advisor for the AST
Sanford Bernstein Core Value Portfolio, the AST Sanford Bernstein Managed Index 500 Portfolio and for the portion of the AST
Alliance/Bernstein Growth + Value Portfolio invested in value stocks. Bernstein is an indirect wholly-owned subsidiary of Alliance
Capital Management, L.P. ("Alliance") and management of the Portfolios are conducted by Bernstein with the investment management
assistance of the Bernstein Investment Research and Management unit (the "Bernstein Unit") of Alliance. The Bernstein Unit services
the former investment research and management business of Sanford C. Bernstein & Co., Inc., a registered investment advisor and
broker/dealer acquired by Alliance in October 2000 that managed value-oriented investment portfolios since 1967.

Day-to-day investment management decisions for the value portion of the AST Alliance/Bernstein Growth + Value Portfolio and
the AST Sanford Bernstein Core Value Portfolio will be made by Lewis A. Sanders and Marilyn Goldstein Fedak. Mr. Sanders is the
Chairman and a Director of Bernstein since September 2000 and is a Vice Chairman, Chief Investment Officer and a Director of Alliance
Capital Management Corporation since October 2000. Mr. Sanders previously served as Chairman of the Board of Directors and Chief
Executive Officer of Sanford C. Bernstein & Co., Inc. since 1993. Ms. Fedak has been an Executive Vice President and Chief
Investment Officer- U.S. Value Equities of Alliance since October 2000 and prior to that Chief Investment Officer and Chairman of the
U.S. Equity Investment Policy Group at Sanford C. Bernstein & Co, Inc. since 1993.

Day-to-day investment management decisions for the AST Sanford Bernstein Managed Index 500 Portfolio will be made by
Bernstein's Investment Policy Group for Structured Equities, which is chaired by Steven Pisarkiewicz. Mr. Pisarkiewicz joined
Bernstein in 1989 and assumed his current position as Chief Investment Officer for Structured Equity Services in 1998. Mr.
Pisarkiewicz and the Investment Policy Group for Structured Equities have managed the Portfolio since Bernstein became the
Portfolio's Sub-advisor in May, 2000.

INVESCO Funds Group, Inc. ("INVESCO"), 7800 East Union Avenue, P.O. Box 173706, Denver, Colorado 80217-3706, serves as
Sub-advisor for the AST INVESCO Equity Income Portfolio. INVESCO was established in 1932. AMVESCAP PLC, the parent of INVESCO, is
one of the largest independent investment management businesses in the world and managed approximately $402.6 billion of assets as of
December 31, 2000.

The portfolio managers responsible for management of the Portfolio are Charles P. Mayer and Donovan J. (Jerry) Paul. Mr.
Mayer has served as Co-Manager of the Portfolio since April, 1993. Mr. Mayer began his investment career in 1969 and is now a
director and senior vice president of INVESCO. From 1993 to 1994, he was vice president of INVESCO. Mr. Paul has served as
Co-Manager of the Portfolio since May 1994. Mr. Paul entered the investment management industry in 1976, and has been a senior vice
president of INVESCO since 1994.

T. Rowe Price International, Inc. ("T. Rowe International"), 100 East Pratt Street, Baltimore, Maryland 21202, serves as
Sub-advisor for the AST T. Rowe Price Global Bond Portfolio. T. Rowe International is a wholly-owned subsidiary of T. Rowe Price and
the successor of Rowe Price-Fleming International, Inc., a joint venture in which T. Rowe Price was a participant that was founded in
1979. T. Rowe International is one of the world's largest international mutual fund asset managers with approximately $32.7 billion
under management as of December 31, 2000 in its offices in Baltimore, London, Tokyo, Hong Kong, Singapore, Buenos Aires and Paris.

The Portfolio has an investment advisory group that has day-to-day responsibility for managing the Portfolio and developing
and executing the Portfolio's investment program. The advisory group consists of Christopher Rothery, William T. Reynolds, Daniel O.
Shackelford, Ian Kelson, Greg Fisher and Michael Conelius. Mr. Rothery joined T. Rowe International in 1994 and has 12 years of
experience managing multi-currency fixed-income portfolios. Mr. T. Reynolds, CFA, CIC, is Director of T. Rowe Price's Fixed Income
Division and joined the firm in 1981. Mr. O. Shackelford, CFA joined T. Rowe Price in 1999; prior to that he was the Principal and
Head of Fixed Income for Investment Counselors of Maryland. Mr. Kelson joined T. Rowe International in November 2000. From 1985 to
2000, Mr. Kelson was head of Fixed Income at Morgan Grenfell/Deutsche Asset Management ("Morgan Grenfell") where he was responsible
for $50 billion in global fixed income assets. Mr. Fisher joined T. Rowe International in November 2000. From 1989 to 2000 Mr.
Fisher was Chief Investment Officer for Morgan Grenfell. Mr. Conelius joined T. Rowe International in 1995.

Lord, Abbett & Co. ("Lord Abbett"), 90 Hudson Street, Jersey City, New Jersey 07302, serves as Sub-advisor for the AST Lord
Abbett Bond-Debenture Portfolio. Lord Abbett has been an investment manager for over 68 years. As of December 31, 2000, Lord Abbett
managed over $35 billion in a family of mutual funds and other advisory accounts.

Christopher J. Towle, Partner of Lord Abbett, heads the management team for the AST Lord Abbett Bond-Debenture Portfolio,
the other senior members of which include Richard Szaro, Michael Goldstein and Thomas Baade, and all have managed the Portfolio since
its inception. Mr. Towle and Mr. Szaro have been with Lord Abbett since 1988 and 1983, respectively. Mr. Goldstein has been with
Lord Abbett since 1997. Before joining Lord Abbett, Mr. Goldstein was a bond trader for Credit Suisse BEA Associates from August
1992 through April 1997. Mr. Baade joined Lord Abbett in 1998 and was a credit analyst with Greenwich Street Advisors from 1990
until 1998.

Pacific Investment Management Company LLC ("PIMCO"), 840 Newport Center Drive, Suite 300, Newport Beach, California 92660
serves as Sub-advisor for the AST PIMCO Total Return Bond Portfolio and the AST PIMCO Limited Maturity Bond Portfolio. PIMCO is an
investment counseling firm founded in 1971 and, as of December 31, 2000, had approximately $215 billion of assets under management.

The portfolio manager responsible for management of the AST PIMCO Total Return Bond Portfolio and the AST PIMCO Limited
Maturity Bond Portfolio is William H. Gross. Mr. Gross is managing director of PIMCO has been associated with the firm since 1971,
and has managed each Portfolio since their respective commencement of operations.

J.P. Morgan Investment Management Inc. ("J.P. Morgan"), with principal offices at 522 Fifth Avenue, New York, New York
10036, serves as Sub-advisor for the AST Money Market Portfolio. J.P. Morgan and its affiliates offer a wide range of services to
governmental, institutional, corporate and individual customers, and act as investment advisor to individual and institutional
clients with combined assets under management of approximately $359 billion as of December 31, 2000. J.P. Morgan has managed
investments for clients since 1913, and has managed short-term fixed income assets since 1969.

Fees and Expenses:

Investment Management Fees. ASISI receives a fee, payable each month, for the performance of its services. ASISI pays each
Sub-advisor a portion of such fee for the performance of the Sub-advisory services at no additional cost to any Portfolio. The
Investment Management fee for each Portfolio will differ, reflecting the differing objectives, policies and restrictions of each
Portfolio. Each Portfolio's fee is accrued daily for the purposes of determining the sale and redemption price of the Portfolio's
shares. The fees paid to ASISI for the fiscal year ended December 31, 2000 by each Portfolio that was in operation for that entire
fiscal year, stated as a percentage of the Portfolio's average daily net assets, were as follows:

Portfolio: Annual Rate:
---------- ------------

AST Founders Passport Portfolio: 1.00%
AST AIM International Equity Portfolio: 0.87%
AST Janus Overseas Growth Portfolio: 1.00%
AST American Century International Growth Portfolio: 1.00%
AST American Century International Growth Portfolio II: 1.00%
AST MFS Global Equity Portfolio 1.00%
AST Janus Small-Cap Growth Portfolio: 0.90%
AST Scudder Small-Cap Growth Portfolio: 0.95%
AST Goldman Sachs Small-Cap Value Portfolio: 0.95%
AST Gabelli Small-Cap Value Portfolio: 0.90%
AST Neuberger Berman Mid-Cap Growth Portfolio: 0.85%
AST Neuberger Berman Mid-Cap Value Portfolio: 0.82%
AST Alger All-Cap Growth Portfolio: 0.95%
AST T. Rowe Price Natural Resources Portfolio: 0.90%
AST Alliance Growth Portfolio: 1.00%
AST MFS Growth Portfolio 0.90%
AST Marsico Capital Growth Portfolio: 0.90%
AST JanCap Growth Portfolio: 0.87%
AST Cohen & Steers Realty Portfolio: 1.00%
AST Sanford Bernstein Managed Index 500 Portfolio: 0.60%
AST American Century Income & Growth Portfolio: 0.75%
AST Alliance Growth and Income Portfolio: 0.75%
AST MFS Growth with Income Portfolio 0.90%
AST INVESCO Equity Income Portfolio: 0.75%
AST AIM Balanced Portfolio: 0.74%
AST American Century Strategic Balanced Portfolio: 0.85%
AST T. Rowe Price Asset Allocation Portfolio: 0.85%
AST T. Rowe Price Global Bond Portfolio: 0.80%
AST Federated High Yield Portfolio: 0.75%
AST PIMCO Total Return Bond Portfolio: 0.65%
AST PIMCO Limited Maturity Bond Portfolio: 0.65%
AST Money Market Portfolio: 0.45%

The investment management fee rate for the AST Scudder Japan Portfolio, which commenced operations during 2000, is an annual
rate of 1.00% of the average daily net assets of the Portfolio. The investment management fee rate for the AST Federated Aggressive
Growth Portfolio, which commenced operations during 2000, is an annual rate of .95% of the average daily net assets of the
Portfolio. The investment management fee rate for the AST Janus Mid-Cap Growth Portfolio, which commenced operations during 2000, is
an annual rate of 1.00% of the average daily net assets of the Portfolio. The investment management fee rate for the AST Gabelli
All-Cap Value Portfolio, which commenced operations during 2000, is an annual rate of .95% of the average daily net assets of the
Portfolio. The investment management fee rate for the AST Kinetics Internet Portfolio, which commenced operations during 2000, is an
annual rate of 1.00% of the average daily net assets of the Portfolio. The investment management fee rate for the AST Janus
Strategic Value Portfolio, which commenced operations during 2000, is an annual rate of 1.00% of the average daily net assets of the
Portfolio. The investment management fee rate for the AST Alliance/Bernstein Growth + Value Portfolio, which had not commenced
operations prior to the date of this Prospectus, is an annual rate of 0.90% of the average daily net assets of the Portfolio. The
investment management fee rate for the AST Sanford Bernstein Core Value Portfolio, which had not commenced operations prior to the
date of this Prospectus, is an annual rate of 0.75% of the average daily net assets of the Portfolio. The investment management fee
rate for the AST Lord Abbett Bond-Debenture Portfolio, which commenced operations during 2000, is an annual rate of .80% of the
average daily net assets of the Portfolio.

For more information about investment management fees, including voluntary fee waivers and the fee rates applicable at
various asset levels, and the fees payable by ASISI to each of the Sub-advisors, please see the Trust's SAI under "Investment
Advisory and Other Services."

Other Expenses. In addition to Investment Management fees, each Portfolio pays other expenses, including costs incurred in
connection with the maintenance of its securities law registrations, printing and mailing prospectuses and statements of additional
information to shareholders, certain office and financial accounting services, taxes or governmental fees, brokerage commissions,
custodial, transfer and shareholder servicing agent costs, expenses of outside counsel and independent accountants, preparation of
shareholder reports and expenses of trustee and shareholder meetings. The Trust may also pay Participating Insurance Companies for
printing and delivery of certain documents (including prospectuses, semi-annual and annual reports and any proxy materials) to
holders of variable annuity contracts and variable life insurance policies whose assets are invested in the Trust. Expenses not
directly attributable to any specific Portfolio or Portfolios are allocated on the basis of the net assets of the Portfolios.

Distribution Plan. The Trust has adopted a Distribution Plan (the "Distribution Plan") under Rule 12b-1 under the
Investment Company Act of 1940 to permit American Skandia Marketing, Inc. ("ASM"), an affiliate of ASISI, to receive brokerage
commissions in connection with purchases and sales of securities held by the Portfolios, and to use these commissions to promote the
sale of shares of the Portfolios. Under the Distribution Plan, transactions for the purchase and sale of securities for a Portfolio
may be directed to certain brokers for execution ("clearing brokers") who have agreed to pay part of the brokerage commissions
received on these transactions to ASM for "introducing" transactions to the clearing broker. In turn, ASM will use the brokerage
commissions received as an introducing broker to pay various distribution-related expenses, such as advertising, printing of sales
materials, and payments to dealers. No Portfolio will pay any new fees or charges resulting from the Distribution Plan, nor is it
expected that the brokerage commissions paid by a Portfolio will increase as the result of implementation of the Distribution Plan.

TAX MATTERS:

Each Portfolio intends to distribute substantially all its net investment income. Dividends from investment income are
expected to be declared and distributed annually (except in the case of the AST Money Market Portfolio, where dividends will be
declared daily and paid monthly), although the Trustees of the Trust may decide to declare dividends at other intervals. Similarly,
any net realized long- and short-term capital gains of each Portfolio will be declared and distributed at least annually either
during or after the close of the Portfolio's fiscal year. Distributions will be made to the various separate accounts of the
Participating Insurance Companies and to qualified plans (not to holders of variable insurance contracts or to plan participants) in
the form of additional shares (not in cash). The result is that the investment performance of the Portfolios, either in the form of
dividends or capital gains, will be reflected in the value of the variable contracts or the qualified plans.

Holders of variable annuity contracts or variable life insurance policies should consult the prospectuses of their
respective contracts or policies for information on the federal income tax consequences to such holders, and plan participants should
consult any applicable plan documents for information on the federal income tax consequences to such participants. In addition,
variable contract owners and qualified plan participants may wish to consult with their own tax advisors as to the tax consequences
of investments in the Trust, including the application of state and local taxes.

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FINANCIAL HIGHLIGHTS: The financial highlights table is intended to help you understand the Portfolios' financial
performance for the past five years (or, for Portfolios that have not been in operation for five years, since their
inceptions). Certain information reflects financial results for a single Portfolio share. The total returns in the
table represent the rate that an investor would have earned or lost in a Portfolio. The information has been audited by
Deloitte & Touche LLP, the Trust's independent auditors. The report of the independent auditors, along with the
Portfolios' financial statements, are included in the annual reports of the separate accounts funding the variable
annuity contracts and variable life insurance policies, which are available without charge upon request to the Trust at
One Corporate Drive, Shelton, Connecticut or by calling (800) 752-6342. No financial information is included for the AST
Alliance/Bernstein Growth + Value Portfolio and the AST Sanford Bernstein Core Value Portfolio, which had not commenced
operations prior to May 1, 2001.

INCREASE (DECREASE) FROM
INVESTMENT OPERATIONS LESS DISTRIBUTIONS

NET ASSET NET NET ASSET
VALUE INVESTMENT NET REALIZED TOTAL FROM FROM NET FROM NET VALUE
PERIOD BEGINNING INCOME & UNREALIZED INVESTMENT INVESTMENT REALIZED TOTAL END
PORTFOLIO ENDED OF PERIOD (LOSS) GAIN (LOSS) OPERATIONS INCOME GAINS DISTRIBUTIONS OF PERIOD

AST AIM 12/31/00 $34.23 $0.22 $(8.09) $(7.87) $(0.07) $(4.26) $(4.33) $22.03
International 12/31/99 22.67 0.05 13.36 13.41 -- (1.85) (1.85) 34.23
Equity** 12/31/98 21.29 0.20 3.81 4.01 (0.67) (1.96) (2.63) 22.67
12/31/97 19.22 0.36 2.96 3.32 (0.30) (0.95) (1.25) 21.29
12/3196 18.20 0.16 1.55 1.71 (0.32) (0.37) (0.69) 19.22

AST Alliance 12/31/00 $23.50 $0.19 $0.57 $0.76 $(0.23) $(2.65) $(2.88) $21.38
Growth and 12/31/99 21.68 0.23 3.04 3.27 (0.25) (1.20) (1.45) 23.50
Income*** 12/31/98 20.53 0.25 2.23 2.48 (0.25) (1.08) (1.33) 21.68
12/31/97 17.17 0.24 3.76 4.00 (0.23) (0.41) (0.64) 20.53
12/31/96 14.98 0.23 2.48 2.71 (0.17) (0.35) (0.52) 17.17

AST JanCap Growth 12/31/00 $55.21 $(0.06) $(15.55) $(15.61) $(0.07) $(4.45) $(4.52) $35.08
12/31/99 37.00 0.05 19.65 19.70 -- (1.49) (1.49) 55.21
12/31/98 23.15 0.04 15.10 15.14 (0.08) (1.21) (1.29) 37.00
12/31/97 18.79 0.06 5.16 5.22 (0.05) (0.81) (0.86) 23.15
12/31/96 15.40 0.02 4.19 4.21 (0.02) (0.80) (0.82) 18.79

AST Money Market 12/31/00 $1.00 $0.0591 $ -- $0.0591 $(0.0591)$ -- $(0.0591) $1.00
12/31/99 1.00 0.0449 0.0001 0.0450 (0.0449) (0.0001) (0.0450) 1.00
12/31/98 1.00 0.0502 0.0002 0.0504 (0.0502) (0.0002) (0.0504) 1.00
12/31/97 1.00 0.0507 0.0002 0.0509 (0.0507) (0.0002) (0.0509) 1.00
12/31/96 1.00 0.0492 0.0005 0.0497 (0.0492) (0.0005) (0.0497) 1.00

AST Neuberger 12/31/00 $13.32 $0.02 $3.60 $3.62 $(0.04) $(0.05) $(0.09) $16.85
Berman 12/31/99 13.16 0.10 0.60 0.70 (0.24) (0.30) (0.54) 13.32
Mid-Cap Value+ 12/31/98 15.15 0.21 (0.52) (0.31) (0.36) (1.32) (1.68) 13.16
12/31/97 12.83 0.32 2.87 3.19 (0.36) (0.51) (0.87) 15.15
12/31/96 11.94 0.36 0.97 1.33 (0.44) -- (0.44) 12.83

AST AIM Balanced++ 12/31/00 $15.24 $0.34 $(0.89) $(0.55) $(0.32) $(1.07) $(1.39) $13.30
12/31/99 14.13 0.32 2.30 2.62 (0.35) (1.16) (1.51) 15.24
12/31/98 13.64 0.34 1.31 1.65 (0.35) (0.81) (1.16) 14.13
12/31/97 13.19 0.33 1.85 2.18 (0.31) (1.42) (1.73) 13.64
12/31/96 12.53 0.32 1.02 1.34 (0.25) (0.43) (0.68) 13.19

---------------------------------------------------------------------------------------------------------------------------
* For 1999 and 2000, includes commissions received by American Skandia Marketing, Inc. under the Trust's Distribution
Plan, as described in this Prospectus under "Management of the Trust - Distribution Plan".
** From October 15, 1996 to May 4, 1999, Putnam Investment Management, Inc. served as Sub-advisor to the AST AIM
International Equity Portfolio (formerly, the AST Putnam International Equity Portfolio). Prior to October 15, 1996,
Seligman Henderson Co. served as Sub-advisor to the Portfolio. A I M Capital Management, Inc. has served as Sub-advisor
to the Portfolio since May 4, 1999.
*** Prior to May 1, 2000, Lord, Abbett & Co. served as Sub-advisor to the AST Alliance Growth and Income Portfolio
(formerly, the AST Lord Abbett Growth and Income Portfolio). Alliance Capital Management L.P. has served as Sub-advisor
to the Portfolio since May 1, 2000.
+ Prior to May 1, 1998, Federated Investment Counseling served as Sub-advisor to the AST Neuberger Berman Mid-Cap Value
Portfolio (formerly, the Federated Utility Income Portfolio). Neuberger Berman Management, Inc. has served as
Sub-advisor to the Portfolio since May 1, 1998.
++ From October 15, 1996 to May 4, 1999, Putnam Investment Management, Inc. served as Sub-advisor to the AST AIM
Balanced Portfolio (formerly, the AST Putnam Balanced Portfolio). Prior to October 15, 1996, Phoenix Investment Counsel,
Inc. served as Sub-advisor to the Portfolio. A I M Capital Management, Inc. has served as Sub-advisor to the Portfolio
since May 4, 1999.

RATIOS OF EXPENSES
SUPPLEMENTAL DATA TO AVERAGE NET ASSETS*

AFTER ADVISORY BEFORE ADVISORY RATIO OF NET
NET ASSETS AT PORTFOLIO FEE WAIVER FEE WAIVER INVESTMENT INCOME
TOTAL END OF PERIOD TURNOVER AND EXPENSE AND EXPENSE (LOSS) TO AVERAGE
RETURN (IN 000'S) RATE REIMBURSEMENT REIMBURSEMENT NET ASSETS

(26.53%) $637,131 86% 1.16% 1.16% 0.63%
64.13% 770,512 159% 1.18% 1.18% 0.18%
20.10% 497,461 117% 1.13% 1.13% 0.69%
18.15% 412,270 116% 1.15% 1.15% 1.04%
9.65% 346,211 124% 1.16% 1.26% 0.88%

5.52% $1,595,755 144% 1.05% 1.06% 0.96%
16.09% 1,498,306 69% 0.92% 0.94% 1.09%
12.48% 1,181,909 78% 0.91% 0.91% 1.32%
23.92% 936,986 41% 0.93% 0.93% 1.60%
18.56% 530,497 43% 0.97% 0.97% 1.92%

(30.97%) $4,262,410 34% 1.00% 1.04% (0.13%)
55.01% 5,923,778 35% 1.00% 1.04% 0.12%
68.26% 3,255,658 42% 1.02% 1.04% 0.16%
28.66% 1,511,602 94% 1.07% 1.08% 0.24%
28.36% 892,324 79% 1.10% 1.10% 0.25%

6.07% $2,244,193 N/A 0.60% 0.65% 5.93%
4.60% 2,409,157 N/A 0.60% 0.65% 4.52%
5.14% 967,733 N/A 0.60% 0.66% 4.99%
5.18% 759,888 N/A 0.60% 0.69% 5.06%
5.08% 549,470 N/A 0.60% 0.71% 4.87%

27.49% $978,649 220% 1.24% 1.24% 0.19%
5.67% 664,383 176% 1.13% 1.13% 0.39%
(2.33%) 271,968 208% 1.05% 1.05% 1.83%
26.42% 201,143 91% 0.90% 0.90% 3.34%
11.53% 123,138 81% 0.93% 0.93% 3.14%

(4.36%) $622,641 60% 0.95% 0.95% 2.70%
20.85% 499,571 154% 1.00% 1.00% 2.37%
12.86% 409,335 139% 1.00% 1.00% 2.55%
18.28% 357,591 170% 1.03% 1.03% 2.81%
11.23% 286,479 276% 0.94% 0.94% 2.66%

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

AMERICAN SKANDIA TRUST
FINANCIAL HIGHLIGHTS
PER SHARE DATA (FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
INCREASE (DECREASE) FROM
INVESTMENT OPERATIONS LESS DISTRIBUTIONS

NET ASSET NET NET ASSET
VALUE INVESTMENT NET REALIZED TOTAL FROM FROM NET FROM NET VALUE

PERIOD BEGINNING INCOME & UNREALIZED INVESTMENT INVESTMENT REALIZED TOTAL END
PORTFOLIO ENDED OF PERIOD (LOSS) GAIN (LOSS) OPERATIONS INCOME GAINS DISTRIBUTIONS OF PERIOD

AST Federated 12/31/00 $11.92 $1.18 $(2.23) $(1.05) $(1.16) $ -- $(1.16) $9.71
High Yield 12/31/99 12.65 1.03 (0.77) 0.26 (0.91) (0.08) (0.99) 11.92
12/31/98 13.11 0.91 (0.57) 0.34 (0.76) (0.04) (0.80) 12.65
12/31/97 12.13 0.75 0.83 1.58 (0.54) (0.06) (0.60) 13.11
12/31/96 11.14 0.56 0.90 1.46 (0.47) -- (0.47) 12.13

AST T. Rowe Price 12/31/00 $18.86 $0.52 $(0.63) $(0.11) $(0.45) $(0.18) $(0.63) $18.12
Asset Allocation 12/31/99 17.47 0.44 1.32 1.76 (0.36) (0.01) (0.37) 18.86
12/31/98 15.13 0.35 2.38 2.73 (0.33) (0.06) (0.39) 17.47
12/31/97 13.27 0.33 2.03 2.36 (0.26) (0.24) (0.50) 15.13
12/31/96 12.01 0.27 1.28 1.55 (0.25) (0.04) (0.29) 13.27

AST PIMCO Total 12/31/00 $10.99 $0.65 $0.56 $1.21 $(0.60) $ -- $(0.60) $11.60
Return Bond 12/31/99 12.02 0.58 (0.71) (0.13) (0.52) (0.38) (0.90) 10.99
12/31/98 11.72 0.49 0.56 1.05 (0.51) (0.24) (0.75) 12.02
12/31/97 11.11 0.48 0.58 1.06 (0.45) -- (0.45) 11.72
12/31/96 11.34 0.46 (0.10) 0.36 (0.28) (0.31) (0.59) 11.11

AST INVESCO Equity 12/31/00 $18.65 $0.38 $0.32 $0.70 $(0.36) $(1.40) $(1.76) $17.59
Income 12/31/99 17.50 0.36 1.61 1.97 (0.32) (0.50) (0.82) 18.65
12/31/98 16.51 0.31 1.81 2.12 (0.32) (0.81) (1.13) 17.50
12/31/97 13.99 0.31 2.84 3.15 (0.26) (0.37) (0.63) 16.51
12/31/96 12.50 0.27 1.79 2.06 (0.24) (0.33) (0.57) 13.99

AST Janus Small-Cap 12/31/00 $42.61 $(0.22) $(18.08) $(18.30) $ -- $(4.01) $(4.01) $20.30
Growth** 12/31/99 17.61 (0.03) 25.03 25.00 -- -- -- 42.61
12/31/98 17.81 (0.08) 0.73 0.65 -- (0.85) (0.85) 17.61
12/31/97 16.80 (0.05) 1.06 1.01 -- -- -- 17.81
12/31/96 14.25 (0.03) 2.85 2.82 -- (0.27) (0.27) 16.80

AST American Century 12/31/00 $16.67 $(0.01) $(2.57) $(2.58) $(0.04) $(1.64) $(1.68) $12.41
International Growth
II*** 12/31/99 13.39 0.06 3.95 4.01 (0.09) (0.64) (0.73) 16.67
12/31/98 12.09 0.08 1.59 1.67 (0.14) (0.23) (0.37) 13.39
12/31/97 12.07 0.09 0.08 0.17 (0.07) (0.08) (0.15) 12.09
12/31/96 10.65 0.06 1.44 1.50 (0.08) -- (0.08) 12.07

AST T. Rowe Price 12/31/00 $9.60 $0.48 $(0.53) $(0.05) $(0.15) $ -- $(0.15) $9.40
Global Bond+ 12/31/99 11.46 0.33 (1.25) (0.92) (0.71) (0.23) (0.94) 9.60
12/31/98 10.11 0.52 0.94 1.46 (0.03) (0.08) (0.11) 11.46
12/31/97 10.90 0.20 (0.57) (0.37) (0.16) (0.26) (0.42) 10.11
12/31/96 10.60 0.23 0.38 0.61 (0.14) (0.17) (0.31) 10.90

RATIOS OF EXPENSES
SUPPLEMENTAL DATA TO AVERAGE NET ASSETS*

(9.69%) $497,882 20% 0.96% 0.96% 10.36%
2.00% 623,788 39% 0.94% 0.94% 9.09%
2.61% 595,680 36% 0.95% 0.95% 8.64%
13.59% 434,420 28% 0.98% 0.98% 8.83%
13.58% 205,262 43% 1.03% 1.03% 8.02%

(0.48%) $395,375 43% 1.08% 1.08% 2.64%
10.28% 447,542 17% 1.07% 1.07% 2.65%
18.36% 344,197 8% 1.09% 1.09% 2.70%
18.40% 213,075 10% 1.13% 1.13% 2.95%
13.14% 120,149 31% 1.20% 1.20% 3.02%

11.57% $1,258,218 365% 0.82% 0.82% 6.14%
(1.09%) 1,005,763 227% 0.82% 0.82% 5.46%
9.46% 896,497 231% 0.83% 0.83% 5.24%
9.87% 572,100 320% 0.86% 0.86% 5.56%
3.42% 360,010 403% 0.89% 0.89% 5.38%

4.74% $1,173,070 55% 0.94% 0.95% 2.25%
11.74% 1,048,064 76% 0.93% 0.93% 2.10%
13.34% 831,482 67% 0.93% 0.93% 2.17%
23.33% 602,105 73% 0.95% 0.95% 2.54%
17.09% 348,680 58% 0.98% 0.98% 2.83%

(48.16%) $592,038 85% 1.07% 1.07% (0.54%)
141.96% 1,443,211 116% 1.08% 1.08% (0.46%)
3.49% 285,847 100% 1.12% 1.12% (0.53%)
6.01% 278,258 77% 1.13% 1.13% (0.32%)
20.05% 220,068 69% 1.16% 1.16% (0.38%)

(17.38%) $388,396 166% 1.26% 1.26% (0.07%)
31.95% 516,824 29% 1.26% 1.26% 0.47%
14.03% 472,161 32% 1.25% 1.25% 0.60%
1.36% 464,456 19% 1.26% 1.26% 0.71%
14.17% 402,559 11% 1.30% 1.30% 0.84%

(0.45%) $122,200 171% 1.12% 1.12% 4.35%
(8.33%) 138,144 106% 1.11% 1.11% 3.51%
14.72% 147,973 136% 1.11% 1.11% 4.78%
(3.42%) 130,408 173% 1.11% 1.11% 4.73%
5.98% 98,235 241% 1.21% 1.21% 5.02%

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

AMERICAN SKANDIA TRUST
FINANCIAL HIGHLIGHTS
PER SHARE DATA (FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
INCREASE (DECREASE) FROM
INVESTMENT OPERATIONS LESS DISTRIBUTIONS

NET ASSET NET NET ASSET

VALUE INVESTMENT NET REALIZED TOTAL FROM FROM NET FROM NET VALUE
PERIOD BEGINNING INCOME & UNREALIZED INVESTMENT INVESTMENT REALIZED TOTAL END
PORTFOLIO ENDED OF PERIOD (LOSS) GAIN (LOSS) OPERATIONS INCOME GAINS DISTRIBUTIONS OF PERIOD

AST Neuberger Berman 12/31/00 $24.03 $(0.04) $(1.74) $(1.78) $ -- $(0.62) $(0.62) $21.63
Mid-Cap Growth** 12/31/99 17.26 (0.11) 8.21 8.10 -- (1.33) (1.33) 24.03
12/31/98 16.61 (0.05) 3.31 3.26 (0.01) (2.60) (2.61) 17.26
12/31/97 14.39 0.01 2.36 2.37 (0.02) (0.13) (0.15) 16.61
12/31/96 12.40 0.01 2.01 2.02 (0.03) -- (0.03) 14.39

AST Founders Passport 12/31/00 $24.63 $(0.07) $(5.10) $(5.17) $ -- $(4.55) $(4.55) $14.91
12/31/99 13.04 (0.07) 11.72 11.65 (0.03) (0.03) (0.06) 24.63
12/31/98 11.78 0.05 1.24 1.29 (0.03) -- (0.03) 13.04
12/31/97 11.63 0.03 0.21 0.24 (0.08) (0.01) (0.09) 11.78
12/31/96 10.33 0.09 1.24 1.33 (0.03) -- (0.03) 11.63

AST T. Rowe Price 12/31/00 $13.16 $0.17 $3.31 $3.48 $(0.14) $ -- $(0.14) $16.50
Natural Resources 12/31/99 11.97 0.14 2.67 2.81 (0.18) (1.44) (1.62) 13.16
12/31/98 14.57 0.19 (1.78) (1.59) (0.14) (0.87) (1.01) 11.97
12/31/97 14.47 0.14 0.35 0.49 (0.07) (0.32) (0.39) 14.57
12/31/96 11.11 0.05 3.35 3.40 (0.02) (0.02) (0.04) 14.47

AST PIMCO Limited 12/31/00 $10.84 $0.68 $0.17 $0.85 $(0.62) $ -- $(0.62) $11.07
Maturity Bond 12/31/99 11.08 0.59 (0.22) 0.37 (0.61) -- (0.61) 10.84
12/31/98 11.02 0.56 0.03 0.59 (0.53) -- (0.53) 11.08
12/31/97 10.81 0.55 0.22 0.77 (0.56) -- (0.56) 11.02
12/31/96 10.47 0.56 (0.15) 0.41 (0.05) (0.02) (0.07) 10.81

AST Alliance Growth***12/31/00 $18.95 $ -- $(2.24) $(2.24) $ -- $(1.56) $(1.56) $15.15
12/31/99 16.07 (0.07) 4.85 4.78 -- (1.90) (1.90) 18.95
12/31/98 12.62 (0.10) 3.55 3.45 -- -- -- 16.07
12/31/97 10.99 (0.05) 1.68 1.63 -- -- -- 12.62
12/31/96(2) 10.00 (0.01) 1.00 0.99 -- -- -- 10.99

AST Janus Overseas 12/31/00 $25.10 $(0.04) $(6.03) $(6.07) $(0.13) $(0.18) $(0.31) $18.72
Growth 12/31/99 13.74 (0.03) 11.39 11.36 -- -- -- 25.10
12/31/98 11.87 0.04 1.88 1.92 (0.05) -- (0.05) 13.74
12/31/97(3) 10.00 0.02 1.85 1.87 -- -- -- 11.87

AST American Century 12/31/00 $15.65 $0.07 $(1.74) $(1.67) $(0.08) $(0.88) $(0.96) $13.02
Income & Growth+ 12/31/99 13.47 0.09 2.84 2.93 (0.11) (0.64) (0.75) 15.65
12/31/98 12.23 0.11 1.38 1.49 (0.07) (0.18) (0.25) 13.47
12/31/97(3) 10.00 0.07 2.16 2.23 -- -- -- 12.23

AST American Century 12/31/00 $15.30 $0.32 $(0.81) $(0.49) $(0.23) $(0.88) $(1.11) $13.70
Strategic Balanced 12/31/99 13.66 0.20 1.56 1.76 (0.12) -- (0.12) 15.30
12/31/98 11.34 0.11 2.29 2.40 (0.08) -- (0.08) 13.66

12/31/97(4) 10.00 0.11 1.23 1.34 -- -- -- 11.34

---------------------------------------------------------------------------------------------------------------------------
(1) Annualized.
(2) Commenced operations on May 2, 1996.
(3) Commenced operations on January 2, 1997.
* For 1999 and 2000, includes commissions received by American Skandia Marketing, Inc. under the Trust's Distribution
Plan, as described in this Prospectus under "Management of the Trust - Distribution Plan".
** Prior to May 1, 1998, Berger Associates, Inc. served as Sub-advisor to the AST Neuberger Berman Mid-Cap Growth
Portfolio (formerly, the Berger Capital Growth Portfolio). Neuberger Berman Management Inc. has served as Sub-advisor to
the Portfolio since May 1, 1998.
*** From December 31, 1998 to April 30, 2000, OppenheimerFunds, Inc. served as Sub-advisor to the AST Alliance Growth
Portfolio (formerly, the AST Oppenheimer Large-Cap Growth Portfolio). Prior to December 31, 1998, Robertson Stephens &
Company Investment Management, L.P. served as Sub-advisor to the Portfolio. Alliance Capital Management L.P. has served
as Sub-advisor to the Portfolio since May 1, 2000.
+ Prior to May 4, 1999, Putnam Investment Management, Inc. served as Sub-advisor to the AST American Century Income &
Growth Portfolio (formerly, the AST Putnam Value Growth and Income Portfolio). American Century Investment Management,
Inc. has served as Sub-advisor to the Portfolio since May 4, 1999.

RATIOS OF EXPENSES
SUPPLEMENTAL DATA_ TO AVERAGE NET ASSETS*

(8.07%) $719,405 121% 1.09% 1.09% (0.55)%
51.37% 394,325 148% 1.13% 1.13% (0.71%)
20.65% 261,792 228% 1.07% 1.07% (0.34%)
16.68% 185,050 305% 0.99% 0.99% 0.07%
16.34% 136,247 156% 1.01% 1.01% 0.24%

(30.28%) $276,037 514% 1.34% 1.38% (0.44)%
89.71% 217,397 309% 1.29% 1.29% (0.54%)
10.92% 119,997 46% 1.30% 1.30% 0.32%
2.03% 117,938 73% 1.35% 1.35% 0.43%
12.91% 117,643 133% 1.36% 1.36% 1.25%

26.79% $134,644 96% 1.14% 1.20% 1.13%
28.11% 102,225 72% 1.16% 1.16% 1.11%
(11.83%) 74,126 55% 1.16% 1.16% 1.14%
3.39% 111,954 44% 1.16% 1.16% 0.98%
30.74% 88,534 31% 1.30% 1.30% 1.08%

8.43% $417,842 171% 0.87% 0.87% 6.14%
3.37% 406,604 178% 0.86% 0.86% 5.51%
5.72% 349,707 263% 0.86% 0.86% 5.70%
7.46% 288,642 54% 0.88% 0.88% 5.71%
3.90% 209,013 247% 0.89% 0.89% 5.69%

(13.74)% $467,362 135% 1.16% 1.16% (0.46%)
33.91% 364,454 316% 1.11% 1.11% (0.50%)
27.34% 300,924 252% 1.22% 1.22% (0.70%)
14.83% 235,648 219% 1.23% 1.23% (0.59%)
9.90% 48,790 77% 1.33%(1) 1.33%(1)
(0.56%)(1)

(24.62%) $1,094,019 75% 1.18% 1.19% (0.02%)
82.68% 1,551,045 76% 1.23% 1.23% (0.18%)
16.22% 607,206 97% 1.27% 1.27% 0.32%
18.70% 255,705 94% 1.35%(1) 1.35%(1) 0.36%(1)

(10.77%) $487,880 61% 0.94% 0.94% 0.68%
22.98% 360,630 125% 0.98% 0.98% 0.86%
12.27% 189,871 87% 1.00% 1.00% 1.05%
22.30% 117,438 81% 1.23%(1) 1.23%(1) 1.24%(1)

(3.11%) $217,483 125% 1.10% 1.10% 2.23%
12.97% 216,748 104% 1.10% 1.10% 1.93%
21.29% 91,043 95% 1.16% 1.13% 1.68%
13.40% 28,947 76% 1.25%(1) 1.35%(1) 2.02%(1)

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

AMERICAN SKANDIA TRUST
FINANCIAL HIGHLIGHTS
PER SHARE DATA (FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
INCREASE (DECREASE) FROM
INVESTMENT OPERATIONS LESS DISTRIBUTIONS

NET ASSET NET NET ASSET
VALUE INVESTMENT NET REALIZED TOTAL FROM FROM NET FROM NET VALUE

PERIOD BEGINNING INCOME & UNREALIZED INVESTMENT INVESTMENT REALIZED TOTAL END
PORTFOLIO ENDED OF PERIOD (LOSS) GAIN (LOSS) OPERATIONS INCOME GAINS DISTRIBUTIONS OF PERIOD

AST American Century 12/31/00 $22.40 $0.03 $(3.45) $(3.42)$ -- $(0.82) $(0.82) $18.16
International Growth 12/31/99 13.66 (0.04) 8.88 8.84 -- (0.10) (0.10) 22.40
12/31/98 11.52 0.03 2.12 2.15 (0.01) -- (0.01) 13.66
12/31/97(4)10.00 (0.03) 1.55 1.52 -- -- -- 11.52

AST Gabelli Small-Cap 12/31/00 $11.39 $0.10 $2.23 $2.23 $(0.07) $(0.63) $(0.70) $13.02
Value** 12/31/99 11.44 0.08 (0.03) 0.05 (0.10) -- (0.10) 11.39
12/31/98 12.88 0.09 (1.42) (1.33) (0.05) (0.06) (0.11) 11.44
12/31/97(4)10.00 0.06 2.82 2.88 -- -- -- 12.88

AST Marsico Capital Growth 12/31/00 $21.63 $(0.01) $(3.00) $(3.01) $ -- $(0.52) $(0.52)
$18.10
12/31/99 14.20 (0.03) 7.48 7.45 (0.01) (0.01) (0.02) 21.63
12/31/98 10.03 -- 4.17 4.17 -- -- -- 14.20
12/31/97(5)10.00 0.01 0.02 0.03 -- -- -- 10.03

AST Cohen & Steers Realty 12/31/00 $8.36 $0.32 $1.78 $2.10 $(0.28) $ -- $(0.28)
$10.18
12/31/99 8.41 0.33 (0.15) 0.18 (0.23) -- (0.23) 8.36
12/31/98(6)10.00 0.28 (1.87) (1.59) -- -- -- 8.41

AST Goldman Sachs 12/31/00 $10.87 $0.01 $3.67 $3.68 $ -- $ -- $ -- $14.55
Small-Cap Value*** 12/31/99 9.99 (0.03) 0.91 0.88 -- -- -- 10.87
12/31/98(6)10.00 (0.01) -- (0.01) -- -- -- 9.99

AST Sanford Bernstein 12/31/00 $14.96 $0.10 $(1.40) $(1.30) $(0.08) $(0.95) $(1.03) $12.63
Managed Index 500+ 12/31/99 12.78 0.08 2.56 2.64 (0.06) (0.40) (0.46) 14.96
12/31/98(6)10.00 0.06 2.72 2.78 -- -- -- 12.78

AST Scudder Small-Cap 12/31/00 $15.59 $(0.08) $(2.90) $(2.98) $ -- $(0.89) $(0.89) $11.72
Growth++ 12/31/99(7)10.00 (0.05) 5.64 5.59 -- -- -- 15.59

AST MFS Global Equity 12/31/00 $11.03 $0.01 $(0.79) $(0.78) $(0.01) $(0.01) $(0.02) $10.23
12/31/99(8)10.00 0.01 1.02 1.03 -- -- -- 11.03

AST MFS Growth 12/31/00 $11.30 $0.01 $(0.75) $(0.74)$ -- $ -- $ -- $10.56
12/31/99(8)10.00 0.01 1.29 1.30 -- -- -- 11.30

AST MFS 12/31/00 $10.52 $0.03 $(0.01) $0.02 $(0.01) $ -- $(0.01) $10.53
Growth with Income 12/31/99(8)10.00 0.01 0.51 0.52 -- -- -- 10.52

AST Alger All-Cap 12/31/00(9)$10.00 $ -- $(3.16) $(3.16)$ -- $ -- $ -- $6.84
Growth

AST Janus Mid-Cap 12/31/00(10)$10.00 $ 0.01 $(3.37) $(3.36)$ -- $ -- $ -- $6.64
Growth

---------------------------------------------------------------------------------------------------------------------------
(1) Annualized.

(4) Commenced operations on January 2, 1997.
(5) Commenced operations on December 22, 1997.
(6) Commenced operations on January 2, 1998.
(7) Commenced operations on January 4, 1999.
(8) Commenced operations on October 18, 1999.
(9) Commenced operations on December 31, 1999.
(10) Commenced operations on May 1, 2000.
* For 1999 and 2000, includes commissions received by American Skandia Marketing, Inc. under the Trust's Distribution
Plan, as described in this Prospectus under "Management of the Trust - Distribution Plan".
** Prior to October 23, 2000, T. Rowe Price Associates, Inc. served as Sub-advisor to the AST Gabelli Small-Cap Value
Portfolio (formerly, the AST T. Rowe Price Small Company Value Portfolio). GAMCO Investors, Inc. has served as
Sub-advisor to the Portfolio since October 23, 2000.
*** Prior to May 1, 2001, Lord, Abbett & Co. served as Sub-advisor to the AST Goldman Sachs Small-Cap Value Portfolio
(formerly, the AST Lord Abbett Small Cap Value Portfolio). Goldman Sachs Asset Management has served as Sub-advisor to
the Portfolio since May 1, 2001.
+ Prior to May 1, 2000, Bankers Trust Company served as Sub-advisor to the AST Sanford Bernstein Managed Index 500
Portfolio (formerly, the AST Bankers Trust Managed Index 500 Portfolio). Sanford C. Bernstein & Co. has served as
Sub-advisor to the Portfolio since May 1, 2000.
++ Prior to May 1, 2001, the AST Scudder Small-Cap Growth Portfolio was known as the AST Kemper Small-Cap Growth
Portfolio.

RATIOS OF EXPENSES
SUPPLEMENTAL DATA TO AVERAGE NET ASSETS*

(16.10%) $332,504 126% 1.27% 1.27% (0.04%)
65.20% 154,226 112% 1.50% 1.50% (0.32%)
18.68% 77,733 220% 1.65% 1.65% 0.10%
15.10% 33,125 171% 1.75%(1) 1.75%(1) (0.58%)(1)

21.86% $333,586 88% 1.12% 1.12% 0.87%
0.58% 261,493 26% 1.11% 1.11% 0.64%
(10.53%) 304,072 10% 1.11% 1.11% 0.93%
28.80% 199,896 7% 1.16%(1) 1.16%(1) 1.20%(1)

(14.25%) $1,770,849 118% 1.04% 1.06% (0.09)%
52.58% 1,723,736 115% 1.08% 1.08% (0.25%)
41.59% 594,966 213% 1.11% 1.11% 0.16%
0.30% 7,299 -- 1.00%(1) 1.00%(1) 3.62%(1)

26.19% $132,486 59% 1.28% 1.28% 5.21%
2.26% 56,697 51% 1.27% 1.27% 4.95%
(16.00%) 33,025 18% 1.30%(1) 1.30%(1) 5.02%(1)

33.85% $227,759 67% 1.15% 1.15% (0.13)%
8.81% 74,192 85% 1.24% 1.24% (0.36%)
(0.10%) 41,788 58% 1.31%(1) 1.31%(1) (0.21%)(1)

(8.82%) $704,897 84% 0.78% 0.78% 0.84%
21.23% 633,567 101% 0.79% 0.77% 0.74%
27.90% 289,551 162% 0.80%(1) 0.86%(1) 1.07%(1)

(20.95%) $791,839 136% 1.13% 1.13% (0.67%)
55.90% 841,984 133% 1.14%(1) 1.14%(1) (0.67%)(1)

(7.19%) $29,514 100% 1.56% 1.87% 0.08%
10.40% 1,291 142% 1.75%(1) 2.11%(1) 0.75%(1)

(6.53%) $82,051 243% 1.20% 1.23% 0.08%
13.00% 4,868 60% 1.35%(1) 1.35%(1) 0.76%(1)

1.19% $77,618 62% 1.23% 1.26% 0.34%
5.20% 8,757 6% 1.23%(1) 1.23%(1) 1.45%(1)

(31.60%) $205,079 123% 1.24%(1) 1.23%(1) (0.05%)(1)

(33.60%) $65,098 55% 1.28% 1.28% 1.18%
---------------------------------------------------------------------------------------------------------------------------

AMERICAN SKANDIA TRUST
FINANCIAL HIGHLIGHTS
PER SHARE DATA (FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
INCREASE (DECREASE) FROM
INVESTMENT OPERATIONS LESS DISTRIBUTIONS

NET ASSET NET NET ASSET
VALUE INVESTMENT NET REALIZED TOTAL FROM FROM NET FROM NET VALUE

PERIOD BEGINNING INCOME & UNREALIZED INVESTMENT INVESTMENT REALIZED TOTAL END
PORTFOLIO ENDED OF PERIOD (LOSS) GAIN (LOSS) OPERATIONS INCOME GAINS DISTRIBUTIONS OF PERIOD

AST Federated 12/31/00(2) $10.00 $ 0.01 $(0.91) $(0.90) $ -- $ -- $ -- $9.10
Aggressive Growth

AST Gabelli All-Cap 12/31/00(2) $10.00 $ 0.03 $0.06 $0.09$ -- $ -- $ -- $10.09
Value

AST Janus Strategic 12/31/00(2) $10.00 $ 0.03 $(0.18) $(0.15) $ -- $ -- $ -- $9.85
Value

AST Kinetics Internet 12/31/00(2) $10.00 $(0.01) $(1.96) $(1.97) $ -- $ -- $ -- $8.03

AST Lord Abbett Bond 12/31/00(2) $10.00 $ 0.02 $0.13 $0.15 $ -- $ -- $ -- $10.15
Debenture

AST Scudder Japan 12/31/00(2) $10.00 $ (0.01) $(1.71) $(1.72) $ (0.01) $ -- $ (0.01) $8.27

---------------------------------------------------------------------------------------------------------------------------
(1) Annualized.
(2) Commenced operations on October 23, 2001.
* Includes commissions received by American Skandia Marketing, Inc. under the Trust's Distribution Plan, as described in
this Prospectus under "Management of the Trust - Distribution Plan".

RATIOS OF EXPENSES
SUPPLEMENTAL DATA TO AVERAGE NET ASSETS*

(9.00%) $1,938 49% 1.35%(1) 7.22%(1) 2.67%(1)

0.90% $14,165 31% 1.45%(1) 1.59%(1) 2.71%(1)

(1.50%) $6,351 1% 1.35%(1) 2.41%(1) 3.39%(1)

(19.70%) $955 14% 1.40%(1) 5.34%(1) (0.67%)(1)

1.50% $6,783 9% 1.20%(1) 3.07%(1) 4.39%(1)

(17.26%) $3,183 89% 1.75%(1) 2.78%(1) (0.26%)(1)

CERTAIN RISK FACTORS AND INVESTMENT METHODS:

The following is a description of certain securities and investment methods that the Portfolios may invest in or use, and
certain of the risks associated with such securities and investment methods. The primary investment focus of each Portfolio is
described above under "Investment Objective and Policies" and an investor should refer to that section to obtain information about
each Portfolio. In general, whether a particular Portfolio may invest in a specific type of security or use an investment method is
described above or in the Trust's SAI under "Investment Objectives and Policies." As noted below, however, certain risk factors and
investment methods apply to all or most of the Portfolios.

DERIVATIVE INSTRUMENTS:

To the extent permitted by the investment objectives and policies of a Portfolio, a Portfolio may invest in securities and
other instruments that are commonly referred to as "derivatives." For instance, a Portfolio may purchase and write (sell) call and
put options on securities, securities indices and foreign currencies, enter into futures contracts and use options on futures
contracts, and enter into swap agreements with respect to foreign currencies, interest rates, and securities indices. In general,
derivative instruments are securities or other instruments whose value is derived from or related to the value of some other
instrument or asset.

There are many types of derivatives and many different ways to use them. Some derivatives and derivative strategies involve
very little risk, while others can be extremely risky and can lead to losses in excess of the amount invested in the derivative. A
Portfolio may use derivatives to hedge against changes in interest rates, foreign currency exchange rates or securities prices, to
generate income, as a low cost method of gaining exposure to a particular securities market without investing directly in those
securities, or for other reasons.

The use of these strategies involves certain special risks, including the risk that the price movements of derivative
instruments will not correspond exactly with those of the investments from which they are derived. In addition, strategies involving
derivative instruments that are intended to reduce the risk of loss can also reduce the opportunity for gain. Furthermore,
regulatory requirements for a Portfolio to set aside assets to meet its obligations with respect to derivatives may result in a
Portfolio being unable to purchase or sell securities when it would otherwise be favorable to do so, or in a Portfolio needing to
sell securities at a disadvantageous time. A Portfolio may also be unable to close out its derivatives positions when desired.
There is no assurance that a Portfolio will engage in derivative transactions. Certain derivative instruments and some of their
risks are described in more detail below.

Options. Most of the Portfolios may purchase or write (sell) call or put options on securities, financial indices or
currencies. The purchaser of an option on a security or currency obtains the right to purchase (in the case of a call option) or
sell (in the case of a put option) the security or currency at a specified price within a limited period of time. Upon exercise by
the purchaser, the writer (seller) of the option has the obligation to buy or sell the underlying security at the exercise price. An
option on a securities index is similar to an option on an individual security, except that the value of the option depends on the
value of the securities comprising the index, and all settlements are made in cash.

A Portfolio will pay a premium to the party writing the option when it purchases an option. In order for a call option
purchased by a Portfolio to be profitable, the market price of the underlying security must rise sufficiently above the exercise
price to cover the premium and other transaction costs. Similarly, in order for a put option to be profitable, the market price of
the underlying security must decline sufficiently below the exercise price to cover the premium and other transaction costs.

Generally, the Portfolios will write call options only if they are covered (i.e., the Portfolio owns the security subject to
the option or has the right to acquire it without additional cost). By writing a call option, a Portfolio assumes the risk that it
may be required to deliver a security for a price lower than its market value at the time the option is exercised. Effectively, a
Portfolio that writes a covered call option gives up the opportunity for gain above the exercise price should the market price of the
underlying security increase, but retains the risk of loss should the price of the underlying security decline. A Portfolio will
write call options in order to obtain a return from the premiums received and will retain the premiums whether or not the options are
exercised, which will help offset a decline in the market value of the underlying securities. A Portfolio that writes a put option
likewise receives a premium, but assumes the risk that it may be required to purchase the underlying security at a price in excess of
its current market value.

A Portfolio may sell an option that it has previously purchased prior to the purchase or sale of the underlying security.
Any such sale would result in a gain or loss depending on whether the amount received on the sale is more or less than the premium
and other transaction costs paid on the option. A Portfolio may terminate an option it has written by entering into a closing
purchase transaction in which it purchases an option of the same series as the option written.

Futures Contracts and Related Options. Each Portfolio (except the AST Neuberger Berman Mid-Cap Growth Portfolio, the AST
Neuberger Berman Mid-Cap Value Portfolio, the AST Federated High Yield Portfolio, the AST Lord Abbett Bond-Debenture Portfolio and
the AST Money Market Portfolio) may enter into financial futures contracts and related options. The seller of a futures contract
agrees to sell the securities or currency called for in the contract and the buyer agrees to buy the securities or currency at a
specified price at a specified future time. Financial futures contracts may relate to securities indices, interest rates or foreign
currencies. Futures contracts are usually settled through net cash payments rather than through actual delivery of the securities
underlying the contract. For instance, in a stock index futures contract, the two parties agree to take or make delivery of an
amount of cash equal to a specified dollar amount times the difference between the stock index value when the contract expires and
the price specified in the contract. A Portfolio may use futures contracts to hedge against movements in securities prices,
interest rates or currency exchange rates, or as an efficient way to gain exposure to these markets.

An option on a futures contract gives the purchaser the right, in return for the premium paid, to assume a position in the
contract at the exercise price at any time during the life of the option. The writer of the option is required upon exercise to
assume the opposite position.

Under regulations of the Commodity Futures Trading Commission ("CFTC"), no Portfolio will:

(i) purchase or sell futures or options on futures contracts or stock indices for purposes other than bona fide hedging
transactions (as defined by the CFTC) if as a result the sum of the initial margin deposits and premiums required to establish
positions in futures contracts and related options that do not fall within the definition of bona fide hedging transactions would
exceed 5% of the fair market value of each Portfolio's net assets; and

(ii) enter into any futures contracts if the aggregate amount of that Portfolio's commitments under outstanding futures
contracts positions would exceed the market value of its total assets.

Risks of Options and Futures Contracts. Options and futures contracts can be highly volatile and their use can reduce a
Portfolio's performance. Successful use of these strategies requires the ability to predict future movements in securities prices,
interest rates, currency exchange rates, and other economic factors. If a Sub-advisor seeks to protect a Portfolio against potential
adverse movements in the relevant financial markets using these instruments, and such markets do not move in the predicted direction,
the Portfolio could be left in a less favorable position than if such strategies had not been used. A Portfolio's potential losses
from the use of futures extends beyond its initial investment in such contracts.

Among the other risks inherent in the use of options and futures are (a) the risk of imperfect correlation between the price
of options and futures and the prices of the securities or currencies to which they relate, (b) the fact that skills needed to use
these strategies are different from those needed to select portfolio securities and (c) the possible need to defer closing out
certain positions to avoid adverse tax consequences. With respect to options on stock indices and stock index futures, the risk of
imperfect correlation increases the more the holdings of the Portfolio differ from the composition of the relevant index. These
instruments may not have a liquid secondary market. Option positions established in the over-the-counter market may be particularly
illiquid and may also involve the risk that the other party to the transaction fails to meet its obligations.

FOREIGN SECURITIES:

Investments in securities of foreign issuers may involve risks that are not present with domestic investments. While
investments in foreign securities can reduce risk by providing further diversification, such investments involve "sovereign risks" in
addition to the credit and market risks to which securities generally are subject. Sovereign risks includes local political or
economic developments, potential nationalization, withholding taxes on dividend or interest payments, and currency blockage (which
would prevent cash from being brought back to the United States). Compared to United States issuers, there is generally less
publicly available information about foreign issuers and there may be less governmental regulation and supervision of foreign stock
exchanges, brokers and listed companies. Foreign issuers are not generally subject to uniform accounting and auditing and financial
reporting standards, practices and requirements comparable to those applicable to domestic issuers. In some countries, there may
also be the possibility of expropriation or confiscatory taxation, difficulty in enforcing contractual and other obligations,
political or social instability or revolution, or diplomatic developments that could affect investments in those countries.

Securities of some foreign issuers are less liquid and their prices are more volatile than securities of comparable domestic
issuers. Further, it may be more difficult for the Trust's agents to keep currently informed about corporate actions and decisions
that may affect the price of portfolio securities. Brokerage commissions on foreign securities exchanges, which may be fixed, may be
higher than in the United States. Settlement of transactions in some foreign markets may be less frequent or less reliable than in
the United States, which could affect the liquidity of investments. For example, securities that are traded in foreign markets may
trade on days (such as Saturday or Holidays) when a Portfolio does not compute its price or accept purchase or redemption orders. As
a result, a shareholder may not be able to act on developments taking place in foreign countries as they occur.

American Depositary Receipts ("ADRs"), European Depositary Receipts ("EDRs"), Global Depositary Receipts ("GDRs"), and
International Depositary Receipts ("IDRs"). ADRs are U.S. dollar-denominated receipts generally issued by a domestic bank evidencing
its ownership of a security of a foreign issuer. ADRs generally are publicly traded in the United States. ADRs are subject to many
of the same risks as direct investments in foreign securities, although ownership of ADRs may reduce or eliminate certain risks
associated with holding assets in foreign countries, such as the risk of expropriation. EDRs, GDRs and IDRs are receipts similar to
ADRs that typically trade in countries other than the United States.

Depositary receipts may be issued as sponsored or unsponsored programs. In sponsored programs, the issuer makes
arrangements to have its securities traded as depositary receipts. In unsponsored programs, the issuer may not be directly involved
in the program. Although regulatory requirements with respect to sponsored and unsponsored programs are generally similar, the
issuers of unsponsored depositary receipts are not obligated to disclose material information in the United States and, therefore,
the import of such information may not be reflected in the market value of such securities.

Developing Countries. Although none of the Portfolios invest primarily in securities of issuers in developing countries,
many of the Funds may invest in these securities to some degree. Many of the risks described above with respect to investing in
foreign issuers are accentuated when the issuers are located in developing countries. Developing countries may be politically and/or
economically unstable, and the securities markets in those countries may be less liquid or subject to inadequate government
regulation and supervision. Developing countries have often experienced high rates of inflation or sharply devalued their currencies
against the U.S. dollar, causing the value of investments in companies located in these countries to decline. Securities of issuers
in developing countries may be more volatile and, in the case of debt securities, more uncertain as to payment of interest and
principal. Investments in developing countries may include securities created through the Brady Plan, under which certain
heavily-indebted countries have restructured their bank debt into bonds.

Currency Fluctuations. Investments in foreign securities may be denominated in foreign currencies. The value of a
Portfolio's investments denominated in foreign currencies may be affected, favorably or unfavorably, by exchange rates and exchange
control regulations. A Portfolio's share price may, therefore, also be affected by changes in currency exchange rates. Foreign
currency exchange rates generally are determined by the forces of supply and demand in foreign exchange markets, including
perceptions of the relative merits of investment in different countries, actual or perceived changes in interest rates or other
complex factors. Currency exchange rates also can be affected unpredictably by the intervention or the failure to intervene by U.S.
or foreign governments or central banks, or by currency controls or political developments in the U.S. or abroad. In addition, a
Portfolio may incur costs in connection with conversions between various currencies.

Foreign Currency Transactions. A Portfolio that invests in securities denominated in foreign currencies will need to engage
in foreign currency exchange transactions. Such transactions may occur on a "spot" basis at the exchange rate prevailing at the time
of the transaction. Alternatively, a Portfolio may enter into forward foreign currency exchange contracts. A forward contract
involves an obligation to purchase or sell a specified currency at a specified future date at a price set at the time of the
contract. A Portfolio may enter into a forward contract when it wishes to "lock in" the U.S. dollar price of a security it expects
to or is obligated to purchase or sell in the future. This practice may be referred to as "transaction hedging." In addition, when
a Portfolio's Sub-advisor believes that the currency of a particular country may suffer or enjoy a significant movement compared to
another currency, the Portfolio may enter into a forward contract to sell or buy the first foreign currency (or a currency that acts
as a proxy for such currency). This practice may be referred to as "portfolio hedging." In any event, the precise matching of the
forward contract amounts and the value of the securities involved generally will not be possible. No Portfolio will enter into a
forward contract if it would be obligated to sell an amount of foreign currency in excess of the value of the Fund's securities or
other assets denominated in or exposed to that currency, or will sell an amount of proxy currency in excess of the value of
securities denominated in or exposed to the related currency. The effect of entering into a forward contract on a Portfolio's share
price will be similar to selling securities denominated in one currency and purchasing securities denominated in another. Although a
forward contract may reduce a Portfolio's losses on securities denominated in foreign currency, it may also reduce the potential for
gain on the securities if the currency's value moves in a direction not anticipated by the Sub-advisor. In addition, foreign
currency hedging may entail significant transaction costs.

COMMON AND PREFERRED STOCKS:

Stocks represent shares of ownership in a company. Generally, preferred stock has a specified dividend and ranks after
bonds and before common stocks in its claim on the company's income for purposes of receiving dividend payments and on the company's
assets in the event of liquidation. (Some of the Sub-advisors consider preferred stocks to be equity securities for purposes of the
various Portfolios' investment policies and restrictions, while others consider them fixed income securities.) After other claims
are satisfied, common stockholders participate in company profits on a pro rata basis; profits may be paid out in dividends or
reinvested in the company to help it grow. Increases and decreases in earnings are usually reflected in a company's stock price, so
common stocks generally have the greatest appreciation and depreciation potential of all corporate securities.

FIXED INCOME SECURITIES:

Most of the Portfolios, including the Portfolios that invest primarily in equity securities, may invest to some degree in
bonds, notes, debentures and other obligations of corporations and governments. Fixed-income securities are generally subject to two
kinds of risk: credit risk and market risk. Credit risk relates to the ability of the issuer to meet interest and principal payments
as they come due. The ratings given a security by Moody's Investors Service, Inc. ("Moody's") and Standard & Poor's Corporation
("S&P"), which are described in detail in the Appendix to the Company's SAI, provide a generally useful guide as to such credit
risk. The lower the rating, the greater the credit risk the rating service perceives to exist with respect to the security.
Increasing the amount of Portfolio assets invested in lower-rated securities generally will increase the Portfolio's income, but also
will increase the credit risk to which the Portfolio is subject. Market risk relates to the fact that the prices of fixed income
securities generally will be affected by changes in the level of interest rates in the markets generally. An increase in interest
rates will tend to reduce the prices of such securities, while a decline in interest rates will tend to increase their prices. In
general, the longer the maturity or duration of a fixed income security, the more its value will fluctuate with changes in interest
rates.

Lower-Rated Fixed Income Securities. Lower-rated high-yield bonds (commonly known as "junk bonds") are those that are rated
lower than the four highest categories by a nationally recognized statistical rating organization (for example, lower than Baa by
Moody's or BBB by S&P), or, if not rated, are of equivalent investment quality as determined by the Sub-advisor. Lower-rated bonds
are generally considered to be high risk investments as they are subject to greater credit risk than higher-rated bonds. In
addition, the market for lower-rated bonds may be thinner and less active than the market for higher-rated bonds, and the prices of
lower-rated high-yield bonds may fluctuate more than the prices of higher-rated bonds, particularly in times of market stress.
Because the risk of default is higher in lower-rated bonds, a Sub-advisor's research and analysis tend to be very important
ingredients in the selection of these bonds. In addition, the exercise by an issuer of redemption or call provisions that are common
in lower-rated bonds may result in their replacement by lower yielding bonds.

Bonds rated in the four highest ratings categories are frequently referred to as "investment grade." However, bonds rated
in the fourth category (Baa or BBB) are considered medium grade and may have speculative characteristics.

MORTGAGE-BACKED SECURITIES:

Mortgage-backed securities are securities representing interests in "pools" of mortgage loans on residential or commercial
real property and that generally provide for monthly payments of both interest and principal, in effect "passing through" monthly
payments made by the individual borrowers on the mortgage loans (net of fees paid to the issuer or guarantor of the securities).
Mortgage-backed securities are frequently issued by U.S. Government agencies or Government-sponsored enterprises, and payments of
interest and principal on these securities (but not their market prices) may be guaranteed by the full faith and credit of the U.S.
Government or by the agency only, or may be supported by the issuer's ability to borrow from the U.S. Treasury. Mortgage-backed
securities created by non-governmental issuers may be supported by various forms of insurance or guarantees.

Like other fixed-income securities, the value of a mortgage-backed security will generally decline when interest rates
rise. However, when interest rates are declining, their value may not increase as much as other fixed-income securities, because
early repayments of principal on the underlying mortgages (arising, for example, from sale of the underlying property, refinancing,
or foreclosure) may serve to reduce the remaining life of the security. If a security has been purchased at a premium, the value of
the premium would be lost in the event of prepayment. Prepayments on some mortgage-backed securities may necessitate that a
Portfolio find other investments, which, because of intervening market changes, will often offer a lower rate of return. In
addition, the mortgage securities market may be particularly affected by changes in governmental regulation or tax policies.

Collateralized Mortgage Obligations (CMOs). CMOs are a type of mortgage pass-through security that are typically issued in
multiple series with each series having a different maturity. Principal and interest payments from the underlying collateral are
first used to pay the principal on the series with the shortest maturity; in turn, the remaining series are paid in order of their
maturities. Therefore, depending on the type of CMOs in which a Portfolio invests, the investment may be subject to greater or
lesser risk than other types of mortgage-backed securities.

Stripped Mortgage-Backed Securities. Stripped mortgage-backed securities are mortgage pass-through securities that have
been divided into interest and principal components. "IOs" (interest only securities) receive the interest payments on the
underlying mortgages while "POs" (principal only securities) receive the principal payments. The cash flows and yields on IO and PO
classes are extremely sensitive to the rate of principal payments (including prepayments) on the underlying mortgage loans. If the
underlying mortgages experience higher than anticipated prepayments, an investor in an IO class of a stripped mortgage-backed
security may fail to recoup fully its initial investment, even if the IO class is highly rated or is derived from a security
guaranteed by the U.S. Government. Conversely, if the underlying mortgage assets experience slower than anticipated prepayments, the
price on a PO class will be affected more severely than would be the case with a traditional mortgage-backed security. Unlike other
fixed-income and other mortgage-backed securities, the value of IOs tends to move in the same direction as interest rates.

ASSET-BACKED SECURITIES:

Asset-backed securities conceptually are similar to mortgage pass-through securities, but they are secured by and payable
from payments on assets such as credit card, automobile or trade loans, rather than mortgages. The credit quality of these
securities depends primarily upon the quality of the underlying assets and the level of credit support or enhancement provided. In
addition, asset-backed securities involve prepayment risks that are similar in nature to those of mortgage pass-through securities.

CONVERTIBLE SECURITIES AND WARRANTS:

Certain of the Portfolios may invest in convertible securities. Convertible securities are bonds, notes, debentures and
preferred stocks that may be converted into or exchanged for shares of common stock. Many convertible securities are rated below
investment grade because they fall below ordinary debt securities in order of preference or priority on the issuer's balance sheet.
Convertible securities generally participate in the appreciation or depreciation of the underlying stock into which they are
convertible, but to a lesser degree. Frequently, convertible securities are callable by the issuer, meaning that the issuer may
force conversion before the holder would otherwise choose.

Warrants are options to buy a stated number of shares of common stock at a specified price any time during the life of the
warrants. The value of warrants may fluctuate more than the value of the securities underlying the warrants. A warrant will expire
without value if the rights under such warrant are not exercised prior to its expiration date.

WHEN-ISSUED, DELAYED-DELIVERY AND FORWARD COMMITMENT TRANSACTIONS:

The Portfolios (other than the AST Founders Passport Portfolio, the AST Scudder Japan Portfolio, the AST Scudder Small-Cap
Growth Portfolio, the Alger All-Cap Growth Portfolio, the AST Alliance Growth Portfolio, the AST Alliance/Bernstein Growth + Value
Portfolio, the AST Sanford Bernstein Core Value Portfolio, the AST Cohen & Steers Realty Portfolio, the AST Sanford Bernstein Managed
Index 500 Portfolio, and the AST Alliance Growth and Income Portfolio) may purchase securities on a when-issued, delayed-delivery or
forward commitment basis. These transactions generally involve the purchase of a security with payment and delivery due at some time
in the future. A Portfolio does not earn interest on such securities until settlement and bears the risk of market value
fluctuations in between the purchase and settlement dates. If the seller fails to complete the sale, the Portfolio may lose the
opportunity to obtain a favorable price and yield. While the Portfolios will generally engage in such when-issued, delayed-delivery
and forward commitment transactions with the intent of actually acquiring the securities, a Portfolio may sometimes sell such a
security prior to the settlement date. The AST Money Market Portfolio will not enter into these commitments if they would exceed 15%
of the value of the Portfolio's total assets less its liabilities other than liabilities created by these commitments.

Certain Portfolios may also sell securities on a delayed-delivery or forward commitment basis. If the Portfolio
does so, it will not participate in future gains or losses on the security. If the other party to such a transaction fails to pay
for the securities, the Portfolio could suffer a loss.

ILLIQUID AND RESTRICTED SECURITIES:

Subject to guidelines adopted by the Trustees of the Trust, each Portfolio may invest up to 15% of its net assets in
illiquid securities (except for the AST Money Market Portfolio, which is limited to 10% of net assets, and the AST Alliance/Bernstein
Growth + Value Portfolio, the AST Sanford Bernstein Core Value Portfolio and the AST Sanford Bernstein Managed Index 500 Portfolio,
which is limited to 5% of its net assets). Illiquid securities are those that, because of the absence of a readily available market
or due to legal or contractual restrictions on resale, cannot be sold within seven days in the ordinary course of business at
approximately the amount at which the Portfolio has valued the investment. Therefore, a Portfolio may find it difficult to sell
illiquid securities at the time considered most advantageous by its Sub-advisor and may incur expenses that would not be incurred in
the sale of securities that were freely marketable.

Certain securities that would otherwise be considered illiquid because of legal restrictions on resale to the general public
may be traded among qualified institutional buyers under Rule 144A of the Securities Act of 1933. These Rule 144A securities, and
well as commercial paper that is sold in private placements under Section 4(2) of the Securities Act, may be deemed liquid by the
Portfolio's Sub-advisor under the guidelines adopted by the Trustees of the Trust. However, the liquidity of a Portfolio's
investments in Rule 144A securities could be impaired if trading does not develop or declines.

REPURCHASE AGREEMENTS:

Each Portfolio may enter into repurchase agreements. Repurchase agreements are agreements by which a Portfolio purchases a
security and obtains a simultaneous commitment from the seller to repurchase the security at an agreed upon price and date. The
resale price is in excess of the purchase price and reflects an agreed upon market rate unrelated to the coupon rate on the purchased
security. Repurchase agreements must be fully collateralized and can be entered into only with well-established banks and
broker-dealers that have been deemed creditworthy by the Sub-advisor. Repurchase transactions are intended to be short-term
transactions, usually with the seller repurchasing the securities within seven days. Repurchase agreements that mature in more than
seven days are subject to a Portfolio's limit on illiquid securities.

A Portfolio that enters into a repurchase agreement may lose money in the event that the other party defaults on its
obligation and the Portfolio is delayed or prevented from disposing of the collateral. A Portfolio also might incur a loss if the
value of the collateral declines, and it might incur costs in selling the collateral or asserting its legal rights under the
agreement. If a defaulting seller filed for bankruptcy or became insolvent, disposition of collateral might be delayed pending court
action.

The AST Neuberger Berman Mid-Cap Growth Portfolio will not invest more than 25% of its net assets in repurchase agreements.

REVERSE REPURCHASE AGREEMENTS:

Certain Portfolios (specifically, the AST Janus Overseas Growth Portfolio, the AST Janus Small-Cap Growth Portfolio, the AST
Janus Mid-Cap Growth Portfolio, the AST Neuberger Berman Mid-Cap Growth Portfolio, the AST Neuberger Berman Mid-Cap Value Portfolio,
the AST Marsico Capital Growth Portfolio, the AST JanCap Growth Portfolio, the AST Janus Strategic Value Portfolio, the AST Lord
Abbett Bond-Debenture Portfolio, the AST PIMCO Total Return Bond Portfolio, the AST PIMCO Limited Maturity Bond Portfolio and the AST
Money Market Portfolio) may enter into reverse repurchase agreements. In a reverse repurchase agreement, a Portfolio sells a
portfolio instrument and agrees to repurchase it at an agreed upon date and price, which reflects an effective interest rate. It may
also be viewed as a borrowing of money by the Portfolio and, like borrowing money, may increase fluctuations in a Portfolio's share
price. When entering into a reverse repurchase agreement, a Portfolio must set aside on its books cash or other liquid assets in an
amount sufficient to meet its repurchase obligation.

BORROWING:

Each Portfolio may borrow money from banks. Each Portfolio's borrowings are limited so that immediately after such
borrowing the value of the Portfolio's assets (including borrowings) less its liabilities (not including borrowings) is at least
three times the amount of the borrowings. Should a Portfolio, for any reason, have borrowings that do not meet the above test, such
Portfolio must reduce such borrowings so as to meet the necessary test within three business days. Certain Portfolios (the AST
Founders Passport Portfolio, the AST AIM International Equity Portfolio, the AST Gabelli Small-Cap Value Portfolio, the AST Neuberger
Berman Mid-Cap Growth Portfolio, the AST Neuberger Berman Mid-Cap Value Portfolio, the AST Gabelli All-Cap Value Portfolio, the AST
T. Rowe Price Natural Resources Portfolio, the AST AIM Balanced Portfolio, the AST T. Rowe Price Asset Allocation Portfolio and the
AST Money Market Portfolio) will not purchase securities when outstanding borrowings are greater than 5% of the Portfolio's total
assets. If a Portfolio borrows money, its share price may fluctuate more widely until the borrowing is repaid.

LENDING PORTFOLIO SECURITIES:

Each Portfolio may lend securities with a value of up to 33 1/3% of its total assets to broker-dealers, institutional
investors, or others for the purpose of realizing additional income. Voting rights on loaned securities typically pass to the
borrower, although a Portfolio has the right to terminate a securities loan, usually within three business days, in order to vote on
significant matters or for other reasons. All securities loans will be collateralized by cash or securities issued or guaranteed by
the U.S. Government or its agencies at least equal in value to the market value of the loaned securities. Nonetheless, lending
securities involves certain risks, including the risk that the Portfolio will be delayed or prevented from recovering the collateral
if the borrower fails to return a loaned security.

OTHER INVESTMENT COMPANIES:

The Company has made arrangements with certain money market mutual funds so that the Sub-advisors for the various Portfolios
can "sweep" excess cash balances of the Portfolios to those funds for temporary investment purposes. In addition, certain
Sub-advisors may invest Portfolio assets in money market funds that they advise or in other investment companies. Mutual funds pay
their own operating expenses, and the Portfolios, as shareholders in the money market funds, will indirectly pay their proportionate
share of such funds' expenses.

SHORT SALES "AGAINST THE BOX":

While none of the Portfolios will make short sales generally, the AST AIM International Equity Portfolio, the AST Janus
Overseas Growth Portfolio, the AST American Century International Growth Portfolio, the AST American Century International Growth
Portfolio II, the AST Janus Small-Cap Growth Portfolio, the AST Goldman Sachs Small-Cap Value Portfolio, the AST Janus Mid-Cap Growth
Portfolio, the AST JanCap Growth Portfolio, the AST Janus Strategic Value Portfolio, the AST American Century Income & Growth
Portfolio, the AST MFS Growth with Income Portfolio, the AST Gabelli All-Cap Value Portfolio, the AST INVESCO Equity Income
Portfolio, the AST AIM Balanced Portfolio, the AST American Century Strategic Balanced Portfolio, the AST PIMCO Total Return Bond
Portfolio and the AST PIMCO Limited Maturity Bond Portfolio may make short sales "against the box." A short sale against the box
involves selling a security that the Portfolio owns, or has the right to obtain without additional costs, for delivery at a specified
date in the future. A Portfolio may make a short sale against the box to hedge against anticipated declines in the market price of a
portfolio security. If the value of the security sold short increases instead, the Portfolio loses the opportunity to participate in
the gain.

Mailing Address
American Skandia Trust
One Corporate Drive
Shelton, CT 06484

Investment Manager
American Skandia Investment Services, Incorporated
One Corporate Drive
Shelton, CT 06484

Sub-Advisors
A I M Capital Management, Inc.
Alliance Capital Management L.P.
American Century Investment Management, Inc.
Cohen & Steers Capital Management, Inc.
Federated Investment Counseling
Founders Asset Management LLC
Fred Alger Management, Inc.
GAMCO Investors, Inc.

Goldman Sachs Asset Management
Kinetics Asset Management, Inc.
INVESCO Funds Group, Inc.
Janus Capital Corporation
J.P. Morgan Investment Management Inc.
Lord, Abbett & Co.
Marsico Capital Management, LLC
Massachusetts Financial Services Company
Neuberger Berman Management Inc.
Pacific Investment Management Company LLC
Sanford C. Bernstein & Co., LLC
T. Rowe Price Associates, Inc.
T. Rowe Price International, Inc.
Zurich Scudder Investments, Inc.

Custodians
PFPC Trust Company
Airport Business Center, International Court 2
200 Stevens Drive
Philadelphia, PA 19113

The Chase Manhattan Bank
One Pierrepont Plaza
Brooklyn, NY 11201

Administrator
Transfer and Shareholder Servicing Agent
PFPC Inc.
103 Bellevue Parkway
Wilmington, DE 19809

Independent Accountants
Deloitte & Touche LLP
Two World Financial Center
New York, NY 10281

Legal Counsel
Stradley Ronon Stevens & Young, LLP
2600 One Commerce Square
Philadelphia, PA 19103

INVESTOR INFORMATION SERVICES:

Shareholder inquiries should be made by calling (800) 752-6342 or by writing to the American Skandia Trust at One Corporate
Drive, Shelton, Connecticut 06484.

Additional information about the Portfolios is included in a Statement of Additional Information, which is incorporated by
reference into this Prospectus. Additional information about the Portfolios' investments is available in the annual and semi-annual
reports to holders of variable annuity contracts and variable life insurance policies. In the annual reports, you will find a
discussion of the market conditions and investment strategies that significantly affected each Portfolio's performance during its
last fiscal year. The Statement of Additional Information and additional copies of annual and semi-annual reports are available
without charge by calling the above number.

Delivery of Prospectus and other Documents to Households. To lower costs and eliminate duplicate documents sent to your
address, the Trust, in accordance with applicable laws and regulations, may begin mailing only one copy of the Trust's prospectus,
prospectus supplements, annual and semi-annual reports, proxy statements and information statements, or any other required documents
to your address even if more than one shareholder lives there. If you have previously consented to have any of these documents
delivered to multiple investors at a shared address, as required by law, and wish to revoke this consent of otherwise would prefer to
continue to receive your own copy, you should call 1-800-SKANDIA or write to "American Skandia Trust, c/o American Skandia Life
Assurance Corporation." at P.O. Box 7038, Bridgeport, CT 06601-9642. The Trust will begin sending individual copies to you within
thirty days of receipt of revocation.

The information in the Trust's filings with the Securities and Exchange Commission (including the Statement of Additional
Information) is available from the Commission. Copies of this information may be obtained, upon payment of duplicating fees, by
electronic request to PUBLICINFO@SEC.GOV or by writing the Public Reference Section of the Commission, Washington, D.C. 20549-0102.
------------------
The information can also be reviewed and copied at the Commission's Public Reference Room in Washington, D.C. Information on the
operation of the Public Reference Room may be obtained by calling the Commission at 1-202-942-8090. Finally, information about the
Trust is available on the EDGAR database on the Commission's Internet site at HTTP://WWW.SEC.GOV.
------------------

Investment Company Act File No. 811-5186

STATEMENT OF ADDITIONAL INFORMATION May 1, 2001

AMERICAN SKANDIA TRUST

One Corporate Drive, Shelton, Connecticut 06484
-------------------------------------------------------------------------------------------------------------------

American Skandia Trust (the "Trust") is a managed, open-end investment company whose separate portfolios
("Portfolios") are diversified, unless otherwise indicated. The Trust seeks to meet the differing objectives of
its Portfolios. Currently, these Portfolios are the AST Founders Passport Portfolio, the AST Scudder Japan
Portfolio, the AST AIM International Equity Portfolio, the AST Janus Overseas Growth Portfolio, the AST American
Century International Growth Portfolio, the AST American Century International Growth Portfolio II, the AST MFS
Global Equity Portfolio, the AST Janus Small-Cap Growth Portfolio, the AST Scudder Small-Cap Growth Portfolio,
the AST Federated Aggressive Growth Portfolio, the AST Goldman Sachs Small-Cap Value Portfolio (formerly, the AST
Lord Abbett Small Cap Value Portfolio), the AST Gabelli Small-Cap Value Portfolio (formerly, the AST T. Rowe
Price Small Company Value Portfolio), the AST Janus Mid-Cap Growth Portfolio, the AST Neuberger Berman Mid-Cap
Growth Portfolio, the AST Neuberger Berman Mid-Cap Value Portfolio, the AST Alger All-Cap Growth Portfolio, the
AST Gabelli All-Cap Value Portfolio, the AST Kinetics Internet Portfolio, the AST T. Rowe Price Natural Resources
Portfolio, the AST Alliance Growth Portfolio, the AST MFS Growth Portfolio, the AST Marsico Capital Growth
Portfolio, the AST JanCap Growth Portfolio, the AST Janus Strategic Value Portfolio, the AST Alliance/Bernstein
Growth + Value Portfolio, the AST Sanford Bernstein Core Value Portfolio, the AST Cohen & Steers Realty
Portfolio, the AST Sanford Bernstein Managed Index 500 Portfolio, the AST American Century Income & Growth
Portfolio, the AST Alliance Growth and Income Portfolio, the AST MFS Growth with Income Portfolio, the AST
INVESCO Equity Income Portfolio, the AST AIM Balanced Portfolio, the AST American Century Strategic Balanced
Portfolio, the AST T. Rowe Price Asset Allocation Portfolio, the AST T. Rowe Price Global Bond Portfolio, the AST
Federated High Yield Portfolio, the AST Lord Abbett Bond-Debenture Portfolio, the AST PIMCO Total Return Bond
Portfolio, the AST PIMCO Limited Maturity Bond Portfolio and the AST Money Market Portfolio.

American Skandia Investment Services, Incorporated ("ASISI") is the investment manager ("Investment Manager") for
the Trust. Currently, ASISI engages a sub-advisor ("Sub-advisor") for each Portfolio. The Sub-advisor for each
Portfolio is as follows: (a) Founders Asset Management LLC: AST Founders Passport Portfolio; (b) Zurich Scudder
Investments, Inc.: AST Scudder Japan Portfolio, AST Scudder Small-Cap Growth Portfolio; (c) A I M Capital
Management, Inc.: AST AIM International Equity Portfolio, AST AIM Balanced Portfolio; (d) Janus Capital
Corporation: AST Janus Overseas Growth Portfolio, AST Janus Small-Cap Growth Portfolio, AST Janus Mid-Cap Growth
Portfolio, AST JanCap Growth Portfolio, AST Janus Strategic Value Portfolio; (e) American Century Investment
Management, Inc.: AST American Century International Growth Portfolio, AST American Century Income & Growth
Portfolio, AST American Century International Growth Portfolio II, AST American Century Strategic Balanced
Portfolio; (f) Massachusetts Financial Services Company: AST MFS Global Equity Portfolio, AST MFS Growth
Portfolio, AST MFS Growth with Income Portfolio; (g) Federated Investment Counseling: AST Federated Aggressive
Growth Portfolio, AST Federated High Yield Portfolio; (h) Goldman Sachs Assets Asset Management: AST Goldman
Sachs Small-Cap Value Portfolio: (i) GAMCO Investors, Inc.; AST Gabelli Small-Cap Value Portfolio, AST Gabelli
All-Cap Value Portfolio; (j) Fred Alger Management, Inc.: AST Alger All-Cap Growth Portfolio; (k) Neuberger
Berman Management Inc.: AST Neuberger Berman Mid-Cap Value Portfolio, AST Neuberger Berman Mid-Cap Growth
Portfolio; (l) Kinetics Asset Management, Inc.: AST Kinetics Internet Portfolio; (m) T. Rowe Price Associates,
Inc.: AST T. Rowe Price Natural Resources Portfolio, AST T. Rowe Price Asset Allocation Portfolio; (n) Alliance
Capital Management L.P.: AST Alliance Growth Portfolio, the growth portion of the AST Alliance/Bernstein Growth +
Value Portfolio, AST Alliance Growth and Income Portfolio; (o) Marsico Capital Management, LLC: AST Marsico
Capital Growth Portfolio; (p) Sanford C. Bernstein & Co., LLC; : the value portion of the AST Alliance/Bernstein
Growth + Value Portfolio, AST Sanford Bernstein Managed Index 500 Portfolio; (q) Cohen & Steers Capital
Management, Inc.: AST Cohen & Steers Realty Portfolio; (r) INVESCO Funds Group, Inc.: AST INVESCO Equity Income
Portfolio; (s) T. Rowe Price International, Inc.: AST T. Rowe Price Global Bond Portfolio (t) Lord, Abbett & Co.:
AST Lord Abbett Bond-Debenture Portfolio; (u) Pacific Investment Management Company LLC: AST PIMCO Total Return
Bond Portfolio, AST PIMCO Limited Maturity Bond Portfolio; and (u) J.P. Morgan Investment Management Inc.: AST
Money Market Portfolio.

This Statement of Additional Information is not a prospectus. It should be read in conjunction with the Trust's
current Prospectus, a copy of which may be obtained by writing the Trust's administrative office at One Corporate
Drive, Shelton, Connecticut 06484 or by calling (203) 926-1888.

This Statement relates to the Trust's Prospectus dated May 1, 2001.

TABLE OF CONTENTS
-----------------

Caption Page
------- ----
General Information and History...........................................................................................3
Investment Objectives and Policies........................................................................................3
AST Founders Passport Portfolio......................................................................................4
AST Scudder Japan Portfolio.........................................................................................10
AST AIM International Equity Portfolio..............................................................................22
AST Janus Overseas Growth Portfolio.................................................................................28
AST American Century International Growth Portfolio.................................................................31
AST American Century International Growth Portfolio II..............................................................36
AST MFS Global Equity Portfolio.....................................................................................36
AST Janus Small-Cap Growth Portfolio................................................................................45
AST Scudder Small-Cap Growth Portfolio..............................................................................48
AST Federated Aggressive Growth Portfolio...........................................................................51
AST Goldman Sachs Small-Cap Value Portfolio.........................................................................55
AST Gabelli Small-Cap Value Portfolio...............................................................................59
AST Janus Mid-Cap Growth Portfolio..................................................................................67
AST Neuberger Berman Mid-Cap Growth Portfolio.......................................................................72
AST Neuberger Berman Mid-Cap Value Portfolio........................................................................78
AST Alger All-Cap Growth Portfolio..................................................................................84
AST Gabelli All-Cap Value Portfolio.................................................................................87
AST Kinetics Internet Portfolio.....................................................................................92
AST T. Rowe Price Natural Resources Portfolio.......................................................................94
AST Alliance Growth Portfolio......................................................................................104
AST MFS Growth Portfolio...........................................................................................107
AST Marsico Capital Growth Portfolio...............................................................................116
AST JanCap Growth Portfolio........................................................................................118
AST Janus Strategic Value Portfolio................................................................................121
AST Alliance/Bernstein Growth + Value Portfolio....................................................................124
AST Sanford Bernstein Core Value Portfolio.........................................................................127
AST Cohen & Steers Realty Portfolio................................................................................130
AST Sanford Bernstein Managed Index 500 Portfolio..................................................................133
AST American Century Income & Growth Portfolio.....................................................................137
AST Alliance Growth and Income Portfolio...........................................................................142
AST MFS Growth with Income Portfolio...............................................................................144
AST INVESCO Equity Income Portfolio................................................................................152
AST AIM Balanced Portfolio.........................................................................................154
AST American Century Strategic Balanced Portfolio..................................................................160
AST T. Rowe Price Asset Allocation Portfolio.......................................................................164
AST T. Rowe Price Global Bond Portfolio............................................................................172
AST Federated High Yield Portfolio.................................................................................181
AST Lord Abbett Bond-Debenture Portfolio...........................................................................183
AST PIMCO Total Return Bond Portfolio..............................................................................183
AST PIMCO Limited Maturity Bond Portfolio..........................................................................196
AST Money Market Portfolio.........................................................................................209
Investment Restrictions.................................................................................................210
Certain Risk Factors and Investment Methods.............................................................................224
Portfolio Turnover......................................................................................................241
Organization and Management of the Trust................................................................................242
Investment Advisory and Other Services..................................................................................245
Brokerage Allocation....................................................................................................260
Allocation of Investments...............................................................................................263
Computation of Net Asset Values.........................................................................................263
Sale of Shares..........................................................................................................263
Description of Shares of the Trust......................................................................................265
Underwriter.............................................................................................................265
Tax Matters.............................................................................................................265
Performance.............................................................................................................266
Custodian...............................................................................................................269
Other Information.......................................................................................................269
Financial Statements....................................................................................................270
Appendix................................................................................................................271

GENERAL INFORMATION AND HISTORY:

Prior to May 1, 1992, the Trust was known as the Henderson International Growth Fund, which consisted of
only one portfolio. This Portfolio is now known as the AST AIM International Equity Portfolio (formerly, the AST
Putnam International Equity Portfolio and the Seligman Henderson International Equity Portfolio). The AST
Alliance Growth and Income Portfolio (formerly, the AST Lord Abbett Growth and Income Portfolio) was first
offered as of May 1, 1992. The AST JanCap Growth Portfolio and the AST Money Market Portfolio were first offered
as of November 4, 1992. The AST Neuberger Berman Mid-Cap Value Portfolio (formerly, the Federated Utility Income
Portfolio) and the AST AIM Balanced Portfolio (formerly, the AST Putnam Balanced Portfolio and the AST Phoenix
Balanced Asset Portfolio) were first offered as of May 1, 1993. The AST Federated High Yield Portfolio, the AST
T. Rowe Price Asset Allocation Portfolio, the AST American Century International Growth Portfolio II (formerly,
the AST T. Rowe Price International Equity Portfolio), the AST Janus Small-Cap Growth Portfolio (formerly, the
Founders Capital Appreciation Portfolio), the AST INVESCO Equity Income Portfolio and the AST PIMCO Total Return
Bond Portfolio were first offered as of December 31, 1993. The AST T. Rowe Price Global Bond Portfolio
(formerly, the AST Scudder International Bond Portfolio) was first offered as of May 1, 1994. The AST Neuberger
Berman Mid-Cap Growth Portfolio (formerly, the Berger Capital Growth Portfolio) was first offered as of October
19, 1994. The AST Founders Passport Portfolio (formerly, the Seligman Henderson International Small Cap
Portfolio), the AST T. Rowe Price Natural Resources Portfolio and the AST PIMCO Limited Maturity Bond Portfolio
were first offered as of May 2, 1995. The AST Alliance Growth Portfolio (formerly, the AST Oppenheimer Large-Cap
Growth Portfolio and the Robertson Stephens Value + Growth Portfolio) was first offered as of May 2, 1996. The
AST Janus Overseas Growth Portfolio, the AST Gabelli Small-Cap Value Portfolio (formerly, the AST T. Rowe Price
Small Company Value Portfolio), the AST American Century International Growth Portfolio, the AST American Century
Strategic Balanced Portfolio and the AST American Century Income & Growth Portfolio (formerly, the AST Putnam
Value Growth & Income Portfolio) were first offered as of January 2, 1997. The AST Marsico Capital Growth
Portfolio was first offered as of December 22, 1997. The AST Goldman Sachs Small-Cap Value Portfolio (formerly,
the AST Lord Abbett Small Cap Value Portfolio), the AST Cohen & Steers Realty Portfolio, and the AST Sanford
Bernstein Managed Index 500 Portfolio (formerly, the AST Bankers Trust Managed Index 500 Portfolio) were first
offered as of January 2, 1998. The AST Scudder Small-Cap Growth Portfolio was first offered as of January 4,
1999. The AST MFS Global Equity Portfolio, the AST MFS Growth Portfolio and the AST MFS Growth with Income
Portfolio were first offered as of October 18, 1999. The AST Alger All-Cap Growth Portfolio was first offered as
of December 30, 1999. The AST Janus Mid-Cap Growth Portfolio was first offered as of May 1, 2000. The AST
Scudder Japan Portfolio, the AST Federated Aggressive Growth Portfolio, the AST Gabelli All-Cap Value Portfolio,
the AST Kinetics Internet Portfolio, the AST Janus Strategic Value Portfolio and the AST Lord Abbett
Bond-Debenture Portfolio commenced operations on October 23, 2000. The AST Alliance/Bernstein Growth + Value
Portfolio and the AST Sanford Bernstein Core Value Portfolio had not been offered prior to the date of this
Statement.

INVESTMENT OBJECTIVES AND POLICIES:

The following information supplements, and should be read in conjunction with, the discussion in the
Trust's Prospectus of the investment objective and policies of each Portfolio. The investment objective and
supplemental information regarding the investment policies for each of the Portfolios are described below and
should be considered separately. Each Portfolio has a different investment objective and certain policies may
vary. As a result, the risks, opportunities and return in each Portfolio may differ. There can be no assurance
that any Portfolio's investment objective will be achieved. Certain risk factors in relation to various
securities and instruments in which the Portfolios may invest are described in this Statement and the Trust's
Prospectus under "Certain Risk Factors and Investment Methods."

The investment objective and the investment policies and limitations of each Portfolio, unless otherwise
specified, are not "fundamental" policies and may be changed by the Board of Trustees of the Trust without
approval of the shareholders of the affected Portfolio. Those investment policies specifically labeled as
fundamental, including those described in the "Investment Restrictions" section of this Statement, may not be
changed without shareholder approval. Fundamental investment policies of a Portfolio may be changed only with
the approval of at least the lesser of (1) 67% or more of the total shares of the Portfolio represented at a
meeting at which more than 50% of the outstanding shares of the Portfolio are represented, or (2) a majority of
the outstanding shares of the Portfolio.

AST Founders Passport Portfolio:

Investment Objective: The investment objective of the Portfolio is to seek capital appreciation.

Investment Policies:

Options On Stock Indices and Stocks. An option is a right to buy or sell a security at a specified
price within a limited period of time. The Portfolio may write ("sell") covered call options on any or all of
its portfolio securities. In addition, the Portfolio may purchase options on securities. The Portfolio may also
purchase put and call options on stock indices.

The Portfolio may write ("sell") options on any or all of its portfolio securities and at such time and
from time to time as the Sub-advisor shall determine to be appropriate. No specified percentage of the
Portfolio's assets is invested in securities with respect to which options may be written. The extent of the
Portfolio's option writing activities will vary from time to time depending upon the Sub-advisor's evaluation of
market, economic and monetary conditions.

When the Portfolio purchases a security with respect to which it intends to write an option, it is
likely that the option will be written concurrently with or shortly after purchase. The Portfolio will write an
option on a particular security only if the Sub-advisor believes that a liquid secondary market will exist on an
exchange for options of the same series, which will permit the Portfolio to enter into a closing purchase
transaction and close out its position. If the Portfolio desires to sell a particular security on which it has
written an option, it will effect a closing purchase transaction prior to or concurrently with the sale of the
security.

The Portfolio may enter into closing purchase transactions to reduce the percentage of its assets
against which options are written, to realize a profit on a previously written option, or to enable it to write
another option on the underlying security with either a different exercise price or expiration time or both.

Options written by the Portfolio will normally have expiration dates between three and nine months from
the date written. The exercise prices of options may be below, equal to or above the current market values of
the underlying securities at the times the options are written. From time to time for tax and other reasons, the
Portfolio may purchase an underlying security for delivery in accordance with an exercise notice assigned to it,
rather than delivering such security from its portfolio.

A stock index measures the movement of a certain group of stocks by assigning relative values to the
stocks included in the index. The Portfolio purchases put options on stock indices to protect the portfolio
against decline in value. The Portfolio purchases call options on stock indices to establish a position in
equities as a temporary substitute for purchasing individual stocks that then may be acquired over the option
period in a manner designed to minimize adverse price movements. Purchasing put and call options on stock
indices also permits greater time for evaluation of investment alternatives. When the Sub-advisor believes that
the trend of stock prices may be downward, particularly for a short period of time, the purchase of put options
on stock indices may eliminate the need to sell less liquid stocks and possibly repurchase them later. The
purpose of these transactions is not to generate gain, but to "hedge" against possible loss. Therefore,
successful hedging activity will not produce net gain to the Portfolio. Any gain in the price of a call option
is likely to be offset by higher prices the Portfolio must pay in rising markets, as cash reserves are invested.
In declining markets, any increase in the price of a put option is likely to be offset by lower prices of stocks
owned by the Portfolio.

The Portfolio may purchase only those put and call options that are listed on a domestic exchange or
quoted on the automatic quotation system of the National Association of Securities Dealers, Inc. ("NASDAQ").
Options traded on stock exchanges are either broadly based, such as the Standard & Poor's 500 Stock Index and 100
Stock Index, or involve stocks in a designated industry or group of industries. The Portfolio may utilize either
broadly based or market segment indices in seeking a better correlation between the indices and the portfolio.

Transactions in options are subject to limitations, established by each of the exchanges upon which
options are traded, governing the maximum number of options which may be written or held by a single investor or
group of investors acting in concert, regardless of whether the options are held in one or more accounts. Thus,
the number of options the Portfolio may hold may be affected by options held by other advisory clients of the
Sub-advisor. As of the date of this Statement, the Sub-advisor believes that these limitations will not affect
the purchase of stock index options by the Portfolio.

One risk of holding a put or a call option is that if the option is not sold or exercised prior to its
expiration, it becomes worthless. However, this risk is limited to the premium paid by the Portfolio. Other
risks of purchasing options include the possibility that a liquid secondary market may not exist at a time when
the Portfolio may wish to close out an option position. It is also possible that trading in options on stock
indices might be halted at a time when the securities markets generally were to remain open. In cases where the
market value of an issue supporting a covered call option exceeds the strike price plus the premium on the call,
the Portfolio will lose the right to appreciation of the stock for the duration of the option. For an additional
discussion of options on stock indices and stocks and certain risks involved therein, see this Statement and the
Trust's Prospectus under "Certain Risk Factors and Investment Methods."

Futures Contracts. The Portfolio may enter into futures contracts (or options thereon) for hedging
purposes. U.S. futures contracts are traded on exchanges which have been designated "contract markets" by the
Commodity Futures Trading Commission ("CFTC") and must be executed through a futures commission merchant (an
"FCM") or brokerage firm which is a member of the relevant contract market. Although futures contracts by their
terms call for the delivery or acquisition of the underlying commodities or a cash payment based on the value of
the underlying commodities, in most cases the contractual obligation is offset before the delivery date of the
contract by buying, in the case of a contractual obligation to sell, or selling, in the case of a contractual
obligation to buy, an identical futures contract on a commodities exchange. Such a transaction cancels the
obligation to make or take delivery of the commodities.

The acquisition or sale of a futures contract could occur, for example, if the Portfolio held or
considered purchasing equity securities and sought to protect itself from fluctuations in prices without buying
or selling those securities. For example, if prices were expected to decrease, the Portfolio could sell equity
index futures contracts, thereby hoping to offset a potential decline in the value of equity securities in the
portfolio by a corresponding increase in the value of the futures contract position held by the Portfolio and
thereby prevent the Portfolio's net asset value from declining as much as it otherwise would have. The Portfolio
also could protect against potential price declines by selling portfolio securities and investing in money market
instruments. However, since the futures market is more liquid than the cash market, the use of futures contracts
as an investment technique would allow the Portfolio to maintain a defensive position without having to sell
portfolio securities.

Similarly, when prices of equity securities are expected to increase, futures contracts could be bought
to attempt to hedge against the possibility of having to buy equity securities at higher prices. This technique
is sometimes known as an anticipatory hedge. Since the fluctuations in the value of futures contracts should be
similar to those of equity securities, the Portfolio could take advantage of the potential rise in the value of
equity securities without buying them until the market had stabilized. At that time, the futures contracts could
be liquidated and the Portfolio could buy equity securities on the cash market.

The Portfolio may also enter into interest rate and foreign currency futures contracts. Interest rate
futures contracts currently are traded on a variety of fixed-income securities, including long-term U.S. Treasury
Bonds, Treasury Notes, Government National Mortgage Association modified pass-through mortgage-backed securities,
U.S. Treasury Bills, bank certificates of deposit and commercial paper. Foreign currency futures contracts
currently are traded on the British pound, Canadian dollar, Japanese yen, Swiss franc, West German mark and on
Eurodollar deposits.

The Portfolio will not, as to any positions, whether long, short or a combination thereof, enter into
futures and options thereon for which the aggregate initial margins and premiums exceed 5% of the fair market
value of its total assets after taking into account unrealized profits and losses on options entered into. In
the case of an option that is "in-the-money," the in-the-money amount may be excluded in computing such 5%. In
general a call option on a future is "in-the-money" if the value of the future exceeds the exercise ("strike")
price of the call; a put option on a future is "in-the-money" if the value of the future which is the subject of
the put is exceeded by the strike price of the put. The Portfolio may use futures and options thereon solely for
bona fide hedging or for other non-speculative purposes. As to long positions which are used as part of the
Portfolio's strategies and are incidental to its activities in the underlying cash market, the "underlying
commodity value" of the Portfolio's futures and options thereon must not exceed the sum of (i) cash set aside in
an identifiable manner, or short-term U.S. debt obligations or other dollar-denominated high-quality, short-term
money instruments so set aside, plus sums deposited on margin; (ii) cash proceeds from existing investments due
in 30 days; and (iii) accrued profits held at the futures commission merchant. The "underlying commodity value"
of a future is computed by multiplying the size of the future by the daily settlement price of the future. For
an option on a future, that value is the underlying commodity value of the future underlying the option.

Unlike the situation in which the Portfolio purchases or sells a security, no price is paid or received
by the Portfolio upon the purchase or sale of a futures contract. Instead, the Portfolio is required to deposit
in a segregated asset account an amount of cash or qualifying securities (currently U.S. Treasury bills),
currently in a minimum amount of $15,000. This is called "initial margin." Such initial margin is in the nature
of a performance bond or good faith deposit on the contract. However, since losses on open contracts are
required to be reflected in cash in the form of variation margin payments, the Portfolio may be required to make
additional payments during the term of a contract to its broker. Such payments would be required, for example,
where, during the term of an interest rate futures contract purchased by the Portfolio, there was a general
increase in interest rates, thereby making the Portfolio's securities less valuable. In all instances involving
the purchase of financial futures contracts by the Portfolio, an amount of cash together with such other
securities as permitted by applicable regulatory authorities to be utilized for such purpose, at least equal to
the market value of the future contracts, will be deposited in a segregated account with the Portfolio's
custodian to collateralize the position. At any time prior to the expiration of a futures contract, the
Portfolio may elect to close its position by taking an opposite position which will operate to terminate the
Portfolio's position in the futures contract.

Because futures contracts are generally settled within a day from the date they are closed out, compared
with a settlement period of three business days for most types of securities, the futures markets can provide
superior liquidity to the securities markets. Nevertheless, there is no assurance a liquid secondary market will
exist for any particular futures contract at any particular time. In addition, futures exchanges may establish
daily price fluctuation limits for futures contracts and may halt trading if a contract's price moves upward or
downward more than the limit in a given day. On volatile trading days when the price fluctuation limit is
reached, it would be impossible for the Portfolio to enter into new positions or close out existing positions.
If the secondary market for a futures contract were not liquid because of price fluctuation limits or otherwise,
the Portfolio would not promptly be able to liquidate unfavorable futures positions and potentially could be
required to continue to hold a futures position until the delivery date, regardless of changes in its value. As
a result, the Portfolio's access to other assets held to cover its futures positions also could be impaired. For
an additional discussion of futures contracts and certain risks involved therein, see this Statement and the
Trust's Prospectus under "Certain Risk Factors and Investment Methods."

Options on Futures Contracts. The Portfolio may purchase put and call options on futures contracts. An
option on a futures contract provides the holder with the right to enter into a "long" position in the underlying
futures contract, in the case of a call option, or a "short" position in the underlying futures contract, in the
case of a put option, at a fixed exercise price to a stated expiration date. Upon exercise of the option by the
holder, a contract market clearing house establishes a corresponding short position for the writer of the option,
in the case of a call option, or a corresponding long position, in the case of a put option. In the event that
an option is exercised, the parties will be subject to all the risks associated with the trading of futures
contracts, such as payment of variation margin deposits.

A position in an option on a futures contract may be terminated by the purchaser or seller prior to
expiration by effecting a closing purchase or sale transaction, subject to the availability of a liquid secondary
market, which is the purchase or sale of an option of the same series (i.e., the same exercise price and
expiration date) as the option previously purchased or sold. The difference between the premiums paid and
received represents the trader's profit or loss on the transaction.

An option, whether based on a futures contract, a stock index or a security, becomes worthless to the
holder when it expires. Upon exercise of an option, the exchange or contract market clearing house assigns
exercise notices on a random basis to those of its members which have written options of the same series and with
the same expiration date. A brokerage firm receiving such notices then assigns them on a random basis to those
of its customers which have written options of the same series and expiration date. A writer therefore has no
control over whether an option will be exercised against it, nor over the time of such exercise.

The purchase of a call option on a futures contract is similar in some respects to the purchase of a
call option on an individual security. See "Options on Foreign Currencies" below. Depending on the pricing of
the option compared to either the price of the futures contract upon which it is based or the price of the
underlying instrument, ownership of the option may or may not be less risky than ownership of the futures
contract or the underlying instrument. As with the purchase of futures contracts, when the Portfolio is not
fully invested it could buy a call option on a futures contract to hedge against a market advance. The purchase
of a put option on a futures contract is similar in some respects to the purchase of protective put options on
portfolio securities. For example, the Portfolio would be able to buy a put option on a futures contract to
hedge the Portfolio against the risk of falling prices. For an additional discussion of options on futures
contracts and certain risks involved therein, see this Statement and the Trust's Prospectus under "Certain Risks
Factors and Investment Methods."

Options on Foreign Currencies. The Portfolio may buy and sell options on foreign currencies for hedging
purposes in a manner similar to that in which futures on foreign currencies would be utilized. For example, a
decline in the U.S. dollar value of a foreign currency in which portfolio securities are denominated would reduce
the U.S. dollar value of such securities, even if their value in the foreign currency remained constant. In
order to protect against such diminutions in the value of portfolio securities, the Portfolio could buy put
options on the foreign currency. If the value of the currency declines, the Portfolio would have the right to
sell such currency for a fixed amount in U.S. dollars and would thereby offset, in whole or in part, the adverse
effect on the Portfolio which otherwise would have resulted. Conversely, when a rise is projected in the U.S.
dollar value of a currency in which securities to be acquired are denominated, thereby increasing the cost of
such securities, the Portfolio could buy call options thereon. The purchase of such options could offset, at
least partially, the effects of the adverse movements in exchange rates.

Options on foreign currencies traded on national securities exchanges are within the jurisdiction of the
Securities and Exchange Commission (the "SEC"), as are other securities traded on such exchanges. As a result,
many of the protections provided to traders on organized exchanges will be available with respect to such
transactions. In particular, all foreign currency option positions entered into on a national securities
exchange are cleared and guaranteed by the Options Clearing Corporation ("OCC"), thereby reducing the risk of
counterparty default. Further, a liquid secondary market in options traded on a national securities exchange may
be more readily available than in the over-the-counter market, potentially permitting the Portfolio to liquidate
open positions at a profit prior to exercise or expiration, or to limit losses in the event of adverse market
movements.

The purchase and sale of exchange-traded foreign currency options, however, is subject to the risks of
the availability of a liquid secondary market described above, as well as the risks regarding adverse market
movements, margining of options written, the nature of the foreign currency market, possible intervention by
governmental authorities, and the effects of other political and economic events. In addition, exchange-traded
options on foreign currencies involve certain risks not presented by the over-the-counter market. For example,
exercise and settlement of such options must be made exclusively through the OCC, which has established banking
relationships in applicable foreign countries for this purpose. As a result, the OCC may, if it determines that
foreign governmental restrictions or taxes would prevent the orderly settlement of foreign currency option
exercises, or would result in undue burdens on the OCC or its clearing member, impose special procedures on
exercise and settlement, such as technical changes in the mechanics of delivery of currency, the fixing of dollar
settlement prices, or prohibitions on exercise.

Risk Factors of Investing in Futures and Options. The successful use of the investment practices
described above with respect to futures contracts, options on futures contracts, and options on securities
indices, securities, and foreign currencies draws upon skills and experience which are different from those
needed to select the other instruments in which the Portfolio invests. Should interest or exchange rates or the
prices of securities or financial indices move in an unexpected manner, the Portfolio may not achieve the desired
benefits of futures and options or may realize losses and thus be in a worse position than if such strategies had
not been used. Unlike many exchange-traded futures contracts and options on futures contracts, there are no
daily price fluctuation limits with respect to options on currencies and negotiated or over-the-counter
instruments, and adverse market movements could therefore continue to an unlimited extent over a period of time.
In addition, the correlation between movements in the price of the securities and currencies hedged or used for
cover will not be perfect and could produce unanticipated losses.

The Portfolio's ability to dispose of its positions in the foregoing instruments will depend on the
availability of liquid markets in the instruments. Markets in a number of the instruments are relatively new and
still developing and it is impossible to predict the amount of trading interest that may exist in those
instruments in the future. Particular risks exist with respect to the use of each of the foregoing instruments
and could result in such adverse consequences to the Portfolio as the possible loss of the entire premium paid
for an option bought by the Portfolio and the possible need to defer closing out positions in certain instruments
to avoid adverse tax consequences. As a result, no assurance can be given that the Portfolio will be able to use
those instruments effectively for the purposes set forth above.

In addition, options on U.S. Government securities, futures contracts, options on futures contracts,
forward contracts and options on foreign currencies may be traded on foreign exchanges and over-the-counter in
foreign countries. Such transactions are subject to the risk of governmental actions affecting trading in or the
prices of foreign currencies or securities. The value of such positions also could be affected adversely by (i)
other complex foreign political and economic factors, (ii) lesser availability than in the United States of data
on which to make trading decisions, (iii) delays in the Portfolio's ability to act upon economic events occurring
in foreign markets during nonbusiness hours in the United States, (iv) the imposition of different exercise and
settlement terms and procedures and margin requirements than in the United States, and (v) low trading volume.
For an additional discussion of certain risks involved in investing in futures and options, see this Statement
and the Trust's Prospectus under "Certain Risk Factors and Investment Methods."

Foreign Securities. Investments in foreign countries involve certain risks which are not typically
associated with U.S. investments. For a discussion of certain risks involved in foreign investing, see this
Statement and the Trust's Prospectus under "Certain Risk Factors and Investment Methods."

Forward Contracts for Purchase or Sale of Foreign Currencies. The Portfolio generally conducts its
foreign currency exchange transactions on a spot (i.e., cash) basis at the spot rate prevailing in the foreign
exchange currency market. When the Portfolio purchases or sells a security denominated in a foreign currency, it
may enter into a forward foreign currency contract ("forward contract") for the purchase or sale, for a fixed
amount of dollars, of the amount of foreign currency involved in the underlying security transaction. A forward
contract involves an obligation to purchase or sell a specific currency at a future date, which may be any fixed
number of days from the date of the contract agreed upon by the parties, at a price set at the time of the
contract. The Portfolio generally will not enter into forward contracts with a term greater than one year. In
this manner, the Portfolio may obtain protection against a possible loss resulting from an adverse change in the
relationship between the U.S. dollar and the foreign currency during the period between the date the security is
purchased or sold and the date upon which payment is made or received. Although such contracts tend to minimize
the risk of loss due to the decline in the value of the hedged currency, at the same time they tend to limit any
potential gain which might result should the value of such currency increase. The Portfolio will not speculate
in forward contracts.

Forward contracts are traded in the interbank market conducted directly between currency traders
(usually large commercial banks) and their customers. Generally a forward contract has no deposit requirement,
and no commissions are charged at any stage for trades. Although foreign exchange dealers do not charge a fee
for conversion, they do realize a profit based on the difference between the prices at which they buy and sell
various currencies. When the Sub-advisor believes that the currency of a particular foreign country may suffer a
substantial decline against the U.S. dollar (or sometimes against another currency), the Portfolio may enter into
a forward contract to sell, for a fixed dollar or other currency amount, foreign currency approximating the value
of some or all of the Portfolio's securities denominated in that currency. In addition, the Portfolio may engage
in "proxy-hedging," i.e., entering into forward contracts to sell a different foreign currency than the one in
which the underlying investments are denominated with the expectation that the value of the hedged currency will
correlate with the value of the underlying currency. The Portfolio will not enter into forward contracts or
maintain a net exposure to such contracts where the fulfillment of the contracts would require the Portfolio to
deliver an amount of foreign currency or a proxy currency in excess of the value of its portfolio securities or
other assets denominated in the currency being hedged. Forward contracts may, from time to time, be considered
illiquid, in which case they would be subject to the Portfolio's limitation on investing in illiquid securities.

At the consummation of a forward contract for delivery by the Portfolio of a foreign currency, the
Portfolio may either make delivery of the foreign currency or terminate its contractual obligation to deliver the
foreign currency by purchasing an offsetting contract obligating it to purchase, at the same maturity date, the
same amount of the foreign currency. If the Portfolio chooses to make delivery of the foreign currency, it may
be required to obtain such currency through the sale of portfolio securities denominated in such currency or
through conversion of other Portfolio assets into such currency.

Dealings in forward contracts by the Portfolio will be limited to the transactions described above. Of
course, the Portfolio is not required to enter into such transactions with regard to its foreign
currency-denominated securities and will not do so unless deemed appropriate by the Sub-advisor. It also should
be realized that this method of protecting the value of the Portfolio's securities against a decline in the value
of a currency does not eliminate fluctuations in the underlying prices of the securities. It simply establishes
a rate of exchange which can be achieved at some future point in time. Additionally, although such contracts
tend to minimize the risk of loss due to the decline in the value of the hedged currency, at the same time they
tend to limit any potential gain which might result should the value of such currency increase. For an
additional discussion of forward foreign currency contracts and certain risks involved therein, see this
Statement and the Trust's Prospectus under "Certain Risk Factors and Investment Methods."

Lower-Rated or Unrated Fixed-Income Securities. The Portfolio may invest up to 5% of its total assets
in fixed-income securities which are unrated or are rated below investment grade either at the time of purchase
or as a result of reduction in rating after purchase. (This limitation does not apply to convertible securities
and preferred stocks.) Investments in lower-rated or unrated securities are generally considered to be of high
risk. These debt securities, commonly referred to as junk bonds, are generally subject to two kinds of risk,
credit risk and market risk. Credit risk relates to the ability of the issuer to meet interest or principal
payments, or both, as they come due. The ratings given a security by Moody's Investors Service, Inc. ("Moody's")
and Standard & Poor's ("S&P") provide a generally useful guide as to such credit risk. For a description of
securities ratings, see the Appendix to this Statement. The lower the rating given a security by a rating
service, the greater the credit risk such rating service perceives to exist with respect to the security.
Increasing the amount of the Portfolio's assets invested in unrated or lower grade securities, while intended to
increase the yield produced by those assets, will also increase the risk to which those assets are subject.

Market risk relates to the fact that the market values of debt securities in which the Portfolio invests
generally will be affected by changes in the level of interest rates. An increase in interest rates will tend to
reduce the market values of such securities, whereas a decline in interest rates will tend to increase their
values. Medium and lower-rated securities (Baa or BBB and lower) and non-rated securities of comparable quality
tend to be subject to wider fluctuations in yields and market values than higher rated securities and may have
speculative characteristics. In order to decrease the risk in investing in debt securities, in no event will the
Portfolio ever invest in a debt security rated below B by Moody's or by S&P. Of course, relying in part on
ratings assigned by credit agencies in making investments will not protect the Portfolio from the risk that the
securities in which they invest will decline in value, since credit ratings represent evaluations of the safety
of principal, dividend, and interest payments on debt securities, and not the market values of such securities,
and such ratings may not be changed on a timely basis to reflect subsequent events.

Because investment in medium and lower-rated securities involves greater credit risk, achievement of the
Portfolio's investment objective may be more dependent on the Sub-advisor's own credit analysis than is the case
for funds that do not invest in such securities. In addition, the share price and yield of the Portfolio may
fluctuate more than in the case of funds investing in higher quality, shorter term securities. Moreover, a
significant economic downturn or major increase in interest rates may result in issuers of lower-rated securities
experiencing increased financial stress, which would adversely affect their ability to service their principal,
dividend, and interest obligations, meet projected business goals, and obtain additional financing. In this
regard, it should be noted that while the market for high yield debt securities has been in existence for many
years and from time to time has experienced economic downturns in recent years, this market has involved a
significant increase in the use of high yield debt securities to fund highly leveraged corporate acquisitions and
restructurings. Past experience may not, therefore, provide an accurate indication of future performance of the
high yield debt securities market, particularly during periods of economic recession. Furthermore, expenses
incurred in recovering an investment in a defaulted security may adversely affect the Portfolio's net asset
value. Finally, while the Sub-advisor attempts to limit purchases of medium and lower-rated securities to
securities having an established secondary market, the secondary market for such securities may be less liquid
than the market for higher quality securities. The reduced liquidity of the secondary market for such securities
may adversely affect the market price of, and ability of the Portfolio to value, particular securities at certain
times, thereby making it difficult to make specific valuation determinations. The Portfolio does not invest in
any medium and lower-rated securities which present special tax consequences, such as zero-coupon bonds or
pay-in-kind bonds. For an additional discussion of certain risks involved in lower-rated securities, see this
Statement and the Trust's Prospectus under "Certain Risk Factors and Investment Methods."

The Sub-advisor seeks to reduce the overall risks associated with the Portfolio's investments through
diversification and consideration of factors affecting the value of securities it considers relevant. No
assurance can be given, however, regarding the degree of success that will be achieved in this regard or that the
Portfolio will achieve its investment objective.

Convertible Securities. The Portfolio may buy securities convertible into common stock if, for example,
the Sub-advisor believes that a company's convertible securities are undervalued in the market. Convertible
securities eligible for purchase include convertible bonds, convertible preferred stocks, and warrants. A
warrant is an instrument issued by a corporation which gives the holder the right to subscribe to a specific
amount of the corporation's capital stock at a set price for a specified period of time. Warrants do not
represent ownership of the securities, but only the right to buy the securities. The prices of warrants do not
necessarily move parallel to the prices of underlying securities. Warrants may be considered speculative in that
they have no voting rights, pay no dividends, and have no rights with respect to the assets of a corporation
issuing them. Warrant positions will not be used to increase the leverage of the Portfolio; consequently,
warrant positions are generally accompanied by cash positions equivalent to the required exercise amount.

Temporary Defensive Investments. Up to 100% of the assets of the Portfolio may be invested temporarily
in U.S. government obligations, commercial paper, bank obligations, repurchase agreements, negotiable U.S.
dollar-denominated obligations of domestic and foreign branches of U.S. depository institutions, U.S. branches of
foreign depository institutions, and foreign depository institutions, in cash, or in other cash equivalents, if
the Sub-advisor determines it to be appropriate for purposes of enhancing liquidity or preserving capital in
light of prevailing market or economic conditions. U.S. government obligations include Treasury bills, notes and
bonds, and issues of United States agencies, authorities and instrumentalities. Some government obligations,
such as Government National Mortgage Association pass-through certificates, are supported by the full faith and
credit of the United States Treasury. Other obligations, such as securities of the Federal Home Loan Banks, are
supported by the right of the issuer to borrow from the United States Treasury; and others, such as bonds issued
by Federal National Mortgage Association (a private corporation), are supported only by the credit of the agency,
authority or instrumentality. The Portfolio also may invest in obligations issued by the International Bank for
Reconstruction and Development (IBRD or "World Bank"). For more information on mortgage-backed securities, see
this Statement and the Company's Prospectus under "Certain Risk Factors and Investment Methods."

Investment Policies Which May be Changed Without Shareholder Approval. The following limitations are
applicable to the AST Founders Passport Portfolio. These limitations are not "fundamental" restrictions, and may
be changed by the Trustees without shareholder approval. The Portfolio will not:

1. Invest more than 15% of the market value of its net assets in securities which are not readily
marketable, including repurchase agreements maturing in over seven days;

2. Purchase securities of other investment companies except in compliance with the 1940 Act;

3. Invest in companies for the purpose of exercising control or management.

4. Purchase any securities on margin except to obtain such short-term credits as may be necessary
for the clearance of transactions (and provided that margin payments and other deposits in connection with
transactions in options, futures and forward contracts shall not be deemed to constitute purchasing securities on
margin); or

5. Sell securities short.

In addition, in periods of uncertain market and economic conditions, as determined by the Sub-advisor,
the Portfolio may depart from its basic investment objective and assume a defensive position with up to 100% of
its assets temporarily invested in high quality corporate bonds or notes and government issues, or held in cash.

If a percentage restriction is adhered to at the time of investment, a later increase or decrease in
percentage beyond the specified limit that results from a change in values or net assets will not be considered a
violation.

AST Scudder Japan Portfolio:

Investment Objective: The Portfolio's investment objective is long-term capital appreciation, which it seeks to
achieve by investing primarily in the equity securities (including American Depositary Receipts) of Japanese
companies, as described below.

Investment Policies:

Under normal conditions, the Portfolio will invest at least 80% of its net assets in Japanese securities
-- that is, securities issued by entities that are organized under the laws of Japan ("Japanese companies"),
securities of affiliates of Japanese companies, wherever organized or traded, and securities of issuers not
organized under the laws of Japan but deriving 50% or more of their revenues from Japan. In so doing, the
Portfolio's investments in Japanese securities will be primarily in common stocks of Japanese companies.
However, the Portfolio may also invest in other equity securities issued by Japanese entities, such as warrants
and convertible debentures, and in debt securities, such as those of the Japanese government and of Japanese
companies, when the Portfolio's Sub-advisor believes that the potential for capital appreciation from investment
in debt securities equals or exceeds that available from investment in equity securities.

The Portfolio may invest up to 20% of its total assets in cash or in short-term government or other
short-term prime obligations in order to have funds readily available for general corporate purposes, including
the payment of operating expenses, dividends and redemptions, or for the investment in securities through
exercise of rights or otherwise, or in repurchase agreements in order to earn income for periods as short as
overnight. When the Sub-advisor determines that market or economic conditions so warrant, the Portfolio may, for
temporary defensive purposes, invest more than 20% of its total assets in cash and cash equivalents. For
instance, there may be periods when changes in market or other economic conditions, or in political conditions,
will make advisable a reduction in equity positions and increased commitments in cash or corporate debt
securities, whether or not Japanese, or in the obligations of the government of the United States or of Japan or
of other governments.

The Portfolio purchases and holds securities that the Sub-advisor believes have the potential for
long-term capital appreciation; investment income is a secondary consideration in the selection of portfolio
securities.

The Portfolio may invest up to 30% of its net assets in the equity securities of Japanese companies that
are traded in an over-the-counter market rather than listed on a securities exchange. These are generally
securities of relatively small or little-known companies that the Sub-advisor believes have above-average
earnings growth potential. Securities that are traded over-the-counter may not be traded in the volumes typical
on a national securities exchange. Consequently, in order to sell this type of holding, the Portfolio may need
to discount the securities from recent prices or dispose of the securities over a long period of time. The
prices of this type of security may be more volatile than those of larger companies, which are often traded on a
national securities exchange.

Foreign Currencies. Although the Portfolio values its assets daily in terms of U.S. dollars, it does
not intend to convert its holdings of foreign currencies into U.S. dollars on a daily basis. It will do so from
time to time, and investors should be aware of the costs of currency conversion. Although foreign exchange
dealers do not charge a fee for conversion, they do realize a profit based on the difference (the "spread")
between the prices at which they are buying and selling various currencies. Thus, a dealer may offer to sell a
foreign currency to the Portfolio at one rate, while offering a lesser rate of exchange should the Portfolio
desire to resell that currency to the dealer. The Portfolio will conduct its foreign currency exchange
transactions either on a spot (i.e., cash) basis, or through entering into forward or futures contracts to
purchase or sell foreign currencies.

Depositary Receipts. The Portfolio may invest indirectly in securities of emerging country issuers
through sponsored or unsponsored American Depositary Receipts ("ADRs"), Global Depositary Receipts ("GDRs"),
International Depositary Receipts ("IDRs") and other types of Depositary Receipts (which, together with ADRs,
GDRs and IDRs are hereinafter referred to as "Depositary Receipts"). Depositary Receipts may not necessarily be
denominated in the same currency as the underlying securities into which they may be converted. ADRs are
Depositary Receipts typically issued by a United States bank or trust company which evidence ownership of
underlying securities issued by a foreign corporation. GDRs, IDRs and other types of Depositary Receipts are
typically issued by foreign banks or trust companies, although they also may be issued by United States banks or
trust companies, and evidence ownership of underlying securities issued by either a foreign or a United States
corporation. Generally, Depositary Receipts in registered form are designed for use in the United States
securities markets and Depositary Receipts in bearer form are designed for use in securities markets outside the
United States. For purposes of the Portfolio's investment policies, the Portfolio's investments in ADRs, GDRs
and other types of Depositary Receipts will be deemed to be investments in the underlying securities.
Depositary Receipts other than those denominated in U.S. dollars will be subject to foreign currency exchange
rate risk. Certain Depositary Receipts may not be listed on an exchange and therefore may be illiquid
securities. For additional information on Depositary Receipts, see the Trust's Prospectus under "Certain Risk
Factors and Investment Methods."

Debt Securities. When the Sub-advisor believes that it is appropriate to do so in order to achieve the
Portfolio's objective of long-term capital growth, the Portfolio may invest up to 20% of its total assets in debt
securities of both foreign and domestic issuers. Portfolio debt investments will be selected for their capital
appreciation potential on the basis of, among other things, yield, credit quality, and the fundamental outlooks
for currency and interest rate rends, taking into account the ability to hedge a degree of currency or local bond
price risk. The Portfolio may purchase bonds rated Aaa, Aa, A or Baa by Moody's Investors Service, Inc.
("Moody's") or AAA, AA, A or BBB by Standard & Poor's Corporation ("S&P") or, if unrated, judged to be of
equivalent quality as determined by the Sub-Advisor. Should the rating of a portfolio security be downgraded,
the Sub-advisor will determine whether it is in the best interest of the Portfolio to retain or dispose of such
security. Additional information about debt securities and their risks is included in this Statement and the
Trust's Prospectus under "Certain Risk Factors and Investment Methods." See Appendix B to this Statement of
Additional Information for a more complete description of the ratings assigned by ratings organizations and their
respective characteristics.

Convertible Securities. The Portfolio may invest in convertible securities. Investments in convertible
securities can provide income through interest and dividend payments and/or an opportunity for capital
appreciation by virtue of their conversion or exchange features.

The convertible securities in which the Portfolio may invest may be converted or exchanged at a stated
or determinable exchange ratio into underlying shares of common stock. The exchange ratio for any particular
convertible security may be adjusted from time to time due to stock splits, dividends, spin-offs, other
corporate distributions, or scheduled changes in the exchange ratio. Convertible debt securities and convertible
preferred stocks, until converted, have general characteristics similar to both debt and equity securities.
Although to a lesser extent than with debt securities generally, the market value of convertible securities tends
to decline as interest rates increase and, conversely, tends to increase as interest rates decline. In addition,
because of the conversion or exchange feature, the market value of convertible securities typically changes as
the market value of the underlying common stocks changes, and, therefore, also tends to follow movements in the
general market for equity securities. A unique feature of convertible securities is that as the market price of
the underlying common stock declines, convertible securities tend to trade increasingly on a yield basis and so
may not experience market value declines to the same extent as the underlying common stock. While no securities
investments are without risk, investments in convertible securities generally entail less risk than investments
in common stock of the same issuer.

As fixed income securities, convertible securities are investments that provide for a stream of income
(or in the case of zero coupon securities, accretion of income) with generally higher yields than common stocks.
Of course, like all fixed income securities, there can be no assurance of income or principal payments because
the issuers of the convertible securities may default on their obligations. Convertible securities generally
offer lower yields than non-convertible securities of similar quality because of their conversion or exchange
features.

Convertible securities may be issued as fixed income obligations that pay current income or as zero
coupon notes and bonds, including Liquid Yield Option Notes ("LYONs"). Additional information about convertible
securities, including convertible zero-coupon securities, in included in this Statement and the Trust's
Prospectus under "Certain Risk Factors and Investment Methods."

Investment Company Securities. The Portfolio may purchase securities of other investment companies to
the extent consistent with its investment objective and policies and subject to the limitations of the 1940 Act.
The Portfolio will indirectly bear its proportionate share of any management fees and other expenses paid by such
other investment companies.

For example, the Portfolio may invest in a variety of investment companies which seek to track the
composition and performance of specific indices or a specific portion of an index. These index-based investments
hold substantially all of their assets in securities representing their specific index. Accordingly, the main
risk of investing in index-based investments is the same as investing in a portfolio of equity securities
comprising the index. The market prices of index-based investments will fluctuate in accordance with both
changes in the market value of their underlying portfolio securities and due to supply and demand for the
instruments on the exchanges on which they are traded (which may result in their trading at a discount or premium
to their net asset values). Index-based investments may not replicate exactly the performance of their specified
index because of transaction costs and because of the temporary unavailability of certain component securities of
the index.

Examples of index-based investments include:

SPDRs(R): SPDRs, an acronym for "Standard & Poor's Depositary Receipts," are based on the S&P 500
Composite Stock Price Index. They are issued by the SPDR Trust, a unit investment trust that holds shares of
substantially all the companies in the S&P 500 in substantially the same weighting and seeks to closely track the
price performance and dividend yield of the Index.

MidCap SPDRs(R): MidCap SPDRs are based on the S&P MidCap 400 Index. They are issued by the MidCap SPDR
Trust, a unit investment trust that holds a portfolio of securities consisting of substantially all of the common
stocks in the S&P MidCap 400 Index in substantially the same weighting and seeks to closely track the price
performance and dividend yield of the Index.

Select Sector SPDRs(R): Select Sector SPDRs are based on a particular sector or group of industries that
are represented by a specified Select Sector Index within the Standard & Poor's Composite Stock Price Index.
They are issued by The Select Sector SPDR Trust, an open-end management investment company with nine portfolios
that each seeks to closely track the price performance and dividend yield of a particular Select Sector Index.

DIAMONDS(SM): DIAMONDS are based on the Dow Jones Industrial Average(SM). They are issued by the
DIAMONDS Trust, a unit investment trust that holds a portfolio of all the component common stocks of the Dow
Jones Industrial Average and seeks to closely track the price performance and dividend yield of the Dow.

Nasdaq-100 Shares: Nasdaq-100 Shares are based on the Nasdaq 100 Index. They are issued by the
Nasdaq-100 Trust, a unit investment trust that holds a portfolio consisting of substantially all of the
securities, in substantially the same weighting, as the component stocks of the Nasdaq-100 Index and seeks to
closely track the price performance and dividend yield of the Index.

WEBs(SM): WEBs, an acronym for "World Equity Benchmark Shares," are based on 17 country-specific Morgan
Stanley Capital International Indexes. They are issued by the WEBs Index Fund, Inc., an open-end management
investment company that seeks to generally correspond to the price and yield performance of a specific Morgan
Stanley Capital International Index.

Strategic Transactions and Derivatives. The Portfolio may, but is not required to, utilize various
other investment strategies as described below for a variety of purposes, such as hedging various market risks,
managing the effective maturity or duration of the fixed-income securities in the Portfolio's portfolio, or
enhancing potential gain. These strategies may be executed through the use of derivative contracts. Such
strategies are generally accepted as a part of modern portfolio management and are regularly utilized by many
mutual funds and other institutional investors.

In the course of pursuing these investment strategies, the Portfolio may purchase and sell
exchange-listed and over-the-counter put and call options on securities, equity and fixed-income indices and
other instruments, purchase and sell futures contracts and options thereon, enter into various transactions such
as swaps, caps, floors, collars, currency forward contracts, currency futures contracts, currency swaps, or
options on currencies or currency futures and various other currency transactions (collectively, all the above
are called "Strategic Transactions"). In addition, Strategic Transactions may also include new techniques,
investments or strategies that are permitted as regulatory changes occur. Strategic Transactions may be used
without limit to attempt to protect against possible changes in the market value of securities held in or to be
purchased for the Portfolio resulting from securities markets or currency exchange rate fluctuations, to protect
the Portfolio's unrealized gains in the value of its portfolio securities, to facilitate the sale of such
securities for investment purposes, to manage the effective maturity or duration of the fixed-income securities
in the Portfolio, or to establish a position in the derivatives markets as a substitute for purchasing or selling
particular securities. Some Strategic Transactions may also be used to enhance potential gain, although no more
than 5% of the Portfolio's assets will be committed to Strategic Transactions entered into to enhance gain rather
than for the purposes set forth in the preceding sentence. Any or all of these investment techniques may be used
at any time and in any combination, and there is no particular strategy that dictates the use of one technique
rather than another, as use of any Strategic Transaction is a function of numerous variables including market
conditions. The ability of the Portfolio to utilize these Strategic Transactions successfully will depend on the
Sub-advisor's ability to predict pertinent market movements, which cannot be assured. Strategic Transactions
will not be used to alter the fundamental investment purposes and characteristics of the Portfolio and the
Portfolio will segregate assets (or as provided by applicable regulations, enter into certain offsetting
positions) to cover its obligations under options, futures and swaps to limit leveraging of the Portfolio.

Strategic Transactions, including derivative contracts, have risks associated with them, including
possible default by the other party to the transaction, illiquidity and, to the extent the Sub-advisor's view as
to certain market movements is incorrect, the risk that the use of such Strategic Transactions could result in
losses greater than if they had not been used. For instance, the use of currency transactions can result in the
Portfolio incurring losses as a result of a number of factors including the imposition of exchange controls,
suspension of settlements, or the inability to deliver or receive a specified currency. The daily variation
margin requirements for futures contracts would create a greater ongoing potential financial risk than would
purchases of options, where the exposure is limited to the cost of the initial premium. Losses resulting from
the use of Strategic Transactions would reduce net asset value, and possibly income, and such losses can be
greater than if the Strategic Transactions had not been utilized.

General Characteristics of Options. Put options and call options typically have similar
structural characteristics and operational mechanics regardless of the underlying instrument on which they are
purchased or sold. Thus, the following general discussion relates to each of the particular types of options
discussed in greater detail below. In addition, many Strategic Transactions involving options require
segregation of Portfolio assets in special accounts, as described below under "Use of Segregated and Other
Special Accounts."

The Portfolio is authorized to purchase and sell exchange listed options and over-the-counter options
("OTC options"). Exchange listed options are issued by a regulated intermediary such as the Options Clearing
Corporation ("OCC"), which guarantees the performance of the obligations of the parties to such options. The
discussion below uses the OCC as an example, but is also applicable to other financial intermediaries.

With certain exceptions, OCC issued and exchange listed options generally settle by physical delivery of
the underlying security or currency, although in the future cash settlement may become available. Index options
and Eurodollar instruments are cash settled for the net amount, if any, by which the option is "in-the-money"
(i.e., where the value of the underlying instrument exceeds, in the case of a call option, or is less than, in
the case of a put option, the exercise price of the option) at the time the option is exercised. Frequently,
rather than taking or making delivery of the underlying instrument through the process of exercising the option,
listed options are closed by entering into offsetting purchase or sale transactions that do not result in
ownership of the new option.

The Portfolio's ability to close out its position as a purchaser or seller of an OCC or exchange listed
put or call option is dependent, in part, upon the liquidity of the option market. If one or more exchanges
decide to discontinue the trading of options (or a particular class or series of options), the relevant market
for that option on that exchange would cease to exist, although outstanding options on that exchange would
generally continue to be exercisable in accordance with their terms.

OTC options are purchased from or sold to securities dealers, financial institutions or other parties
("Counterparties") through direct bilateral agreement with the Counterparty. In contrast to exchange listed
options, which generally have standardized terms and performance mechanics, all the terms of an OTC option,
including such terms as method of settlement, term, exercise price, premium, guarantees and security, are set by
negotiation of the parties. The Portfolio will only sell OTC options (other than OTC currency options) that are
subject to a buy-back provision permitting the Portfolio to require the Counterparty to sell the option back to
the Portfolio at a formula-based price within seven days. The Portfolio expects generally to enter into OTC
options that have cash settlement provisions, although it is not required to do so.

Unless the parties provide for it, there is no central clearing or guaranty function in an OTC option.
As a result, if the Counterparty fails to make or take delivery of the security, currency or other instrument
underlying an OTC option it has entered into with the Portfolio or fails to make a cash settlement payment due in
accordance with the terms of that option, the Portfolio will lose any premium it paid for the option as well as
any anticipated benefit of the transaction. Accordingly, the Sub-advisor must assess the creditworthiness of
each such Counterparty or any guarantor or credit enhancement of the Counterparty's credit to determine the
likelihood that the terms of the OTC option will be satisfied. The Portfolio will engage in OTC option
transactions only with U.S. Government securities dealers recognized by the Federal Reserve Bank of New York as
"primary dealers" or broker/dealers, domestic or foreign banks or other financial institutions that have received
(or the guarantors of the obligation of which have received) a short-term credit rating of A-1 from S&P or P-1
from Moody's or an equivalent rating from any nationally recognized statistical rating organization ("NRSRO") or,
in the case of OTC currency transactions, determined to be of equivalent credit quality by the Sub-advisor.

The Portfolio may purchase and sell call options on securities including U.S. Treasury and agency
securities, mortgage-backed securities, corporate debt securities, equity securities (including convertible
securities) and Eurodollar instruments that are traded on U.S. and foreign securities exchanges and in the
over-the-counter markets, and on securities indices, currencies and futures contracts. All calls sold by the
Portfolio must be "covered" (i.e., the Portfolio must own the securities or futures contract subject to the call)
or must meet the asset segregation requirements described below as long as the call is outstanding.

The Portfolio may purchase and sell put options on securities including U.S. Treasury and agency
securities, mortgage-backed securities, foreign sovereign debt, corporate debt securities, equity securities
(including convertible securities) and Eurodollar instruments (whether or not it holds the above securities in
its portfolio), and on securities indices, currencies and futures contracts other than futures on individual
corporate debt and individual equity securities. The Portfolio will not sell put options if, as a result, more
than 50% of the Portfolio's assets would be required to be segregated to cover its potential obligations under
such put options other than those with respect to futures and options thereon.

Additional information about options and their risks is included in this Statement and the Trust's
Prospectus under "Certain Risk Factors and Investment Methods."

General Characteristics of Futures. The Portfolio may enter into futures contracts or purchase
or sell put and call options on such futures as a hedge against anticipated interest rate, currency or equity
market changes (including to protect against increases in those markets by creating current exposure to the
markets), and for duration management, risk management purposes and return enhancements. Futures are generally
bought and sold on the commodities exchanges where they are listed.

The Portfolio's use of futures and options thereon will be solely for bona fide hedging, risk management
(including duration management) or other portfolio management and return enhancement purposes. Initial margin in
connection with maintaining a futures contract or selling an option thereon typically ranges from 1% to 10% of
the face amount of the contract (but may be higher in some circumstances). If the Portfolio exercises an option
on a futures contract it will be obligated to post initial margin (and potential subsequent variation margin) for
the resulting futures position just as it would for any position.

The Portfolio will not enter into a futures contract or related option (except for closing transactions)
if, immediately thereafter, the sum of the amount of its initial margin and premiums on open futures contracts
and options thereon would exceed 5% of the Portfolio's total assets (taken at current value); however, in the
case of an option that is in-the-money at the time of the purchase, the in-the-money amount may be excluded in
calculating the 5% limitation. The segregation requirements with respect to futures contracts and options
thereon are described below.

Additional information about futures contracts, options thereon and their risks is included in this
Statement and the Trust's Prospectus under "Certain Risk Factors and Investment Methods."

Options on Securities Indices and Other Financial Indices. The Portfolio also may purchase and
sell call and put options on securities indices and other financial indices and in so doing can achieve many of
the same objectives it would achieve through the sale or purchase of options on individual securities or other
instruments. Additional information about options on indices and their risks is included in this Statement and
the Trust's Prospectus under "Certain Risk Factors and Investment Methods."

Currency Transactions. The Portfolio may engage in currency transactions with Counterparties,
primarily in order to hedge, or manage the risk of, the value of portfolio holdings denominated in particular
currencies against fluctuations in relative value. Currency transactions include forward currency contracts,
exchange listed currency futures, exchange listed and OTC options on currencies, and currency swaps. A currency
swap is an agreement to exchange cash flows based on the notional difference among two or more currencies and
operates in a manner similar to an interest rate swap, which is described below. The Portfolio may enter into
currency transactions with Counterparties that have received (or the guarantors of the obligations have received)
a credit rating of A-1 or P-1 by S&P or Moody's, respectively, or that have an equivalent rating from a NRSRO or
are determined to be of equivalent credit quality by the Sub-advisor.

The Portfolio's dealings in forward currency contracts and other currency transactions such as futures,
options, options on futures and swaps generally will be limited to hedging involving either specific transactions
or portfolio positions. Transaction hedging is entering into a currency transaction with respect to specific
assets or liabilities of the Portfolio, which will generally arise in connection with the purchase or sale of its
portfolio securities or the receipt of income therefrom. Position hedging is entering into a currency
transaction with respect to portfolio security positions denominated or generally quoted in that currency.

The Portfolio generally will not enter into a transaction to hedge currency exposure to an extent
greater, after netting all transactions intended wholly or partially to offset other transactions, than the
aggregate market value (at the time of entering into the transaction) of the securities held in its portfolio
that are denominated or generally quoted in or currently convertible into such currency, other than with respect
to proxy hedging as described below.

The Portfolio may also cross-hedge currencies by entering into transactions to purchase or sell one or
more currencies that are expected to decline in value relative to other currencies to which the Portfolio has, or
in which the Portfolio expects to have, portfolio exposure.

To reduce the effect of currency fluctuations on the value of existing or anticipated holdings of
portfolio securities, the Portfolio may also engage in "proxy hedging." Proxy hedging is often used when the
currency to which the Portfolio is exposed is difficult to hedge generally or against the dollar. Proxy hedging
entails entering into a commitment or option to sell a currency whose changes in value are generally considered
to be correlated to a currency or currencies in which some or all of the Portfolio's portfolio securities are or
are expected to be denominated, in exchange for U.S. dollars. For example, if the Sub-advisor considers that the
Austrian schilling is correlated to the German deutschemark (the "D-mark"), the Portfolio holds securities
denominated in schillings, and the Sub-advisor believes that the value of schillings will decline against the
U.S. dollar, the Sub-advisor may enter into a contract to sell D-marks and buy dollars. Currency transactions
can result in losses to the Portfolio if the currency being hedged fluctuates in value to a degree or in a
direction that is not anticipated. Further, there is the risk that the perceived linkage between various
currencies may not be present or may not be present during the particular time that the Portfolio is engaging in
proxy hedging. If the Portfolio enters into a currency hedging transaction, the Portfolio will comply with the
asset segregation requirements described below.

Additional information about forward foreign currency exchange contracts and their risks is included in
this Statement and the Trust's Prospectus under "Certain Risk Factors and Investment Methods."

Risks of Currency Transactions. Currency transactions are subject to risks different from
those of other portfolio transactions. Because currency control is of great importance to the issuing
governments and influences economic planning and policy, purchases and sales of currency and related instruments
can be negatively affected by government exchange controls, blockages, and manipulations or exchange restrictions
imposed by governments. These can result in losses to the Portfolio if it is unable to deliver or receive
currency or funds in settlement of obligations and could also cause hedges it has entered into to be rendered
useless, resulting in full currency exposure as well as incurring transaction costs. Buyers and sellers of
currency futures are subject to the same risks that apply to the use of futures generally. Further, settlement
of a currency futures contract for the purchase of most currencies must occur at a bank based in the issuing
nation. Trading options on currency futures is relatively new, and the ability to establish and close out
positions on such options is subject to the maintenance of a liquid market, which may not always be available.
Currency exchange rates may fluctuate based on factors extrinsic to that country's economy.

Combined Transactions. The Portfolio may enter into multiple transactions, including multiple
options transactions, multiple futures transactions, multiple currency transactions (including forward currency
contracts) and multiple interest rate transactions and any combination of futures, options, currency and interest
rate transactions ("component" transactions), instead of a single Strategic Transaction, as part of a single or
combined strategy. A combined transaction will usually contain elements of risk that are present in each of its
component transactions. Although combined transactions are normally entered into based on the Sub-advisor's
judgment that the combined strategies will reduce risk or otherwise more effectively achieve the desired
portfolio management goal, it is possible that the combination will instead increase such risks or hinder
achievement of the portfolio management objective.

Swaps, Caps, Floors and Collars. Among the Strategic Transactions that the Portfolio may enter
into are interest rate, currency, index and other swaps and the purchase or sale of related caps, floors and
collars. The Portfolio expects to enter into these transactions primarily to preserve a return or spread on a
particular investment or portion of its portfolio, to protect against currency fluctuations, as a duration
management technique or to protect against an increase in the price of securities the Portfolio anticipates
purchasing at a later date. The Portfolio will not sell interest rate caps or floors where it does not own
securities or other instruments providing the income stream the Portfolio may be obligated to pay. Interest rate
swaps involve the exchange by the Portfolio with another party of their respective commitments to pay or receive
interest, e.g., an exchange of floating rate payments for fixed rate payments with respect to a notional amount
of principal. A currency swap is an agreement to exchange cash flows on a notional amount of two or more
currencies based on the relative value differential among them and an index swap is an agreement to swap cash
flows on a notional amount based on changes in the values of the reference indices. The purchase of a cap
entitles the purchaser to receive payments on a notional principal amount from the party selling such cap to the
extent that a specified index exceeds a predetermined interest rate or amount. The purchase of a floor entitles
the purchaser to receive payments on a notional principal amount from the party selling such floor to the extent
that a specified index falls below a predetermined interest rate or amount. A collar is a combination of a cap
and a floor that preserves a certain return within a predetermined range of interest rates or values.

The Portfolio will usually enter into swaps on a net basis, i.e., the two payment streams are netted out
in a cash settlement on the payment date or dates specified in the instrument, with the Portfolio receiving or
paying, as the case may be, only the net amount of the two payments. Inasmuch as the Portfolio will segregate
assets (or enter into offsetting positions) to cover its obligations under swaps, the Sub-advisor and the Trust
believe such obligations do not constitute senior securities under the 1940 Act and, accordingly, will not treat
them as being subject to the Portfolio's borrowing restrictions. The Portfolio will not enter into any swap,
cap, floor or collar transaction unless, at the time of entering into such transaction, the unsecured long-term
debt of the Counterparty, combined with any credit enhancements, is rated at least A by S&P or Moody's or has an
equivalent rating from another NRSRO. If there is a default by the Counterparty, the Portfolio may have
contractual remedies pursuant to the agreements related to the transaction. The swap market has grown
substantially in recent years with a large number of banks and investment banking firms acting both as principals
and as agents utilizing standardized swap documentation. As a result, the swap market has become relatively
liquid. Caps, floors and collars are more recent innovations for which standardized documentation has not yet
been fully developed and, accordingly, they are less liquid than swaps.

Eurodollar Instruments. The Portfolio may make investments in Eurodollar instruments.
Eurodollar instruments are U.S. dollar-denominated futures contracts or options thereon which are linked to the
London Interbank Offered Rate ("LIBOR"), although foreign currency-denominated instruments are available from
time to time. Eurodollar futures contracts enable purchasers to obtain a fixed rate for the lending of funds and
sellers to obtain a fixed rate for borrowings. The Portfolio might use Eurodollar futures contracts and options
thereon to hedge against changes in LIBOR, to which many interest rate swaps and fixed income instruments are
linked.

Risks of Strategic Transactions Outside the U.S. When conducted outside the U.S., Strategic
Transactions may not be regulated as rigorously as in the U.S., may not involve a clearing mechanism and related
guarantees, and are subject to the risk of governmental actions affecting trading in, or the prices of, foreign
securities, currencies and other instruments. The value of such positions also could be adversely affected by:
(i) other complex foreign political, legal and economic factors, (ii) lesser availability than in the U.S. of
data on which to make trading decisions, (iii) delays in the Portfolio's ability to act upon economic events
occurring in foreign markets during non-business hours in the U.S., (iv) the imposition of different exercise and
settlement terms and procedures and margin requirements than in the U.S., and (v) lower trading volume and
liquidity.

Use of Segregated and Other Special Accounts. Many Strategic Transactions, in addition to
other requirements, require that the Portfolio segregate any liquid assets to the extent Portfolio obligations
are not otherwise "covered" through ownership of the underlying security, financial instrument or currency. In
general, either the full amount of any obligation by the Portfolio to pay or deliver securities or assets must be
covered at all times by the securities, instruments or currency required to be delivered, or, subject to any
regulatory restrictions, an amount of cash or other liquid assets at least equal to the current amount of the
obligation. The segregated assets cannot be sold or transferred unless equivalent assets are substituted in
their place or it is no longer necessary to segregate them. For example, a call option written by the Portfolio
will require the Portfolio to hold the securities subject to the call (or securities convertible into the needed
securities without additional consideration) or to segregate any liquid assets sufficient to purchase and deliver
the securities if the call is exercised. A call option sold by the Portfolio on an index will require the
Portfolio to own securities that correlate with the index or to segregate any liquid assets equal to the excess
of the index value over the exercise price on a current basis. A put option written by the Portfolio requires
the Portfolio to segregate any liquid assets equal to the exercise price.

A currency contract that obligates the Portfolio to buy or sell currency will generally require the
Portfolio to hold an amount of that currency or liquid securities denominated in that currency equal to the
Portfolio's obligation or to segregate liquid assets equal to the amount of the Portfolio's obligation.

OTC options entered into by the Portfolio, including those on securities, currency, financial
instruments or indices, and OCC issued and exchange listed index options will generally provide for cash
settlement. As a result, when the Portfolio sells these instruments it will only segregate an amount of assets
equal to its accrued net obligations, as there is no requirement for payment or delivery of amounts in excess of
the net amount. These amounts will equal 100% of the exercise price in the case of a non cash-settled put, the
same as an OCC guaranteed listed option sold by the Portfolio, or the in-the-money amount plus any sell-back
formula amount in the case of a cash-settled put or call. In addition, when the Portfolio sells a call option on
an index at a time when the in-the-money amount exceeds the exercise price, the Portfolio will segregate, until
the option expires or is closed out, cash or cash equivalents equal in value to such excess. OCC issued and
exchange listed options sold by the Portfolio other than those above generally settle with physical delivery, and
the Portfolio will segregate an amount of assets equal to the full value of the option. OTC options settling
with physical delivery or with an election of either physical delivery or cash settlement will be treated the
same as other options settling with physical delivery.

In the case of a futures contract or an option thereon, the Portfolio must deposit initial margin and
possible daily variation margin in addition to segregating assets sufficient to meet its obligation to purchase
or provide securities or currencies, or to pay the amount owed at the expiration of an index-based futures
contract. Such assets may consist of cash, cash equivalents, liquid debt or equity securities or other
acceptable assets.

With respect to swaps, the Portfolio will accrue the net amount of the excess, if any, of its
obligations over its entitlements with respect to each swap on a daily basis and will segregate an amount of
cash or other liquid assets having a value equal to the accrued excess. Caps, floors and collars require
segregation of assets with a value equal to the Portfolio's net obligation, if any.

Strategic Transactions may be covered by other means when consistent with applicable regulatory
policies. The Portfolio may also enter into offsetting transactions so that its combined position, coupled with
any segregated assets, equals its net outstanding obligation in related options and Strategic Transactions. For
example, the Portfolio could purchase a put option if the strike price of that option is the same or higher than
the strike price of a put option sold by the Portfolio. Moreover, instead of segregating assets if the Portfolio
held a futures or forward contract, it could purchase a put option on the same futures or forward contract with a
strike price as high or higher than the price of the contract held. Other Strategic Transactions may also be
offset in combinations. If the offsetting transaction terminates at the time of or after the primary transaction
no segregation is required, but if it terminates prior to such time, assets equal to any remaining obligation
would need to be segregated.

The Portfolio's activities involving Strategic Transactions may be limited by the requirements of
Subchapter M of the Internal Revenue Code of 1986 for qualification as a regulated investment company (see this
Statement under "Tax Matters").

Japan and the Japanese Economy*

* WHERE FIGURES IN TABLES UNDER THIS CAPTION HAVE BEEN ROUNDED OFF, THE TOTALS MAY NOT NECESSARILY AGREE WITH
THE SUM OF THE FIGURES.

Because of distance, as well as differences in language, history, and culture, Japan remains relatively
unfamiliar to many investors. The archipelago of Japan stretches for 1300 miles in the western Pacific Ocean and
comprises an area of approximately 146,000 square miles. The four main islands, Hokkaido, Honshu, Kyushu and
Shikoku, cover the same approximate range of latitude and the same general range of climate as the east coast of
the United States north of Florida. The archipelago has in the past experienced earthquakes and tidal waves of
varying degrees of severity, and the risks of such phenomena, and damage resulting therefrom, continue to exist.

Japan has a total population of approximately 126 million. Life expectancy is one of the highest in the
world. Literacy in Japan approaches 100%. Nearly 90% of Japanese students graduate from high school.
Approximately 37% go on to college or university. Approximately 45% of the total population of Japan is
concentrated in the metropolitan areas of Tokyo, Osaka and Nagoya, cities with some of the world's highest
population densities.

Over the post war period Japan has experienced significant economic development. Today Japan is the
second largest industrial nation in the world in terms of GDP, with the United States being the largest. During
the era of high economic growth in the 1960s and early 1970s the expansion was based on the development of heavy
industries such as steel and shipbuilding. In the 1970s, Japan moved into assembly industries that employ high
levels of technology and consume relatively low quantities of resources, and since then has become a major
producer of automobiles and electrical and electronic products. In the 1980s, as Japan experienced a sharp
appreciation of its currency; Japanese manufacturers increasingly moved their production offshore, while domestic
demand was driven by a boom in consumption, housing, construction, and private capital expenditures. After the
sharp collapse in the stock market, which began in 1990s, the Japanese economy has been in an adjustment phase,
dealing with excess capacity, lower growth, and consequent problems within the banking sector.

Another development in the Japanese economy in the 1990s was a growing trend of deregulation and
globalization. Import restrictions on many products, ranging from meats to gasoline were gradually lifted, and
deregulation proceeded in industries ranging from retail, communication, transportation, finance, and many others.

Since the second half of the 1990s, asset price declines and excess capacity in many sectors have
continued to support a largely deflationary environment.

Japan's economy is a market economy in which industry and commerce are predominantly privately owned and
operated. However, the Government is involved in establishing and meeting objectives for developing the economy
and improving the standard of living of the Japanese people. In order to achieve its economic objectives, the
Government has generally relied on providing the prerequisite business environment and administrative guidance.
The agencies of the Government primarily concerned with economic policy and its implementation are the Economic
Planning Agency, The Ministry of Finance (MOF) and the Ministry of Economy, Trade, and Industry (METI) The Bank
of Japan, Japan's central bank, also acts in this field.

Economic Trends

During the five-year period ended December 31, 2000, Japan's real gross domestic product in constant prices
hardly changed. As a result of deflation, in nominal terms it fell by an annualized compound rate of 0.4%. In
1996, the gross domestic product grew at a high rate of 5.0% due to the front-loading of housing investment
before the consumption tax hike scheduled on April 1, 1997. In 1997, the growth rate of gross domestic product
slowed to 1.6% mainly due to a drop off in consumer spending and housing investment in reaction to the
consumption tax hike. In 1998, the gross domestic product decreased by 2.5%, affected by reduced fixed
investment in the private sector and continuous stagnation of consumer spending. In 1999, real GDP grew 0.3%
reflecting a slight improvement in consumer spending, the largest component. In 2000, real GDP grew by 1.1%, but
nominal growth fell for the third year in a row. Private sector capital expenditure as domestic industries began
to restructure was the only significant generator of positive growth.

Industrial Production. The following table sets forth indices of industrial production of Japan and
other selected industrial countries for the six years ending with calendar year 2000 (with 1995 as 100):

INDICES OF INDUSTRIAL PRODUCTION
------------------------------ ------------------ ------------------ ------------------ ------------------ ------------------
----------------------------- 1996 1997 1998 1999 2000
(1995=100)
------------------------------ ------------------ ------------------ ------------------ ------------------ ------------------
------------------------------ ------------------ ------------------ ------------------ ------------------ ------------------
Japan 102.90 107.30 99.70 100.10 106.40
------------------------------ ------------------ ------------------ ------------------ ------------------ ------------------
------------------------------ ------------------ ------------------ ------------------ ------------------ ------------------
United States 104.50 110.70 114.80 119.70 123.50
------------------------------ ------------------ ------------------ ------------------ ------------------ ------------------
------------------------------ ------------------ ------------------ ------------------ ------------------ ------------------
Germany 99.80 102.70 106.20 107.80 113.20
------------------------------ ------------------ ------------------ ------------------ ------------------ ------------------
------------------------------ ------------------ ------------------ ------------------ ------------------ ------------------
United Kingdom 101.10 101.90 102.50 103.40 104.90
------------------------------ ------------------ ------------------ ------------------ ------------------ ------------------
------------------------------ ------------------ ------------------ ------------------ ------------------ ------------------
France 100.30 104.10 108.80 113.40 116.60
------------------------------ ------------------ ------------------ ------------------ ------------------ ------------------
------------------------------ ------------------ ------------------ ------------------ ------------------ ------------------
Italy 98.30 100.50 102.20 110.90 106.90
------------------------------ ------------------ ------------------ ------------------ ------------------ ------------------
------------------------------ ------------------ ------------------ ------------------ ------------------ ------------------
Canada 100.10 104.00 109.10 113.67 117.90
------------------------------ ------------------ ------------------ ------------------ ------------------ ------------------

Source: IMF, International Financial Statistics

The following table sets forth the proportion of gross domestic product contributed by major industrial
sectors of the economy for 1996 to 2000:

GROSS DOMESTIC PRODUCT* BY INDUSTRIAL SECTORS

------------------------------------------------------------ ------------ ------------ ------------ ------------- ------------
1996 1997 1998 1999 2000

------------------------------------------------------------ ------------ ------------ ------------ ------------- ------------
------------------------------------------------------------ ------------ ------------ ------------ ------------- ------------
Manufacturing 93.7% 94.2% 94.0% 94.0% N/A
------------------------------------------------------------ ------------ ------------ ------------ ------------- ------------
------------------------------------------------------------ ------------ ------------ ------------ ------------- ------------
Agriculture, Forestry and Fisheries 1.9% 1.7% 1.7% 1.6% N/A
------------------------------------------------------------ ------------ ------------ ------------ ------------- ------------
------------------------------------------------------------ ------------ ------------ ------------ ------------- ------------
Mining 0.2% 0.2% 0.2% 0.2% N/A
------------------------------------------------------------ ------------ ------------ ------------ ------------- ------------
------------------------------------------------------------ ------------ ------------ ------------ ------------- ------------
Construction 7.9% 7.6% 7.4% 7.3% N/A
------------------------------------------------------------ ------------ ------------ ------------ ------------- ------------
------------------------------------------------------------ ------------ ------------ ------------ ------------- ------------
Manufacturing 23.2% 23.6% 22.4% 22.4% N/A
------------------------------------------------------------ ------------ ------------ ------------ ------------- ------------
------------------------------------------------------------ ------------ ------------ ------------ ------------- ------------
Electricity, Gas and Water 2.8% 2.8% 2.9% 2.9% N/A
------------------------------------------------------------ ------------ ------------ ------------ ------------- ------------
------------------------------------------------------------ ------------ ------------ ------------ ------------- ------------
Wholesale and Retail Trade 15.3% 15.4% 15.1% 14.5% N/A
------------------------------------------------------------ ------------ ------------ ------------ ------------- ------------
------------------------------------------------------------ ------------ ------------ ------------ ------------- ------------
Finance and Insurance 5.6% 5.8% 5.8% 6.3% N/A
------------------------------------------------------------ ------------ ------------ ------------ ------------- ------------
------------------------------------------------------------ ------------ ------------ ------------ ------------- ------------
Real Estate 11.8% 11.8% 12.0% 12.2% N/A
------------------------------------------------------------ ------------ ------------ ------------ ------------- ------------
------------------------------------------------------------ ------------ ------------ ------------ ------------- ------------
Transportation & Communication 6.9% 7.1% 7.4% 7.5% N/A
------------------------------------------------------------ ------------ ------------ ------------ ------------- ------------
------------------------------------------------------------ ------------ ------------ ------------ ------------- ------------
Services 18.1% 18.2% 19.1% 19.1% N/A
------------------------------------------------------------ ------------ ------------ ------------ ------------- ------------
------------------------------------------------------------ ------------ ------------ ------------ ------------- ------------
Government Services 8.3% 8.3% 8.5% 8.7% N/A
------------------------------------------------------------ ------------ ------------ ------------ ------------- ------------
------------------------------------------------------------ ------------ ------------ ------------ ------------- ------------
Private Non-Profit Institutions 1.7% 1.7% 1.9% 1.8% N/A
------------------------------------------------------------ ------------ ------------ ------------ ------------- ------------
------------------------------------------------------------ ------------ ------------ ------------ ------------- ------------
Import Duty 0.5% 0.5% 0.5% 0.5% N/A
------------------------------------------------------------ ------------ ------------ ------------ ------------- ------------
------------------------------------------------------------ ------------ ------------ ------------ ------------- ------------
(Deduction) Others 0.4% 0.4% 0.4% 0.4% N/A
------------------------------------------------------------ ------------ ------------ ------------ ------------- ------------
------------------------------------------------------------ ------------ ------------ ------------ ------------- ------------
(Deduction) Imputed Interest 4.6% 4.8% 4.9% 5.0% N/A
------------------------------------------------------------ ------------ ------------ ------------ ------------- ------------
------------------------------------------------------------ ------------ ------------ ------------ ------------- ------------
Statistical Discrepancy 0.7% 0.6% 0.4% 0.3% N/A

Source: Economic Planning Agency, Annual Report on National Accounts

* Gross domestic product measures the value of original goods and services produced by a country's domestic
economy. It is equal to gross national product, minus the income that residents receive from abroad for factor
services rendered abroad, plus similar payments made to non-residents who contribute to the domestic economy.

Energy. Japan has historically depended on oil for most of its energy requirements. Virtually all of
its oil is imported, the majority from the Middle East. Oil price changes used to have a major impact on the
domestic economy, but now their influence is relatively diminished.

Japan has worked to reduce its dependence on oil by encouraging energy conservation and the use of
alternative fuels. In addition to conservation efforts, industrial restructuring with and emphasis on shifting
from basic industries to processing and assembly type industries, has also contributed to the reduction of oil
consumption. Despite Japan's sustained economic growth, crude oil imports have not increased materially since
1979.

Labor. In 2000, approximately 67.8 million persons, or approximately 53% of the Japanese population,
were employed, of which approximately 4.8% were employed in agriculture, forestry and fisheries, 32.3% in
construction and manufacturing and 6.8% in transportation and communications, 24.1% in wholesale and retail
trade, 4.0% in finance, and 28.0% in other service-related industries (including the government). Since 1980 an
increasing proportion of the paid work force is female and an increasing number of people have been employed in
service industries.

Source: Ministry of Labor, Monthly Labor.

Prices. In the early 1990s, price inflation in Japan was weak. Over the last six years the tendency has
become increasingly deflationary under the influences of slow economic growth, overcapacity, and increasing
penetration of imports from low cost countries such as China. The tables below set forth the wholesale and
consumer price indices for Japan and other selected industrial countries for which comparable statistics are
available:

COMPARATIVE WHOLESALE PRICE INDICES
---------------------- -------------------- ------------------- -------------------- ------------------- -------------------
(1995=100) 1996 1997 1998 1999 2000
---------------------- -------------------- ------------------- -------------------- ------------------- -------------------
---------------------- -------------------- ------------------- -------------------- ------------------- -------------------
Japan 100.10 101.60 100.00 96.70 96.60
---------------------- -------------------- ------------------- -------------------- ------------------- -------------------
---------------------- -------------------- ------------------- -------------------- ------------------- -------------------
United States 102.30 102.30 99.70 100.60 106.30
---------------------- -------------------- ------------------- -------------------- ------------------- -------------------
---------------------- -------------------- ------------------- -------------------- ------------------- -------------------
Germany 99.60 100.70 100.30 99.03 102.50
---------------------- -------------------- ------------------- -------------------- ------------------- -------------------
---------------------- -------------------- ------------------- -------------------- ------------------- -------------------
United Kingdom 102.60 103.60 104.30 105.40 108.10
---------------------- -------------------- ------------------- -------------------- ------------------- -------------------
---------------------- -------------------- ------------------- -------------------- ------------------- -------------------
Italy 101.90 103.20 103.30 103.10 N/A
---------------------- -------------------- ------------------- -------------------- ------------------- -------------------
---------------------- -------------------- ------------------- -------------------- ------------------- -------------------
Canada 100.40 101.30 101.20 102.90 108.10
---------------------- -------------------- ------------------- -------------------- ------------------- -------------------
Source: IMF, International Financial Statistics

COMPARATIVE CONSUMER PRICE INDICES
---------------------- -------------------- ------------------- -------------------- ------------------- -------------------
(1995=100) 1996 1997 1998 1999 2000
---------------------- -------------------- ------------------- -------------------- ------------------- -------------------
---------------------- -------------------- ------------------- -------------------- ------------------- -------------------
Japan 100.10 101.80 102.50 102.20 101.50
---------------------- -------------------- ------------------- -------------------- ------------------- -------------------
---------------------- -------------------- ------------------- -------------------- ------------------- -------------------
United States 102.90 105.30 107.00 109.30 113.00
---------------------- -------------------- ------------------- -------------------- ------------------- -------------------
---------------------- -------------------- ------------------- -------------------- ------------------- -------------------
Germany 101.50 103.30 104.30 104.90 107.00
---------------------- -------------------- ------------------- -------------------- ------------------- -------------------
---------------------- -------------------- ------------------- -------------------- ------------------- -------------------
United Kingdom 102.40 105.70 109.30 111.00 114.20
---------------------- -------------------- ------------------- -------------------- ------------------- -------------------
---------------------- -------------------- ------------------- -------------------- ------------------- -------------------
France 102.00 103.20 103.90 104.50 106.30
---------------------- -------------------- ------------------- -------------------- ------------------- -------------------
---------------------- -------------------- ------------------- -------------------- ------------------- -------------------
Italy 104.00 106.10 108.20 110.00 112.80
---------------------- -------------------- ------------------- -------------------- ------------------- -------------------
---------------------- -------------------- ------------------- -------------------- ------------------- -------------------
Canada 100.10 104.00 109.10 113.67 117.30
---------------------- -------------------- ------------------- -------------------- ------------------- -------------------

Source: IMF, International Financial Statistics

Foreign Trade. Overseas trade is important to Japan's economy even though offshore production has
eroded its importance. Japan has few natural resources and must export to pay for its imports of these basic
requirements. During the year ended December 31, 2000, exports and imports represented approximately 11.1%% and
9.7%, respectively, of Japan's nominal gross domestic product. Roughly three quarters of Japan's exports are
machinery and equipment including motor vehicles, machine tools and electronic equipment. Japan's principal
imports consist of raw materials, foodstuff and fuels, such as oil and coal.

Japan's principal export markets are the United States, Canada, the United Kingdom, Germany, Australia,
Korea, Taiwan and the People's Republic of China. The principal sources of its imports are the United States,
South East Asia, the People's Republic of China and the Middle East.

A country's terms of trade (the ratio of export to import prices) is an indicator of the country's
comparative advantage in trade. The terms of trade fell slightly in 1996 and 1997 as a result of the rise in
import prices reflecting the lower yen rate. In 1998, the terms of trade improved slightly mainly because of
lower import prices. In 1999, the terms of trade improved to the 1995 level largely because of lower import
prices as a result of the higher yen rate. The terms of trade at the end of 2000 were approximately similar to
those at the end of 1996, despite considerable volatility in the yen rate during the period.

Source: Ministry of Finance, The Summary Report on Trade of Japan

Securities Markets in Japan

There are eight stock exchanges in Japan. Of these, the Tokyo Stock Exchange, the Osaka Stock Exchange
and the Nagoya Stock Exchange are the largest. The three main markets have two sections of stocks; generally,
companies with smaller capitalization are listed on the second section. In addition, The Japan Over-The-Counter
Trading Co. acts as the intermediary between securities companies wishing to trade shares on the over-the-counter
(OTC) market. The primary role of the OTC market is to facilitate the raising of funds from the investing public
by unlisted, small and medium-sized companies. Equity securities of Japanese companies, which are traded in an
over-the-counter market, are generally securities of relatively small or little-known companies. A new market,
named "Mothers", was established in the Tokyo Stock Exchange on November 11, 1999. This market is designed to
facilitate the public listing of venture business-type small corporations.

There are two widely followed price indices. The Nikkei Stock Average (NSA) is an arithmetic average of
225 selected stocks computed by a private corporation. In addition, the Tokyo Stock Exchange publishes the
TOPIX, formerly the TSE Index, which is an index of all first section stocks, about 1450 in total. The second
section has its own index. Nihon Keizai Shimbun, Inc., the publisher of a leading Japanese economic newspaper,
publishes the OTC Index.

In the five years ending December 1989, the Tokyo Stock Price Index (TOPIX) more than tripled, rising
from 913.37 to 2884.80 on December 18, 1989. The TOPIX then declined heavily in 1990 and in 1992, and after
showing a slight rebound in 1993 and 1994, the Index continued to decline throughout 1996, 1997 and 1998 to the
latest low of 980.11 on October 15, 1998. From the 1989 peak to the 1998 bottom, the TOPIX registered a 66%
drop. In 1999, the Tokyo stock market showed a strong upturn led by information service sector. The OTC index
more than tripled in 1999. In 2000 TOPIX gave up much of the ground gained in 1999 as high growth company
valuations fell in line with those in the U.S. and Europe.

Compared to the United States, the common stocks of many Japanese companies trade at a higher
price-earnings ratio. Historically, investments in the OTC market have been more volatile than the TSE.

In the past, the proportion of trading value by institutional investors has tended to increase at the
expense of individuals, but over the last five years, the share of trading value represented by financial
institutions and business corporations has fallen while the value of trading by foreigners has risen
substantially. In 1999, the trading value by individuals increased dramatically reflecting the stock market
rally and brisk demand for stock investment trusts, but this subsided again in 2000.

The following tables, compiled by Morgan Stanley Capital International, set forth the size of the
Japanese equity market in comparison with that of other major equity markets for the five years ending December
31, 2000.

EQUITY STOCK MARKETS OF THE WORLD
----------------------- -------------------- -------------------- -------------------- -------------------- --------------------
1996 1997 1998 1999 2000
----------------------- -------------------- -------------------- -------------------- -------------------- --------------------
----------------------- -------------------- -------------------- -------------------- -------------------- --------------------
United States 42.83% 49.29% 50.46% 48.62% 50.14%
----------------------- -------------------- -------------------- -------------------- -------------------- --------------------
----------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Japan 17.35% 12.12% 9.98% 13.58% 10.73%
----------------------- -------------------- -------------------- -------------------- -------------------- --------------------
----------------------- -------------------- -------------------- -------------------- -------------------- --------------------
United Kingdom 10.30% 10.20% 9.95% 9.30% 9.94%
----------------------- -------------------- -------------------- -------------------- -------------------- --------------------
----------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Euroland 15.67% 17.93% 20.84% 20.22% 20.23%
----------------------- -------------------- -------------------- -------------------- -------------------- --------------------
----------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Canada 2.56% 2.43% 1.79% 2.11% 2.34%
----------------------- -------------------- -------------------- -------------------- -------------------- --------------------
----------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Switzerland 3.02% 3.70% 3.77% 2.76% 3.36%
----------------------- -------------------- -------------------- -------------------- -------------------- --------------------
----------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Hong Kong 2.02% 1.33% 0.97% 1.13% 1.03%
----------------------- -------------------- -------------------- -------------------- -------------------- --------------------
----------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Australia 1.60% 1.44% 1.43% 1.33% 1.34%
----------------------- -------------------- -------------------- -------------------- -------------------- --------------------
----------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Other 4.65% 3.01% 2.25% 2.27% 2.24%
----------------------- -------------------- -------------------- -------------------- -------------------- --------------------

Source: Morgan Stanley Capital International, Quarterly Report

Investment Policies Which May Be Changed Without Shareholder Approval. The following restrictions are
applicable to the AST Scudder Japan Portfolio. These limitations are not "fundamental" restrictions and may be
changed by the Trustees without shareholder approval. The Portfolio will not:

1. enter into either of reverse repurchase agreements or dollar rolls in an amount greater than 5%
of its total assets;

2. purchase securities on margin or make short sales, except (i) short sales against the box, (ii)
in connection with arbitrage transactions, (iii) for margin deposits in connection with futures contracts,
options or other permitted investments, (iv) that transactions in futures contracts and options shall not be
deemed to constitute selling securities short, and (v) that the Portfolio may obtain such short-term credits as
may be necessary for the clearance of securities transactions;

3. purchase options, unless the aggregate premiums paid on all such options held by the Portfolio
at any time do not exceed 20% of its total assets; or sell put options, if as a result, the aggregate value of
the obligations underlying such put options would exceed 50% of its total assets;

4. enter into futures contracts or purchase options thereon unless immediately after the purchase,
the value of the aggregate initial margin with respect to such futures contracts entered into on behalf of the
Portfolio and the premiums paid for such options on futures contracts does not exceed 5% of the fair market value
of the Portfolio's total assets; provided that in the case of an option that is in-the-money at the time of
purchase, the in-the-money amount may be excluded in computing the 5% limit; or

5. make investments for the purpose of exercising control over management or that would involve
promotion or business management or that would subject the Portfolio to unlimited liability.

If a percentage restriction is adhered to at the time of investment, a later increase or decrease in percentage
beyond the specified limit resulting from a change in values or net assets will not be considered a violation.

AST AIM International Equity Portfolio:

Investment Objective: The investment objective of the Portfolio is to seek capital growth.

Investment Policies:

In managing the Portfolio, the Sub-advisor seeks to apply to the Portfolio the same investment strategy
that it applies to several of its other managed portfolios that have similar investment objectives but that
invest primarily in United States equities markets. The Portfolio will utilize to the extent practicable a fully
managed investment policy providing for the selection of securities which meet certain quantitative standards
determined by the Sub-advisor. The Sub-advisor reviews carefully the earnings history and prospects for growth
of each company considered for investment by the Portfolio. It is anticipated that common stocks will be the
principal form of investment of the Portfolio. The Portfolio is primarily comprised of securities of two basic
categories of companies: (a) "core" companies, which the Sub-advisor considers to have experienced above-average
and consistent long-term growth in earnings and to have excellent prospects for outstanding future growth, and
(b) "earnings acceleration" companies, which the Sub-advisor believes are currently enjoying a dramatic increase
in earnings.

If a particular foreign company meets the quantitative standards determined by the Sub-advisor, its
securities may be acquired by the Portfolio regardless of the location of the company or the percentage of the
Portfolio's investments in the company's country or region. However, the Sub-advisor will also consider other
factors in making investment decisions for the Portfolio, including such factors as the prospects for relative
economic growth among countries or regions, economic and political conditions, currency exchange fluctuations,
tax considerations and the liquidity of a particular security.

The Sub-advisor recognizes that often there is less public information about foreign companies than is
available in reports supplied by domestic companies, that foreign companies are not subject to uniform accounting
and financial reporting standards, and that there may be greater delays experienced by the Portfolio in receiving
financial information supplied by foreign companies than comparable information supplied by domestic companies.
In addition, the value of the Portfolio's investments that are denominated in a foreign currency may be affected
by changes in currency exchange rates. For these and other reasons, the Sub-advisor from time to time may
encounter greater difficulty applying its disciplined stock selection strategy to an international equity
investment portfolio than to a portfolio of domestic equity securities.

Any income realized by the Portfolio will be incidental and will not be an important criterion in the
selection of portfolio securities.

Under normal market conditions the Portfolio will invest at least 70% of its total assets in marketable
equity securities, including common stock, preferred stock, and other securities having the characteristics of
stock (such as an equity or ownership interest in a company) of foreign companies that are listed on a recognized
foreign securities exchange or traded on a foreign over-the-counter market. The Portfolio may also satisfy the
foregoing requirement in part by investing in the securities of foreign issuers in the form of ADRs, EDRs, or
other securities representing underlying securities of foreign issuers.

The Portfolio will emphasize investment in foreign companies in the developed countries of Western
Europe (such as Germany, France, Switzerland, the Netherlands and the United Kingdom) and the Pacific Basin (such
as Japan, Hong Kong and Australia), but the Portfolio may also invest in the securities of companies located in
developing countries (such as Turkey, Malaysia and Mexico) in various regions of the world. The risks of
investment in the equity markets of developing countries are described in more detail immediately below and in
this Statement under "Certain Risk Factors and Investment Methods."

Real Estate Investment Trusts ("REITs"). The Portfolio may invest in equity and/or debt securities
issued by REITs. Such investments will not exceed 5% of the total assets of the Portfolio.

REITs are trusts that sell equity or debt securities to investors and use the proceeds to invest in real
estate or interests therein. A REIT may focus on particular types of projects, such as apartment complexes, or
geographic regions, such as the Southeastern United States, or both.

To the extent that the Portfolio invests in REITs, it could conceivably own real estate directly as a
result of a default on the securities it owns. The Portfolio, therefore, may be subject to certain risks
associated with the direct ownership of real estate, including difficulties in valuing and trading real estate,
declines in the value of real estate, environmental liability risks, risks related to general and local economic
conditions, adverse change in the climate for real estate, increases in property taxes and operating expenses,
changes in zoning laws, casualty or condemnation losses, limitations on rents, changes in neighborhood values,
the appeal of properties to tenants, and increases in interest rates.

In addition to the risks described above, equity REITs may be affected by any changes in the value of
the underlying property owned by the trusts, while mortgage REITs may be affected by the quality of any credit
extended. Equity and mortgage REITs are dependent upon management skill, and are generally not diversified and
therefore are subject to the risk of financing single or a limited number of projects. Such trusts are also
subject to heavy cash flow dependency, defaults by borrowers, self-liquidation, and the possibility that the REIT
will fail to maintain its exemption from the 1940 Act. Changes in interest rates may also affect the value of
debt securities of REITs held by the Portfolio. By investing in REITs indirectly through the Portfolio, a
shareholder will bear not only his/her proportionate share of the expenses of the Portfolio, but also,
indirectly, similar expenses of the REITs.

Lending of Portfolio Securities. While securities are being lent, the Portfolio will continue to
receive the equivalent of the interest or dividends paid by the issuer on the securities, as well as interest on
the investment of the collateral or a fee from the borrower. The Portfolio has the right to call its loans and
obtain the securities on three business days' notice or, in connection with securities trading on foreign
markets, within such longer period of time that coincides with the normal settlement period for purchases and
sales of such securities in such foreign markets. The risks in lending portfolio securities, as with other
extensions of secured credit, consist of possible delay in receiving additional collateral or in the recovery of
the securities or possible loss of rights in the collateral should the borrower fail financially. Additional
information about the lending of portfolio securities is included in this Statement and the Trust's Prospectus
under "Certain Risk Factors and Investment Methods."

Borrowings. The Portfolio may borrow money to a limited extent from banks for temporary or emergency
purposes subject to the limitations under the 1940 Act. In addition, the Portfolio does not intend to engage in
leverage; therefore, consistent with current interpretations of the SEC, the Portfolio will not purchase
additional securities while borrowings exceed 5% of the Portfolio's total assets. Additional information about
borrowing is included in the Trust's Prospectus under "Certain Risk Factors and Investment Methods."

Securities Issued on a When-Issued or Delayed-Delivery Basis. The Portfolio may purchase securities on
a "when-issued" basis, that is, delivery of and payment for the securities is not fixed at the date of purchase,
but is set after the securities are issued (normally within forty-five days after the date of the transaction).
The Portfolio also may purchase or sell securities on a delayed-delivery basis. The payment obligation and the
interest rate that will be received on the delayed delivery-securities are fixed at the time the buyer enters
into the commitment. If the Portfolio purchases a when-issued security or enters into a delayed-delivery
agreement, the Portfolio's custodian bank will segregate cash or other liquid assets in an amount at least equal
to the when-issued commitment or delayed-delivery agreement commitment. Additional information about when-issued
and delayed-delivery transactions and their risks is included in this Statement and in the Trust's Prospectus
under "Certain Risk Factors and Investment Methods."

Short Sales "Against the Box." As described in the Trust's Prospectus, the Portfolio may make short
sales against the box. To secure its obligation to deliver the securities sold short, the Portfolio will deposit
in escrow in a separate account with its custodian an equal amount of the securities sold short or securities
convertible into or exchangeable for such securities. Since the Portfolio ordinarily will want to continue to
receive interest and dividend payments on securities in its portfolio that are convertible into the securities
sold short, the Portfolio will normally close out a short position covered by convertible securities by
purchasing and delivering an equal amount of the securities sold short, rather than by delivering securities that
it already holds.

The Portfolio will make a short sale, as a hedge, when it believes that the price of a security may
decline, causing a decline in the value of a security owned by the Portfolio or a security convertible into or
exchangeable for such security. In such case, any future losses in the Portfolio's long position should be
reduced by a gain in the short position. Conversely, any gain in the long position should be reduced by a loss
in the short position. The extent to which such gains or losses are reduced will depend upon the amount of the
security sold short relative to the amount the Portfolio owns, either directly or indirectly, and, in the case
where the Portfolio owns convertible securities, changes in the conversion premium. In determining the number of
shares to be sold short against a Portfolio's position in a convertible security, the anticipated fluctuation in
the conversion premium is considered. The Portfolio may also make short sales to generate additional income from
the investment of the cash proceeds of short sales. In no event may more than 10% of the value of the
Portfolio's total assets be deposited or pledged as collateral for short sales at any time.

Foreign Securities. The Portfolio normally invests primarily in foreign securities, including American
Depositary Receipts ("ADRs") and European Depositary Receipts ("EDRs"). Generally, ADRs, in registered form, are
designed for use in the United States securities markets, and EDRs, in bearer form, are designed for use in
European securities markets. ADRs and EDRs may be listed on stock exchanges, or traded in OTC markets in the
United States or Europe, as the case may be. ADRs, like other securities traded in the United States, will be
subject to negotiated commission rates.

To the extent the Portfolio invests in securities denominated in foreign currencies, the Portfolio bears
the risk of changes in the exchange rates between U.S. currency and the foreign currency, as well as the
availability and status of foreign securities markets. The Portfolio's investments in securities denominated in
foreign currencies generally will be marketable equity securities (including common and preferred stock,
depositary receipts for stock and fixed income or equity securities exchangeable for or convertible into stock)
of foreign companies that generally are listed on a recognized foreign securities exchange or traded in a foreign
over-the-counter market. The Portfolio may also invest in foreign securities listed on recognized U.S.
securities exchanges or traded in the U.S. over-the-counter market.

Investments by the Portfolio in foreign securities, whether denominated in U.S. currencies or foreign
currencies, may entail risks that are greater than those associated with domestic investments. The risks of
investing in foreign securities are discussed in detail in this Statement and the Trust's Prospectus under
"Certain Risk Factors and Investment Methods." Investment by the Portfolio in ADRs, EDRs and similar securities
also may entail some or all or these risks. The Sub-advisor seeks to mitigate the risks associated with foreign
investment through diversification and active professional management.

Developing Countries. A developing country or emerging market country can be considered to be
a country that is in the initial stages of its industrialization cycle. Currently, emerging markets generally
include every country in the world other than the developed European countries (primarily in Western Europe), the
United States, Canada, Japan, Australia, New Zealand, Hong Kong and Singapore. The characteristics of markets
can change over time. Currently, the Sub-advisor believes that investing in many emerging markets is not
desirable or feasible because of the lack of adequate custody arrangements for the Portfolio's assets, overly
burdensome repatriation and similar restrictions, the lack of organized and liquid securities markets,
unacceptable political risks or other reasons. As desirable opportunities to invest in securities in emerging
markets develop, the Portfolio may expand and further broaden the group of emerging markets in which it invests.

Many of the risks relating to foreign securities generally will be greater for emerging markets than for
developed countries. Many emerging markets have experienced substantial rates of inflation for many years.
Inflation and rapid fluctuations in inflation rates have had and may continue to have very negative effects on
the economies and securities markets for certain developing markets. Economies in emerging markets generally are
heavily dependent upon international trade and accordingly, have been and may continue to be affected adversely
by trade barriers, exchange controls, managed adjustments in relative currency values and other protectionist
measures imposed or negotiated by the countries with which they trade. These economies also have been and may
continue to be affected adversely by economic conditions in the countries with which they trade. There also may
be a lower level of securities market monitoring and regulation of developing markets and the activities of
investors in such markets, and enforcement of existing regulations has been extremely limited. The possibility
of revolution and the dependence on foreign economic assistance may be greater in these countries than in
developed countries.

In addition, brokerage commissions, custodial services and other costs relating to investment in foreign
markets may be particularly high with respect to emerging markets. Such markets have different settlement and
clearance procedures. In certain markets there have been times when settlements have been unable to keep pace
with the volume of securities transactions, making it difficult to conduct such transactions. Such settlement
problems may cause emerging market securities to be illiquid. The inability of the Portfolio to make intended
securities purchases due to settlement problems could cause the Portfolio to miss attractive investment
opportunities. Inability to dispose of a portfolio security caused by settlement problems could result in losses
to the Portfolio due to subsequent declines in value of the portfolio security or, if the Portfolio has entered
into a contract to sell the security, could result in liability to the purchaser. Certain emerging markets may
lack clearing facilities equivalent to those in developed countries. Accordingly, settlements can pose
additional risks in such markets and ultimately can expose the Portfolio to the risk of losses resulting from its
inability to recover from a counterparty.

The risk also exists that an emergency situation may arise in one or more emerging markets as a result
of which trading of securities may cease or may be substantially curtailed and prices for the Portfolio's
portfolio securities in such markets may not be readily available. The Portfolio's portfolio securities in the
affected markets will be valued at fair value determined in good faith by or under the direction of the Trust's
Board of Trustees.

Portfolio Turnover. Any particular security will be sold, and the proceeds reinvested, whenever such
action is deemed prudent from the viewpoint of the Portfolio's investment objectives, regardless of the holding
period of that security. Additional information about portfolio turnover is included in this Statement and the
Trust's Prospectus under "Certain Risk Factors and Investment Methods."

Options, Futures and Currency Strategies. The Portfolio may use forward contracts, futures contracts,
options on securities, options on indices, options on currencies, and options on futures contracts to attempt to
hedge against the overall level of investment and currency risk normally associated with the Portfolio's
investments. These instruments are often referred to as "derivatives," which may be defined as financial
instruments whose performance is derived, at least in part, from the performance of another asset (such as a
security, currency or an index of securities).

General Risks of Options, Futures and Currency Strategies. The use by the Portfolio of options, futures
contracts and forward currency contracts involves special considerations and risks. For example, there might be
imperfect correlation, or even no correlation, between the price movements or an instrument (such as an option
contract) and the price movements of the investments being hedged. In these circumstances, if a "protective put"
is used to hedge a potential decline in a security and the security does decline in price, the put option's
increased value may not completely offset the loss in the underlying security. Such a lack of correlation might
occur due to factors unrelated to the value of the investments being hedged, such as changing interest rates,
market liquidity, and speculative or other pressures on the markets in which the hedging instrument is traded.

The Portfolio will not enter into a hedging transaction if the Sub-advisor determines that the cost of
hedging will exceed the potential benefit to the Portfolio.

Additional information on these instruments is included in this Statement and the Trust's Prospectus
under "Certain Risk Factors and Investment Methods." Certain risks pertaining to particular strategies are
described in the sections that follow.

Cover. Transactions using forward contracts, futures contracts and options (other
than options purchased by a Portfolio) expose the Portfolio to an obligation to another party. A Portfolio will
not enter into any such transactions unless it owns either (1) an offsetting ("covered") position in securities,
currencies, or other options, forward contracts or futures contracts or (2) cash or liquid assets with a value
sufficient at all times to cover its potential obligations not covered as provided in (1) above. The Portfolio
will comply with SEC guidelines regarding cover for these instruments and, if the guidelines so require, set
aside cash or liquid securities.

Assets used as cover cannot be sold while the position in the corresponding forward contract,
futures contract or option is open, unless they are replaced with other appropriate assets. If a large portion
of a Portfolio's assets is used for cover or otherwise set aside, it could affect portfolio management or the
Portfolio's ability to meet redemption requests or other current obligations.

Writing Call Options. The Portfolio may write (sell) covered call options on securities,
futures contracts, forward contracts, indices and currencies. Writing call options can serve as a limited hedge
because declines in the value of the hedged investment would be offset to the extent of the premium received for
writing the option.

Writing Put Options. The Portfolio may write (sell) put options on securities, futures
contracts, forward contracts, indices and currencies. The Portfolio would write a put option at an exercise
price that, reduced by the premium received on the option, reflects the lower price it is willing to pay for the
underlying security, contract or currency. The risk in such a transaction would be that the market price of the
underlying security, contract or currency would decline below the exercise price less the premium received.

Purchasing Put Options. The Portfolio may purchase put options on securities, futures
contracts, forward contracts, indices and currencies. The Portfolio may enter into closing sale transactions
with respect to such options, exercise such option or permit such option to expire.

The Portfolio may also purchase put options on underlying securities, contracts or currencies against
which it has written other put options. For example, where the Portfolio has written a put option on an
underlying security, rather than entering a closing transaction of the written option, it may purchase a put
option with a different strike price and/or expiration date that would eliminate some or all of the risk
associated with the written put. Used in combinations, these strategies are commonly referred to as "put
spreads." Likewise, the Portfolio may write call options on underlying securities, contracts or currencies
against which it has purchased protective put options. This strategy is commonly referred to as a "collar."

Purchasing Call Options. The Portfolio may purchase covered call options on securities, futures
contracts, forward contracts, indices and currencies. The Portfolio may enter into closing sale transactions
with respect to such options, exercise such options or permit such options to expire.

The Portfolio may also purchase call options on underlying securities, contracts or currencies against
which it has written other call options. For example, where the Portfolio has written a call option on an
underlying security, rather than entering a closing transaction of the written option, it may purchase a call
option with a different strike price and/or expiration date that would eliminate some or all of the risk
associated with the written call. Used in combinations, these strategies are commonly referred to as "call
spreads."

Options may be either listed on an exchange or traded in over-the-counter ("OTC") markets. Listed
options are third-party contracts (i.e., performance of the obligations of the purchaser and seller is guaranteed
by the exchange or clearing corporation) and have standardized strike prices and expiration dates. OTC options
are two-party contracts with negotiated strike prices and expiration dates. The Portfolio will not purchase an
OTC option unless it believes that daily valuations for such options are readily obtainable. OTC options differ
from exchange-traded options in that OTC options are transacted with dealers directly and not through a clearing
corporation (which would guarantee performance). Consequently, there is a risk of non-performance by the
dealer. Since no exchange is involved, OTC options are valued on the basis of an average of the last bid prices
obtained from dealers, unless a quotation from only one dealer is available, in which case only that dealer's
price will be used.

Index Options. The risks of investment in index options may be greater than options on
securities. Because index options are settled in cash, when the Portfolio writes a call on an index it cannot
provide in advance for its potential settlement obligations by acquiring and holding the underlying securities.
The Portfolio can offset some of the risk of writing a call index option position by holding a diversified
portfolio of securities similar to those on which the underlying index is based. However, the Portfolio cannot,
as a practical matter, acquire and hold a portfolio containing exactly the same securities as underlie the index
and, as a result, bears a risk that the value of the securities held will not be perfectly correlated with the
value of the index.

Limitations on Options. The Portfolio will not write options it, immediately after such sale,
the aggregate value of securities or obligations underlying the outstanding options exceeds 20% of the
Portfolio's total assets. The Portfolio will not purchase options if, at the time of the investment, the
aggregate premiums paid for the options will exceed 5% of the Portfolio's total assets.

Interest Rate, Currency and Stock Index Futures Contracts. The Portfolio may enter into
interest rate, currency or stock index futures contracts (collectively, "Futures" or "Futures Contracts") and
options on Futures as a hedge against changes in prevailing levels of interest rates, currency exchange rates or
stock price levels, respectively, in order to establish more definitely the effective return on securities or
currencies held or intended to be acquired by it. The Portfolio's hedging may include sales of Futures as an
offset against the effect of expected increases in interest rates, and decreases in currency exchange rates and
stock prices, and purchase of Futures as an offset against the effect of expected declines in interest rates, and
increases in currency exchange rates or stock prices.

A Futures Contract is a two party agreement to buy or sell a specified amount of a specified security or
currency (or deliver a cash settlement price, in the case of an index future) for a specified price at a
designated date, time and place. A stock index future provides for the delivery, at a designated date, time and
place, of an amount of cash equal to a specified dollar amount times the difference between the stock index value
at the close of trading on the contract and the price agreed upon in the Futures Contract; no physical delivery
of stocks comprising the index is made.

The Portfolio will only enter into Futures Contracts that are traded on futures exchanges and are
standardized as to maturity date and underlying financial instrument. Futures exchanges and trading thereon in
the United States are regulated under the Commodity Exchange Act and by the CFTC.

The Portfolio's Futures transactions will be entered into for hedging purposes only; that is, Futures
will be sold to protect against a decline in the price of securities or currencies that the Portfolio owns, or
Futures will be purchased to protect the Portfolio against an increase in the price of securities or currencies
it has committed to purchase or expects to purchase.

If the Portfolio were unable to liquidate a Future or an option on Futures position due to the absence
of a liquid secondary market or the imposition of price limits, it could incur substantial losses. The Portfolio
would continue to be subject to market risk with respect to the position. In addition, except in the case of
purchased options, the Portfolio might be required to maintain the position being hedged by the Future or option
or to maintain cash or securities in a segregated account.

Additional information on Futures, options on Futures, and their risks is included in this Statement and
the Trust's Prospectus under "Certain Risk Factors and Investment Methods."

Forward Contracts. A forward contract is an obligation, usually arranged with a commercial bank or
other currency dealer, to purchase or sell a currency against another currency at a future date and price as
agreed upon by the parties. The Portfolio either may accept or make delivery of the currency at the maturity of
the forward contract. The Portfolio may also, if its contra party agrees prior to maturity, enter into a closing
transaction involving the purchase or sale of an offsetting contract. Forward contracts are traded
over-the-counter, and not on organized commodities or securities exchanges. As a result, it may be more
difficult to value such contracts, and it may be difficult to enter into closing transactions.

The cost to the Portfolio of engaging in forward contracts varies with factors such as the currencies
involved, the length of the contract period and the market conditions then prevailing. Because forward contracts
are usually entered into on a principal basis, no fees or commissions are involved. The use of forward contracts
does not eliminate fluctuations in the prices of the underlying securities the Portfolio owns or intends to
acquire, but it does establish a rate of exchange in advance.

Additional information on forward contracts and their risks is included in this Statement and the
Trust's Prospectus under "Certain Risk Factors and Investment Methods."

Other Investment Companies. The Portfolio may invest in other investment companies to the extent
permitted by the 1940 Act and rules and regulations thereunder, and, if applicable, exemptive orders granted by
the SEC.

Investment Policy Which May Be Changed Without Shareholder Approval. The following limitation is
applicable to the AST AIM International Equity Portfolio. This limitation is not a "fundamental" restriction, and
may be changed by the Trustees without shareholder approval. The Portfolio will not:

1. Make investments for the purpose of gaining control of a company's management.

AST Janus Overseas Growth Portfolio:

Investment Objective: The investment objective of the Portfolio is to seek long-term growth of capital.

Investment Policies:

The portfolio pursues its objective by investing primarily in common stocks of foreign issuers of any
size. The Portfolio normally invests at least 65% of its total assets in issuers from at least five different
countries excluding the United States. The Portfolio may invest all of its assets in the securities of a single
open-end management investment company with substantially the same fundamental investment objectives, policies
and restrictions as the Portfolio subject to the prior approval of the Investment Manager. The Investment
Manager will not approve such investment unless: (a) the Investment Manager believes, on the advice of counsel,
that such investment will not have an adverse effect on the tax status of the annuity contracts and/or life
insurance policies supported by the separate accounts of the Participating Insurance Companies which purchase
shares of the Trust; (b) the Investment Manager has given prior notice to the Participating Insurance Companies
that it intends to permit such investment and has determined whether such Participating Insurance Companies
intend to redeem any shares and/or discontinue the purchase of shares because of such investment; (c) the
Trustees have determined that the fees to be paid by the Trust for administrative, accounting, custodial and
transfer agency services for the Portfolio subsequent to such an investment are appropriate, or the Trustees have
approved changes to the agreements providing such services to reflect a reduction in fees; (d) the Sub-advisor
has agreed to reduce its fee by the amount of any investment advisory fees paid to the investment manager of such
open-end management investment company; and (e) shareholder approval is obtained if required by law. The
Portfolio will apply for such exemptive relief under the provisions of the 1940 Act, or other such relief as may
be necessary under the then governing rules and regulations of the 1940 Act, regarding investments in such
investment companies.

Futures, Options and Other Derivative Instruments. The Portfolio may enter into futures contracts on
securities, financial indices, and foreign currencies and options on such contracts, and may invest in options on
securities, financial indices and foreign currencies, forward contracts and swaps. The Portfolio will not enter
into any futures contracts or options on futures contracts if the aggregate amount of the Portfolio's commitments
under outstanding futures contracts positions and options on futures contracts written by the Portfolio would
exceed the market value of the total assets of the Portfolio. The Portfolio may invest in forward currency
contracts with stated values of up to the value of the Portfolio's assets.

The Portfolio may buy or write options in privately negotiated transactions on the types of securities
and indices based on the types of securities in which the Portfolio is permitted to invest directly. The
Portfolio will effect such transactions only with investment dealers and other financial institutions (such as
commercial banks or savings and loan institutions) deemed creditworthy, and only pursuant to procedures adopted,
by the Sub-advisor for monitoring the creditworthiness of those entities. To the extent that an option bought or
written by the Portfolio in a negotiated transaction is illiquid, the value of an option bought or the amount of
the Portfolio's obligations under an option written by the Portfolio, as the case may be, will be subject to the
Portfolio's limitation on illiquid investments. In the case of illiquid options, it may not be possible for the
Portfolio to effect an offsetting transaction at a time when the Sub-advisor believes it would be advantageous
for the Portfolio to do so. For a description of these strategies and instruments and certain risks involved
therein, see this Statement and the Trust's Prospectus under "Certain Risk Factors and Investment Methods."

Eurodollar Instruments. The Portfolio may make investments in Eurodollar instruments. Eurodollar
instruments are U.S. dollar-denominated futures contracts or options thereon which are linked to the London
Interbank Offered Rate ("LIBOR"), although foreign currency-denominated instruments are available from time to
time. Eurodollar futures contracts enable purchasers to obtain a fixed rate for the lending of funds and sellers
to obtain a fixed rate for borrowings. The Portfolio might use Eurodollar futures contracts and options thereon
to hedge against changes in LIBOR, to which many interest rate swaps and fixed-income instruments are linked.

Swaps and Swap-Related Products. The Portfolio may enter into interest rate swaps, caps and floors on
either an asset-based or liability-based basis, depending upon whether it is hedging its assets or its
liabilities, and will usually enter into interest rate swaps on a net basis (i.e., the two payment streams are
netted out, with the Portfolio receiving or paying, as the case may be, only the net amount of the two payments).
The net amount of the excess, if any, of the Portfolio's obligations over its entitlement with respect to each
interest rate swap will be calculated on a daily basis and an amount of cash or high-grade liquid assets having
an aggregate net asset value at least equal to the accrued excess will be maintained in a segregated account by
the custodian of the Portfolio. If the Portfolio enters into an interest rate swap on other than a net basis, it
would maintain a segregated account in the full amount accrued on a daily basis of its obligations with respect
to the swap. The Portfolio will not enter into any interest rate swap, cap or floor transaction unless the
unsecured senior debt or the claims-paying ability of the other party thereto is rated in one of the three
highest rating categories of at least one nationally recognized statistical rating organization at the time of
entering into such transaction. The Sub-advisor will monitor the creditworthiness of all counterparties on an
ongoing basis. If there is a default by the other party to such a transaction, the Portfolio will have
contractual remedies pursuant to the agreements related to the transaction.

The swap market has grown substantially in recent years with a large number of banks and investment
banking firms acting both as principals and as agents utilizing standardized swap documentation. The Sub-advisor
has determined that, as a result, the swap market has become relatively liquid. Caps and floors are more recent
innovations for which standardized documentation has not yet been developed and, accordingly, they are less
liquid than swaps. To the extent the Portfolio sells (i.e., writes) caps and floors, it will segregate cash or
high-grade liquid assets having an aggregate net asset value at least equal to the full amount, accrued on a
daily basis, of its obligations with respect to any caps or floors.

There is no limit on the amount of interest rate swap transactions that may be entered into by the
Portfolio. These transactions may in some instances involve the delivery of securities or other underlying assets
by the Portfolio or its counterparty to collateralize obligations under the swap. Under the documentation
currently used in those markets, the risk of loss with respect to interest rate swaps is limited to the net
amount of the payments that the Portfolio is contractually obligated to make. If the other party to an interest
rate swap that is not collateralized defaults, the Portfolio would risk the loss of the net amount of the
payments that it contractually is entitled to receive. The Portfolio may buy and sell (i.e., write) caps and
floors without limitation, subject to the segregation requirement described above. For an additional discussion
of these strategies, see this Statement under "Certain Risk Factors and Investment Methods."

Investment Company Securities. From time to time, the Portfolio may invest in securities of other
investment companies, subject to the provisions of Section 12(d)(1) of the 1940 Act. The Portfolio may invest in
securities of money market funds managed by the Sub-advisor subject to the terms of an exemptive order obtained
by the Sub-advisor and the funds that are advised or sub-advised by the Sub-advisor. Under such order, the
Portfolio will limit its aggregate investment in a money market fund managed by the Sub-advisor to the greater of
(i) 5% of its total assets or (ii) $2.5 million, although the Trust's Board of Trustees may increase this limit
up to 25% of the Trust's total assets.

Zero-Coupon, Pay-In-Kind and Step Coupon Securities. The Portfolio may invest up to 10% of its assets
in zero-coupon, pay-in-kind and step coupon securities. For a discussion of zero-coupon debt securities and the
risks involved therein, see this Statement under "Certain Risk Factors and Investment Methods."

Pass-Through Securities. The Portfolio may invest in various types of pass-through securities, such as
mortgage-backed securities, asset-backed securities and participation interests. A pass-through security is a
share or certificate of interest in a pool of debt obligations that have been repackaged by an intermediary, such
as a bank or broker-dealer. The purchaser of a pass-through security receives an undivided interest in the
underlying pool of securities. The issuers of the underlying securities make interest and principal payments to
the intermediary which are passed through to purchasers, such as the Portfolio. For an additional discussion of
pass-through securities and certain risks involved therein, see this Statement and the Trust's Prospectus under
"Certain Risk Factors and Investment Methods."

Depositary Receipts. The Portfolio may invest in sponsored and unsponsored American Depositary Receipts
("ADRs"), which are receipts issued by an American bank or trust company evidencing ownership of underlying
securities issued by a foreign issuer. ADRs, in registered form, are designed for use in U.S. securities markets.
Unsponsored ADRs may be created without the participation of the foreign issuer. Holders of these ADRs generally
bear all the costs of the ADR facility, whereas foreign issuers typically bear certain costs in a sponsored ADR.
The bank or trust company depositary of an unsponsored ADR may be under no obligation to distribute shareholder
communications received from the foreign issuer or to pass through voting rights. The Portfolio may also invest
in European Depositary Receipts ("EDRs"), receipts issued by a European financial institution evidencing an
arrangement similar to that of ADRs, Global Depositary Receipts ("GDRs") and in other similar instruments
representing securities of foreign companies. EDRs, in bearer form, are designed for use in European securities
markets. GDRs are securities convertible into equity securities of foreign issuers.

Other Income-Producing Securities. Other types of income producing securities that the Portfolio may
purchase include, but are not limited to, the following types of securities:

Variable and Floating Rate Obligations. These types of securities are relatively long-term
instruments that often carry demand features permitting the holder to demand payment of principal at any time or
at specified intervals prior to maturity.

Standby Commitments. These instruments, which are similar to a put, give the Portfolio the
option to obligate a broker, dealer or bank to repurchase a security held by that Portfolio at a specified price.

Tender Option Bonds. Tender option bonds are relatively long-term bonds that are coupled with
the agreement of a third party (such as a broker, dealer or bank) to grant the holders of such securities the
option to tender the securities to the institution at periodic intervals.

Inverse Floaters. Inverse floaters are debt instruments whose interest bears an inverse
relationship to the interest rate on another security. The Portfolio will not invest more than 5% of its assets
in inverse floaters. The Portfolio will purchase standby commitments, tender option bonds and instruments with
demand features primarily for the purpose of increasing the liquidity of the Portfolio.

Reverse Repurchase Agreements. The Portfolio may enter into reverse repurchase agreements. The
Portfolio will enter into such agreements only to provide cash to satisfy unusually heavy redemption requests and
for other temporary or emergency purposes, rather than to obtain cash to make additional investments. While a
reverse repurchase agreement is outstanding, the Portfolio will maintain cash and appropriate liquid assets in a
segregated custodial account to cover its obligation under the agreement. The Portfolio will enter into reverse
repurchase agreements only with parties that Sub-advisor deems creditworthy. For an additional description of
these investment techniques, see the Trust's Prospectus under "Certain Risk Factors and Investment Methods."

Investment Policies Which May be Changed Without Shareholder Approval. The following limitations are
applicable to the AST Janus Overseas Growth Portfolio. These limitations are not "fundamental" restrictions and
may be changed by the Trustees without shareholder approval:

1. The Portfolio will not (i) enter into any futures contracts and related options for purposes
other than bona fide hedging transactions within the meaning of CFTC regulations if the aggregate initial margin
and premiums required to establish positions in futures contracts and related options that do not fall within the
definition of bona fide hedging transactions will exceed 5% of the fair market value of the Portfolio's net
assets, after taking into account unrealized profits and unrealized losses on any such contracts it has entered
into; and (ii) enter into any futures contracts if the aggregate amount of the Portfolio's commitments under
outstanding futures contracts positions would exceed the market value of its total assets.

2. The Portfolio does not currently intend to sell securities short, unless it owns or has the
right to obtain securities equivalent in kind and amount to the securities sold short without the payment of any
additional consideration therefor, and provided that transactions in futures, options, swaps and forward
contracts are not deemed to constitute selling securities short.

3. The Portfolio does not currently intend to purchase securities on margin, except that the
Portfolio may obtain such short-term credits as are necessary for the clearance of transactions, and provided
that margin payments and other deposits in connection with transactions in futures, options, swaps and forward
contracts shall not be deemed to constitute purchasing securities on margin.

4. The Portfolio does not currently intend to purchase securities of other investment companies,
except in compliance with the 1940 Act.

5. The Portfolio may not mortgage or pledge any securities owned or held by the Portfolio in
amounts that exceed, in the aggregate, 15% of the Portfolio's net asset value, provided that this limitation does
not apply to reverse repurchase agreements, deposits of assets to margin, guarantee positions in futures,
options, swaps or forward contracts, or the segregation of assets in connection with such contracts.

6. The Portfolio does not currently intend to purchase any security or enter into a repurchase
agreement if, as a result, more than 15% of its net assets would be invested in repurchase agreements not
entitling the holder to payment of principal and interest within seven days and in securities that are illiquid
by virtue of legal or contractual restrictions on resale or the absence of a readily available market. The
Trustees, or the Sub-advisor acting pursuant to authority delegated by the Trustees, may determine that a readily
available market exists for securities eligible for resale pursuant to Rule 144A under the Securities Act of 1933
("Rule 144A Securities"), or any successor to such rule, and Section 4(2) commercial paper. Accordingly, such
securities may not be subject to the foregoing limitation.

7. The Portfolio may not invest in companies for the purpose of exercising control of management.

AST American Century International Growth Portfolio:

Investment Objective: The investment objective of the Portfolio is to seek capital growth.

Investment Policies:

In general, within the restrictions outlined herein, the Portfolio has broad powers with respect to
investing funds or holding them uninvested. Investments are varied according to what is judged advantageous under
changing economic conditions. It will be the Sub-advisor's policy to retain maximum flexibility in management
without restrictive provisions as to the proportion of one or another class of securities that may be held,
subject to the investment restrictions described below. It is the Sub-advisor's intention that the Portfolio
will generally consist of common stocks. However, the Sub-advisor may invest the assets of the Portfolio in
varying amounts in other instruments and in senior securities, such as bonds, debentures, preferred stocks and
convertible issues, when such a course is deemed appropriate in order to attempt to attain its financial
objective.

Foreign Currency Transactions and Forward Contracts. The Portfolio may conduct foreign currency
transactions on a spot basis (i.e., cash) or forward basis (i.e., by entering into forward currency exchange
contracts, currency options and futures transactions to purchase or sell foreign currencies). Although foreign
exchange dealers generally do not charge a fee for such transactions, they do realize a profit based on the
difference between the prices at which they are buying and selling various currencies.

Forward contracts are customized transactions that require a specific amount of a currency to be
delivered at a specific exchange rate on a specific date or range of dates in the future. Forward contracts are
generally traded in an interbank market directly between currency traders (usually larger commercial banks) and
their customers. The parties to a forward contract may agree to offset or terminate the contract before its
maturity, or may hold the contract to maturity and complete the contemplated currency exchange.

The following summarizes the principal currency management strategies for the Portfolio involving
forward contracts. The Portfolio may also use swap agreements, indexed securities, and options and futures
contracts relating to foreign currencies for the same purposes.

(1) Settlement Hedges or Transaction Hedges. When the Sub-advisor wishes to lock in the U.S. dollar price
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of a foreign currency denominated security when the Portfolio is purchasing or selling the security, the
Portfolio may enter into a forward contract to do so. This type of currency transaction, often called a
"settlement hedge" or "transaction hedge," protects the Portfolio against an adverse change in foreign
currency values between the date a security is purchased or sold and the date on which payment is made or
received (i.e., "settled). Forward contracts to purchase or sell a foreign currency may also be used by the
Portfolio in anticipation of future purchases or sales of securities denominated in foreign currency, even
if the specific investments have not yet been selected by the Sub-advisor. This strategy is often referred
to as "anticipatory hedging."

(2) Position Hedges. When the Sub-advisor believes that the currency of a particular foreign country may
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suffer substantial decline against the U.S. dollar, the Portfolio may enter into a forward contract to sell
foreign currency for a fixed U.S. dollar amount approximating the value of some or all of its portfolio
securities either denominated in, or whose value is tied to, such foreign currency. This use of a forward
contract is sometimes referred to as a "position hedge." For example, if a Portfolio owned securities
denominated in Euros, it could enter into a forward contract to sell Euros in return for U.S. dollars to
hedge against possible declines in the Euro's value. This hedge would tend to offset both positive and
negative currency fluctuations, but would not tend to offset changes in security values caused by other
factors.

The Portfolio could also hedge the position by entering into a forward contract to sell another currency
expected to perform similarly to the currency in which the Portfolio's existing investments are denominated.
This type of hedge, often called a "proxy hedge," could offer advantages in terms of cost, yield or efficiency,
but may not hedge currency exposure as effectively as a simple position hedge against U.S. dollars. This type of
hedge may result in losses if the currency used to hedge does not perform similarly to the currency in which the
hedged securities are denominated.

The precise matching of forward contracts in the amounts and values of securities involved generally
would not be possible because the future values of such foreign currencies will change as a consequence of market
movements in the values of those securities between the date the forward contract is entered into and the date it
matures. Predicting short-term currency market movements is extremely difficult, and the successful execution of
a short-term hedging strategy is highly uncertain. Normally, consideration of the prospect for currency parities
will be incorporated into the long-term investment decisions made with respect to overall diversification
strategies. However, the Sub-advisor believes that it is important to have flexibility to enter into such
forward contracts when it determines that the Portfolio's best interests may be served.

At the maturity of the forward contract, the Portfolio may either sell the portfolio security and make
delivery of the foreign currency, or it may retain the security and terminate the obligation to deliver the
foreign currency by purchasing an "offsetting" forward contract with the same currency trader obligating the
Portfolio to purchase, on the same maturity date, the same amount of the foreign currency.

It is impossible to forecast with absolute precision the market value of portfolio securities at the
expiration of the forward contract. Accordingly, it may be necessary for the Portfolio to purchase additional
foreign currency on the spot market (and bear the expense of such purchase) if the market value of the security
is less than the amount of foreign currency the Portfolio is obligated to deliver and if a decision is made to
sell the security and make delivery of the foreign currency the Portfolio is obligated to deliver.

(3) Shifting Currency Exposure. The Portfolio may also enter into forward contracts to shift its investment
-------------------------------------
exposure from one currency into another. This may include shifting exposure from U.S. dollars to foreign
currency, or from one foreign currency to another foreign currency. This strategy tends to limit exposure to
the currency sold, and increase exposure to the currency that is purchased, much as if the Portfolio had
sold a security denominated in one currency and purchased an equivalent security denominated in another
currency. For example, if the Sub-advisor believes that the U.S. dollar may suffer a substantial decline
against the Euro, it could enter into a forward contract to purchase Euros for a fixed amount of U.S.
dollars. This transaction would protect against losses resulting from a decline in the value of the U.S.
dollar, but would cause the Portfolio to assume the risk of fluctuations in the value of the Euro.

Successful use of currency management strategies will depend on the Sub-advisor's skill in analyzing
currency values. Currency management strategies may substantially change the Portfolio's investment exposure to
changes in currency rates and could result in losses to the Portfolio if currencies do not perform as the
Sub-advisor anticipates. For example, if a currency's value rose at a time when the Sub-advisor hedged the
Portfolio by selling the currency in exchange for U.S. dollars, the Portfolio would not participate in the
currency's appreciation. Similarly, if the Sub-advisor increases the Portfolio's exposure to a currency and that
currency's value declines, the Portfolio will sustain a loss. There is no assurance that the Sub-advisor's use
of foreign currency management strategies will be advantageous to the Portfolio or that they will hedge at
appropriate times.

The Portfolio will cover outstanding forward contracts by maintaining liquid portfolio securities
denominated in, or whose value is tied to, the currency underlying the forward contract or the currency being
hedged. To the extent that the Portfolio is not able to cover its forward currency positions with underlying
portfolio securities, the Portfolio's custodian will segregate cash or other liquid assets having a value equal
to the aggregate amount of the Portfolio's commitments under forward contracts entered into with respect to
position hedges, settlement hedges and anticipatory hedges.

For an additional discussion of foreign currency contracts and forward contracts and the risks involved
therein, see this Statement and the Trust's Prospectus under "Certain Risk Factors and Investment Methods."

Derivative Securities. To the extent permitted by its investment objectives and policies discussed
elsewhere herein, the Portfolio may invest in securities that are commonly referred to as "derivative"
securities. Certain derivative securities are more accurately described as "index/structured" securities.
Index/structured securities are derivative securities whose value or performance is linked to other equity
securities (such as depositary receipts), currencies, interest rates, indices or other financial indicators
("reference indices").

Some "derivatives," such as mortgage-backed and other asset-backed securities, are in many respects like
any other investment, although they may be more volatile or less liquid than more traditional debt securities.

The Portfolio may not invest in a derivative security unless the reference index or the instrument to
which it relates is an eligible investment for the Portfolio. For example, a security whose underlying value is
linked to the price of oil would not be a permissible investment because the Portfolio may not invest in oil and
gas leases or futures.

The return on a derivative security may increase or decrease, depending upon changes in the reference
index or instrument to which it relates.

There is a range of risks associated with derivative investments, including:

o the risk that the underlying security, interest rate, market index or other financial asset will not
move in the direction the portfolio manager anticipates;

o the possibility that there may be no liquid secondary market, or the possibility that price fluctuation
limits may be imposed by the exchange, either of which may make it difficult or impossible to close out
a position when desired; and

o the risk that the counterparty will fail to perform its obligations.

The Sub-advisor will report to the Investment Manager on activity in derivative securities, and the Investment
Manager will report to the Trust's Board of Trustees as necessary. For additional information on derivatives and
their risks, see the Trust's Prospectus under "Certain Risk Factors and Investment Methods."

Futures and Options. The Portfolio may enter into futures contracts, options or options on futures
contracts. The Portfolio may not, however, enter into a futures transaction for speculative purposes.
Generally, futures transactions will be used to:

o protect against a decline in market value of the Portfolio's securities (taking a short futures
position), or

o protect against the risk of an increase in market value for securities in which the Portfolio generally
invests at a time when the Portfolio is not fully-invested (taking a long futures position), or

o provide a temporary substitute for the purchase of an individual security that may be purchased in an
orderly fashion.

Some futures and options strategies, such as selling futures, buying puts and writing calls, hedge the
Portfolio's investments against price fluctuations. Other strategies, such as buying futures, writing puts and
buying calls, tend to increase market exposure.

Although other techniques may be used to control the Portfolio's exposure to market fluctuations, the
use of futures contracts may be a more effective means of hedging this exposure. While the Portfolio will pay
brokerage commissions in connection with opening and closing out futures positions, these costs are lower than
the transaction costs incurred in the purchase and sale of the underlying securities.

The Portfolio may engage in futures and options transactions based on securities indices that are
consistent with the Portfolio's investment objectives. Examples of indices that may be used include the Bond
Buyer Index of Municipal Bonds for fixed income funds, or the S&P 500 Index for equity funds. The Portfolio also
may engage in futures and options transactions based on specific securities, such as U.S. Treasury bonds or
notes. Futures contracts are traded on national futures exchanges. Futures exchanges and trading are regulated
under the Commodity Exchange Act by the CFTC, a U.S. government agency.

Unlike when the Portfolio purchases or sells a bond, no price is paid or received by the Portfolio upon
the purchase or sale of the future. Initially, the Portfolio will be required to deposit an amount of cash or
securities equal to a varying specified percentage of the contract amount. This amount is known as initial
margin. The margin deposit is intended to assure completion of the contract (delivery or acceptance of the
underlying security) if it is not terminated prior to the specified delivery date. Minimum initial margin
requirements are established by the futures exchanges and may be revised. In addition, brokers may establish
margin deposit requirements that are higher than the exchange minimums. Cash held in the margin account is not
income producing. Subsequent payments, called variation margin, to and from the broker, will be made on a daily
basis as the price of the underlying debt securities or index fluctuates, making the future more or less
valuable, a process known as marking the contract to market.

Futures and options prices can be volatile, and trading in these markets involves certain risks, which
are described in more detail in this Statement and the Trust's Prospectus under "Certain Risk Factors and
Investment Methods." The Sub-advisor will seek to minimize these risks by limiting the contracts entered into on
behalf of the Portfolio to those traded on national futures exchanges and for which there appears to be a liquid
secondary market.

Options on Futures. By purchasing an option on a futures contract, the Portfolio obtains the right, but
not the obligation, to sell the futures contract (a put option) or to buy the contract (a call option) at a fixed
strike price. The Portfolio can terminate its position in a put option by allowing it to expire or by exercising
the option. If the option is exercised, the Portfolio completes the sale of the underlying instrument at the
strike price. Purchasing an option on a futures contract does not require the Portfolio to make margin payments
unless the option is exercised.

Although they do not currently intend to do so, the Portfolio may write (or sell) call options that
obligate it to sell (or deliver) the option's underlying instrument upon exercise of the option. While the
receipt of option premiums would mitigate the effects of price declines, the Portfolio would give up some ability
to participate in a price increase on the underlying instrument. If the Portfolio were to engage in options
transactions, it would own the futures contract at the time a call were written and would keep the contract open
until the obligation to deliver it pursuant to the call expired.

Investments in securities of issuers with limited operating history may involve greater risks than
investments in securities of more mature issuers. By their nature, such issuers present limited operating
history and financial information upon which the manager may base its investment decision on behalf of the
Portfolio. In addition, financial and other information regarding such issuers, when available, may be
incomplete or inaccurate.

The Portfolio will not invest more than 5% of its total assets in the securities of issuers with less
than a three-year operating history. The Sub-advisor will consider periods of capital formation, incubation,
consolidation, and research and development in determining whether a particular issuer has a record of three
years of continuous operation.

Short Sales. The Portfolio may engage in short sales if, at the time of the short sale, the Portfolio
owns or has the right to acquire an equal amount of the security being sold short at no additional cost.

In a short sale, the seller does not immediately deliver the securities sold and is said to have a short
position in those securities until delivery occurs. To make delivery to the purchaser, the executing broker
borrows the securities being sold short on behalf of the seller. While the short position is maintained, the
seller collateralizes its obligation to deliver the securities sold short in an amount equal to the proceeds of
the short sale plus an additional margin amount established by the Board of Governors of the Federal Reserve. If
the Portfolio engages in a short sale the collateral account will be maintained by the Portfolio's custodian.
While the short sale is open the Portfolio will maintain in a segregated custodial account an amount of
securities convertible into or exchangeable for such equivalent securities at no additional cost. These
securities would constitute the Portfolio's long position.

If the Portfolio sells short securities that it owns, any future gains or losses in the Portfolio's long
position should be reduced by a gain or loss in the short position. The extent to which such gains or losses are
reduced would depend upon the amount of the security sold short relative to the amount the Portfolio owns. There
will be certain additional transaction costs associated with short sales, but the Portfolio will endeavor to
offset these costs with income from the investment of the cash proceeds of short sales.

Sovereign Debt Obligations. The Portfolio may purchase sovereign debt instruments issued or guaranteed
by foreign governments or their agencies, including debt of emerging market countries. Sovereign debt may be in
the form of conventional securities or other types of debt instruments such as loans or loan participations.
Sovereign debt of developing countries may involve a high degree of risk and may present a risk of default or
renegotiation or rescheduling of debt payments.

Portfolio Turnover. The Sub-advisor will purchase and sell securities without regard to the length of
time the security has been held and, accordingly, it can be expected that the rate of portfolio turnover may be
substantial.

The Sub-advisor intends to purchase a given security whenever the Sub-advisor believes it will
contribute to the stated objective of the Portfolio, even if the same security has only recently been sold. The
Portfolio will sell a given security, no matter for how long or for how short a period it has been held, and no
matter whether the sale is at a gain or at a loss, if the Sub-advisor believes that such security is not
fulfilling its purpose, either because, among other things, it did not live up to the Sub-advisor's expectations,
or because it may be replaced with another security holding greater promise, or because it has reached its
optimum potential, or because of a change in the circumstances of a particular company or industry or in general
economic conditions, or because of some combination of such reasons.

When a general decline in security prices is anticipated, the Portfolio may decrease or eliminate
entirely its equity position and increase its cash position, and when a rise in price levels is anticipated, the
Portfolio may increase its equity position and decrease its cash position. However, it should be expected that
the Portfolio will, under most circumstances, be essentially fully invested in equity securities.

Since investment decisions are based on the anticipated contribution of the security in question to the
Portfolio's objectives, the rate of portfolio turnover is irrelevant when the Sub-advisor believes a change is in
order to achieve those objectives, and the Portfolio's annual portfolio turnover rate cannot be anticipated and
may be comparatively high. Since the Sub-advisor does not take portfolio turnover rate into account in making
investment decisions, (1) the Sub-advisor has no intention of accomplishing any particular rate of portfolio
turnover, whether high or low, and (2) the portfolio turnover rates should not be considered as a representation
of the rates that will be attained in the future.

Investment Policies Which May Be Changed Without Shareholder Approval. The following limitations are
applicable to the AST American Century International Growth Portfolio. These limitations are not "fundamental"
restrictions and may be changed by the Trustees without shareholder approval. The Portfolio will not:

1. Invest more than 15% of its assets in illiquid investments;

2. Invest in the securities of other investment companies except in compliance with the 1940 Act;

3. Buy securities on margin or sell short (unless it owns or by virtue of its ownership of other
securities has the right to obtain securities equivalent in kind and amount to the securities sold); however, the
Portfolio may make margin deposits in connection with the use of any financial instrument or any transaction in
securities permitted under its investment policies;

4. Invest in oil, gas or other mineral leases;

5. Invest for control or for management.

AST American Century International Growth Portfolio II:

Investment Objective: The investment objective of the Portfolio is to seek capital growth.

Investment Policies:

The investment policies of the Portfolio are identical in all material respects to those of the AST
American Century International Growth Portfolio as described above.

AST MFS Global Equity Portfolio:

Investment Objective: The investment objective of the Portfolio is capital growth.

Investment Policies:

U.S. Government Securities. The Portfolio may invest in U.S. Government securities including (i) U.S.
Treasury obligations, all of which are backed by the full faith and credit of the U.S. Government and (ii) U.S.
Government securities, some of which are backed by the full faith and credit of the U.S. Treasury, e.g., direct
pass-through certificates of the Government National Mortgage Association ("GNMA"); some of which are backed only
by the credit of the issuer itself, e.g., obligations of the Student Loan Marketing Association; and some of
which are supported by the discretionary authority of the U.S. Government to purchase the agency's obligations,
e.g., obligations of the Federal National Mortgage Association ("FNMA").

U.S. Government securities also include interest in trust or other entities representing interests in
obligations that are issued or guaranteed by the U.S. Government, its agencies, authorities or instrumentalities.

Equity Securities. The Portfolio may invest in all types of equity securities, including the following:
common stocks, preferred stocks and preference stocks; securities such as bonds, warrants or rights that are
convertible into stocks; and depositary receipts for those securities. These securities may be listed on
securities exchanges, traded in various over-the-counter markets or have no organized market.

Foreign Securities. The Portfolio may invest in dollar-denominated and non-dollar denominated foreign
securities. Investing in securities of foreign issuers generally involves risks not ordinarily associated with
investing in securities of domestic issuers. For a discussion of the risks involved in foreign securities, see
this Statement and the Trust's Prospectus under "Certain Risk Factors and Investment Methods."

Depositary Receipts. The Portfolio may invest in American Depositary Receipts ("ADRs"), Global
Depositary Receipts ("GDRs") and other types of depositary receipts. ADRs are certificates by a U.S. depository
(usually a bank) and represent a specified quantity of shares of an underlying non-U.S. stock on deposit with a
custodian bank as collateral. GDRs and other types of depositary receipts are typically issued by foreign banks
or trust companies and evidence ownership of underlying securities issued by either a foreign or a U.S. company.
For the purposes of the Portfolio's policy to invest a certain percentage of its assets in foreign securities,
the investments of the Portfolio in ADRs, GDRs and other types of depositary receipts are deemed to be
investments in the underlying securities.

ADRs may be sponsored or unsponsored. A sponsored ADR is issued by a depositary which has an exclusive
relationship with the issuer of the underlying security. An unsponsored ADR may be issued by any number of U.S.
depositories. Under the terms of most sponsored arrangements, depositories agree to distribute notices of
shareholder meetings and voting instructions, and to provide shareholder communications and other information to
the ADR holders at the request of the issuer of the deposited securities. The depositary of an unsponsored ADR,
on the other hand, is under no obligation to distribute shareholder communications received from the issuer of
the deposited securities or to pass through voting rights to ADR holders in respect of the deposited securities.
The Portfolio may invest in either type of ADR. Although the U.S. investor holds a substitute receipt of
ownership rather than direct stock certificates, the use of the depositary receipts in the United Sates can
reduce costs and delays as well as potential currency exchange and other difficulties. The Portfolio may
purchase securities in local markets and direct delivery of these shares to the local depositary of an ADR agent
bank in the foreign country. Simultaneously, the ADR agents create a certificate which settles at the Portfolio's
custodian in five days. The Portfolio may also execute trades on the U.S. markets using existing ADRs. A
foreign issuer of the security underlying an ADR is generally not subject to the same reporting requirements in
the United States as a domestic issuer. Accordingly, information available to a U.S. investor will be limited
to the information the foreign issuer is required to disclose in its country and the market value of an ADR may
not reflect undisclosed material information concerning the issuer of the underlying security. ADRs may also be
subject to exchange rate risks if the underlying foreign securities are denominated in a foreign currency.

Emerging Markets. The Portfolio may invest in securities of government, government-related,
supranational and corporate issuers located in emerging markets. Such investments entail significant risks as
described below.

Company Debt. Governments of many emerging market countries have exercised and continue to exercise
substantial influence over many aspects of the private sector through the ownership or control of many companies,
including some of the largest in any given country. As a result, government actions in the future could have a
significant effect on economic conditions in emerging markets, which in turn, may adversely affect companies in
the private sector, general market conditions and prices and yields of certain of the securities in the
Portfolio's portfolio. Expropriation, confiscatory taxation, nationalization, political, economic or social
instability or other similar developments have occurred frequently over the history of certain emerging markets
and could adversely affect the Portfolio's assets should these conditions recur.

Foreign currencies. Some emerging market countries may have managed currencies, which are not free
floating against the U.S. dollar. In addition, there is risk that certain emerging market countries may restrict
the free conversion of their currencies into other currencies. Further, certain emerging market currencies may
not be internationally traded. Certain of these currencies have experienced a steep devaluation relative to the
U.S. dollar. Any devaluations in the currencies in which a Portfolio's portfolio securities are denominated may
have a detrimental impact on the Portfolio's net asset value.

Inflation. Many emerging markets have experienced substantial, and in some periods extremely high,
rates of inflation for many years. Inflation and rapid fluctuations in inflation rates have had and may continue
to have adverse effects on the economies and securities markets of certain emerging market countries. In an
attempt to control inflation, wage and price controls have been imposed in certain countries. Of these
countries, some, in recent years, have begun to control inflation through prudent economic policies.

Liquidity; Trading Volume; Regulatory Oversight. The securities markets of emerging market countries
are substantially smaller, less developed, less liquid and more volatile than the major securities markets in the
U.S. Disclosure and regulatory standards are in many respects less stringent than U.S. standards. Furthermore ,
there is a lower level of monitoring and regulation of the markets and the activities of investors in such
markets.

The limited size of many emerging market securities markets and limited trading volume in the securities
of emerging market issuers compared to volume of trading in the securities of U.S. issuers could cause prices to
be erratic for reasons apart from factors that affect the soundness and competitiveness of the securities
issuers. For example, limited market size may cause prices to be unduly influenced by traders who control large
positions. Adverse publicity and investors' perceptions, whether or not based on in-depth fundamental analysis,
may decrease the value and liquidity of portfolio securities.

The risk also exists that an emergency situations may arise in one or more emerging markets, as a result
of which trading of securities may cease or may be substantially curtailed and prices for the Portfolio's
securities in such markets may not be readily available. The Portfolio may suspend redemption of its shares for
any period during which an emergency exists, as determined by the SEC. If market prices are not readily
available, the Portfolio's securities in the affected markets will be valued at fair value determined in good
faith by or under the direction of the Board of Directors.

Withholding. Income from securities held by the Portfolio could be reduced by a withholding tax on the
source or other taxes imposed by the emerging market countries in which the Portfolio makes its investments. The
Portfolio's net asset value may also be affected by changes in the rates or methods of taxation applicable to the
Portfolio or to entities in which the Portfolio has invested. The Sub-advisor will consider the cost of any
taxes in determining whether to acquire any particular investments, but can provide no assurance that the taxes
will not be subject to change.

Forward Contracts. The Portfolio may enter into contracts for the purchase or sale of a specific
currency at a future date at a price at the time the contract is entered into (a "Forward Contract"), for hedging
purposes (e.g., to protect its current or intended investments from fluctuations in currency exchange rates) as
well as for non-hedging purposes.

The Portfolio does not presently intend to hold Forward Contracts entered into until maturity, at which
time it would be required to deliver or accept delivery of the underlying currency, but will seek in most
instances to close out positions in such Contracts by entering into offsetting transactions, which will serve to
fix the Portfolio's profit or loss based upon the value of the Contracts at the time the offsetting transactions
is executed.

The Portfolio will also enter into transactions in Forward Contracts for other than hedging purposes,
which presents greater profit potential but also involves increased risk. For example, the Portfolio may
purchase a given foreign currency through a Forward Contract if, in the judgement of the Sub-advisor, the value
of such currency is expected to rise relative to the U.S. dollar. Conversely, the Portfolio may sell the
currency through a Forward Contract if the Sub-advisor believes that its value will decline relative to the
dollar.

For an additional discussion of Forward Contracts see this Statement and the Trust's Prospectus under
"Certain Risk Factors and Investment Methods."

Futures Contracts. The Portfolio may purchase and sell futures contracts ("Future Contracts") on stock
indices, foreign currencies, interest rates or interest-rate related instruments, indices or foreign currencies
or commodities. The Portfolio also may purchase and sell Futures Contracts on foreign or domestic fixed income
securities or indices of such securities including municipal bond indices and any other indices of foreign or
domestic fixed income securities that may become available for trading. Such investment strategies will be used
for hedging purposes and for non-hedging purposes, subject to applicable law.

Futures Contracts differ from options in that they are bilateral agreements, with both the purchaser and
the seller equally obligated to complete the transaction. Futures Contracts call for settlement only on the
expiration date and cannot be exercised at any other time during their term.

Purchases or sales of stock index futures contracts are used to attempt to protect the Portfolio's
current or intended stock investments from broad fluctuations in stock prices. For example, the Portfolio may
sell stock index futures contracts in anticipations of or during market decline to attempt to offset the decrease
in market value of the Portfolio's securities portfolio that might otherwise result. If such decline occurs, the
loss in value of portfolio securities may be offset, in whole or in part, by gains on the futures position. When
the Portfolio is not fully invested in the securities market and anticipates a significant market advance, it may
purchase stock index futures in order to gain rapid market exposure that may, in part or entirely, offset
increases in the cost of securities that the Portfolio intends to purchase. As such purchases are made, the
corresponding positions in stock index futures contracts will be closed out. In a substantial majority of these
transactions, the Portfolio will purchase such securities upon termination of the futures position, but under
unusual market conditions, a long futures position may be terminated without a related purchase of securities.

The Portfolio may purchase and sell foreign currency futures contracts for hedging purposes, to attempt
to protect its current or intended investments from fluctuations in currency exchange rates. Such fluctuations
could reduce the dollar value of portfolio securities denominated in foreign currencies, or increase the dollar
cost of foreign-denominated securities, or increase the dollar cost of foreign-denominated securities to be
acquired, even if the value of such securities in the currencies in which they are denominated remains constant.
The Portfolio may sell futures contracts on a foreign currency, for example, where it holds securities
denominated in such currency and it anticipates a decline in the value of such currency relative to the dollar.
In the event such decline occurs, the resulting adverse effect on the value of foreign-denominated securities may
be offset, in whole or in part, by gains on the futures contracts.

Conversely, the Portfolio could protect against a rise in the dollar cost of foreign-denominated
securities to be acquired by purchasing futures contracts on the relevant security, which could offset, in whole
or in part, the increased cost of such securities resulting from the rise in the dollar value of the underlying
currencies. Where the Portfolio purchases futures contracts under such circumstances, however, and the prices of
securities to be acquired instead decline, the Portfolio will sustain losses on its futures position which could
reduce or eliminate the benefits of the reduced cost of portfolio securities to be acquired.

For further information on Futures Contracts, see this Statement under "Certain Risk Factors and
Investment Methods."

Investment in Other Investment Companies. The Portfolio may invest in other investment companies,
including both open-end and closed-end companies. Investments in closed-end investment companies may involve the
payment of substantial premiums above the value of such investment companies' portfolio securities.

Options. The Portfolio may invest in the following types of options, which involves the risks described
below under the caption "Risk Factors."

Options on Foreign Currencies. The Portfolio may purchase and write options on foreign currencies for
hedging and non-hedging purposes in a manner similar to that in which Futures Contracts on foreign currencies, or
Forward Contracts, will be utilized. For example, where a rise in the dollar value of a currency in which
securities to be acquired are denominated is projected, thereby increasing the cost of such securities, the
Portfolio may purchase call options thereon. The purchase of such options could offset, at least partially, the
effect of the adverse movements in exchange rates.

Similarly, instead of purchasing a call option to hedge against an anticipated increase in the dollar
cost of securities to be acquired, the Portfolio could write a put option on the relevant currency which, if
rates move in the manner projected, will expire unexercised and allow the Portfolio to hedge such increased cost
up to the amount of the premium. Foreign currency options written by the Portfolio will generally be covered in
a manner similar to the covering of other types of options.

Options on Futures Contracts. The Portfolio may also purchase and write options to buy or sell those
Futures Contracts in which it may invest as described above under "Futures Contracts." Such investment
strategies will be used for hedging purposes and for non-hedging purposes, subject to applicable law.

Options on Futures Contracts that are written or purchased by the Portfolio on U.S. Exchanges are traded
on the same contract market as the underlying Futures Contract, and, like Futures Contracts, are subject to the
regulation by the CFTC and the performance guarantee of the exchange clearinghouse. In addition, Options on
Futures Contracts may be traded on foreign exchanges. The Portfolio may cover the writing of call Options on
Futures Contracts (a) through purchases of the underlying Futures Contract, (b) through ownership of the
instrument, or instruments included in the index, underlying the Futures Contract, or (c) through the holding of
a call on the same Futures Contract and in the same principal amount as the call written where the exercise price
of the call held (i) is equal to or less than the exercise price of the call written or (ii) is greater than the
exercise price of the call written if the Portfolio owns liquid and unencumbered assets equal to the difference.
The Portfolio may cover the writing of put Options on Futures Contracts (a) through sales of the underlying
Futures Contract, (b) through the ownership of liquid and unencumbered assets equal to the value of the security
or index underlying the Futures Contract, or (c) through the holding of a put on the same Futures Contract and in
the same principal amount as the put written where the exercise price of the put held (i) is equal to or greater
than the exercise price of the put written or where the exercise price of the put held (ii) is less than the
exercise price of the put written if the Portfolio owns liquid and unencumbered assets equal to the difference.
Put and call Options on Futures Contracts may also be covered in such other manner as may be in accordance with
the rules of the exchange on which the option is traded and applicable laws and regulations. Upon the exercise
of a call Option on a Futures Contract written by the Portfolio, the Portfolio will be required to sell the
underlying Futures Contract which, if the Portfolio has covered its obligation through the purchase of such
Contract, will serve to liquidate its futures position. Similarly, where a put Option on a Futures Contract
written by the Portfolio is exercised, the Portfolio will be required to purchase the underlying Futures Contract
which, if the Portfolio has covered its obligation through the sale of such Contract, will close out its futures
position.

Depending on the degree of correlation between changes in the value of its portfolio securities and the
changes in the value of its futures positions, the Portfolio's losses from existing Options on Futures Contracts
may to some extent be reduced or increased by changes in the value of portfolio securities.

Options on Securities. The Portfolio may write (sell) covered put and call options, and purchase put
and call options, on securities.

A call option written by the Portfolio is "covered" if the Portfolio owns the security underlying the
call or has an absolute and immediate right to acquire that security without additional cash consideration (or
for additional cash consideration if the Portfolio owns liquid and unencumbered assets equal to the amount of
cash consideration) upon conversion or exchange of other securities held in its portfolio. A call option is also
covered if the Portfolio holds a call on the same security and in the same principal amount as the call written
where the exercise price of the call held (a) is equal to or less than the exercise price of the call written or
(b) is greater than the exercise price of the call written if the Portfolio owns liquid and unencumbered assets
equal to the difference. If the portfolio writes a put option it must segregate liquid and unencumbered assets
with a value equal to the exercise price, or else holds a put on the same security and in the same principal
amount as the put written where the exercise price of the put held is equal to or greater than the exercise price
of the put written or where the exercise price of the put held is less than the exercise price of the put written
if the Portfolio owns liquid and unencumbered assets equal to the difference. Put and call options written by
the Portfolio may also be covered in such other manner as may be in accordance with the requirements of the
exchange on which, or the counterparty with which, the option is traded, and applicable laws and regulations.

Effecting a closing transaction in the case of a written call option will permit the Portfolio to write
another call option on the underlying security with either a different exercise price or expiration date or both,
or in the case of a written put option will permit the Portfolio to write another put option to the extent that
the Portfolio owns liquid and unencumbered assets. Such transactions permit the Portfolio to generate additional
premium income, which will partially offset declines in the value of portfolio securities or increases in the
cost of securities to be acquired. Also, effecting a closing transaction will permit the cash or proceeds from
the concurrent sale of any securities subject to the option to be used for other investments of the Portfolio,
provided that another option on such security is not written. If the Portfolio desires to sell a particular
security from its portfolio on which it has written a call option, it will effect a closing transaction in
connection with the option prior to or concurrent with the sale of the security.

The Portfolio may write options in connection with buy-and-write transactions; that is, the Portfolio
may purchase a security and then write a call option against that security. The exercise price of the call
option the Portfolio determines to write will depend upon the expected price movement of the underlying
security. The exercise price of a call option may be below ("in-the-money"), equal to ("at-the-money") or above
("out-of-the-money") the current value of the underlying security at the time the option is written.
Buy-and-write transactions using in-the-money call options may be used when it is expected that the price of the
underlying security will decline moderately during the option period. Buy-and-write transactions using
out-of-the-money call options may be used when it is expected that the premiums received from writing the call
option plus the appreciation in the market price of the underlying security up to the exercise price will be
greater than the appreciation in the price of the underlying security alone. If the call options are exercised
in such transactions, the Portfolio's maximum gain will be the premium received by it for writing the option,
adjusted upwards or downwards by the difference between the Portfolio's purchase price of the security and the
exercise price, less related transaction costs. If the options are not exercised and the price of the underlying
security declines, the amount of such decline will be offset in part, or entirely, by the premium received.

The writing of covered put options is similar in terms of risk/return characteristics to buy-and-write
transactions. If the market price or the underlying security rises or otherwise is above the exercise price, the
put option will expire worthless and the Portfolio's gain will be limited to the premium received, less related
transaction costs. If the market price of the underlying security declines or otherwise is below the exercise
price, the Portfolio may elect to close the position or retain the option until it is exercised, at which time
the Portfolio will be required to take delivery of the security at the exercise price; the Portfolio's return
will be the premium received from the put option minus the amount by which the market price of the security is
below the exercise price, which could result in a loss. Out-of-the-money, at-the-money and in-the-money put
options may be used by the Portfolio in the same market environments that call options are used in equivalent
buy-and-write transactions.

The Portfolio may also write combinations of put and call options on the same security, known as
"straddles" with the same exercise price and expiration date. By writing a straddle, the Portfolio undertakes a
simultaneous obligation to sell and purchase the same security in the event that one of the options is
exercised. If the price of the security subsequently rises sufficiently above the exercise price to cover the
amount of the premium and transaction costs, the call will likely be exercised and the Portfolio will be required
to sell the underlying security at a below market price. This loss may be offset, however, in whole or in part,
by the premiums received on the writing of the two options. Conversely, if the price of the security declines by
a sufficient amount, the put will likely be exercised. The writing of straddles will likely be effective,
therefore, only where the price of the security remains stable and neither the call nor the put is exercised. In
those instances where one of the options is exercised, the loss on the purchase or sale of the underlying
security may exceed the amount of the premiums received.

The writing of options on securities will not be undertaken by the Portfolio solely for hedging
purposes, and could involve certain risks which are not present in the case of hedging transactions. Moreover,
even where options are written for hedging purposes, such transactions constitute only a partial hedge against
declines in the value of portfolio securities or against increases in the value of securities to be acquired, up
to the amount of the premium. The Portfolio may also purchase options for hedging purposes or to increase its
return.

The Portfolio may also purchase call options to hedge against an increase in the price of securities
that the Portfolio anticipates purchasing in the future. If such increase occurs, the call option will permit
the Portfolio to purchase the securities at the exercise price, or to close out the options at a profit.

Options on Stock Indices. The Portfolio may write (sell) covered call and put options and purchase call
and put options on stock indices. The Portfolio may cover written call options on stock indices by owning
securities whose price changes, in the opinion of the Sub-advisor, are expected to be similar to those of the
underlying index, or by having an absolute and immediate right to acquire such securities without additional cash
consideration (or for additional cash consideration if the Portfolio owns liquid and unencumbered assets equal to
the amount of cash consideration) upon conversion or exchange of other securities in its portfolio. The
Portfolio may also cover call options on stock indices by holding a call on the same index and in the same
principal amount as the call written where the exercise price of the call held (a) is equal to or less than the
exercise price of the call written or (b) is greater than the exercise price of the call written if the Portfolio
own liquid and unencumbered assets equal to the difference. If the Portfolio writes put options on stock
indices, it must segregate liquid and unencumbered assets with a value equal to the exercise price, or hold a put
on the same stock index and in the same principal amount as the put written where the exercise price of the put
held (a) is equal to or greater than the exercise price of the put written or (b) is less than the exercise price
of the put written if the Portfolio owns liquid and unencumbered assets equal to the difference. Put and call
options on stock indices may also be covered in such other manner as may be in accordance with the rules of the
exchange on which, or the counterparty with which, the option is traded and applicable laws and regulations.

The purchase of call options on stock indices may be used by the Portfolio to attempt to reduce the risk
of missing a broad market advance, or an advance in an industry or market segment, at a time when the Portfolio
holds uninvested cash or short-term debt securities awaiting investment. When purchasing call options for this
purpose, the Portfolio will also bear the risk of losing all or a portion of the premium paid it the value of the
index does not rise. The purchase of call options on stock indices when the Portfolio is substantially fully
invested is a form of leverage, up to the amount of the premium and related transaction costs, and involves risks
of loss and of increased volatility similar to those involved in purchasing calls on securities the Portfolio
owns.

The index underlying a stock index option may be a "broad-based" index, such as the Standard & Poor's
500 Index or the New York Stock Exchange Composite Index, the changes in value of which ordinarily will reflect
movements in the stock market in general. In contrast, certain options may be based on narrower market indices,
such as the Standard & Poor's 100 Index, or on indices of securities of particular industry groups, such as those
of oil and gas or technology companies. A stock index assigns relative values to the stocks included in the
index and the index fluctuates with changes in the market values of the stocks so included. The composition of
the index is changed periodically.

For an additional discussion of options, see this Statement under "Certain Risk Factors and Investment
Methods."

Special Risk Factors.

Risk of Imperfect Correlation of Hedging Instruments with the Portfolio's Portfolio. The use of
derivatives for "cross hedging" purposes (such as a transaction in a Forward Contract on one currency to hedge
exposure to a different currency) may involve greater correlation risks. Consequently, the Portfolio bears the
risk that the price of the portfolio securities being hedged will not move in the same amount or direction as the
underlying index or obligation.

It should be noted that stock index futures contracts or options based upon a narrower index of
securities, such as those of a particular industry group, may present greater risk than options or futures based
on a broad market index. This is due to the fact that a narrower index is more susceptible to rapid and extreme
fluctuations as a result of changes in the value of a small number of securities. Nevertheless, where the
Portfolio enters into transactions in options or futures on narrowly-based indices for hedging purposes,
movements in the value of the index should, if the hedge is successful, correlate closely with the portion of the
Portfolio's portfolio or the intended acquisitions being hedged.

The trading of derivatives for hedging purposes entails the additional risk of imperfect correlation
between movements in the price of the derivative and the price of the underlying index or obligation. The
anticipated spread between the prices may be distorted due to the difference in the nature of the markets such as
differences in margin requirements, the liquidity of such markets and the participation of speculators in the
derivatives markets. In this regard, trading by speculators in derivatives has in the past occasionally resulted
in market distortions, which may be difficult or impossible to predict, particularly near the expiration of such
instruments.

The trading of Options on Futures Contracts also entails the risk that changes in the value of the
underlying Futures Contracts will not be fully reflected in the value of the option. The risk of imperfect
correlation, however, generally tends to diminish as the maturity date of the Futures Contract or expiration date
of the option approaches.

Further, with respect to options on securities, options on stock indices, options on currencies and
Options on Futures Contracts, the Portfolio is subject to the risk of market movements between the time that the
option is exercised and the time of performance thereunder. This could increase the extent of any loss suffered
by the Portfolio in connection with such transactions.

In writing a covered call option on a security, index or futures contract, the Portfolio also incurs the
risk that changes in the value of the instruments used to cover the position will not correlate closely with
changes in the value of the option or underlying index or instrument. For example, where the Portfolio covers a
call option written on a stock index through segregation of securities, such securities may not match the
composition of the index, and the Portfolio may not be fully covered. As a result, the Portfolio could be
subject to risk of loss in the event of adverse market movements.

Risks of Non-Hedging Transactions. The Portfolio may enter transactions in derivatives for non-hedging
purposes as well as hedging purposes. Non-hedging transactions in such instruments involve greater risks and may
result in losses which may not be offset by increases in the value of portfolio securities or declines in the
cost of securities to be acquired. Nevertheless, the method of covering an option employed by the Portfolio may
not fully protect it against risk of loss and, in any event, the Portfolio could suffer losses on the option
position which might not be offset by corresponding portfolio gains. The Portfolio may also enter into futures,
Forward Contracts for non-hedging purposes. For example, the Portfolio may enter into such a transaction as an
alternative to purchasing or selling the underlying instrument or to obtain desired exposure to an index or
market. In such instances, the Portfolio will be exposed to the same economic risks incurred in purchasing or
selling the underlying instrument or instruments. However, transactions in futures, Forward Contracts may be
leveraged, which could expose the Portfolio to greater risk of loss than such purchases or sales. Entering into
transactions in derivatives for other than hedging purposes, therefore, could expose the Portfolio to significant
risk of loss if the prices, rates or values of the underlying instruments or indices do not move in the direction
or to the extent anticipated.

With respect to the writing of straddles on securities, the Portfolio incurs the risk that the price of
the underlying security will not remain stable, that one of the options written will be exercised and that the
resulting loss will not be offset by the amount of the premiums received. Such transactions, therefore, create
an opportunity for increased return by providing the Portfolio with two simultaneous premiums on the same
security, but involve additional risk, since the Portfolio may have an option exercised against it regardless of
whether the price of the security increases or decreases.

Risk of a Potential Lack of a Liquid Secondary Market. Prior to exercise or expiration, a futures or
option position can only be terminated by entering into a closing purchase or sale transaction. In that event,
it may not be possible to close out a position held by the Portfolio, and the Portfolio could be required to
purchase or sell the instrument underlying an option, make or receive a cash settlement or meet ongoing variation
margin requirements. Under such circumstances, if the Portfolio has insufficient cash available to meet margin
requirements, it will be necessary to liquidate portfolio securities or other assets at a time when it is
disadvantageous to do so. The inability to close out options and futures positions, therefore, could have an
adverse impact on the Portfolio's ability effectively to hedge its portfolio, and could result in trading losses.

The trading of Futures Contracts and options is also subject to the risk of trading halts, suspensions,
exchange or clearinghouse equipment failures, government intervention, insolvency of a brokerage firm or
clearinghouse or other disruptions of normal trading activity, which could at times make it difficult or
impossible to liquidate existing positions or to recover excess variation margin payments.

Potential Bankruptcy of a Clearinghouse or Broker. When the Portfolio enters into transactions in
exchange-traded futures or options, it is exposed to the risk of the potential bankruptcy of the relevant
exchange clearinghouse or the broker through which the Portfolio has effected the transaction. In that event,
the Portfolio might not be able to recover amounts deposited as margin, or amounts owed to the Portfolio in
connection with its transactions, for an indefinite period of time, and could sustain losses of a portion or all
of such amounts. Moreover, the performance guarantee of an exchange clearinghouse generally extends only to its
members and the Portfolio could sustain losses, notwithstanding such guarantee, in the event of the bankruptcy of
its broker.

Trading and Position Limits. The exchanges on which futures and options are traded may impose
limitations governing the maximum number of positions on the same side of the market and involving the same
underlying instrument which may be held by a single investor, whether acting alone or in concert with others
(regardless of whether such contracts are held on the same or different exchanges or held or written in one or
more accounts or through one or more brokers.) Further, the CFTC and the various contract markets have
established limits referred to as "speculative position limits" on the maximum net long or net short position
which any person may hold or control in a particular futures or option contract. An exchange may order the
liquidation of positions found to be in violation of these limits and it may impose other sanctions or
restrictions. The Sub-advisor does not believe that these trading and position limits will have any adverse
impact on the strategies for hedging the portfolios of the Portfolio.

Risks of Options on Futures Contracts. The amount of risk the Portfolio assumes when it purchases an
Option on a Futures Contract is the premium paid for the option, plus related transaction costs. In order to
profit from an option purchased, however, it may be necessary to exercise the option and to liquidate the
underlying Futures Contract, subject to the risks of the availability of a liquid offset market described
herein. The writer of an Option on a Futures Contract is subject to the risks of commodity futures trading,
including the requirement of initial and variation margin payments, as well as the additional risk that movements
in the price of the option may not correlate with movements in the price of the underlying security, index,
currency or Futures Contract.

Risks of Transactions in Foreign Currencies and Over-the-Counter Derivatives and Other Transactions Not
Conducted on U.S. Exchanges. Transactions in Forward Contracts on foreign currencies, as well as futures and
options on foreign currencies and transactions executed on foreign exchanges, are subject to all of the
correlation, liquidity and other risks outlined above. In addition, however, such transactions are subject to
the risk of governmental actions affecting trading in or the prices of currencies underlying such contracts,
which could restrict or eliminate trading and could have a substantial adverse effect on the value of positions
held by the Portfolio. Further, the value of such positions could be adversely affected by a number of other
complex political and economic factors applicable to the countries issuing the underlying currencies.

Further, unlike trading in most other types of instruments, there is no systematic reporting of last
sale information with respect to the foreign currencies underlying contracts thereon. As a result, the available
information on which trading systems will be based may not be as complete as the comparable data on which the
Portfolio makes investment and trading decisions in connection with other transactions. Moreover, because the
foreign currency market is a global, 24-hour market, events could occur in that market which will not be
reflected in the forward, futures or options market until the following day, thereby making it more difficult for
the Portfolio to respond to such events in a timely manner.

Settlements of exercises of over-the-counter Forward Contracts or foreign currency options generally
must occur within the country issuing the underlying currency, which in turn requires traders to accept or make
delivery of such currencies in conformity with any U.S. or foreign restrictions and regulations regarding the
maintenance of foreign banking relationships, fees, taxes or other charges.

Unlike transactions entered into by the Portfolio in Futures Contracts and exchange-traded options, on
foreign currencies, Forward Contracts, over-the-counter options on securities, swaps and other over-the-counter
derivatives are not traded on contract markets regulated by the CFTC or (with the exception of certain foreign
currency options) the SEC. To the contrary, such instruments are traded through financial institutions acting as
market-makers, although foreign currency options are also traded on certain national securities exchanges, such
as the Philadelphia Stock Exchange and the Chicago Board Options Exchange, subject to SEC regulation. In an
over-the-counter trading environment, many of the protections afforded to exchange participants will not be
available. For example, there are no daily price fluctuation limits, and adverse market movements could
therefore continue to an unlimited extent over a period of time. Although the purchaser of an option cannot lose
more than the amount of the premium plus related transaction costs, this entire amount could be lost. Moreover,
the option writer and a trader of Forward Contracts could lose amounts substantially in excess of their initial
investments, due to the margin and collateral requirements associated with such positions.

In addition, over-the-counter transactions can only be entered into with a financial institution willing
to take the opposite side, as principal, of the Portfolio's position unless the institution acts as broker and is
able to find another counterparty willing to enter into the transaction with the Portfolio. Where no such
counterparty is available, it will not be possible to enter into a desired transaction.

Further, over-the-counter transactions are not subject to the guarantee of an exchange clearinghouse,
and the Portfolio will therefore be subject to the risk of default by, or the bankruptcy of, the financial
institution serving as its counterparty. One or more of such institutions also may decide to discontinue their
role as market-makers in a particular currency or security, thereby restricting the Portfolio's ability to enter
into desired hedging transactions.

Options on securities, options on stock indices, Futures Contracts, Options on Futures Contracts and
options on foreign currencies may be traded on exchanges located in foreign countries. Such transactions may not
be conducted in the same manner as those entered into on U.S. exchanges, and may be subject to different margin,
exercise, settlement or expiration procedures. As a result, many of the risks of over-the-counter trading may be
present in connection with such transactions.

Options on foreign currencies traded on national securities exchanges are within the jurisdiction of the
SEC, as are other securities traded on such exchanges. As a result, many of the protections provided to traders
on organized exchanges will be available with respect to such transactions. In particular, all foreign currency
option positions entered into on a national securities exchange are cleared and guaranteed by the Options
Clearing Corporation (the "OCC"), thereby reducing the risk of counterparty default.

The purchase and sale of exchange-traded foreign currency options, is subject to the risks regarding
adverse market movements, margining of options written, the nature of the foreign currency market, possible
intervention by governmental authorities and the effects of other political and economic events. In addition,
exchange-traded options on foreign currencies involve certain risks not presented by the over-the-counter
market. For example, exercise and settlement of such options must be made exclusively through the OCC, which has
established banking relationships in applicable foreign countries for this purpose. As a result, the OCC may, if
it determines that foreign governmental restrictions or taxes would prevent the orderly settlement of foreign
currency option exercises, or would result in undue burdens on the OCC or its clearing member, impose special
procedures on exercise and settlement, such as technical changes in the mechanics of delivery of currency, the
fixing of dollar settlement prices or prohibitions on exercise.

Short Term Instruments. The Portfolio may hold cash and invest in cash equivalents, such as short-term
U.S. Government Securities, commercial paper and bank instruments.

Temporary Defensive Positions. During periods of unusual market conditions when the Sub-advisor
believes that investing for temporary defensive purposes is appropriate, or in order to meet anticipated
redemption requests, a large portion or all of the assets of the Portfolio may be invested in cash (including
foreign currency) or cash equivalents, including, but not limited to, obligations of banks (including
certificates of deposit, bankers acceptances, time deposits and repurchase agreements), commercial paper,
short-term notes, U.S. Government securities and related repurchase agreements.

Warrants. The Portfolio may invest in warrants. The strike price of warrants typically is much lower
than the current market price of the underlying securities, yet they are subject to similar price fluctuations,
in absolute terms. As a result, warrants may be more volatile investments than the underlying securities and may
offer greater potential for capital appreciation as well as capital loss.

Additional information regarding warrants is included in this Statement and the Trust's Prospectus under
"Certain Risk factors and Investment Methods."

"When-Issued" Securities. The Portfolio may purchase securities on a "when-issued," "forward
commitment," or "delayed delivery basis." The commitment to purchase a security for which payment will be made on
a future date may be deemed a separate security. While awaiting delivery of securities purchased on such basis,
the Portfolio will identify liquid and unencumbered assets equal to its forward delivery commitment.

For more information about when-issued securities, please see this Statement under "Certain Risk Factors
and Investment Methods."

AST Janus Small-Cap Growth Portfolio:

Investment Objective: The Portfolio's investment objective is capital appreciation. Realization of income is not
a significant investment consideration and any income realized on the Portfolio's investments therefore will be
incidental to the Portfolio's objective.

Investment Policies:

Depositary Receipts. The Portfolio may invest in sponsored and unsponsored American Depositary Receipts
("ADRs"), which are described in the Trust's Prospectus under "Certain Risk Factors and Investment Methods."
Holders of unsponsored ADRs generally bear all the costs of the ADR facility, whereas foreign issuers typically
bear certain costs in a sponsored ADR. The bank or trust company depositary of an unsponsored ADR may be under
no obligation to distribute shareholder communications received from the foreign issuer or to pass through voting
rights. The Portfolio may also invest in European Depositary Receipts ("EDRs"), Global Depositary Receipts
("GDRs") and in other similar instruments representing securities of foreign companies.

Income-Producing Securities. Types of income producing securities that the Portfolio may purchase
include, but are not limited to, (i) variable and floating rate obligations, which are securities having interest
rates that are adjusted periodically according to a specified formula, usually with reference to some interest
rate index or market interest rate, (ii) standby commitments, which are instruments similar to puts that give the
holder the option to obligate a broker, dealer or bank to repurchase a security at a specified price, and (iii)
tender option bonds, which are securities that are coupled with the option to tender the securities to a bank,
broker-dealer or other financial institution at periodic intervals and receive the face value of the bond. The
Portfolio will purchase standby commitments, tender option bonds and instruments with demand features primarily
for the purpose of increasing the liquidity of its portfolio. The Portfolio may also invest in inverse floaters,
which are debt instruments the interest on which varies in an inverse relationship to the interest rate on
another security. For example, certain inverse floaters pay interest at a rate that varies inversely to
prevailing short-term interest rates. Some inverse floaters have an interest rate reset mechanism that
multiplies the effects of changes in an underlying index. Such a mechanism may increase fluctuations in the
security's market value. The Portfolio will not invest more than 5% of its assets in inverse floaters.

High-Yield/High-Risk Securities. The Portfolio intends to invest less than 35% of its net assets in
debt securities that are rated below investment grade (e.g., securities rated BB or lower by Standard & Poor's
Ratings Services ("Standard & Poor's") or Ba or lower by Moody's Investors Service, Inc. ("Moody's")). Lower
rated securities involve a higher degree of credit risk, which is the risk that the issuer will not make interest
or principal payments when due. In the event of an unanticipated default, the Portfolio would experience a
reduction in its income, and could expect a decline in the market value of the securities so affected.

The Portfolio may also invest in unrated debt securities of foreign and domestic issuers. Unrated debt,
while not necessarily of lower quality than rated securities, may not have as broad a market. Sovereign debt of
foreign governments is generally rated by country. Because these ratings do not take into account individual
factors relevant to each issue and may not be updated regularly, the Sub-advisor may treat such securities as
unrated debt. Because of the size and perceived demand of the issue, among other factors, certain municipalities
may not incur the costs of obtaining a rating. The Sub-advisor will analyze the creditworthiness of the issuer,
as well as any financial institution or other party responsible for payments on the security, in determining
whether to purchase unrated municipal bonds. Unrated debt securities will be included in the 35% limit unless
the portfolio managers deem such securities to be the equivalent of investment grade securities.

The Portfolio may purchase defaulted securities subject to the above limits, but only when the
Sub-advisor believes, based upon its analysis of the financial condition, results of operations and economic
outlook of an issuer, that there is potential for resumption of income payments and that the securities offer an
unusual opportunity for capital appreciation. Notwithstanding the Sub-advisor's belief as to the resumption of
income, however, the purchase of any security on which payment of interest or dividends is suspended involves a
high degree of risk. Such risk includes, among other things, the following:

Financial and Market Risks. Investments in securities that are in default involve a high
degree of financial and market risks that can result in substantial or, at times, even total losses. Issuers of
defaulted securities may have substantial capital needs and may become involved in bankruptcy or reorganization
proceedings. Among the problems involved in investments in such issuers is the fact that it may be difficult to
obtain information about their condition. The market prices of securities of such issuers also are subject to
abrupt and erratic movements and above average price volatility, and the spread between the bid and asked prices
of such securities may be greater than normally expected.

Disposition of Portfolio Securities. Although the Portfolio generally will purchase securities
for which the Sub-advisor expects an active market to be maintained, defaulted securities may be less actively
traded than other securities and it may be difficult to dispose of substantial holdings of such securities at
prevailing market prices. The Portfolio will limit holdings of any such securities to amounts that the
Sub-advisor believes could be readily sold, and holdings of such securities would, in any event, be limited so as
not to limit the Portfolio's ability to readily dispose of securities to meet redemptions.

Other. Defaulted securities require active monitoring and may, at times, require participation
in bankruptcy or receivership proceedings on behalf of the Portfolio.

Reverse Repurchase Agreements. The Portfolio may use reverse repurchase agreements to provide cash to
satisfy unusually heavy redemption requests or for other temporary or emergency purposes without the necessity of
selling portfolio securities, rather than to obtain cash to make additional investments. The Portfolio will
enter into reverse repurchase agreements only with parties that the Sub-advisor deems creditworthy. Using
reverse repurchase agreements to earn additional income involves the risk that the interest earned on the
invested proceeds is less than the expense of the reverse repurchase agreement transaction. This technique may
also have a leveraging effect on the Portfolio, although the requirement for the Portfolio to segregate assets in
the amount of the reverse repurchase agreement minimizes this effect.

For an additional discussion of repurchase agreements and reverse repurchase agreements and their risks,
see the Trust's Prospectus under "Certain Risk Factors and Investment Methods."

Futures, Options and Forward Contracts. The Portfolio may enter into futures contracts on securities,
financial indices, and foreign currencies and options on such contracts, and may invest in options on securities,
financial indices, and foreign currencies, and forward contracts. The Portfolio will not enter into any futures
contracts or options on futures contracts if the aggregate amount of the Portfolio's commitments under
outstanding futures contract positions and options on futures contracts written by the Portfolio would exceed the
market value of the Portfolio's total assets. The Portfolio may invest in forward currency contracts with stated
values of up to the value of the Portfolio's assets.

The Portfolio may buy or write options in privately negotiated transactions on the types of securities,
and on indices based on the types of securities, in which the Portfolio is permitted to invest directly. The
Portfolio will effect such transactions only with investment dealers and other financial institutions (such as
commercial banks or savings and loan institutions) deemed creditworthy by the Sub-advisor pursuant to procedures
adopted by the Sub-advisor for monitoring the creditworthiness of those entities. To the extent that an option
purchased or written by the Portfolio in a negotiated transaction is illiquid, the value of the option purchased
or the amount of the Portfolio's obligations under an option it has written, as the case may be, will be subject
to the Portfolio's limitation on illiquid investments. In the case of illiquid options, it may not be possible
for the Portfolio to effect an offsetting transaction when the Sub-advisor believes it would be advantageous for
the Portfolio to do so. For a description of these strategies and instruments and certain of their risks, see
this Statement and the Trust's Prospectus under "Certain Risk Factors and Investment Methods."

Eurodollar Instruments. The Portfolio may make investments in Eurodollar instruments. Eurodollar
instruments are U.S. dollar-denominated futures contracts or options thereon that are linked to the London
Interbank Offered Rate ("LIBOR"), although foreign currency-denominated instruments are available from time to
time. Eurodollar futures contracts enable purchasers to obtain a fixed rate for the lending of funds and sellers
to obtain a fixed rate for borrowings. The Portfolio might use Eurodollar futures contracts and options thereon
to hedge against changes in LIBOR, to which many interest rate swaps and fixed-income instruments are linked.

Swaps and Swap-Related Products. The Portfolio may enter into interest rate swaps, caps and floors on
either an asset-based or liability-based basis, depending upon whether it is hedging its assets or its
liabilities, and will usually enter into interest rate swaps on a net basis (i.e., the two payment streams are
netted out, with the Portfolio receiving or paying, as the case may be, only the net amount of the two
payments). The net amount of the excess, if any, of the Portfolio's obligations over its entitlement with
respect to each interest rate swap will be calculated on a daily basis and an amount of cash or other liquid
assets having an aggregate net asset value at least equal to the accrued excess will be maintained in a
segregated account by the Portfolio's custodian. If the Portfolio enters into an interest rate swap on other
than a net basis, it would maintain a segregated account in the full amount accrued on a daily basis of its
obligations with respect to the swap. The Portfolio will not enter into any interest rate swap, cap or floor
transaction unless the unsecured senior debt or the claims-paying ability of the other party thereto is rated in
one of the three highest rating categories of at least one NRSRO at the time of entering into such transaction.
The Sub-advisor will monitor the creditworthiness of all counterparties on an ongoing basis. If there is a
default by the other party to such a transaction, the Portfolio will have contractual remedies pursuant to the
agreements related to the transaction.

The swap market has grown substantially in recent years, with a large number of banks and investment
banking firms acting both as principals and as agents utilizing standardized swap documentation. The Sub-advisor
has determined that, as a result, the swap market has become relatively liquid. Caps and floors are more recent
innovations for which standardized documentation has not yet been developed and, accordingly, are less liquid
than swaps. To the extent the Portfolio sells (i.e., writes) caps and floors, it will segregate cash or other
liquid assets having an aggregate net asset value at least equal to the full amount, accrued on a daily basis, of
its obligations with respect to any caps or floors.

There is no limit on the amount of interest rate swap transactions that may be entered into by the
Portfolio. These transactions may in some instances involve the delivery of securities or other underlying
assets by the Portfolio or its counterparty to collateralize obligations under the swap. The Portfolio bears the
risk of loss of any payments it is contractually obligated to make in connection with interest rate swaps. In
addition, if the other party to an interest rate swap that is not collateralized defaults, the Portfolio would
risk the loss of the payments that it contractually is entitled to receive. The Portfolio may buy and sell
(i.e., write) caps and floors without limitation, subject to the segregation requirement described above.

Investment Policies Which May Be Changed Without Shareholder Approval. The following limitations are
applicable to the AST Janus Small-Cap Growth Portfolio. These limitations are not "fundamental" restrictions,
and may be changed by the Trustees without shareholder approval.

1. The Portfolio does not currently intend to sell securities short, unless it owns or has the
right to obtain securities equivalent in kind and amount to the securities sold short without the payment of any
additional consideration therefor, and provided that transactions in futures, options, swaps and forward
contracts are not deemed to constitute selling securities short.

2. The Portfolio does not currently intend to purchase securities on margin, except that the
Portfolio may obtain such short-term credits as are necessary for the clearance of transactions, and provided
that margin payments and other deposits in connection with transactions in futures, options, swaps and forward
contracts shall not be deemed to constitute purchasing securities on margin.

3. The Portfolio does not currently intend to purchase any security or enter into a repurchase
agreement if, as a result, more than 15% of its net assets would be invested in repurchase agreements not
entitling the holder to payment of principal and interest within seven days and in securities that are illiquid
by virtue of legal or contractual restrictions on resale or the absence of a readily available market. The
Trustees, or the Portfolio's Sub-advisor acting pursuant to authority delegated by the Trustees, may determine
that a readily available market exists for securities eligible for resale pursuant to Rule 144A under the
Securities Act of 1933 ("Rule 144A Securities"), or any successor to such rule, Section 4(2) commercial paper and
municipal lease obligations. Accordingly, such securities may not be subject to the foregoing limitation.

4. The Portfolio may not invest in companies for the purpose of exercising control of management.

AST Scudder Small-Cap Growth Portfolio:

Investment Objective: The investment objective of the Portfolio is to seek maximum appreciation of investors'
capital from a portfolio primarily of growth stocks of smaller companies.

Investment Policies:

Options. The Portfolio may write (sell) call options on securities as long as it owns the underlying
securities subject to the option, or an option to purchase the same underlying securities having an exercise
price equal to or less than the exercise price of the option, or will establish and maintain with the Portfolio's
custodian for the term of the option a segregated account consisting of cash or other liquid securities
("eligible securities") to the extent required by applicable regulation in connection with the optioned
securities. The Portfolio may write put options provided that, so long as the Portfolio is obligated as the
writer of the option, the Portfolio owns an option to sell the underlying securities subject to the option having
an exercise price equal to or greater than the exercise price of the option, or it deposits and maintains with
the custodian in a segregated account eligible securities having a value equal to or greater than the exercise
price of the option. The premium received for writing an option will reflect, among other things, the current
market price of the underlying security, the relationship of the exercise price to such market price, the price
volatility of the underlying security, the option period, supply and demand and interest rates. The Portfolio
may write or purchase spread options, which are options for which the exercise price may be a fixed dollar spread
or yield spread between the security underlying the option and another security that is used as a benchmark. The
exercise price of an option may be below, equal to or above the current market value of the underlying security
at the time the option is written. The Portfolio may write (sell) call and put options on up to 25% of net
assets and may purchase put and call options provided that no more than 5% of its net assets may be invested in
premiums on such options.

If a secured put option expires unexercised, the writer realizes a gain from the amount of the premium,
plus the interest income on the securities in the segregated account. If the secured put writer has to buy the
underlying security because of the exercise of the put option, the secured put writer incurs an unrealized loss
to the extent that the current market value of the underlying security is less than the exercise price of the put
option. However, this would be offset in whole or in part by gain from the premium received and any interest
income earned on the securities in the segregated account.

For an additional discussion of investing in options and the risks involved therein, see this Statement
and the Trust's Prospectus under "Certain Risk Factors and Investment Methods."

Over-the-Counter Options. The Portfolio may deal in over-the-counter traded options ("OTC
options"). Unlike exchange-traded options, OTC options are transacted directly with dealers and not with a
clearing corporation. Since there is no exchange, pricing is normally done by reference to information from
market makers, which information is carefully monitored by the Sub-advisor and verified in appropriate cases. In
writing OTC options, the Portfolio receives the premium in advance from the dealer. OTC options are available
for a greater variety of securities or other assets, and for a wider range of expiration dates and exercise
prices, than exchange traded options.

The staff of the SEC takes the position that purchased OTC options and the assets used as "cover" for
written OTC options are illiquid securities. Accordingly, the Portfolio will only engage in OTC options
transactions with dealers that have been specifically approved by the Sub-advisor. The Sub-advisor believes that
the approved dealers should be able to enter into closing transactions if necessary and, therefore, present
minimal credit risks to the Portfolio. The Sub-advisor will monitor the creditworthiness of the approved dealers
on an on-going basis. The Portfolio currently will not engage in OTC options transactions if the amount invested
by the Portfolio in OTC options, plus a "liquidity charge" related to OTC options written by the Portfolio, plus
the amount invested by the Portfolio in other illiquid securities, would exceed 15% of the Portfolio's net
assets. The "liquidity charge" referred to above is computed as described below.

The Portfolio anticipates entering into agreements with dealers to which the Portfolio sells OTC
options. Under these agreements the Portfolio would have the absolute right to repurchase the OTC options from
the dealer at any time at a price no greater than a price established under the agreements (the "Repurchase
Price"). The "liquidity charge" referred to above for a specific OTC option transaction will be the Repurchase
Price related to the OTC option less the intrinsic value of the OTC option. The intrinsic value of an OTC call
option for such purposes will be the amount by which the current market value of the underlying security exceeds
the exercise price. In the case of an OTC put option, intrinsic value will be the amount by which the exercise
price exceeds the current market value of the underlying security. If there is no such agreement requiring a
dealer to allow the Portfolio to repurchase a specific OTC option written by the Portfolio, the "liquidity
charge" will be the current market value of the assets serving as "cover" for such OTC option.

Options on Securities Indices. The Portfolio, as part of its options transactions, may also
use options on securities indices in an attempt to hedge against market conditions affecting the value of
securities that the Portfolio owns or intends to purchase, and not for speculation. When the Portfolio writes an
option on a securities index, it will be required to deposit with its custodian and mark-to-market eligible
securities to the extent required by applicable regulation. In addition, where the Portfolio writes a call
option on a securities index at a time when the contract value exceeds the exercise price, the Portfolio will
segregate and mark-to-market, until the option expires or is closed out, cash or cash equivalents equal in value
to such excess. The Portfolio may also purchase and sell options on indices other than securities indices, as
available, such as foreign currency indices. Because index options are settled in cash, a call writer cannot
determine the amount of its settlement obligations in advance and, unlike call writing on specific securities,
cannot cover its potential settlement obligations by acquiring and holding the underlying securities. Index
options involve risks similar to those risks relating to transactions in financial futures contracts described
below.

For an additional discussion of investing in OTC options and options on securities indices, and the
risks involved therein, see this Statement and the Trust's Prospectus under "Certain Risk Factors and Investment
Methods."

Financial Futures Contracts and Related Options. The Portfolio may enter into financial futures
contracts. This investment technique is designed primarily to hedge (i.e. protect) against anticipated future
changes in market conditions or foreign exchange rates which otherwise might affect adversely the value of
securities or other assets which the Portfolio holds or intends to purchase. For example, when the near-term
market view is bearish but the portfolio composition is judged satisfactory for the longer term, exposure to
temporary declines in the market may be reduced by entering into futures contracts to sell securities or the cash
value of an index. Conversely, where the near-term view is bullish, but the Portfolio is believed to be well
positioned for the longer term with a high cash position, the Portfolio can hedge against market increases by
entering into futures contracts to buy securities or the cash value of an index. In either case, the use of
futures contracts would tend to minimize portfolio turnover and facilitate the Portfolio's pursuit of its
investment objective. Also, if the Portfolio owned long-term bonds and interest rates were expected to rise, it
could sell financial futures contracts. If interest rates did increase, the value of the bonds held by the
Portfolio would decline, but this decline would be offset in whole or in part by an increase in the value of the
Portfolio's futures contracts. If, on the other hand, long-term interest rates were expected to decline, the
Portfolio could hold short-term debt securities and benefit from the income earned by holding such securities,
while at the same time the Portfolio could purchase futures contracts on long-term bonds or the cash value of a
securities index. Thus, the Portfolio could take advantage of the anticipated rise in the value of long-term
bonds without actually buying them. The futures contracts and short-term debt securities could then be
liquidated and the cash proceeds used to buy long-term bonds. At the time of delivery, in the case of fixed
income securities pursuant to the contract, adjustments are made to recognize differences in value arising from
the delivery of securities with a different interest rate than that specified in the contract. In some cases,
securities to be delivered under a futures contract may not have been issued at the time the contract was
written.

The market prices of futures contracts may be affected by certain factors. If participants in the
futures market elect to close out their contracts through offsetting transactions rather than meet margin
requirements, distortions in the normal relationship between the assets and futures market could result. Price
distortions also could result if investors in futures contracts decide to make or take delivery of underlying
securities or other assets rather than engage in closing transactions because of the resultant reduction in the
liquidity of the futures market. In addition, because margin requirements in the futures market are less onerous
than margin requirements in the cash market, increased participation by speculators in the futures market could
cause temporary price distortions. Due to the possibility of these price distortions and because of the
imperfect correlation between movements in the prices of securities or other assets and movements in the prices
of futures contracts, a correct forecast of market trends by the Sub-advisor still may not result in a successful
hedging transaction.

The Portfolio may purchase and write call and put options on financial futures contracts. Options on
futures contracts involve risks similar to those risks relating to transactions in financial futures contracts.
The Portfolio will not enter into any futures contracts or options on futures contracts if the aggregate of the
contract value of the outstanding futures contracts of the Portfolio and futures contracts subject to outstanding
options written by the Portfolio would exceed 50% of the total assets of the Portfolio. For an additional
discussion of investing in financial futures contracts and options on financial futures contracts and the risks
involved therein, see this Statement and the Trust's Prospectus under "Certain Risk Factors and Investment
Methods."

Section 4(2) Paper. The Portfolio may invest in commercial paper issued by major corporations under the
Securities Act of 1933 in reliance on the exemption from registration afforded by Section 3(a)(3) thereof. Such
commercial paper may be issued only to finance current transactions and must mature in nine months or less. Such
commercial paper is traded primarily by institutional investors through investment dealers, and individual
investor participation in the commercial paper market is very limited. The Portfolio also may invest in
commercial paper issued in reliance on the so-called "private placement" exemption from registration afforded by
Section 4(2) of the Securities Act of 1933 ("Section 4(2) paper"). Section 4(2) paper is restricted as to
disposition under the federal securities laws, and generally is sold to institutional investors, such as the
Portfolio, who agree that they are purchasing the paper for investment and not with a view to public
distribution. Any resale by the purchaser must be in an exempt transaction. Section 4(2) paper normally is
resold to other institutional investors through or with the assistance of the issuer or investment dealers who
make a market in the Section 4(2) paper, thus providing liquidity. Section 4(2) paper will be considered
illiquid, and subject to the Portfolio's limitation on investing in illiquid securities, unless the Sub-advisor
determines such Section 4(2) paper to be liquid under guidelines established by the Board of Trustees of the
Trust.

Collateralized Obligations. The Portfolio may invest in asset-backed and mortgage-backed securities,
including interest only ("IO") and principal only ("PO") securities (collectively, "collateralized
obligations"). A collateralized obligation is a debt security issued by a corporation, trust or custodian, or by
a U.S. Government agency or instrumentality, that is collateralized by a portfolio or pool of mortgages, mortgage
pass-through securities, U.S. Government securities or other assets. Collateralized obligations, depending on
their structure and the rate of prepayments, can be volatile.

The Portfolio will currently invest in only those collateralized obligations that are fully
collateralized and that meet the quality standards otherwise applicable to the Portfolio's investments. Fully
collateralized means that the collateral will generate cash flows sufficient to meet obligations to holders of
the collateralized obligations under even the most conservative prepayment and interest rate projections. Thus,
the collateralized obligations are structured to anticipate a worst case prepayment condition and to minimize the
reinvestment rate risk for cash flows between coupon dates for the collateralized obligations. A worst case
prepayment condition generally assumes immediate prepayment of all securities purchased at a premium and zero
prepayment of all securities purchased at a discount. Reinvestment rate risk may be minimized by assuming very
conservative reinvestment rates and by other means such as by maintaining the flexibility to increase principal
distributions in a low interest rate environment. The effective credit quality of the collateralized obligations
in such instances is the credit quality of the issuer of the collateral. The requirements as to
collateralization are determined by the issuer or sponsor of the collateralized obligation in order to satisfy
rating agencies, if rated. The Portfolio does not currently intend to invest more than 5% of its total assets in
collateralized obligations.

Because some collateralized obligations are issued in classes with varying maturities and interest
rates, the investor may obtain greater predictability of maturity through these collateralized obligations than
through direct investments in mortgage pass-through securities. Classes with shorter maturities may have lower
volatility and lower yield while those with longer maturities may have higher volatility and higher yield.
Payments of principal and interest on the underlying collateral securities are not passed through directly to the
holders of these collateralized obligations. Rather, the payments on the underlying portfolio or pool of
obligations are used to pay interest on each class and to retire successive maturities in sequence. These
relationships may in effect "strip" the interest payments from principal payments of the underlying obligations
and allow for the separate purchase of either the interest or the principal payments, sometimes called interest
only ("IO") and principal only ("PO") securities. By investing in IOs and POs, an investor has the option to
select from a pool of underlying collateral the portion of the cash flows that most closely corresponds to the
investor's forecast of interest rate movements.

Collateralized obligations are designed to be retired as the underlying obligations are repaid. In the
event of prepayment on or call of such securities, the class of collateralized obligation first to mature
generally will be paid down first. Although in most cases the issuer of collateralized obligations will not
supply additional collateral in the event of such prepayment, there generally will be sufficient collateral to
secure collateralized obligations that remain outstanding. Governmentally-issued and privately-issued IO's and
PO's will be considered illiquid for purposes of the Portfolio's limitation on illiquid securities unless they
are determined to be liquid under guidelines established by the Board of Trustees.

In reliance on an interpretation by the SEC, the Portfolio's investments in certain qualifying
collateralized obligations are not subject to the limitations in the 1940 Act regarding investments by a
registered investment company, such as the Portfolio, in another investment company.

The Portfolio may also invest in "inverse floaters." These inverse floaters are more volatile than
conventional fixed or floating rate collateralized obligations, and their yield and value will fluctuate in
inverse proportion to changes in the index upon which rate adjustments are based. As a result, the yield on an
inverse floater will generally increase when market yields (as reflected by the index) decrease and decrease when
market yields increase. The extent of the volatility of inverse floaters depends on the extent of anticipated
changes in market rates of interest. Generally, inverse floaters provide for interest rate adjustments based
upon a multiple of the specified interest index, which further increases their volatility. The degree of
additional volatility will be directly proportional to the size of the multiple used in determining interest rate
adjustments. Currently, the Portfolio does not intend to invest more than 5% of its net assets in inverse
floaters.

For an additional discussion of investing in collateralized obligations and the risks involved therein,
see this Statement and the Trust's Prospectus under "Certain Risk Factors and Investment Methods."

Investment Policies Which May Be Changed Without Shareholder Approval. The following limitations are applicable
to the AST Scudder Small-Cap Growth Portfolio. These limitations are not "fundamental" restrictions and may be
changed without shareholder approval. The Portfolio will not:

1. Invest for the purpose of exercising control or management of another issuer.

2. Purchase securities of other investment companies, except in compliance with the 1940 Act.

3. Invest more than 15% of its net assets in illiquid securities.

AST Federated Aggressive Growth Portfolio:

Investment Objective: The investment objective of the Portfolio is to seek capital growth.
Investment Policies:

In pursuing its investment strategy, the Fund may invest in the following securities for any purpose that is consistent
with its investment objective.

Equity Securities. The Portfolio cannot predict the income it will receive from equity securities
because issuers generally have discretion as to the payment of any dividends or distributions. However, equity
securities offer greater potential for appreciation than many other types of securities, because their value
generally increases directly with any increase in the value of the issuer's business. Types of equity securities
in which the Portfolio may invest include common stocks, preferred stocks, real estate investment trusts, and
American Depositary Receipts.

Preferred Stocks. In addition to the right to receive specified dividends or distributions,
some preferred stocks also participate in dividends and distributions paid on common stock. Preferred stocks may
also permit the issuer to redeem the stock. The Portfolio may also treat such redeemable preferred stock as a
fixed income security.

Real Estate Investment Trusts (REITs). REITs are real estate investment trusts that lease,
operate and finance commercial real estate. REITs are exempt from federal corporate income tax if they limit
their operations and distribute most of their income. Such tax requirements limit a REIT's ability to respond to
changes in the commercial real estate market.

For additional information on equity securities and their risks, see the Trust's Prospectus under "Certain Risk
Factors and Investment Methods."

Fixed Income Securities. Fixed income securities pay interest, dividends or distributions at a
specified rate. The rate may be a fixed percentage of the principal or may be adjusted periodically. In
addition, the issuer of a fixed income security must repay the principal amount of the security, normally within
a specified time. Fixed income securities provide more regular income than equity securities. However, the
returns on fixed income securities are limited and normally do not increase with the issuer's earnings. This
limits the potential appreciation of fixed income securities as compared to equity securities.

A security's yield measures the annual income earned on the security as a percentage of its price. A
security's yield will increase or decrease depending upon whether it costs less (a discount) or more (a premium)
than the principal amount. If the issuer may redeem the security before its scheduled maturity, the price and
yield of the security may change based upon the probability of an early redemption.

Market factors other than changes in interest rates, such as the demand for particular fixed income
securities, may cause the price of certain fixed income securities to fall while the prices of other securities
rise or remain unchanged. Fixed income securities are also subject to call risk. Call risk is the possibility
that an issuer may redeem a fixed income security before maturity (a call) at a price below its current market
price. An increase in the likelihood of a call may reduce the security's price. If a fixed income security is
called, the Portfolio may have to reinvest the proceeds in other fixed income securities with lower interest
rates, higher credit risks, or other less favorable characteristics.

If a security is downgraded, the Sub-advisor will reevaluate the security, but will not be required to
sell it. If the Portfolio buys securities that have not received a rating, the Portfolio must rely entirely upon
the Sub-advisor's credit assessment. Trading opportunities are more limited for fixed income securities that are
unrated, have received ratings below investment grade or are not widely held.

Fixed income securities generally compensate for greater credit risk by paying interest at a higher
rate. The difference between the yield of a security and the yield of a U.S. Treasury security with a comparable
maturity (the spread) measures the additional interest paid for risk. Spreads may increase generally in response
to adverse economic or market conditions. A security's spread may also increase if the security's rating is
lowered, or the security is perceived to have an increased credit risk. An increase in the spread will cause the
price of the security to decline.

Additional information on fixed income securities and their risks is included in this Statement and in
the Trust's Prospectus under "Certain Risk Factors and Investment Methods."

The following describes the types of fixed income securities in which the Portfolio may invest.

Treasury Securities. Treasury securities are direct obligations of the federal government of
the United States. Treasury securities are generally regarded as having the lowest credit risks.

Agency Securities. Agency securities are issued or guaranteed by a federal agency or other
government sponsored entity acting under federal authority (a "GSE"). The United States supports some GSEs with
its full faith and credit. Other GSEs receive support through federal subsidies, loans or other benefits. A few
GSEs have no explicit financial support, but are regarded as having implied support because the federal
government sponsors their activities. Agency securities are generally regarded as having low credit risks, but
not as low as treasury securities.

Mortgage-Backed Securities. Mortgage-backed securities represent interests in pools of
mortgages. The mortgages that comprise a pool normally have similar interest rates, maturities and other terms.
Mortgages may have fixed or adjustable interest rates. Interests in pools of adjustable rate mortgages are known
as ARMs.

Mortgage-backed securities come in a variety of forms. Many have extremely complicated terms. The
simplest form of mortgage-backed securities are pass-through certificates. Holders of pass-through certificates
receive a pro rata share of all payments and pre-payments from the underlying mortgages. As a result, the
holders assume all the prepayment risks of the underlying mortgages.

Commercial Paper. Commercial paper is an issuer's obligation with a maturity of less than nine
months. Companies typically issue commercial paper to pay for current expenditures. Most issuers constantly
reissue their commercial paper and use the proceeds (or bank loans) to repay maturing paper. If the issuer
cannot continue to obtain liquidity in this fashion, its commercial paper may default. The short maturity of
commercial paper reduces both the market and credit risks as compared to other debt securities of the same issuer.

Corporate Debt Securities. Corporate debt securities are fixed income securities issued by
businesses. Notes, bonds, debentures and commercial paper are the most prevalent types of corporate debt
securities. The Portfolio may also purchase interests in bank loans to companies. The credit risks of corporate
debt securities vary widely among issuers.

In addition, the credit risk of an issuer's debt security may vary based on its priority for repayment.
For example, higher ranking (senior) debt securities have a higher priority than lower ranking (subordinated)
securities. This means that the issuer might not make payments on subordinated securities while continuing to
make payments on senior securities. In addition, in the event of bankruptcy, holders of senior securities will
have priority over holders of subordinated securities in terms their claims on the company's assets. Some
subordinated securities, such as trust preferred and capital securities notes, also permit the issuer to defer
payments under certain circumstances. For example, insurance companies issue securities known as surplus notes
that permit the insurance company to defer any payment that would reduce its capital below regulatory
requirements.

Bank Instruments. Bank instruments are unsecured interest-bearing deposits with banks. Bank
instruments include bank accounts, time deposits, certificates of deposit and banker's acceptances. Yankee
instruments are denominated in U.S. dollars and issued by U.S. branches of foreign banks. Eurodollar instruments
are denominated in U.S. dollars and issued by non-U.S. branches of U.S. or foreign banks.

Demand Instruments. Demand instruments are corporate debt securities that the issuer must
repay upon demand. Other demand instruments require a third party, such as a dealer or bank, to repurchase the
security for its face value upon demand. Because of the demand feature, the prices of demand instruments
generally fluctuate as though they were short-term securities, even though these instruments may have longer
stated maturities.

Convertible Securities. Convertible securities are fixed income securities that the Portfolio has the
option to exchange for equity securities at a specified conversion price. The option allows the Portfolio to
realize additional returns if the market price of the equity securities exceeds the conversion price. For
example, the Portfolio may hold fixed income securities that are convertible into shares of common stock at a
conversion price of $10 per share. If the market value of the shares of common stock reached $12, the Portfolio
could realize an additional $2 per share by converting its fixed income securities.

Convertible securities have lower yields than comparable fixed income securities. In addition, at the
time a convertible security is issued the conversion price exceeds the market value of the underlying equity
securities. Thus, convertible securities may provide lower returns than non-convertible fixed income securities
or equity securities depending upon changes in the price of the underlying equity securities. However,
convertible securities permit the Portfolio to realize some of the potential appreciation of the underlying
equity securities with less risk of losing its initial investment.

The Portfolio treats convertible securities as both fixed income and equity securities for purposes of
its investment policies and limitations, because of their unique characteristics.

Derivative Contracts. For purposes of the Portfolio, derivative contracts are financial instruments
that require payments based upon changes in the values of designated (or underlying) securities, currencies,
commodities, financial indices or other assets. Some derivative contracts (such as futures, forwards and
options) require payments relating to a future trade involving the underlying asset. The other party to a
derivative contract is referred to as a counterparty.

Many derivative contracts are traded on securities or commodities exchanges. In this case, the exchange
sets all the terms of the contract except for the price. Investors make payments due under their contracts
through the exchange. Most exchanges require investors to maintain margin accounts through their brokers to
cover their potential obligations to the exchange. Parties to the contract make (or collect) daily payments to
the margin accounts to reflect losses (or gains) in the value of their contracts. This protects investors
against potential defaults by the counterparty. Trading contracts on an exchange also allows investors to close
out their contracts by entering into offsetting contracts.

Exchanges may limit the amount of open contracts permitted at any one time. Such limits may prevent the
Portfolio from closing out a position. If this happens, the Portfolio will be required to keep the contract open
(even if it is losing money on the contract), and to make any payments required under the contract (even if it
has to sell portfolio securities at unfavorable prices to do so).

The Portfolio may also trade derivative contracts over-the-counter (OTC) in transactions negotiated
directly between the Portfolio and the counterparty. OTC contracts do not necessarily have standard terms, so
they cannot be directly offset with other OTC contracts. In addition, OTC contracts with more specialized terms
may be more difficult to price than exchange traded contracts.

Depending upon how the Portfolio uses derivative contracts and the relationships between the market
value of a derivative contract and the underlying asset, derivative contracts may increase or decrease the
Portfolio's exposure to risks relating to changes in security prices, interest rates and currency exchange
rates. OTC contracts also expose the Fund to the risk that a counterparty will default on the contract.

The Portfolio may trade in the following types of derivative contracts:

o The Portfolio may buy and sell futures contracts relating to financial instruments and indices.
o The Portfolio may buy call options on portfolio securities, indices and futures in anticipation of an
increase in the value of the underlying asset.
o The Portfolio may buy put options on portfolio securities, indices and futures in anticipation of a
decrease in the value of the underlying asset.
o The Portfolio may write call options on portfolio securities, indices and futures to generate income
from premiums, and in anticipation of a decrease or only limited increase in the value of the underlying
asset.
o The Portfolio may also write put options on portfolio securities, indices and futures to generate income
from premiums, and in anticipation of an increase or only limited decrease in the value of the underlying
asset.

For additional information on derivative contracts, including futures and options, see this Statement
and the Trust's Prospectus under "Certain Risk Factors and Investment Methods."

Foreign Securities. Foreign securities are securities of issuers based outside the United States. The
Portfolio considers an issuer to be based outside the United States if:

o it is organized under the laws of, or has a principal office located in, another country;
o the principal trading market for its securities is in another country; or
o it (or its subsidiaries) derived in its most current fiscal year at least 50% of its total assets,
capitalization, gross revenue or profit from goods produced, services performed, or sales made in another
country.

Investment income on foreign securities may be subject to foreign withholding or other taxes that could
reduce the return on these securities. Tax treaties between the United States and foreign countries, however,
may reduce or eliminate the amount of foreign taxes to which the Portfolio would be subject. The effective rate
of foreign tax cannot be predicted since the amount of Portfolio assets to be invested within various countries
is uncertain.

Additional Information about foreign securities and their risks is included in this Statement and the
Trust's Prospectus under "Certain Risk Factors and Investment Methods."

Foreign Government Securities. Foreign government securities generally consist of fixed income
securities supported by national, state or provincial governments or similar political subdivisions. Foreign
government securities also include debt obligations of supranational entities, such as international
organizations designed or supported by governmental entities to promote economic reconstruction or development,
international banking institutions and related government agencies. Examples of these include, but are not
limited to, the International Bank for Reconstruction and Development (the World Bank), the Asian Development
Bank, the European Investment Bank and the Inter-American Development Bank.

Foreign government securities also include fixed income securities of quasi-governmental agencies (i.e.,
securities issued by entities owned by a national, state or equivalent government or obligations of a political
unit that are not backed by the national government's full faith and credit). Further, foreign government
securities include mortgage-related securities issued or guaranteed by national, state or provincial governmental
instrumentalities, including quasi-governmental agencies.

Delayed-Delivery Transactions. The Portfolio records a delayed-delivery or when-issued transaction when
it agrees to buy the securities and reflects their value in determining the price of its shares. Settlement
dates may be a month or more after entering into these transactions so that the market values of the securities
bought may vary from the purchase prices. Additional information on delayed-delivery and when-issued
transactions is included in this Statement and the Trust's Prospectus under "Certain Risk Factors and Investment
Methods."

Securities Lending. The Portfolio may lend portfolio securities to borrowers that are deemed
creditworthy by the Investment Manager or Sub-advisor. The borrower must furnish additional collateral if the
market value of the loaned securities increases. Also, the borrower must pay the Portfolio the equivalent of any
dividends or interest received on the loaned securities. The Portfolio may pay administrative and custodial fees
in connection with a loan and may pay a negotiated portion of the interest earned on the cash collateral to a
securities lending agent or broker. Additional information about securities lending and its risks is included in
this Statement and the Trust's Prospectus under "Certain Risk Factors and Investment Methods."

Investment Policies Which May Be Changed Without Shareholder Approval. The following limitations are
applicable to the AST Federated Aggressive Growth Portfolio. These limitations are not "fundamental"
restrictions and may be changed by the Trustees without shareholder approval.

1. The Portfolio will not purchase securities on margin, provided that the Portfolio may obtain
short-term credits necessary for the clearance of purchases and sales of securities, and further provided that
the Portfolio may make margin deposits in connection with its use of financial options and futures, forward and
spot currency contracts, swap transactions and other financial contracts or derivative instruments.

2. The Portfolio will not mortgage, pledge, or hypothecate any of its assets, provided that this
shall not apply to the transfer of securities in connection with any permissible borrowing or to collateral
arrangements in connection with permissible activities.

3. The Portfolio will not purchase securities for which there is no readily available market, or
enter into repurchase agreements or purchase time deposits maturing in more than seven days, if immediately after
and as a result, the value of such securities would exceed, in the aggregate, 15% of the Portfolio's net assets.

AST Goldman Sachs Small-Cap Value Portfolio:

Investment Objective: The investment objective of the Portfolio (formerly, the AST Lord Abbett Small Cap Value
Portfolio) is to seek long-term capital appreciation.

Investment Policies:

Foreign Currency Hedging Techniques. The Portfolio expects to enter into forward foreign currency
contracts in primarily two circumstances. First, when the Portfolio enters into a contract for the purchase or
sale of a security denominated in a foreign currency, it may desire to "lock in" the U.S. dollar price of the
security. Second, when management believes that the currency of a particular foreign country may suffer a
decline against the U.S. dollar, the Portfolio may enter into a forward contract to sell the amount of foreign
currency approximating the value of some or all of the Portfolio's securities denominated in such foreign
currency or, in the alternative, the Portfolio may use a cross-hedging technique whereby it sells another
currency which the Portfolio expects to decline in a similar way but which has a lower transaction cost. The
Portfolio does not intend to enter into forward contracts under this second circumstance on a continuous basis.
For an additional discussion of forward foreign currency contracts and certain risks involved therein, see this
Statement and the Trust's Prospectus under "Certain Risk Factors and Investment Methods."

The Portfolio also may purchase foreign currency put options and write foreign currency call options on
U.S. exchanges or U.S. over-the-counter markets. Exchange-listed options markets in the United States include
several major currencies, and trading may be thin and illiquid. A number of major investment firms trade
unlisted options which are more flexible than exchange-listed options with respect to strike price and maturity
date. Unlisted options generally are available in a wider range of currencies. Unlisted foreign currency
options are generally less liquid than listed options and involve the credit risk associated with the individual
issuer. Unlisted options, together with other illiquid securities, are subject to a limit of 15% of the
Portfolio's net assets. The premiums paid for foreign currency put options will not exceed 5% of the net assets
of the Portfolio.

The Portfolio may write a call option on a foreign currency only in conjunction with a purchase of a put
option on that currency. Such a strategy is designed to reduce the cost of downside currency protection by
limiting currency appreciation potential. The face value of such call writing may not exceed 90% of the value of
the securities denominated in such currency invested in by the Portfolio or in such cross currency (referred to
above) to cover such call writing. For an additional discussion of foreign currency options and certain risks
involved therein, see this Statement under "Certain Risk Factors and Investment Methods."

Call Options on Stock. The Portfolio may, from time to time, write call options on its portfolio
securities. The Portfolio may write only call options which are "covered," meaning that the Portfolio either
owns the underlying security or has an absolute and immediate right to acquire that security, without additional
cash consideration, upon conversion or exchange of other securities currently held in its portfolio. In
addition, the Portfolio will not permit the call to become uncovered prior to the expiration of the option or
termination through a closing purchase transaction.

The Portfolio would not be able to effect a closing purchase transaction after it had received notice of
exercise. In order to write a call option, the Portfolio is required to comply with the rules of The Options
Clearing Corporation and the various exchanges with respect to collateral requirements. The Portfolio may not
purchase call options except in connection with a closing purchase transaction. It is possible that the cost of
effecting a closing purchase transaction may be greater than the premium received by the Portfolio for writing
the option.

Generally, the Portfolio intends to write listed covered call options during periods when it anticipates
declines in the market values of portfolio securities because the premiums received may offset to some extent the
decline in the Portfolio's net asset value occasioned by such declines in market value. Except as part of the
"sell discipline" described below, the Portfolio will generally not write listed covered call options when it
anticipates that the market values of its portfolio securities will increase.

One reason for the Portfolio to write call options is as part of a "sell discipline." If the Portfolio
decides that a portfolio security would be overvalued and should be sold at a certain price higher than the
current price, it could write an option on the stock at the higher price. Should the stock subsequently reach
that price and the option be exercised, the Portfolio would, in effect, have increased the selling price of that
stock, which it would have sold at that price in any event, by the amount of the premium. In the event the
market price of the stock declined and the option were not exercised, the premium would offset all or some
portion of the decline. It is possible that the price of the stock could increase beyond the exercise price; in
that event, the Portfolio would forego the opportunity to sell the stock at that higher price.

In addition, call options may be used as part of a different strategy in connection with sales of
portfolio securities. If, in the judgment of the Sub-advisor, the market price of a stock is overvalued and it
should be sold, the Portfolio may elect to write a call option with an exercise price below the current market
price. As long as the value of the underlying security remains above the exercise price during the term of the
option, the option will, in all probability, be exercised, in which case the Portfolio will be required to sell
the stock at the exercise price. If the sum of the premium and the exercise price exceeds the market price of
the stock at the time the call option is written, the Portfolio would, in effect, have increased the selling
price of the stock. The Portfolio would not write a call option in these circumstances if the sum of the premium
and the exercise price were less than the current market price of the stock. For an additional discussion of
call options and certain risks involved therein, see this Statement and the Trust's Prospectus under "Certain
Risk Factors and Investment Methods."

Put Options on Stock. The Portfolio may also write listed put options. Writing listed put options is a
useful portfolio investment strategy when the Portfolio has cash or other reserves available for investment as a
result of sales of Portfolio shares or, more importantly, because the Sub-advisor believes a more defensive and
less fully invested position is desirable in light of market conditions. If the Sub-advisor wishes to invest its
cash or reserves in a particular security at a price lower than current market value, it may write a put option
on that security at an exercise price which reflects the lower price it is willing to pay. The buyer of the put
option generally will not exercise the option unless the market price of the underlying security declines to a
price near or below the exercise price. If the Portfolio writes a listed put, the price of the underlying stock
declines and the option is exercised, the premium, net of transaction charges, will reduce the purchase price
paid by the Portfolio for the stock. The price of the stock may decline by an amount in excess of the premium,
in which event the Portfolio would have foregone an opportunity to purchase the stock at a lower price.

If, prior to the exercise of a put option, the Portfolio determines that it no longer wishes to invest
in the stock on which the put option had been written, the Portfolio may be able to effect a closing purchase
transaction on an exchange by purchasing a put option of the same series as the one which it has previously
written. The cost of effecting a closing purchase transaction may be greater than the premium received on
writing the put option and there is no guarantee that a closing purchase transaction can be effected. For an
additional discussion of put options and certain risks involved therein, see this Statement and the Trust's
Prospectus under "Certain Risk Factors and Investment Methods."

Stock Index Options. Except as describe below, the Portfolio will write call options on indices only if
on such date it holds a portfolio of stocks at least equal to the value of the index times the multiplier times
the number of contracts. When the Portfolio writes a call option on a broadly-based stock market index, the
Portfolio will segregate or put into escrow with its custodian, or pledge to a broker as collateral for the
option, one or more "qualified securities" with a market value at the time the option is written of not less than
100% of the current index value times the multiplier times the number of contracts.

Trading in index options commenced in April 1983 with the S&P 100 option (formerly called the CBOE
100). Since that time a number of additional index option contracts have been introduced including options on
industry indices. Although the markets for certain index option contracts have developed rapidly, the markets
for other index options are still relatively illiquid. The ability to establish and close out positions on such
options will be subject to the development and maintenance of a liquid secondary market. It is not certain that
this market will develop in all index option contracts. The Portfolio will not purchase or sell any index option
contract unless and until, in the Sub-advisor's opinion, the market for such options has developed sufficiently
that such risk in connection with such transactions in no greater than such risk in connection with options on
stocks. For an additional discussion of stock index options and certain risks involved therein, see this
Statement under "Certain Risk Factors and Investment Methods."

Stock Index Futures. The Portfolio will engage in transactions in stock index futures contracts as a
hedge against changes resulting from market conditions in the values of securities which are held in the
Portfolio's portfolio or which it intends to purchase. The Portfolio will engage in such transactions when they
are economically appropriate for the reduction of risks inherent in the ongoing management of the Portfolio. The
Portfolio may not purchase or sell stock index futures if, immediately thereafter, more than one-third of its net
assets would be hedged and, in addition, except as described above in the case of a call written and held on the
same index, will write call options on indices or sell stock index futures only if the amount resulting from the
multiplication of the then current level of the index (or indices) upon which the option or future contract(s) is
based, the applicable multiplier(s), and the number of futures or options contracts which would be outstanding,
would not exceed one-third of the value of the Portfolio's net assets.

Limitations on Stock Options, Options on Stock Indices and Stock Index Futures Transactions. The
Portfolio may write put and call options on stocks only if they are covered, and such options must remain covered
so long as the Portfolio is obligated as a writer. The Portfolio does not currently intend to write covered call
options with respect to securities with an aggregate market value of more than 5% of its gross assets at the time
an option is written. The Portfolio will not (a) write puts having an aggregate exercise price greater than 25%
of the Portfolio's net assets; or (b) purchase (i) put options on stocks not held in the Portfolio's portfolio,
(ii) put options on stock indices, or (iii) call options on stocks or stock indices if, after any such purchase,
the aggregate premiums paid for such options would exceed 20% of the Portfolio's net assets.

Special Risks of Writing Calls on Indices. Because exercises of index options are settled in cash, a
call writer cannot determine the amount of its settlement obligations in advance and, unlike call writing on
specific stocks, cannot provide in advance for, or cover, its potential settlement obligations by acquiring and
holding the underlying securities. However, the Portfolio will write call options on indices only under the
circumstances described above under "Limitations on Stock Options, Options on Stock Indices and Stock Index
Futures Transactions."

Unless the Portfolio has other liquid assets that are sufficient to satisfy the exercise of a call, the
Portfolio would be required to liquidate portfolio securities in order to satisfy the exercise. Because an
exercise must be settled within hours after receiving the notice of exercise, if the Portfolio fails to
anticipate an exercise, it may have to borrow (in amounts not exceeding 20% of the Portfolio's total assets)
pending settlement of the sale of securities in its portfolio and would incur interest charges thereon.

When the Portfolio has written a call, there is also a risk that the market may decline between the time
the call is written and the time the Portfolio is able to sell stocks in its portfolio. As with stock options,
the Portfolio will not learn that an index option has been exercised until the day following the exercise date
but, unlike a call on stock where the Portfolio would be able to deliver the underlying securities in settlement,
the Series may have to sell part of its stock portfolio in order to make settlement in cash, and the price of
such stocks might decline before they can be sold. This timing risk makes certain strategies involving more than
one option substantially more risky with index options than with stock options. For example, even if an index
call which the Portfolio has written is "covered" by an index call held by the Portfolio with the same strike
price, the Portfolio will bear the risk that the level of the index may decline between the close of trading on
the date the exercise notice is filed with the clearing corporation and the close of trading on the date the
Portfolio exercises the call it holds or the time the Portfolio sells the call which in either case would occur
no earlier than the day following the day the exercise notice was filed.

Short Sales. The Portfolio may make short sales of securities or maintain a short position, provided
that at all times when a short position is open the Portfolio owns an equal amount of such securities or
securities convertible into or exchangeable, without payment of any further consideration, for an equal amount of
the securities of the same issuer as the securities sold short (a "short sale against-the-box"), and that not
more than 25% of the Portfolio's net assets (determined at the time of the short sale) may be subject to such
sales. Notwithstanding this 25% limitation, the Portfolio does not currently intend to have more than 5% of its
net assets (determined at the time of the short sale) subject to short sales against-the-box.

Debt Securities. The Portfolio may invest in straight bonds or other debt securities, including lower
rated, high-yield bonds. Neither an issuer's ceasing to be rated investment grade nor a rating reduction below
that grade will require elimination of a bond from the Portfolio's portfolio. The Portfolio has no present
intention to commit more than 5% of gross assets to investing in debt securities. For a discussion of debt
securities, including lower rated, high-yield bonds, see this Statement under "Certain Risk Factors and
Investment Methods."

Real Estate Investment Trusts (REITs). The Portfolio may invest in shares of REITs. REITs are pooled
investment vehicles which invest primarily in real estate or real estate related loans. REITs are generally
classified as equity REITs, mortgage REITs or a combination of equity and mortgage REITs. Equity REITs invest
the majority of their assets directly in real property and derive income primarily from the collection of rents.
Equity REITs can also realize capital gains by selling properties that have appreciated in value. Mortgage REITs
invest the majority of their assets in real estate mortgages and derive income from the collection of interest
payments. Like regulated investment companies such as the Funds, REITs are not taxed on income distributed to
shareholders provided they comply with certain requirements under the Internal Revenue Code (the "Code"). The
Portfolio will indirectly bear its proportionate share of any expenses paid by REITs in which it invests in
addition to the expenses paid by the Portfolio.

Investing in REITs involves certain unique risks. Equity REITs may be affected by changes in the value
of the underlying property owned by such REITs, while mortgage REITs may be affected by the quality of any credit
extended. REITs are dependent upon management skills, are not diversified (except to the extent the Code
requires), and are subject to the risks of financing projects. REITs are subject to heavy cash flow dependency,
default by borrowers, self-liquidation, and the possibilities of failing to qualify for the exemption from tax
for distributed income under the Code and failing to maintain their exemptions from the Investment Company Act of
1940. REITs (especially mortgage REITs) are also subject to interest rate risks.

Investment Policies Which May Be Changed Without Shareholder Approval. The following limitations are
applicable to the AST Goldman Sachs Small-Cap Value Portfolio. The limitations are not "fundamental"
restrictions and may be changed by the Trustees without shareholder approval. The Portfolio will not:

1. Pledge its assets (other than to secure borrowings or to the extent permitted by the
Portfolio's investment policies as permitted by applicable law);

2. Make short sales of securities or maintain a short position except to the extent permitted by
applicable law;

3. Invest knowingly more than 15% of its net assets (at the time of investment) in illiquid
securities, except for securities qualifying for resale under Rule 144A of the Securities Act of 1933, deemed to
be liquid by the Board of Trustees;

4. Invest in the securities of other investment companies except as permitted by applicable law;

5. Invest in real estate limited partnership interests or interests in oil, gas or other mineral
leases, or exploration or other development programs, except that the Portfolio may invest in securities issued
by companies that engage in oil, gas or other mineral exploration or other development activities; or

6. Write, purchase or sell puts, calls, straddles, spreads or combinations thereof, except to the
extent permitted in this Statement and the Trust's Prospectus, as they may be amended from time to time.

AST Gabelli Small-Cap Value Portfolio:

Investment Objective: The investment objective of the Portfolio (formerly, the AST T. Rowe Price Small Company
Value Portfolio) is to provide long-term capital appreciation by investing primarily in small-capitalization
stocks that appear to be undervalued.

Investment Policies:

Although primarily all of the Portfolio's assets are invested in common stocks, the Portfolio may invest
in convertible securities, corporate debt securities and preferred stocks. The fixed-income securities in which
the Portfolio may invest include, but are not limited to, those described below. See this Statement under
"Certain Risk Factors and Investment Methods," for an additional discussion of debt obligations.

U.S. Government Obligations. Bills, notes, bonds and other debt securities issued by the U.S.
Treasury. These are direct obligations of the U.S. Government and differ mainly in the length of their
maturities.

U.S. Government Agency Securities. Issued or guaranteed by U.S. Government sponsored enterprises and
federal agencies. These include securities issued by the Federal National Mortgage Association, Government
National Mortgage Association, Federal Home Loan Bank, Federal Land Banks, Farmers Home Administration, Banks for
Cooperatives, Federal Intermediate Credit Banks, Federal Financing Bank, Farm Credit Banks, the Small Business
Association, and the Tennessee Valley Authority. Some of these securities are supported by the full faith and
credit of the U.S. Treasury; and the remainder are supported only by the credit of the instrumentality, which may
or may not include the right of the issuer to borrow from the Treasury.

Bank Obligations. Certificates of deposit, bankers' acceptances, and other short-term debt
obligations. Certificates of deposit are short-term obligations of commercial banks. A bankers' acceptance is a
time draft drawn on a commercial bank by a borrower, usually in connection with international commercial
transactions. Certificates of deposit may have fixed or variable rates. The Portfolio may invest in U.S. banks,
foreign branches of U.S. banks, U.S. branches of foreign banks, and foreign branches of foreign banks.

Short-Term Corporate Debt Securities. Outstanding nonconvertible corporate debt securities (e.g., bonds
and debentures) which have one year or less remaining to maturity. Corporate notes may have fixed, variable, or
floating rates.

Commercial Paper. Short-term promissory notes issued by corporations primarily to finance short-term
credit needs. Certain notes may have floating or variable rates.

Foreign Government Securities. Issued or guaranteed by a foreign government, province, instrumentality,
political subdivision or similar unit thereof.

Savings and Loan Obligations. Negotiable certificates of deposit and other short-term debt obligations
of savings and loan associations.

Supranational Entities. The Portfolio may also invest in the securities of certain supranational
entities, such as the International Development Bank.

Lower-Rated Debt Securities. The Portfolio's investment program permits it to purchase below investment
grade securities, commonly referred to as "junk bonds." The Portfolio will not purchase a junk bond if
immediately after such purchase the Portfolio would have more than 5% of its total assets invested in such
securities. Since investors generally perceive that there are greater risks associated with investment in lower
quality securities, the yields from such securities normally exceed those obtainable from higher quality
securities. However, the principal value of lower-rated securities generally will fluctuate more widely than
higher quality securities. Lower quality investments entail a higher risk of default -- that is, the nonpayment
of interest and principal by the issuer than higher quality investments. Such securities are also subject to
special risks, discussed below. Although the Portfolio seeks to reduce risk by portfolio diversification, credit
analysis, and attention to trends in the economy, industries and financial markets, such efforts will not
eliminate all risk. There can, of course, be no assurance that the Portfolio will achieve its investment
objective.

Junk bonds are regarded as predominantly speculative with respect to the issuer's continuing ability to
meet principal and interest payments. Because investment in low and lower-medium quality bonds involves greater
investment risk, to the extent the Portfolio invests in such bonds, achievement of its investment objective will
be more dependent on the Sub-advisor's credit analysis than would be the case if the Portfolio was investing in
higher quality bonds. For a discussion of the special risks involved in low-rated bonds, see this Statement and
the Trust's Prospectus under "Certain Risk Factors and Investment Methods."

Mortgage-Backed Securities. Mortgage-backed securities are securities representing interests in a pool
of mortgages. After purchase by the Portfolio, a security may cease to be rated or its rating may be reduced
below the minimum required for purchase by the Portfolio. Neither event will require a sale of such security by
the Portfolio. However, the Sub-advisor will consider such event in its determination of whether the Portfolio
should continue to hold the security. To the extent that the ratings given by Moody's or S&P may change as a
result of changes in such organizations or their rating systems, the Portfolio will attempt to use comparable
ratings as standards for investments in accordance with the investment policies contained in the Trust's
Prospectus. For a discussion of mortgage-backed securities and certain risks involved therein, see this
Statement and the Trust's Prospectus under "Certain Risk Factors and Investment Methods."

Collateralized Mortgage Obligations (CMOs). CMOs are obligations fully collateralized by a portfolio of
mortgages or mortgage-related securities. Payments of principal and interest on the mortgages are passed through
to the holders of the CMOs on the same schedule as they are received, although certain classes of CMOs have
priority over others with respect to the receipt of prepayments on the mortgages. Therefore, depending on the
type of CMOs in which the Portfolio invests, the investment may be subject to a greater or lesser risk of
prepayment than other types of mortgage-related securities. For an additional discussion of CMOs and certain
risks involved therein, see the Trust's Prospectus under "Certain Risk Factors and Investment Methods."

Stripped Agency Mortgage-Backed Securities. Stripped Agency Mortgage-Backed securities represent
interests in a pool of mortgages, the cash flow of which has been separated into its interest and principal
components. "IOs" (interest only securities) receive the interest portion of the cash flow while "POs"
(principal only securities) receive the principal portion. Stripped Agency Mortgage-Backed Securities may be
issued by U.S. Government Agencies or by private issuers similar to those described above with respect to CMOs
and privately-issued mortgage-backed certificates. As interest rates rise and fall, the value of IOs tends to
move in the same direction as interest rates. The value of the other mortgage-backed securities described
herein, like other debt instruments, will tend to move in the opposite direction compared to interest rates.
Under the Internal Revenue Code of 1986, as amended, POs may generate taxable income from the current accrual of
original issue discount, without a corresponding distribution of cash to the Portfolio.

The cash flows and yields on IO and PO classes are extremely sensitive to the rate of principal payments
(including prepayments) on the related underlying mortgage assets. For example, a rapid or slow rate of
principal payments may have a material adverse effect on the prices of IOs or POs, respectively. If the
underlying mortgage assets experience greater than anticipated prepayments of principal, an investor may fail to
recoup fully its initial investment in an IO class of a stripped mortgage-backed security, even if the IO class
is rated AAA or Aaa or is derived from a full faith and credit obligation. Conversely, if the underlying
mortgage assets experience slower than anticipated prepayments of principal, the price on a PO class will be
affected more severely than would be the case with a traditional mortgage-backed security.

The Portfolio will treat IOs and POs, other than government-issued IOs or POs backed by fixed rate
mortgages, as illiquid securities and, accordingly, limit its investments in such securities, together with all
other illiquid securities, to 15% of the Portfolio's net assets. The Sub-advisor will determine the liquidity of
these investments based on the following guidelines: the type of issuer; type of collateral, including age and
prepayment characteristics; rate of interest on coupon relative to current market rates and the effect of the
rate on the potential for prepayments; complexity of the issue's structure, including the number of tranches;
size of the issue; and the number of dealers who make a market in the IO or PO. The Portfolio will treat
non-government-issued IOs and POs not backed by fixed or adjustable rate mortgages as illiquid unless and until
the SEC modifies its position.

Asset-Backed Securities. The Portfolio may invest a portion of its assets in debt obligations known as
asset-backed securities. The credit quality of most asset-backed securities depends primarily on the credit
quality of the assets underlying such securities, how well the entity issuing the security is insulated from the
credit risk of the originator or any other affiliated entities and the amount and quality of any credit support
provided to the securities. The rate of principal payment on asset-backed securities generally depends on the
rate of principal payments received on the underlying assets which in turn may be affected by a variety of
economic and other factors. As a result, the yield on any asset-backed security is difficult to predict with
precision and actual yield to maturity may be more or less than the anticipated yield to maturity.

Automobile Receivable Securities. The Portfolio may invest in asset-backed securities which
are backed by receivables from motor vehicle installment sales contracts or installment loans secured by motor
vehicles ("Automobile Receivable Securities").

Credit Card Receivable Securities. The Portfolio may invest in asset-backed securities backed
by receivables from revolving credit card agreements ("Credit Card Receivable Securities").

Other Assets. The Sub-advisor anticipates that asset-backed securities backed by assets other
than those described above will be issued in the future. The Portfolio may invest in such securities in the
future if such investment is otherwise consistent with its investment objective and policies. For a discussion
of these securities, see this Statement and the Trust's Prospectus under "Certain Risk Factors and Investment
Methods."

Writing Covered Call Options. The Portfolio may write (sell) American or European style "covered" call
options and purchase options to close out options previously written by a Portfolio. In writing covered call
options, the Portfolio expects to generate additional premium income which should serve to enhance the
Portfolio's total return and reduce the effect of any price decline of the security or currency involved in the
option. Covered call options will generally be written on securities or currencies which, in the Sub-advisor's
opinion, are not expected to have any major price increases or moves in the near future but which, over the long
term, are deemed to be attractive investments for the Portfolio.

The Portfolio will write only covered call options. This means that the Portfolio will own the security
or currency subject to the option or an option to purchase the same underlying security or currency, having an
exercise price equal to or less than the exercise price of the "covered" option, or will establish and maintain
with its custodian for the term of the option, an account consisting of cash or other liquid assets having a
value equal to the fluctuating market value of the optioned securities or currencies.

Portfolio securities or currencies on which call options may be written will be purchased solely on the
basis of investment considerations consistent with the Portfolio's investment objective. The writing of covered
call options is a conservative investment technique believed to involve relatively little risk (in contrast to
the writing of naked or uncovered options, which the Portfolio will not do), but capable of enhancing the
Portfolio's total return. When writing a covered call option, the Portfolio, in return for the premium, gives up
the opportunity for profit from a price increase in the underlying security or currency above the exercise price,
but conversely retains the risk of loss should the price of the security or currency decline. Unlike one who
owns securities or currencies not subject to an option, the Portfolio has no control over when it may be required
to sell the underlying securities or currencies, since it may be assigned an exercise notice at any time prior to
the expiration of its obligation as a writer. If a call option which the Portfolio has written expires, the
Portfolio will realize a gain in the amount of the premium; however, such gain may be offset by a decline in the
market value of the underlying security or currency during the option period. If the call option is exercised,
the Portfolio will realize a gain or loss from the sale of the underlying security or currency. The Portfolio
does not consider a security or currency covered by a call to be "pledged" as that term is used in the
Portfolio's policy which limits the pledging or mortgaging of its assets.

Call options written by the Portfolio will normally have expiration dates of less than nine months from
the date written. The exercise price of the options may be below, equal to, or above the current market values
of the underlying securities or currencies at the time the options are written. From time to time, the Portfolio
may purchase an underlying security or currency for delivery in accordance with an exercise notice of a call
option assigned to it, rather than delivering such security or currency from its portfolio. In such cases,
additional costs may be incurred.

The premium received is the market value of an option. The premium the Portfolio will receive from
writing a call option will reflect, among other things, the current market price of the underlying security or
currency, the relationship of the exercise price to such market price, the historical price volatility of the
underlying security or currency, and the length of the option period. Once the decision to write a call option
has been made, the Sub-advisor, in determining whether a particular call option should be written on a particular
security or currency, will consider the reasonableness of the anticipated premium and the likelihood that a
liquid secondary market will exist for those options. The premium received by the Portfolio for writing covered
call options will be recorded as a liability of the Portfolio. This liability will be adjusted daily to the
option's current market value, which will be the latest sale price at the time at which the net asset value per
share of the Portfolio is computed (close of the New York Stock Exchange), or, in the absence of such sale, the
latest asked price. The option will be terminated upon expiration of the option, the purchase of an identical
option in a closing transaction, or delivery of the underlying security or currency upon the exercise of the
option.

The Portfolio will realize a profit or loss from a closing purchase transaction if the cost of the
transaction is less or more than the premium received from the writing of the option. Because increases in the
market price of a call option will generally reflect increases in the market price of the underlying security or
currency, any loss resulting from the repurchase of a call option is likely to be offset in whole or in part by
appreciation of the underlying security or currency owned by the Portfolio.

The Portfolio will not write a covered call option if, as a result, the aggregate market value of all
portfolio securities or currencies covering call or put options exceeds 25% of the market value of the
Portfolio's net assets. In calculating the 25% limit, the Portfolio will offset, against the value of assets
covering written calls and puts, the value of purchased calls and puts on identical securities or currencies with
identical maturity dates.

Writing Covered Put Options. The Portfolio may write American or European style covered put options and
purchase options to close out options previously written by the Portfolio.

The Portfolio would write put options only on a covered basis, which means that the Portfolio would
maintain in a segregated account cash, U.S. government securities or other liquid high-grade debt obligations in
an amount not less than the exercise price or the Portfolio will own an option to sell the underlying security or
currency subject to the option having an exercise price equal to or greater than the exercise price of the
"covered" option at all times while the put option is outstanding. (The rules of a clearing corporation
currently require that such assets be deposited in escrow to secure payment of the exercise price.) The
Portfolio would generally write covered put options in circumstances where the Sub-advisor wishes to purchase the
underlying security or currency for the Portfolio at a price lower than the current market price of the security
or currency. In such event the Portfolio would write a put option at an exercise price which, reduced by the
premium received on the option, reflects the lower price it is willing to pay. Since the Portfolio would also
receive interest on debt securities or currencies maintained to cover the exercise price of the option, this
technique could be used to enhance current return during periods of market uncertainty. The risk in such a
transaction would be that the market price of the underlying security or currency would decline below the
exercise price less the premiums received. Such a decline could be substantial and result in a significant loss
to the Portfolio. In addition, the Portfolio, because it does not own the specific securities or currencies
which it may be required to purchase in exercise of the put, cannot benefit from appreciation, if any, with
respect to such specific securities or currencies.

The Portfolio will not write a covered put option if, as a result, the aggregate market value of all
portfolio securities or currencies covering put or call options exceeds 25% of the market value of the
Portfolio's net assets. In calculating the 25% limit, the Portfolio will offset, against the value of assets
covering written puts and calls, the value of purchased puts and calls on identical securities or currencies with
identical maturity dates.

Purchasing Put Options. The Portfolio may purchase American or European style put options. As the
holder of a put option, the Portfolio has the right to sell the underlying security or currency at the exercise
price at any time during the option period (American style) or at the expiration of the option (European style).
The Portfolio may enter into closing sale transactions with respect to such options, exercise them or permit
them to expire. The Portfolio may purchase put options for defensive purposes in order to protect against an
anticipated decline in the value of its securities or currencies. An example of such use of put options is
provided in this Statement under "Certain Risk Factors and Investment Methods."

The premium paid by the Portfolio when purchasing a put option will be recorded as an asset of the
Portfolio. This asset will be adjusted daily to the option's current market value, which will be the latest sale
price at the time at which the net asset value per share of the Portfolio is computed (close of New York Stock
Exchange), or, in the absence of such sale, the latest bid price. This asset will be terminated upon expiration
of the option, the selling (writing) of an identical option in a closing transaction, or the delivery of the
underlying security or currency upon the exercise of the option.

Purchasing Call Options. The Portfolio may purchase American or European style call options. As the
holder of a call option, the Portfolio has the right to purchase the underlying security or currency at the
exercise price at any time during the option period (American style) or at the expiration of the option (European
style). The Portfolio may enter into closing sale transactions with respect to such options, exercise them or
permit them to expire. The Portfolio may purchase call options for the purpose of increasing its current return
or avoiding tax consequences which could reduce its current return. The Portfolio may also purchase call options
in order to acquire the underlying securities or currencies. Examples of such uses of call options are provided
in this Statement under "Certain Risk Factors and Investment Methods."

The Portfolio may also purchase call options on underlying securities or currencies it owns in order to
protect unrealized gains on call options previously written by it. A call option would be purchased for this
purpose where tax considerations make it inadvisable to realize such gains through a closing purchase
transaction. Call options may also be purchased at times to avoid realizing losses.

Dealer (Over-the-Counter) Options. The Portfolio may engage in transactions involving dealer options.
Certain risks are specific to dealer options. While the Portfolio would look to a clearing corporation to
exercise exchange-traded options, if the Portfolio were to purchase a dealer option, it would rely on the dealer
from whom it purchased the option to perform if the option were exercised. Failure by the dealer to do so would
result in the loss of the premium paid by the Portfolio as well as loss of the expected benefit of the
transaction. For a discussion of dealer options, see this Statement under "Certain Risk Factors and Investment
Methods."

Futures Contracts.

Transactions in Futures. The Portfolio may enter into futures contracts, including stock
index, interest rate and currency futures ("futures" or "futures contracts"). The Portfolio may also enter into
futures on commodities related to the types of companies in which it invests, such as oil and gold futures.
Otherwise the nature of such futures and the regulatory limitations and risks to which they are subject are the
same as those described below.

Stock index futures contracts may be used to attempt to hedge a portion of the Portfolio, as a cash
management tool, or as an efficient way for the Sub-advisor to implement either an increase or decrease in
portfolio market exposure in response to changing market conditions. The Portfolio may purchase or sell futures
contracts with respect to any stock index. Nevertheless, to hedge the Portfolio successfully, the Portfolio must
sell futures contacts with respect to indices or subindices whose movements will have a significant correlation
with movements in the prices of the Portfolio's securities.

Interest rate or currency futures contracts may be used to attempt to hedge against changes in
prevailing levels of interest rates or currency exchange rates in order to establish more definitely the
effective return on securities or currencies held or intended to be acquired by the Portfolio. In this regard,
the Portfolio could sell interest rate or currency futures as an offset against the effect of expected increases
in interest rates or currency exchange rates and purchase such futures as an offset against the effect of
expected declines in interest rates or currency exchange rates.

The Portfolio will enter into futures contracts which are traded on national or foreign futures
exchanges, and are standardized as to maturity date and underlying financial instrument. Futures exchanges and
trading in the United States are regulated under the Commodity Exchange Act by the CFTC. Although techniques
other than the sale and purchase of futures contracts could be used for the above-referenced purposes, futures
contracts offer an effective and relatively low cost means of implementing the Portfolio's objectives in these
areas.

Regulatory Limitations. The Portfolio will engage in futures contracts and options thereon
only for bona fide hedging, yield enhancement, and risk management purposes, in each case in accordance with
rules and regulations of the CFTC.

The Portfolio may not purchase or sell futures contracts or related options if, with respect to
positions which do not qualify as bona fide hedging under applicable CFTC rules, the sum of the amounts of
initial margin deposits and premiums paid on those positions would exceed 5% of the net asset value of the
Portfolio after taking into account unrealized profits and unrealized losses on any such contracts it has entered
into; provided, however, that in the case of an option that is in-the-money at the time of purchase, the
in-the-money amount may be excluded in calculating the 5% limitation. For purposes of this policy options on
futures contracts and foreign currency options traded on a commodities exchange will be considered "related
options." This policy may be modified by the Board of Trustees of the Trust without a shareholder vote and does
not limit the percentage of the Portfolio's assets at risk to 5%.

In instances involving the purchase of futures contracts or the writing of call or put options thereon
by the Portfolio, an amount of cash or other liquid assets equal to the market value of the futures contracts and
options thereon (less any related margin deposits), will be identified by the Portfolio to cover the position,
or alternative cover (such as owning an offsetting position) will be employed. Assets used as cover or held in
an identified account cannot be sold while the position in the corresponding option or future is open, unless
they are replaced with similar assets. As a result, the commitment of a large portion of the Portfolio's assets
to cover or identified accounts could impede portfolio management or the Portfolio's ability to meet redemption
requests or other current obligations.

Options on Futures Contracts. The Portfolio may purchase and sell options on the same types of futures
in which it may invest. As an alternative to writing or purchasing call and put options on stock index futures,
the Portfolio may write or purchase call and put options on financial indices. Such options would be used in a
manner similar to the use of options on futures contracts. From time to time, a single order to purchase or sell
futures contracts (or options thereon) may be made on behalf of the Portfolio and other mutual funds or
portfolios of mutual funds managed by the Sub-advisor or its affiliates. Such aggregated orders would be
allocated among the Portfolio and such other portfolios in a fair and non-discriminatory manner. See this
Statement and Trust's Prospectus under "Certain Risk Factors and Investment Methods" for a description of certain
risks in options and future contracts.

Additional Futures and Options Contracts. Although the Portfolio has no current intention of engaging
in futures or options transactions other than those described above, it reserves the right to do so. Such
futures and options trading might involve risks which differ from those involved in the futures and options
described above.

Foreign Futures and Options. The Portfolio is permitted to invest in foreign futures and options. For
a description of foreign futures and options and certain risks involved therein as well as certain risks involved
in foreign investing, see this Statement and the Trust's Prospectus under "Certain Risk Factors and Investment
Methods."

Foreign Securities. The Portfolio may invest in U.S. dollar-denominated and non-U.S.
dollar-denominated securities of foreign issuers. There are special risks in foreign investing. Certain of
these risks are inherent in any international mutual fund while others relate more to the countries in which the
Portfolio will invest. Many of the risks are more pronounced for investments in developing or emerging
countries, such as many of the countries of Southeast Asia, Latin America, Eastern Europe and the Middle East.
For an additional discussion of certain risks involved in investing in foreign securities, see this Statement and
the Trust's Prospectus under "Certain Risk Factors and Investment Methods."

Foreign Currency Transactions. A forward foreign currency exchange contract involves an obligation to
purchase or sell a specific currency at a future date, which may be any fixed number of days from the date of the
contract agreed upon by the parties, at a price set at the time of the contract. These contracts are principally
traded in the interbank market conducted directly between currency traders (usually large, commercial banks) and
their customers. A forward contract generally has no deposit requirement, and no commissions are charged at any
stage for trades.

The Portfolio may enter into forward contracts for a variety of purposes in connection with the
management of the foreign securities portion of its portfolio. The Portfolio's use of such contracts would
include, but not be limited to, the following. First, when the Portfolio enters into a contract for the purchase
or sale of a security denominated in a foreign currency, it may desire to "lock in" the U.S. dollar price of the
security. Second, when the Sub-advisor believes that one currency may experience a substantial movement against
another currency, including the U.S. dollar, it may enter into a forward contract to sell or buy the amount of
the former foreign currency, approximating the value of some or all of the Portfolio's securities denominated in
such foreign currency. Alternatively, where appropriate, the Portfolio may hedge all or part of its foreign
currency exposure through the use of a basket of currencies or a proxy currency where such currency or currencies
act as an effective proxy for other currencies. In such a case, the Portfolio may enter into a forward contract
where the amount of the foreign currency to be sold exceeds the value of the securities denominated in such
currency. The use of this basket hedging technique may be more efficient and economical than entering into
separate forward contracts for each currency held in the Portfolio. The precise matching of the forward contract
amounts and the value of the securities involved will not generally be possible since the future value of such
securities in foreign currencies will change as a consequence of market movements in the value of those
securities between the date the forward contract is entered into and the date it matures. The projection of
short-term currency market movement is extremely difficult, and the successful execution of a short-term hedging
strategy is highly uncertain. Under normal circumstances, consideration of the prospect for currency parities
will be incorporated into the longer term investment decisions made with regard to overall diversification
strategies. However, Sub-advisor believes that it is important to have the flexibility to enter into such
forward contracts when it determines that the best interests of the Portfolio will be served.

The Portfolio may enter into forward contracts for any other purpose consistent with the Portfolio's
investment objective and policies. However, the Portfolio will not enter into a forward contract, or maintain
exposure to any such contract(s), if the amount of foreign currency required to be delivered thereunder would
exceed the Portfolio's holdings of liquid assets and currency available for cover of the forward contract(s). In
determining the amount to be delivered under a contract, the Portfolio may net offsetting positions.

At the maturity of a forward contract, the Portfolio may sell the portfolio security and make delivery
of the foreign currency, or it may retain the security and either extend the maturity of the forward contract (by
"rolling" that contract forward) or may initiate a new forward contract.

If the Portfolio retains the portfolio security and engages in an offsetting transaction, the Portfolio
will incur a gain or a loss (as described below) to the extent that there has been movement in forward contract
prices. If the Portfolio engages in an offsetting transaction, it may subsequently enter into a new forward
contract to sell the foreign currency. Should forward prices decline during the period between the Portfolio's
entering into a forward contract for the sale of a foreign currency and the date it enters into an offsetting
contract for the purchase of the foreign currency, the Portfolio will realize a gain to the extent the price of
the currency it has agreed to sell exceeds the price of the currency it has agreed to purchase. Should forward
prices increase, the Portfolio will suffer a loss to the extent of the price of the currency it has agreed to
purchase exceeds the price of the currency it has agreed to sell.

The Portfolio's dealing in forward foreign currency exchange contracts will generally be limited to the
transactions described above. However, the Portfolio reserves the right to enter into forward foreign currency
contracts for different purposes and under different circumstances. Of course, the Portfolio is not required to
enter into forward contracts with regard to its foreign currency-denominated securities and will not do so
unless deemed appropriate by the Sub-advisor. It also should be realized that this method of hedging against a
decline in the value of a currency does not eliminate fluctuations in the underlying prices of the securities.
It simply establishes a rate of exchange at a future date. Additionally, although such contracts tend to
minimize the risk of loss due to a decline in the value of the hedged currency, at the same time, they tend to
limit any potential gain which might result from an increase in the value of that currency.

Although the Portfolio values its assets daily in terms of U.S. dollars, it does not intend to convert
its holdings of foreign currencies into U.S. dollars on a daily basis. It will do so from time to time, and
investors should be aware of the costs of currency conversion. Although foreign exchange dealers do not charge a
fee for conversion, they do realize a profit based on the difference (the "spread") between the prices at which
they are buying and selling various currencies. Thus, a dealer may offer to sell a foreign currency to the
Portfolio at one rate, while offering a lesser rate of exchange should the Portfolio desire to resell that
currency to the dealer. For a discussion of certain risk factors involved in foreign currency transactions, see
this Statement and the Trust's Prospectus under "Certain Risk Factors and Investment Methods."

Federal Tax Treatment of Options, Futures Contracts and Forward Foreign Exchange Contracts. The
Portfolio may enter into certain option, futures, and forward foreign exchange contracts, including options and
futures on currencies, which will be treated as Section 1256 contracts or straddles.

Transactions which are considered Section 1256 contracts will be considered to have been closed at the
end of the Portfolio's fiscal year and any gains or losses will be recognized for tax purposes at that time.
Such gains or losses from the normal closing or settlement of such transactions will be characterized as 60%
long-term capital gain (taxable at a maximum rate of 20%) or loss and 40% short-term capital gain or loss
regardless of the holding period of the instrument (or, in the case of foreign exchange contracts, entirely as
ordinary income or loss). The Portfolio will be required to distribute net gains on such transactions to
shareholders even though it may not have closed the transaction and received cash to pay such distributions.

Options, futures and forward foreign exchange contracts, including options and futures on currencies,
which offset a foreign dollar denominated bond or currency position may be considered straddles for tax purposes
in which case a loss on any position in a straddle will be subject to deferral to the extent of unrealized gain
in an offsetting position. The holding period of the securities or currencies comprising the straddle will be
deemed not to begin until the straddle is terminated. The holding period of the security offsetting an
"in-the-money qualified covered call" option on an equity security will not include the period of time the option
is outstanding.

Losses on written covered calls and purchased puts on securities, excluding certain "qualified covered
call" options on equity securities, may be long-term capital loss, if the security covering the option was held
for more than twelve months prior to the writing of the option.

In order for the Portfolio to continue to qualify for federal income tax treatment as a regulated
investment company, at least 90% of its gross income for a taxable year must be derived from qualifying income,
i.e., dividends, interest, income derived from loans of securities, and gains from the sale of securities or
currencies. Tax regulations could be issued limiting the extent that net gain realized from option, futures or
foreign forward exchange contracts on currencies is qualifying income for purposes of the 90% requirement.

As a result of the "Taxpayer Relief Act of 1997," entering into certain option, futures contracts, or
forward contracts may be deemed a "constructive sale" of offsetting securities, which could result in a taxable
gain from the sale being distributed to shareholders. The Portfolio would be required to distribute any such
gain even though it would not receive proceeds from the sale at the time the option, futures or forward position
is entered into.

Hybrid Instruments. Hybrid Instruments have been developed and combine the elements of futures
contracts, options or other financial instruments with those of debt, preferred equity or a depositary
instrument (hereinafter "Hybrid Instruments). Hybrid Instruments may take a variety of forms, including, but not
limited to, debt instruments with interest or principal payments or redemption terms determined by reference to
the value of a currency or commodity or securities index at a future point in time, preferred stock with dividend
rates determined by reference to the value of a currency, or convertible securities with the conversion terms
related to a particular commodity. For a discussion of certain risks involved in investing in hybrid instruments
see this Statement under "Certain Risk Factors and Investment Methods."

Reverse Repurchase Agreements. Although the Portfolio has no current intention, in the foreseeable
future, of engaging in reverse repurchase agreements, the Portfolio reserves the right to do so. Reverse
repurchase agreements are ordinary repurchase agreements in which a fund is the seller of, rather than the
investor in, securities, and agrees to repurchase them at an agreed upon time and price. Use of a reverse
repurchase agreement may be preferable to a regular sale and later repurchase of the securities because it avoids
certain market risks and transaction costs. A reverse repurchase agreement may be viewed as a type of borrowing
by the Portfolio.

Short Sales. The Portfolio may, from time to time, make short sales of securities it owns or has the
right to acquire through conversion or exchange of other securities it owns (short sales "against the box"). In
a short sale, the Portfolio does not immediately deliver the securities sold or receive the proceeds from the
sale. The Portfolio may make a short sale against the box in order to hedge against market risks when it
believes that the price of a security may decline, affecting the Portfolio directly if it owns that security or
causing a decline in the value of a security owned by the Portfolio that is convertible into the security sold
short.

To secure its obligations to deliver the securities sold short, the Portfolio will segregate assets with
its custodian in an amount at least equal to the value of the securities sold short or the securities convertible
into, or exchangeable for, the securities. The Portfolio may close out a short position by purchasing and
delivering an equal amount of securities sold short, rather than by delivering securities already held by the
Portfolio, because the Portfolio may want to continue to receive interest and dividend payments on securities in
its portfolio that are convertible into the securities sold short.

Warrants. The Portfolio may acquire warrants. For a discussion of certain risks involved therein, see
this Statement under "Certain Risk Factor and Investment Methods."

Investment in Small, Unseasoned Companies. The Portfolio may invest in small, less well-known companies
that have operated for less than three years (including predecessors). The securities of such companies may have
a limited trading market, which may adversely affect their disposition and can result in their being priced lower
than might otherwise be the case. If other investment companies and investors who invest in such issuers trade
the same securities when the Portfolio attempts to dispose of its holdings, the Portfolio may receive lower
prices than might otherwise be obtained.

Corporate Reorganizations. In general, securities of companies engaged in reorganization transactions
sell at a premium to their historic market price immediately prior to the announcement of the tender offer or
reorganization proposal. However, the increased market price of such securities may also discount what the
stated or appraised value of the security would be if the contemplated transaction were approved or consummated.
Such investments may be advantageous when the discount significantly overstates the risk of the contingencies
involved, significantly undervalues the securities, assets or cash to be received by shareholders of the issuer
as a result of the contemplated transaction, or fails adequately to recognize the possibility that the offer or
proposal may be replaced or superseded by an offer or proposal of greater value. The evaluation of such
contingencies requires unusually broad knowledge and experience on the part of the Sub-advisor, which must
appraise not only the value of the issuer and its component businesses and the assets or securities to be
received as a result of the contemplated transaction, but also the financial resources and business motivation of
the offeror as well as the dynamic of the business climate when the offer or proposal is in progress.

In making such investments, the Portfolio will be subject to its diversification and other investment
restrictions, including the requirement that, except with respect to 25% of its assets, not more than 5% of its
assets may be invested in the securities of any issuer (see this Statement under "Fundamental Investment
Restrictions"). Because such investments are ordinarily short term in nature, they will tend to increase the
Portfolio's portfolio turnover rate, thereby increasing its brokerage and other transaction expenses. The
Sub-advisor intends to select investments of the type described that, in its view, have a reasonable prospect of
capital growth that is significant in relation to both the risk involved and the potential of available alternate
investments.

Lending of Portfolio Securities. Securities loans are made to broker-dealers or institutional investors
or other persons, pursuant to agreements requiring that the loans be continuously secured by collateral at least
equal at all times to the value of the securities lent marked to market on a daily basis. The collateral
received will consist of cash or U.S. government securities. While the securities are being lent, the Portfolio
will continue to receive the equivalent of the interest or dividends paid by the issuer on the securities, as
well as interest on the investment of the collateral or a fee from the borrower. The Portfolio has a right to
call each loan and obtain the securities on three business days' notice or, in connection with securities trading
on foreign markets, within such longer period of time which coincides with the normal settlement period for
purchases and sales of such securities in such foreign markets. The Portfolio will not have the right to vote
securities while they are being lent, but it will call a loan in anticipation of any important vote. The risks
in lending portfolio securities, as with other extensions of secured credit, consist of possible delay in
receiving additional collateral or in the recovery of the securities or possible loss of rights in the collateral
should the borrower fail financially.

When-Issued Securities and Forward Commitment Contracts. The Portfolio may purchase securities on a
"when-issued" or delayed delivery basis and may purchase securities on a forward commitment basis. Any or all of
the Portfolio's investments in debt securities may be in the form of when-issueds and forwards. The price of
such securities, which may be expressed in yield terms, is fixed at the time the commitment to purchase is made,
but delivery and payment take place at a later date. Normally, the settlement date occurs within 90 days of the
purchase for when-issueds, but may be substantially longer for forwards. The Portfolio will cover its
commitments with respect to these securities by maintaining cash and/or other liquid assets with its custodian
bank equal in value to these commitments during the time between the purchase and the settlement. Such
segregated securities either will mature or, if necessary, be sold on or before the settlement date. For a
discussion of these securities and the risks involved therein, see this Statement under "Certain Risk Factors and
Investment Methods."

Money Market Securities. The Portfolio will hold a certain portion of its assets in U.S. and foreign
dollar-denominated money market securities, including repurchase agreements, rated in the two highest rating
categories, maturing in one year or less.

Investment Opportunities and Related Limitations. Affiliates of the Sub-advisor may, in the ordinary
course of their business, acquire for their own account or for the accounts of their advisory clients,
significant (and possibly controlling) positions in the securities of companies that may also be suitable for
investment by the Portfolio. The securities in which the Portfolio might invest may thereby be limited to some
extent. For instance, many companies in the past several years have adopted so-called "poison pill" or other
defensive measures designed to discourage or prevent the completion of non-negotiated offers for control of the
company. Such defensive measures may have the effect of limiting the shares of the company that might otherwise
be acquired by the Portfolio if the affiliates of the Sub-advisor or their advisory accounts have or acquire a
significant position in the same securities. However, the Sub-advisor does not believe that the investment
activities of its affiliates will have a material adverse effect upon the Portfolio in seeking to achieve its
investment objectives. In addition, orders for the Portfolio generally are accorded priority of execution over
orders entered on behalf of accounts in which the Sub-advisor or its affiliates have a substantial pecuniary
interest. The Portfolio may invest in the securities of companies that are investment management clients of the
Sub-advisor's affiliates. In addition, portfolio companies or their officers or directors may be minority
shareholders of the Sub-advisor or its affiliates.

Investment Policies Which May Be Changed Without Shareholder Approval. The following limitations are
applicable to the AST Gabelli Small-Cap Value Portfolio. These limitations are not "fundamental" restrictions,
and can be changed by the Trustees without shareholder approval. The Portfolio will not:

1. Purchase additional securities when money borrowed exceeds 5% of its total assets;

2. Invest in companies for the purpose of exercising management or control;

3. Purchase a futures contract or an option thereon if, with respect to positions in futures or
options on futures which do not represent bona fide hedging, the aggregate initial margin and premiums on such
options would exceed 5% of the Portfolio's net asset value;

4. Purchase illiquid securities if, as a result, more than 15% of its net assets would be invested
in such securities. Securities eligible for resale under Rule 144A of the Securities Act of 1933 may be subject
to this 15% limitation;

5. Purchase securities of open-end or closed-end investment companies except in compliance with
the 1940 Act or the conditions of any order of exemption from the SEC regarding the purchase of securities of
money market funds managed by the Sub-advisor or its affiliates;

6. Purchase securities on margin, except (i) for use of short-term credit necessary for clearance
of purchases of portfolio securities and (ii) the Portfolio may make margin deposits in connection with futures
contracts or other permissible investments;

7. Mortgage, pledge, hypothecate or, in any manner, transfer any security owned by the Portfolio
as security for indebtedness except as may be necessary in connection with permissible borrowings or investments
and then such mortgaging, pledging or hypothecating may not exceed 33 1/3% of the Portfolio's total assets at the
time of borrowing or investment;

8. Invest in puts, calls, straddles, spreads, or any combination thereof, except to the extent
permitted by the Trust's Prospectus and this Statement;

9. Sell securities short, except that the Fund may make short sales if it owns the securities sold
short or has the right to acquire such securities through conversion or exchange of other securities it owns; or

10. Invest in warrants if, as a result thereof, more than 10% of the value of the net assets of the
Portfolio would be invested in warrants, except that this restriction does not apply to warrants acquired as a
result of the purchase of another security. For purposes of these percentage limitations, the warrants will be
valued at the lower of cost or market.

AST Janus Mid-Cap Growth Portfolio:

Investment Objective: The investment objective of the Portfolio is to seek long-term growth of capital.

Investment Policies:

Foreign Securities. The Portfolio may invest up to 25% of its net assets in foreign securities
denominated in foreign currencies and not publicly traded in the United States. Investing in securities of
foreign issuers generally involves risks not ordinarily associated with investing in securities of domestic
issuers. For a discussion of the risks involved in foreign securities, see this Statement and the Trust's
Prospectus under "Certain Risk Factors and Investment Methods."

Municipal Obligations. The Portfolio may invest in municipal obligations issued by states, territories
and possessions of the United States and the District of Columbia. The value of municipal obligations can be
affected by changes in their actual or perceived credit quality. The credit quality of municipal obligations can
be affected by among other things the financial condition of the issuer or guarantor, the issuer's future
borrowing plans and sources of revenue, the economic feasibility of the revenue bond project or general borrowing
purpose, political or economic developments in the region where the security is issued, and the liquidity of the
security. Because municipal securities are generally traded over-the-counter, the liquidity of a particular
issue often depends on the willingness of dealers to make a market in the security. The liquidity of some
municipal obligations may be enhanced by demand features, which would enable the Portfolio to demand payment on
short notice from the issuer or a financial intermediary.

Income-Producing Securities. Types of income producing securities that the Portfolio may purchase
include, but are not limited to, (i) variable and floating rate obligations, which are securities having interest
rates that are adjusted periodically according to a specified formula, usually with reference to some interest
rate index or market interest rate, (ii) standby commitments, which are instruments similar to puts that give the
holder the option to obligate a broker, dealer or bank to repurchase a security at a specified price, and (iii)
tender option bonds, which are relatively long-term bonds that are coupled with the agreement of a third party
(such as a broker, dealer or bank) to grant the holders of such securities the option to tender the securities to
the institution at periodic intervals. The Portfolio will purchase standby commitments, tender option bonds and
instruments with demand features primarily for the purpose of increasing the liquidity of its portfolio. The
Portfolio may also invest in inverse floaters, which are debt instruments the interest on which varies in an
inverse relationship to the interest rate on another security. If movements in interest rates are incorrectly
anticipated, the Portfolio could lose money or its net asset value could decline by the use of inverse floaters.
The Portfolio will not invest more than 5% of its assets in inverse floaters. The Portfolio may also invest in
strip bonds, which are debt securities that are stripped of their interest (usually by a financial intermediary)
after the securities are issued. The market value of these securities generally fluctuates more in response to
changes in interest rates than interest-paying securities of comparable maturity.

Zero Coupon, Step Coupon and Pay-In-Kind Securities. The Portfolio may invest up to 10% of its assets
in zero coupon, pay-in-kind and step coupon securities. Zero coupon bonds are described in this Statement under
"Certain Risk Factors and Investment Methods." Step coupon bonds trade at a discount from their face value and
pay coupon interest. The coupon rate is low for an initial period and then increases to a higher coupon rate
thereafter. The discount from the face amount or par value depends on the time remaining until cash payments
begin, prevailing interest rates, liquidity of the security and the perceived credit quality of the issuer.
Pay-in-kind bonds normally give the issuer an option to pay cash at a coupon payment date or give the holder of
the security a similar bond with the same coupon rate and a face value equal to the amount of the coupon payment
that would have been made. For the purposes of the Portfolio's restriction on investing in income-producing
securities, income-producing securities include securities that make periodic interest payments as well as those
that make interest payments on a deferred basis or pay interest only at maturity (e.g., Treasury bills or zero
coupon bonds).

Generally, the market prices of zero coupon, step coupon and pay-in-kind securities are more volatile
than the prices of securities that pay interest periodically and in cash and are likely to respond to changes in
interest rates to a greater degree than other types of debt securities having similar maturities and credit
quality.

High-Yield/High-Risk Securities. The Portfolio may invest up to 35% of its net assets in bonds that are
rated below investment grade. The Portfolio may also invest in unrated debt securities of foreign and domestic
issuers. Unrated debt, while not necessarily of lower quality than rated securities, may not have as broad a
market. Because of the size and perceived demand of the issue, among other factors, certain municipalities may
not incur the costs of obtaining a rating. The Sub-advisor will analyze the creditworthiness of the issuer, as
well as any financial institution or other party responsible for payments on the security, in determining whether
to purchase unrated municipal bonds. Unrated bonds will be included in the 35% limit unless the Sub-advisor
deems such securities to be the equivalent of investment grade securities. For a description of these securities
and a discussion of the risks involved therein, see this Statement and the Trust's Prospectus under "Certain Risk
Factors and Investment Methods."

Other. Defaulted securities require active monitoring and may, at times, require participation
in bankruptcy or receivership proceedings on behalf of the Portfolio.

Reverse Repurchase Agreements. The Portfolio may use reverse repurchase agreements to provide cash to
satisfy unusually heavy redemption requests or for other temporary or emergency purposes without the necessity of
selling portfolio securities, or to earn additional income on portfolio securities, such as Treasury bills or
notes. The Portfolio will enter into reverse repurchase agreements only with parties that the Sub-advisor deems
creditworthy. Using reverse repurchase agreements to earn additional income involves the risk that the interest
earned on the invested proceeds is less than the expense of the reverse repurchase agreement transaction. This
technique may also have a leveraging effect on the Portfolio, although the requirement for the Portfolio to
segregate assets in the amount of the reverse repurchase agreement minimizes this effect.

For an additional discussion of reverse repurchase agreements and their risks, see the Trust's
Prospectus under "Certain Risk Factors and Investment Methods."

Eurodollar Instruments. The Portfolio may make investments in Eurodollar instruments. Eurodollar
instruments are U.S. dollar-denominated futures contracts or options thereon that are linked to the London
Interbank Offered Rate ("LIBOR"), although foreign currency-denominated instruments are available from time to
time. Eurodollar futures contracts enable purchasers to obtain a fixed rate for the lending of funds and sellers
to obtain a fixed rate for borrowings. The Portfolio might use Eurodollar futures contracts and options thereon
to hedge against changes in LIBOR, to which many interest rate swaps and fixed-income instruments are linked.

Swaps and Swap-Related Products. The Portfolio may enter into interest rate swaps, caps and floors on
either an asset-based or liability-based basis, depending upon whether it is hedging its assets or its
liabilities, and will usually enter into interest rate swaps on a net basis (i.e., the two payment streams are
netted out, with the Portfolio receiving or paying, as the case may be, only the net amount of the two
payments). The net amount of the excess, if any, of the Portfolio's obligations over its entitlement with
respect to each interest rate swap will be calculated on a daily basis and an amount of cash or other liquid
assets having an aggregate net asset value at least equal to the accrued excess will be maintained in a
segregated account by the Portfolio's custodian. If the Portfolio enters into an interest rate swap on other
than a net basis, it would maintain a segregated account in the full amount accrued on a daily basis of its
obligations with respect to the swap. The Portfolio will not enter into any interest rate swap, cap or floor
transaction unless the unsecured senior debt or the claims-paying ability of the other party thereto is rated in
one of the three highest rating categories of at least one NRSRO at the time of entering into such transaction.
The Sub-advisor will monitor the creditworthiness of all counterparties on an ongoing basis. If there is a
default by the other party to such a transaction, the Portfolio will have contractual remedies pursuant to the
agreements related to the transaction.

The swap market has grown substantially in recent years with a large number of banks and investment
banking firms acting both as principals and as agents utilizing standardized swap documentation. The Sub-advisor
has determined that, as a result, the swap market has become relatively liquid. Caps and floors are more recent
innovations for which standardized documentation has not yet been developed and, accordingly, are less liquid
than swaps. To the extent the Portfolio sells (i.e., writes) caps and floors, it will segregate cash or other
liquid assets having an aggregate net asset value at least equal to the full amount, accrued on a daily basis, of
its obligations with respect to any caps or floors.

There is no limit on the amount of interest rate swap transactions that may be entered into by the
Portfolio. These transactions may in some instances involve the delivery of securities or other underlying
assets by the Portfolio or its counterparty to collateralize obligations under the swap. Under the documentation
currently used in those markets, the risk of loss with respect to interest rate swaps is limited to the net
amount of the payments that the Portfolio is contractually obligated to make. If the other party to an interest
rate swap that is not collateralized defaults, the Portfolio would risk the loss of the payments that it
contractually is entitled to receive. The Portfolio may buy and sell (i.e., write) caps and floors without
limitation, subject to the segregation requirement described above.

Investment Policies Which May Be Changed Without Shareholder Approval. The following limitations are
applicable to the AST Janus Mid-Cap Growth Portfolio. These limitations are not "fundamental" restrictions, and
may be changed by the Trustees without shareholder approval.

3. The Portfolio may not mortgage or pledge any securities owned or held by the Portfolio in
amounts that exceed, in the aggregate, 15% of the Portfolio's net asset value, provided that this limitation does
not apply to reverse repurchase agreements, deposits of assets to margin, guarantee positions in futures,
options, swaps or forward contracts, or the segregation of assets in connection with such contracts.

4. The Portfolio does not currently intend to purchase any security or enter into a repurchase
agreement if, as a result, more than 15% of its net assets would be invested in repurchase agreements not
entitling the holder to payment of principal and interest within seven days and in securities that are illiquid
by virtue of legal or contractual restrictions on resale or the absence of a readily available market. The
Trustees, or the Portfolio's Sub-advisor acting pursuant to authority delegated by the Trustees, may determine
that a readily available market exists for securities eligible for resale pursuant to Rule 144A under the
Securities Act of 1933 ("Rule 144A Securities"), or any successor to such rule, Section 4(2) commercial paper and
municipal lease obligations. Accordingly, such securities may not be subject to the foregoing limitation.

5. The Portfolio may not invest in companies for the purpose of exercising control of management.

AST Neuberger Berman Mid-Cap Growth Portfolio:

Investment Objective: The investment objective of the Portfolio is to seek capital appreciation.

Investment Policies:

Securities Loans. In order to realize income, the Portfolio may lend portfolio securities with a value
not exceeding 33-1/3% of its total assets to banks, brokerage firms, or institutional investors. Borrowers are
required continuously to secure their obligations to return securities on loan from the Portfolio by depositing
collateral, which will be marked to market daily, in a form determined to be satisfactory by the Trustees and
equal to at least 100% of the market value of the loaned securities, which will also be marked to market daily.
The Sub-advisor believes the risk of loss on these transactions is slight because, if a borrower were to default
for any reason, the collateral should satisfy the obligation. However, as with other extensions of secured
credit, loans of portfolio securities involve some risk of loss of rights in the collateral should the borrower
fail financially.

Reverse Repurchase Agreements. In a reverse repurchase agreement, the Portfolio sells portfolio
securities subject to its agreement to repurchase the securities at a later date for a fixed price reflecting a
market rate of interest; these agreements are considered borrowings for purposes of the Portfolio's investment
limitations and policies concerning borrowings. There is a risk that the counterparty to a reverse repurchase
agreement will be unable or unwilling to complete the transaction as scheduled, which may result in losses to the
Portfolio.

Covered Call Options. The Portfolio may write covered call options on securities it owns. Generally,
the purpose of writing these options is to reduce the effect of price fluctuation of securities held by the
Portfolio's net asset value. Securities on which call options may be written by the Portfolio are purchased
solely on the basis of investment considerations consistent with the Portfolio's investment objectives.

When the Portfolio writes a call option, it is obligated to sell a security to a purchaser at a
specified price at any time until a certain date if the purchaser decides to exercise the option. The Portfolio
receives a premium for writing the call option. The Portfolio writes only "covered" call options on securities
it owns. So long as the obligation of the writer of the call option continues, the writer may be assigned an
exercise notice, requiring it to deliver the underlying security against payment of the exercise price. The
Portfolio may be obligated to deliver securities underlying a call option at less than the market price thereby
giving up any additional gain on the security.

When the Portfolio purchases a call option, it pays a premium for the right to purchase a security from
the writer at a specified price until a specified date. A call option would be purchased by the Portfolio to
offset a previously written call option.

The writing of covered call options is a conservative investment technique believed to involve
relatively little risk (in contrast to the writing of "naked" or uncovered call options, which the Portfolio will
not do), but is capable of enhancing the Portfolio's total return. When writing a covered call option, the
Portfolio, in return for the premium, gives up the opportunity for profit from a price increase in the underlying
security above the exercise price, but conversely retains the risk of loss should the price of the security
decline. If a call option that the Portfolio has written expires unexercised, the Portfolio will realize a gain
in the amount of the premium; however, in the case of a call option, that gain may be offset by a decline in the
market value of the underlying security during the option period. If the call option is exercised, the Portfolio
will realize a gain or loss from the sale or purchase of the underlying security.

The exercise price of an option may be below, equal to, or above the market value of the underlying
security at the time the option is written. Options normally have expiration dates between three and nine months
from the date written. The obligation under any option terminates upon expiration of the option or, at an
earlier time, when the writer offsets the option by entering into a "closing purchase transaction" to purchase an
option of the same series.

Options are traded both on national securities exchanges and in the over-the-counter ("OTC") market.
Exchange-traded options are issued by a clearing organization affiliated with the exchange on which the option is
listed; the clearing organization in effect guarantees completion of, every exchange-traded option. In contrast,
OTC options are contracts between the Portfolio and its counter-party with no clearing organization guarantee.
Thus, when the Portfolio sells or purchases an OTC option, it generally will be able to "close out" the option
prior to its expiration only by entering into a "closing purchase transaction" with the dealer to whom or from
whom the Portfolio originally sold or purchased the option. The Sub-advisor monitors the creditworthiness of
dealers with which the Portfolio may engage in OTC options, and will limit counterparties in such transactions to
dealers with a net worth of at least $20 million as reported in their latest financial statements. For an
additional discussion of OTC options and their risks, see this Statement under "Certain Risk Factors and
Investment Methods."

The premium received (or paid) by the Portfolio when it writes (or purchases) an option is the amount
at which the option is currently traded on the applicable exchange, less (or plus) a commission. The premium may
reflect, among other things, the current market price of the underlying security, the relationship of the
exercise price to the market price, the historical price volatility of the underlying security, the length of the
option period, the general supply of and demand for credit, and the general interest rate environment. The
premium received by the Portfolio for writing an option is recorded as a liability on the Portfolio's statement
of assets and liabilities. This liability is adjusted daily to the option's current market value.

The Portfolio pays the brokerage commissions in connection with purchasing or writing options, including
those used to close out existing positions. These brokerage commissions normally are higher than those
applicable to purchases and sales of portfolio securities.

For an additional discussion of options and their risks, see this Statement and the Trust's Prospectus
under "Certain Risk Factors and Investment Methods."

Foreign Securities. The Portfolio may invest in U.S. dollar-denominated equity and debt securities
issued by foreign issuers (including governments, quasi-governments and foreign banks) and foreign branches of
U.S. banks, including negotiable CDs and commercial paper. These investments are subject to the Portfolio's
quality standards. While investments in foreign securities are intended to reduce risk by providing further
diversification, such investments involve sovereign and other risks, in addition to the credit and market risks
normally associated with domestic securities.

The Portfolio may invest in equity, debt, or other income-producing securities that are denominated in
or indexed to foreign currencies, including, but not limited to (1) common and preferred stocks, (2) convertible
securities, (3) warrants, (4) CDs, commercial paper, fixed-time deposits, and bankers' acceptances issued by
foreign banks, (5) obligations of other corporations, and (6) obligations of foreign governments, or their
subdivisions, agencies, and instrumentalities, international agencies, and supranational entities. Risks of
investing in foreign currency denominated securities include (1) nationalization, expropriation, or confiscatory
taxation, (2) adverse changes in investment or exchange control regulations (which could prevent cash from being
brought back to the U.S.), and (3) expropriation or nationalization of foreign portfolio companies. Mail service
between the U.S. and foreign countries may be slower or less reliable than within the United States, thus
increasing the risk of delayed settlements of portfolio transactions or loss of certificates for portfolio
securities. For an additional discussion of the risks associated with foreign securities, whether denominated in
U.S. dollars or foreign currencies, see this Statement and the Trust's Prospectus under "Certain Risk Factors and
Investment Methods."

Prices of foreign securities and exchange rates for foreign currencies may be affected by the interest
rates prevailing in other countries. The interest rates in other countries are often affected by local factors,
including the strength of the local economy, the demand for borrowing, the government's fiscal and monetary
policies, and the international balance of payments. Individual foreign economies may differ favorably or
unfavorably from the U.S. economy in such respects as gross national product, rate of inflation, capital
reinvestment, resource self-sufficiency, and balance of payments position.

Foreign markets also have different clearance and settlement procedures, and in certain markets there
have been times when settlements have been unable to keep pace with the volume of securities transactions, making
it difficult to conduct such transactions. Such delays in settlement could result in temporary periods when a
portion of the assets of the Portfolio is uninvested and no return is earned thereon. The inability of the
Portfolio to make intended security purchases due to settlement problems could cause the Portfolio to miss
attractive investment opportunities. Inability to dispose of portfolio securities due to settlement problems
could result either in losses to the Portfolio due to subsequent declines in value of the portfolio securities,
or, if the Portfolio has entered into a contract to sell the securities, could result in possible liability to
the purchaser.

The Portfolio may invest in foreign corporate bonds and debentures and sovereign debt instruments issued
or guaranteed by foreign governments, their agencies or instrumentalities. Foreign debt securities are subject
to risks similar to those of other foreign securities, as well as risks similar to those of other debt
securities, as discussed in this Statement and in the Trust's Prospectus under "Investment Objectives and
Policies" and "Certain Risk Factors and Investment Methods."

In order to limit the risk inherent in investing in foreign currency-denominated securities, the
Portfolio may not purchase any such security if after such purchase more than 10% of its total assets (taken at
market value) would be invested in such securities. Within such limitation, however, the Portfolio is not
restricted in the amount it may invest in securities denominated in any one foreign currency.

Foreign Currency Transactions. The Portfolio may engage in foreign currency exchange transactions.
Foreign currency exchange transactions will be conducted either on a spot (i.e., cash) basis at the spot rate
----
prevailing in the foreign currency exchange market, or through entering into forward contracts to purchase or
sell foreign currencies ("forward contracts"). The Portfolio may enter into forward contracts in order to
protect against uncertainty in the level of future foreign currency exchange rates. The Portfolio may also use
forward contracts for non-hedging purposes.

A forward contract involves an obligation to purchase or sell a specific currency at a future date,
which may be any fixed number of days (usually less than one year) from the date of the contract agreed upon by
the parties, at a price set at the time of the contract. These contracts are traded in the interbank market
conducted directly between traders (usually large commercial banks) and their customers. A forward contract
generally has no deposit requirement, and no commissions are charged at any stage for trades. Although foreign
exchange dealers do not charge a fee for conversion, they do realize a profit based on the difference (the
spread) between the price at which they are buying and selling various currencies.

When the Portfolio enters into a contract for the purchase or sale of a security denominated in a
foreign currency, it may wish to "lock in" the U.S. dollar price of the security. By entering into a forward
contract for the purchase or sale, for a fixed amount of U.S. dollars, of the amount of foreign currency involved
in the underlying security transactions, the Portfolio will be able to protect itself against a possible loss.
When the Sub-advisor believes that the currency of a particular foreign country may suffer a substantial decline
against the U.S. dollar, it may also enter into a forward contract to sell the amount of foreign currency for a
fixed amount of dollars which approximates the value of some or all of a Portfolio's securities denominated in
such foreign currency.

The Portfolio may also engage in cross-hedging by using forward contracts in one currency to hedge
against fluctuations in the value of securities denominated in a different currency, when the Sub-advisor
believes that there is a pattern of correlation between the two currencies. The Portfolio may also purchase and
sell forward contracts for non-hedging purposes when the Sub-advisor anticipates that the foreign currency will
appreciate or depreciate in value, but securities in that currency do not present attractive investment
opportunities and are not held in the Portfolio's portfolio.

When the Portfolio engages in forward contracts for hedging purposes, it will not enter into forward
contracts to sell currency or maintain a net exposure to such contracts if their consummation would obligate the
Portfolio to deliver an amount of foreign currency in excess of the value of its portfolio securities or other
assets denominated in that currency. At the consummation of the forward contract, the Portfolio may either make
delivery of the foreign currency or terminate its contractual obligation to deliver by purchasing an offsetting
contract obligating it to purchase the same amount of such foreign currency at the same maturity date. If the
Portfolio chooses to make delivery of the foreign currency, it may be required to obtain such currency through
the sale of portfolio securities denominated in such currency or through conversion of other assets into such
currency. If the Portfolio engages in an offsetting transaction, it will incur a gain or a loss to the extent
that there has been a change in forward contract prices. Closing purchase transactions with respect to forward
contracts are usually made with the currency trader who is a party to the original forward contract.

The Portfolio is not required to enter into such transactions and will not do so unless deemed
appropriate by the Sub-advisor.

Using forward contracts to protect the value of the Portfolio's portfolio securities against a decline
in the value of a currency does not eliminate fluctuations in the underlying prices of the securities. It simply
establishes a rate of exchange which can be achieved at some future point in time. The precise projection of
short-term currency market movements is not possible, and short-term hedging provides a means of fixing the
dollar value of only a portion of the Portfolio's foreign assets.

While the Portfolio may enter forward contracts to reduce currency exchange rate risks, transactions in
such contracts involve certain other risks. Thus, while the Portfolio may benefit from such transactions,
unanticipated changes in currency prices may result in a poorer overall performance for the Portfolio than if it
had not engaged in any such transactions. Moreover, there may be imperfect correlation between the Portfolio's
holdings of securities denominated in a particular currency and forward contracts entered into by the Portfolio.
Such imperfect correlation may cause the Portfolio to sustain losses which will prevent it from achieving a
complete hedge or expose it to risk of foreign exchange loss.

The Portfolio generally will not enter into a forward contract with a term of greater than one year.
The Portfolio may experience delays in the settlement of its foreign currency transactions.

When the Portfolio engages in forward contracts for the sale or purchase of currencies, the Portfolio
will either cover its position or establish a segregated account. The Portfolio will consider its position
covered if it has securities in the currency subject to the forward contract, or otherwise has the right to
obtain that currency at no additional cost. In the alternative, the Portfolio will place cash, fixed income, or
equity securities (denominated in the foreign currency subject to the forward contract) in a separate account.
The amounts in such separate account will equal the value of the Portfolio's assets which are committed to the
consummation of foreign currency exchange contracts. If the value of the securities placed in the separate
account declines, the Portfolio will place additional cash or securities in the account on a daily basis so that
the value of the account will equal the amount of its commitments with respect to such contracts.

For an additional discussion of forward foreign currency exchange contracts and their risks, see this
Statement and the Trust's Prospectus under "Certain Risk Factors and Investment Methods."

Options on Foreign Currencies. The Portfolio may write and purchase covered call and put options on
foreign currencies in amounts not exceeding 5% of its net assets for the purpose of protecting against declines
in the U.S. dollar value of portfolio securities or increases in the U.S.-dollar cost of securities to be
acquired, or to protect the dollar equivalent of dividend, interest, or other payment on those securities. A
decline in the dollar value of a foreign currency in which portfolio securities are denominated will reduce the
dollar value of such securities, even if their value in the foreign currency remains constant. In order to
protect against such decreases in the value of portfolio securities, the Portfolio may purchase put options on
the foreign currency. If the value of the currency declines, the Portfolio will have the right to sell such
currency for a fixed amount of dollars which exceeds the market value of such currency. This would result in a
gain that may offset, in whole or in part, the negative effect of currency depreciation on the value of the
Portfolio's securities denominated in that currency.

Conversely, if the dollar value of a currency in which securities to be acquired by the Portfolio are
denominated rises, thereby increasing the cost of such securities, the Portfolio may purchase call options on
such currency. If the value of such currency increases sufficiently, the Portfolio will have the right to
purchase that currency for a fixed amount of dollars which is less than the market value of that currency. Such
a purchase would result in a gain that may offset, at least partially, the effect of any currency-related
increase in the price of securities the Portfolio intends to acquire.

As in the case of other types of options transactions, however, the benefit the Portfolio derives from
purchasing foreign currency options will be reduced by the amount of the premium and related transaction costs.
In addition, if currency exchange rates do not move in the direction or to the extent anticipated, the Portfolio
could sustain losses on transactions in foreign currency options which would deprive it of a portion or all of
the benefits of advantageous changes in such rates.

The Portfolio may also write options on foreign currencies for hedging purposes. For example, if the
Sub-advisor anticipates a decline in the dollar value of foreign currency denominated securities because of
declining exchange rates, it could, instead of purchasing a put option, write a call option on the relevant
currency. If the expected decline occurs, the option will most likely not be exercised, and the decrease in
value of portfolio securities will be offset, at least in part, by the amount of the premium received by the
Portfolio.

Similarly, the Portfolio could write a put option on the relevant currency, instead of purchasing a call
option, to hedge against an anticipated increase in the dollar cost of securities to be acquired. If exchange
rates move in the manner projected, the put option most likely will not be exercised, and such increased cost
will be offset, at least in part, by the amount of the premium received. However, as in the case of other types
of options transactions, the writing of a foreign currency option will constitute only a partial hedge up to the
amount of the premium, and only if rates move in the expected direction.

If unanticipated exchange rate fluctuations occur, a put or call option may be exercised and the
Portfolio could be required to purchase or sell the underlying currency at a loss which may not be fully offset
by the amount of the premium. As a result of writing options on foreign currencies, the Portfolio also may be
required to forego all or a portion of the benefits which might otherwise have been obtained from favorable
movements in currency exchange rates. Options on foreign currencies may be traded on U.S. or foreign exchanges
or over-the-counter options or foreign currencies that are traded on the OTC market and involve liquidity and
credit risks that may not be present in the case of exchange-traded currency options.

A call option written on foreign currency by the Portfolio is "covered" if the Portfolio owns the
underlying foreign currency subject to the call, or if it has an absolute and immediate right to acquire that
foreign currency without additional cash consideration. A call option is also covered if the Portfolio holds a
call on the same foreign currency for the same principal amount as the call written where the exercise price of
the call held is (a) equal to or less than the exercise price of the call written or (b) greater than the
exercise price of the call written if the amount of the difference is maintained by the Portfolio in cash, fixed
income or equity securities in a segregated account with its custodian.

The risks of currency options are similar to the risks of other options, as discussed above and in this
Statement under "Certain Risk Factors and Investment Methods."

Cover for Options on Securities, Forward Contracts, and Options on Foreign Currencies ("Hedging
Instruments"). The Portfolio will comply with SEC staff guidelines regarding "cover" for Hedging Instruments
and, if the guidelines so require, set aside in a segregated account with its custodian the prescribed amount of
cash, fixed income, or equity securities. Securities held in a segregated account cannot be sold while the
futures, option, or forward strategy covered by those securities is outstanding, unless they are replaced with
other suitable assets. As a result, segregation of a large percentage of the Portfolio's assets could impede
portfolio management or the Portfolio's ability to meet current obligations. The Portfolio may be unable
promptly to dispose of assets that cover, or are segregated with respect to, an illiquid options or forward
position; this inability may result in a loss to the Portfolio.

Preferred Stock. The Portfolio may invest in preferred stock. Unlike interest payments on debt
securities, dividends on preferred stock are generally payable at the discretion of the issuer's board of
directors, although preferred shareholders may have certain rights if dividends are not paid. Shareholders may
suffer a loss of value if dividends are not paid, and generally have no legal recourse against the issuer. The
market prices of preferred stocks are generally more sensitive to changes in the issuer's creditworthiness than
are the prices of debt securities.

Fixed Income Securities. The Portfolio may invest in money market instruments, U.S. Government or
Agency securities, and corporate bonds and debentures receiving one of the four highest ratings from Standard &
Poor's Ratings Group ("S&P"), Moody's Investors Service, Inc. ("Moody's") or any other nationally recognized
statistical rating organization ("NRSRO"), or, if not rated by any NRSRO, deemed comparable by the Sub-advisor to
such rated securities. The ratings of an NRSRO represent its opinion as to the quality of securities it
undertakes to rate. Ratings are not absolute standards of quality; consequently, securities with the same
maturity, coupon, and rating may have different yields. Although the Portfolio may rely on the ratings of any
NRSRO, the Portfolio mainly refers to ratings assigned by S&P and Moody's, which are described in Appendix A to
this Statement.

Fixed income securities are subject to the risk of an issuer's inability to meet principal and interest
payments on the obligations ("credit risk") and also may be subject to price volatility due to such factors as
interest rate sensitivity, market perception of the creditworthiness of the issuer, and general market liquidity
("market risk"). Lower-rated securities are more likely to react to developments affecting market and credit
risk than are more highly rated securities, which react primarily to movements in the general level of interest
rates.

Changes in economic conditions or developments regarding the individual issuer are more likely to cause
price volatility and weaken the capacity of the issuer of such securities to make principal and interest payments
than is the case for higher-grade debt securities. An economic downturn affecting the issuer may result in an
increased incidence of default. The market for lower-rated securities may be thinner and less active than for
higher-rated securities. Pricing of thinly traded securities requires greater judgment than pricing of
securities for which market transactions are regularly reported.

If the quality of any fixed income securities held by the Portfolio deteriorates so that they no longer
would be eligible for purchase by the Portfolio, the Portfolio will engage in an orderly disposition of the
securities to the extent necessary to ensure that the Portfolio's holding of such securities will not exceed 5%
of its net assets.

Convertible Securities. The Portfolio may invest in convertible securities of any quality. A
convertible security entitles the holder to receive interest paid or accrued on debt or the dividend paid on
preferred stock until the convertible security matures or is redeemed, converted or exchanged. Before
conversion, convertible securities ordinarily provide a stream of income with generally higher yields than those
of common stocks of the same or similar issuers, but lower than the yield on non-convertible debt. Convertible
securities are usually subordinated to comparable-tier nonconvertible securities but rank senior to common stock
in a corporation's capital structure. The value of a convertible security is a function of (1) its yield in
comparison with the yields of other securities of comparable maturity and quality that do not have a conversion
privilege, and (2) its worth, at market value, if converted into the underlying common stock. Convertible debt
securities are subject to the Portfolio's investment policies and limitations concerning fixed-income investments.

Convertible securities are typically issued by smaller companies whose stock prices may be volatile.
The price of a convertible security often reflects such variations in the price of the underlying common stock in
a way that nonconvertible debt does not. A convertible security may be subject to redemption at the option of
the issuer at a price established in the security's governing instrument. If a convertible security held by the
Portfolio is called for redemption, the Portfolio will be required to convert it into the underlying common
stock, sell it to a third party or permit the issuer to redeem the security. Any of these actions could have an
adverse effect on the Portfolio's ability to achieve its investment objective.

Commercial Paper. Commercial paper is a short-term debt security issued by a corporation, bank,
municipality, or other issuer, usually for purposes such as financing current operations. The Portfolio may
invest only in commercial paper receiving the highest rating from S&P (A-1) or Moody's (P-1), or deemed by the
Sub-advisor to be of equivalent quality.

The Portfolio may invest in commercial paper that cannot be resold to the public because it was issued
under the exception for private offerings in Section 4(2) of the Securities Act of 1933. While such securities
normally will be considered illiquid and subject to the Portfolio's 15% limitation on investments in illiquid
securities, the Sub-advisor may in certain cases determine that such paper is liquid under guidelines established
by the Board of Trustees.

Banking and Savings Institution Securities. The Portfolio may invest in banking and savings institution
obligations, which include CDs, time deposits, bankers' acceptances, and other short-term debt obligations issued
by savings institutions. CDs are receipts for funds deposited for a specified period of time at a specified rate
of return; time deposits generally are similar to CDs, but are uncertificated; and bankers' acceptances are time
drafts drawn on commercial banks by borrowers, usually in connection with international commercial transactions.
The CDs, time deposits, and bankers' acceptances in which the Portfolio invests typically are not covered by
deposit insurance.

Investment Policies Which May be Changed Without Shareholder Approval. The following limitations are
applicable to the AST Neuberger Berman Mid-Cap Growth Portfolio. These limitations are not fundamental
restrictions and can be changed without shareholder approval.

1. The Portfolio may not purchase securities if outstanding borrowings, including any reverse
repurchase agreements, exceed 5% of its total assets.

2. Except for the purchase of debt securities and engaging in repurchase agreements, the Portfolio
may not make any loans other than securities loans.

3. The Portfolio may not purchase securities on margin from brokers, except that the Portfolio may
obtain such short-term credits as are necessary for the clearance of securities transactions. Margin payments in
connection with transactions in futures contracts and options on futures contracts shall not constitute the
purchase of securities on margin and shall not be deemed to violate the foregoing limitation.

4. The Portfolio may not sell securities short, unless it owns or has the right to obtain
securities equivalent in kind and amount to the securities sold without payment of additional consideration.
Transactions in futures contracts and options shall not constitute selling securities short.

5. The Portfolio may not purchase any security if, as a result, more than 15% of its net assets
would be invested in illiquid securities. Illiquid securities include securities that cannot be sold within
seven days in the ordinary course of business for approximately the amount at which the Portfolio has valued the
securities, such as repurchase agreements maturing in more than seven days.

AST Neuberger Berman Mid-Cap Value Portfolio:

Investment Objective: The investment objective of the Portfolio is to seek capital growth.

Investment Policies:

Covered Call Options. The Portfolio may write covered call options on securities it owns valued at up
to 10% of its net assets and may purchase call options in related closing transactions. Generally, the purpose
of writing these options is to reduce the effect of price fluctuations of securities held by the Portfolio on the
Portfolio's net asset value. Securities on which call options may be written by the Portfolio are purchased
solely on the basis of investment considerations consistent with the Portfolio's investment objectives.

The writing of covered call options is a conservative investment technique believed to involve
relatively little risk (in contrast to the writing of "naked" or uncovered call options, which the Portfolio will
not do), but is capable of enhancing the Portfolio's total return. When writing a covered call option, the
Portfolio, in return for the premium, gives up the opportunity for profit from a price increase in the underlying
security above the exercise price, but conversely retains the risk of loss should the price of the security
decline. If a call option that the Portfolio has written expires unexercised, the Portfolio will realize a gain
in the amount of the premium; however, that gain may be offset by a decline in the market value of the underlying
security during the option period. If the call option is exercised, the Portfolio will realize a gain or loss
from the sale or purchase of the underlying security.

For an additional discussion of options and their risks, see this Statement and the Trust's Prospectus
under "Certain Risk Factors and Investment Methods."

Foreign Securities. The Portfolio may invest in U.S. dollar-denominated securities issued by foreign
issuers (including governments and quasi-governments) and foreign branches of U.S. banks, including negotiable
CDs and commercial paper. These investments are subject to the Portfolio's quality standards. While investments
in foreign securities are intended to reduce risk by providing further diversification, such investments involve
sovereign and other risks, in addition to the credit and market risks normally associated with domestic
securities.

The Portfolio may invest in equity, debt, or other income-producing securities that are denominated in
or indexed to foreign currencies, including, but not limited to (1) common and preferred stocks, (2) convertible
securities, (3) CDs, commercial paper, fixed-time deposits, and bankers' acceptances issued by foreign banks, (4)
obligations of other corporations, and (5) obligations of foreign governments, or their subdivisions, agencies,
and instrumentalities, international agencies, and supranational entities. Risks of investing in foreign
currency denominated securities include (1) nationalization, expropriation, or confiscatory taxation, (2) adverse
changes in investment or exchange control regulations (which could prevent cash from being brought back to the
U.S.), and (3) expropriation or nationalization of foreign portfolio companies. Mail service between the U.S.
and foreign countries may be slower or less reliable than within the United States, thus increasing the risk of
delayed settlements of portfolio transactions or loss of certificates for portfolio securities. For an
additional discussion of the risks associated with foreign securities, whether denominated in U.S. dollars or
foreign currencies, see this Statement and the Trust's Prospectus under "Certain Risk Factors and Investment
Methods."

The Portfolio may invest in foreign corporate bonds and debentures and sovereign debt instruments issued
or guaranteed by foreign governments, their agencies or instrumentalities. The Portfolio may invest in
lower-rated foreign debt securities subject to the Portfolio's 15% limitation on lower-rated debt securities.
Foreign debt securities are subject to risks similar to those of other foreign securities, as well as risks
similar to those of other debt securities, as discussed in this Statement and in the Trust's Prospectus under
"Investment Objectives and Policies" and "Certain Risk Factors and Investment Methods."

Foreign Currency Transactions. The Portfolio may engage in foreign currency exchange transactions.
Foreign currency exchange transactions will be conducted either on a spot (i.e., cash) basis at the spot rate
----
prevailing in the foreign currency exchange market, or through entering into forward contracts to purchase or
sell foreign currencies ("forward contracts"). The Portfolio may enter into forward contracts in order to
protect against uncertainty in the level of future foreign currency exchange rates, and only in amounts not
exceeding 5% of the Portfolio's net assets.

The Portfolio is not required to enter into such transactions and will not do so unless deemed
appropriate by the Sub-advisor.

The Portfolio generally will not enter into a forward contract with a term of greater than one year.
The Portfolio may experience delays in the settlement of its foreign currency transactions.

For an additional discussion of forward foreign currency exchange contracts and their risks, see this
Statement and the Trust's Prospectus under "Certain Risk Factors and Investment Methods."

If unanticipated exchange rate fluctuations occur, a put or call option may be exercised and the
Portfolio could be required to purchase or sell the underlying currency at a loss which may not be fully offset
by the amount of the premium. As a result of writing options on foreign currencies, the Portfolio also may be
required to forego all or a portion of the benefits which might otherwise have been obtained from favorable
movements in currency exchange rates. Certain options on foreign currencies are traded on the OTC market and
involve liquidity and credit risks that may not be present in the case of exchange-traded currency options.

The risks of currency options are similar to the risks of other options, as discussed above and in this
Statement under "Certain Risk Factors and Investment Methods."

Fixed Income Securities. The Portfolio may invest in money market instruments, U.S. Government or
Agency securities, and corporate bonds and debentures receiving one of the four highest ratings from Standard &
Poor's Ratings Group ("S&P"), Moody's Investors Service, Inc. ("Moody's") or any other nationally recognized
statistical rating organization ("NRSRO"), or, if not rated by any NRSRO, deemed comparable by the Sub-advisor to
such rated securities ("Comparable Unrated Securities"). In addition, the Portfolio may invest up to 15% of its
net assets, measured at the time of investment, in corporate debt securities rated below investment grade or
Comparable Unrated Securities. The ratings of an NRSRO represent its opinion as to the quality of securities it
undertakes to rate. Ratings are not absolute standards of quality; consequently, securities with the same
maturity, coupon, and rating may have different yields. Although the Portfolio may rely on the ratings of any
NRSRO, the Portfolio mainly refers to ratings assigned by S&P and Moody's, which are described in Appendix A to
this Statement.

Convertible Securities. The Portfolio may invest in convertible securities. A convertible security
entitles the holder to receive interest paid or accrued on debt or the dividend paid on preferred stock until the
convertible security matures or is redeemed, converted or exchanged. Before conversion, convertible securities
ordinarily provide a stream of income with generally higher yields than those of common stocks of the same or
similar issuers, but lower than the yield on non-convertible debt. Convertible securities are usually
subordinated to comparable-tier nonconvertible securities but rank senior to common stock in a corporation's
capital structure. The value of a convertible security is a function of (1) its yield in comparison with the
yields of other securities of comparable maturity and quality that do not have a conversion privilege, and (2)
its worth, at market value, if converted into the underlying common stock. Convertible debt securities are
subject to the Portfolio's investment policies and limitations concerning fixed-income investments.

Zero Coupon Securities. The Portfolio may invest up to 5% of its net assets in zero coupon securities,
which are debt obligations that do not entitle the holder to any periodic payment of interest prior to maturity
or specify a future date when the securities begin paying current interest. Rather, they are issued and traded
at a discount from their face amount or par value, which discount varies depending on prevailing interest rates,
the time remaining until cash payments begin, the liquidity of the security, and the perceived credit quality of
the issuer.

The market prices of zero coupon securities generally are more volatile than the prices of securities
that pay interest periodically and are likely to respond to changes in interest rates to a greater degree than do
other types of debt securities having similar maturities and credit quality.

Investment Policies Which May be Changed Without Shareholder Approval. The following limitations are
applicable to the AST Neuberger Berman Mid-Cap Value Portfolio. These limitations are not fundamental
restrictions, and can be changed without shareholder approval.

1. The Portfolio may not purchase securities if outstanding borrowings, including any reverse
repurchase agreements, exceed 5% of its total assets.

2. Except for the purchase of debt securities and engaging in repurchase agreements, the Portfolio
may not make any loans other than securities loans.

6. The Portfolio may not invest in puts, calls, straddles, spreads, or any combination thereof,
except that the Portfolio may (i) write (sell) covered call options against portfolio securities having a market
value not exceeding 10% of its net assets and (ii) purchase call options in related closing transactions. The
Portfolio does not construe the foregoing limitation to preclude it from purchasing or writing options on futures
contracts.

7. The Portfolio may not invest more than 10% of the value of its total assets in securities of
foreign issuers, provided that this limitation shall not apply to foreign securities denominated in U.S. dollars.

AST Alger All-Cap Growth Portfolio:

Investment Objective: The investment objective of the Portfolio is to seek long-term capital growth.

Investment Policies:

Cash Position. In order to afford the Portfolio the flexibility to take advantage of new opportunities
for investments in accordance with its investment objective or to meet redemptions, it may, under normal
circumstances, hold up to 15% of its total assets in money market instruments including, but not limited to,
certificates of deposit, time deposits and bankers' acceptances issued by domestic bank and thrift institutions,
U.S. Government securities, commercial paper and repurchase agreements. In addition, when the Sub-advisor's
analysis of economic and technical market factors suggests that common stock prices will decline sufficiently so
that a temporary defensive position is deemed advisable, the Portfolio may invest in cash, commercial paper,
high-grade bonds or cash equivalents, all without limitation.

U.S. Government Obligations. Obligations, bills, notes, bonds, and other debt securities issued by the
U.S. Treasury are direct obligations of the U.S. Government and differ mainly in the length of their maturities.

Short-term Corporate Debt Securities. These are outstanding nonconvertible corporate debt securities
(e.g., bonds and debentures) which have one year or less remaining to maturity. Corporate debt securities may
have fixed, variable, or floating rates. For additional discussion on Short-term Corporate Debt Securities see
this Statement under "Certain Risk Factors and Investment Methods."

Commercial Paper. These are short-term promissory notes issued by corporations primarily to finance
short-term credit needs.

Repurchase Agreements. Under the terms of a repurchase agreement, the Portfolio would acquire a high
quality money market instrument for a relatively short period (usually not more than one week) subject to an
obligation of the seller to repurchase, and the Portfolio to resell, the instrument at an agreed price (including
accrued interest) and time, thereby determining the yield during the Portfolio's holding period. Repurchase
agreements may be viewed as loans by the Portfolio collateralized by the underlying instrument. This arrangement
results in a fixed rate of return that is not subject to market fluctuations during the Portfolio's holding
period and not necessarily related to the rate of return on the underlying instrument. The value of the sold
securities, including accrued interest, will be at least equal at all times to the total amount of the repurchase
obligation, including interest. For additional information about repurchase agreements and their risks, see the
Trust's Prospectus under "Certain Risk factors and Investment Methods."

Small Capitalization and Related Investments. Certain companies in which the Portfolio will invest may
still be in the developmental stage. Investing in smaller, newer issuers generally involves greater risk than
investing in larger, more established issuers. Such companies may have limited product lines, markets or
financial resources and may lack management depth. Their securities may have limited marketability and may be
subject to more abrupt or erratic price movements than securities of larger, more established companies or the
market averages in general. The Portfolio also may invest in older companies that appear to be entering a new
stage of growth progress owing to factors such as management changes or development of new technology, products
or markets, or companies providing products or services with a high unit volume growth rate. These companies may
be subject to many of the same risks as small-cap companies.

Convertible Securities, Warrants, and Rights. The Portfolio may invest in securities convertible into
or exchangeable for equity securities, including warrants and rights. A warrant is a type of security that
entitles the holder to buy a proportionate amount of common stock at a specified price, usually higher than the
market price at the time of issuance, for a period of years or to perpetuity. In contrast, rights, which also
represent the right to buy common shares, normally have a subscription price lower than the current market value
of the common stock and a life of two to four weeks. Warrants may be freely transferable and may be traded on
the major securities exchanges. For additional discussion about Convertible Securities, Warrants, and Rights and
their risks, see this Statement under "Certain Risk Factors and Investment Methods."

Portfolio Depositary Receipts. To the extent otherwise consistent with applicable law, the Portfolio
may invest up to 5% of its total assets in Portfolio Depositary Receipts, exchange-traded shares issued by
investment companies, typically unit investment trusts, holding portfolios of common stocks designed to
replicated and, therefore, track the performance of various broadly-based securities indexes or sectors of such
indexes. For example, the Portfolio may invest in Standard & Poor's Depositary Receipts(R)(SPDRs), issued by a
unit investment trust whose portfolio tracks the S&P 500 Composite Stock Price Index, or Standard & Poor's MidCap
400 Depositary Receipts(R)(MidCap SPDRs), which are similarly linked to the S&P Midcap 400 Index.

Lending of Portfolio Securities. The Portfolio will not lend securities to the Sub-advisor or its
affiliates. By lending its securities, the Portfolio can increase its income by continuing to receive interest
or dividends on the loaned securities as well as by either investing the cash collateral or by earning income in
the form of interest paid by the borrower when U.S. Government securities are used as collateral. The Portfolio
will adhere to the following conditions whenever its securities are loaned: (a) the Portfolio must receive at
least 100 percent cash collateral or equivalent securities from the borrower, (b) the borrower must increase this
collateral whenever the market value of the loaned securities including accrued interest exceeds the value of the
collateral, (c) the Portfolio must receive reasonable interest on the loan, as well as any dividends, interest or
other distributions on the loaned securities and any increase in market value, (d) the Portfolio may pay only
reasonable custodian fees in connection with the loan. For additional information on the lending of Portfolio
securities and its risks see this Statement and the Trust's Prospectus under "Certain Risk Factors and Investment
Methods."

Options. The Portfolio may purchase put and call options and write (sell) put and covered call options
on securities and securities indexes to increase gain or to hedge against the risk of unfavorable price movements
although, as in the past, it does not currently intend to rely on these strategies extensively, if at all. The
Portfolio will purchase or write options only if such options are exchange-traded or traded on an automated
quotation system of a national securities association.

The Portfolio will only sell options that are "covered." A call option written by the Portfolio on a
security is "covered" if the Portfolio owns the underlying security covered by the call or has an absolute and
immediate right to acquire that security without additional cash consideration (or for additional cash
consideration held in a segregated account) upon conversion or exchange of other securities held in its
portfolio. A call option is also covered if the Portfolio holds a call on the same security as the call written
where the exercise price of the call held is (a) equal to or less than the exercise price of the call written or
(b) greater than the exercise price of the call written if the difference is maintained by the Portfolio in cash
or other liquid assets in a segregated account. A put option is considered to be "covered" if the Portfolio
maintains cash or other liquid assets with a value equal to the exercise price in a segregated account or else
holds a put on the same security as the put written where the exercise price of the put held is equal to or
greater than the exercise price of the put written.

Although the Portfolio will generally not purchase or write options that appear to lack an active
secondary market, there is no assurance that a liquid secondary market on an exchange will exist for any
particular option. In such event it might not be possible to effect closing transactions in particular options,
so that the Portfolio would have to exercise its option in order to realize any profit and would incur brokerage
commissions upon the exercise of the options. If the Portfolio, as a covered call option writer, is unable to
effect a closing purchase transaction in a secondary market, it will not be able to sell the underlying security
until the option expires, until it delivers the underlying security upon exercise, or until it otherwise covers
the position.

In addition to options on securities, the Portfolio may also purchase and sell call and put options on
securities indexes. The Portfolio may offset its position in stock index options prior to expiration by entering
into a closing transaction on an exchange or it may let the option expire unexercised. The Portfolio will not
purchase these options unless the Sub-advisor is satisfied with the development, depth and liquidity of the
market and the Sub-advisor believes the options can be closed out.

The Portfolio will not purchase options if, as a result, the aggregate cost of all outstanding options
exceeds 10% of the Portfolio's total assets, although no more than 5% of the total assets will be committed to
transactions entered into for non-hedging (speculative) purposes.

Stock Index Futures and Options on Stock Index Futures. Futures are generally bought and sold on the
commodities exchanges where they are listed. A stock index future obligates the seller to deliver (and the
purchaser to take)
an amount of cash equal to a specific dollar amount times the difference between the value of a specific stock
index at the close of the last trading day of the contract and the price at which the agreement is made. No
physical delivery of the underlying stocks in the index is made.

While incidental to its securities activities, the Portfolio may purchase index futures as a substitute
for a comparable market position in the underlying securities. Securities index futures might be sold to protect
against a general decline in the value of securities of the type that comprise the index. Put options on futures
might be purchased to protect against declines in the market values of securities occasioned by a decline in
stock prices.

In an effort to compensate for the imperfect correlation of movements in the price of the securities
being hedged and movements in the price of the stock index futures, the Portfolio may buy or sell stock index
futures contracts in a greater or lesser dollar amount than the dollar amount of the securities being hedged if
the historical volatility of the stock index futures has been less or greater than that of the securities. Such
"over hedging" or "under hedging" may adversely affect the Portfolio's net investment results if market movements
are not as anticipated when the hedge is established.

The Portfolio will sell options on stock index futures contracts only as part of closing transactions to
terminate options positions it has purchased. No assurance can be given that such closing transactions can be
effected.

The Portfolio's use, if any, of stock index futures and options thereon will in all cases be consistent
with applicable regulatory requirements and in particular the rules and regulations of the CFTC and will be
entered into only for bona fide hedging, risk management or other portfolio management purposes. If the
Portfolio exercises an option on a futures contract it will be obligated to post initial margin (and potential
subsequent variation margin) for the resulting futures position just as it would for any position. In order to
cover its potential obligations if the Portfolio enters into futures contracts or options thereon, the Portfolio
will maintain a segregated account which will contain only liquid assets in an amount equal to the total market
value of such futures contracts less the amount of initial margin on deposit for such contracts.

For additional information about futures contracts and related options, see this Statement and the
Trust's Prospectus under "Certain Risk Factors and Investment Methods."

Borrowing. The Portfolio may borrow from banks for temporary or emergency purposes. If asset coverage
for such borrowings should decline below the required 300% as a result of market fluctuations or other reasons,
the Portfolio may be required to sell some of its portfolio holdings to reduce the debt and restore the 300%
asset coverage, even though it may be disadvantageous from an investment standpoint to sell securities at that
time. Additional information about borrowings and its risks is included in the Trust's Prospectus under "Certain
Risk Factors and Investment Methods."

Investment Policies Which May Be Changed Without Shareholder Approval. The following limitations are
applicable to the AST Alger All-Cap Growth Portfolio. These limitations are not "fundamental" restrictions and
may be changed by the Trustees without shareholder approval. The Portfolio will not:

1. Purchase securities on margin, except (I) for use of short-term credit necessary for clearance of
purchases of portfolio securities and (ii) the Portfolio may take margin deposits in connection with futures
contracts or to her permissible investments;

2. Mortgage, pledge, hypothecate or, in any manner, transfer any security owned by the Portfolio as
security for indebtedness except as may be necessary in connection with permissible borrowings or investments and
then such mortgaging, pledging or hypothecating may not exceed 33 1/3% of the Portfolio's total assets at the
time of borrowing or investment;

3. Invest in oil, gas or mineral leases.

4. Purchase securities of open-end or closed-end investment companies except in compliance with the 1940
Act.

5. The Portfolio may not invest more than 15% of the assets of the Portfolio (taken at the time of the
investments) in "illiquid securities," illiquid securities being defined to include securities subject to legal
or contractual restrictions on resale (which may include private placements), repurchase agreements maturing in
more than seven days, certain options traded over the counter that the Portfolio has purchased, securities being
used to cover options a Portfolio has written, securities for which market quotations are not readily available,
or other securities which legally or in the Sub-advisor's option may be deemed illiquid.

AST Gabelli All-Cap Value Portfolio:

Investment Objective: The investment objective of the Portfolio is to seek capital growth.

Investment Policies:

Convertible Securities. The Portfolio may invest in convertible securities when it appears to the
Portfolio's Sub-advisor that it may not be prudent to be fully invested in common stocks. In evaluating a
convertible security, the Sub-advisor places primary emphasis on the attractiveness of the underlying common
stock and the potential for capital growth through conversion. The Portfolio will normally purchase only
investment grade convertible debt securities having a rating of, or equivalent to, at least "BBB" (which
securities may have speculative characteristics) by Standard & Poor's Rating Service ("S&P") or, if unrated,
judged by the Sub-advisor to be of comparable quality. However, the Portfolio may also invest up to 25% of its
assets in more speculative convertible debt securities, provided such securities have a rating of, or equivalent
to, at least B by S&P.

Convertible securities may include corporate notes or preferred stock but are ordinarily a long-term
debt obligation of the issuer convertible at a stated exchange rate into common stock of the issuer. As with all
debt securities, the market value of convertible securities tends to decline as interest rates increase and,
conversely, to increase as interest rates decline. Convertible securities generally offer lower interest or
dividend yields than non-convertible securities of similar quality. However, when the market price of the common
stock underlying a convertible security exceeds the conversion price, the price of the convertible security tends
to reflect the value of the underlying common stock. As the market price of the underlying common stock
declines, the convertible security tends to trade increasingly on a yield basis, and thus may not depreciate to
the same extent as the underlying common stock. Convertible securities rank senior to common stocks in an
issuer's capital structure and consequently entail less risk than the issuer's common stock, although the extent
to which such risk is reduced depends in large measure upon the degree to which the convertible security sells
above its value as a fixed income security.

In selecting convertible securities for the Portfolio, the Sub-advisor relies primarily on its own
evaluation of the issuer and the potential for capital growth through conversion. It does not rely on the rating
of the security or sell the security because of a change in rating absent a change in its own evaluation of the
underlying common stock and the ability of the issuer to pay principal and interest or dividends when due without
disrupting its business goals. Interest or dividend yield is a factor only to the extent it is reasonably
consistent with prevailing rates for securities of similar quality and thereby provides a support level for the
market price of the security. The Portfolio will purchase the convertible securities of highly leveraged issuers
only when, in the judgment of the Sub-advisor, the risk of default is outweighed by the potential for capital
growth.

The issuers of debt obligations having speculative characteristics may experience difficulty in paying
principal and interest when due in the event of a downturn in the economy or unanticipated corporate
developments. The market prices of such securities may become increasingly volatile in periods of economic
uncertainty. Moreover, adverse publicity or the perceptions of investors, over which the Sub-advisor has no
control and whether or not based on Fundamental analysis, may decrease the market price and liquidity of such
investments. Although the Sub-advisor will attempt to avoid exposing the Portfolio to such risks, there is no
assurance that it will be successful or that a liquid secondary market will continue to be available for the
disposition of such securities.

Lower-rated Debt Securities. The Portfolio may invest up to 5% of its assets in low-rated and unrated
corporate debt securities (often referred to as "junk bonds"). Corporate debt securities that are either unrated
or have a predominantly speculative rating may present opportunities for significant long-term capital growth if
the ability of the issuer to repay principal and interest when due is underestimated by the market or the rating
organizations. Because of its perceived credit weakness, the issuer is generally required to pay a higher
interest rate and/or its debt securities may be selling at a significantly lower market price than the debt
securities of other issuers. If the inherent value of such securities is higher than was perceived and such
value is eventually recognized, the market value of the securities may appreciate significantly. The Sub-advisor
believes that its research on the credit and balance sheet strength of certain issuers may enable it to select a
limited number of corporate debt securities that, in certain markets, will better serve the objective of capital
growth than alternative investments in common stocks. Of course, there can be no assurance that the Sub-advisor
will be successful. In its evaluation, the Sub-advisor will not rely exclusively on ratings and the receipt of
income from these securities is only an incidental consideration.

The ratings of Moody's Investors Service, Inc. ("Moody's") and S&P generally represent the opinions of
those organizations as to the quality of the securities that they rate. Such ratings, however, are relative and
subjective, and are not absolute standards of quality. Although the Sub-advisor uses these ratings as a
criterion for the selection of securities for the Portfolio, the Sub-advisor also relies on its independent
analysis to evaluate potential investments for the Portfolio. The Portfolio does not intend to purchase debt
securities for which a liquid trading market does not exist, but there can be no assurance that such a market
will exist for the sale of such securities.

Additional information on lower-rated debt securities and their risks is included in this Statement and
the Trust's Prospectus under "Certain Risk Factors and Investment Methods." Additional information on corporate
bond ratings is included in the Appendix to this Statement.

Borrowing. The Portfolio may borrow subject to certain restrictions set forth in the Trust's Prospectus
under "Certain Risk Factors and Investment Methods" and in this Statement under "Investment Restrictions." The
Portfolio may mortgage, pledge or hypothecate up to 20% of its assets to secure permissible borrowings. Money
borrowed will be subject to interest costs, which may or may not be recovered by appreciation if securities are
purchased with the proceeds of the borrowing.

Investments in Warrants and Rights. The Portfolio may invest in warrants and rights (in addition to
those acquired in units or attached to other securities), which entitle the holder to buy equity securities at a
specific price for or at the end of a specific period of time. The value of a right or warrant may decline
because of a decline in the value of the underlying security, the passage of time, changes in interest rates or
in the dividend or other policies of the issuer whose equity underlies the warrant, a change in the perception as
to the future price of the underlying security, or any combination thereof. Additional information about
warrants and rights and their risks is included in this Statement and the Trust's Prospectus under "Certain Risk
Factors and Investment Methods."

In making such investments, the Portfolio will be subject to its diversification and other investment
restrictions, including the requirement that, except with respect to 25% of its assets, not more than 5% of its
assets may be invested in the securities of any issuer (see this Statement under "Investment Restrictions").
Because such investments are ordinarily short term in nature, they will tend to increase the Portfolio's
portfolio turnover rate, thereby increasing its brokerage and other transaction expenses. The Sub-advisor
intends to select investments of the type described that, in its view, have a reasonable prospect of capital
growth that is significant in relation to both the risk involved and the potential of available alternate
investments.

When-Issued, Delayed-Delivery and Forward Commitment Transactions. The Portfolio may enter into forward
commitments for the purchase or sale of securities, including on a "when issued" or "delayed delivery" basis, in
excess of customary settlement periods for the type of securities involved. In some cases, the obligations of
the parties under a forward commitment may be conditioned upon the occurrence of a subsequent event, such as
approval and consummation of a merger, corporate reorganization or debt restructuring (i.e., a when, as and if
issued security). When such transactions are negotiated, the price is fixed at the time of the commitment, with
payment and delivery generally taking place a month or more after the date of the commitment. While the
Portfolio will only enter into a forward commitment with the intention of actually acquiring the security, the
Portfolio may sell the security before the settlement date if it is deemed advisable. The Portfolio will
segregate with its custodian cash or liquid securities in an aggregate amount at least equal to the amount of its
outstanding forward commitments. Additional information regarding when-issued, delayed-delivery and forward
commitment transactions and their risks is included in this Statement and the Trust's Prospectus under "Certain
Risk Factors and Investment Methods."

Other Investment Companies. The Portfolio may invest up to 10% of its total assets in the securities of
other investment companies, including small business investment companies. (Not more than 5% of its total assets
may be invested in any one investment company, nor will the Portfolio purchase more than 3% of the securities of
any other investment company.) To the extent that the Portfolio invests in the securities of other investment
companies, shareholders in the Portfolio may be subject to duplicative management and administrative fees.

Options. The Portfolio may purchase or sell listed call or put options on securities as a means of
achieving additional return or of hedging the value of the Portfolio's portfolio. In addition to changes in the
price of an underlying security, other principal factors affecting the market value of a put or a call option
include supply and demand, interest rates, price volatility of the underlying security and the time remaining
until the expiration date.

The Portfolio will only write calls options if they are covered. A call option is covered if the
Portfolio owns the underlying security covered by the call or has an absolute and immediate right to acquire that
security without additional cash consideration (or for additional cash consideration if cash or other liquid
assets with a value equal to such additional consideration are segregated with the Portfolio's custodian) upon
conversion or exchange of other securities held in its portfolio. A call option is also covered if the Portfolio
holds a call on the same security as the call written where the exercise price of the call held is (1) equal to
or less than the exercise price of the call written or (2) greater than the exercise price of the call written if
cash or other liquid assets equal to the difference are segregated with the custodian. If the Portfolio writes a
put option, the Portfolio will segregate cash or other assets with a value equal to the exercise price of the
option, or will hold a put on the same security as the put written where the exercise price of the put held is
equal to or greater than the exercise price of the put written.

If the Portfolio has written an option, it may terminate its obligation by effecting a closing purchase
transaction. However, once the Portfolio has been assigned an exercise notice, the Portfolio will be unable to
effect a closing purchase transaction. Similarly, if the Portfolio is the holder of an option it may liquidate
its position by effecting a closing sale transaction. This is accomplished by selling an option of the same
series as the option previously purchased. There can be no assurance that either a closing purchase or sale
transaction can be effected when the Portfolio so desires. The Portfolio will realize a profit from a closing
sale transaction if the price of the transaction is more than the premium paid to purchase the option; the
Portfolio will realize a loss from a closing sale transaction if the price of the transaction is less than the
premium paid to purchase the option.

The Portfolio will generally purchase or write only those options for which there appears to be an
active secondary market. If, however, there is no liquid secondary market when the Sub-advisor wishes to close
out an option the Portfolio has purchased, it might not be possible to effect a closing sale transaction, so that
the Portfolio would have to exercise its options in order to realize any profit and would incur brokerage
commissions upon the exercise of call options and upon the subsequent disposition of underlying securities for
the exercise of put options. If the Portfolio, as a covered call option writer, is unable to effect a closing
purchase transaction in a secondary market, it will not be able to sell the underlying security until the option
expires or it delivers the underlying security upon exercise or otherwise covers the position.

In addition to options on securities, the Portfolio may also purchase and sell call and put options on
securities indices. The Portfolio may offset its position in stock index options prior to expiration by entering
into a closing transaction on an exchange or it may let the option it has purchased expire unexercised. The
Portfolio may write put and call options on stock indices for the purposes of increasing its gross income,
thereby partially protecting its portfolio against declines in the value of the securities it owns or increases
in the value of securities to be acquired. In addition, the Portfolio may purchase put and call options on stock
indices in order to hedge its investments against a decline in value or to attempt to reduce the risk of missing
a market or industry segment advance. While one purpose of writing such options is to generate additional income
for the Portfolio, the Portfolio recognizes that it may be required to deliver an amount of cash in excess of the
market value of a stock index at such time as an option written by the Portfolio is exercised by the holder.
Because options on securities indices require settlement in cash, the Sub-advisor may be forced to liquidate
portfolio securities to meet settlement obligations. The Portfolio will not purchase options on indexes unless
the Sub-advisor is satisfied with the development, depth and liquidity of the market and believes that the
options can be closed out.

Although the Sub-advisor will attempt to take appropriate measures to minimize the risks relating to the
Portfolio's writing of put and call options, there can be no assurance that the Portfolio will succeed in any
option-writing program it undertakes.

Additional information about options on securities and securities indices and their risks is included in
this Statement and the Trust's Prospectus under "Certain Risk Factors and Investment Methods."

Futures Contracts and Options on Futures. The Portfolio may enter into futures contracts that are
traded on a U.S. exchange or board of trade. Although the Portfolio has no current intention of using options on
futures contracts, the Portfolio may at some future date enter into such options. Investments in futures
contracts and related options will be made by the Portfolio solely for the purpose of hedging against changes in
the value of its portfolio securities or in the value of securities it intends to purchase. Such investments
will only be made if they are economically appropriate to the reduction of risks involved in the management of
the Portfolio. In this regard, the Portfolio may enter into futures contracts or options on futures relating to
securities indices or other financial instruments, including but not limited to U.S. Government securities.
Futures exchanges and trading in the United States are regulated under the Commodity Exchange Act by the
Commodity Futures Trading Commission.

Initial margin payments required in connection with futures contracts will range from approximately 1%
to 10% of the contract amount. Initial margin amounts are subject to change by the exchange or board of trade on
which the contract is traded, and brokers or members of such board of trade may charge higher amounts. At any
time prior to the expiration of a futures contract, the portfolio may elect to close the position by taking an
opposite position, which will operate to terminate the Portfolio's existing position in the contract. At
expiration, certain futures contracts, including stock and bond index futures, are settled on a net cash payment
basis rather than by the sale and delivery of the securities underlying the futures contracts.

The potential loss related to the purchase of an option on a futures contract is limited to the premium
paid for the option (plus transaction costs). There are no daily cash payments by the purchaser of an option on
a futures contract to reflect changes in the value of the underlying contract; however, the value of the option
does change daily and that change would be reflected in the net asset value of the Portfolio.

The Sub-advisor may use such instruments for the Portfolio depending upon market conditions prevailing
at the time and the perceived investment needs of the Portfolio. In the event the Portfolio enters into futures
contracts or writes related options, an amount of cash or other liquid assets equal to the market value of the
contract will be segregated with the Portfolio's custodian to collateralize the positions, thereby insuring that
the use of the contract is unleveraged.

The Sub-advisor may have difficulty selling or buying futures contracts and options when it chooses. In
addition, hedging practices may not be available, may be too costly to be used effectively, or may be unable to
be used for other reasons.

Additional information about futures contracts, options on futures contracts and their risks is included
in this Statement and the Trust's Prospectus under "Certain Risk Factors and Investment Methods."

Investment Policies Which May be Changed Without Shareholder Approval. The following limitations are
applicable to the AST Gabelli All-Cap Value Portfolio. These limitations are not Fundamental restrictions and
can be changed without shareholder approval. The Portfolio may not:

1. Purchase securities on margin, but it may obtain such short-term credits from banks as may be
necessary for the clearance of purchase and sales of securities;

2. Mortgage, pledge or hypothecate any of its assets except that, in connection with permissible
borrowings, not more than 20% of the assets of the Portfolio (not including amounts borrowed) may be used as
collateral;

3. Invest in the securities of other investment companies except in compliance with the Investment
Company Act of 1940;

4. Invest, in the aggregate, more than 15% of the value of its total assets in securities for
which market quotations are not readily available, securities that are restricted for public sale, or in
repurchase agreements maturing or terminable in more than seven days;

5. Sell securities short, except that the Portfolio may make short sales if it owns the securities
sold short or has the right to acquire such securities through conversion or exchange of other securities it
owns; or

6. Invest in companies for the purpose of exercising control.

AST Kinetics Internet Portfolio:

Investment Objective: The investment objective of the Portfolio is to seek long-term growth of capital.

Investment Policies:

The Portfolio is designed for long-term investors who understand and are willing to accept the risk of
loss involved in investing in a mutual fund seeking long-term capital growth. Except during temporary defensive
periods, the Portfolio invests at least 65% of its total assets in securities of companies that provide products
or services designed for the Internet.

Preferred Stock. Some preferred stocks in which the Portfolio may invest may be convertible into common
stock. Convertible securities are securities that may be converted into or exchanged for a specified amount of
common stock of the same or different issuer within a particular period of time at a specified price or formula.
Additional information on preferred stock is included in the Trust's Prospectus under "Certain Risk Factors and
Investment Methods."

Fixed-Income Securities. Debt purchased by the Portfolio will consist of obligations of medium-grade or
higher, having at least adequate capacity to pay interest and repay principal. Non-convertible debt obligations
will be rated BBB or higher by S&P, or Baa or higher by Moody's. Convertible debt obligations will be rated B or
higher by S&P or Moody's. See Appendix B to this Statement for a description of debt security ratings.

Medium- and lower-rated securities (BBB or Baa and lower) and non-rated securities of comparable quality
tend to be subject to wilder fluctuations in yields and market values than higher-rated securities. At no time
will the Portfolio have more than 5% of its total assets invested in fixed-income securities that are unrated or
rated below investment grade either at the time of purchase or as a result of a reduction in rating after
purchase. Except to comply with this limitation, the Portfolio is not required to dispose of debt securities
whose ratings are downgraded below the Portfolio's minimum ratings subsequent to the Portfolio's purchase of the
securities.

Additional information on fixed-income or debt securities (including lower-rated fixed income
securities) and their risks is included in this Statement and the Trust's Prospectus under "Certain Risk Factors
and Investment Methods."

Depositary Receipts. The Portfolio may invest in American Depositary Receipts ("ADRs") or other forms
of depositary receipts, such as International Depositary Receipts ("IDRs"). Investments in these types of
securities involve certain inherent risks generally associated with investments in foreign securities, including
those relating to political and economic factors, currency fluctuation, and foreign withholding taxes. A change
in the value of any foreign currency against the U.S. dollar will result in a corresponding change in the U.S.
dollar value of portfolio securities underlying an ADR that are denominated in that currency. For additional
information on depositary receipts, foreign securities generally, and their risks, see this Statement and the
Trust's Prospectus under "Certain Risk Factors and Investment Methods."

Futures Contracts. The Portfolio may purchase and sell financial futures contracts and related options
for hedging purposes and/or as a substitute for direct investment. For additional information on futures
contracts and their risks, see this Statement and the Trust's Prospectus under "Certain Risk Factors and
Investment Methods."

Options Transactions: Most mutual funds that use option strategies to hedge portfolio positions do not
depend solely on the option profit or loss to justify the use of options, because such funds also take into
account the profit or loss of the underlying securities.

Purchasing Put and Call Options. The Portfolio may purchase put and call options on securities
eligible for purchase by the Portfolio and on securities indices. Prior to exercise or expiration, the Portfolio
may sell an option through a "closing sale transaction," which is accomplished by selling an option of the same
series as the option previously purchased. The Portfolio generally will purchase only those options for which
the Sub-advisor believes there is an active secondary market to facilitate closing transactions.

The Portfolio may purchase call options to hedge against an increase in the price of securities that the
Portfolio wants ultimately to buy. Such hedge protection is provided during the life of the call option since
the Portfolio, as holder of the call option, is able to buy the underlying security at the exercise price
regardless of any increase in the underlying security's market price. In order for a call option to be
profitable, the market price of the underlying security must rise sufficiently above the exercise price to cover
the premium and transaction costs.

Writing Call Options. The Portfolio may write covered call options on securities eligible for
purchase by the Portfolio. A call option is "covered" if the Portfolio owns the security underlying the call or
has an absolute right to acquire the security without additional cash consideration (or, if additional cash
consideration is required, cash or cash equivalents in such amount are segregated with the Portfolio's
custodian).

Writing Put Options. The Portfolio may also write put options on securities eligible for
purchase by the Portfolio. If the Portfolio writes a put option, it will, at all times when the put option is
outstanding, segregate cash or other liquid assets in an amount equal to or exceeding its potential obligation
under the option, or will own an option to sell the underlying security at a price equal to or greater than the
exercise price of the put option.

A writer of an option may not effect a closing purchase transaction after it has been notified of the
exercise of the option. Effecting a closing transaction in the case of a written call option allows the cash or
proceeds from the concurrent sale of any securities subject to the option to be used for other investments of the
Portfolio.

The Portfolio realizes a gain from a closing transaction if the cost of the closing transaction is less
than the premium received from writing the option or if the proceeds from the closing transaction are more than
the premium paid to purchase the option. The Portfolio realizes a loss from a closing transaction if the cost of
the closing transaction is more than the premium received from writing the option or if the proceeds from the
closing transaction are less than the premium paid to purchase the option.

Risk Factors in Options Transactions. The successful use of options by the Portfolio depends
on the ability of the Sub-advisor to forecast correctly interest rate and market movements. For example, if the
Portfolio were to write a call option based on the Sub-advisor's expectation that the price of the underlying
security would fall, but the price were to rise instead, the Portfolio could be required to sell the security
upon exercise at a price below the current market price. Similarly, if the Portfolio were to write a put option
based on the Sub-advisor's expectation that the price of the underlying security would rise, but the price were
to fall instead, the Portfolio could be required to purchase the security upon exercise at a price higher than
the current market price.

When the Portfolio purchases an option, it runs the risk that it will lose its entire investment in the
option in a relatively short period of time, unless the Portfolio exercises the option or enters into a closing
sale transaction before the option's expiration. If the price of the underlying security does not rise (in the
case of a call) or fall (in the case of a put) to an extent sufficient to cover the option premium and
transaction costs, the Portfolio will lose part or all of its investment in the option. This contrasts with an
investment by the Portfolio in the underlying security, since the Portfolio will not realize a loss if the
security's price does not change.

The effective use of options also depends on the Portfolio's ability to terminate option positions at
times when the Sub-advisor deems it desirable to do so. There is no assurance that the Portfolio will be able to
effect closing transactions at any particular time or at an acceptable price.

A market may at times find it necessary to impose restrictions on particular types of options
transactions, such as opening transactions. For example, if an underlying security ceases to meet qualifications
imposed by the market or an options clearing corporation, new series of options on that security will no longer
be opened to replace expiring series, and opening transactions in existing series may be prohibited. If an
options market were to become illiquid, the Portfolio as a holder of an option would be able to realize profits
or limit losses only by exercising the option, and the Portfolio, as option writer, would remain obligated under
the option until expiration or exercise.

Disruptions in the markets for the securities underlying options purchased or sold by the Portfolio
could result in losses on the options. If trading is interrupted in an underlying security, the trading of
options on that security is normally halted as well. As a result, the Portfolio as purchaser or writer of an
option will be unable to close out its positions until options trading resumes, and it may be faced with
considerable losses if trading in the security reopens at a substantially different price. In addition, an
options clearing corporation or other options markets may impose exercise restrictions.

Dealer Options. The Portfolio may engage in transactions involving dealer options as well as
exchange-traded options. Certain risks are specific to dealer options. While the Portfolio might look to an
exchange's clearing corporation to exercise exchange-traded options, if the Portfolio purchases a dealer option
it must rely on the selling dealer to perform if the Portfolio exercises the option. Failure by the dealer to do
so would result in the loss of the premium paid by the Portfolio as well as loss of the expected benefit of the
transaction.

Additional information about options transactions and their risks is included in this Statement and the
Trust's Prospectus under "Certain Risk Factors and Investment Methods."

Temporary Investments. Due to the changing nature of the Internet and related companies, the national
economy and market conditions, the Portfolio may, as a temporary defensive measure, invest without limitation in
short-term debt securities and money market securities with a rating of A2-P2 or higher.

In order to have funds available for redemption and investment opportunities, the Portfolio may also
hold a portion of its assets in cash or U.S. short-term money market instruments. Certificates of deposit
purchased by the Portfolio will be those of U.S. banks having total assets at the time of purchase in excess of
$1 billion, and bankers' acceptances purchased by the Portfolio will be guaranteed by U.S. or foreign banks
having total assets at the time of purchase in excess of $1 billion. Under normal market conditions, the
Portfolio anticipates that not more than 10% of its total assets will be invested in these short-term instruments
or held in cash.

Portfolio Turnover. In order to qualify for the beneficial tax treatment afforded regulated investment
companies, and to be relieved of Federal tax liabilities, the Portfolio must distribute substantially all of its
net income to shareholders generally on an annual basis. Thus, the Portfolio may have to dispose of portfolio
securities under disadvantageous circumstances to generate cash or borrow cash in order to satisfy the
distribution requirement. The Portfolio does not trade in securities for short-term profits but, when
circumstances warrant, securities may be sold without regard to the length of time they have been held.

Investment Policies Which May Be Changed Without Shareholder Approval. The following limitations are
applicable to the AST Kinetics Internet Portfolio. The limitations are not "fundamental" restrictions and may be
changed by the Trustees without shareholder approval.

1. The Portfolio will not invest more than 15% of the value of its net assets in illiquid
securities, restricted securities, and other securities for which market quotations are not readily available.

2. The Portfolio will not purchase or sell commodities or commodity contracts, or invest in oil,
gas or mineral exploration or development programs or real estate, except that the Portfolio may purchase and
sell securities of companies that deal in oil, gas, or mineral exploration or development programs or interests
therein.

AST T. Rowe Price Natural Resources Portfolio:

Investment Objective: The investment objective of the Portfolio is to seek long-term growth of capital through
investment primarily in common stocks of companies which own or develop natural resources and other basic
commodities. Current income is not a factor in the selection of stocks for investment by the Portfolio. Total
return will consist primarily of capital appreciation (or depreciation).

Investment Policies: The Portfolio will normally have primarily all of its assets in equity securities (e.g.,
common stocks). This portion of the Portfolio's assets will be subject to all of the risks of investing in the
stock market. There is risk in all investment. The value of the portfolio securities of the Portfolio will
fluctuate based upon market conditions. Although the Portfolio seeks to reduce risk by investing in a
diversified portfolio, such diversification does not eliminate all risk. The fixed-income securities in which
the Portfolio may invest include, but are not limited to, those described below.

Commercial Paper. Short-term promissory notes issued by corporations primarily to finance short-term
credit needs. Certain notes may have floating or variable rates.

Foreign Government Securities. Issued or guaranteed by a foreign government, province, instrumentality,
political subdivision or similar unit thereof.

Savings and Loan Obligations. Negotiable certificates of deposit and other short-term debt obligations
of savings and loan associations.

Supranational Entities. The Portfolio may also invest in the securities of certain supranational
entities, such as the International Development Bank.

Debt Obligations. Although primarily all of the Portfolio's assets are invested in common stocks, the
Portfolio may invest in convertible securities, corporate debt securities and preferred stocks. See this
Statement under "Certain Risk Factors and Investment Methods," for a discussion of debt obligations.

The Portfolio's investment program permits it to purchase below investment grade securities. Since
investors generally perceive that there are greater risks associated with investment in lower quality securities,
the yields from such securities normally exceed those obtainable from higher quality securities. However, the
principal value of lower-rated securities generally will fluctuate more widely than higher quality securities.
Lower quality investments entail a higher risk of default -- that is, the nonpayment of interest and principal by
the issuer than higher quality investments. Such securities are also subject to special risks, discussed below.
Although the Portfolio seeks to reduce risk by portfolio diversification, credit analysis, and attention to
trends in the economy, industries and financial markets, such efforts will not eliminate all risk. There can, of
course, be no assurance that the Portfolio will achieve its investment objective.

Risks of Low-Rated Debt Securities. The Portfolio may invest in low quality bonds commonly referred to
as "junk bonds." Junk bonds are regarded as predominantly speculative with respect to the issuer's continuing
ability to meet principal and interest payments. Because investment in low and lower-medium quality bonds
involves greater investment risk, to the extent the Portfolio invests in such bonds, achievement of its
investment objective will be more dependent on Sub-advisor's credit analysis than would be the case if the
Portfolio was investing in higher quality bonds. For a discussion of the special risks involved in low-rated
bonds, see this Statement and the Trust's Prospectus under "Certain Risk Factors and Investment Methods."

Mortgage-Backed Securities. Mortgage-backed securities are securities representing interest in a pool
of mortgages. After purchase by the Portfolio, a security may cease to be rated or its rating may be reduced
below the minimum required for purchase by the Portfolio. Neither event will require a sale of such security by
the Portfolio. However, the Sub-advisor will consider such event in its determination of whether the Portfolio
should continue to hold the security. To the extent that the ratings given by Moody's or S&P may change as a
result of changes in such organizations or their rating systems, the Portfolio will attempt to use comparable
ratings as standards for investments in accordance with the investment policies continued in the Trust's
Prospectus. For a discussion of mortgage-backed securities and certain risks involved therein, see this
Statement and the Trust's Prospectus under "Certain Risk Factors and Investment Methods."

Collateralized Mortgage Obligations (CMOs). CMOs are obligations fully collateralized by a portfolio of
mortgages or mortgage-related securities. Payments of principal and interest on the mortgages are passed through
to the holders of the CMOs on the same schedule as they are received, although certain classes of CMOs have
priority over others with respect to the receipt of prepayments on the mortgages. Therefore, depending on the
type of CMOs in which a Portfolio invests, the investment may be subject to a greater or lesser risk of
prepayment than other types of mortgage-related securities. For an additional discussion of CMOs and certain
risks involved therein, see the Trust's Prospectus under "Certain Risk Factors and Investment Methods."

Credit Card Receivable Securities. The Portfolio may invest in asset-backed securities backed
by receivables from revolving credit card agreements ("Credit Card Receivable Securities").

Stripped Agency Mortgage-Backed Securities. Stripped Agency Mortgage-Backed securities represent
interests in a pool of mortgages, the cash flow of which has been separated into its interest and principal
components. "IOs" (interest only securities) receive the interest portion of the cash flow while "POs"
(principal only securities) receive the principal portion. Stripped Agency Mortgage-Backed Securities may be
issued by U.S. Government Agencies or by private issuers similar to those described above with respect to CMOs
and privately-issued mortgage-backed certificates. As interest rates rise and fall, the value of IOs tends to
move in the same direction as interest rates. The value of the other mortgage-backed securities described
herein, like other debt instruments, will tend to move in the opposite direction compared to interest rates.
Under the Internal Revenue Code of 1986, as amended (the "Code"), POs may generate taxable income from the
current accrual of original issue discount, without a corresponding distribution of cash to the Portfolio.

The Portfolio will treat IOs and POs, other than government-issued IOs or POs backed by fixed rate
mortgages, as illiquid securities and, accordingly, limit its investments in such securities, together with all
other illiquid securities, to 15% of the Portfolio's net assets. Sub-advisor will determine the liquidity of
these investments based on the following guidelines: the type of issuer; type of collateral, including age and
prepayment characteristics; rate of interest on coupon relative to current market rates and the effect of the
rate on the potential for prepayments; complexity of the issue's structure, including the number of tranches;
size of the issue and the number of dealers who make a market in the IO or PO. The Portfolio will treat
non-government-issued IOs and POs not backed by fixed or adjustable rate mortgages as illiquid unless and until
the SEC modifies its position.

Writing Covered Call Options. The Portfolio may write (sell) American or European style "covered" call
options and purchase options to close out options previously written by a Portfolio. In writing covered call
options, the Portfolio expects to generate additional premium income which should serve to enhance the
Portfolio's total return and reduce the effect of any price decline of the security or currency involved in the
option. Covered call options will generally be written on securities or currencies which, in Sub-advisor is
opinion, are not expected to have any major price increases or moves in the near future but which, over the long
term, are deemed to be attractive investments for the Portfolio.

The Portfolio will write only covered call options. This means that the Portfolio will own the security
or currency subject to the option or an option to purchase the same underlying security or currency, having an
exercise price equal to or less than the exercise price of the "covered" option, or will establish and maintain
with its custodian for the term of the option, an account consisting of cash, U.S. government securities or other
liquid high-grade debt obligations having a value equal to the fluctuating market value of the optioned
securities or currencies.

Portfolio securities or currencies on which call options may be written will be purchased solely on the
basis of investment considerations consistent with the Portfolio's investment objective. The writing of covered
call options is a conservative investment technique believed to involve relatively little risk (in contrast to
the writing of naked or uncovered options, which the Portfolio will not do), but capable of enhancing the
Portfolio's total return. When writing a covered call option, a Portfolio, in return for the premium, gives up
the opportunity for profit from a price increase in the underlying security or currency above the exercise price,
but conversely retains the risk of loss should the price of the security or currency decline. Unlike one who
owns securities or currencies not subject to an option, the Portfolio has no control over when it may be required
to sell the underlying securities or currencies, since it may be assigned an exercise notice at any time prior to
the expiration of its obligation as a writer. If a call option which the Portfolio has written expires, the
Portfolio will realize a gain in the amount of the premium; however, such gain may be offset by a decline in the
market value of the underlying security or currency during the option period. If the call option is exercised,
the Portfolio will realize a gain or loss from the sale of the underlying security or currency. The Portfolio
does not consider a security or currency covered by a call to be "pledged" as that term is used in the
Portfolio's policy which limits the pledging or mortgaging of its assets.

The premium received is the market value of an option. The premium the Portfolio will receive from
writing a call option will reflect, among other things, the current market price of the underlying security or
currency, the relationship of the exercise price to such market price, the historical price volatility of the
underlying security or currency, and the length of the option period. Once the decision to write a call option
has been made, Sub-advisor, in determining whether a particular call option should be written on a particular
security or currency, will consider the reasonableness of the anticipated premium and the likelihood that a
liquid secondary market will exist for those options. The premium received by the Portfolio for writing covered
call options will be recorded as a liability of the Portfolio. This liability will be adjusted daily to the
option's current market value, which will be the latest sale price at the time at which the net asset value per
share of the Portfolio is computed (close of the New York Stock Exchange), or, in the absence of such sale, the
latest asked price. The option will be terminated upon expiration of the option, the purchase of an identical
option in a closing transaction, or delivery of the underlying security or currency upon the exercise of the
option.

Writing Covered Put Options. The Portfolio may write American or European style covered put options and
purchase options to close out options previously written by the Portfolio.

The Portfolio will not commit more than 5% of its total assets to premiums when purchasing call or put
options.

Futures Contracts.

The Portfolio may not purchase or sell futures contracts or related options if, with respect to
positions which do not
qualify as bona fide hedging under applicable CFTC rules, the sum of the amounts of initial margin deposits and
premiums paid on those positions would exceed 5% of the net asset value of the Portfolio after taking into
account unrealized profits and unrealized losses on any such contracts it has entered into; provided, however,
that in the case of an option that is in-the-money at the time of purchase, the in-the-money amount may be
excluded in calculating the 5% limitation. For purposes of this policy options on futures contracts and foreign
currency options traded on a commodities exchange will be considered "related options." This policy may be
modified by the Board of Trustees of the Trust without a shareholder vote and does not limit the percentage of
the Portfolio's assets at risk to 5%.

In instances involving the purchase of futures contracts or the writing of call or put options thereon
by the Portfolio, an amount of cash, U.S. government securities or other liquid, high-grade debt obligations,
equal to the market value of the futures contracts and options thereon (less any related margin deposits), will
be identified by the Portfolio to cover the position, or alternative cover (such as owning an offsetting
position) will be employed. Assets used as cover or held in an identified account cannot be sold while the
position in the corresponding option or future is open, unless they are replaced with similar assets. As a
result, the commitment of a large portion of a Portfolio's assets to cover or identified accounts could impede
portfolio management or the Portfolio's ability to meet redemption requests or other current obligations.

Options on Futures Contracts. The Portfolio may purchase and sell options on the same types of futures
in which it may invest. As an alternative to writing or purchasing call and put options on stock index futures,
the Portfolio may write or purchase call and put options on financial indices. Such options would be used in a
manner similar to the use of options on futures contracts. From time to time, a single order to purchase or sell
futures contracts (or options thereon) may be made on behalf of the Portfolio and other mutual funds or
portfolios of mutual funds managed by the Sub-advisor or T. Rowe Price International, Inc. Such aggregated
orders would be allocated among such portfolios in a fair and non-discriminatory manner.

See this Statement and Trust's Prospectus under "Certain Risk Factors and Investment Methods" for a
description of certain risks in options and future contracts.

Foreign Securities. The Portfolio may invest in U.S. dollar-denominated and non-U.S. dollar-denominated
securities of foreign issuers. There are special risks in foreign investing. Certain of these risks are
inherent in any international mutual fund while others relate more to the countries in which the Portfolio will
invest. Many of the risks are more pronounced for investments in developing or emerging countries, such as many
of the countries of Southeast Asia, Latin America, Eastern Europe and the Middle East. For an additional
discussion of certain risks involved in investing in foreign securities, see this Statement and the Trust's
Prospectus under "Certain Risk Factors and Investment Methods."

The Portfolio may enter into forward contracts for any other purpose consistent with the Portfolio's
investment objective and policies. However, the Portfolio will not enter into a forward contract, or maintain
exposure to any such contract(s), if the amount of foreign currency required to be delivered thereunder would
exceed the Portfolio's holdings of liquid, high-grade debt securities and currency available for cover of the
forward contract(s). In determining the amount to be delivered under a contract, the Portfolio may net
offsetting positions.

The Portfolio's dealing in forward foreign currency exchange contracts will generally be limited to the
transactions described above. However, the Portfolio reserves the right to enter into forward foreign currency
contracts for different purposes and under different circumstances. Of course, the Portfolio is not required to
enter into forward contracts with regard to its foreign currency-denominated securities and will not do so unless
deemed appropriate by the Sub-advisor. It also should be realized that this method of hedging against a decline
in the value of a currency does not eliminate fluctuations in the underlying prices of the securities. It simply
establishes a rate of exchange at a future date. Additionally, although such contracts tend to minimize the risk
of loss due to a decline in the value of the hedged currency, at the same time, they tend to limit any potential
gain which might result from an increase in the value of that currency.

Hybrid Instruments. Hybrid Instruments have been developed and combine the elements of futures
contracts, options or other financial instruments with those of debt, preferred equity or a depositary
instrument (hereinafter "Hybrid Instruments. Hybrid Instruments may take a variety of forms, including, but not
limited to, debt instruments with interest or principal payments or redemption terms determined by reference to
the value of a currency or commodity or securities index at a future point in time, preferred stock with dividend
rates determined by reference to the value of a currency, or convertible securities with the conversion terms
related to a particular commodity. For a discussion of certain risks involved in investing in hybrid instruments
see this statement under "Certain Risk Factors and Investment Methods."

Reverse Repurchase Agreements. Although the Portfolio has no current intention, in the foreseeable
future, of engaging in reverse repurchase agreements, the Portfolio reserves the right to do so. Reverse
repurchase agreements are ordinary repurchase agreements in which a Portfolio is the seller of, rather than the
investor in, securities, and agrees to repurchase them at an agreed upon time and price. Use of a reverse
repurchase agreement may be preferable to a regular sale and later repurchase of the securities because it avoids
certain market risks and transaction costs. A reverse repurchase agreement may be viewed as a type of borrowing
by the Portfolio.

Warrants. The Portfolio may acquire warrants. For a discussion of certain risks involved therein, see
this Statement under "Certain Risk Factor and Investment Methods."

Lending of Portfolio Securities. Securities loans are made to broker-dealers or institutional investors
or other persons, pursuant to agreements requiring that the loans be continuously secured by collateral at least
equal at all times to the value of the securities lent, marked to market on a daily basis. The collateral
received will consist of cash or U.S. government securities. While the securities are being lent, the Portfolio
will continue to receive the equivalent of the interest or dividends paid by the issuer on the securities, as
well as interest on the investment of the collateral or a fee from the borrower. The Portfolio has a right to
call each loan and obtain the securities on three business days' notice or, in connection with securities trading
on foreign markets, within such longer period of time which coincides with the normal settlement period for
purchases and sales of such securities in such foreign markets. The Portfolio will not have the right to vote
securities while they are being lent, but it will call a loan in anticipation of any important vote. The risks
in lending portfolio securities, as with other extensions of secured credit, consist of possible delay in
receiving additional collateral or in the recovery of the securities or possible loss of rights in the collateral
should the borrower fail financially.

Other Lending/Borrowing. Subject to approval by the SEC and certain state regulatory agencies, the
Portfolio may make loans to, or borrow funds from, other mutual funds sponsored or advised by the Sub-advisor or
T. Rowe Price International, Inc. The Portfolio has no current intention of engaging in these practices at this
time.

When-Issued Securities and Forward Commitment Contracts. The Portfolio may purchase securities on a
"when-issued" or delayed delivery basis and may purchase securities on a forward commitment basis. Any or all of
the Portfolio's investments in debt securities may be in the form of when-issueds and forwards. The price of
such securities, which may be expressed in yield terms, is fixed at the time the commitment to purchase is made,
but delivery and payment take place at a later date. Normally, the settlement date occurs within 90 days of the
purchase for when-issueds, but may be substantially longer for forwards. The Portfolio will cover its
commitments with respect to these securities by maintaining cash and/or liquid, high-grade debt securities with
its custodian bank equal in value to these commitments during the time between the purchase and the settlement.
Such segregated securities either will mature or, if necessary, be sold on or before the settlement date. For a
discussion of these securities and the risks involved therein, see this Statement under "Certain Risk Factors and
Investment Methods."

Investment Policies Which May Be Changed Without Shareholder Approval. The following limitations are
applicable to the AST T. Rowe Price Natural Resources Portfolio. These limitations are not "fundamental"
restrictions and can be changed by the Trustees without shareholder approval. The Portfolio will not:

1. Purchase additional securities when money borrowed exceeds 5% of its total assets;

2. Invest in companies for the purpose of exercising management or control;

5. Purchase securities of open-end or closed-end investment companies except in compliance with
the 1940 Act.

8. Invest in puts, calls, straddles, spreads, or any combination thereof, except to the extent
permitted by the Trust's Prospectus and this Statement;

9. Effect short sales of securities; or

AST Alliance Growth Portfolio:

Investment Objective: The Portfolio's investment objective is to seek long-term growth of capital by investing
predominantly in the equity securities (common stocks, securities convertible into common stocks and rights and
warrants to subscribe for or purchase common stocks) of a limited number of large, carefully selected,
high-quality U.S. companies that, in the judgment of the Portfolio's Sub-advisor, are likely to achieve superior
earnings growth.

Investment Policies:

The Sub-advisor's research staff generally follows a primary research universe of approximately 500
companies that are considered by the Sub-advisor to have strong management, superior industry positions,
excellent balance sheets and the ability to demonstrate superior earnings growth. As one of the largest
multi-national investment firms, the Sub-advisor has access to considerable information concerning all of the
companies followed, an in-depth understanding of the products, services, markets and competition of these
companies and a good knowledge of the managements of most of the companies in its research universe.

The Sub-advisor's analysts prepare their own earnings estimates and financial models for each company
followed. While each analyst has responsibility for following companies in one or more identified sectors and/or
industries, the lateral structure of the Sub-advisor's research organization and constant communication among the
analysts result in decision-making based on the relative attractiveness of stocks among industry sectors. The
focus during this process is on the early recognition of change on the premise that value is created through the
dynamics of changing company, industry and economic fundamentals. Research emphasis is placed on the
identification of companies whose substantially above average prospective earnings growth is not fully reflected
in current market valuations.

The Sub-advisor continually reviews its primary research universe of approximately 500 companies to
maintain a list of favored securities, the "Alliance 100," considered by the Sub-advisor to have the most clearly
superior earnings potential and valuation attraction. The Sub-advisor's concentration on a limited universe of
companies allows it to devote its extensive resources to constant intensive research of these companies.
Companies are constantly added to and deleted from the Alliance 100 as their fundamentals and valuations change.
The Sub-advisor's Large Cap Growth Group, in turn, further refines, on a weekly basis, the selection process for
the Portfolio with each portfolio manager in the Group selecting 25 such companies that appear to the manager
most attractive at current prices. These individual ratings are then aggregated and ranked to produce a
composite list of the 25 most highly regarded stocks, the "Favored 25." Approximately 70% of the Portfolio's net
assets will usually be invested in the Favored 25 with the balance of the Portfolio's investment portfolio
consisting principally of other stocks in the Alliance 100. Portfolio emphasis upon particular industries or
sectors is a by-product of the stock selection process rather than the result of assigned targets or ranges.

The Sub-advisor expects the average weighted market capitalization of companies represented in the
Portfolio (i.e., the number of a company's shares outstanding multiplied by the price per share) to normally be
in the range of or exceed the average weighted market capitalization of companies comprising the Standard &
Poor's 500 Composite Stock Price Index, a widely recognized unmanaged index of market activity based upon the
aggregate performance of a selected portfolio of publicly traded stocks, including monthly adjustments to reflect
the reinvestment of dividends and distributions. Investments will be made upon their potential for capital
appreciation.

Convertible Securities. The Portfolio may invest in convertible securities, which are convertible at a
stated exchange rate into common stock. Prior to their conversion, convertible securities have the same general
characteristics as non-convertible debt securities, as they provide a stable stream of income with generally
higher yields than those of equity securities of the same or similar issuers. As with all debt securities, the
market value of convertible securities tends to decline as interest rates increase and, conversely, to increase
as interest rates decline. Convertible securities generally offer lower interest or dividend yields than
non-convertible debt securities of similar quality. However, when the market price of the common stock
underlying a convertible security increases, the price of the convertible security increasingly reflects the
value of the underlying common stock and may rise accordingly. As the market price of the underlying common
stock declines, the convertible security tends to trade increasingly on a yield basis, and thus may not
depreciate to the same extent as the underlying common stock. Convertible securities rank senior to common
stocks on an issuer's capital structure. They are consequently of higher quality and entail less risk than the
issuer's common stock, although the extent to which such risk is reduced depends in large measure upon the degree
to which the convertible security sells above its value as a fixed income security. The Portfolio may invest up
to 20% of its net assets in the convertible securities of companies whose common stocks are eligible for purchase
by the Portfolio under the investment policies described above. Additional information about convertible
securities is included in the Trust's Prospectus under "Certain Risk Factors and Investment Methods."

Rights and Warrants. The Portfolio may invest up to 5% of its net assets in rights or warrants, but
will do so only if the equity securities themselves are deemed appropriate by the Sub-advisor for inclusion in
the Portfolio. Rights and warrants may be more speculative than certain other types of investments in that they
do not entitle a holder to dividends or voting rights with respect to the securities which may be purchased nor
do they represent any rights in the assets of the issuing company. Also, the value of a right or warrant does
not necessarily change with the value of the underlying securities. Additional information about warrants is
included in the Trust's Prospectus under "Certain Risk Factors and Investment Methods."

Foreign Securities. The Portfolio may invest up to 15% of the value of its total assets in securities
of foreign issuers whose common stocks are eligible for purchase by the Portfolio under the investment policies
described above. For purposes of the Portfolio, a non-U.S. company is a company that (i) is organized outside the
United States, (ii) has its principal place of business outside the United States, and (iii) issues securities
that are traded principally in foreign countries. Companies that do not fall within this definition are deemed
to be U.S. companies. Additional information about foreign securities and their risks is included in this
Statement and the Trust's Prospectus under "Certain Risk Factors and Investment Methods."

Options and Futures:

While the Portfolio does not anticipate utilizing them on a regular basis, the Portfolio may from time
to time may engage in options and futures transactions as described below. Additional information about option,
futures and their risks is included in this Statement and the Trust's Prospectus under "Certain Risk Factors and
Investment Methods."

Options on Securities. The Portfolio may write exchange-traded call options on common stocks, and may
purchase and sell exchange-traded call and put options on common stocks written by others or combinations
thereof. The Portfolio will not write put options.

Generally, the opportunity for profit from the writing of options is higher, and consequently the risks
are greater, when the stocks involved are lower priced or volatile, or both. While an option that has been
written is in force, the maximum profit that may be derived from the optioned stock is the premium less brokerage
commissions and fees. The Portfolio will not write a call unless the Portfolio at all times during the option
period owns either (a) the optioned securities or has an absolute and immediate right to acquire that security
without additional cash consideration (or for additional cash consideration held in a segregated account by its
custodian) upon conversion or exchange of other securities held in its portfolio or (b) a call option on the same
security and in the same principal amount as the call written where the exercise price of the call held (i) is
equal to or less than the exercise price of the call written or (ii) is greater than the exercise price of the
call written if the difference is maintained by the Portfolio in liquid assets in a segregated account with its
Custodian.

Premiums received by the Portfolio in connection with writing call options will vary widely.
Commissions, stock transfer taxes and other expenses of the Portfolio must be deducted from such premium
receipts. Calls written by the Portfolio will ordinarily be sold either on a national securities exchange or
through put and call dealers, most, if not all, of whom are members of a national securities exchange on which
options are traded, and will be endorsed or guaranteed by a member of a national securities exchange or qualified
broker-dealer, which may be Sanford C. Bernstein & Company, LLC, an affiliate of the Sub-advisor. The endorsing
or guaranteeing firm requires that the option writer (in this case the Portfolio) maintain a margin account
containing either corresponding stock or other equity as required by the endorsing or guaranteeing firm.

The Portfolio will not sell a call option written by it if, as a result of the sale, the aggregate of
the Portfolio's portfolio securities subject to outstanding call options (valued at the lower of the option price
or market value of such securities) would exceed 15% of the Portfolio's total assets.

The Portfolio may purchase or write options on securities of the types in which it is permitted to
invest in privately negotiated (i.e., over-the-counter) transactions. The Sub-advisor has adopted procedures for
monitoring the creditworthiness of financial institutions with which over-the-counter options transactions are
effected.

In buying a call, the Portfolio would be in a position to realize a gain if, during the option period,
the price of the shares increased by an amount in excess of the premium paid and commissions payable on
exercise. It would realize a loss if the price of the security declined or remained the same or did not increase
during the period by more than the amount of the premium and commissions payable on exercise. In buying a put,
the Portfolio would realize a loss if the price of the security increased or remained the same or did not
decrease during that period by more than the amount of the premium and commissions payable on exercise. In
addition, the Portfolio could realize a gain or loss on such options by selling them.

The aggregate cost of all outstanding options purchased and held by the Portfolio, including options on
market indices as described below, will at no time exceed 10% of the Portfolio's total assets.

Options on Market Indices. The Portfolio may purchase and sell exchange-traded index options. Through
the purchase of listed index options, the portfolio could achieve many of the same objectives as through the use
of options on individual securities. Price movements in the Portfolio's securities probably will not correlate
perfectly with movements in the level of the index and, therefore, the Portfolio would bear a risk of loss on
index options purchased by it if favorable price movements of the hedged portfolio securities do not equal or
exceed losses on the options or if adverse price movements of the hedged portfolio securities are greater than
gains realized from the options.

Stock Index Futures. The Portfolio may purchase and sell stock index futures contracts. A stock index
futures contract is a bilateral agreement pursuant to which two parties agree to take or make delivery of an
amount of liquid assets equal to a specified dollar amount multiplied by the difference between the stock index
value at the close of the last trading day of the contract and the price at which the futures contract is
originally struck. No physical delivery of the underlying stocks in the index is made. The Portfolio will not
purchase or sell options on stock index futures contracts.

The Portfolio may not purchase or sell a stock index future if, immediately thereafter, more than 30% of
its total assets would be hedged by stock index futures. The Portfolio may not purchase or sell a stock index
future if, immediately thereafter, the sum of the amount of margin deposits on the Portfolio's existing futures
positions would exceed 5% of the market value of the Portfolio's total assets.

Currently, stock index futures contracts can be purchased or sold with respect to the Standard & Poor's
500 Stock Index on the Chicago Mercantile Exchange, the New York Stock Exchange Composite Index on the New York
Futures Exchange and the Value Line Stock Index on the Kansas City Board of Trade. The Sub-advisor does not
believe that differences in composition of the three indices will create any differences in the price movements
of the stock index futures contracts in relation to the movements in such indices. However, such differences in
the indices may result in differences in correlation of the futures contracts with movements in the value of the
securities being hedged. The Portfolio reserves the right to purchase or sell stock index futures contracts that
may be created in the future.

The nature of initial margin in futures transactions is different from that of margin in security
transactions in that futures contract margin does not involve the borrowing of funds to finance transactions.
Rather, the initial margin is in the nature of a performance bond or good faith deposit on the contract which is
returned to the Portfolio upon termination of the futures contract, assuming all contractual obligations have
been satisfied.

There are several risks in connection with the use of stock index futures by the Portfolio as a hedging
device. One risk arises because of the imperfect correlation between movements in the price of the stock index
futures and movements in the price of the securities which are the subject of the hedge. The price of the stock
index futures may move more than or less than the price of the securities being hedged. If the price of the
stock index futures moves less than the price of the securities which are the subject of the hedge, the hedge
will not be fully effective but, if the price of the securities being hedged has moved in an unfavorable
direction, the Portfolio would be in a better position than if it had not hedged at all. If the price of the
securities being hedged has moved in a favorable direction, this advantage will be partially offset by the loss
on the index future. If the price of the future moves more than the price of the stock, the Portfolio will
experience either a loss or gain on the future which will not be completely offset by movements in the price of
the securities which are the subject of the hedge. To compensate for the imperfect correlation of movements in
the price of securities being hedged and movements in the price of the stock index futures, the Portfolio may buy
or sell stock index futures contracts in a greater dollar amount than the dollar amount of securities being
hedged if the volatility over a particular time period of the prices of such securities has been greater than the
volatility over such time period for the index, or if otherwise deemed to be appropriate by the Sub-advisor.
Conversely, the Portfolio may buy or sell fewer stock index futures contracts if the volatility over a particular
time period of the prices of the securities being hedged is less than the volatility over such time period of the
stock index, or if otherwise deemed to be appropriate by the Sub-advisor.

Where futures are purchased to hedge against a possible increase in the price of stock before the
Portfolio is able to invest its cash (or cash equivalents) in stocks (or options) in an orderly fashion, it is
possible that the market may decline instead. If the Sub-advisor then concludes not to invest in stock or
options at that time because of concern as to possible further market decline or for other reasons, the Portfolio
will realize a loss on the futures contract that is not offset by a reduction in the price of securities
purchased.

The Portfolio's Sub-advisor intends to purchase and sell futures contracts on the stock index for which
it can obtain the best price with due consideration to liquidity.

Portfolio Turnover. The Portfolio's investment policies as described above are based on the
Sub-advisor's assessment of fundamentals in the context of changing market valuations. Therefore, they may under
some conditions involve frequent purchases and sales of shares of a particular issuer as well as the replacement
of securities. The Sub-advisor expects that more of its portfolio turnover will be attributable to increases and
decreases in the size of particular portfolio positions rather than to the complete elimination of a particular
issuer's securities from the Portfolio. For more information on portfolio turnover, see this Statement and the
Trust's Prospectus under "Portfolio Turnover."

Investment Policies Which May Be Changed Without Shareholder Approval. The following limitations are
applicable to the AST Alliance Growth Portfolio. These limitations are not "fundamental" restrictions and may be
changed without shareholder approval. The Portfolio will not:

1. Invest in companies for the purpose of exercising control;

2. Purchase the securities of any other investment company or investment trust, except in
compliance with the 1940 Act;

3. Invest in interests in oil, gas or other mineral exploration or development programs, except
that it may purchase and sell securities of companies that deal in oil, gas or other mineral exploration or
development programs;

4. Make short sales of securities or purchase securities on margin except for such short-term
credits as may be necessary for the clearance of transactions;

5. Purchase illiquid securities if immediately after such investment more than 15% of the
Portfolio's net assets (taken at market value) would be so invested;

Whenever any investment restriction states a maximum percentage of the Portfolio's assets which may be invested
in any security or other asset, it is intended that such percentage be determined immediately after and as a
result of the Portfolio's acquisition of such securities or other assets. Accordingly, any later increase or
decrease in percentage beyond the specified limitation resulting from changes in values or net assets will not be
considered a violation of any such maximum.

AST MFS Growth Portfolio:

Investment Objective: The investment objective of the Portfolio is to seek to provide long-term growth of capital
and future income rather than current income.

Investment Policies:

Variable and Floating Rate Obligations. The Portfolio may invest in floating or variable rate
securities. Investments in variable or floating rate securities normally will involve industrial development or
revenue bonds which provide that the rate of interest is set as a specific percentage of a designated base rate,
such as rates on Treasury Bonds or Bills or the prime rate at a major commercial bank, and that a bondholder can
demand payment of the obligations on behalf of the Portfolio on short notice at par plus accrued interest, which
amount may be more or less than the amount of the bondholder paid for them. The maturity of floating or variable
rate obligations (including participation interests therein) is deemed to be the longer of (i) the notice period
required before the Portfolio is entitled to receive payment of the obligation upon demand or (ii) the period
remaining until the obligation's next interest rate adjustment. If not redeemed by the Portfolio through the
demand feature, the obligations mature on a specified date, which may range up to thirty years from the date of
issuance.

ADRs may be sponsored or unsponsored. A sponsored ADR is issued by a depositary which has an exclusive
relationship with the issuer of the underlying security. An unsponsored ADR may be issued by any number of U.S.
depositories. Under the terms of most sponsored arrangements, depositories agree to distribute notices of
shareholder meetings and voting instructions, and to provide shareholder communications and other information to
the ADR holders at the request of the issuer of the deposited securities. The depositary of an unsponsored ADR,
on the other hand, is under no obligation to distribute shareholder communications received from the issuer of
the deposited securities or to pass through voting rights to ADR holders in respect of the deposited securities.
The Portfolio may invest in either type of ADR. Although the U.S. investor holds a substitute receipt of
ownership rather than direct stock certificates, the use of the depositary receipts in the United Sates can
reduce costs and delays as well as potential currency exchange and other difficulties. The Portfolio may
purchase securities in local markets and direct delivery of these shares to the local depositary of an ADR agent
bank in the foreign country. Simultaneously, the ADR agents create a certificate which settles at the Portfolio's
custodian in five days. The Portfolio may also execute trades on the U.S. markets using existing ADRs. A
foreign issuer of the security underlying an ADR is generally not subject to the same reporting requirements in
the United States as a domestic issuer. Accordingly, information available to a U.S. investor will be limited to
the information the foreign issuer is required to disclose in its country and the market value of an ADR may not
reflect undisclosed material information concerning the issuer of the underlying security. ADRs may also be
subject to exchange rate risks if the underlying foreign securities are denominated in a foreign currency.

The risk also exists that an emergency situation may arise in one or more emerging markets, as a result
of which trading of securities may cease or may be substantially curtailed and prices for the Portfolio's
securities in such markets may not be readily available. The Portfolio may suspend redemption of its shares for
any period during which an emergency exists, as determined by the SEC. If market prices are not readily
available, the Portfolio's securities in the affected markets will be valued at fair value determined in good
faith by or under the direction of the Board of Trustees.

For an additional discussion of Forward Contracts see this Statement and the Trust's Prospectus under
"Certain Risk Factors and Investment Methods."

Futures Contracts. The Portfolio may purchase and sell futures contracts ("Future Contracts") on stock
indices, foreign currencies, interest rates or interest-rate related instruments, indices of foreign currencies
or commodities. The Portfolio also may purchase and sell Futures Contracts on foreign or domestic fixed income
securities or indices of such securities including municipal bond indices and any other indices of foreign or
domestic fixed income securities that may become available for trading. Such investment strategies will be used
for hedging purposes and for non-hedging purposes, subject to applicable law.

For further information on Futures Contracts, see this Statement under "Certain Risk Factors and
Investment Methods."

Options. The Portfolio may invest in the following types of options, which involves the risks described
below under the caption "Risk Factors."

Options of Futures Contracts. The Portfolio may also purchase and write options to buy or sell those
Futures Contracts in which it may invest as described above under "Futures Contracts." Such investment
strategies will be used for hedging purposes and for non-hedging purposes, subject to applicable law.

Options on Securities. The Portfolio may write (sell) covered put and call options, and purchase put
and call options, on securities.

For an additional discussion of options, see this Statement under "Certain Risk Factors and Investment
Methods."

Special Risk Factors.

Risk of Imperfect Correlation of Hedging Instruments with the Portfolio's Portfolio. The use of derivatives for
"cross hedging" purposes (such as a transaction in a Forward Contract on one currency to hedge exposure to a
different currency) may involve greater correlation risks. Consequently, the Portfolio bears the risk that the
price of the portfolio securities being hedged will not move in the same amount or direction as the underlying
index or obligation.

Short Term Instruments. The Portfolio may hold cash and invest in cash equivalents, such as short-term
U.S. Government Securities, commercial paper and bank instruments.

For more information about when-issued securities, please see this Statement under "Certain Risk Factors
and Investment Methods."

AST Marsico Capital Growth Portfolio:

Investment Objective: The investment objective of the Portfolio is to seek capital growth. Realization of income
is not an investment objective and any income realized on the Portfolio's investments, therefore, will be
incidental to the Portfolio's objective.

Investment Policies:

Futures, Options and Other Derivative Instruments. The Portfolio may enter into futures contracts on
securities, financial indices, and foreign currencies and options on such contracts, and may invest in options on
securities, financial indices and foreign currencies, forward contracts and swaps. The Portfolio will not enter
into any futures contracts or options on futures contracts if the aggregate amount of the Portfolio's commitments
under outstanding futures contract positions and options on futures contracts written by the Portfolio would
exceed the market value of the total assets of the Portfolio. The Portfolio may invest in forward currency
contracts with stated values of up to the value of the Portfolio's assets.

The Portfolio may buy or write options in privately negotiated transactions on the types of securities
and indices based on the types of securities in which the Portfolio is permitted to invest directly. The
Portfolio will effect such transactions only with investment dealers and other financial institutions (such as
commercial banks or savings and loan institutions) deemed creditworthy by the Sub-advisor, and only pursuant to
procedures adopted by the Sub-advisor for monitoring the creditworthiness of those entities. To the extent that
an option bought or written by the Portfolio in a negotiated transaction is illiquid, the value of an option
bought or the amount of the Portfolio's obligations under an option written by the Portfolio, as the case may be,
will be subject to the Portfolio's limitation on illiquid investments. In the case of illiquid options, it may
not be possible for the Portfolio to effect an offsetting transaction at a time when the Sub-advisor believes it
would be advantageous for the Portfolio to do so. For a description of these strategies and instruments and
certain risks involved therein, see this Statement and the Trust's Prospectus under "Certain Risk Factors and
Investment Methods."

Interest Rate Swaps and Purchasing and Selling Interest Rate Caps and Floors. In addition to the
strategies noted above, the Portfolio, in order to attempt to protect the value of its investments from interest
rate or currency exchange rate fluctuations, may enter into interest rate swaps and may buy or sell interest rate
caps and floors. The Portfolio expects to enter into these transactions primarily to preserve a return or spread
on a particular investment or portion of its investments. The Portfolio also may enter into these transactions
to protect against any increase in the price of securities the Portfolio may consider buying at a later date.
The Portfolio does not intend to use these transactions as speculative investments. Interest rate swaps involve
the exchange by the Portfolio with another party of their respective commitments to pay or receive interest,
e.g., an exchange of floating rate payments for fixed rate payments. The exchange commitments can involve
payments to be made in the same currency or in different currencies. The purchase of an interest rate cap
entitles the purchaser, to the extent that a specified index exceeds a predetermined interest rate, to receive
payments of interest on a contractually based principal amount from the party selling the interest rate cap. The
purchase of an interest rate floor entitles the purchaser, to the extent that a specified index falls below a
predetermined interest rate, to receive payments of interest on a contractually based principal amount from the
party selling the interest rate floor.

The Portfolio may enter into interest rate swaps, caps and floors on either an asset-based or
liability-based basis, depending upon whether it is hedging its assets or its liabilities, and will usually enter
into interest rate swaps on a net basis, i.e., the two payment streams are netted out, with the Portfolio
receiving or paying, as the case may be, only the net amount of the two payments. The net amount of the excess,
if any, of the Portfolio's obligations over its entitlements with respect to each interest rate swap will be
calculated on a daily basis and an amount of cash or other liquid assets having an aggregate net asset value at
least equal to the accrued excess will be maintained in a segregated account by the Portfolio's custodian. If
the Portfolio enters into an interest rate swap on other than a net asset basis, the Portfolio would maintain a
segregated account in the full amount accrued on a daily basis of the Portfolio's obligations with respect to the
swap. The Portfolio will not enter into any interest rate swap, cap or floor transaction unless the unsecured
senior debt or the claims-paying ability of the other party thereto is rated in one of the three highest rating
categories of at least one nationally recognized statistical rating organization at the time of entering into
such transaction. The Sub-advisor will monitor the creditworthiness of all counterparties on an ongoing basis.
If there is a default by the other party to such a transaction, the Portfolio will have contractual remedies
pursuant to the agreements related to the transaction.

The swap market has grown substantially in recent years with a large number of banks and investment
banking firms acting both as principals and as agents utilizing standardized swap documentation. The Sub-advisor
has determined that, as a result, the swap market has become relatively liquid. Caps and floors are more recent
innovations for which standardized documentation has not yet been developed and, accordingly, they are less
liquid than swaps. To the extent the Portfolio sells (i.e., writes) caps and floors, it will maintain in a
segregated account cash or other liquid assets having an aggregate net asset value at least equal to the full
amount, accrued on a daily basis, of the Portfolio's obligations with respect to any caps or floors.

There is no limit on the amount of interest rate swap transactions that may be entered into by the
Portfolio. These transactions may in some instances involve the delivery of securities or other underlying
assets by the Portfolio or its counterparty to collateralize obligations under the swap. Under the documentation
currently used in those markets, the risk of loss with respect to interest rate swaps is limited to the net
amount of the payments that the Portfolio is contractually obligated to make. If the other party to an interest
rate swap that is not collateralized defaults, the Portfolio would risk the loss of the net amount of the
payments that the Portfolio contractually is entitled to receive. The Portfolio may buy and sell (i.e., write)
caps and floors without limitation, subject to the segregated account requirement described above. For an
additional discussion of these strategies, see this Statement under "Certain Risk Factors and Investment Methods."

Reverse Repurchase Agreements. The Portfolio may enter into reverse repurchase agreements. For a
description of these investment techniques, see the Trust's Prospectus under "Certain Risk Factors and Investment
Methods."

High-Yield/High-Risk Securities. High-yield/high-risk securities (or "junk" bonds) are debt securities
rated below investment grade by the primary rating agencies such as Standard & Poor's Rating Services ("Standard
& Poor's") and Moody's Investors Service, Inc. ("Moody's"). The Portfolio will not invest more than 5% of its
total assets in high-yield/high-risk and mortgage- and asset-backed securities.

The value of lower quality securities generally is more dependent on the ability of the issuer to meet
interest and principal payments (i.e. credit risk) than is the case for higher quality securities. Conversely,
the value of higher quality securities may be more sensitive to interest rate movements than lower quality
securities. The Portfolio will not purchase debt securities rated below "CCC-" by Standard & Poor's or "Caa" by
Moody's. The Portfolio may also purchase unrated bonds of foreign and domestic issuers. For an additional
discussion of high-yield/high-risk and mortgage- and asset-backed securities, see this Statement and the Trust's
Prospectus under "Certain Risk Factors and Investment Methods."

Zero Coupon, Pay-in-Kind, and Step Coupon Bonds. The Portfolio may purchase zero coupon, pay-in-kind,
and step coupon bonds. Zero coupon bonds are debt securities that do not pay periodic interest, but are issued
at a discount from their face value. The discount approximates the total amount of interest the security will
accrue from the date of issuance to maturity. Pay-in-kind bonds normally give the issuer the option to pay cash
at a coupon payment date or give the holder of the security a similar bond with the same coupon rate and a face
value equal to the amount of the coupon payment that would have been made. Step coupon bonds begin to pay coupon
interest, or pay an increased rate of interest, at some time after they are issued. The discount at which step
coupon bonds trade depends on the time remaining until cash payments begin, prevailing interest rates, the
liquidity of the security and the perceived credit quality of the issuer. The market value of zero coupon,
pay-in-kind and step coupon bonds generally will fluctuate more in response to changes in interest rates than
will conventional interest-paying securities with comparable maturities. For an additional discussion of zero
coupon securities, see this STATEMENT under "Certain Risk Factors and Investment Methods."

Investment Policies Which May Be Changed Without Shareholder Approval. The following limitations are
applicable to the AST Marsico Capital Growth Portfolio. These limitations are not "fundamental" restrictions,
and may be changed by the Trustees without shareholder approval.

3. The Portfolio may not mortgage or pledge any securities owned or held by the Portfolio in
amounts that exceed, in the aggregate, 15% of the Portfolio's net asset value, provided that this limitation does
not apply to (i) reverse repurchase agreements; (ii) deposits of assets on margin; (iii) guaranteed positions in
futures, options, swaps or forward contracts; or (iv) the segregation of assets in connection with such contracts.

4. The Portfolio does not currently intend to purchase any securities or enter into a repurchase
agreement if, as a result, more than 15% of its net assets would be invested in repurchase agreements not
entitling the holder to payment of principal and interest within seven days and in securities that are illiquid
by virtue of legal or contractual restrictions on resale or the absence of a readily available market. The
Trustees of the Trust, or the Sub-advisor acting pursuant to authority delegated by the Trustees, may determine
that a readily available market exists for securities eligible for resale pursuant to Rule 144A under the
Securities Act of 1933, as amended, or any successor to such rule, and Section 4(2) commercial paper.
Accordingly, such securities may not be subject to the foregoing limitation.

5. The Portfolio may not invest in companies for the purpose of exercising control or management.

AST JanCap Growth Portfolio:

Investment Objective: The investment objective of the Portfolio is growth of capital in a manner consistent with
the preservation of capital. Realization of income is not a significant investment consideration and any income
realized on the Portfolio's investments, therefore, will be incidental to the Portfolio's objective.

Investment Policies:

The Portfolio may, as a fundamental policy, invest all of its assets in the securities of a single
open-end management investment company with substantially the same fundamental investment objectives, policies
and restrictions as the Portfolio subject to the prior approval of the Investment Manager. The Investment
Manager will not approve such investment unless: (a) the Investment Manager believes, on the advice of counsel,
that such investment will not have an adverse effect on the tax status of the annuity contracts and/or life
insurance policies supported by the separate accounts of the Participating Insurance Companies which purchase
shares of the Trust; (b) the Investment Manager has given prior notice to the Participating Insurance Companies
that it intends to permit such investment and has determined whether such Participating Insurance Companies
intend to redeem any shares and/or discontinue the purchase of shares because of such investment; (c) the
Trustees have determined that the fees to be paid by the Trust for administrative, accounting, custodial and
transfer agency services for the Portfolio subsequent to such an investment are appropriate, or the Trustees have
approved changes to the agreements providing such services to reflect a reduction in fees; (d) the Sub-advisor
for the Portfolio has agreed to reduce its fee by the amount of any investment advisory fees paid to the
investment manager of such open-end management investment company; and (e) shareholder approval is obtained if
required by law. The Portfolio will apply for such exemptive or other relief under the provisions of the
Investment Company Act of 1940 (the "1940 Act") and the rules thereunder as may be necessary regarding
investments in such investment companies.

Corporate Bonds and Debentures. The Portfolio may purchase corporate bonds and debentures, including
bonds rated below investment grade by the primary rating agencies. The Portfolio will not invest more than 35%
of its net assets in bonds rated below investment grade. For a discussion of lower rated securities, see this
Statement and the Trust's Prospectus under "Certain Risk Factors and Investment Methods."

Futures, Options and Other Derivative Instruments. The Portfolio may enter into futures contracts on
securities, financial indices, and foreign currencies and options on such contracts, and may invest in options on
securities, financial indices and foreign currencies, forward contracts and swaps. The Portfolio will not enter
into any futures contracts or options on futures contracts if the aggregate amount of the Portfolio's commitments
under outstanding futures contract positions and options on futures contracts written by the Portfolio would
exceed the market value of the total assets of the Portfolio. The Portfolio may invest in forward currency
contracts with stated values of up to the value of the Portfolio's assets.

The Portfolio may buy or write options in privately negotiated transactions on the types of securities
and indices based on the types of securities in which the Portfolio is permitted to invest directly. The
Portfolio will effect such transactions only with investment dealers and other financial institutions (such as
commercial banks or savings and loan institutions) deemed creditworthy by the Sub-advisor, and only pursuant to
procedures adopted by the Sub-advisor for monitoring the creditworthiness of those entities. To the extent that
an option bought or written by the Portfolio in a negotiated transaction is illiquid, the value of an option
bought or the amount of the Portfolio's obligations under an option written by the Portfolio, as the case may be,
will be subject to the Portfolio's limitation on illiquid investments. In the case of illiquid options, it may
not be possible for the Portfolio to effect an offsetting transaction at a time when the Sub-advisor believes it
would be advantageous for the Portfolio to do so. For a description of these strategies and instruments and
certain risks involved therein, see this Statement and the Trust's Prospectus under "Certain Risk Factors and
Investment Methods."

The Portfolio may enter into interest rate swaps, caps and floors on either an asset-based or
liability-based basis, depending upon whether it is hedging its assets or its liabilities, and will usually enter
into interest rate swaps on a net basis, i.e., the two payment streams are netted out, with the Portfolio
receiving or paying, as the case may be, only the net amount of the two payments. The net amount of the excess,
if any, of the Portfolio's obligations over its entitlements with respect to each interest rate swap will be
calculated on a daily basis and an amount of cash or other liquid assets having an aggregate net asset value at
least equal to the accrued excess will be maintained in a segregated account by the Portfolio's custodian. If
the Portfolio enters into an interest rate swap on other than a net basis, the Portfolio would maintain a
segregated account in the full amount accrued on a daily basis of the Portfolio's obligations with respect to the
swap. The Portfolio will not enter into any interest rate swap, cap or floor transaction unless the unsecured
senior debt or the claims-paying ability of the other party thereto is rated in one of the three highest rating
categories of at least one nationally recognized statistical rating organization at the time of entering into
such transaction. The Sub-advisor will monitor the creditworthiness of all counterparties on an ongoing basis.
If there is a default by the other party to such a transaction, the Portfolio will have contractual remedies
pursuant to the agreements related to the transaction.

The swap market has grown substantially in recent years with a large number of banks and investment
banking firms acting both as principals and as agents utilizing standardized swap documentation. The Sub-advisor
has determined that, as a result, the swap market has become relatively liquid. Caps and floors are more recent
innovations for which standardized documentation has not yet been developed and, accordingly, they are less
liquid than swaps. To the extent the Portfolio sells (i.e., writes) caps and floors, it will maintain in a
segregated account cash or other liquid assets having an aggregate net asset value at least equal to the full
amount, accrued on a daily basis, of the Portfolio's obligations with respect to any caps or floors.

There is no limit on the amount of interest rate swap transactions that may be entered into by the
Portfolio. These transactions may in some instances involve the delivery of securities or other underlying
assets by the Portfolio or its counterparty to collateralize obligations under the swap. Under the documentation
currently used in those markets, the risk of loss with respect to interest rate swaps is limited to the net
amount of the payments that the Portfolio is contractually obligated to make. If the other party to an interest
rate swap that is not collateralized defaults, the Portfolio would risk the loss of the net amount of the
payments that the Portfolio contractually is entitled to receive. The Portfolio may buy and sell (i.e., write)
caps and floors without limitation, subject to the segregated account requirement described above. For an
additional discussion of these strategies, see this Statement under "Certain Risk Factors and Investment Methods."

Investment Policies Which May Be Changed Without Shareholder Approval. The following limitations are
applicable to the AST JanCap Growth Portfolio. These limitations are not "fundamental" restrictions, and may be
changed by the Trustees without shareholder approval.

1. The Portfolio will not purchase a security if as a result, more than 15% of its net assets in
the aggregate, at market value, would be invested in securities which cannot be readily resold because of legal
or contractual restrictions on resale or for which there is no readily available market, or repurchase agreements
maturing in more than seven days or securities used as a cover for written over-the-counter options, if any. The
Trustees, or the Investment Manager or the Sub-advisor acting pursuant to authority delegated by the Trustees,
may determine that a readily available market exists for securities eligible for resale pursuant to Rule 144A
under the Securities Act of 1933, or any successor to such rule, and therefore that such securities are not
subject to the foregoing limitation.

2. The Portfolio may borrow money for temporary or emergency purposes (not for leveraging or
investment) in an amount not exceeding 25% of the value of its total assets (including the amount borrowed) less
liabilities (other than borrowings). Any borrowings that come to exceed 25% of the value of the Portfolio's
total assets by reason of a decline in net assets will be reduced within three business days to the extent
necessary to comply with the 25% limitation. Under such a circumstance, the Portfolio may have to liquidate
securities at a time when it is disadvantageous to do so. This policy shall not prohibit reverse repurchase
agreements or deposits of assets to margin or guarantee positions in futures, options, swaps or forward
contracts, or the segregation of assets in connection with such contracts.

3. The Portfolio will not enter into any futures contracts or options on futures contracts for
purposes other than bona fide hedging transactions (as defined by the CFTC) if as a result the sum of the initial
margin deposits and premium required to establish positions in futures contracts and related options that do not
fall within the definition of bona fide hedging transactions would exceed 5% of the fair market value of the
Portfolio's net assets.

4. The Portfolio will not enter into any futures contracts if the aggregate amount of the
Portfolio's commitments under outstanding futures contracts positions of the Portfolio would exceed the market
value of the total assets of the Portfolio.

5. The Portfolio will not sell securities short, unless it owns or has the right to obtain
securities equivalent in kind and amount to the securities sold short, and provided that transactions in options,
swaps and forward futures contracts are not deemed to constitute selling securities short.

6. The Portfolio will not mortgage or pledge any securities owned or held by the Portfolio in
amounts that exceed, in the aggregate, 15% of the Portfolio's net asset value, provided that this limitation does
not apply to reverse repurchase agreements or in the case of assets deposited to margin or guarantee positions in
futures, options, swaps or forward contracts or placed in a segregated account in connection with such contracts.

AST Janus Strategic Value Portfolio:

Investment Objective: The investment objective of the Portfolio is to seek long-term growth of capital.

Investment Policies:

Income-Producing Securities. Types of income producing securities that the Portfolio may purchase
include, but are not limited to, (i) variable and floating rate obligations, which are securities having interest
rates that are adjusted periodically according to a specified formula, usually with reference to some interest
rate index or market interest rate, (ii) standby commitments, which are instruments similar to puts that give the
holder the option to obligate a broker, dealer or bank to repurchase a security at a specified price, and (iii)
tender option bonds, which are relatively long-term bonds that are coupled with the agreement of a third party
(such as a broker, dealer or bank) to grant the holders of such securities the option to tender the securities to
the institution at periodic intervals. The Portfolio will purchase standby commitments, tender option bonds and
instruments with demand features primarily for the purpose of increasing the liquidity of its portfolio. The
Portfolio may also invest in inverse floaters, which are debt instruments the interest on which varies in an
inverse relationship to the interest rate on another security. If movements in interest rates are incorrectly
anticipated, the Portfolio could lose money or its net asset value could decline by the use of inverse floaters.
The Portfolio will not invest more than 5% of its assets in inverse floaters. The Portfolio may also invest in
strip bonds, which are debt securities that are stripped of their interest (usually by a financial intermediary)
after the securities are issued. The market value of these securities generally fluctuates more in response to
changes in interest rates than interest-paying securities of comparable maturity.

High-Yield/High-Risk Securities. The Portfolio may invest up to 35% of its net assets in bonds that are
rated below investment grade. The Portfolio may also invest in unrated debt securities of foreign and domestic
issuers. Unrated debt, while not necessarily of lower quality than rated securities, may not have as broad a
market. Because of the size and perceived demand of the issue, among other factors, certain municipalities may
elect not to incur the costs of obtaining a rating. The Sub-advisor will analyze the creditworthiness of the
issuer, as well as any financial institution or other party responsible for payments on the security, in
determining whether to purchase unrated municipal bonds. Unrated bonds will be included in the 35% limit unless
the Sub-advisor deems such securities to be the equivalent of investment grade securities. For a description of
these securities and a discussion of the risks involved therein, see this Statement and the Trust's Prospectus
under "Certain Risk Factors and Investment Methods."

Other. Defaulted securities require active monitoring and may, at times, require participation
in bankruptcy or receivership proceedings on behalf of the Portfolio at additional expense to the Portfolio,
which expense could be substantial.

Reverse Repurchase Agreements. The Portfolio may use reverse repurchase agreements to provide cash
to satisfy unusually heavy redemption requests or for other temporary or emergency purposes without the necessity
of selling portfolio securities, or to earn additional income on portfolio securities, such as Treasury bills or
notes. The Portfolio will enter into reverse repurchase agreements only with parties that the Sub-advisor deems
creditworthy. Using reverse repurchase agreements to earn additional income involves the risk that the interest
earned on the invested proceeds is less than the expense of the reverse repurchase agreement transaction. This
technique may also have a leveraging effect on the Portfolio, although the requirement for the Portfolio to
segregate assets in the amount of the reverse repurchase agreement minimizes this effect.

For an additional discussion of reverse repurchase agreements and their risks, see the Trust's
Prospectus under "Certain Risk Factors and Investment Methods."

Eurodollar Instruments. The Portfolio may make investments in Eurodollar instruments. Eurodollar
instruments are U.S. dollar-denominated futures contracts or options thereon that are linked to the London
Interbank Offered Rate ("LIBOR"), although foreign currency-denominated instruments are available from time to
time. Eurodollar futures contracts enable purchasers to obtain a fixed rate for the lending of funds and sellers
to obtain a fixed rate for borrowings. The Portfolio might use Eurodollar futures contracts and options thereon
to hedge against changes in LIBOR, to which many interest rate swaps and fixed-income instruments are linked.

Swaps and Swap-Related Products. The Portfolio may enter into interest rate swaps, caps and floors on
either an asset-based or liability-based basis, depending upon whether it is hedging its assets or its
liabilities, and will usually enter into interest rate swaps on a net basis (i.e., the two payment streams are
netted out, with the Portfolio receiving or paying, as the case may be, only the net amount of the two
payments). The net amount of the excess, if any, of the Portfolio's obligations over its entitlement with
respect to each interest rate swap will be calculated on a daily basis and an amount of cash or other liquid
assets having an aggregate net asset value at least equal to the accrued excess will be maintained in a
segregated account by the Portfolio's custodian. If the Portfolio enters into an interest rate swap on other
than a net basis, it would maintain a segregated account in the full amount accrued on a daily basis of its
obligations with respect to the swap. The Portfolio will not enter into any interest rate swap, cap or floor
transaction unless the unsecured senior debt or the claims-paying ability of the other party thereto is rated in
one of the three highest rating categories of at least one NRSRO at the time of entering into such transaction.
The Sub-advisor will monitor the creditworthiness of all counterparties on an ongoing basis. If there is a
default by the other party to such a transaction, the Portfolio will have contractual remedies pursuant to the
agreements related to the transaction.

The swap market has grown substantially in recent years with a large number of banks and investment
banking firms acting both as principals and as agents utilizing standardized swap documentation. The Sub-advisor
has determined that, as a result, the swap market has become relatively liquid. Caps and floors are more recent
innovations for which standardized documentation has not yet been developed and, accordingly, are less liquid
than swaps. To the extent the Portfolio sells (i.e., writes) caps and floors, it will segregate cash or other
liquid assets having an aggregate net asset value at least equal to the full amount, accrued on a daily basis, of
its obligations with respect to any caps or floors.

There is no limit on the amount of interest rate swap transactions that may be entered into by the
Portfolio. These transactions may in some instances involve the delivery of securities or other underlying
assets by the Portfolio or its counterparty to collateralize obligations under the swap. Under the documentation
currently used in those markets, the risk of loss with respect to interest rate swaps is limited to the net
amount of the payments that the Portfolio is contractually obligated to make. If the other party to an interest
rate swap that is not collateralized defaults, the Portfolio would risk the loss of the payments that it
contractually is entitled to receive. The Portfolio may buy and sell (i.e., write) caps and floors without
limitation, subject to the segregation requirement described above.

Investment Policies Which May Be Changed Without Shareholder Approval. The following limitations are
applicable to the AST Janus Strategic Value Portfolio. The limitations are not "fundamental restrictions and may
be changed by the Trustees without shareholder approval.

1. The Portfolio does not currently intend to sell securities short, unless it owns or has the right to
obtain securities equivalent in kind and amount to the securities sold short without the payment of any
additional consideration therefor, and provided that transactions in futures, options, swaps and forward
contracts are not deemed to constitute selling securities short.

2. The Portfolio does not currently intend to purchase securities on margin, except that the Portfolio may
obtain such short-term credits as are necessary for the clearance of transactions, and provided that margin
payments and other deposits in connection with transactions in futures, options, swaps and forward contracts
shall not be deemed to constitute purchasing securities on margin.

3. The Portfolio may not mortgage or pledge any securities owned or held by the Portfolio in amounts that
exceed, in the aggregate, 15% of the Portfolio's net asset value, provided that this limitation does not apply to
reverse repurchase agreements, margin and other deposits in connection with transactions in futures, options,
swaps or forward contracts, or the segregation of assets in connection with such contracts.

4. The Portfolio does not currently intend to purchase any security or enter into a repurchase agreement
if, as a result, more than 15% of its net assets would be invested in repurchase agreements not entitling the
holder to payment of principal and interest within seven days and in securities that are illiquid by virtue of
legal or contractual restrictions on resale or the absence of a readily available market. The Trustees, or the
Portfoio's Sub-advisor acting pursuant to authority delegated by the Trustees, may determine that a readily
available market exists for securities eligible for resale pursuant to Rule 144A under the Securities Act of 1933
or any successor to such rule, Section 4(2) commercial paper, and municipal lease obligations. Accordingly, such
securities may not be subject to the foregoing limitation.

5. The Portfolio may not invest in companies for the purpose of exercising control of management.

AST Alliance/Bernstein Growth + Value Portfolio:

Investment Objective: The investment objective of the Portfolio is to seek capital growth by investing
approximately 50% of its assets in growth stocks of large companies and 50% of its assets in value stocks of
large companies.

Investment Policies:

Convertible Securities. The Portfolio may invest in convertible securities, which are convertible at a
stated exchange rate into common stock. Prior to their conversion, convertible securities have the same general
characteristics as non-convertible debt securities, as they provide a stable stream of income with generally
higher yields than those of equity securities of the same or similar issuers. As with all debt securities, the
market value of convertible securities tends to decline as interest rates increase and, conversely, to increase
as interest rates decline. Convertible securities generally offer lower interest or dividend yields than
non-convertible debt securities of similar quality. However, when the market price of the common stock
underlying a convertible security increases, the price of the convertible security increasingly reflects the
value of the underlying common stock and may rise accordingly. As the market price of the underlying common
stock declines, the convertible security tends to trade increasingly on a yield basis, and thus may not
depreciate to the same extent as the underlying common stock. Convertible securities rank senior to common
stocks on an issuer's capital structure. They are consequently of higher quality and entail less risk than the
issuer's common stock, although the extent to which such risk is reduced depends in large measure upon the degree
to which the convertible security sells above its value as a fixed income security. The Portfolio may invest up
to 20% of the growth portion of its net assets in the convertible securities of companies whose common stocks are
eligible for purchase by the Portfolio under the investment policies described above. Additional information
about convertible securities is included in the Trust's Prospectus under "Certain Risk Factors and Investment
Methods."

Rights and Warrants. The Portfolio may invest up to 5% of the growth portion of its net assets in
rights or warrants, but will do so only if the equity securities themselves are deemed appropriate by the
Sub-advisor for inclusion in the Portfolio. Rights and warrants may be more speculative than certain other types
of investments in that they do not entitle a holder to dividends or voting rights with respect to the securities
which may be purchased nor do they represent any rights in the assets of the issuing company. Also, the value of
a right or warrant does not necessarily change with the value of the underlying securities. Additional
information about warrants is included in the Trust's Prospectus under "Certain Risk Factors and Investment
Methods."

Foreign Securities. The Portfolio may invest up to 15% of the value of its total assets in foreign
securities. A foreign security is a security issued by a non-U.S. company which is defined as a company that (i)
is organized outside the United States; (ii) has their principal place of business outside the United States; and
(iii) issues securities traded principally in a foreign country. Companies that do not fall within the
definition of a non-U.S. company shall be considered a U.S. company for purposes of this definition. American
Depositary Receipts (ADRs) are not considered foreign securities for the purposes of the 15% limitation on
foreign securities. Additional information about foreign securities and their risks is included in this
Statement and the Trust's Prospectus under "Certain Risk Factors and Investment Methods."

Options and Futures:

While the Portfolio does not anticipate utilizing them on a regular basis, the Portfolio may from time to time
may engage in options and futures transactions as described below. Additional information about option, futures
and their risks is included in this Statement and the Trust's Prospectus under "Certain Risk Factors and
Investment Methods."

Premiums received by the Portfolio in connection with writing call options will vary widely.
Commissions, stock transfer taxes and other expenses of the Portfolio must be deducted from such premium
receipts. Calls written by the Portfolio will ordinarily be sold either on a national securities exchange or
through put and call dealers, most, if not all, of whom are members of a national securities exchange on which
options are traded, and will be endorsed or guaranteed by a member of a national securities exchange or qualified
broker-dealer. The endorsing or guaranteeing firm requires that the option writer (in this case the Portfolio)
maintain a margin account containing either corresponding stock or other equity as required by the endorsing or
guaranteeing firm.

The aggregate cost of all outstanding options purchased and held by the Portfolio, including options on
market indices as described below, will at no time exceed 10% of the growth portion of the Portfolio's total
assets.

The Portfolio's Sub-advisor intends to purchase and sell futures contracts on the stock index for which
it can obtain the best price with due consideration to liquidity.

Portfolio Turnover. The Portfolio's investment policies as described above are based on the
Sub-advisor's assessment of fundamentals in the context of changing market valuations. Therefore, they may under
some conditions involve frequent purchases and sales of shares of a particular issuer as well as the replacement
of securities. The Sub-advisor expects that more of its portfolio turnover will be attributable to increases and
decreases in the size of particular portfolio positions rather than to the complete elimination of a particular
issuer's securities from the Portfolio. It is anticipated that the growth portion of the Portfolio may have
portfolio turnover exceeding 100%. For more information on portfolio turnover, see this Statement and the Trust's
Prospectus under "Portfolio Turnover."

Investment Policies Which May Be Changed Without Shareholder Approval. The following limitations are
applicable to the AST Alliance/Bernstein Growth + Value Portfolio. These limitations are not "fundamental"
restrictions and may be changed without shareholder approval. The Portfolio will not:

1. Invest in companies for the purpose of exercising control;

2. Purchase the securities of any other investment company or investment trust, except in
compliance with the 1940 Act;

4. Make short sales of securities or purchase securities on margin except for such short-term
credits as may be necessary for the clearance of transactions;

5. Purchase illiquid securities if immediately after such investment more than 15% of the
Portfolio's net assets (taken at market value) would be so invested;

Whenever any investment restriction states a maximum percentage of the Portfolio's assets which may be
invested in any security or other asset, it is intended that such percentage be determined immediately after and
as a result of the Portfolio's acquisition of such securities or other assets. Accordingly, any later increase
or decrease in percentage beyond the specified limitation resulting from changes in values or net assets will not
be considered a violation of any such maximum.

AST Sanford Bernstein Core Value Portfolio:

Investment Objective: The investment objective of the Portfolio is to seek long-term capital growth.

Investment Policies:

Short-Term Instruments. When the Portfolio experiences large cash inflows or anticipates substantial
redemption requests, the Portfolio may hold short-term investments for a limited time pending the purchase of
equity securities. The Portfolio's short-term instruments may consist of: (i) short-term obligations issued or
guaranteed by the U.S. government or any of its agencies or instrumentalities or by any of the states; (ii) other
short-term debt securities rated AA or higher by Standard & Poor's ("S&P") or Aa or higher by Moody's or, if
unrated, of comparable quality in the opinion of the Sub-advisor; (iii) commercial paper; (iv) bank obligations,
including negotiable certificates of deposit, time deposits and bankers' acceptances; and (v) repurchase
agreements. At the time the Portfolio invests in commercial paper, bank obligations or repurchase agreements,
the issuer or the issuer's parent must have outstanding debt rated AA or higher by S&P or Aa or higher by Moody's
or outstanding commercial paper or bank obligations rated A-1 by S&P or Prime-1 by Moody's; or, if no such
ratings are available, the instrument must be of comparable quality in the opinion of the Sub-advisor.

Certificates of Deposit and Bankers' Acceptances. Certificates of deposit are receipts issued by a
depositary institution in exchange for the deposit of funds. The issuer agrees to pay the amount deposited plus
interest to the bearer of the receipt on the date specified on the certificate. The certificate usually can be
traded in the secondary market prior to maturity. Bankers' acceptances typically arise from short-term credit
arrangements designed to enable businesses to obtain funds to finance commercial transactions. Generally, an
acceptance is a time draft drawn on a bank by an exporter or an importer to obtain a stated amount of funds to
pay for specific merchandise. The draft is then "accepted" by a bank that, in effect, unconditionally guarantees
to pay the face value of the instrument on its maturity date. The acceptance may then be held by the accepting
bank as an asset or it may be sold in the secondary market at the going rate of discount for a specific
maturity. Although maturities for acceptances can be as long as 270 days, most acceptances have maturities of
six months or less.

Commercial Paper. Commercial paper consists of short-term (usually from 1 to 270 days) unsecured
promissory notes issued by corporations in order to finance their current operations. A variable amount master
demand note (which is a type of commercial paper) represents a direct borrowing arrangement involving
periodically fluctuating rates of interest under a letter agreement between a commercial paper issuer and an
institutional lender pursuant to which the lender may determine to invest varying amounts.

U.S. Government Obligations. The Portfolio may invest in obligations issued or guaranteed by U.S.
Government agencies or instrumentalities. These obligations may or may not be backed by the "full faith and
credit" of the United States. In the case of securities not backed by the full faith and credit of the United
States, the Portfolio must look principally to the federal agency issuing or guaranteeing the obligation for
ultimate repayment, and may not be able to assert a claim against the United States itself in the event the
agency or instrumentality does not meet its commitments. Government securities in which the Portfolio may invest
that are not backed by the full faith and credit of the United States include, but are not limited to,
obligations of the Tennessee Valley Authority, the Federal Home Loan Mortgage Corporation and the U.S. Postal
Service, each of which has the right to borrow from the U.S. Treasury to meet its obligations, and obligations of
the Federal Farm Credit System and the Federal Home Loan Banks, both of whose obligations may be satisfied only
by the individual credit of the issuing agency. Securities that are backed by the full faith and credit of the
United States include obligations of the Government National Mortgage Association, the Farmers Home
Administration, and the Export-Import Bank.

Equity Investments. The Portfolio may invest in equity securities listed on any domestic securities
exchange or traded in the over-the-counter markets, including ADRs and U.S. dollar denominated securities of
foreign issuers that trade on domestic exchanges and in the over-the-counter markets.. They may or may not pay
dividends or carry voting rights. Common stock occupies the most junior position in a company's capital
structure.

Futures Contracts and Options on Futures Contracts.

Futures Contracts. The Portfolio may enter into securities index futures contracts. U.S. futures
contracts have been designed by exchanges which have been designated "contracts markets" by the CFTC, and must be
executed through a futures commission merchant, or brokerage firm, which is a member of the relevant contract
market. Futures contracts trade on a number of exchange markets, and, through their clearing corporations, the
exchanges guarantee performance of the contracts as between the clearing members of the exchange. These
investments will be made by the Portfolio solely for hedging purposes.

At the same time a futures contract is purchased or sold, the Portfolio must allocate cash or securities
as a deposit payment ("initial margin"). It is expected that the initial margin would be approximately 1 1/2% to
5% of a contract's face value. Daily thereafter, the futures contract is valued and the payment of "variation
margin" may be required, because each day the Portfolio will provide or receive cash that reflects any decline or
increase in the contract's value.

Although futures contracts by their terms call for the actual delivery or acquisition of securities, in
most cases the contractual obligation is fulfilled before the date of the contract without having to make or take
delivery of the securities. The offsetting of a contractual obligation is accomplished by buying (or selling, as
the case may be) on a commodities exchange an identical futures contract calling for delivery in the same month.
Such a transaction, which is effected through a member of an exchange, cancels the obligation to make or take
delivery of the securities. Because transactions in the futures market are made, offset or fulfilled through a
clearinghouse associated with the exchange on which the contracts are traded, the Portfolio will incur brokerage
fees when it purchases or sells futures contracts. The liquidity of the futures market depends on participants
entering into offsetting transactions rather than making or taking delivery. To the extent participants decide
to make or take delivery, liquidity in the futures market could be reduced, thus producing distortion.

In addition, futures contracts entail other risks. Nonetheless, the Sub-advisor believes that use of
such contracts in certain circumstances will benefit the Portfolio. For an additional discussion of futures
contracts and the risks involved therein, see this Statement and the Trust's Prospectus under "Certain Risk
Factors and Investment Methods."

Options on Futures Contracts. The Portfolio may use stock index futures on a continual basis to
"equitize" cash so that the Portfolio may maintain 100% equity exposure. The Portfolio will not enter into any
futures contracts or options on futures contracts if immediately thereafter the amount of margin deposits on all
the futures contracts of the Portfolio and premiums paid on outstanding options on futures contracts owned by the
Portfolio (other than those entered into for bona fide hedging purposes) would exceed 5% of the market value of
the total assets of the Portfolio.

A futures option gives the holder, in return for the premium paid, the right to buy (call) from or sell
(put) to the writer of the option a futures contract at a specified price at any time during the period of the
option. Upon exercise, the writer of the option is obligated to pay the difference between the cash value of the
futures contract and the exercise price. Like the buyer or seller of a futures contract, the holder, or writer,
of an option has the right to terminate its position prior to the scheduled expiration of the option by selling
or purchasing an option of the same series, at which time the person entering into the closing transaction will
realize a gain or loss. The Portfolio will be required to deposit initial margin and variation margin with
respect to put and call options on futures contracts written by it pursuant to brokers' requirements similar to
those described above. Net option premiums received will be included as initial margin deposits. In
anticipation of an increase in securities prices, the Portfolio may purchase call options on futures contracts as
a substitute for the purchase of futures contracts to hedge against a possible increase in the price of
securities that the Portfolio intends to purchase. Similarly, if the value of the securities held by the
Portfolio is expected to decline, the Portfolio might purchase put options or sell call options on futures
contracts rather than sell futures contracts.

Investments in futures options involve some of the same considerations that are involved in connection
with investments in futures contracts (for example, the existence of a liquid secondary market). In addition,
the purchase or sale of an option also entails the risk that changes in the value of the underlying futures
contract will not correspond to changes in the value of the option purchased. Depending on the pricing of the
option compared to either the futures contract upon which it is based, or upon the price of the securities being
hedged, an option may or may not be less risky than ownership of the futures contract or such securities. In
general, the market prices of options can be expected to be more volatile than the market prices on the
underlying futures contract. Compared to the purchase or sale of futures contracts, however, the purchase of
call or put options on futures contracts may frequently involve less potential risk to the Portfolio because the
maximum amount at risk is the premium paid for the options (plus transaction costs). The writing of an option on
a futures contact involves risks similar to those risks relating to the sale of futures contracts.

Options on Securities Indices. The Portfolio may purchase and write (sell) call and put options on
securities indices. Such options give the holder the right to receive a cash settlement during the term of the
option based upon the difference between the exercise price and the value of the index.

Options on securities indices entail certain risks. The absence of a liquid secondary market to close
out options positions on securities indices may occur, although the Portfolio generally will only purchase or
write such an option if the Sub-advisor believes the option can be closed out.

Use of options on securities indices also entails the risk that trading in such options may be
interrupted if trading in certain securities included in the index is interrupted. The Portfolio will not
purchase such options unless the Sub-advisor believes the market is sufficiently developed such that the risk of
trading in such options is no greater than the risk of trading in options on securities.

For an additional discussion of options and the risks involved therein, see this Statement and the
Trust's Prospectus under "Certain Risk Factors and Investment Methods."

Investment Policies Which May Be Changed Without Shareholder Approval. The following limitations are
not "fundamental" restrictions and may be changed by the Trustees of the Trust without shareholder approval. The
Portfolio will not:

1. Purchase any security or evidence of interest therein on margin, except that such short-term
credit as may be necessary for the clearance of purchases and sales of securities may be obtained and except that
deposits of initial deposit and variation margin may be made in connection with the purchase, ownership, holding
or sale of futures;

2. Invest for the purpose of exercising control or management;

3. Purchase securities of other investment companies except in compliance with the 1940 Act; or

4. Invest more than 15% of the Portfolio's net assets (taken at the greater of cost or market
value) in securities that are illiquid or not readily marketable, not including Rule 144A securities and
commercial paper that is sold under section 4(2) of the 1933 Act that have been determined to be liquid under
procedures established by the Board of Trustees.

AST Cohen & Steers Realty Portfolio:

Investment Objective: The investment objective of the Portfolio is to maximize total return through investment
in real estate securities.

Investment Policies:

Investment Techniques. The following sections provide expanded discussion of several of the types of
investments and investment techniques which may be used by the Portfolio.

Real Estate Investment Trusts. REITs are sometimes informally characterized as equity REITs,
mortgage REITs and hybrid REITs. An equity REIT invests primarily in the fee ownership or leasehold ownership of
land and buildings and derives its income primarily from rental income. An equity REIT may also realize capital
gains (or losses) by selling real estate properties in its portfolio that have appreciated (or depreciated) in
value. A mortgage REIT invests primarily in mortgages on real estate, which may secure construction, development
or long-term loans. A mortgage REIT generally derives its income primarily from interest payments on the credit
it has extended. A hybrid REIT combines the characteristics of equity REITs and mortgage REITs, generally by
holding both ownership interests and mortgage interests in real estate. It is anticipated, although not
required, that under normal circumstances a majority of the Portfolio's investments in REITs will consist of
equity REITs.

A REIT is not taxed on amounts distributed to shareholders if it complies with several requirements
relating to its organization, ownership, assets, and income and a requirement that it distribute to its
shareholders at least 95% of its taxable income (other than net capital gains) for each taxable year. Equity and
Mortgage REITs are dependent upon the skills of their managers and generally may not be diversified. Equity and
Mortgage REITs are also subject to heavy cash flow dependency, defaults by borrowers and self-liquidation. In
addition, Equity and Mortgage REITs could possibly fail to qualify for tax free pass-through of income under the
Internal Revenue Code of 1986, as amended (the "Code"), or to maintain their exemptions from registration under
the Investment Company Act of 1940 (the "1940 Act").

Futures Contracts. The Portfolio may purchase and sell financial futures contracts. A futures
contract is an agreement to buy or sell a specific security or financial instrument at a particular price on a
stipulated future date. Although some financial futures contracts call for making or taking delivery of the
underlying securities, in most cases these obligations are closed out before the settlement date. The closing of
a contractual obligation is accomplished by purchasing or selling an identical offsetting futures contract.
Other financial futures contracts by their terms call for cash settlements.

The Portfolio may also buy and sell index futures contracts with respect to any stock or bond index
traded on a recognized stock exchange or board of trade. An index futures contract is a contract to buy or sell
units of an index at a specified future date at a price agreed upon when the contract is made. The stock index
futures contract specifies that no delivery of the actual stocks making up the index will take place. Instead,
settlement in cash must occur upon the termination of the contract, with the settlement being the difference
between the contract price and the actual level of the stock index at the expiration of the contract.

At the time the Portfolio purchases a futures contract, an amount of cash or other liquid assets equal
to the market value of the futures contract will be deposited in a segregated account with the Portfolio's
custodian. When writing a futures contract, the Portfolio will maintain with its custodian similar liquid assets
that, when added to the amounts deposited with a futures commission merchant or broker as margin, are equal to
the market value of the instruments underlying the contract. Alternatively, the Portfolio may "cover" its
position by owning the instruments underlying the contract (or, in the case of an index futures contract, a
portfolio with a volatility substantially similar to that of the index on which the futures contract is based),
or holding a call option permitting the Portfolio to purchase the same futures contract at a price no higher than
the price of the contract written by the Portfolio (or at a higher price if the difference is maintained in
liquid assets with the Portfolio's custodian). For an additional discussion of futures contracts and the risks
associated with them, see this Statement and the Trust's Prospectus under "Certain Risk Factors and Investment
Methods."

Options on Securities and Stock Indices. The Portfolio may write covered call and put options
and purchase call and put options on securities or stock indices that are traded on United States exchanges.

An option on a security is a contract that gives the purchaser of the option, in return for the premium
paid, the right to buy a specified security (in the case of a call option) or to sell a specified security (in
the case of a put option) from or to the writer of the option at a designated price during the term of the
option. An option on a securities index gives the purchaser of the option, in return for the premium paid, the
right to receive from the seller cash equal to the difference between the closing price of the index and the
exercise price of the option. The value of the underlying securities on which options may be written at any one
time will not exceed 25% of the total assets of the Portfolio. The Portfolio will not purchase put or call
options if the aggregate premiums paid for such options would exceed 5% of its total assets at the time of
purchase.

The Portfolio may write a call or put option only if the option is "covered." A call option on a
security written by the Portfolio is covered if the Portfolio owns the underlying security covered by the call or
has an absolute and immediate right to acquire that security without additional cash consideration (or for
additional cash consideration held in a segregated account by its custodian) upon conversion or exchange of other
securities held in its portfolio. A call option on a security is also covered if the Portfolio holds a call on
the same security and in the same principal amount as the call written where the exercise price of the call held
(a) is equal to or less than the exercise price of the call written or (b) is greater than the exercise price of
the call written if the difference is maintained by the Portfolio in cash or other liquid assets in a segregated
account with its custodian. A put option on a security written by the Portfolio is "covered" if the Portfolio
maintains similar liquid assets with a value equal to the exercise price in a segregated account with its
custodian, or else holds a put on the same security and in the same principal amount as the put written where the
exercise price of the put held is equal to or greater than the exercise price of the put written.

The Portfolio will cover call options on stock indices by owning securities whose price changes, in the
opinion of the Sub-advisor are expected to be similar to those of the index, or in such other manner as may be in
accordance with the rules of the exchange on which the option is traded and applicable laws and regulations.
Nevertheless, where the Portfolio covers a call option on a stock index through ownership of securities, such
securities may not match the composition of the index. In that event, the Portfolio will not be fully covered
and could be subject to risk of loss in the event of adverse changes in the value of the index. The Portfolio
will cover put options on stock indices by segregating assets equal to the option's exercise price, or in such
other manner as may be in accordance with the rules of the exchange on which the option is traded and applicable
laws and regulations.

The Portfolio will receive a premium from writing a put or call option, which increases the Portfolio's
gross income in the event the option expires unexercised or is closed out at a profit. If the value of a
security or an index on which the Portfolio has written a call option falls or remains the same, the Portfolio
will realize a profit in the form of the premium received (less transaction costs) that could offset all or a
portion of any decline in the value of the portfolio securities being hedged. If the value of the underlying
security or index rises, however, the Portfolio will realize a loss in its call option position, which will
reduce the benefit of any unrealized appreciation in the Portfolio's stock investments. By writing a put option,
the Portfolio assumes the risk of a decline in the underlying security or index. To the extent that the price
changes of the portfolio securities being hedged correlate with changes in the value of the underlying security
or index, writing covered put options on securities or indices will increase the Portfolio's losses in the event
of a market decline, although such losses will be offset in part by the premium received for writing the option.

The Portfolio may also purchase put options to hedge its investments against a decline in value. By
purchasing a put option, the Portfolio will seek to offset a decline in the value of the portfolio securities
being hedged through appreciation of the put option. If the value of the Portfolio's investments does not
decline as anticipated, or if the value of the option does not increase, the Portfolio's loss will be limited to
the premium paid for the option plus related transaction costs. The success of this strategy will depend, in
part, on the accuracy of the correlation between the changes in value of the underlying security or index and the
changes in value of the Portfolio's security holdings being hedged.

The Portfolio may purchase call options on individual securities to hedge against an increase in the
price of securities that the Portfolio anticipates purchasing in the future. Similarly, the Portfolio may
purchase call options to attempt to reduce the risk of missing a broad market advance, or an advance in an
industry or market segment, at a time when the Portfolio holds uninvested cash or short-term debt securities
awaiting investment. When purchasing call options, the Portfolio will bear the risk of losing all or a portion
of the premium paid if the value of the underlying security or index does not rise.

There can be no assurance that a liquid market will exist when the Portfolio seeks to close out an
option position. Trading could be interrupted, for example, because of supply and demand imbalances arising from
a lack of either buyers or sellers, or the options exchange could suspend trading after the price has risen or
fallen more than the maximum specified by the exchange. Although the Portfolio may be able to offset to some
extent any adverse effects of being unable to liquidate an option position, the Portfolio may experience losses
in some cases as a result of such inability.

Foreign Currency Contracts and Currency Hedging Transaction. In order to hedge against foreign currency
exchange rate risks, the Portfolio may enter into forward foreign currency exchange contracts and foreign
currency futures contracts, as well as purchase put or call options on foreign currencies, as described below.
The Portfolio may also conduct its foreign currency exchange transactions on a spot (i.e., cash) basis at the
spot rate prevailing in the foreign currency exchange market. The Portfolio will not enter into forward foreign
currency contracts if, as a result, the Portfolio will have more than 15% of the value of its net assets
committed to the consummation of such contracts.

The Portfolio may enter into forward foreign currency exchange contracts ("forward contracts") to
attempt to minimize the risk to the Portfolio from adverse changes in the relationship between the U.S. dollar
and foreign currencies. A forward contract is an obligation to purchase or sell a specific currency for an
agreed price at a future date which is individually negotiated and privately traded by currency traders and their
customers. The Portfolio may enter into a forward contract, for example, when it enters into a contract for the
purchase or sale of a security denominated in a foreign currency in order to "lock in" the U.S. dollar price of
the security. In addition, for example, when the Portfolio believes that a foreign currency may suffer or enjoy
a substantial movement against another currency, it may enter into a forward contract to sell an amount of the
former foreign currency (or another currency which acts as a proxy for that currency) approximating the value of
some or all of the Portfolio's portfolio securities denominated in such foreign currency. This second investment
practice is generally referred to as "cross-hedging." Because in connection with the Portfolio's foreign
currency forward transactions an amount of the Portfolio's assets equal to the amount of the purchase will be
held aside or segregated to be used to pay for the commitment, the Portfolio will always have cash or other
liquid assets available sufficient to cover any commitments under these contracts or to limit any potential
risk. The segregated account will be marked-to-market on a daily basis. In addition, the Portfolio will not
enter into such forward contracts if, as a result, the Portfolio will have more than 15% of the value of its
total assets committed to such contracts. While these contracts are not presently regulated by the CFTC, the
CFTC may in the future assert authority to regulate forward contracts. In such event, the Portfolio's ability to
utilize forward contracts in the manner set forth above may be restricted. Forward contracts may limit potential
gain from a positive change in the relationship between the U.S. dollar and foreign currencies. Unanticipated
changes in currency prices may result in poorer overall performance for the Portfolio than if it had not engaged
in such contracts.

The Portfolio may purchase and write put and call options on foreign currencies for the purpose of
protecting against declines in the dollar value of foreign portfolio securities and against increases in the
dollar cost of foreign securities to be acquired. As is the case with other kinds of options, however, the
writing of an option on foreign currency will constitute only a partial hedge, up to the amount of the premium
received, and the Portfolio could be required to purchase or sell foreign currencies at disadvantageous exchange
rates, thereby incurring losses. The purchase of an option on foreign currency may constitute an effective hedge
against fluctuation in exchange rates although, in the event of rate movements adverse to the Portfolio's
position, the Portfolio may forfeit the entire amount of the premium plus related transaction costs.

The Portfolio may enter into exchange-traded contracts for the purchase or sale for future delivery of
foreign currencies ("foreign currency futures"). This investment technique will be used only to hedge against
anticipated future changes in exchange rates which otherwise might adversely affect the value of the Portfolio's
portfolio securities or adversely affect the prices of securities that the Portfolio intends to purchase at a
later date. The successful use of currency futures will usually depend on the Sub-advisor's ability to forecast
currency exchange rate movements correctly. Should exchange rates move in an unexpected manner, the Portfolio
may not achieve the anticipated benefits of foreign currency futures or may realize losses.

Short Sales. The Portfolio may enter into short sales, provided the dollar amount of short sales at any
one time would not exceed 25% of the net assets of the Portfolio, and the value of securities of any one issuer
in which the Portfolio is short would not exceed the lesser of 2% of the value of the Portfolio's net assets or
2% of the securities of any class of any issuer. The Portfolio must maintain collateral in a segregated account
consisting of cash or other liquid assets with a value equal to the current market value of the shorted
securities, which are marked to market daily. If the Portfolio owns an equal amount of such securities or
securities convertible into or exchangeable for, without payment of any further consideration, securities of the
same issuer as, and equal in amount to, the securities sold short (which sales are commonly referred to as "short
sales against the box"), the above requirements are not applicable.

Non-Diversified Status. The Portfolio is classified as a "non-diversified" investment company under the
1940 Act, which means the Portfolio is not limited by the 1940 Act in the proportion of its assets that may be
invested in the securities of a single issuer. However, the Portfolio intends conduct its operations so as to
qualify as a regulated investment company for purposes of the Code, which generally will relieve the Portfolio of
any liability for Federal income tax to the extent its earnings are distributed to shareholders. To so qualify,
among other requirements, the Portfolio will limit its investments so that, at the close of each quarter of the
taxable year, (i) not more than 25% of the market value of the Portfolio's total assets will be invested in the
securities of a single issuer, and (ii) with respect to 50% of the market value of its total assets, not more
than 5% of the market value of its total assets will be invested in the securities of a single issuer and the
Portfolio will not own more than 10% of the outstanding voting securities of a single issuer. The Portfolio's
investments in securities issued by the U.S. Government, its agencies and instrumentalities are not subject to
these limitations.

Investment Policies Which May Be Changed Without Shareholder Approval. The following limitations are
applicable to the AST Cohen & Steers Realty Portfolio. These limitations are not "fundamental" restrictions and
may be changed by the Trustees without shareholder approval. The Portfolio will not:

1. Invest in illiquid securities, as defined in the prospectus under "Investment Objective and
Policies, AST Cohen & Steers Realty Portfolio" if immediately after such investment more than 15% of the
Portfolio's net assets (taken at market value) would be invested in such securities;

2. Pledge, hypothecate, mortgage or otherwise encumber its assets, except to secure permitted
borrowings;

3. Participate on a joint or joint and several basis in any securities trading account;

4. Invest in companies for the purpose of exercising control;

5. Purchase securities of investment companies except in compliance with the 1940 Act; or

6. (a) invest in interests in oil, gas, or other mineral exploration or development programs; or
(b) purchase securities on margin, except for such short-term credits as may be necessary for the clearance of
transactions.

AST Sanford Bernstein Managed Index 500 Portfolio:

Investment Objective: The investment objective of the Portfolio is to outperform the Standard & Poor's 500
Composite Stock Price Index (the "S&P 500(R)Index") through stock selection resulting in different weightings of
common stocks relative to the index.

Investment Policies:

As a diversified fund, no more than 5% of the assets of the Portfolio may be invested in the securities
of one issuer (other than U.S. Government Securities), except that up to 25% of the Portfolio's assets may be
invested without regard to this limitation. The Portfolio will not invest more than 25% of its assets in the
securities of issuers in any one industry. In the unlikely event that the S&P 500 should concentrate to an
extent greater than that amount, the Portfolio's ability to achieve its objective may be impaired.

About the S&P 500. The Portfolio is not sponsored, endorsed, sold or promoted by Standard & Poor's, a
division of The McGraw-Hill Companies, Inc. ("S&P"). S&P makes no representation or warranty, express or
implied, to the shareholders of the Portfolio or any member of the public regarding the advisability of investing
in securities generally or in the Fund particularly or the ability of the S&P 500 to track general stock market
performance. S&P's only relationship to the Investment Manager or the Sub-advisor is a license provided to the
Investment Manager of certain trademarks and trade names of S&P and of the S&P 500 which is determined, composed
and calculated by S&P without regard to Investment Manager, Sub-advisor or the Portfolio. S&P has no obligation
to take the needs of the Investment Manager, Sub-advisor or the shareholders of the Portfolio into consideration
in determining, composing or calculating the S&P 500. S&P is not responsible for and has not participated in the
determination of the prices and amount of Portfolio's shares or the timing of the issuance or sale of the
Portfolio's shares, or in the determination or calculation of the Portfolio's net asset value. S&P has no
obligation or liability in connection with the administration, marketing or trading of the Portfolio.

S&P does not guarantee the accuracy and/or the completeness of the S&P 500 or any data included therein
and shall have no liability for any errors, omissions, or interruptions therein. S&P makes no warranty, express
or implied, as to the results to be obtained by the Portfolio, shareholders of the Portfolio, or any other person
or entity from the use of the S&P 500 or any data included therein. S&P makes no express or implied warranties
and expressly disclaims all warranties of merchantability or fitness for a particular purpose or use with respect
to the S&P 500 or any data included therein. Without limiting any of the foregoing, in no event shall S&P have
any liability for any special, punitive, indirect or consequential damages (including lost profits), even if
notified of the possibility of such damages.

Short-Term Instruments. When the Portfolio experiences large cash inflows or anticipates substantial
redemption requests, the Portfolio may hold short-term investments for a limited time pending the purchase of
equity securities. The Portfolio's short-term instruments may consist of: (i) short-term obligations issued or
guaranteed by the U.S. government or any of its agencies or instrumentalities or by any of the states; (ii) other
short-term debt securities rated AA or higher by S&P or Aa or higher by Moody's or, if unrated, of comparable
quality in the opinion of the Sub-advisor; (iii) commercial paper; (iv) bank obligations, including negotiable
certificates of deposit, time deposits and bankers' acceptances; and (v) repurchase agreements. At the time the
Portfolio invests in commercial paper, bank obligations or repurchase agreements, the issuer or the issuer's
parent must have outstanding debt rated AA or higher by S&P or Aa or higher by Moody's or outstanding commercial
paper or bank obligations rated A-1 by S&P or Prime-1 by Moody's; or, if no such ratings are available, the
instrument must be of comparable quality in the opinion of the Sub-advisor.

Certificates of Deposit and Bankers' Acceptances. Certificates of deposit are receipts issued by a
depositoy institution in exchange for the deposit of funds. The issuer agrees to pay the amount deposited plus
interest to the bearer of the receipt on the date specified on the certificate. The certificate usually can be
traded in the secondary market prior to maturity. Bankers' acceptances typically arise from short-term credit
arrangements designed to enable businesses to obtain funds to finance commercial transactions. Generally, an
acceptance is a time draft drawn on a bank by an exporter or an importer to obtain a stated amount of funds to
pay for specific merchandise. The draft is then "accepted" by a bank that, in effect, unconditionally guarantees
to pay the face value of the instrument on its maturity date. The acceptance may then be held by the accepting
bank as an asset or it may be sold in the secondary market at the going rate of discount for a specific
maturity. Although maturities for acceptances can be as long as 270 days, most acceptances have maturities of
six months or less.

Short-Term Instruments. When the Portfolio experiences large cash inflows through the sale of
securities and desirable equity securities that are consistent with the Portfolio's investment objective are
unavailable in sufficient quantities or at attractive prices, the Portfolio may hold short-term investments for a
limited time pending availability of such equity securities. Short-term instruments consist of: (i) short-term
obligations issued or guaranteed by the U.S. government or any of its agencies or instrumentalities or by any of
the states; (ii) other short-term debt securities rated AA or higher by Standard & Poor's ("S&P") or Aa or higher
by Moody's or, if unrated, of comparable quality in the opinion of the Sub-advisor; (iii) commercial paper; (iv)
bank obligations, including negotiable certificates of deposit, time deposits and bankers' acceptances; and (v)
repurchase agreements. At the time the Portfolio invests in commercial paper, bank obligations or repurchase
agreements, the issuer of the issuer's parent must have outstanding debt rated AA or higher by S&P or Aa or
higher by Moody's or outstanding commercial paper or bank obligations rated A-1 by S&P or Prime-1 by Moody's; or,
if no such ratings are available, the instrument must be of comparable quality in the opinion of the Sub-advisor.

Additional U.S. Government Obligations. The Portfolio may invest in obligations issued or guaranteed by
U.S. Government agencies or instrumentalities. These obligations may or may not be backed by the "full faith and
credit" of the United States. In the case of securities not backed by the full faith and credit of the United
States, the Portfolio must look principally to the federal agency issuing or guaranteeing the obligation for
ultimate repayment, and may not be able to assert a claim against the United States itself in the event the
agency or instrumentality does not meet its commitments. Securities in which the Portfolio may invest that are
not backed by the full faith and credit of the United States include, but are not limited to, obligations of the
Tennessee Valley Authority, the Federal Home Loan Mortgage Corporation and the U.S. Postal Service, each of which
has the right to borrow from the U.S. Treasury to meet its obligations, and obligations of the Federal Farm
Credit System and the Federal Home Loan Banks, both of whose obligations may be satisfied only by the individual
credits of each issuing agency. Securities which are backed by the full faith and credit of the United States
include obligations of the Government National Mortgage Association, the Farmers Home Administration, and the
Export-Import Bank.

Equity Investments. The Portfolio may invest in equity securities listed on any domestic securities
exchange or traded in the over-the-counter market as well as certain restricted or unlisted securities. They may
or may not pay dividends or carry voting rights. Common stock occupies the most junior position in a company's
capital structure.

Warrants. Warrants entitle the holder to buy common stock from the issuer at a specific price (the
strike price) for a specific period of time. The strike price of warrants sometimes is much lower than the
current market price of the underlying securities, yet warrants are subject to similar price fluctuations. As a
result, warrants may be more volatile investments than the underlying securities.

Warrants do not entitle the holder to dividends or voting rights with respect to the underlying
securities and do not represent any rights in the assets of the issuing company. Also, the value of the warrant
does not necessarily change with the value of the underlying securities and a warrant ceases to have value if it
is not exercised prior to the expiration date.

Convertible Securities. Convertible securities may be debt securities or preferred stocks that may be
converted into common stock or that carry the right to purchase common stock. Convertible securities entitle the
holder to exchange the securities for a specified number of shares of common stock, usually of the same company,
at specified prices within a certain period of time.

The terms of any convertible security determine its ranking in a company's capital structure. In the
case of subordinated convertible debentures, the holders' claims on assets and earnings are subordinated to the
claims of other creditors, and are senior to the claims of preferred and common shareholders. In the case of
convertible preferred stock, the holders' claims on assets and earnings are subordinated to the claims of all
creditors and are senior to the claims of common shareholders.

Futures Contracts and Options on Futures Contracts.

Futures Contracts. The Portfolio may enter into securities index futures contracts. U.S.
futures contracts have been designed by exchanges which have been designated "contracts markets" by the CFTC, and
must be executed through a futures commission merchant, or brokerage firm, which is a member of the relevant
contract market. Futures contracts trade on a number of exchange markets, and, through their clearing
corporations, the exchanges guarantee performance of the contracts as between the clearing members of the
exchange. These investments will be made by the Portfolio solely for hedging purposes. Such investments will be
made only if they are economically appropriate to the reduction of risks involved in the management of the
Portfolio. In this regard, the Portfolio may enter into futures contracts or options on futures related to the
S&P 500.

At the same time a futures contract is purchased or sold, the Portfolio must allocate cash or securities
as a deposit payment ("initial deposit"). It is expected that the initial deposit would be approximately 1 1/2%
to 5% of a contract's face value. Daily thereafter, the futures contract is valued and the payment of "variation
margin" may be required, since each day the Portfolio would provide or receive cash that reflects any decline or
increase in the contract's value.

Although futures contracts by their terms call for the actual delivery or acquisition of securities, in
most cases the contractual obligation is fulfilled before the date of the contract without having to make or take
delivery of the securities. The offsetting of a contractual obligation is accomplished by buying (or selling, as
the case may be) on a commodities exchange an identical futures contract calling for delivery in the same month.
Such a transaction, which is effected through a member of an exchange, cancels the obligation to make or take
delivery of the securities. Since all transactions in the futures market are made, offset or fulfilled through a
clearinghouse associated with the exchange on which the contracts are traded, the Portfolio will incur brokerage
fees when it purchases or sells futures contracts. The liquidity of the futures market depends on participants
entering into offsetting transactions rather than making or taking delivery. To the extent participants decide
to make or take delivery, liquidity in the futures market could be reduced, thus producing distortion.

In addition, futures contracts entail other risks. The Sub-advisor believes that use of such contracts
will benefit the Portfolio. The successful use of futures contracts, however, depends on the degree of
correlation between the futures and securities markets. In addition, successful use of futures contracts is
dependent on the Sub-advisor's ability to correctly predict movements in the securities markets and no assurance
can be given that its judgment will be correct. For an additional discussion of futures contracts and the risks
involved therein, see the Trust's Prospectus and this Statement under "Certain Risk Factors and Investment
Methods."

Options on Futures Contracts. The Portfolio may use stock index futures on a continual basis
to equitize cash so that the Portfolio may maintain 100% equity exposure. The Portfolio will not enter into any
futures contracts or options on futures contracts if immediately thereafter the amount of margin deposits on all
the futures contracts of the Portfolio and premiums paid on outstanding options on futures contracts owned by the
Portfolio (other than those entered into for bona fide hedging purposes) would exceed 5% of the market value of
the total assets of the Portfolio.

A futures option gives the holder, in return for the premium paid, the right to buy (call) from or sell
(put) to the writer of the option a futures contract at a specified price at any time during the period of the
option. Upon exercise, the writer of the option is obligated to pay the difference between the cash value of the
futures contract and the exercise price. Like the buyer or seller of a futures contract, the holder, or writer,
of an option has the right to terminate its position prior to the scheduled expiration of the option by selling
or purchasing an option of the same series, at which time the person entering into the closing transaction will
realize a gain or loss. The Portfolio will be required to deposit initial margin and variation margin with
respect to put and call options on futures contracts written by it pursuant to brokers' requirements similar to
those described above. Net option premiums received will be included as initial margin deposits. In
anticipation of a decline in interest rates, the Portfolio may purchase call options on futures contracts as a
substitute for the purchase of futures contracts to hedge against a possible increase in the price of securities
that the Portfolio intends to purchase. Similarly, if the value of the securities held by the Portfolio is
expected to decline as a result of an increase in interest rates, the Portfolio might purchase put options or
sell call options on futures contracts rather than sell futures contracts.

Investments in futures options involve some of the same considerations that are involved in connection
with investments in futures contracts (for example, the existence of a liquid secondary market). In addition,
the purchase or sale of an option also entails the risk that changes in the value of the underlying futures
contract will not correspond to changes in the value of the option purchased. Depending on the pricing of the
option compared to either the futures contract upon which it is based, or upon the price of the securities being
hedged, an option my or may not be less risky than ownership of the futures contract or such securities. In
general, the market prices of options can be expected to be more volatile than the market prices on the
underlying futures contract. Compared to the purchase or sale of futures contracts, however, the purchase of
call or put options on futures contracts may frequently involve less potential risk to the Portfolio because the
maximum amount at risk is the premium paid for the options (plus transaction costs). The writing of an option on
a futures contact involves risks similar to those risks relating to the sale of futures contracts.

For an additional discussion of options and the risks involved therein, see the Trust's Prospectus and
this Statement under "Certain Risk Factors and Investment Methods."

Investment Policies Which May Be Changed Without Shareholder Approval. The following limitations are
applicable to the AST Sanford Bernstein Managed Index 500 Portfolio. These limitations are not "fundamental'
restrictions and may be changed by the Trustees without shareholder approval. The Portfolio will not:

2. Invest for the purpose of exercising control or management;

3. Purchase securities of other investment companies except in compliance with the 1940 Act; or

AST American Century Income & Growth Portfolio:

Investment Objective: The primary investment objective of the Portfolio is to seek capital growth. Current
income is a secondary investment objective.

Investment Policies:

In general, within the restrictions outlined here and in the Trust's Prospectus, the Sub-advisor has
broad powers to decide how to invest fund assets. Investments are varied according to what is judged
advantageous under changing economic conditions. It is the Sub-advisor's intention that the Portfolio will
generally consist of domestic and foreign common stocks and equity equivalent securities. However, subject to
the specific limitations applicable to the Portfolio, the Sub-advisor may invest the assets of the Portfolio in
varying amounts in other instruments, such as those discussed below, when such a course is deemed appropriate in
order to attempt to attain its investment objective.

Senior securities that, in the opinion of the manager, are high-grade issues also may be purchased for
defensive purposes. However, so long as a sufficient number of such securities are available, the manager
intends to keep the Portfolio fully invested in stocks that meet the Portfolio's investment criteria, regardless
of the movement of stock prices generally. In most circumstances, the Portfolio's actual level of cash and cash
equivalents will be less than 10%. As noted in the Prospectus, the Sub-advisor may use S&P 500 Index futures as
a way to expose the Portfolio's cash assets to the market, while maintaining liquidity. The Sub-advisor may not
leverage the Portfolio through investment in these futures, so there should be no greater market risk to the
Portfolio than if they purchased stocks.

As a diversified fund as defined in the 1940 Act, the Portfolio will not, with respect to 75% of its
total assets, invest more than 5% of its total assets in the securities of a single issuer or purchase more than
10% of the outstanding voting securities of a single issuer. To meet federal tax requirements for qualification
as a regulated investment company, the Portfolio must limit its investments so that at the close of each quarter
of its taxable year (1) no more than 25% of its total assets are invested in the securities of a single issuer
(other than the U.S government or a regulated investment company), and (2) with respect to at least 50% of its
total assets, no more than 5% of its total assets are invested in the securities of a single issuer.

Foreign Securities. The Portfolio may invest an unlimited amount of its assets in the securities of
foreign issuers, including foreign governments, when these securities meet its standards of selection. Securities
of foreign issuers may trade in the U.S. or foreign securities markets.

Investments in foreign securities involve risks that are different from and generally greater than
investments in U.S. securities. These risks are discussed in this Statement and the Trust's Prospectus under
"Certain Risk Factors and Investment Methods." In addition, because most foreign securities are denominated in
non-U.S. currencies, the investment performance of the Portfolio could be affected by changes in foreign currency
exchange rates. Currency exchange rates can be volatile at times in response to supply and demand in the
currency exchange markets, international balances of payments, governmental intervention, speculation, and other
political and economic conditions. As discussed below, the Portfolio may purchase and sell foreign currency on a
spot basis and may engage in forward currency contracts, currency options and futures transactions for hedging or
any other lawful purpose.

In certain countries one securities broker may represent all or a significant part of the trading
volume, resulting in higher trading costs and decreased liquidity due to a lack of alternative trading partners.
In certain markets there have been times when settlements have been unable to keep pace with the volume of
securities transactions, making it difficult to conduct such transactions. Delays in clearance and settlement
could result in temporary periods when assets of the Portfolio are uninvested and no return is earned thereon.
The inability of the Portfolio to make intended security purchases due to clearance and settlement problems could
cause the Portfolio to miss attractive investment opportunities. Inability to dispose of portfolio securities
due to clearance and settlement problems could result either in losses to the Portfolio due to subsequent due to
subsequent declines in the value of the portfolio security or, if the Portfolio has entered into a contract to
sell the security, liability to the purchaser.

Evidence of securities ownership may be uncertain in many foreign countries. In many of these
countries, the most notable of which is the Russian Federation, the ultimate evidence of securities ownership is
the share register held by the issuing company or its registrar. While some companies may issue share
certificates or provide extracts of the company's share register, these are not negotiable instruments and are
not effective evidence of securities ownership. In an ownership dispute, the company's share register is
controlling. As a result, there is a risk that the Portfolio's trade details could be incorrectly or
fraudulently entered on the issuer's share register at the time of the transaction, or that the Portfolio's
ownership could thereafter be altered or deleted entirely, resulting in a loss to the Portfolio.

Depositary Receipts. The Portfolio may invest in foreign companies through American Depositary Receipts
(ADRs), European Depositary Receipts (EDRs), ordinary shares and New York shares. Additional information about
ADRs and EDRs is included in the Trust's prospectus under "Certain Risk Factors and Investment Methods."
Ordinary shares are shares of foreign issuers that are traded abroad and on a U.S. exchange. New York shares are
shares that a foreign issuer has allocated for trading in the United States. ADRs, ordinary shares, and New York
shares all may be purchased with and sold for U.S. dollars, which protects the fund from foreign settlement risks.

Forward Currency Exchange Contracts. The Portfolio may purchase and sell foreign currency either on a
spot (i.e., cash) basis and may engage in forward foreign currency exchange contracts, currency options and
futures transactions for hedging or any lawful purpose. The Portfolio will segregate on its records cash or
other liquid assets in an amount sufficient to cover its obligations under the contract.

The Sub-advisor does not intend to enter into such contracts on a regular basis. Normally,
consideration of the prospect for currency parties will be incorporated into the long-term investment decisions
made with respect to overall diversification strategies. However, the Sub-advisor believes that it is important
to have flexibility to enter into such forward contracts when it determines that the Portfolio's best interests
may be served.

At the maturity of the forward contract, the Portfolio may either sell the portfolio security and make
delivery of the foreign currency, or it may retain the security and terminate the obligation to deliver the
foreign currency by purchasing an offsetting forward contract with the same currency trader obligating the fund
to purchase, on the same maturity date, the same amount of the foreign currency.

Convertible Securities. A convertible security is a fixed income security that offers the potential for
capital appreciation through a conversion feature that enables the holder to convert the fixed income security
into a stated number of shares of common stock. As fixed income securities, convertible securities provide a
stable stream of income, with generally higher yields than common stocks. Because convertible securities offer
the potential to benefit from increases in the market price of the underlying common stock, however, they
generally offer lower yields than non-convertible securities of similar quality. Of course, like all fixed
income securities, there can be no assurance of current income because the issuers of the convertible securities
may default on their obligations. In addition, there can be no assurance of capital appreciation because the
value of the underlying common stock will fluctuate.

Unlike a convertible security that is a single security, a synthetic convertible security is comprised
of two distinct securities that together resemble convertible securities in certain respects. Synthetic
convertible securities are created by combining non-convertible bonds or preferred stocks with warrants or stock
call options. The options that will form elements of synthetic convertible securities will be listed on a
securities exchange or on the National Association of Securities Dealers Automated Quotation Systems. The two
components of a synthetic convertible security, which will be issued with respect to the same entity, generally
are not offered as a unit, and may be purchased and sold by the Portfolio at different times. Synthetic
convertible securities differ from convertible securities in certain respects, including that each component of a
synthetic convertible security has a separate market value and responds differently to market fluctuations.
Investing in synthetic convertible securities involves the risk normally involved in holding the securities
comprising the synthetic convertible security.

Additional information about convertible securities is included in the Trust's Prospectus under "Certain
Risk Factors and Investment Methods."

Short Sales "Against the Box." As discussed in the Trust's Prospectus, the Portfolio may engage in
short sales if, at the time of the short sale, the Portfolio owns or has the right to acquire securities
equivalent in kind and amount to the securities being sold short. While the short sale is maintained, the
Portfolio will segregate assets to collateralize its obligation to deliver the securities sold short in an amount
equal to the proceeds of the short sale plus an additional margin amount established by the Board of Governors of
the Federal Reserve. There will be certain additional transaction costs associated with short sales, but the
Portfolio will endeavor to offset these costs with income from the investment of the cash proceeds of short sales.

The return on a derivative security may increase or decrease, depending upon changes in the reference
index or instrument to which it relates.

There is a range of risks associated with derivative investments, including:

o the risk that the underlying security, interest rate, market index or other financial asset will not
move in the direction the portfolio manager anticipates;

o the risk that the counterparty will fail to perform its obligations.

o protect against a decline in market value of the Portfolio's securities (taking a short futures
position), or

o provide a temporary substitute for the purchase of an individual security that may be purchased in an
orderly fashion.

When-Issued and Forward Commitment Agreements. The Portfolio may sometimes purchase new issues of
securities on a when-issued or forward commitment basis in which the transaction price and yield are each fixed
at the time the commitment is made, but payment and delivery occur at a future date (typically 15 to 45 days
later).

In purchasing securities on a when-issued or forward commitment basis, the Portfolio will segregate
until the settlement date cash or other liquid assets in an amount sufficient to meet the purchase price. When
the time comes to pay for the when-issued securities, the Portfolio will meet its obligations with available
cash, through the sale of securities, or, although it would not normally expect to do so, by selling the
when-issued securities themselves (which may have a market value greater or less than the Portfolio's payment
obligation). Additional information about when-issued and forward commitment transactions is included in this
Statement and in the Trust's Prospectus under "Certain Risk Factors and Investment Methods."

Investments in Companies with Limited Operating History. The Portfolio may invest in the securities of
issuers with limiting operating history. The Sub-advisor considers an issuer to have a limited operating history
if that issuer has a record of less than three years of continuous operation. The Sub-advisor will consider
periods of capital formation, incubation, consolidation, and research and development in determining whether a
particular issuer has a record of three years of continuous operation.

Other Investment Companies. The Portfolio may invest in other mutual funds, including those advised by
the Sub-advisor, provided that the investment is consistent with the fund's investment policies and restrictions
and with the limitations of the 1940 Act. Under the 1940 Act, the Portfolio's investment in such securities,
subject to certain exceptions, currently is limited to (a) 3% of the total voting stock of any one investment
company, (b) 5% of the Portfolio's total assets with respect to any one investment company and (c) 10% of the
Portfolio's total assets in the aggregate. Such purchases will be made in the open market where no commission or
profit to a sponsor or dealer results from the purchase other than the customary brokers' commissions.
Additional information about other investment companies is included in the Trust's Prospectus under "Certain Risk
Factors and Investment Methods."

Short-Term Securities. In order to meet anticipated redemptions, to hold assets pending the purchase of
additional securities for the Portfolio, or, in some cases, for temporary defensive purposes, the Portfolio may
invest a portion of its assets in money market and other short-term securities.

Examples of those securities include:

o Securities issued or guaranteed by the U.S. government and its agencies and instrumentalities;
o Commercial Paper;
o Certificates of Deposit and Eurodollar Certificates of Deposit;
o Bankers' Acceptances;
o Short-term notes, bonds, debentures, or other debt instruments; and
o Repurchase agreements.

U.S. Government Securities. The Portfolio may invest in U.S. government securities, including bills,
notes, and bonds issued by the U.S. Treasury and securities issued or guaranteed by agencies or instrumentalities
of the U.S. government. Some U.S. government securities are supported by the direct full faith and credit pledge
of the U.S. government; others are supported by the right of the issuer to borrow from the U.S. Treasury; others,
such as securities issued by the Federal National Mortgage Association, are supported by the discretionary
authority of the U.S. government to purchase the agencies' obligations; and others are supported only by
assurance that the U.S. government will provide financial support to an instrumentality it sponsors when it is
not obligated by law to do so.

Lending of Securities. The Portfolio may lend its securities. Additional information on securities
lending and its risk is included in this Statement and the Trust's Prospectus under "Certain Risk Factors and
Investment Methods."

AST Alliance Growth and Income Portfolio:

Investment Objective: The investment objective of the Portfolio is to seek capital growth and income through
investments primarily in dividend-paying common stocks of good quality.

Investment Policies:

It is the policy of the Portfolio to seek to balance the objectives of reasonable opportunity for
capital growth and reasonable current income through investments primarily in dividend-paying common stocks of
good quality. However, it may invest whenever the economic outlook is unfavorable for common stock investments
in other types of securities, such as bonds, convertible bonds, preferred stocks, and convertible preferred
stocks.

Purchases and sales of portfolio securities are made at such times and in such amounts as deemed
advisable in light of market, economic and other conditions, irrespective of the degree of portfolio turnover.
The Portfolio engages primarily in holding securities for investment and not for trading purposes.

Covered Call Options. Subject to market conditions, the Portfolio may try to realize income by writing
covered call option contracts provided that the option is listed on a domestic securities exchange and that no
option will be written if, as a result, more than 25% of the Portfolio's assets are subject to call options. The
Sub-advisor believes that the premiums the Portfolio will receive for writing options can increase the
Portfolio's income without subjecting it to substantial risks.

A security on which an option has been written will be held in escrow by the Portfolio's custodian until
the option expires, is exercised, or a closing purchase transaction is made. The Portfolio will purchase call
options only to close out a position in an option written by it. When a security is sold from the Portfolio
against which a call option has been written, the Portfolio will effect a closing purchase transaction so as to
close out any existing call option on that security.

The premium received by the Portfolio upon writing a call option will increase the Portfolio's assets,
and a corresponding liability will be recorded and subsequently adjusted from day to day to the current value of
the option written. For example, if the current value of the option exceeds the premium received, the excess
would be an unrealized loss and, conversely, if the premium exceeds the current value, such excess would be an
unrealized gain. The current value of the option will be the last sales price on the principal exchange on which
the option is traded or, in the absence of any transactions, the mean between the closing bid and asked price.

Except as stated above, the Portfolio will not purchase or sell puts or calls or combinations thereof.

Additional information on covered call options and their risks is included in this Statement and the
Trust's Prospectus under "Certain Risk Factors and Investment Methods."

Where futures are purchased to hedge against a possible increase in the price of stock before the
Portfolio is able to invest its cash (or cash equivalents) in stocks (or options) in an orderly fashion, it is
possible that the market may decline instead. If the Portfolio then concludes not to invest in stock or options
at that time because of concern as to possible further market decline or for other reasons, the Portfolio will
realize a loss on the futures contract that is not offset by a reduction in the price of securities purchased.

The Portfolio's Sub-advisor intends to purchase and sell futures contracts on the stock index for which
it can obtain the best price with due consideration to liquidity.

For additional information regarding futures contracts and their risks, see this Statement and the
Trust's Prospectus under "Certain Risk Factors and Investment Methods."

Foreign Securities. The Portfolio may invest in foreign securities, but will not make any such
investments unless such securities are listed on a national securities exchange. The purchase of foreign
securities entails certain political and economic risks, and accordingly, the Portfolio has restricted its
investments in securities in this category to issues of high quality. Evidences of ownership of foreign
securities may be held outside of the U.S., and the Portfolio may be subject to the risks associated with the
holding of such property overseas. Additional information on foreign securities and their risks is included in
this Statement and the Trust's Prospectus under "Certain Risk Factors and Investment Methods."

Securities Ratings. The ratings of debt securities by S&P, Moody's, Duff & Phelps and Fitch are a
generally accepted barometer of credit risk. They are, however, subject to certain limitations from an
investor's standpoint. The rating of an issuer is heavily weighted by past developments and does not necessarily
reflect probable future conditions. There is frequently a lag between the time a rating is assigned and the time
it is updated. In addition, there may be varying degrees of difference in credit risk of securities within each
rating category.

A detailed description of the debt security ratings assigned by Moody's and S&P is included in Appendix
B to this Statement.

Investment Policies Which May Be Changed Without Shareholder Approval. The following limitations are
applicable to the AST Alliance Growth and Income Portfolio. These limitations are not "fundamental restrictions
and may be changed by the Trustees without shareholder approval. The Portfolio may not:

1. Purchase the securities of any other investment company except in compliance with the 1940 Act;
and

2. Sell securities short.

AST MFS Growth with Income Portfolio:

Investment Objective: The investment objective of the Portfolio is to seek to provide reasonable current income
and long-term capital growth and income.

Investment Policies:

Corporate Debt Securities. The Portfolio may invest in debt securities, such as convertible and
non-convertible bonds, notes and debentures, issued by corporations, limited partnerships and similar entities.

Zero Coupon Bonds, Deferred Interest Bonds and PIK Bonds. The Portfolio may invest in zero coupon
bonds, deferred bonds and bonds on which the interest is payable in kind ("PIK bonds"). Zero coupon and deferred
interest bonds are debt obligations, which are issued at a significant discount from face value. The discount
approximates the total amount of interest the bonds will accrue and compound over the period until maturity or
the first interest payment date at a rate of interest reflecting the market rate of the security at the time of
issuance. While zero coupon bonds do not require the periodic payment of interest, deferred interest bonds do
provide for a period of delay before the regular payment of interest begins. PIK bonds are debt obligations,
which provide that the issuer may, at its option, pay interest on such bonds in cash or in the form of additional
debt obligations. Such investments benefit the issuer by mitigating its need for cash to meet debt service, but
also require a higher rate of return to attract investors who are willing to defer receipt of such cash. Such
investments may experience greater volatility in market value than debt obligations, which make regular payments
of interest. The Portfolio will accrue income on such investments for tax and accounting purposes, which are
distributable to shareholders and which, because no cash is received at the time of accrual, may require the
liquidation of other portfolio securities to satisfy the Portfolio's distribution obligations.

For an additional discussion of Forward Contracts see this Statement and the Trust's Prospectus under
"certain Risk Factors and Investment Methods."

Futures Contracts. The Portfolio may purchase and sell futures contracts ("Future Contracts") on stock
indices, foreign currencies, interest rates or interest-rate related instruments, indices of foreign currencies
or commodities. The Portfolio also may purchase and sell Futures Contracts on foreign or domestic fixed income
securities or indices of such securities including municipal bond indices and any other indices of foreign or
domestic fixed income securities that may become available for trading. Such investment strategies will be used
for hedging purposes and for non-hedging purposes, subject to applicable law.

For further information on Futures Contracts, see this Statement under "Certain Risk Factors and
Investment Methods."

Options. The Portfolio may invest in the following types of options, which involves the risks described
below under the caption "Risk Factors."

Options on Securities. The Portfolio may write (sell) covered put and call options, and purchase put
and call options, on securities.

For an additional discussion of options, see this Statement under "Certain Risk Factors and Investment
Methods."

Special Risk Factors.

Risk of Imperfect Correlation of Hedging Instruments with the Portfolio's Portfolio. The use of derivatives for
"cross hedging" purposes (such as a transaction in a Forward Contract on one currency to hedge exposure to a
different currency) may involve greater correlation risks. Consequently, the Portfolio bears the risk that the
price of the portfolio securities being hedged will not move in the same amount or direction as the underlying
index or obligation.

Short Sales Against The Box. The Portfolio may make short sales "against the box." If the Portfolio
enters into a short sales against the box, it is required to segregate securities equivalent in kind and amount
to the securities sold short (or securities convertible or exchangeable into such securities) and is required to
hold such securities while the short sale is outstanding. The Portfolio will incur transaction costs, including
interest, in connection with opening, maintaining, and closing short sales against the box. For further
information about this practice, please refer to the Trust's Prospectus under "Certain Risk Factors and
Investment Methods."

Short Term Instruments. The Portfolio may hold cash and invest in cash equivalents, such as short-term
U.S. Government Securities, commercial paper and bank instruments.

For more information about when-issued securities, please see this Statement under "Certain Risk Factors
and Investment Methods."

AST INVESCO Equity Income Portfolio:

Investment Objective: The investment objective of the Portfolio is to seek capital growth and current income.

Investment Policies:

The Portfolio will pursue its objective by investing its assets in securities that are expected to
produce high levels of income and consistent, stable returns.

In pursuing its investment objective, the Portfolio normally invests at least 65% of its total assets in
dividend paying common and preferred stocks. Up to 30% of the Portfolio's assets may be invested in equity
securities that do not pay regular dividends. The remaining assets are invested in other income-producing
securities, such as corporate bonds. Sometimes warrants are acquired when offered with income-producing
securities, but the warrants are disposed of at the first favorable opportunity. Acquiring warrants involves a
risk that the Portfolio will lose the premium it pays to acquire warrants if the Portfolio does not exercise a
warrant before it expires. The major portion of the investment portfolio normally consists of common stocks,
convertible bonds and debentures, and preferred stocks; however, there may also be substantial holdings of debt
securities, including non-investment grade and unrated debt securities.

Debt Securities. The debt securities in which the Portfolio invests are generally subject to two kinds
of risk, credit risk and market risk. The ratings given a debt security by Moody's and Standard & Poor's
("S&P") provide a generally useful guide as to such credit risk. The lower the rating given a debt security by
such rating service, the greater the credit risk such rating service perceives to exist with respect to such
security. Increasing the amount of Portfolio assets invested in unrated or lower grade (Ba or less by Moody's,
BB or less by S&P) debt securities, while intended to increase the yield produced by the Portfolio's debt
securities, will also increase the credit risk to which those debt securities are subject.

Lower-rated debt securities and non-rated securities of comparable quality tend to be subject to wider
fluctuations in yields and market values than higher rated debt securities and may have speculative
characteristics. Although the Portfolio may invest in debt securities assigned lower grade ratings by S&P or
Moody's, the Portfolio's investments have generally been limited to debt securities rated B or higher by either
S&P or Moody's. Debt securities rated lower than B by either S&P or Moody's may be highly speculative. The
Sub-advisor intends to limit such portfolio investments to debt securities which are not believed by the
Sub-advisor to be highly speculative and which are rated at least CCC or Caa, respectively, by S&P or Moody's.
In addition, a significant economic downturn or major increase in interest rates may well result in issuers of
lower-rated debt securities experiencing increased financial stress which would adversely affect their ability to
service their principal and interest obligations, to meet projected business goals, and to obtain additional
financing. While the Sub-advisor attempts to limit purchases of lower-rated debt securities to securities having
an established retail secondary market, the market for such securities may not be as liquid as the market for
higher rated debt securities. For an additional discussion of certain risks involved in lower-rated or unrated
securities, see this Statement and the Trust's Prospectus under "Certain Risk Factors and Investment Methods."

Lending Portfolio Securities. The Portfolio may lend its securities to qualified brokers, dealers,
banks, or other financial institutions. While voting rights may pass with the loaned securities, if a material
event (e.g., proposed merger, sale of assets, or liquidation) is to occur affecting an investment on loan, the
loan must be called and the securities voted. Loans of securities made by the Portfolio will comply with all
other applicable regulatory requirements, including the rules of the New York Stock Exchange and the requirements
of the 1940 Act and the rules of the SEC thereunder.

AST AIM Balanced Portfolio:

Investment Objective: The investment objective of the Portfolio is to provide a well-diversified portfolio of
stocks that will produce both capital growth and current income.

Investment Policies:

The Portfolio, investing in both equity and debt securities, acquires securities in the over-the-counter
market and on national securities exchanges, and acquires bonds in new offerings or in principal trades with
broker-dealers. Ordinarily, the Portfolio does not purchase securities with the intention of engaging in
short-term trading. However, any particular security will be sold, and the proceeds reinvested, whenever such
action is deemed prudent from the viewpoint of the Portfolio's investment objective, regardless of the holding
period of that security.

Short-Term Investments. A portion of each Portfolio's assets may be held in cash and high quality,
short-term money market instruments such as certificates of deposit, commercial paper, bankers' acceptances,
short-term U.S. Government obligations, taxable municipal securities, master notes, and repurchase agreements,
pending investment in portfolio securities, to meet anticipated short-term cash needs such as dividend payments
or redemptions of shares, or for temporary defensive purposes. Such investments generally will have maturities
of 60 days or less and normally are held to maturity. The underlying securities that are subject to a repurchase
agreement will be "marked-to-market" on a daily basis so that the value of the securities in relation to the
amount of the repurchase agreement may be determined.

U.S. Government securities may take the form of participation interests in, and may be evidenced by,
deposit or safekeeping receipts. Participation interests are pro rata interests in U.S. Government securities.
The Portfolio may acquire participation interests in pools of mortgages sold by the Government National Mortgage
Association ("GNMA"), the Federal National Mortgage Association ("FNMA") and the Federal Home Loan Banks.
Instruments evidencing deposit or safekeeping are documentary receipts for such original securities held in
custody by others.

U.S. Government securities, including those that are guaranteed by federal agencies or
instrumentalities, may or may not be backed by the "full faith and credit" of the United States. Some securities
issued by federal agencies or instrumentalities are only supported by the credit of the agency or instrumentality
(such as the Federal Home Loan Banks) while others have an additional line of credit with the U.S. Treasury (such
as FNMA). In the case of securities not backed by the full faith and credit of the United States, the Portfolio
must look principally to the agency issuing or guaranteeing the obligation for ultimate repayment and may not be
able to assert a claim against the United States itself in the event the agency or instrumentality does not meet
its commitments.

Debt Securities. Most debt securities purchased by the Portfolio will be rated Baa or better by Moody's
Investors Service, Inc. ("Moody's") or BBB or better by Standard & Poor's Ratings Services ("S&P") or, if
unrated, deemed to be of comparable quality by the Sub-advisor, although the Portfolio may invest to a limited
extent in lower-rated securities. The fixed income securities in which the Portfolio invests may include U.S.
Government obligations, mortgage-backed securities, asset-backed securities, bank obligations, corporate debt
obligations and unrated obligations, including those of foreign issuers. The Portfolio may, in pursuit of its
objective, invest up to 10% of its total assets in debt securities rated lower than Baa by Moody's or BBB by S&P
(or a comparable rating of any other nationally recognized statistical rating organizations "NRSROs") or unrated
securities determined by the Sub-advisor to be of comparable quality ("junk bonds"). Junk bonds have speculative
characteristics that are likely to increase in number and significance with each successive lower rating
category. Additional information about lower-rated debt securities and their risks is included in this Statement
and the Trust's Prospectus under "Certain Risk Factors and Investment Methods."

Real Estate Investment Trusts ("REITs"). To the extent consistent with its investment objective and
policies, the Portfolio may invest up to 25% of its total assets and in equity and/or debt securities issued by
REITs.

Lending Portfolio Securities. Consistent with applicable regulatory requirements, the Portfolio may
lend its portfolio securities. The Portfolio would continue to receive the income on loaned securities and
would, at the same time, earn interest on the loan collateral or on the investment of the loan collateral if it
were cash. Lending securities entails a risk of loss to the Portfolio if and to the extent that the market value
of the securities loaned were to increase and the lender did not increase the collateral accordingly. Other
risks and limitations of lending portfolio securities are discussed in this Statement and the Trust's Prospectus
under "Certain Risk Factors and Investment Methods."

Short Sales "Against the Box." As described in the Trust's Prospectus, the Portfolio may make short
sales against the box. In no event may the Portfolio deposit or pledge more than 10% of its total assets as
collateral for short sales at any one time. To secure its obligation to deliver the securities sold short, the
Portfolio will deposit in escrow in a separate account with its custodian an equal amount of the securities sold
short or securities convertible into or exchangeable for such securities. Since the Portfolio ordinarily will
want to continue to receive interest and dividend payments on securities in its portfolio that are convertible
into the securities sold short, the Portfolio will normally close out a short position covered by convertible
securities by purchasing and delivering an equal amount of the securities sold short, rather than by delivering
securities that it already holds.

General Risks of Options, Futures and Currency Strategies. The use by the Portfolio of options, futures
contracts and forward currency contracts involves special considerations and risks. For example, there might be
imperfect correlation, or even no correlation, between the price movements of an instrument (such as an option
contract) and the price movements of the investments being hedged. In these circumstances, if a "protective put"
is used to hedge a potential decline in a security and the security does decline in price, the put option's
increased value may not completely offset the loss in the underlying security. Such a lack of correlation might
occur due to factors unrelated to the value of the investments being hedged, such as changing interest rates,
market liquidity, and speculative or other pressures on the markets in which the hedging instrument is traded.

The Portfolio will not enter into a hedging transaction if the Sub-advisor believes that the cost of
hedging will exceed the potential benefit to the Portfolio.

Cover. Transactions using forward contracts, futures contracts and options (other than options
purchased by a Portfolio) expose the Portfolio to an obligation to another party. A Portfolio will not enter
into any such transactions unless it owns either (1) an offsetting ("covered") position in securities,
currencies, or other options, forward contracts or futures contracts or (2) cash and/or short-term debt
securities with a value sufficient at all times to cover its potential obligations not covered as provided in (1)
above. The Portfolio will comply with SEC guidelines regarding cover for these instruments and, if the
guidelines so require, set aside cash or liquid securities. To the extent that a futures contract, forward
contract or option is deemed to be illiquid, the assets used to "cover" the Portfolio's obligation will also be
treated as illiquid in determining the Portfolio's maximum allowable investment in illiquid securities.

Assets used as cover cannot be sold while the position in the corresponding forward contract, futures
contract or option is open, unless they are replaced with other appropriate assets. If a large portion of a
Portfolio's assets is used for cover or otherwise set aside, it could affect portfolio management or the
Portfolio's ability to meet redemption requests or other current obligations.

Writing Call Options. The Portfolio may write (sell) covered call options on securities, futures
contracts, forward contracts, indices and currencies. Writing call options can serve as a limited hedge because
declines in the value of the hedged investment would be offset to the extent of the premium received for writing
the option.

Purchasing Call Options. The Portfolio may purchase covered call options on securities,
futures contracts, forward contracts, indices and currencies. The Portfolio may enter into closing sale
transactions with respect to such options, exercise such options or permit such options to expire.

Index Options. The risks of investment in index options may be greater than options on securities.
Because index options are settled in cash, when the Portfolio writes a call on an index it cannot provide in
advance for its potential settlement obligations by acquiring and holding the underlying securities. The
Portfolio can offset some of the risk of writing a call index option position by holding a diversified portfolio
of securities similar to those on which the underlying index is based. However, the Portfolio cannot, as a
practical matter, acquire and hold a portfolio containing exactly the same securities as underlie the index and,
as a result, bears a risk that the value of the securities held will not be perfectly correlated with the value
of the index.

Limitations on Options. The Portfolio will not write options it, immediately after such sale, the
aggregate value of securities or obligations underlying the outstanding options exceeds 20% of the Portfolio's
total assets. The Portfolio will not purchase options if, at the time of the investment, the aggregate premiums
paid for the options will exceed 5% of the Portfolio's total assets.

Interest Rate, Currency and Stock Index Futures Contracts. The Portfolio may enter into interest rate,
currency or stock index futures contracts (collectively, "Futures" or "Futures Contracts") and options on Futures
as a hedge against changes in prevailing levels of interest rates, currency exchange rates or stock price levels,
respectively, in order to establish more definitely the effective return on securities or currencies held or
intended to be acquired by it. The Portfolio's hedging may include sales of Futures as an offset against the
effect of expected increases in interest rates, and decreases in currency exchange rates and stock prices, and
purchase of Futures as an offset against the effect of expected declines in interest rates, and increases in
currency exchange rates or stock prices.

Additional information on Futures, options on Futures, and their risks is included in this Statement and
the Trust's Prospectus under "Certain Risk Factors and Investment Methods."

Additional information on forward contracts and their risks is included in this Statement and the
Trust's Prospectus under "Certain Risk Factors and Investment Methods."

Delayed-Delivery Agreements. The Portfolio may purchase or sell securities on a delayed-delivery
basis. Delayed-delivery agreements involve commitments by the Portfolio to dealers or issuers to acquire
securities or instruments at a specified future date beyond the customary same-day settlement for such securities
or instruments. These commitments may fix the payment price and interest rate to be received on the investment.
Delayed-delivery agreements will not be used as a speculative or leverage technique. Rather, from time to time,
the Sub-advisor can anticipate that cash for investment purposes will result from, among other things, scheduled
maturities of existing portfolio instruments or from net sales of shares of the Portfolio. To assure that the
Portfolio will be as fully invested as possible in instruments meeting its investment objective, the Portfolio
may enter into delayed-delivery agreements, but only to the extent of anticipated funds available for investment
during a period of not more than five business days. Until the settlement date, the Portfolio will segregate
liquid assets of a dollar value sufficient at all times to make payment for the delayed-delivery securities. No
more than 25% of the Portfolio's total assets will be committed to delayed-delivery agreements and when-issued
securities, as described below. The delayed-delivery securities will be recorded as an asset of the Portfolio.
The purchase price of the delayed-delivery securities is a liability of the Portfolio until settlement. If cash
is not available to the Portfolio at the time of settlement, the Portfolio may be required to dispose of
portfolio securities that it would otherwise hold to maturity in order to meet its obligation to accept delivery
under a delayed-delivery agreement. Absent extraordinary circumstances, the Portfolio will not sell or otherwise
transfer delayed-delivery securities prior to settlement.

Additional information about delayed-delivery agreements and their risks is included in this Statement
and in the Trust's Prospectus under "Certain Risk Factors and Investment Methods."

When-Issued Securities. The Portfolio may purchase securities on a "when-issued" basis; that is, the
date for delivery of and payment for the securities is not fixed at the date of purchase, but is set after the
securities are issued (normally within forty-five days after the date of the transaction). The payment obligation
and, if applicable, the interest rate that will be received on the securities are fixed at the time the buyer
enters into the commitment. No additional when-issued commitments will be made if as a result more than 25% of a
Portfolio's total assets would become committed to purchases of when-issued securities and delayed delivery
agreements.

If the Portfolio purchases a when-issued security, it will direct the its custodian bank to
collateralize the when-issued commitment by segregating liquid assets in the same fashion as required for a
delayed-delivery agreement. Such segregated liquid assets will likewise be marked-to-market, and the amount
segregated will be increased if necessary to maintain adequate coverage of the when-issued commitments. To the
extent assets are segregated, they will not be available for new investments or to meet redemptions.

Securities purchased on a when-issued basis and the securities held by the Portfolio are subject to
changes in market value based upon the public's perception of the creditworthiness of the issuer and, if
applicable, changes in the level of interest rates. Therefore, if the Portfolio is to remain substantially fully
invested at the same time that it has purchased securities on a when-issued basis, there will be a possibility
that the market value of the Portfolio's assets will fluctuate to a greater degree. Furthermore, when the time
comes for the Portfolio to meet its obligations under when-issued commitments, the Portfolio will do so by using
then-available cash flow, by sale of the segregated liquid assets, by sale of other securities or, although it
would not normally expect to do so, by directing the sale of the when-issued securities themselves (which may
have a market value greater or less than the Portfolio's payment obligation).

Additional information about when-issued transactions and their risks is included in this Statement and
in the Trust's Prospectus under "Certain Risk Factors and Investment Methods."

Investments in Foreign Securities. The Portfolio may invest up to 20% of its total assets in foreign
securities. To the extent it invests in securities denominated in foreign currencies, the Portfolio bears the
risks of changes in the exchange rates between U.S. currency and the foreign currency, as well as the
availability and status of foreign securities markets. The Portfolio may invest in securities of foreign issuers
that are in the form of American Depositary Receipts ("ADRs"), European Depositary Receipts ("EDRs"), or other
securities representing underlying securities of foreign issuers, and such investments are treated as foreign
securities for purposes of percentage limitations on investments in foreign securities.

Foreign Exchange Transactions. The Portfolio has authority to deal in foreign exchange between
currencies of the different countries in which it will invest either for the settlement of transactions or as a
hedge against possible variations in the foreign exchange rates between those currencies. This may be
accomplished through direct purchases or sales of foreign currency, purchases of options on futures contracts
with respect to foreign currency, and contractual agreements to purchase or sell a specified currency at a
specified future date (up to one year) at a price set at the time of the contract. Such contractual commitments
may be forward contracts entered into directly with another party or exchange traded futures contracts.

The Portfolio may purchase and sell options on futures contracts, forward contracts or futures contracts
that are denominated in a particular foreign currency to hedge the risk of fluctuations in the value of another
currency. The Portfolio's dealings in foreign exchange will be limited to hedging foreign currency exposure and
may involve either specific transactions or portfolio positions. Transaction hedging is the purchase or sale of
foreign currency with respect to specific receivables or payables of the Portfolio accruing in connection with
the purchase or sale of its portfolio securities, the sale and redemption of shares of the Portfolio, or the
payment of dividends and distributions by the Portfolio. Position hedging is the purchase or sale of foreign
currency with respect to portfolio security positions (or underlying portfolio security positions, such as in an
ADR) denominated or quoted in a foreign currency. The Portfolio will not speculate in foreign exchange, and will
not commit a larger percentage of its total assets to foreign exchange hedges than the percentage of its total
assets that it can invest in foreign securities.

Additional information about the various foreign currency transactions that the Portfolio may enter into
and their risks is included in this Statement and in the Trust's Prospectus under "Certain Risk Factors and
Investment Methods."

Borrowings. The Portfolio may borrow money to a limited extent from banks for temporary or emergency
purposes subject to the limitations under the 1940 Act. The Portfolio will not purchase additional securities
while any borrowings are outstanding. Additional information about borrowing is included in the Trust's
Prospectus under "Certain Risk Factors and Investment Methods."

Other Investment Companies. The Portfolio may invest in other investment companies to the extent
permitted by the 1940 Act and rules and regulations thereunder and exemptive orders granted by the SEC.

Investment Policy Which May Be Changed Without Shareholder Approval. The following limitation is
applicable to the AST AIM Balanced Portfolio. This limitation is not a "fundamental" restriction, and may be
changed by the Trustees without shareholder approval. The Portfolio will not:

1. Invest for the purpose of exercising control or management.

AST American Century Strategic Balanced Portfolio:

Investment Objective: The investment objective of the Portfolio is to seek capital growth and current income.

Investment Policies:

In general, within the restrictions outlined herein, the Sub-advisor has broad powers with respect to
investing funds or holding them uninvested. Investments are varied according to what is judged advantageous
under changing economic conditions. It will be the policy of the Sub-advisor to retain maximum flexibility in
management without restrictive provisions as to the proportion of one or another class of securities that may be
held subject to the investment restrictions described below. However, the Sub-advisor may invest the assets of
the Portfolio in varying amounts in other instruments and in senior securities, such as bonds, debentures,
preferred stocks and convertible issues, when such a course is deemed appropriate in order to attempt to attain
its financial objectives. Senior securities that, in the opinion of the Sub-advisor, are high-grade issues may
also be purchased for defensive purposes.

The above statement of investment policy gives the Sub-advisor authority to invest in securities other
than common stocks and traditional debt and convertible issues. The Sub-advisor may invest in master limited
partnerships (other than real estate partnerships) and royalty trusts which are traded on domestic stock
exchanges when such investments are deemed appropriate for the attainment of the Portfolio's investment
objectives.

The Sub-advisor will invest approximately 60% of the Portfolio in common stocks and the balance in fixed
income securities. Common stock investments are described above. The fixed income assets will be invested
primarily in investment grade securities. The Portfolio may invest up to 15% of its fixed income assets in high
yield securities. There are no credit or maturity restrictions on the fixed income securities in which the high
yield portion of the Portfolio may be invested. The Portfolio may invest in securities of the United States
government and its agencies and instrumentalities, corporate, sovereign government, municipal, mortgage-backed,
and other asset-backed securities. For purposes of determining the weighted average maturity of the fixed income
portion of the Portfolio, the Sub-advisor will use weighted average life as the measure of maturity for all
mortgage-backed and asset-backed securities. It can be expected that the Sub-advisor will invest from time to
time in bonds and preferred stock convertible into common stock.

Forward Currency Exchange Contracts. The Portfolio conducts its foreign currency exchange transactions
either on a spot (i.e., cash) basis at the spot rate prevailing in the foreign currency exchange market, or
through entering into forward foreign currency exchange contracts to purchase or sell foreign currencies.

The Portfolio expects to use forward contracts under two circumstances: (1) when the Sub-advisor wishes
to "lock in" the U.S. dollar price of a security when the Portfolio is purchasing or selling a security
denominated in a foreign currency, the Portfolio would be able to enter into a forward contract to do so
("transaction hedging"); (2) when the Sub-advisor believes that the currency of a particular foreign country may
suffer a substantial decline against the U.S. dollar, the Portfolio would be able to enter into a forward
contract to sell foreign currency for a fixed U.S. dollar amount approximating the value of some or all of the
Portfolio's securities either denominated in, or whose value is tied to, such foreign currency ("portfolio
hedging"). It is anticipated that the Portfolio will enter into portfolio hedges much less frequently than
transaction hedges.

As to transaction hedging, when the Portfolio enters into a trade for the purchase or sale of a security
denominated in a foreign currency, it may be desirable to establish (lock in) the U.S. dollar cost or proceeds.
By entering into forward contracts in U.S. dollars for the purchase or sale of a foreign currency involved in an
underlying security transaction, the Portfolio will be able to protect itself against a possible loss between
trade and settlement dates resulting from the adverse change in the relationship between the U.S. dollar at the
subject foreign currency.

Under portfolio hedging, when the Sub-advisor believes that the currency of a particular country may
suffer a substantial decline relative to the U.S. dollar, the Portfolio could enter into a foreign contract to
sell for a fixed dollar amount the amount in foreign currencies approximating the value of some or all of its
portfolio securities either denominated in, or whose value is tied to, such foreign currency. The Portfolio will
place cash or high-grade liquid securities in a separate account with its custodian in an amount sufficient to
cover its obligation under the contract. If the value of the securities placed in the separate account declines,
additional cash or securities will be placed in the account on a daily basis so that the value of the account
equals the amount of the Portfolio's commitments with respect to such contracts. At any given time, no more than
10% of the Portfolio's assets will be committed to a segregated account in connection with portfolio hedging
transactions.

The precise matching of forward contracts in the amounts and values of securities involved would not
generally be possible since the future values of such foreign currencies will change as a consequence of market
movements in the values of those securities between the date the forward contract is entered into and the date it
matures. Predicting short-term currency market movements is extremely difficult, and the successful execution of
short-term hedging strategy is highly uncertain. The Sub-advisor does not intend to enter into such contracts on
a regular basis. Normally, consideration of the prospect for currency parities will be incorporated into the
long-term investment decisions made with respect to overall diversification strategies. However, the Sub-advisor
believes that it is important to have flexibility to enter into such forward contracts when it determines that
the Portfolio 's best interests may be served.

Generally, the Portfolio will not enter into a forward contract with a term of greater than one year.
At the maturity of the forward contract, the Portfolio may either sell the portfolio security and make delivery
of the foreign currency, or it may retain the security and terminate the obligation to deliver the foreign
currency by purchasing an "offsetting" forward contract with the same currency trader obligating the Portfolio to
purchase, on the same maturity date, the same amount of the foreign currency.

It is impossible to forecast with absolute precision the market value of the Portfolio's securities at
the expiration of the forward contract. Accordingly, it may be necessary for the Portfolio to purchase
additional foreign currency on the spot market (and bear the expense of such purchase) if the market value of the
security is less than the amount of foreign currency the Portfolio is obligated to deliver and if a decision is
made to sell the security and make delivery of the foreign currency the Portfolio is obligated to deliver. For
an additional discussion of forward currency exchange contracts and certain risks involved therein, see this
Statement and the Trust's Prospectus under "Certain Risk Factors and Investment Methods."

The return on a derivative security may increase or decrease, depending upon changes in the reference
index or instrument to which it relates.

There is a range of risks associated with derivative investments, including:

o the risk that the underlying security, interest rate, market index or other financial asset will not
move in the direction the portfolio manager anticipates;

o the risk that the counterparty will fail to perform its obligations.

o protect against a decline in market value of the Portfolio's securities (taking a short futures
position), or

o provide a temporary substitute for the purchase of an individual security that may be purchased in an
orderly fashion.

In a short sale, the seller does not immediately deliver the securities sold and is said to have a short
position in those securities until delivery occurs. To make delivery to the purchaser, the executing broker
borrows the securities being sold short on behalf of the seller. While the short position is maintained, the
seller collateralizes its obligation to deliver the securities sold short in an amount equal to the proceeds of
the short sale plus an additional margin amount established by the Board of Governors of the Federal Reserve. If
the Portfolio engages in a short sale, the collateral account will be maintained by the Portfolio's custodian.
While the short sale is open, the Portfolio will maintain in a segregated custodial account an amount of
securities convertible into, or exchangeable for, such equivalent securities at no additional cost. These
securities would constitute the Portfolio's long position.

The Sub-advisor intends to purchase a given security whenever the Sub-advisor believes it will
contribute to the stated objective of the Portfolio, even if the same security has only recently been sold. The
Portfolio will sell a given security, no matter for how long or for how short a period it has been held, and no
matter whether the sale is at a gain or at a loss, if the Sub-advisor believes that it is not fulfilling its
purpose, either because, among other things, it did not live up to the Sub-advisor's expectations, or because it
may be replaced with another security holding greater promise, or because it has reached its optimum potential,
or because of a change in the circumstances of a particular company or industry or in general economic
conditions, or because of some combination of such reasons.

When a general decline in security prices is anticipated, the equity portion of the Portfolio may
decrease or eliminate entirely its equity position and increase its cash position, and when a rise in price
levels is anticipated, it may increase its equity position and decrease its cash position. However, it should be
expected that the Portfolio will, under most circumstances, be essentially fully invested in equity securities.

Since investment decisions are based on the anticipated contribution of the security in question to the
Portfolio's objectives, the rate of portfolio turnover is irrelevant when the Sub-advisor believes a change is in
order to achieve those objectives, and the Portfolio's annual portfolio turnover rate cannot be anticipated and
may be comparatively high. Since the Sub-advisor does not take portfolio turnover rate into account in making
investment decisions, (1) the Sub-advisor has no intention of accomplishing any particular rate of portfolio
turnover, whether high or low, and (2) the portfolio turnover rates in the past should not be considered as a
representation of the rates which will be attained in the future.

Collateralized Mortgage Obligations. The Portfolio may buy collateralized mortgage obligations
("CMOs"). The Portfolio may buy CMOs that are: (i) collateralized by pools of mortgages in which payment of
principal and interest of each mortgage is guaranteed by an agency or instrumentality of the U.S. government;
(ii) collateralized by pools of mortgages in which payment of principal and interest are guaranteed by the
issuer, and the guarantee is collateralized by U.S. government securities; or (iii) securities in which the
proceeds of the issue are invested in mortgage securities and payments of principal and interest are supported by
the credit of an agency or instrumentality of the U.S. government. For a discussion of CMOs and the risks
involved therein, see the Company's Prospectus under "Certain Risk Factors and Investment Methods."

Investment Policies Which May Be Changed Without Shareholder Approval. The following limitations are
applicable to the AST American Century Strategic Balanced Portfolio. These limitations are not "fundamental"
restrictions and may be changed by the Trustees without shareholder approval. The Portfolio will not:

1. Invest more than 15% of its assets in illiquid investments;

2. Invest in the securities of other investment companies except in compliance with the 1940 Act;

3. Buy securities on margin or sell short (unless it owns, or by virtue of its ownership of, other
securities has the right to obtain securities equivalent in kind and amount to the securities sold); however, the
Portfolio may make margin deposits in connection with the use of any financial instrument or any transaction in
securities permitted under its investment policies; or

4. Invest for control or for management.

AST T. Rowe Price Asset Allocation Portfolio:

Investment Objective: The investment objective of the Portfolio is to seek a high level of total return by
investing primarily in a diversified portfolio of fixed-income and equity securities.

Investment Policies: The Portfolio's share price will fluctuate with changing market conditions and interest
rate levels and your investment may be worth more or less when redeemed than when purchased. The Portfolio
should not be relied upon for short-term financial needs, nor used to play short-term swings in the stock or bond
markets. The Portfolio cannot guarantee that it will achieve its investment objectives. Fixed income securities
in which the Portfolio may invest include, but are not limited to, those described below.

U.S. Government Agency Securities. Issued or guaranteed by U.S. Government sponsored enterprises and
federal agencies. These include securities issued by the Federal National Mortgage Association, Government
National Mortgage Association, Federal Home Loan Bank, Federal Land Banks, Farmers Home Administration, Banks for
Cooperatives, Federal Intermediate Credit Banks, Federal Financing Bank, Farm Credit Banks, the Small Business
Association, and the Tennessee Valley Authority. Some of these securities are supported by the full faith and
credit of the U.S. Treasury, and the remainder are supported only by the credit of the instrumentality, which may
or may not include the right of the issuer to borrow from the Treasury.

Savings and Loan Obligations. Negotiable certificates of deposit and other short-term debt obligations
of savings and loan associations.

Supranational Entities. The Portfolio may also invest in the securities of certain supranational
entities, such as the International Development Bank.

Collateralized Mortgage Obligations (CMOs). CMOs are obligations fully collateralized by a portfolio of
mortgages or mortgage-related securities. Payments of principal and interest on the mortgages are passed through
to the holders of the CMOs on the same schedule as they are received, although certain classes of CMOs have
priority over others with respect to the receipt of prepayments on the mortgages. Therefore, depending on the
type of CMOs in which a Portfolio invests, the investment may be subject to a greater or lesser risk of
prepayment than other types of mortgage-related securities. For an additional discussion of CMOs and certain
risks involved therein, see the Trust's Prospectus under "Certain Risk Factors and Investment Methods."

Credit Card Receivable Securities. The Portfolio may invest in asset-backed securities backed
by receivables from revolving credit card agreements ("Credit Card Receivable Securities").

In addition to the investments described in the Trust's Prospectus, the Portfolio may invest in the
following:

Writing Covered Call Options. The Portfolio may write (sell) "covered" call options and purchase
options to close out options previously written by the Portfolio. In writing covered call options, the Portfolio
expects to generate additional premium income which should serve to enhance the Portfolio's total return and
reduce the effect of any price decline of the security or currency involved in the option. Covered call options
will generally be written on securities or currencies which, in the Sub-advisor's opinion, are not expected to
have any major price increases or moves in the near future but which, over the long term, are deemed to be
attractive investments for the Portfolio.

Portfolio securities or currencies on which call options may be written will be purchased solely on the
basis of investment considerations consistent with the Portfolio's investment objectives. The writing of covered
call options is a conservative investment technique believed to involve relatively little risk (in contrast to
the writing of naked or uncovered options, which the Portfolio will not do), but capable of enhancing the
Portfolio's total return. When writing a covered call option, the Portfolio, in return for the premium, gives up
the opportunity for profit from a price increase in the underlying security or currency above the exercise price,
but conversely, retains the risk of loss should the price of the security or currency decline. Unlike one who
owns securities or currencies not subject to an option, the Portfolio has no control over when it may be required
to sell the underlying securities or currencies, since it may be assigned an exercise notice at any time prior to
the expiration of its obligations as a writer. If a call option which the Portfolio has written expires, the
Portfolio will realize a gain in the amount of the premium; however, such gain may be offset by a decline in the
market value of the underlying security or currency during the option period. If the call option is exercised,
the Portfolio will realize a gain or loss from the sale of the underlying security or currency. The Portfolio
does not consider a security or currency covered by a call "pledged" as that term is used in the Portfolio's
policy which limits the pledging or mortgaging of its assets.

The premium received is the market value of an option. The premium the Portfolio will receive from
writing a call option will reflect, among other things, the current market price of the underlying security or
currency, the relationship of the exercise price to such market price, the historical price volatility of the
underlying security or currency, and the length of the option period. Once the decision to write a call option
has been made, Sub-advisor, in determining whether a particular call option should be written on a particular
security or currency, will consider the reasonableness of the anticipated premium and the likelihood that a
liquid secondary market will exist for those options. The premium received by the Portfolio for writing covered
call options will be recorded as a liability of the Portfolio. This liability will be adjusted daily to the
option's current market value, which will be the latest sale price at the time at which the net asset value per
share of the Portfolio is computed (close of the New York Stock Exchange), or, in the absence of such sale, the
latest asked price. The option will be terminated upon expiration of the option, the purchase of an identical
option in a closing transaction, or delivery of the underlying security or currency upon the exercise of the
option.

Writing Covered Put Options. The Portfolio may write American or European style covered put options and
purchase options to close out options previously written by the Portfolio.

The Portfolio would write put options only on a covered basis, which means that the Portfolio would
maintain in a segregated account cash, U.S. government securities or other liquid high-grade debt obligations in
an amount not less than the exercise price or the Portfolio will own an option to sell the underlying security or
currency subject to the option having an exercise price equal to or greater than the exercise price of the
"covered" option at all times while the put option is outstanding. (The rules of a clearing corporation
currently require that such assets be deposited in escrow to secure payment of the exercise price.) The
Portfolio would generally write covered put options in circumstances where Sub-advisor wishes to purchase the
underlying security or currency for the Portfolio's portfolio at a price lower than the current market price of
the security or currency. In such event the Portfolio would write a put option at an exercise price which,
reduced by the premium received on the option, reflects the lower price it is willing to pay. Since the
Portfolio would also receive interest on debt securities or currencies maintained to cover the exercise price of
the option, this technique could be used to enhance current return during periods of market uncertainty. The
risk in such a transaction would be that the market price of the underlying security or currency would decline
below the exercise price less the premiums received. Such a decline could be substantial and result in a
significant loss to the Portfolio. In addition, the Portfolio, because it does not own the specific securities
or currencies which it may be required to purchase in the exercise of the put, can not benefit from appreciation,
if any, with respect to such specific securities or currencies.

Purchasing Put Options. The Portfolio may purchase American or European style put options. The
Portfolio may enter into closing sale transactions with respect to such options, exercise them or permit them to
expire. The Portfolio may purchase put options for defensive purposes in order to protect against an anticipated
decline in the value of its securities or currencies. An example of such use of put options is provided in this
Statement under "Certain Risk Factors and Investment Methods."

The Portfolio will not commit more than 5% of its assets to premiums when purchasing call and put
options. The Portfolio may also purchase call options on underlying securities or currencies it owns in order to
protect unrealized gains on call options previously written by it. A call option would be purchased for this
purpose where tax considerations make it inadvisable to realize such gains through a closing purchase
transaction. Call options may also be purchased at times to avoid realizing losses.

Purchasing Call Options. The Portfolio may purchase American or European call options. The Portfolio
may enter into closing sale transactions with respect to such options, exercise them or permit them to expire.
The Portfolio may purchase call options for the purpose of increasing its current return or avoiding tax
consequences which could reduce its current return. The Portfolio may also purchase call options in order to
acquire the underlying securities or currencies. Examples of such uses of call options are provided this
Statement under "Certain Risk Factors and Investment Methods."

Dealer Options. The Portfolio may engage in transactions involving dealer options. Certain risks are
specific to dealer options. While the Portfolio would look to a clearing corporation to exercise exchange-traded
options, if the Portfolio were to purchase a dealer option, it would rely on the dealer from whom it purchased
the option to perform if the option were exercised. While the Portfolio will seek to enter into dealer options
only with dealers who will agree to and which are expected to be capable of entering into closing transactions
with the Portfolio, there can be no assurance that the Portfolio will be able to liquidate a dealer option at a
favorable price at any time prior to expiration. Failure by the dealer to do so would result in the loss of the
premium paid by the Portfolio as well as loss of the expected benefit of the transaction. For a discussion of
dealer options, see this Statement under "Certain Risk Factors and Investment Methods."

Futures Contracts.

Transactions in Futures. The Portfolio may enter into financial futures contracts, including
stock index, interest rate and currency futures ("futures" or "futures contracts").

Stock index futures contracts may be used to attempt to provide a hedge for a portion of the Portfolio's
portfolio, as a cash management tool, or as an efficient way for the Sub-advisor to implement either an increase
or decrease in portfolio market exposure in response to changing market conditions. Stock index futures
contracts are currently traded with respect to the S&P 500 Index and other broad stock market indices, such as
the New York Stock Exchange Composite Stock Index and the Value Line Composite Stock Index. The Portfolio may,
however, purchase or sell futures contracts with respect to any stock index. Nevertheless, to hedge the
Portfolio's portfolio successfully, the Portfolio must sell futures contacts with respect to indices or
subindexes whose movements will have a significant correlation with movements in the prices of the Portfolio's
securities.

The Portfolio will enter into futures contracts which are traded on national or foreign futures
exchanges and are standardized as to maturity date and underlying financial instrument. Futures exchanges and
trading in the United States are regulated under the Commodity Exchange Act by the CFTC. Although techniques
other than the sale and purchase of futures contracts could be used for the above-referenced purposes, futures
contracts offer an effective and relatively low cost means of implementing the Portfolio's objectives in these
areas. For a discussion of futures transactions and certain risks involved therein, see this Statement and the
Trust's Prospectus under "Certain Risk Factors and Investment Methods."

Regulatory Limitations. The Portfolio will engage in transactions in futures contracts and
options thereon only for bona fide hedging, yield enhancement and risk management purposes, in each case in
accordance with the rules and regulations of the CFTC.

The Portfolio may not enter into futures contracts or options thereon if, with respect to positions
which do not qualify as bona fide hedging under applicable CFTC rules, the sum of the amounts of initial margin
deposits on the Portfolio's existing futures and premiums paid for options on futures would exceed 5% of the net
asset value of the Portfolio after taking into account unrealized profits and unrealized losses on any such
contracts it has entered into; provided, however, that in the case of an option that is in-the-money at the time
of purchase, the in-the-money amount may be excluded in calculating the 5% limitation.

In instances involving the purchase of futures contracts or call options thereon or the writing of put
options thereon by the Portfolio, an amount of cash, U.S. government securities or other liquid, high-grade debt
obligations, equal to the market value of the futures contracts and options thereon (less any related margin
deposits), will be identified by the Portfolio to cover the position, or alternative cover (such as owning an
offsetting position) will be employed.

Risks of Transactions in Futures Contracts. See this Statement and the Trust's Prospectus
under "Certain Risks and Investment Methods" for an additional description of certain risks involved in futures
contracts.

Options on Futures Contracts. As an alternative to writing or purchasing call and put options on stock
index futures, the Portfolio may write or purchase call and put options on financial indices. Such options would
be used in a manner similar to the use of options on futures contracts. From time to time, a single order to
purchase or sell futures contracts (or options thereon) may be made on behalf of the Portfolio and other mutual
funds or portfolios of mutual funds managed by the Sub-advisor or T. Rowe Price International, Inc. Such
aggregated orders would be allocated among the Portfolio and such other mutual funds or portfolios of mutual
funds in a fair and non-discriminatory manner. See this Statement and the Trust's Prospectus under "Certain Risk
Factors and Investment Methods" for a description of certain risks involved in options on futures contracts.

Additional Futures and Options Contracts. Although the Portfolio has no current intention of engaging
in futures or options transactions other than those described above, it reserves the right to do so. Such
futures or options trading might involve risks which differ from those involved in the futures and options
described above.

Foreign Futures and Options. The Portfolio is permitted to enter into foreign futures and options
transactions. See this Statement and the Trust's Prospectus under "Certain Risk Factors and Investment Methods"
for a description of certain risks involved in foreign futures and options.

Foreign Securities. The Portfolio may invest in U.S. dollar-denominated and non-U.S. dollar-denominated
securities of foreign issuers in developed countries. Because the Portfolio may invest in foreign securities,
investment in the Portfolio involves risks that are different in some respects from an investment in a Portfolio
which invests only in securities of U.S. domestic issuers. Foreign investments may be affected favorably or
unfavorably by changes in currency rates and exchange control regulations. There may be less publicly available
information about a foreign company than about a U.S. company, and foreign companies may not be subject to
accounting, auditing, and financial reporting standards and requirements comparable to those applicable to U.S.
companies. There may be less governmental supervision of securities markets, brokers and issuers of securities.
Securities of some foreign companies are less liquid or more volatile than securities of U.S. companies, and
foreign brokerage commissions and custodian fees are generally higher than in the United States. Settlement
practices may include delays and may differ from those customary in United States markets. Investments in
foreign securities may also be subject to other risks different from those affecting U.S. investments, including
local political or economic developments, expropriation or nationalization of assets, restrictions on foreign
investment and repatriation of capital, imposition of withholding taxes on dividend or interest payments,
currency blockage (which would prevent cash from being brought back to the United States), and difficulty in
enforcing legal rights outside the U.S. For an additional discussion of certain risks involved in investing in
foreign securities, see this Statement and the Trust's Prospectus under "Certain Risk Factors and Investment
Methods."

Foreign Currency Transactions. The Portfolio will generally enter into forward foreign currency
exchange contracts under two circumstances. First, when the Portfolio enters into a contract for the purchase or
sale of a security denominated in a foreign currency, it may desire to "lock in" the U.S. dollar price of the
security. Second, when the Sub-advisor believes that the currency of a particular foreign country may suffer or
enjoy a substantial movement against another currency, including the U.S. dollar, it may enter into a forward
contract to sell or buy the amount of the former foreign currency, approximating the value of some or all of the
Portfolio's securities denominated in such foreign currency. Alternatively, where appropriate, the Portfolio may
hedge all or part of its foreign currency exposure through the use of a basket of currencies or a proxy currency
where such currency or currencies act as an effective proxy for other currencies. In such a case, the Portfolio
may enter into a forward contract where the amount of the foreign currency to be sold exceeds the value of the
securities denominated in such currency. The use of this basket hedging technique may be more efficient and
economical than entering into separate forward contracts for each currency held in the Portfolio. The precise
matching of the forward contract amounts and the value of the securities involved will not generally be possible
since the future value of such securities in foreign currencies will change as a consequence of market movements
in the value of those securities between the date the forward contract is entered into and the date it matures.
The projection of short-term currency market movement is extremely difficult, and the successful execution of a
short-term hedging strategy is highly uncertain. Other than as set forth above, and immediately below, the
Portfolio will also not enter into such forward contracts or maintain a net exposure to such contracts where the
consummation of the contracts would obligate the Portfolio to deliver an amount of foreign currency in excess of
the value of the Portfolio's securities or other assets denominated in that currency. The Portfolio, however, in
order to avoid excess transactions and transaction costs, may maintain a net exposure to forward contracts in
excess of the value of the Portfolio's securities or other assets to which the forward contracts relate
(including accrued interest to the maturity of the forward on such securities) provided the excess amount is
"covered" by liquid, high-grade debt securities, denominated in any currency, at least equal at all times to the
amount of such excess. For these purposes "the securities or other assets to which the forward contracts relate
may be securities or assets denominated in a single currency, or where proxy forwards are used, securities
denominated in more than one currency. Under normal circumstances, consideration of the prospect for currency
parities will be incorporated into the longer term investment decisions made with regard to overall
diversification strategies. However, the Sub-advisor believes that it is important to have the flexibility to
enter into such forward contracts when it determines that the best interests of the Portfolio will be served.

At the maturity of a forward contract, the Portfolio may either sell the portfolio security and make
delivery of the foreign currency, or it may retain the security and terminate its contractual obligation to
deliver the foreign currency by purchasing an "offsetting" contract obligating it to purchase, on the same
maturity date, the same amount of the foreign currency.

As indicated above, it is impossible to forecast with absolute precision the market value of portfolio
securities at the expiration of the forward contract. Accordingly, it may be necessary for the Portfolio to
purchase additional foreign currency on the spot market (and bear the expense of such purchase) if the market
value of the security is less than the amount of foreign currency the Portfolio is obligated to deliver and if a
decision is made to sell the security and make delivery of the foreign currency. Conversely, it may be necessary
to sell on the spot market some of the foreign currency received upon the sale of the portfolio security if its
market value exceeds the amount of foreign currency the Portfolio is obligated to deliver. However, as noted, in
order to avoid excessive transactions and transaction costs, the Portfolio may use liquid, high-grade debt
securities denominated in any currency, to cover the amount by which the value of a forward contract exceeds the
value of the securities to which it relates.

The Portfolio's dealing in forward foreign currency exchange contracts will generally be limited to the
transactions described above. However, the Portfolio reserves the right to enter into forward foreign currency
contracts for different purposes and under different circumstances. Of course, the Portfolio is not required to
enter into forward contracts with regard to its foreign currency-denominated securities and will not do so unless
deemed appropriate by the Sub-advisor. It also should be realized that this method of hedging against a decline
in the value of a currency does not eliminate fluctuations in the underlying prices of the securities. It simply
establishes a rate of exchange at a future date. Additionally, although such contracts tend to minimize the risk
of loss due to a decline in the value of the hedged currency, at the same time, they tend to limit any potential
gain which might result from an increase in the value of that currency.

Although the Portfolio values its assets daily in terms of U.S. dollars, it does not intend to convert
its holdings of foreign currencies into U.S. dollars on a daily basis. It will do so from time to time, and
investors should be aware of the costs of currency conversion. Although foreign exchange dealers do not charge a
fee for conversion, they do realize a profit based on the difference (the "spread") between the prices at which
they are buying and selling various currencies. Thus, a dealer may offer to sell a foreign currency to the
Portfolio at one rate, while offering a lesser rate of exchange should the Portfolio desire to resell that
currency to the dealer. For a discussion of certain risks involved in foreign currency transactions, see this
Statement and the Trust's Prospectus under "Certain Risk Factors and Investment Methods."

Hybrid Commodity and Security Instruments. Instruments have been developed which combine the elements
of futures contracts or options with those of debt, preferred equity or a depositary instrument (hereinafter
"Hybrid Instruments"). Often these hybrid instruments are indexed to the price of a commodity or particular
currency or a domestic or foreign debt or equity securities index. Hybrid instruments may take a variety of
forms, including, but not limited to, debt instruments with interest or principal payments or redemption terms
determined by reference to the value of a currency or commodity at a future point in time, preferred stock with
dividend rates determined by reference to the value of a currency, or convertible securities with the conversion
terms related to a particular commodity. For a discussion of certain risks involved in investing in hybrid
instruments, see this Statement under "Certain Risk Factors and Investment Methods."

Lending of Portfolio Securities. For the purpose of realizing additional income, the Portfolio may make
secured loans of Portfolio securities amounting to not more than 33 1/3% of its total assets. This policy is a
fundamental policy. Securities loans are made to broker-dealers, institutional investors, or other persons
pursuant to agreements requiring that the loans be continuously secured by collateral at least equal at all times
to the value of the securities lent, marked to market on a daily basis. The collateral received will consist of
cash or U.S. government securities. While the securities are being lent, the Portfolio will continue to receive
the equivalent of the interest or dividends paid by the issuer on the securities, as well as interest on the
investment of the collateral or a fee from the borrower. The Portfolio has a right to call each loan and obtain
the securities on three business days' notice or, in connection with securities trading on foreign markets,
within such longer period of time which coincides with the normal settlement period for purchases and sales of
such securities in such foreign markets. The Portfolio will not have the right to vote securities while they are
being lent, but it will call a loan in anticipation of any important vote. The risks in lending portfolio
securities, as with other extensions of secured credit, consist of possible delay in receiving additional
collateral or in the recovery of the securities or possible loss of rights in the collateral should the borrower
fail financially.

Other Lending/Borrowing. Subject to approval by the SEC, the Portfolio may make loans to, or borrow
Portfolios from, other mutual funds or portfolios of mutual funds sponsored or advised by the Sub-advisor or T.
Rowe Price International, Inc. The Portfolio has no current intention of engaging in these practices at this
time.

When-Issued Securities. The Portfolio may from time to time purchase securities on a "when-issued"
basis. At the time the Portfolio makes the commitment to purchase a security on a when-issued basis, it will
record the transaction and reflect the value of the security in determining its net asset value. The Portfolio
does not believe that its net asset value or income will be adversely affected by its purchase of securities on a
when-issued basis. The Portfolio will maintain cash and marketable securities equal in value to commitments for
when-issued securities. Such segregated securities either will mature or, if necessary, be sold on or before the
settlement date. For a discussion of when-issued securities, see this Statement under "Certain Risk Factors and
Investment Methods."

Investment Policies Which May Be Changed Without Shareholder Approval. The following limitations are
applicable only to the AST T. Rowe Price Asset Allocation Portfolio. These limitations are not fundamental
restrictions, and can be changed by the Trustees without shareholder approval. The Portfolio will not:

1. Purchase additional securities when money borrowed exceeds 5% of the Portfolio's total assets;

2. Invest in companies for the purpose of exercising management or control;

3. Purchase illiquid securities if, as a result, more than 15% of its net assets would be invested
in such securities. Securities eligible for resale under Rule 144A of the Securities Act of 1933 may be subject
to this 15% limitation;

4. Purchase securities of open-end or closed-end investment companies except in compliance with
the 1940 Act;

5. Mortgage, pledge, hypothecate or, in any manner, transfer any security owned by the Portfolio
as security for indebtedness except as may be necessary in connection with permissible borrowings or investments
and then such mortgaging, pledging or hypothecating may not exceed 33 1/3% of the Portfolio's total assets at the
time of borrowing or investment;

6. Invest in puts, calls, straddles, spreads, or any combination thereof to the extent permitted
by the Trust's Prospectus and this Statement;

7. Purchase securities on margin, except (i) for use of short-term credit necessary for clearance
of purchases of portfolio securities and (ii) the Portfolio may make margin deposits in connection with futures
contracts or other permissible investments;

8. Invest in warrants if, as a result thereof, more than 10% of the value of the total assets of
the Portfolio would be invested in warrants, provided that this restriction does not apply to warrants acquired
as the result of the purchase of another security. For purposes of these percentage limitations, the warrants
will be valued at the lower of cost or market;

9. Effect short sales of securities; or

10. Purchase a futures contract or an option thereon if, with respect to positions in futures or
options on futures which do not represent bona fide hedging, the aggregate initial margin and premiums on such
positions would exceed 5% of the Portfolio's net assets.

Notwithstanding anything in the above fundamental and operating restrictions to the contrary, the
Portfolio may, as a fundamental policy, invest all of its assets in the securities of a single open-end
management investment company with substantially the same fundamental investment objectives, policies and
restrictions as the Portfolio subject to the prior approval of the Investment Manager. The Investment Manager
will not approve such investment unless: (a) the Investment Manager believes, on the advice of counsel, that such
investment will not have an adverse effect on the tax status of the annuity contracts and/or life insurance
policies supported by the separate accounts of the Participating Insurance Companies which purchase shares of the
Trust; (b) the Investment Manager has given prior notice to the Participating Insurance Companies that it intends
to permit such investment and has determined whether such Participating Insurance Companies intend to redeem any
shares and/or discontinue purchase of shares because of such investment; (c) the Trustees have determined that
the fees to be paid by the Trust for administrative, accounting, custodial and transfer agency services for the
Portfolio subsequent to such an investment are appropriate, or the Trustees have approved changes to the
agreements providing such services to reflect a reduction in fees; (d) the Sub-advisor for the Portfolio has
agreed to reduce its fee by the amount of any investment advisory fees paid to the investment manager of such
open-end management investment company; and (e) shareholder approval is obtained if required by law. The
Portfolio will apply for such exemptive relief under the provisions of the 1940 Act, or other such relief as may
be necessary under the then governing rules and regulations of the 1940 Act, regarding investments in such
investment companies.

AST T. Rowe Price Global Bond Portfolio:

Investment Objective: The investment objective of the Portfolio is to provide high current income and capital
growth by investing in high-quality, foreign and U.S. government bonds.

Investment Policies: The Portfolio also seeks to moderate price fluctuation by actively managing its currency
exposure. The Portfolio's investments may include debt securities issued or guaranteed by a foreign national
government, its agencies, instrumentalities or political subdivisions, debt securities issued or guaranteed by
supranational organizations, corporate debt securities, bank or bank holding company debt securities and other
debt securities including those convertible into common stock. The Portfolio will invest at least 65% of its
assets in high-quality bonds but may invest up to 20% of assets in the aggregate in below investment-grade,
high-risk bonds and emerging market bonds.

Sub-advisor regularly analyzes a broad range of international equity and fixed-income markets in order
to assess the degree of risk and level of return that can be expected from each market. Of course, there can be
no assurance that Sub-advisor's forecasts of expected return will be reflected in the actual returns achieved by
the Portfolio.

The Portfolio's share price will fluctuate with market, economic and foreign exchange conditions, and
your investment may be worth more or less when redeemed than when purchased. The Portfolio should not be relied
upon as a complete investment program, nor used to play short-term swings in the global bond or foreign exchange
markets. The Portfolio is subject to risks unique to international investing.

It is contemplated that most foreign securities will be purchased in over-the-counter markets or on
stock exchanges located in the countries in which the respective principal offices of the issuers of the various
securities are located, if that is the best available market.

The Portfolio may invest in investment portfolios which have been authorized by the governments of
certain countries specifically to permit foreign investment in securities of companies listed and traded on the
stock exchanges in these respective countries. The Portfolio's investment in these portfolios is subject to the
provisions of the 1940 Act discussed below. If the Portfolio invests in such investment portfolios, the
Portfolio's shareholders will bear not only their proportionate share of the expenses of the Portfolio (including
operating expenses and the fees of the Investment Manager), but also will bear indirectly similar expenses of the
underlying investment portfolios. In addition, the securities of these investment portfolios may trade at a
premium over their net asset value.

Apart from the matters described herein, the Portfolio is not aware at this time of the existence of any
investment or exchange control regulations which might substantially impair the operations of the Portfolio as
described in the Trust's Prospectus and this Statement. It should be noted, however, that this situation could
change at any time.

The Portfolio may invest in companies located in Eastern Europe, Russia or certain Latin American
countries. The Portfolio will only invest in a company located in, or a government of, Eastern Europe, Russia or
Latin America, if the Sub-advisor believes the potential return justifies the risk.

Risk Factors of Foreign Investing. There are special risks in investing in the Portfolio. Certain of
these risks are inherent in any international mutual fund others relate more to the countries in which the
Portfolio will invest. Many of the risks are more pronounced for investments in developing or emerging
countries. Although there is no universally accepted definition, a developing country is generally considered to
be a country which is in the initial stages of its industrialization cycle with a per capita gross national
product of less than $8,000.

Investors should understand that all investments have a risk factor. There can be no guarantee against
loss resulting from an investment in the Portfolio, and there can be no assurance that the Portfolio's investment
policies will be successful, or that its investment objective will be attained. The Portfolio is designed for
individual and institutional investors seeking to diversify beyond the United States in an actively researched
and managed portfolio, and is intended for long-term investors who can accept the risks entailed in investment in
foreign securities. For a discussion of certain risks involved in foreign investing see this Statement and the
Trust's Prospectus under "Certain Risk Factors and Investment Methods."

The Portfolio may invest in the following:

Brady Bonds. The Portfolio may invest in Brady Bonds. Brady Bonds, which are named after former U.S.
Secretary of the Treasury Nicholas Brady, are used as a means of restructuring the external debt burden of a
government in certain emerging markets. A Brady bond is created when an outstanding commercial bank loan to a
government or private entity is exchanged for a new bond in connection with a debt restructuring plan. Brady
bonds may be collateralized or uncollateralized and issued in various currencies (although typically in the U.S.
dollar). They are often fully collateralized as to principal in U.S. Treasury zero coupon bonds. However, even
with this collateralization feature, Brady Bonds are often considered speculative, below investment grade
investments because the timely payment of interest is the responsibility of the issuing party (for example, a
Latin American country) and the value of the bonds can fluctuate significantly based on the issuer's ability or
perceived ability to make these payments. Finally, some Brady Bonds may be structured with floating rate or low
fixed rate coupons. The Portfolio does not expect to have more than 10% of its total assets invested in Brady
Bonds.

Nondiversified Investment Company. Despite its nondiversified status under the Investment Company Act,
the Portfolio generally will not invest more than 5% of its assets in any individual corporate issuer. However,
the Portfolio (1) may place assets in bank deposits or other short-term bank instruments with a maturity of up to
30 days provided that (i) the bank has a short-term credit rating of A1+ (or, if unrated, the equivalent as
determined by the Sub-advisor) and (ii) the Portfolio may not maintain more than 10% of its total assets with any
single bank; and (2) may maintain more than 5% of its total assets, including cash and currencies, in custodial
accounts or deposits of the Trust's custodian or sub-custodians.

Writing Covered Call Options. The Portfolio may write (sell) "covered" call options and purchase
options to close out options previously written by the Portfolio. In writing covered call options, the Portfolio
expects to generate additional premium income which should serve to enhance the Portfolio's total return and
reduce the effect of any price decline of the security or currency involved in the option. Covered call options
will generally be written on securities or currencies which, in Sub-advisor's opinion, are not expected to have
any major price increases or moves in the near future but which, over the long term, are deemed to be attractive
investments for the Portfolio.

Portfolio securities or currencies on which call options may be written will be purchased solely on the
basis of investment considerations consistent with the Portfolio's investment objective. The writing of covered
call options is a conservative investment technique believed to involve relatively little risk (in contrast to
the writing of naked or uncovered options, which the Portfolio will not do), but capable of enhancing the
Portfolio's total return. When writing a covered call option, the Portfolio, in return for the premium, gives up
the opportunity for profit from a price increase in the underlying security or currency above the exercise price,
but conversely, retains the risk of loss should the price of the security or currency decline. Unlike one who
owns securities or currencies not subject to an option, the Portfolio has no control over when it may be required
to sell the underlying securities or currencies, since it may be assigned an exercise notice at any time prior to
the expiration of its obligations as a writer. If a call option which the Portfolio has written expires, the
Portfolio will realize a gain in the amount of the premium; however, such gain may be offset by a decline in the
market value of the underlying security or currency during the option period. If the call option is exercised,
the Portfolio will realize a gain or loss from the sale of the underlying security or currency, The Portfolio
does not consider a security or currency covered by a call "pledged" as that term is used in the Portfolio's
policy which limits the pledging or mortgaging of its assets.

The premium received is the market value of an option. The premium the Portfolio will receive from
writing a call option will reflect, among other things, the current market price of the underlying security or
currency, the relationship of the exercise price to such market price, the historical price volatility of the
underlying security or currency, and the length of the option period. Once the decision to write a call option
has been made, Sub-advisor, in determining whether a particular call option should be written on a particular
security or currency, will consider the reasonableness of the anticipated premium and the likelihood that a
liquid secondary market will exist for those options. The premium received by the Portfolio for writing covered
call options will be recorded as a liability of the Portfolio. This liability will be adjusted daily to the
option's current market value, which will be the latest sale price at the time at which the net asset value per
share of the Portfolio is computed (close of the New York Stock Exchange), or, in the absence of such sale, the
average of the latest bid and asked price. The option will be terminated upon expiration of the option, the
purchase of an identical option in a closing transaction, or delivery of the underlying security or currency upon
the exercise of the option.

The Portfolio will effect closing transactions in order to realize a profit on an outstanding call
option, to prevent an underlying security or currency from being called, or, to permit the sale of the underlying
security or currency. The Portfolio will realize a profit or loss from a closing purchase transaction if the
cost of the transaction is less or more than the premium received from the writing of the option. Because
increases in the market price of a call option will generally reflect increases in the market price of the
underlying security or currency, any loss resulting from the repurchase of a call option is likely to be offset
in whole or in part by appreciation of the underlying security or currency owned by the Portfolio.

Writing Covered Put Options. Although the Portfolio has no current intention in the foreseeable future
of writing American or European style covered put options and purchasing put options to close out options
previously written by the Portfolio, the Portfolio reserves the right to do so.

The Portfolio would write put options only on a covered basis, which means that the Portfolio would
maintain in a segregated account cash, U.S. government securities or other liquid high-grade debt obligations in
an amount not less than the exercise price or the Portfolio will own an option to sell the underlying security or
currency subject to the option having an exercise price equal to or greater than the exercise price of the
"covered" options at all times while the put option is outstanding. (The rules of a clearing corporation
currently require that such assets be deposited in escrow to secure payment of the exercise price.) The
Portfolio would generally write covered put options in circumstances where Sub-advisor wishes to purchase the
underlying security or currency for the Portfolio's portfolio at a price lower than the current market price of
the security or currency. In such event the Portfolio would write a put option at an exercise price which,
reduced by the premium received on the option, reflects the lower price it is willing to pay. Since the
Portfolio would also receive interest on debt securities or currencies maintained to cover the exercise price of
the option, this technique could be used to enhance current return during periods of market uncertainty. The
risk in such a transaction would be that the market price of the underlying security or currency would decline
below the exercise price less the premiums received. Such a decline could be substantial and result in a
significant loss to the Portfolio. In addition, the Portfolio, because it does not own the specific securities
or currencies which it may be required to purchase in exercise of the put, cannot benefit from appreciation, if
any, with respect to such specific securities or currencies.

Purchasing Put Options. The Portfolio may purchase American or European style put options. As the
holder of a put option, the Portfolio has the right to sell the underlying security or currency at the exercise
price at any time during the option period. The Portfolio may enter into closing sale transactions with respect
to such options, exercise them or permit them to expire. The Portfolio may purchase put options for defensive
purposes in order to protect against an anticipated decline in the value of its securities or currencies. An
example of such use of put options is provided in this Statement under "Certain Risk Factors and Investment
Methods."

The Portfolio will not commit more than 5% of its total assets to premiums when purchasing call or put
options.

Futures Contracts.

Transactions in Futures. The Portfolio may enter into financial futures contracts, including
stock index, interest rate and currency futures ("futures" or "futures contracts"); however, the Portfolio has no
current intention of entering into interest rate futures. The Portfolio, however, reserves the right to trade in
financial futures of any kind.

Stock index futures contracts may be used to attempt to provide a hedge for a portion of the Portfolio's
portfolio, as a cash management tool, or as an efficient way for Sub-advisor to implement either an increase or
decrease in portfolio market exposure in response to changing market conditions. Stock index futures contracts
are currently traded with respect to the S&P 500 Index and other broad stock market indices, such as the New York
Stock Exchange Composite Stock Index and the Value Line Composite Stock Index. The Portfolio may, however,
purchase or sell futures contracts with respect to any stock index whose movements will, in its judgment, have a
significant correlation with movements in the prices of all or portions of the Portfolio's portfolio securities.

The Portfolio may not enter into futures contracts or options thereon if, with respect to positions
which do not qualify as bona fide hedging under applicable CFTC rules, the sum of the amounts of initial margin
deposits on the Portfolio's existing futures and premiums paid for options on futures would exceed 5% of the net
asset value of the Portfolio after taking into account unrealized profits and unrealized losses on any such
contracts it has entered into; provided however, that in the case of an option that is in-the-money at the time
of purchase, the in-the-money amount may be excluded in calculating the 5% limitation.

In instances involving the purchase of futures contracts or call options thereon or the writing of put
options thereon by the Portfolio, an amount of cash or other liquid assets equal to the market value of the
futures contracts and options thereon (less any related margin deposits), will be identified by the Portfolio to
cover the position, or alternative cover (such as owning an offsetting position) will be employed.

Options on Futures Contracts. As an alternative to writing or purchasing call and put options on stock
index futures, the Portfolio may write or purchase call and put options on financial indices. Such options would
be used in a manner similar to the use of options on futures contracts. From time to time, a single order to
purchase or sell futures contracts (or options thereon) may be made on behalf of the Portfolio and other mutual
funds or portfolios of mutual funds managed by the Sub-advisor or T. Rowe Price Associates, Inc. Such aggregated
orders would be allocated among the Portfolio and such other portfolios in a fair and non-discriminatory manner.
See this Statement and the Trust's Prospectus under "Certain Risk Factors and Investment Methods" for a
description of certain risks involved in options and futures contracts.

Additional Futures and Options Contracts. Although the Portfolio has no current intention of engaging
in futures or options transactions other than those described above, it reserves the right to do so. Such
futures or options trading might involve risks which differ from those involved in the futures and options
described above.

Foreign Currency Transactions. The Portfolio will generally enter into forward foreign currency
exchange contracts under two circumstances. First, when the Portfolio enters into a contract for the purchase or
sale of a security denominated in a foreign currency, it may desire to "lock in" the U.S. dollar price of the
security. Second, when the Sub-advisor believes that the currency of a particular foreign country may suffer or
enjoy a substantial movement against another currency, including the U.S. dollar, it may enter into a forward
contract to sell or buy the amount of the former foreign currency, approximating the value of some or all of the
Portfolio's securities denominated in such foreign currency. Alternatively, where appropriate, the Portfolio may
hedge all or part of its foreign currency exposure through the use of a basket of currencies or a proxy currency
where such currency or currencies act as an effective proxy for other currencies. In such a case, the Portfolio
may enter into a forward contract where the amount of the foreign currency to be sold exceeds the value of the
securities denominated in such currency. The use of this basket hedging technique may be more efficient and
economical than entering into separate forward contracts for each currency held in the Portfolio. The precise
matching of the forward contract amounts and the value of the securities involved will not generally be possible
since the future value of such securities in foreign currencies will change as a consequence of market movements
in the value of those securities between the date the forward contract is entered into and the date it matures.
The projection of short-term currency market movement is extremely difficult, and the successful execution of a
short-term hedging strategy is highly uncertain. Other than as set forth above, and immediately below, the
Portfolio will also not enter into such forward contracts or maintain a net exposure to such contracts where the
consummation of the contracts would obligate the Portfolio to deliver an amount of foreign currency in excess of
the value of the Portfolio's securities or other assets denominated in that currency. The Portfolio, however, in
order to avoid excess transactions and transaction costs, may maintain a net exposure to forward contracts in
excess of the value of the Portfolio's securities or other assets to which the forward contracts relate
(including accrued interest to the maturity of the forward on such securities) provided the excess amount is
"covered" by liquid, high-grade debt securities, denominated in any currency, at least equal at all times to the
amount of such excess. For these purposes "the securities or other assets to which the forward contracts relate
may be securities or assets denominated in a single currency, or where proxy forwards are used, securities
denominated in more than one currency. Under normal circumstances, consideration of the prospect for currency
parities will be incorporated into the longer term investment decisions made with regard to overall
diversification strategies. However, Sub-advisor believes that it is important to have the flexibility to enter
into such forward contracts when it determines that the best interests of the Portfolio will be served. Forward
foreign currency exchange contracts ("forwards") will generally have terms of less than one year.

The Portfolio's dealing in forward foreign currency exchange contracts will generally be limited to the
transactions described above. However, the Portfolio reserves the right to enter into forward foreign currency
contracts for different purposes and under different circumstances. Of course, the Portfolio is not required to
enter into forward contracts with regard to its foreign currency-denominated securities and will not do so unless
deemed appropriate by the Sub-advisor. It also should be realized that this method of hedging against a decline
in the value of a currency does not eliminate fluctuations in the underlying prices of the securities. It simply
establishes a rate of exchange at a future date. Additionally, although such contracts tend to minimize the risk
of loss due to a decline in the value of the hedged currency, at the same time, they tend to limit any potential
gain which might result from an increase in the value of that currency.

When the Portfolio purchases a foreign bond with a higher interest rate than is available on U.S. bonds
of a similar maturity, the additional yield on the foreign bond could be substantially lost if the Portfolio were
to enter into a direct hedge by selling the foreign currency and purchasing the U.S. dollar. This is what is
known as the "cost" of hedging. Proxy hedging attempts to reduce this cost through an indirect hedge back to the
U.S. dollar. It is important to note that hedging costs are treated as capital transactions and are not,
therefore, deducted from the Portfolio's dividend distribution and are not reflected in its yield. Instead such
costs will, over time, be reflected in the Portfolio's net asset value per share. For an additional discussion
of certain risks involved in foreign investing, see this Statement and the Trust's Prospectus under "Certain
Risk Factors and Investment Methods."

Hybrid Commodity and Security Instruments. Instruments have been developed which combine the elements
of futures contracts or options with those of debt, preferred equity or a depositary instrument (hereinafter
"Hybrid Instruments"). Often these hybrid instruments are indexed to the price of a commodity or particular
currency or a domestic or foreign debt or equity securities index. Hybrid instruments may take a variety of
forms, including, but not limited to, debt instruments with interest or principal payments or redemption terms
determined by reference to the value of a currency or commodity at a future point in time, preferred stock with
dividend rates determined by reference to the value of a currency, or convertible securities with the conversion
terms related to a particular commodity. For a discussion of certain risks involved in hybrid instruments, see
this Statement under "Certain Risk Factors and Investment Methods."

Debt Securities. The Portfolio's investment program permits it to purchase below investment grade
securities. Since investors generally perceive that there are greater risks associated with investment in lower
quality securities, the yields from such securities normally exceed those obtainable from higher quality
securities. However, the principal value of lower-rated securities generally will fluctuate more widely than
higher quality securities. Lower quality investments entail a higher risk of default -- that is, the nonpayment
of interest and principal by the issuer than higher quality investments. Such securities are also subject to
special risks, discussed below. Although the Portfolio seeks to reduce risk by portfolio diversification, credit
analysis, and attention to trends in the economy, industries and financial markets, such efforts will not
eliminate all risk. There can, of course, be no assurance that the Portfolio will achieve its investment
objective.

After purchase by the Portfolio, a debt security may cease to be rated or its rating may be reduced
below the minimum required for purchase by the Portfolio. Neither event will require a sale of such security by
the Portfolio. However, Sub-advisor will consider such event in its determination of whether the Portfolio
should continue to hold the security. To the extent that the ratings given by Moody's Investors Service, Inc.
("Moody's") or Standard & Poor's Corporation ("S&P") may change as a result of changes in such organizations or
their rating systems, the Portfolio will attempt to use comparable ratings as standards for investments in
accordance with the investment policies contained in the prospectus. The Portfolio may invest up to 20% of its
total assets in securities rated below BBB or Baa, including bonds in default or those with the lowest rating.
See the Appendix to this Statement for a more complete description of the ratings assigned by ratings
organizations and their respective characteristics.

High Yield, High Risk Securities. Below investment grade securities (rated below Baa by Moody's and
below BBB by S&P) or unrated securities of equivalent quality in the Sub-advisor's judgment, carry a high degree
of risk (including the possibility of default or bankruptcy of the issuers of such securities), generally involve
greater volatility of price and risk of principal and income, and may be less liquid, than securities in the
higher rating categories and are considered speculative. The lower the ratings of such debt securities, the
greater their risks render them like equity securities. For an additional discussion of certain risks involved
in investing in lower-rated debt securities, see this Statement and the Trust's Prospectus under "Certain Risk
Factors and Investment Methods."

Zero-Coupon Securities. The Portfolio may invest in zero-coupon securities which pay no cash income and
are sold at substantial discounts from their value at maturity. For a discussion of zero-coupon securities and
certain risks involved therein, see this Statement under "Certain Risk Factors and Investment Methods."

Lending of Portfolio Securities. For the purpose of realizing additional income, the Portfolio may make
secured loans of portfolio securities amounting to not more than 33 1/3% of its total assets. This policy is a
"fundamental policy." Securities loans are made to broker-dealers, institutional investors, or other persons
pursuant to agreements requiring that the loans be continuously secured by collateral at least equal at all times
to the value of the securities lent, marked to market on a daily basis. The collateral received will consist of
cash or U.S. government securities. While the securities are being lent, the Portfolio will continue to receive
the equivalent of the interest or dividends paid by the issuer on the securities, as well as interest on the
investment of the collateral or a fee from the borrower. The Portfolio has a right to call each loan and obtain
the securities on three business days' notice or, in connection with securities trading on foreign markets,
within such longer period of time which coincides with the normal settlement period for purchases and sales of
such securities in such foreign markets. The Portfolio will not have the right to vote securities while they are
being lent, but it will call a loan in anticipation of any important vote. The risks in lending portfolio
securities, as with other extensions of secured credit, consist of possible delay in receiving additional
collateral or in the recovery of the securities or possible loss of rights in the collateral should the borrower
fail financially.

Other Lending/Borrowing. Subject to approval by the SEC, the Portfolio may make loans to, or borrow
funds from, other mutual funds sponsored or advised by the Sub-advisor or T. Rowe Price Associates, Inc. The
Portfolio has no current intention of engaging in these practices at this time.

Investment Policies Which May Be Changed Without Shareholder Approval. The following limitations are
applicable to the AST T. Rowe Price Global Bond Portfolio. These limitations are not "fundamental" restrictions
and may be changed by the Trustees without shareholder approval. The Portfolio will not:

1. Pledge, mortgage or hypothecate its assets in excess, together with permitted borrowings, of
1/3 of its total assets;

2. Purchase securities on margin, unless, by virtue of its ownership of other securities, it has
the right to obtain securities equivalent in kind and amount to the securities sold and, if the right is
conditional, the sale is made upon the same conditions, except in connection with arbitrage transactions and
except that the Portfolio may obtain such short-term credits as may be necessary for the clearance of purchases
and sales of securities;

3. Purchase illiquid securities if, as a result, more than 15% of its net assets would be invested
in such securities;

4. Buy options on securities or financial instruments, unless the aggregate premiums paid on all
such options held by the Portfolio at any time do not exceed 20% of its net assets; or sell put options on
securities if, as a result, the aggregate value of the obligations underlying such put options would exceed 50%
of the Portfolio's net assets;

5. Enter into futures contracts or purchase options thereon which do not represent bona fide
hedging unless immediately after the purchase, the value of the aggregate initial margin with respect to all such
futures contracts entered into on behalf of the Portfolio and the premiums paid for such options on futures
contracts does not exceed 5% of the Portfolio's total assets, provided that in the case of an option that is
in-the-money at the time of purchase, the in-the-money amount may be excluded in computing the 5% limit;

6. Purchase warrants if as a result warrants taken at the lower of cost or market value would
represent more than 10% of the value of the Portfolio's total net assets, except that this restriction does not
apply to warrants acquired as a result of the purchase of another security;

7. Make securities loans if the value of such securities loaned exceeds 30% of the value of the
Portfolio's total assets at the time any loan is made; all loans of portfolio securities will be fully
collateralized and marked to market daily. The Portfolio has no current intention of making loans of portfolio
securities that would amount to greater than 5% of the Portfolio's total assets; or

8. Purchase or sell real estate limited partnership interests.

9. Purchase securities which are not bonds denominated in foreign currency ("international bonds")
if, immediately after such purchase, less than 65% of its total assets would be invested in international bonds,
except that for temporary defensive purposes the Portfolio may purchase securities which are not international
bonds without limitation;

10. Borrow money in excess of 5% of its total assets (taken at market value) or borrow other than
from banks; however, in the case of reverse repurchase agreements, the Portfolio may invest in such agreements
with other than banks subject to total asset coverage of 300% for such agreements and all borrowings;

11. Invest more than 20% of its total assets in below investment grade, high-risk bonds, including
bonds in default or those with the lowest rating;

12. Invest in companies for the purpose of exercising management or control;

13. Purchase securities of open-end or closed-end investment companies except in compliance with
the 1940 Act; or

14. Effect short sales of securities.

In addition to the restrictions described above, some foreign countries limit, or prohibit, all direct
foreign investment in the securities of their companies. However, the governments of some countries have
authorized the organization of investment funds to permit indirect foreign investment in such securities. For
tax purposes these funds may be known as Passive Foreign Investment Companies. The Portfolio is subject to
certain percentage limitations under the 1940 Act relating to the purchase of securities of investment companies,
and may be subject to the limitation that no more than 10% of the value of the Portfolio's total assets may be
invested in such securities.

Restrictions with respect to repurchase agreements shall be construed to be for repurchase agreements
entered into for the investment of available cash consistent with the Portfolio's repurchase agreement
procedures, not repurchase commitments entered into for general investment purposes.

If a percentage restriction on investment or utilization of assets as set forth under "Investment
Restrictions" and "Investment Policies" above is adhered to at the time an investment is made, a later change in
percentage resulting from changes in the value or the total cost of Portfolio's assets will not be considered a
violation of the restriction.

AST Federated High Yield Portfolio:

Investment Objective: The investment objective of the Portfolio is to seek high current income by investing
primarily in a diversified portfolio of fixed income securities. The fixed income securities in which the
Portfolio intends to invest are lower-rated corporate debt obligations.

Investment Policies:

Corporate Debt Securities. The Portfolio invests primarily in corporate debt securities. The corporate
debt obligations in which the Portfolio intends to invest are expected to be lower-rated. For a discussion of
the special risks associated with lower-rated securities, see the Trust's Prospectus and this Statement under
"Certain Risk Factors and Investment Methods." Corporate debt obligations in which the Portfolio invests may
bear fixed, floating, floating and contingent, or increasing rates of interest. They may involve equity features
such as conversion or exchange rights, warrants for the acquisition of common stock of the same or a different
issuer, participations based on revenues, sales or profits, or the purchase of common stock in a unit transaction
(where corporate debt securities and common stock are offered as a unit).

U.S. Government Obligations. The types of U.S. government obligations in which the Portfolio may invest
include, but are not limited to, direct obligations of the U.S. Treasury (such as U.S. Treasury bills, notes, and
bonds) and obligations issued or guaranteed by U.S. government agencies or instrumentalities (such as the Federal
Home Loan Banks, Federal National Mortgage Association, Government National Mortgage Association, Federal Farm
Credit Banks, Tennessee Valley Authority, Export-Import Bank of the United States, Commodity Credit Corporation,
Federal Financing Bank, Student Loan Marketing Association, Federal Home Loan Mortgage Corporation, or National
Credit Union Administration). These securities may be backed by: the full faith and credit of the U.S. Treasury;
the issuer's right to borrow from the U.S. Treasury; the discretionary authority of the U.S. government to
purchase certain obligations of agencies or instrumentalities; or the credit of the agency or instrumentality
issuing the obligations. For an additional discussion of the types of U.S. government obligations in which the
Portfolio may invest, see the Trust's Prospectus under "Investment Objectives and Policies."

Time and Savings Deposits and Bankers' Acceptances. The Portfolio may enter into time and savings
deposits (including certificates of deposit) and may purchase bankers' acceptances. The Portfolio may enter into
time and savings deposits (including certificates of deposit) in commercial or savings banks whose deposits are
insured by the Bank Insurance Fund ("BIF"), or the Savings Association Insurance Fund ("SAIF"), including
certificates of deposit issued by and other time deposits in foreign branches of BIF-insured banks. The
Portfolio may also purchase bankers' acceptances issued by a BIF-insured bank, or issued by the bank's Edge Act
subsidiary and guaranteed by the bank, with remaining maturities of nine months or less. The total acceptances
of any bank held by the Portfolio cannot exceed 0.25 of 1% of such bank's total deposits according to the bank's
last published statement of condition preceding the date of acceptance; and general obligations of any state,
territory, or possession of the United States, or their political subdivisions, so long as they are either (1)
rated in one of the four highest grades by nationally recognized statistical rating organizations or (2) issued
by a public housing agency and backed by the full faith and credit of the United States.

When-Issued and Delayed Delivery Transactions. The Portfolio may purchase fixed-income securities on a
when-issued or delayed delivery basis. The Portfolio may engage in when-issued and delayed delivery transactions
only for the purpose of acquiring portfolio securities consistent with the Portfolio's investment objective and
policies, not for investment leverage. These transactions are arrangements in which the Portfolio purchases
securities with payment and delivery scheduled for a future time. Settlement dates may be a month or more after
entering into these transactions, and the market values of the securities purchased may vary from the purchase
prices. These transactions are made to secure what is considered to be an advantageous price and yield for the
Portfolio.

No fees or other expenses, other than normal transaction costs, are incurred. However, liquid assets of
the Portfolio sufficient to make payment for the securities to be purchased are segregated at the trade date.
These securities are marked to market daily and will maintain until the transaction is settled. For an
additional discussion of when-issued securities and certain risks involved therein, see this Statement under
"Certain Risk Factors and Investment Methods."

Lending Portfolio Securities. In order to generate additional income, the Portfolio may lend its
securities to brokers/dealers, banks, or other institutional borrowers of securities. The collateral received
when the Portfolio lends portfolio securities must be valued daily and, should the market value of the loaned
securities increase, the borrower must furnish additional collateral to the Portfolio. During the time portfolio
securities are on loan, the borrower pays the Portfolio any dividends or interest paid on such securities. Loans
are subject to termination at the option of the Portfolio or the borrower. The Portfolio may pay reasonable
administrative and custodial fees in connection with a loan and may pay a negotiated portion of the interest
earned on the cash or cash equivalent collateral to the borrower or placing broker. The Portfolio does not have
the right to vote securities on loan, but would terminate the loan and regain the right to vote if that were
considered important with respect to the investment.

Reverse Repurchase Agreements. The Portfolio may also enter into reverse repurchase agreements. When
effecting reverse repurchase agreements, liquid assets of the Portfolio, in a dollar amount sufficient to make
payment for the obligations to be purchased, are segregated at the trade date. These securities are marked to
market daily and are maintained until the transaction is settled. During the period any reverse repurchase
agreements are outstanding, but only to the extent necessary to ensure completion of the reverse repurchase
agreements, the Portfolio will restrict the purchase of portfolio instruments to money market instruments
maturing on or before the expiration date of the reverse repurchase agreements. For a discussion of reverse
repurchase agreements and certain risks involved therein, see the Trust's Prospectus under "Certain Risk Factors
and Investment Methods."

Portfolio Turnover. The Portfolio may experience greater portfolio turnover than would be expected with
a portfolio of higher-rated securities. For an additional discussion of portfolio turnover, see this Statement
and the Trust's Prospectus under "Portfolio Turnover."

Adverse Legislation. In 1989, legislation was enacted that required federally insured savings and loan
associations to divest their holdings of lower-rated bonds by 1994. This legislation also created the Resolution
Trust Corporation (the "RTC"), which disposed of a substantial portion of lower-rated bonds held by failed
savings and loan associations. The reduction of the number of institutions empowered to purchase and hold
lower-rated bonds, and the divestiture of bonds by these institutions and the RTC, have had an adverse impact on
the overall liquidity of the market for such bonds. Federal and state legislatures and regulators have and may
continue to propose new laws and regulations designed to limit the number or type of institutions that may
purchase lower-rated bonds, reduce the tax benefits to issuers of such bonds, or otherwise adversely impact the
liquidity of such bonds. The Portfolio cannot predict the likelihood that any of these proposals will be
adopted, or their potential impact on the liquidity of lower-rated bonds.

Foreign Securities. The Portfolio may invest up to 5% of its total assets in foreign securities that are
not publicly traded in the United States. For a discussion of certain risks involved with investing in foreign
securities, including currency risks, see this Statement and the Trust's Prospectus under "Certain Risk Factors
and Investment Methods."

Investment Policies Which May Be Changed Without Shareholder Approval. The following limitations are
applicable to the AST Federated High Yield Portfolio. The limitations are not "fundamental" restrictions and may
be changed by the Trustees without shareholder approval.

1. The Portfolio will not invest more than 15% of the value of its net assets in securities that
are not readily marketable;

2. The Portfolio will not purchase the securities of any issuer (other than the U.S. government,
its agencies, or instrumentalities or instruments secured by securities of such issuers, such as repurchase
agreements) if as a result more than 5% of the value of its total assets would be invested in the securities of
such issuer. For these purposes, the Portfolio takes all common stock and all preferred stock of an issuer each
as a single class, regardless of priorities, series designations or other differences.

AST Lord Abbett Bond-Debenture Portfolio:

Investment Objective: The investment objective of the Portfolio is to seek high current income and the
opportunity for capital appreciation to produce a high total return.

Investment Policies:

Convertible Securities. The Portfolio may invest in convertible bonds and convertible preferred
stocks. These investments tend to be more volatile than debt securities but tend to be less volatile and produce
more income than their underlying common stocks.

Investment Policies Which May Be Changed Without Shareholder Approval. The following limitations are
applicable to the AST Lord Abbett Bond-Debenture Portfolio. These limitations are not "fundamental" restrictions
and may be changed by the Trustees without shareholder approval. The Portfolio will not:

1. Pledge its assets (other than to secure borrowings, or to the extent permitted by the Portfolio's
investment policies);

2. Make short sales of securities;

3. Invest knowingly more than 15% of its net assets (at the time of investment) in illiquid securities;

4. Invest in the securities of other investment companies except in compliance with the 1940 Act;

5. Invest in real estate limited partnership interests or interests in oil, gas or other mineral leases, or
exploration or other development programs, except that the Portfolio may invest in securities issued by companies
that engage in oil, gas or other mineral exploration or other development activities;

6. Write, purchase or sell puts, calls, straddles, spreads or combinations thereof, except to the extent
permitted in this Statement and the Trust's Prospectus, as they may be amended from time to time;

7. Invest more than 10% of the market value of its gross assets at the time of investment in debt
securities that are in default as to interest or principal.

AST PIMCO Total Return Bond Portfolio:

Investment Objective: The investment objective of the Portfolio is to seek to maximize total return, consistent
with preservation of capital. The Sub-advisor will seek to employ prudent investment management techniques,
especially in light of the broad range of investment instruments in which the Portfolio may invest.

Investment Policies:

Borrowing. The Portfolio may borrow for temporary administrative purposes. This borrowing may be
unsecured. The 1940 Act requires the Portfolio to maintain continuous asset coverage (that is, total assets
including borrowings, less liabilities exclusive of borrowings) of 300% of the amount borrowed. If the 300%
asset coverage should decline as a result of market fluctuations or other reasons, the Portfolio may be required
to sell some of its holdings within three days to reduce the debt and restore the 300% asset coverage, even
though it may be disadvantageous from an investment standpoint to sell securities at that time. Borrowing will
tend to exaggerate the effect on net asset value of any increase or decrease in the market value of the
Portfolio. Money borrowed will be subject to interest costs which may or may not be recovered by appreciation of
the securities purchased. The Portfolio also may be required to maintain minimum average balances in connection
with such borrowing or to pay a commitment or other fee to maintain a line of credit; either of these
requirements would increase the cost of borrowing over the stated interest rate.

In addition to the above, the Portfolio may enter into reverse repurchase agreements and "mortgage
dollar rolls." A reverse repurchase agreement involves the sale of a portfolio-eligible security by the
Portfolio, coupled with its agreement to repurchase the instrument at a specified time and price. In a "dollar
roll" transaction the Portfolio sells a mortgage-related security (such as a GNMA security) to a dealer and
simultaneously agrees to repurchase a similar security (but not the same security) in the future at a
pre-determined price. A "dollar roll" can be viewed, like a reverse repurchase agreement, as a collateralized
borrowing in which the Portfolio pledges a mortgage-related security to a dealer to obtain cash. Unlike in the
case of reverse repurchase agreements, the dealer with which the Portfolio enters into a dollar roll transaction
is not obligated to return the same securities as those originally sold by the Portfolio, but only securities
which are "substantially identical." To be considered "substantially identical," the securities returned to the
Portfolio generally must: (1) be collateralized by the same types of underlying mortgages; (2) be issued by the
same agency and be part of the same program; (3) have a similar original stated maturity; (4) have identical net
coupon rates; (5) have similar maturity: (4) have identical net coupon rates; (5) have similar market yields (and
therefore price); and (6) satisfy "good delivery" requirements, meaning that the aggregate principal amounts of
the securities delivered and received back must be within 2.5% of the initial amount delivered. The Portfolio's
obligations under a dollar roll agreement must be covered by cash or other liquid assets equal in value to the
securities subject to repurchase by the Portfolio, maintained in a segregated account.

Both dollar roll and reverse repurchase agreements will be subject to the 1940 Act's limitations on
borrowing, as discussed above. Furthermore, because dollar roll transactions may be for terms ranging between
one and six months, dollar roll transactions may be deemed "illiquid" and subject to the Portfolio's overall
limitations on investments in illiquid securities.

Corporate Debt Securities. The Portfolio's investments in U.S. dollar- or foreign currency-denominated
corporate debt securities of domestic or foreign issuers are limited to corporate debt securities (corporate
bonds, debentures, notes and other similar corporate debt instruments, including convertible securities) which
meet the minimum ratings criteria set forth for the Portfolio, or, if unrated, are in the Sub-advisor's opinion
comparable in quality to corporate debt securities in which the Portfolio may invest. In the event that ratings
services assign different ratings to the same security, the Sub-advisor will determine which rating it believes
best reflects the security's quality and risk at that time, which may be the higher of the several assigned
ratings. The rate of return or return of principal on some debt obligations may be linked or indexed to the
level of exchange rates between the U.S. dollar and a foreign currency or currencies.

Among the corporate bonds in which the Portfolio may invest are convertible securities. A convertible
security is a bond, debenture, note, or other security that entitles the holder to acquire common stock or other
equity securities of the same or a different issuer. A convertible security generally entitles the holder to
receive interest paid or accrued until the convertible security matures or is redeemed, converted or exchanged.
Before conversion, convertible securities have characteristics similar to nonconvertible debt securities.
Convertible securities rank senior to common stock in a corporation's capital structure and, therefore, generally
entail less risk than the corporation's common stock, although the extent to which such risk is reduced depends
in large measure upon the degree to which the convertible security sells above its value as a fixed-income
security.

A convertible security may be subject to redemption at the option of the issuer at a predetermined
price. If a convertible security held by the Portfolio is called for redemption, the Portfolio will be required
to permit the issuer to redeem the security and convert it to underlying common stock, or will sell the
convertible security to a third party. The Portfolio generally would invest in convertible securities for their
favorable price characteristics and total return potential and would normally not exercise an option to convert.

Investments in securities rated below investment grade that are eligible for purchase by the Portfolio
(i.e., rated B or better by Moody's or S&P) are described as "speculative" by both Moody's and S&P. Investment
in lower-rated corporate debt securities ("high yield securities") generally provides greater income and
increased opportunity for capital appreciation than investments in higher quality securities, but they also
typically entail greater price volatility and principal and income risk. These high yield securities are
regarded as high risk and predominantly speculative with respect to the issuer's continuing ability to meet
principal and interest payments. The market for these securities is relatively new, and many of the outstanding
high yield securities have not endured a major business recession. A long-term track record on default rates,
such as that for investment grade corporate bonds, does not exist for this market. Analysis of the
creditworthiness of issuers of debt securities that are high yield may be more complex than for issuers of higher
quality debt securities.

High yield, high risk securities may be more susceptible to real or perceived adverse economic and
competitive industry conditions than investment grade securities. The price of high yield securities have been
found to be less sensitive to interest-rate adverse economic downturns or individual corporate developments. A
projection of an economic downturn or of a period of rising interest rates, for example, could cause a decline in
high yield security prices because the advent of a recession could lessen the ability of a highly leveraged
company to make principal and interest payments on its debt securities. If an issuer of high yield securities
defaults, in addition to risking payment of all or a portion of interest and principal, the Portfolio may incur
additional expenses to seek recovery. In the case of high yield securities structured as zero-coupon or
pay-in-kind securities, their market prices are affected to a greater extent by interest rate changes, and
therefore tend to be more volatile than securities which pay interest periodically and in cash.

The secondary market on which high yield, high risk securities are traded may be less liquid than the
market for higher grade securities. Less liquidity in the secondary trading market could adversely affect the
price at which the Portfolio could sell a high yield security, and could adversely affect the daily net asset
value of the shares. Adverse publicity and investor perceptions, whether or not based on fundamental analysis,
may decrease the values and liquidity of high yield securities especially in a thinly-traded market. When
secondary markets for high yield securities are less liquid than the market for higher grade securities, it may
be more difficult to value the securities because such valuation may require more research, and elements of
judgment may play a greater role in the valuation because there is less reliable, objective data available. The
Sub-advisor seeks to minimize the risks of investing in all securities through diversification, in-depth credit
analysis and attention to current developments in interest rates and market conditions. For an additional
discussion of certain risks involved in lower-rated debt securities, see this Statement and the Trust's
Prospectus under "Certain Risk Factors and Investment Objectives."

Participation on Creditors Committees. The Portfolio may from time to time participate on committees
formed by creditors to negotiate with the management of financially troubled issuers of securities held by the
Portfolio. Such participation may subject the Portfolio to expenses such as legal fees and may make the
Portfolio an "insider" of the issuer for purposes of the federal securities laws, and therefore may restrict the
Portfolio's ability to trade in or acquire additional positions in a particular security when it might otherwise
desire to do so. Participation by the Portfolio on such committees also may expose the Portfolio to potential
liabilities under the federal bankruptcy laws or other laws governing the rights of creditors and debtors. The
Portfolio will participate on such committees only when the Sub-advisor believes that such participation is
necessary or desirable to enforce the Portfolio's rights as a creditor or to protect the value of securities held
by the Portfolio.

Mortgage-Related Securities. The Portfolio may invest in mortgage-backed securities. Mortgage-related
securities are interests in pools of mortgage loans made to residential home buyers, including mortgage loans
made by savings and loan institutions, mortgage bankers, commercial banks and others. Pools of mortgage loans
are assembled as securities for sale to investors by various governmental, government-related and private
organizations (see "Mortgage Pass-Through Securities"). The Portfolio may also invest in debt securities which
are secured with collateral consisting of mortgage-related securities (see "Collateralized Mortgage
Obligations"), and in other types of mortgage-related securities.

Interests in pools of mortgage-related securities differ from other forms of debt securities, which
normally provide for periodic payment of interest in fixed amounts with principal payments at maturity or
specified call dates. Instead, these securities provide a monthly payment which consists of both interest and
principal payments. In effect, these payments are a "pass-through" of the monthly payments made by the
individual borrowers on their residential or commercial mortgage loans, net of any fees paid to the issuer or
guarantor of such securities. Additional payments are caused by repayments of principal resulting from the sale
of the underlying property, refinancing or foreclosure, net of fees or costs which may be incurred. Some
mortgage-related securities (such as securities issued by the Government National Mortgage Association) are
described as "modified pass-through." These securities entitle the holder to receive all interest and principal
payments owned on the mortgage pool, net of certain fees, at the scheduled payment dates regardless of whether or
not the mortgagor actually makes the payment.

The principal governmental guarantor of mortgage-related securities is the Government National Mortgage
Association ("GNMA"). GNMA is a wholly owned United States Government corporation within the Department of
Housing and Urban Development. GNMA is authorized to guarantee, with the full faith and credit of the United
States Government, the timely payment of principal and interest on securities issued by institutions approved by
GNMA (such as savings and loan institutions, commercial banks and mortgage bankers) and backed by pools of
FHA-insured or VA-guaranteed mortgages.

Government-related guarantors (i.e., not backed by the full faith and credit of the United States
Government) include the Federal National Mortgage Association ("FNMA") and the Federal Home Loan Mortgage
Corporation ("FHLMC"). FNMA is a government-sponsored corporation owned entirely by private stockholders. It is
subject to general regulation by the Secretary of Housing and Urban Development. FNMA purchases conventional
(i.e., not insured or guaranteed by any government agency) residential mortgages from a list of approved
seller/servicers which include state and federally chartered savings and loan associations, mutual savings banks,
commercial banks and credit unions and mortgage bankers. Pass-though securities issued by FNMA are guaranteed as
to timely payment of principal and interest by FNMA but are not backed by the full faith and credit of the United
States Government.

FHLMC was created by Congress in 1970 for the purpose of increasing the availability of mortgage credit
for residential housing. It is a government-sponsored corporation formerly owned by the twelve Federal Home Loan
Banks and now owned entirely by private stockholders. FHLMC issues Participation Certificates ("PC's") which
represent interests in conventional mortgages from FHLMC's national portfolio. FHLMC guarantees the timely
payment of interest and ultimate collection of principal, but PCs are not backed by the full faith and credit of
the United States Government.

Commercial banks, savings and loan institutions, private mortgage insurance companies, mortgage bankers
and other secondary market issuers also create pass-though pools of conventional residential mortgage loans.
Such issuers may, in addition, be the originators and/or servicers of the underlying mortgage loans as well as
the guarantors of the mortgage-related securities. Pools created by such nongovernmental issuers generally offer
a higher rate of interest than government and government-related pools because there are no direct or indirect
government or agency guarantees of payments in the former pools. However, timely payment of interest and
principal of these pools may be supported by various forms of insurance or guarantees, including individual loan,
title, pool and hazard insurance and letters of credit. The insurance and guarantees are issued by governmental
entities, private insurers and the mortgage poolers. Such insurance and guarantees and the creditworthiness of
the issuers thereof will be considered in determining whether a mortgage-related security meets the Trust's
investment quality standards. There can be no assurance that the private insurers or guarantors can meet their
obligations under the insurance policies or guarantee arrangements. The Portfolio may buy mortgage-related
securities without insurance or guarantees if, through an examination of the loan experience and practices of the
originator/servicers and poolers, the Sub-advisor determines that the securities meet the Trust's quality
standards. Although the market for such securities is becoming increasingly liquid, securities issued by certain
private organizations may not be readily marketable. The Portfolio will not purchase mortgage-related securities
or any other assets which in the Sub-advisor's opinion are illiquid if, as a result, more than 15% of the value
of the Portfolio's total assets will be illiquid.

Mortgage-backed securities that are issued or guaranteed by the U.S. Government, its agencies or
instrumentalities, are not subject to the Portfolio's industry concentration restrictions, set forth in this
Statement under "Investment Restrictions," by virtue of the exclusion from that test available to all U.S.
Government securities. In the case of privately issued mortgage-related securities, the Portfolio takes the
position that mortgage-related securities do not represent interests in any particular "industry" or group of
industries. The assets underlying such securities may be represented by a portfolio of first lien residential
mortgages (including both whole mortgage loans and mortgage participation interests) or portfolios of mortgage
pass-through securities issued or guaranteed by GNMA, FNMA or FHLMC. Mortgage loans underlying a
mortgage-related security may in turn be insured or guaranteed by the Federal Housing Administration or the
Department of Veterans Affairs. In the case of private issue mortgage-related securities whose underlying assets
are neither U.S. Government securities nor U.S. Government-insured mortgages, to the extent that real properties
securing such assets may be located in the same geographical region, the security may be subject to a greater
risk of default that other comparable securities in the event of adverse economic, political or business
developments that may affect such region and ultimately, the ability of residential homeowners to make payments
of principal and interest on the underlying mortgages.

Collateralized Mortgage Obligations (CMOs). A CMO is a hybrid between a mortgage-backed bond
and a mortgage pass-through security. Similar to a bond, interest and prepaid principal is paid, in most cases,
semiannually. CMOs may be collateralized by whole mortgage loans, but are more typically collateralized by
portfolios of mortgage pass-through securities guaranteed by GNMA, FHLMC, or FNMA, and their income streams.

CMOs are structured into multiple classes, each bearing a different stated maturity. Actual maturity
and average life will depend upon the prepayment experience of the collateral. CMOs provide for a modified form
of call protection through a de facto breakdown of the underlying pool of mortgages according to how quickly the
--------
loans are repaid. Monthly payment of principal received from the pool of underlying mortgages, including
prepayments, is first returned to investors holding the shortest maturity class. Investors holding the longer
maturity classes receive principal only after the first class has been retired. An investor is partially guarded
against a sooner than desired return or principal because of the sequential payments.

In a typical CMO transaction, a corporation ("issuer") issues multiple series (e.g., A, B, C, Z) of the
CMO bonds ("Bonds"). Proceeds of the Bond offering are used to purchase mortgages or mortgage pass-through
certificates ("Collateral"). The Collateral is pledged to a third party trustee as security for the Bonds.
Principal and interest payments from the Collateral are used to pay principal on the Bonds in the order A, B, C,
Z. The Series A, B, and C Bonds all bear current interest. Interest on the Series Z Bond is accrued and added
to principal and a like amount is paid as principal on the Series A, B, or C Bond currently being paid off. When
the Series A, B, and C Bonds are paid in full, interest and principal on the Series Z Bond begins to be paid
currently. With some CMOs, the issuer serves as a conduit to allow loan originators (primarily builders or
savings and loan associations) to borrow against their loan portfolios.

FHLMC Collateralized Mortgage Obligations. FHLMC CMOs are debt obligations of FHLMC issued in
multiple classes having different maturity dates which are secured by the pledge of a pool of conventional
mortgage loans purchased by FHLMC. Unlike FHLMC PCs, payments of principal and interest on the CMOs are made
semiannually, as opposed to monthly. The amount of principal payable on each semiannual payment date is
determined in accordance with FHLMC's mandatory sinking fund schedule, which, in turn, is equal to approximately
100% of FHA prepayment experience applied to the mortgage collateral pool. All sinking fund payments in the CMOs
are allocated to the retirement of the individual classes of bonds in the order of their stated maturities.
Payment of principal on the mortgage loans in the collateral pool in excess of the amount of FHLMC's minimum
sinking fund obligation for any payment date are paid to the holders of the CMOs as additional sinking fund
payments. Because of the "pass-through" nature of all principal payments received on the collateral pool in
excess of FHLMC's minimum sinking fund requirement, the rate at which principal of the CMOs is actually repaid is
likely to be such that each class of bonds will be retired in advance of its scheduled maturity date.

If collection of principal (including prepayments) on the mortgage loans during any semiannual payment
period is not sufficient to meet FHLMC's minimum sinking fund obligation on the next sinking fund payment date,
FHLMC agrees to make up the deficiency from its general funds.

Criteria for the mortgage loans in the pool backing the FHLMC CMOs are identical to those of FHLMC PCs.
FHLMC has the right to substitute collateral in the event of delinquencies and/or defaults.

For an additional discussion of mortgage-backed securities and certain risks involved therein, see this
Statement and the Trust's Prospectus under "Certain Risk Factors and Investment Methods."

Other Mortgage-Related Securities. Other mortgage-related securities include securities other than
those described above that directly or indirectly represent a participation in, or are secured by and payable
from, mortgage loans on real property, including CMO residuals or stripped mortgage-backed securities. Other
mortgage-related securities may be equity or debt securities issued by agencies or instrumentalities of the U.S.
Government or by private originators of, or investors in, mortgage loans, including savings and loan
associations, homebuilders, mortgage banks, commercial banks, investment banks, partnerships, trusts and special
purpose entities of the foregoing.

CMO Residuals. CMO residuals are derivative mortgage securities issued by agencies or
instrumentalities of the U.S. Government or by private originators of, or investors in, mortgage loans, including
savings and loan associations, homebuilders, mortgage banks, commercial banks, investment banks and special
purpose entities of the foregoing.

The cash flow generated by the mortgage assets underlying a series of CMOs is applied first to make
required payments of principal and interest on the CMOs and second to pay the related administrative expenses of
the issuer. The residual in a CMO structure generally represents the interest in any excess cash flow remaining
after making the foregoing payments. Each payment of such excess cash flow to a holder of the related CMO
residual represents income and/or a return of capital. The amount of residual cash flow resulting from a CMO
will depend on, among other things, the characteristics of the mortgage assets, the coupon rate of each class of
CMO, prevailing interest rates, the amount of administrative expenses and the prepayment experience on the
mortgage assets. In particular, the yield to maturity on CMO residuals is extremely sensitive to prepayments on
the related underlying mortgage assets, in the same manner as an interest-only ("IO") class of stripped
mortgage-backed securities. See "Other Mortgage-Related Securities -- Stripped Mortgage-Backed Securities." In
addition, if a series of a CMO includes a class that bears interest at an adjustable rate, the yield to maturity
on the related CMO residual will also be extremely sensitive to changes in the level of the index upon which
interest rate adjustments are based. As described below with respect to stripped mortgage-backed securities, in
certain circumstances the Portfolio may fail to recoup fully its initial investment in a CMO residual.

CMO residuals are generally purchased and sold by institutional investors through several investment
banking firms acting as brokers or dealers. The CMO residual market has only very recently developed and CMO
residuals currently may not have the liquidity of other more established securities trading in other markets.
Transactions in CMO residuals are generally completed only after careful review of the characteristics of the
securities in question. In addition, CMO residuals may or, pursuant to an exemption therefrom, may not have been
registered under the Securities Act of 1933, as amended. CMO residuals, whether or not registered under such
Act, may be subject to certain restrictions on transferability, and may be deemed "illiquid" and subject to the
Portfolio's limitations on investment in illiquid securities.

Stripped Mortgage-Backed Securities. Stripped mortgage-backed securities ("SMBS") are
derivative multi-class mortgage securities. SMBS may be issued by agencies or instrumentalities of the U.S.
Government, or by private originators of, or investors in, mortgage loans, including savings and loan
associations, mortgage banks, commercial banks, investment banks and special purpose entities of the foregoing.

SMBS are usually structured with two classes that receive different proportions of the interest and
principal distributions on a pool of mortgage assets. A common type of SMBS will have one class receiving some
of the interest and most of the principal from the mortgage assets, which the other class will receive most of
the interest and the remainder of the principal. In the most extreme case, one class will receive all of the
interest (the IO class), while the other class will receive all of the principal (the principal-only or "PO"
class). The yield to maturity on an IO class is extremely sensitive to the rate of principal payments (including
prepayments) on the related underlying mortgage assets, and a rapid rate of principal payments may have a
material adverse effect on the Portfolio's yield to maturity from these securities. If the underlying mortgage
assets experience greater than anticipated prepayments of principal, the Portfolio may fail to fully recoup its
initial investment in these securities even if the security is in one of the highest rating categories.

Although SMBS are purchased and sold by institutional investors through several investment banking firms
acting as brokers or dealers, these securities were only recently developed. As a result, established trading
markets have not yet developed and, accordingly, these securities may be deemed "illiquid" and subject to the
Portfolio's limitations on investment in illiquid securities.

Other Asset-Backed Securities. Similarly, the Sub-advisor expects that other asset-backed securities
(unrelated to mortgage loans) will be offered to investors in the future. Several types of asset-backed
securities may be offered to investors, including Certificates for Automobile Receivables. For a discussion of
automobile receivables, see this Statement under "Certain Risk Factors and Investment Methods." Consistent with
the Portfolio's investment objectives and policies, the Sub-advisor also may invest in other types of
asset-backed securities.

Foreign Securities. The Portfolio may invest in corporate debt securities of foreign issuers (including
preferred or preference stock), certain foreign bank obligations (see "Bank Obligations") and U.S. dollar- or
foreign currency-denominated obligations of foreign governments or their subdivisions, agencies and
instrumentalities, international agencies and supranational entities. The Portfolio may invest up to 20% of its
assets in securities denominated in foreign currencies, and may invest beyond this limit in U.S.
dollar-denominated securities of foreign issuers. The Portfolio may invest up to 10% of its assets in securities
of issuers based in emerging market countries. Investing in the securities of foreign issuers involves special
risks and considerations not typically associated with investing in U.S. companies. For a discussion of certain
risks involved in foreign investments, in general, and the special risks of investing in developing countries,
see this Statement and the Trust's Prospectus under "Certain Risk Factors and Investment Methods."

The Portfolio also may purchase and sell foreign currency options and foreign currency futures contracts
and related options (see ""Derivative Instruments"), and enter into forward foreign currency exchange contracts
in order to protect against uncertainty in the level of future foreign exchange rates in the purchase and sale of
securities.

A forward foreign currency contract involves an obligation to purchase or sell a specific currency at a
future date, which may be any fixed number of days from the date of the contract agreed upon by the parties, at a
price set at the tine of the contract. These contracts may be bought or sold to protect the Portfolio against a
possible loss resulting from an adverse change in the relationship between foreign currencies and the U.S. dollar
or to increase exposure to a particular foreign currency. Open positions in forward contracts are covered by the
segregation with the Trust's custodian of cash or other liquid assets and are marked to market daily. Although
such contracts are intended to minimize the risk of loss due to a decline on the value of the hedged currencies,
at the same time, they tend to limit any potential gain which might result should the value of such currencies
increase.

Brady Bonds. The Portfolio may invest in Brady Bonds. Brady Bonds are securities created through the
exchange of existing commercial bank loans to sovereign entities for new obligations in connection with debt
restructurings under a debt restructuring plan introduced by former U.S. Secretary of the Treasury, Nicholas F.
Brady (the "Brady Plan"). Brady Plan debt restructurings have been implemented in a number of countries,
including in Argentina, Bolivia, Bulgaria, Costa Rica, the Dominican Republic, Ecuador, Jordan, Mexico, Niger,
Nigeria, the Philippines, Poland, Uruguay, and Venezuela. In addition, Brazil has concluded a Brady-like plan.
It is expected that other countries will undertake a Brady Plan in the future.

Brady Bonds have been issued only recently, and accordingly do not have a long payment history. Brady
Bonds may be collateralized or uncollateralized, are issued in various currencies (primarily the U.S. dollar) and
are actively traded in the over-the-counter secondary market. U.S. dollar-denominated, collateralized Brady
Bonds, which may be fixed rate par bonds or floating rate discount bonds, are generally collateralized in full as
to principal by U.S. Treasury zero-coupon bonds having the same maturity as the Brady Bonds. Interest payments
on these Brady Bonds generally are collateralized on a one-year or longer rolling-forward basis by cash or
securities in an amount that, in the case of fixed rate bonds, is equal to at least one year of interest payments
or, in the case of floating rate bonds, initially is equal to at least one year's interest payments based on the
applicable interest rate at that time and is adjusted at regular intervals thereafter. Certain Brady Bonds are
entitled to "value recovery payments" in certain circumstances, which in effect constitute supplemental interest
payments but generally are not collateralized. Brady Bonds are often viewed as having three or four valuation
components: (i) the collateralized repayment of principal at final maturity; (ii) the collateralized interest
payments; (iii) the uncollateralized interest payments; and (iv) any uncollateralized repayment of principal at
maturity (these uncollateralized amounts constitute the "residual risk").

Most Mexican Brady Bonds issued to date have principal repayments at final maturity fully collateralized
by U.S. Treasury zero-coupon bonds (or comparable collateral denominated in other currencies) and interest coupon
payments collateralized on an 18-month rolling-forward basis by funds held in escrow by an agent for the
bondholders. A significant portion of the Venezuelan Brady Bonds and the Argentine Brady Bonds issued to date
have principal repayments at final maturity collateralized by U.S. Treasury zero-coupon bonds (or comparable
collateral denominated in other currencies) and/or interest coupon payments collateralized on a 14-month (for
Venezuela) or 12-month (for Argentina) rolling-forward basis by securities held by the Federal Reserve Bank of
New York as collateral agent.

Brady Bonds involve various risk factors including residual risk and the history of defaults with
respect to commercial bank loans by public and private entities of countries issuing Brady Bonds. There can be
no assurance that Brady Bonds in which the Portfolio may invest will not be subject to restructuring arrangements
or to requests for new credit, which may cause the Portfolio to suffer a loss of interest or principal on any of
its holdings.

Bank Obligations. Bank obligations in which the Portfolios invest include certificates of deposit,
bankers' acceptances, and fixed time deposits. Certificates of deposit are negotiable certificates issued
against funds deposited in a commercial bank for a definite period of time and earning a specified return.
Bankers' acceptances are negotiable drafts or bills of exchange, normally drawn by an importer or exporter to pay
for specific merchandise, which are "accepted" by a bank, meaning, in effect, that the bank unconditionally
agrees to pay the face value of the instrument on maturity. Fixed time deposits are bank obligations payable at
a stated maturity date and bearing interest at a fixed rate. Fixed time deposits may be withdrawn on demand by
the investor, but may be subject to early withdrawal penalties which vary depending upon market conditions and
the remaining maturity of the obligation. There are no contractual restrictions on the right to transfer a
beneficial interest in a fixed time deposit to a third party, although there is no market for such deposits. The
Portfolio will not invest in fixed time deposits which (1) are not subject to prepayment or (2) provide for
withdrawal penalties upon prepayment (other than overnight deposits) if, in the aggregate, more than 15% of its
assets would be invested in such deposits, repurchase agreements maturing in more than seven days and other
illiquid assets.

The Portfolio will limit its investments in United States bank obligations to obligations of United
States bank (including foreign branches) which have more than $1 billion in total assets at the time of
investment and are member of the Federal Reserve System, are examined by the Comptroller of the Currency or whose
deposits are insured by the Federal Deposit Insurance Corporation. The Portfolio also may invest in certificates
of deposit of savings and loan associations (federally or state chartered and federally insured) having total
assets in excess $1 billion.

The Portfolio will limit its investments in foreign bank obligations to United States dollar- or foreign
currency-denominated obligations of foreign banks (including United States branches of foreign banks) which at
the time of investment (i) have more than $10 billion, or the equivalent in other currencies, in total assets;
(ii) in terms of assets are among the 75 largest foreign banks in the world; (iii) have branches or agencies
(limited purpose offices which do not offer all banking services) in the United States; and (iv) in the opinion
of the Sub-advisor, are of an investment quality comparable to obligations of United States banks in which the
Portfolio may invest. Subject to the Portfolio's limitation on concentration of no more than 25% of its assets
in the securities of issuers in particular industry, there is no limitation on the amount of the Portfolio's
assets which may be invested in obligations of foreign banks which meet the conditions set forth herein.

Obligations of foreign banks involve somewhat different investment risks than those affecting
obligations of United States banks, including the possibilities that their liquidity could be impaired because of
future political and economic developments, that their obligations may be less marketable than comparable
obligations of United States banks, that a foreign jurisdiction might impose withholding taxes on interest income
payable on those obligations, that foreign deposits may be seized or nationalized, that foreign governmental
restrictions such as exchange controls may be adopted which might adversely affect the payment of principal and
interest on those obligations and that the selection of those obligations may be more difficult because there may
be less publicly available information concerning foreign banks or the accounting, auditing and financial
reporting standards, practices and requirements applicable to foreign banks may differ from those applicable to
United States banks. Foreign banks are not generally subject to examination by any United States Government
agency or instrumentality.

Short Sales. The Portfolio may make short sales of securities as part of their overall portfolio
management strategies involving the use of derivative instruments and to offset potential declines in long
positions in similar securities. A short sale is a transaction in which the Portfolio sells a security it does
not own in anticipation that the market price of that security will decline.

When the Portfolio makes a short sale, it must borrow the security sold short and deliver it to the
broker-dealer through which it made the short sale as collateral for its obligation to deliver the security upon
conclusion of the sale. The Portfolio may have to pay a fee to borrow particular securities and is often
obligated to pay over any accrued interest on such borrowed securities.

If the price of the security sold short increases between the time of the short sale and the time and
the Portfolio replaces the borrowed security, the Portfolio will incur a loss; conversely, if the price declines,
the Portfolio will realize a capital gain. Any gain will be decreased, and any loss increased, by the
transaction costs described above. The successful use of short selling may be adversely affected by imperfect
correlation between movements in the price of the security sold short and the securities being hedged.

To the extent that the Portfolio engages in short sales, it will provide collateral to the broker-dealer
and (except in the case of short sales "against the box") will maintain additional asset coverage in the form of
cash or other liquid assets in a segregated account. The Portfolio does not intend to enter into short sales
(other than those "against the box") if immediately after such sale the aggregate of the value of all collateral
plus the amount in such segregated account exceeds one-third of the value of the Portfolio's net assets. This
percentage may be varied by action of the Trust's Board of Trustees. A short sale is "against the box" to the
extent that the Portfolio contemporaneously owns, or has the right to obtain at no added cost, securities
identical to those sold short.

Derivative Instruments. In pursuing its individual objective, the Portfolio may, as described in the
Prospectus, purchase and sell (write) both put options and call options on securities, securities indexes, and
foreign currencies, and enter into interest rate, foreign currency and index futures contracts and purchase and
sell options on such futures contracts ("future options") for hedging purposes. The Portfolio also may enter
into swap agreements with respect to foreign currencies, interest rates and indexes of securities. If other
types of financial instruments, including other types of options, futures contracts, or futures options are
traded in the future, the Portfolio may also use those instruments, provided that the Trust's Board of Trustees
determines that their use is consistent with the Portfolio's investment objective, and provided that their use is
consistent with restrictions applicable to options and futures contracts currently eligible for use by the Trust
(i.e., that written call or put options will be "covered" or "secured" and that futures and futures options will
be used only for hedging purposes).

Options on Securities and Indexes. The Portfolio may purchase and sell both put and call options on
debt or other securities or indexes in standardized contracts traded on foreign or national securities exchanges,
boards of trade, or similar entities, or quoted on NASDAQ or on a regulated foreign over-the-counter market, and
agreements sometimes called cash puts, which may accompany the purchase of a new issue of bonds from a dealer.

The Portfolio will write call options and put options only if they are "covered." In the case of a call
option on a security, the option is "covered" if the Portfolio owns the security underlying the call or has an
absolute and immediate right to acquire that security without additional cash consideration (or, if additional
cash consideration is required, cash or cash equivalents in such amount are placed in a segregated account by its
custodian) upon conversion or exchange of other securities held by the Portfolio. For a call option on an index,
the option is covered if the Portfolio maintains with its custodian cash or cash equivalents equal to the
contract value. A call option is also covered if the Portfolio holds a call on the same security or index as the
call written where the exercise price of the call held is (i) equal to or less than the exercise price of the
call written, or (ii) greater than the exercise price of the call written, provided the difference is maintained
by the Portfolio in cash or cash equivalents in a segregated account with its custodian. A put option on a
security or an index is "covered" if the Portfolio maintains cash or cash equivalents equal to the exercise price
in a segregated account with its custodian. A put option is also covered if the Portfolio holds a put on the
same security or index as the put written where the exercise price of the put held is (i) equal to or greater
than the exercise price of the put written, or (ii) less than the exercise price of the put written, provided the
difference is maintained by the Portfolio in cash or cash equivalents in a segregated account with its custodian.

If an option written by the Portfolio expires, the Portfolio realizes a capital gain equal to the
premium received at the time the option was written. If an option purchased by the Portfolio expires
unexercised, the Portfolio realizes a capital loss equal to the premium paid.

Prior to the earlier of exercise or expiration, an option may be closed out by an offsetting purchase or
sale of an option of the same series (type, exchange, underlying security or index, exercise price, and
expiration). There can be no assurance, however, that a closing purchase or sale transaction can be effected
when the Portfolio desires.

The Portfolio will realize a capital gain from a closing purchase transaction if the cost of the closing
option is less than the premium received from writing the option, or if it is more, the Portfolio will realize a
capital loss. If the premium received from a closing sale transaction is more than the premium paid to purchase
the option, the Portfolio will realize a capital gain or, if it is less, the Portfolio will realize a capital
loss. The principal factors affecting the market value of a put or a call option include supply and demand,
interest rates, the current market price of the underlying security or index in relation to the exercise price of
the option, the volatility of the underlying security or index, and the time remaining until the expiration date.

The premium paid for a put or call option purchased by the Portfolio is an asset of the Portfolio. The
premium received for a option written by the Portfolio is recorded as a deferred credit. The value of an option
purchased or written is marked to market daily and is valued at the closing price on the exchange on which it is
traded or, if not traded on an exchange or no closing price is available, at the mean between the last bid and
asked prices. For a discussion of certain risks involved in options, see this Statement and the Trust's
Prospectus under "Certain Risk Factors and Investment Methods."

Foreign Currency Options. The Portfolio may buy or sell put and call options on foreign currencies
either on exchanges or in the over-the-counter market. A put option on a foreign currency gives the purchaser of
the option the right to sell a foreign currency at the exercise price until the option expires. Currency options
traded on U.S. or other exchanges may be subject to position limits which may limit the ability of the Portfolio
to reduce foreign currency risk using such options. Over-the-counter options differ from traded options in that
they are two-party contracts with price and other terms negotiated between buyer and seller, and generally do not
have as much market liquidity as exchange-traded options.

Futures Contracts and Options on Futures Contracts. The Portfolio may use interest rate, foreign
currency or index futures contracts, as specified in the Trust's Prospectus. An interest rate, foreign currency
or index futures contract provides for the future sale by one party and purchase by another party of a specified
quantity of a financial instrument, foreign currency or the cash value of an index at a specified price and
time. A futures contract on an index is an agreement pursuant to which two parties agree to take or make
delivery of an amount of cash equal to the difference between the value of the index at the close of the last
trading day of the contract and the price at which the index contract was originally written. Although the value
of an index might be a function of the value of certain specified securities, no physical delivery of these
securities is made.

The Portfolio may purchase and write call and put futures options. Futures options possess many of the
same characteristics as options on securities and indexes (discussed above). A futures option gives the holder
the right, in return for the premium paid, to assume a long position (call) or short position (put) in a futures
contract at a specified exercise price at any time during the period of the option. Upon exercise of a call
option, the holder acquires a long position in the futures contract and the writer is assigned the opposite short
position. In the case of a put option, the opposite is true.

To comply with applicable rules of the CFTC under which the Trust and the Portfolio avoid being deemed a
"commodity pool" or a "commodity pool operator," the Portfolio intends generally to limit its use of futures
contracts and futures options to "bona fide hedging" transactions, as such term is defined in applicable
regulations, interpretations and practice. For example, the Portfolio might use futures contracts to hedge
against anticipated changes in interest rates that might adversely affect either the value of the Portfolio's
securities or the price of the securities which the Portfolio intends to purchase. The Portfolio's hedging
activities may include sales of futures contracts as an offset against the effect or expected increases in
interest rates, and purchases of futures contracts as an offset against the effect of expected declines in
interest rates. Although other techniques could be used to reduce that Portfolio's exposure to interest rate
fluctuations, the Portfolio may be able to hedge its exposure more effectively and perhaps at a lower cost by
using futures contracts and futures options.

The Portfolio will only enter into futures contracts and futures options which are standardized and
traded on a U.S. or foreign exchange, board of trade, or similar entity, or quoted on an automated quotation
system.

When a purchase or sale of a futures contract is made by the Portfolio, the Portfolio is required to
deposit with its custodian (or broker, if legally permitted) a specified amount of cash or U.S. Government
securities ("initial margin"). The margin required for a futures contract is set by the exchange on which the
contract is traded and may be modified during the term of the contract. The initial margin is in the nature of a
performance bond or good faith deposit on the futures contract which is returned to the Portfolio upon
termination of the contract, assuming all contractual obligations have been satisfied. The Portfolio expects to
earn interest income on its initial margin deposits. A futures contract held by the Portfolio is valued daily at
the official settlement price of the exchange on which it is traded. Each day the Portfolio pays or receives
cash, called "variation margin," equal to the daily change in value of the futures contract. This process is
known as "marking to market." Variation margin does not represent a borrowing or loan by the Portfolio but is
instead a settlement between the Portfolio and the broker of the amount one would owe the other if the futures
contract expired. In computing daily net asset value, each Portfolio will mark to market its open futures
positions.

The Portfolio is also required to deposit and maintain margin with respect to put and call options on
futures contracts written by it. Such margin deposits will vary depending on the nature of the underlying
futures contract (and the related initial margin requirements), the current market value of the option, and other
futures positions held by the Portfolio.

Although some futures contracts call for making or taking delivery of the underlying securities,
generally these obligations are closed out prior to delivery by offsetting purchases or sales of matching futures
contracts (same exchange, underlying security or index, and delivery month). If an offsetting purchase price is
less than the original sale price, the Portfolio realizes a capital gain, or if it is more, the Portfolio
realizes a capital loss. Conversely, if an offsetting sale price is more than the original purchase price, the
Portfolio realizes a capital gain, or if it is less, the Portfolio realizes a capital loss. The transaction
costs must also be included in these calculations.

Limitations on Use of Futures and Futures Options. In general, the Portfolio intends to enter into
positions in futures contracts and related options only for "bona fide hedging" purposes. With respect to
positions in futures and related options that do not constitute bona fide hedging positions, the Portfolio will
not enter into a futures contract or futures option contract if, immediately thereafter, the aggregate initial
margin deposits relating to such positions plus premiums paid by it for open futures option positions, less the
amount by which any such options are "in-the-money," would exceed 5% of the Portfolio's total assets. A call
option is "in-the-money" if the value of the futures contract that is the subject of the option exceeds the
exercise price. A put option is "in-the-money" if the exercise price exceeds the value of the futures contract
that is the subject of the option.

When purchasing a futures contract, the Portfolio will maintain with its custodian (and mark-to-market
on a daily basis) cash or other liquid assets that, when added to the amounts deposited with a futures commission
merchant as margin, are equal to the market value of the futures contract. Alternatively, the Portfolio may
"cover" its position by purchasing a put option on the same futures contract with a strike price as high or
higher than the price of the contract held by the Portfolio.

When selling a futures contract, the Portfolio will maintain with its custodian (and mark-to-market on a
daily basis) liquid assets that, when added to the amount deposited with a futures commission merchant as margin,
are equal to the market value of the instruments underlying the contract. Alternatively, the Portfolio may
"cover" its position by owning the instruments underlying the contract (or, in the case of an index futures
contract, a portfolio with a volatility substantially similar to that of the index on which the futures contract
is based), or by holding a call option permitting the Portfolio to purchase the same futures contract at a price
no higher than the price of the contract written by the Portfolio (or at a higher price if the difference is
maintained in liquid assets with the Trust's custodian).

When selling a call option on a futures contract, the Portfolio will maintain with its custodian (and
mark-to-market on a daily basis) cash or other liquid assets that, when added to the amounts deposited with a
futures commission merchant as margin, equal the total market value of the futures contract underlying the call
option. Alternatively, the Portfolio may cover its position by entering into a long position in the same futures
contract at a price no higher than the strike price of the call option, by owning the instruments underlying the
futures contract, or by holding a separate call option permitting the Portfolio to purchase the same futures
contract at a price not higher than the strike price of the call option sold by the Portfolio.

When selling a put option on a futures contract, the Portfolio will maintain with its custodian (and
mark-to market on a daily basis) cash or other liquid assets that equal the purchase price of the futures
contract, less any margin on deposit. Alternatively, the Portfolio may cover the position either by entering
into a short position in the same futures contract, or by owning a separate put option permitting it to sell the
same futures contract so long as the strike price of the purchased put option is the same or higher than the
strike price of the put option sold by the Portfolio.

Swap Agreements. The Portfolio may enter into interest rate, index and currency exchange rate swap
agreements for purposes of attempting to obtain a particular desired return at a lower cost to the Portfolio than
if the Portfolio had invested directly in an instrument that yielded that desired return. For a discussion of
swap agreements, see the Trust's Prospectus under "Investment Objectives and Policies." The Portfolio's
obligations under a swap agreement will be accrued daily (offset against any amounts owing to the Portfolio) and
any accrued but unpaid net amounts owed to a swap counterparty will be covered by the maintenance of a segregated
account consisting of cash or other liquid assets to avoid any potential leveraging of the Portfolio's
portfolio. The Portfolio will not enter into a swap agreement with any single party if the net amount owned or
to be received under existing contracts with that party would exceed 5% of the Portfolio's assets.

Whether the Portfolio's use of swap agreements will be successful in furthering its investment objective
of total return will depend on the Sub-advisor's ability correctly to predict whether certain types of
investments are likely to produce greater returns than other investments. Because they are two party contracts
and because they may have terms of longer than seven days, swap agreements may be considered to be illiquid.
Moreover, the Portfolio bears the risk of loss of the amount expected to be received under a swap agreement in
the event of the default or bankruptcy of a swap agreement counterparty. The Sub-advisor will cause the
Portfolio to enter into swap agreements only with counterparties that would be eligible for consideration as
repurchase agreement counterparties under the Portfolio's repurchase agreement guidelines. Certain restrictions
imposed on the Portfolio by the Internal Revenue Code may limit the Portfolio's ability to use swap agreements.
The swaps market is a relatively new market and is largely unregulated. It is possible that developments in the
swaps market, including potential government regulation, could adversely affect the Portfolio's ability to
terminate existing swap agreements or to realize amounts to be received under such agreements.

Certain swap agreements are exempt from most provisions of the Commodity Exchange Act ("CEA") and,
therefore, are not regulated as futures or commodity option transactions under the CEA, pursuant to regulations
approved by the CFTC. To qualify for this exemption, a swap agreement must be entered into by "eligible
participants." To be eligible, natural persons and most other entities must have total assets exceeding $10
million; commodity pools and employee benefit plans must have assets exceeding $5 million. In addition, an
eligible swap transaction must meet three conditions. First, the swap agreement may not be part of a fungible
class of agreements that are standardized as to their material economic terms. Second, the creditworthiness of
parties with actual or potential obligations under the swap agreement must be a material consideration in
entering into or determining the terms of the swap agreement, including pricing, cost or credit enhancement
terms. Third, swap agreements may not be entered into and traded on or through a multilateral transaction
execution facility.

This exemption is not exclusive, and partnerships may continue to rely on existing exclusions for swaps,
such as the Policy Statement issued in July 1989 which recognized a safe harbor for swap transactions from
regulation as futures or commodity option transactions under the CEA or its regulations. The Policy Statement
applies to swap transactions settled in cash that (1) have individual tailored terms, (2) lack exchange-style
offset and the use of a clearing organization or margin system, (3) are undertaken in conjunction with a line of
business, and (4) are not marketed to the public.

Structured Notes. Structured notes are derivative debt securities, the interest rate or principal of
which is related to another economic indicator or financial market index. Indexed securities include structured
notes as well as securities other than debt securities, the interest rate or principal of which is determined by
such an unrelated indicator. Indexed securities may include a multiplier that multiplies the indexed element by
a specified factor and, therefore, the value of such securities may be very volatile. To the extent the
Portfolio invests in these securities, however, the Sub-advisor analyzes these securities in its overall
assessment of the effective duration of the Portfolio's portfolio in an effort to monitor the Portfolio's
interest rate risk.

Foreign Currency Exchange-Related Securities. The Portfolio may invest in foreign currency warrants,
principal exchange rate linked securities and performance indexed paper. For a description of these instruments,
see this Statement under "Certain Risk Factor and Investment Methods."

Warrants to Purchase Securities. The Portfolio may invest in or acquire warrants to purchase equity or
fixed-income securities. Bonds with warrants attached to purchase equity securities have many characteristics of
convertible bonds and their prices may, to some degree, reflect the performance of the underlying stock. Bonds
also may be issued with warrants attached to purchase additional fixed-income securities at the same coupon
rate. A decline in interest rates would permit the Portfolio to buy additional bonds at the favorable rate or to
sell the warrants at a profit. If interest rates rise, the warrants would generally expire with no value.

Hybrid Instruments. The Portfolio may invest up to 5% of its assets in hybrid instruments. A hybrid
instrument can combine the characteristics of securities, futures, and options. Hybrids can be used as an
efficient means of pursuing a variety of investment goals, including currency hedging, duration management, and
increased total return. For an additional discussion of hybrid instruments and certain risks involved therein,
see this Statement under "Certain Risk Factors and Investment Methods."

Inverse Floaters. The Portfolio may also invest in inverse floating rate debt instruments ("inverse
floaters"). The interest rate on an inverse floater resets in the opposite direction from the market rate of
interest to which the inverse floater is indexed. An inverse floating rate security may exhibit greater price
volatility than a fixed rate obligation of similar credit quality. The Portfolio will not invest more than 5% of
its net assets in any combination of inverse floater, interest only, or principal only securities.

Loan Participations. The Portfolio may purchase participations in commercial loans. Such indebtedness
may be secured or unsecured. Loan participations typically represent direct participation in a loan to a
corporate borrower, and generally are offered by banks or other financial institutions or lending syndicates.
When purchasing loan participations, the Portfolio assumes the credit risk associated with the corporate borrower
and may assume the credit risk associated with an interposed bank or other financial intermediary. The
participation interests in which the Portfolio intends to invest may not be rated by any nationally recognized
rating service.

A loan is often administered by an agent bank acting as agent for all holders. The agent bank
administers the terms of the loan, as specified in the loan agreement. In addition, the agent bank is normally
responsible for the collection of principal and interest payments from the corporate borrower and the
apportionment of these payments to the credit of all institutions which are parties to the loan agreement.
Unless, under the terms of the loan or other indebtedness, the Portfolio has direct recourse against the
corporate borrower, the Portfolio may have to rely on the agent bank or other financial intermediary to apply
appropriate credit remedies against a corporate borrower.

A financial institution's employment as agent bank might be terminated in the event that it fails to
observe a requisite standard of care or becomes insolvent. A successor agent bank would generally be appointed
to replace the terminated agent bank, and assets held by the agent bank under the loan agreement should remain
available to holders of such indebtedness. However, if assets held by the agent bank for the benefit of the
Portfolio were determined to be subject to the claims of the agent bank's general creditors, the Portfolio might
incur certain costs and delays in realizing payment on a loan or loan participation and could suffer a loss of
principal and/or interest. In situations involving other interposed financial institutions (e.g., an insurance
company or governmental agency) similar risks may arise.

Purchasers of loans and other forms of direct indebtedness depend primarily upon the creditworthiness of
the corporate borrower for payment of principal and interest. If the Portfolio does not receive scheduled
interest or principal payments on such indebtedness, the Portfolio's share price and yield could be adversely
affected. Loans that are fully secured offer the Portfolio more protection than an unsecured loan in the event
of non-payment of scheduled interest or principal. However, there is no assurance that the liquidation of
collateral from a secured loan would satisfy the corporate borrower's obligation, or that the collateral can be
liquidated.

The Portfolio may invest in loan participations with credit quality comparable to that of issuers of its
securities investments. Indebtedness of companies whose creditworthiness is poor involves substantially greater
risks, and may be highly speculative. Some companies may never pay off their indebtedness, or may pay only a
small fraction of the amount owed. Consequently, when investing in indebtedness of companies with poor credit,
the Portfolio bears a substantial risk of losing the entire amount invested.

The Portfolio limits the amount of its total assets that it will invest in any one issuer or in issuers
within the same industry (see "Investment Restrictions"). For purposes of these limits, the Portfolio generally
will treat the corporate borrower as the "issuer" of indebtedness held by the Portfolio. In the case of loan
participations where a bank or other lending institution serves as a financial intermediary between the Portfolio
and the corporate borrower, if the participation does not shift to the Portfolio the direct debtor-creditor
relationship with the corporate borrower, SEC interpretations require the Portfolio to treat both the lending
bank or other lending institution and the corporate borrower as "issuers" for the purposes of determining whether
the Portfolio has invested more than 5% of its total assets in a single issuer. Treating a financial
intermediary as an issuer of indebtedness may restrict the Portfolio's ability to invest in indebtedness related
to a single financial intermediary, or a group of intermediaries engaged in the same industry, even if the
underlying borrowers represent many different companies and industries.

Loan and other types of direct indebtedness may not be readily marketable and may be subject to
restrictions on resale. In some cases, negotiations involved in disposing of indebtedness may require weeks to
complete. Consequently, some indebtedness may be difficult or impossible to dispose of readily at what the
Sub-advisor believes to be a fair price. In addition, valuation of illiquid indebtedness involves a greater
degree of judgment in determining the Portfolio's net asset value than if that value were based on available
market quotations, and could result in significant variations in the Portfolio's daily share price. At the same
time, some loan interests are traded among certain financial institutions and accordingly may be deemed liquid.
As the market for different types of indebtedness develops, the liquidity of these instruments is expected to
improve. In addition, the Portfolio currently intends to treat indebtedness for which there is no readily
available market as illiquid for purposes of the Portfolio's limitation on illiquid investments. Investments in
loan participations are considered to be debt obligations for purposes of the Company's investment restriction
relating to the lending of funds or assets by the Portfolio.

Investments in loans through a direct assignment of the financial institution's interests with respect
to the loan may involve additional risks to the Portfolio. For example, if a loan is foreclosed, the Portfolio
could become part owner of any collateral, and would bear the costs and liabilities associated with owning and
disposing of the collateral. In addition, it is conceivable that under emerging legal theories of lender
liability, the Portfolio could be held liable as co-lender. It is unclear whether loans and other forms of
direct indebtedness offer securities law protections against fraud and misrepresentation. In the absence of
definitive regulatory guidance, the Portfolio relies on the Sub-advisor's research in an attempt to avoid
situations where fraud or misrepresentation could adversely affect the Portfolio.

Delayed Funding Loans and Revolving Credit Facilities. The Portfolio may enter into, or acquire
participations in, delayed funding loans and revolving credit facilities. Delayed funding loans and revolving
credit facilities are borrowing arrangements in which the lender agrees to make loans up to a maximum amount upon
demand by the borrower during a specified term. These commitments may have the effect of requiring the Portfolio
to increase its investment in a company at a time when it might not otherwise decide to do so (including at a
time when the company's financial condition makes it unlikely that such amounts will be repaid). To the extent
that the Portfolio is committed to advance additional funds, it will at all times segregate liquid assets,
determined to be liquid by the Sub-advisor in accordance with procedures established by the Board of Trustees, in
an amount sufficient to meet such commitments. The Portfolio may invest in delayed funding loans and revolving
credit facilities with credit quality comparable to that of issuers of its securities investments. Delayed
funding loans and revolving credit facilities may be subject to restrictions on transfer, and only limited
opportunities may exist to resell such instruments. As a result, the Portfolio may be unable to sell such
investments at an opportune time or may have to resell them at less than fair market value. The Portfolio
currently intend to treat delayed funding loans and revolving credit facilities for which there is no readily
available market as illiquid for purposes of the Portfolio's limitation on illiquid investments. Participation
interests in revolving credit facilities will be subject to the limitations discussed above under "Loan
Participations." Delayed funding loans and revolving credit facilities are considered to be debt obligations for
purposes of the Company's investment restriction relating to the lending of funds or assets by the Portfolio.

Investment Policies Which May Be Changed Without Shareholder Approval. The following limitations are
applicable to the AST PIMCO Total Return Bond Portfolio. These limitations are not "fundamental" restrictions,
and may be changed by the Trustees without shareholder approval.

1. The Portfolio will not invest more than 15% of the assets of the Portfolio (taken at market
value at the time of the investment) in "illiquid securities," illiquid securities being defined to include
securities subject to legal or contractual restrictions on resale (which may include private placements),
repurchase agreements maturing in more than seven days, certain options traded over the counter that the
Portfolio has purchased, securities being used to cover options a Portfolio has written, securities for which
market quotations are not readily available, or other securities which legally or in the Sub-advisor's option may
be deemed illiquid.

2. The Portfolio will not purchase securities for the Portfolio from, or sell portfolio securities
to, any of the officers and directors or Trustees of the Trust or of the Investment Manager or of the
Sub-advisor.

3. The Portfolio will not invest more than 5% of the assets of the Portfolio (taken at market
value at the time of investment) in any combination of interest only, principal only, or inverse floating rate
securities.

AST PIMCO Limited Maturity Bond Portfolio:

Investment Objective: The investment objective of the Portfolio is to seek to maximize total return, consistent
with preservation of capital and prudent investment management.

Investment Policies:

Borrowing. The Portfolio may borrow for temporary administrative purposes. This borrowing may be
unsecured. The 1940 Act requires the Portfolio to maintain continuous asset coverage (that is, total assets
including borrowings, less liabilities exclusive of borrowings) of 300% of the amount borrowed. If the 300%
asset coverage should decline as a result of market fluctuations or other reasons, the Portfolio may be required
to sell some of its portfolio holdings within three days to reduce the debt and restore the 300% asset coverage,
even though it may be disadvantageous from an investment standpoint to sell securities at that time. Borrowing
will tend to exaggerate the effect on net asset value of any increase or decrease in the market value of the
Portfolio's securities. Money borrowed will be subject to interest costs which may or may not be recovered by
appreciation of the securities purchased. The Portfolio also may be required to maintain minimum average
balances in connection with such borrowing or to pay a commitment or other fee to maintain a line of credit;
either of these requirements would increase the cost of borrowing over the stated interest rate.

Among the forms of borrowing in which the Portfolio may engage is the entry into reverse repurchase
agreements. A reverse repurchase agreement involves the sale of the Portfolio-eligible security by the
Portfolio, coupled with its agreement to repurchase the instrument at a specified time and price. The Portfolio
will maintain a segregated account with its Custodian consisting of cash or other liquid assets equal (on a daily
mark-to-market basis) to its obligations under reverse repurchase agreements with broker-dealers (but not
banks). However, reverse repurchase agreements involve the risk that the market value of securities retained by
the Portfolio may decline below the repurchase price of the securities sold by the Portfolio which it is
obligated to repurchase. To the extent that the Portfolio collateralizes its obligations under a reverse
repurchase agreement, the asset coverage requirements of the 1940 Act will not apply.

In addition to the above, the Portfolio may enter into reverse repurchase agreements and "mortgage
dollar rolls." A reverse repurchase agreement involves the sale of a portfolio-eligible security by the
Portfolio, coupled with its agreement to repurchase the instrument at a specified time and price. In a "dollar
roll" transaction the Portfolio sells a mortgage-related security (such as a GNMA security) to a dealer and
simultaneously agrees to repurchase a similar security (but not the same security) in the future at a
pre-determined price. A "dollar roll" can be viewed, like a reverse repurchase agreement, as a collateralized
borrowing in which the Portfolio pledges a mortgage-related security to a dealer to obtain cash. Unlike in the
case of reverse repurchase agreements, the dealer with which the Portfolio enters into a dollar roll transaction
is not obligated to return the same securities as those originally sold by the Portfolio, but only securities
which are "substantially identical." To be considered "substantially identical," the securities returned to the
Portfolio generally must: (1) be collateralized by the same types of underlying mortgages; (2) be issued by the
same agency and be part of the same program; (3) have a similar original stated maturity; (4) have identical net
coupon rates; (5) have similar market yields (and therefore price); and (6) satisfy "good delivery" requirements,
meaning that the aggregate principal amounts of the securities delivered and received back must be within 2.5% of
the initial amount delivered. The Portfolio's obligations under a dollar roll agreement must be covered by cash
or other liquid assets equal in value to the securities subject to repurchase by the Portfolio, maintained in a
segregated account.

Corporate Debt Securities. The Portfolio's investments in U.S. dollar- or foreign currency-denominated
corporate debt securities of domestic or foreign issuers are limited to corporate debt securities (corporate
bonds, debentures, notes and other similar corporate debt instruments, including convertible securities) which
meet the minimum ratings criteria set forth for the Portfolio, or, if unrated, are in the Sub-advisor's opinion
comparable in quality to corporate debt securities in which the Portfolio may invest. The rate of return or
return of principal on some debt obligations may be linked or indexed to the level of exchange rates between the
U.S. dollar and a foreign currency or currencies.

A convertible security may be subject to redemption at the option of the issuer at a predetermined
price. If a convertible security held by the Portfolio is called for redemption, the Portfolio would be required
to permit the issuer to redeem the security and convert it to underlying common stock, or would sell the
convertible security to a third party. The Portfolio generally would invest in convertible securities for their
favorable price characteristics and total return potential and would normally not exercise an option to convert.

Investments in securities rated below investment grade that are eligible for purchase by the Portfolio
(i.e., rated B or better by Moody's or S&P), are described as "speculative" by both Moody's and S&P. Investment
in lower-rated corporate debt securities ("high yield securities") generally provides greater income and
increased opportunity for capital appreciation than investments in higher quality securities, but they also
typically entail greater price volatility and principal and income risk. These high yield securities are
regarded as predominantly speculative with respect to the issuer's continuing ability to meet principal and
interest payments. The market for these securities is relatively new, and many of the outstanding high yield
securities have not endured a major business recession. A long-term track record on default rates, such as that
for investment grade corporate bonds, does not exist for this market. Analysis of the creditworthiness of
issuers of debt securities that are high yield may be more complex than for issuers of higher quality debt
securities.

High yield securities may be more susceptible to real or perceived adverse economic and competitive
industry conditions than investment grade securities. The prices of high yield securities have been found to be
less sensitive to interest-rate changes than higher-rated investments, but more sensitive to adverse economic
downturns or individual corporate developments. A projection of an economic downturn or of a period of rising
interest rates, for example, could cause a decline in high yield security prices because the advent of a
recession could lessen the ability of a highly leveraged company to make principal and interest payments on its
debt securities. If an issuer of high yield securities defaults, in addition to risking payment of all or a
portion of interest and principal, the Portfolio may incur additional expenses to seek recovery. In the case of
high yield securities structured as zero-coupon or pay-in-kind securities, their market prices are affected to a
greater extent by interest rate changes, and therefore tend to be more volatile than securities which pay
interest periodically and in cash.

The secondary market on which high yield securities are traded may be less liquid than the market for
higher grade securities. Less liquidity in the secondary trading market could adversely affect the price at
which the Portfolio could sell a high yield security, and could adversely affect the daily net asset value of the
shares. Adverse publicity and investor perceptions, whether or not based on fundamental analysis, may decrease
the values and liquidity of high yield securities especially in a thinly-traded market. When secondary markets
for high yield securities are less liquid than the market for higher grade securities, it may be more difficult
to value the securities because such valuation may require more research, and elements of judgment may play a
greater role in the valuation because there is less reliable, objective data available. The Sub-advisor seeks to
minimize the risks of investing in all securities through diversification, in-depth credit analysis and attention
to current developments in interest rates and market conditions. For a discussion of the risks involved in
lower-rated debt securities, see this Statement and the Trust's Prospectus under "Certain Risk Factors and
Investment Methods."

Participation on Creditors Committees. The Portfolio may from time to time participate on committees
formed by creditors to negotiate with the management of financially troubled issuers of securities held by the
Portfolio. Such participation may subject the Portfolio to expenses such as legal fees and may make the
Portfolio an "insider" of the issuer for purposes of the federal securities laws, and therefore may restrict the
Portfolio's ability to trade in or acquire additional positions in a particular security when it might otherwise
desire to do so. Participation by the Portfolio on such committees also may expose the Portfolio to potential
liabilities under the federal bankruptcy laws or other laws governing the rights of creditors and debtors. The
Portfolio would participate on such committees only when the Adviser believed that such participation was
necessary or desirable to enforce the Portfolio's rights as a creditor or to protect the value of securities held
by the Portfolio.

Mortgage-Related Securities. The Portfolio may invest in mortgage-backed securities. Mortgage-related
securities are interests in pools of residential or commercial mortgage loans, including mortgage loans made by
savings and loan institutions, mortgage bankers, commercial banks and others. Pools of mortgage loans are
assembled as securities for sale to investors by various governmental, government-related and private
organizations (see "Mortgage Pass-Through Securities"). The Portfolio may also invest in debt securities which
are secured with collateral consisting of mortgage-related securities (see "Collateralized Mortgage
Obligations"), and in other types of mortgage-related securities.

Interests in pools of mortgage-related securities differ from other forms of debt securities, which
normally provide for periodic payment of interest in fixed amounts with principal payments at maturity or
specified call dates. Instead, these securities provide a monthly payment which consists of both interest and
principal payments. In effect, these payments are a "pass-through" of the monthly payments made by the
individual borrowers on their residential or commercial mortgage loans, net of any fees paid to the issuer or
guarantor of such securities. Additional payments are caused by repayments of principal resulting from the sale
of the underlying property, refinancing or foreclosure, net of fees or costs which may be incurred. Some
mortgage-related securities (such as securities issued by the Government National Mortgage Association) are
described as "modified pass-through." These securities entitle the holder to receive all interest and principal
payments owed on the mortgage pool, net of certain fees, at the scheduled payment dates regardless of whether or
not the mortgagor actually makes the payment.

Government-related guarantors (i.e., not backed by the full faith and credit of the United States
Government) include the Federal National Mortgage Association ("FNMA") and the Federal Home Loan Mortgage
Corporation ("FHLMC"). FNMA is a government-sponsored corporation owned entirely by private stockholders. It is
subject to general regulation by the Secretary of Housing and Urban Development. FNMA purchases conventional
(i.e., not insured or guaranteed by any government agency) residential mortgages from a list of approved
seller/servicers which include state and federally chartered savings and loan associations, mutual savings banks,
commercial banks and credit unions and mortgage bankers. Pass-through securities issued by FNMA are guaranteed
as to timely payment of principal and interest by FNMA but are not backed by the full faith and credit of the
United States Government.

FHLMC was created by Congress in 1970 for the purpose of increasing the availability of mortgage credit
for residential housing. It is a government-sponsored corporation formerly owned by the twelve Federal Home Loan
Banks and now owned entirely by private stockholders. FHLMC issues Participation Certificates ("PCs") which
represent interests in conventional mortgages from FHLMC's national portfolio. FHLMC guarantees the timely
payment of interest and ultimate collection of principal, but PCs are not backed by the full faith and credit of
the United States Government.

Commercial banks, savings and loan institutions, private mortgage insurance companies, mortgage bankers
and other secondary market issuers also create pass-through pools of conventional residential mortgage loans.
Such issuers may, in addition, be the originators and/or servicers of the underlying mortgage loans as well as
the guarantors of the mortgage-related securities. Pools created by such non-governmental issuers generally
offer a higher rate of interest than government and government-related pools because there are no direct or
indirect government or agency guarantees of payments in the former pools. However, timely payment of interest
and principal of these pools may be supported by various forms of insurance or guarantees, including individual
loan, title, pool and hazard insurance and letters of credit. The insurance and guarantees are issued by
governmental entities, private insurers and the mortgage poolers. Such insurance and guarantees and the
creditworthiness of the issuers thereof will be considered in determining whether a mortgage-related security
meets the Trust's investment quality standards. There can be no assurance that the private insurers or
guarantors can meet their obligations under the insurance policies or guarantee arrangements. The Fixed-Income
Portfolio may buy mortgage-related securities without insurance or guarantees if, through an examination of the
loan experience and practices of the originator/servicers and poolers, the Adviser determines that the securities
meet the Trust's quality standards. Although the market for such securities is becoming increasingly liquid,
securities issued by certain private organizations may not be readily marketable. No Portfolio will purchase
mortgage-related securities or any other assets which in the Adviser's opinion are illiquid if, as a result, more
than 15% of the value of the Portfolio's total assets will be illiquid.

Mortgage-backed securities that are issued or guaranteed by the U.S. Government, its agencies or
instrumentalities, are not subject to the Portfolio' industry concentration restrictions, set forth in this
Statement under "Investment Restrictions," by virtue of the exclusion from that test available to all U.S.
Government securities. In the case of privately issued mortgage-related securities, the Portfolio takes the
position that mortgage-related securities do not represent interests in any particular "industry" or group of
industries. The assets underlying such securities may be represented by the Portfolio of first lien residential
mortgages (including both whole mortgage loans and mortgage participation interests) or portfolios of mortgage
pass-through securities issued or guaranteed by GNMA, FNMA or FHLMC. Mortgage loans underlying a
mortgage-related security may in turn be insured or guaranteed by the Federal Housing Administration or the
Department of Veterans Affairs. In the case of private issue mortgage-related securities whose underlying assets
are neither U.S. Government securities nor U.S. Government-insured mortgages, to the extent that real properties
securing such assets may be located in the same geographical region, the security may be subject to a greater
risk of default than other comparable securities in the event of adverse economic, political or business
developments that may affect such region and, ultimately, the ability of residential homeowners to make payments
of principal and interest on the underlying mortgages.

In a typical CMO transaction, a corporation ("issuer") issues multiple series (e.g., A, B, C, Z) of CMO
bonds ("Bonds"). Proceeds of the Bond offering are used to purchase mortgages or mortgage pass-through
certificates ("Collateral"). The Collateral is pledged to a third party trustee as security for the Bonds.
Principal and interest payments from the Collateral are used to pay principal on the Bonds in the order A, B, C,
Z. The Series A, B, and C Bonds all bear current interest. Interest on the Series Z Bond is accrued and added
to principal and a like amount is paid as principal on the Series A, B, or C Bond currently being paid off. When
the Series A, B, and C Bonds are paid in full, interest and principal on the Series Z Bond begins to be paid
currently. With some CMOs, the issuer serves as a conduit to allow loan originators (primarily builders or
savings and loan associations) to borrow against their loan portfolios.

Criteria for the mortgage loans in the pool backing the FHLMC CMOs are identical to those of FHLMC PCs.
FHLMC has the right to substitute collateral in the event of delinquencies and/or defaults. For an additional
discussion of mortgage-backed securities and certain risks involved therein, see this Statement and the Trust's
Prospectus under "Certain Risk Factors and Investment Methods."

SMBS are usually structured with two classes that receive different proportions of the interest and
principal distributions on a pool of mortgage assets. A common type of SMBS will have one class receiving some
of the interest and most of the principal from the mortgage assets, while the other class will receive most of
the interest and the remainder of the principal. In the most extreme case, one class will receive all of the
interest (the IO class), while the other class will receive all of the principal (the principal-only or "PO"
class). The yield to maturity on an IO class is extremely sensitive to the rate of principal payments (including
prepayments) on the related underlying mortgage assets, and a rapid rate of principal payments may have a
material adverse effect on the Portfolio's yield to maturity from these securities. If the underlying mortgage
assets experience greater than anticipated prepayments of principal, the Portfolio may fail to fully recoup its
initial investment in these securities even if the security is in one of the highest rating categories.

Although SMBS are purchased and sold by institutional investors through several investment banking firms
acting as brokers or dealers, these securities were only recently developed. As a result, established trading
markets have not
yet developed and, accordingly, these securities may be deemed "illiquid" and subject to the Portfolio's
limitations on investment in illiquid securities.

Other Asset-Backed Securities. Similarly, the Sub-advisor expects that other asset-backed securities
(unrelated to mortgage loans) will be offered to investors in the future. Several types of asset-backed
securities maybe offered to investors, including Certificates for Automobile Receivables. For a discussion of
automobile receivables, see this Statement under "Certain Risk Factors and Investment Methods."

Foreign Securities. The Portfolio may invest in corporate debt securities of foreign issuers (including
preferred or preference stock), certain foreign bank obligations (see "Bank Obligations") and U.S. dollar- or
foreign currency-denominated obligations of foreign governments or their subdivisions, agencies and
instrumentalities, international agencies and supranational entities. The Portfolio may invest up to 20% of its
assets in securities denominated in foreign currencies, and may invest beyond this limit in U.S.
dollar-denominated securities of foreign issuers. The Portfolio will concentrate its foreign investments in
securities of issuers based in developed countries. The Portfolio may invest up to 5% of its assets in
securities of issuers based in emerging market countries. Investing in the securities of foreign issuers
involves special risks and considerations not typically associated with investing in U.S. companies. For a
discussion of certain risks involved in foreign investments, in general, and the special risks of investing in
developing countries, see this Statement and the Trust's Prospectus under "Certain Risk Factors and Investment
Methods."

The Portfolio also may purchase and sell foreign currency options and foreign currency futures contracts
and related options (see "Derivative Instruments"), and enter into forward foreign currency exchange contracts in
order to protect against uncertainty in the level of future foreign exchange rates in the purchase and sale of
securities.

A forward foreign currency contract involves an obligation to purchase or sell a specific currency at a
future date, which may be any fixed number of days from the date of the contract agreed upon by the parties, at a
price set at the time of the contract. These contracts may be bought or sold to protect the Portfolio against a
possible loss resulting from an adverse change in the relationship between foreign currencies and the U.S. dollar
or to increase exposure to a particular foreign currency. Open positions in forward contracts are covered by the
segregation with the Trust's custodian of cash or other liquid assets and are marked to market daily. Although
such contracts are intended to minimize the risk of loss due to a decline in the value of the hedged currencies,
at the same time, they tend to limit any potential gain which might result should the value of such currencies
increase.

Bank Obligations. Bank obligations in which the Portfolio invests include certificates of deposit,
bankers' acceptances, and fixed time deposits. Certificates of deposit are negotiable certificates issued
against funds deposited in a commercial bank for a definite period of time and earning a specified return.
Bankers' acceptances are negotiable drafts or bills of exchange, normally drawn by an importer or exporter to pay
for specific merchandise, which are "accepted" by a bank, meaning, in effect, that the bank unconditionally
agrees to pay the face value of the instrument on maturity. Fixed time deposits are bank obligations payable at
a stated maturity date and bearing interest at a fixed rate. Fixed time deposits may be withdrawn on demand by
the investor, but may be subject to early withdrawal penalties which vary depending upon market conditions and
the remaining maturity of the obligation. There are no contractual restrictions on the right to transfer a
beneficial interest in a fixed time deposit to a third party, although there is no market for such deposits. The
Portfolio will not invest in fixed time deposits which (1) are not subject to prepayment or (2) provide for
withdrawal penalties upon prepayment (other than overnight deposits) if, in the aggregate, more than 15% of its
assets would be invested in such deposits, repurchase agreements maturing in more than seven days and other
illiquid assets.

The Portfolio will limit its investments in United States bank obligations to obligations of United
States banks (including foreign branches) which have more than $1 billion in total assets at the time of
investment and are members of the Federal Reserve System, are examined by the Comptroller of the Currency or
whose deposits are insured by the Federal Deposit Insurance Corporation. The Portfolio also may invest in
certificates of deposit of savings and loan associations (federally or state chartered and federally insured)
having total assets in excess of $1 billion.

The Portfolio will limit its investments in foreign bank obligations to United States dollar- or foreign
currency-denominated obligations of foreign banks (including United States branches of foreign banks) which at
the time of investment (I) have more than $10 billion, or the equivalent in other currencies, in total assets;
(ii) in terms of assets are among the 75 largest foreign banks in the world; (iii) have branches or agencies
(limited purpose offices which do not offer all banking services) in the United States; and (iv) in the opinion
of the Sub-advisor, are of an investment quality comparable to obligations of United States banks in which the
Portfolio may invest. Subject to the Trust's limitation on concentration of no more than 25% of its assets in
the securities of issuers in a particular industry, there is no limitation on the amount of the Portfolio's
assets which may be invested in obligations of foreign banks which meet the conditions set forth herein.

Obligations of foreign banks involve somewhat different investment risks than those affecting
obligations of United States banks, including the possibilities that their liquidity could be impaired because of
future political and economic developments, that their obligations may be less marketable than comparable
obligations of United States banks, that a foreign jurisdiction might impose withholding taxes on interest income
payable on those obligations, that foreign deposits may be seized or nationalized, that foreign governmental
restrictions such as exchange controls may be adopted which might adversely affect the payment of principal and
interest on those obligations and that the selection of those obligations may be more difficult because there may
be less publicly available information concerning foreign banks or because the accounting, auditing and financial
reporting standards, practices and requirements applicable to foreign banks may differ from those applicable to
United States banks. Foreign banks are not generally subject to examination by any United States Government
agency or instrumentality.

Derivative Instruments. In pursuing its objective, the Portfolio may, as described in the Prospectus,
purchase and sell (write) both put options and call options on securities, securities indexes, and foreign
currencies, and enter into interest rate, foreign currency and index futures contracts and purchase and sell
options on such futures contracts ("futures options") for hedging purposes. The Portfolio also may purchase and
sell foreign currency options for purposes of increasing exposure to a foreign currency or to shift exposure to
foreign currency fluctuations from one country to another. The Portfolio also may enter into swap agreements
with respect to foreign currencies, interest rates and indexes of securities. If other types of financial
instruments, including other types of options, futures contracts, or futures options are traded in the future,
the Portfolio may also use those instruments, provided that the Trust's Board of Trustees determines that their
use is consistent with the Portfolio's investment objective, and provided that their use is consistent with
restrictions applicable to options and futures contracts currently eligible for use by the Trust (i.e., that
written call or put options will be "covered" or "secured" and that futures and futures options will be used only
for hedging purposes).

Options on Securities and Indexes. The Portfolio may purchase and sell both put and call options on
debt or other securities or indexes in standardized contracts traded on foreign or national securities exchanges,
boards of trade, or similar entities, or quoted on NASDAQ or on a regulated foreign over-the-counter market, and
agreements, sometimes called cash puts, which may accompany the purchase of a new issue of bonds from a dealer.

The Portfolio will write call options and put options only if they are "covered." In the case of a call
option on a security, the option is "covered" if the Portfolio owns the security underlying the call or has an
absolute and immediate right to acquire that security without additional cash consideration (or, if additional
cash consideration is required, cash or cash equivalents in such amount are placed in a segregated account by its
custodian) upon conversion or exchange of other securities held by the Portfolio. For a call option on an index,
the option is covered if the Portfolio maintains with its custodian cash or cash equivalents equal to the
contract value. A call option is also covered if the Portfolio holds a call on the same security or index as the
call written where the exercise price of the call held is (I) equal to or less than the exercise price of the
call written, or (ii) greater than the exercise price of the call written, provided the difference is maintained
by the Portfolio in cash or cash equivalents in a segregated account with its custodian. A put option on a
security or an index is "covered" if the Portfolio maintains cash or cash equivalents equal to the exercise price
in a segregated account with its custodian. A put option is also covered if the Portfolio holds a put on the
same security or index as the put written where the exercise price of the put held is (i) equal to or greater
than the exercise price of the put written, or (ii) less than the exercise price of the put written, provided the
difference is maintained by the Portfolio in cash or cash equivalents in a segregated account with its custodian.

The Portfolio will realize a capital gain from a closing purchase transaction if the cost of the closing
option is less than the premium received from writing the option, or, if it is more, the Portfolio will realize a
capital loss. If the premium received from a closing sale transaction is more than the premium paid to purchase
the option, the Portfolio will realize a capital gain or, if it is less, the Portfolio will realize a capital
loss. The principal factors affecting the market value of a put or a call option include supply and demand,
interest rates, the current market price of the underlying security or index in relation to the exercise price of
the option, the volatility of the underlying security or index, and the time remaining until the expiration date.

The premium paid for a put or call option purchased by the Portfolio is an asset of the Portfolio. The
premium received for an option written by the Portfolio is recorded as a deferred credit. The value of an option
purchased or written is marked to market daily and is valued at the closing price on the exchange on which it is
traded or, if not traded on an exchange or no closing price is available, at the mean between the last bid and
asked prices. For a discussion of certain risks involved in options, see this Statement and the Trust's
Prospectus under "Certain Risk Factors and Investment Methods."

To comply with applicable rules of the CFTC under which the Trust and the Portfolio avoid being deemed a
"commodity pool" or a "commodity pool operator," the Portfolio intends generally to limit its use of futures
contracts and futures options to "bona fide hedging" transactions, as such term is defined in applicable
regulations, interpretations and practice. For example, the Portfolio might use futures contracts to hedge
against anticipated changes in interest rates that might adversely affect either the value of the Portfolio's
securities or the price of the securities which the Portfolio intends to purchase. The Portfolio's hedging
activities may include sales of futures contracts as an offset against the effect of expected increases in
interest rates, and purchases of futures contracts as an offset against the effect of expected declines in
interest rates. Although other techniques could be used to reduce that Portfolio's exposure to interest rate
fluctuations, the Portfolio may be able to hedge its exposure more effectively and perhaps at a lower cost by
using futures contracts and futures options.

When a purchase or sale of a futures contract is made by the Portfolio, the Portfolio is required to
deposit with its custodian (or broker, if legally permitted) a specified amount of cash or U.S. Government
securities ("initial margin"). The margin required for a futures contract is set by the exchange on which the
contract is traded and may be modified during the term of the contract. The initial margin is in the nature of a
performance bond or good faith deposit on the futures contract which is returned to the Portfolio upon
termination of the contract, assuming all contractual obligations have been satisfied. The Portfolio expects to
earn interest income on its initial margin deposits. A futures contract held by the Portfolio is valued daily at
the official settlement price of the exchange on which it is traded. Each day the Portfolio pays or receives
cash, called "variation margin," equal to the daily change in value of the futures contract. This process is
known as "marking to market." Variation margin does not represent a borrowing or loan by the Portfolio but is
instead a settlement between the Portfolio and the broker of the amount one would owe the other if the futures
contract expired. In computing daily net asset value, the Portfolio will mark to market its open futures
positions.

Limitations on Use of Futures and Futures Options. In general, the Portfolio intends to enter into
positions in futures contracts and related options only for "bona fide hedging" purposes. With respect to
positions in futures and related options that do not constitute bona fide hedging positions, the Portfolio will
not enter into a futures contract or futures option contract if, immediately thereafter, the aggregate initial
margin deposits relating to such positions plus premiums paid by it for open futures option positions, less the
amount by which any such options are "in-the-money," would exceed 5% of the Portfolio's total net assets. A call
option is "in-the-money" if the value of the futures contract that is the subject of the option exceeds the
exercise price. A put option is "in-the-money" if the exercise price exceeds the value of the futures contract
that is the subject of the option.

When selling a put option on a futures contract, the Portfolio will maintain with its custodian (and
mark-to-market on a daily basis) cash or other liquid assets that equal the purchase price of the futures
contract, less any margin on deposit. Alternatively, the Portfolio may cover the position either by entering
into a short position in the same futures contract, or by owning a separate put option permitting it to sell the
same futures contract so long as the strike price of the purchased put option is the same or higher than the
strike price of the put option sold by the Portfolio. For a discussion of the risks involved in futures
contracts and related options, see the Trust's Prospectus and this Statement under "Certain Factors and
Investment Methods."

Swap Agreements. The Portfolio may enter into interest rate, index and currency exchange rate swap
agreements for purposes of attempting to obtain a particular desired return at a lower cost to the Portfolio than
if the Portfolio had invested directly in an instrument that yielded that desired return. For a discussion of
swap agreements, see the Trust's Prospectus under "Investment Objectives and Policies." The Portfolio's
obligations (or rights) under a swap agreement will generally be equal only to the net amount to be paid or
received under the agreement based on the relative values of the positions held by each party to the agreement
(the "net amount"). The Portfolio's obligations under a swap agreement will be accrued daily (offset against any
amounts owing to the Portfolio) and any accrued but unpaid net amounts owed to a swap counterparty will be
covered by the maintenance of a segregated account consisting of cash or other liquid assets to avoid any
potential leveraging of the Portfolio's portfolio. The Portfolio will not enter into a swap agreement with any
single party if the net amount owed or to be received under existing contracts with that party would exceed 5% of
the Portfolio's assets.

Certain swap agreements are exempt from most provisions of the Commodity Exchange Act ("CEA") and,
therefore, are not regulated as futures or commodity option transactions under the CEA, pursuant to regulations
approved by the CFTC. To qualify for this exemption, a swap agreement must be entered into by "eligible
participants," which includes the following, provided the participants' total assets exceed established levels:
a bank or trust company, savings association or credit union, insurance company, investment company subject to
regulation under the 1940 Act, commodity pool, corporation, partnership, proprietorship, organization, trust or
other entity, employee benefit plan, governmental entity, broker-dealer, futures commission merchant, natural
person, or regulated foreign person. To be eligible, natural persons and most other entities must have total
assets exceeding $10 million; commodity pools and employee benefit plans must have assets exceeding $5 million.
In addition, an eligible swap transaction must meet three conditions. First, the swap agreement may not be part
of a fungible class of agreements that are standardized as to their material economic terms. Second, the
creditworthiness of parties with actual or potential obligations under the swap agreement must be a material
consideration in entering into or determining the terms of the swap agreement, including pricing, cost or credit
enhancement terms. Third, swap agreements may not be entered into and traded on or through a multilateral
transaction execution facility.

This exemption is not exclusive, and participants may continue to rely on existing exclusions for swaps,
such as the Policy Statement issued in July 1989 which recognized a safe harbor for swap transactions from
regulation as futures or commodity option transactions under the CEA or its regulations. The Policy Statement
applies to swap transactions settled in cash that (1) have individually tailored terms, (2) lack exchange-style
offset and the use of a clearing organization or margin system, (3) are undertaken in conjunction with a line of
business, and (4) are not marketed to the public.

Foreign Currency Exchange Related Securities. The Portfolio may also invest in foreign currency
warrants, principal exchange rate linked securities and performance indexed paper. For a discussion of these,
see this Statement under "Certain Risk Factors and Investment Methods."

Delayed Funding Loans and Revolving Credit Facilities. The Portfolio may enter into, or acquire
participations in, delayed funding loans and revolving credit facilities. Delayed funding loans and revolving
credit facilities are borrowing arrangements in which the lender agrees to make loans up to a maximum amount upon
demand by the borrower during a specified term. These commitments may have the effect of requiring the Portfolio
to increase its investment in a company at a time when it might not otherwise decide to do so (including at a
time when the company's financial condition makes it unlikely that such amounts will be repaid). To the extent
that the Portfolio is committed to advance additional funds, it will at all times segregate liquid assets,
determined to be liquid by the Sub-advisor in accordance with procedures established by the Board of Directors,
in an amount sufficient to meet such commitments. The Portfolio may invest in delayed funding loans and
revolving credit facilities with credit quality comparable to that of issuers of its securities investments.
Delayed funding loans and revolving credit facilities may be subject to restrictions on transfer, and only
limited opportunities may exist to resell such instruments. As a result, the Portfolio may be unable to sell
such investments at an opportune time or may have to resell them at less than fair market value. The Portfolio
currently intend to treat delayed funding loans and revolving credit facilities for which there is no readily
available market as illiquid for purposes of the Portfolio's limitation on illiquid investments. Participation
interests in revolving credit facilities will be subject to the limitations discussed above under "Loan
Participations." Delayed funding loans and revolving credit facilities are considered to be debt obligations for
purposes of the Company's investment restriction relating to the lending of funds or assets by the Portfolio.

Investment Policies Which May Be Changed Without Shareholder Approval. The following limitations are
applicable to the AST PIMCO Limited Maturity Bond Portfolio. These limitations are not "fundamental"
restrictions and may be changed by the Trustees without shareholder approval. The Portfolio will not:

1. Invest more than 15% of the assets of the Portfolio (taken at market value at the time of the
investment) in "illiquid securities," illiquid securities being defined to include securities subject to legal or
contractual restrictions on resale (which may include private placements), repurchase agreements maturing in more
than seven days, certain options traded over the counter that a Portfolio has purchased, securities being used to
cover such options a Portfolio has written, securities for which market quotations are not readily available, or
other securities which legally or in the Sub-advisor's opinion may be deemed illiquid.

2. Invest more than 5% of the assets of the Portfolio (taken at market value at the time of
investment) in any combination of interest only, principal only, or inverse floating rate securities.

The Staff of the SEC has taken the position that purchased OTC options and the assets used as cover for
written OTC options are illiquid securities. Therefore, the Portfolio has adopted an investment policy pursuant
to which the Portfolio will not purchase or sell OTC options if, as a result of such transactions, the sum of the
market value of OTC options currently outstanding which are held by the Portfolio, the market value of the
underlying securities covered by OTC call options currently outstanding which were sold by the Portfolio and
margin deposits on the Portfolio's existing OTC options on futures contracts exceeds 15% of the total assets of
the Portfolio, taken at market value, together with all other assets of the Portfolio which are illiquid or are
otherwise not readily marketable. However, if an OTC option is sold by the Portfolio to a primary U.S.
Government securities dealer recognized by the Federal Reserve Bank of New York and if the Portfolio has the
unconditional contractual right to repurchase such OTC option from the dealer at a predetermined price, then the
Portfolio will treat as illiquid such amount of the underlying securities equal to the repurchase price less the
amount by which the option is "in-the-money" (i.e., current market value of the underlying securities minus the
option's strike price). The repurchase price with the primary dealers is typically a formula price which is
generally based on a multiple of the premium received for the option, plus the amount by which the option is
"in-the-money."

AST Money Market Portfolio:

Investment Objective: The investment objective of the Portfolio is to seek high current income and maintain high
levels of liquidity.

Investment Policies:

Bank Obligations. The Portfolio will not invest in bank obligations for which any affiliate of the
Sub-advisor is the ultimate obligor or accepting bank.

Asset-Backed Securities. The asset-backed securities in which the Portfolio may invest are subject to
the Portfolio's overall credit requirements. However, asset-backed securities, in general, are subject to
certain risks. Most of these risks are related to limited interests in applicable collateral. For example,
credit card receivables are generally unsecured and the debtors are entitled to the protection of a number of
state and federal consumer credit laws, many of which give such debtors the right to set off certain amounts on
credit card debt thereby reducing the balance due. Additionally, if the letter of credit is exhausted, holders
of asset-backed securities may also experience delays in payments or losses if the full amounts due on underlying
sales contracts are not realized. Because asset-backed securities are relatively new, the market experience in
these securities is limited and the market's ability to sustain liquidity through all phases of the market cycle
has not been tested. For a discussion of asset-backed securities and the risks involved therein see the Trust's
Prospectus and this Statement under "Certain Risk Factors and Investment Methods."

Synthetic Instruments. As may be permitted by current laws and regulations and if expressly permitted
by the Board of Trustees of the Trust, the Portfolio may invest in certain synthetic instruments. Such
instruments generally involve the deposit of asset-backed securities in a trust arrangement and the issuance of
certificates evidencing interests in the trust. The certificates are generally sold in private placements in
reliance on Rule 144A of the Securities Act of 1933 (without registering the certificates under such Act).

Reverse Repurchase Agreements. The Portfolio invests the proceeds of borrowings under reverse
repurchase agreements. The Portfolio will enter into a reverse repurchase agreement only when the interest
income to be earned from the investment of the proceeds is greater than the interest expense of the transaction.
The Portfolio will not invest the proceeds of a reverse repurchase agreement for a period which exceeds the
duration of the reverse repurchase agreement. The Portfolio may not enter into reverse repurchase agreements
exceeding in the aggregate one-third of the market value of its total assets, less liabilities other than the
obligations created by reverse repurchase agreements. The Portfolio will establish and maintain with its
custodian a separate account with a segregated portfolio of securities in an amount at least equal to its
purchase obligations under its reverse repurchase agreements. If interest rates rise during the term of a
reverse repurchase agreement, such reverse repurchase agreement may have a negative impact on the Portfolio's
ability to maintain a net asset value of $1.00 per share.

Foreign Securities. The Portfolio may invest in U.S. dollar-denominated foreign securities. Any
foreign commercial paper must not be subject to foreign withholding tax at the time of purchase. Foreign
investments may be made directly in securities of foreign issuers or in the form of American Depositary Receipts
("ADRs") and European Depositary Receipts ("EDRs"). Generally, ADRs and EDRs are receipts issued by a bank or
trust company that evidence ownership of underlying securities issued by a foreign corporation and that are
designed for use in the domestic, in the case of ADRs, or European, in the case of EDRs, securities markets. For
a discussion of depositary receipts and the risks involved in investing in foreign securities, see the Trust's
Prospectus under "Certain Risk Factors and Investment Methods."

Lending Portfolio Securities. Loans will be subject to termination by the Portfolio in the normal
settlement time, generally three business days after notice. Borrowed securities must be returned when the loan
is terminated. The Portfolio may pay reasonable finders' and custodial fees in connection with a loan. In
making a loan, the Portfolio will consider the creditworthiness of the borrowing financial institution.

Investment Objective and Policy Applicable to All Portfolios:

In order to permit the sale of shares of the Trust to separate accounts of Participating Insurance
Companies in certain states, the Trust may make commitments more restrictive than the restrictions described in
the section of this Statement entitled "Investment Restrictions." Should the Trust determine that any such
commitment is no longer in the best interests of the Trust and its shareholders it will revoke the commitment and
terminate sales of its shares in the state(s) involved.

The Board of Trustees of the Trust may, from time to time, promulgate guidelines with respect to the
investment policies of the Portfolios.

INVESTMENT RESTRICTIONS:

The investment restrictions set forth below are "fundamental" policies. See the subsection of this
Statement entitled "Investment Objectives and Policies" for further discussion of "fundamental" policies of the
Trust and the requirements for changing such "fundamental" policies. Investment policies that are not
"fundamental" may be found in the general description of the investment policies of each Portfolio, as described
in the section of this Statement and the Trust's Prospectus entitled "Investment Objectives and Policies."

The investment restrictions below apply only to the Portfolio or Portfolios described in the text
preceding the restrictions.

Investment Restrictions Applicable Only to the AST Alliance Growth and Income Portfolio, the AST JanCap Growth
Portfolio, the AST INVESCO Equity Income Portfolio, the AST Federated High Yield Portfolio, the AST PIMCO Total
Return Bond Portfolio, the AST PIMCO Limited Maturity Bond Portfolio and the AST Money Market Portfolio.

1. A Portfolio will not buy any securities or other property on margin (except for such short-term credits
as are necessary for the clearance of transactions).

2. Portfolio will not invest in companies for the purpose of exercising control or management.

3. A Portfolio will not underwrite securities issued by others except to the extent that the Portfolio may
be deemed an underwriter when purchasing or selling securities.

4. A Portfolio will not issue senior securities.

Investment Restrictions Applicable Only to the AST Founders Passport Portfolio:

As a matter of fundamental policy, the Portfolio will not:

1. Make loans of money or securities other than (a) through the purchase of securities in accordance with
the Portfolio's investment objective, (b) through repurchase agreements, and (c) by lending portfolio securities
in an amount not to exceed 33 1/3% of the Portfolio's total assets;

2. Underwrite securities issued by others except to the extent that the Portfolio may be deemed an
underwriter when purchasing or selling securities;

3. Issue senior securities;

4. Invest directly in physical commodities (other than foreign currencies), real estate or interests in
real estate; provided, that the Portfolio may invest in securities of issuers which invest in physical
commodities, real estate or interests in real estate; and, provided further, that this restriction shall not
prevent the Portfolio from purchasing or selling options, futures, swaps and forward contracts, or from investing
in securities or other instruments backed by physical commodities, real estate or interests in real estate;

5. Make any investment which would concentrate 25% or more of the Portfolio's total assets in the
securities of issuers having their principal business activities in the same industry, provided that this
limitation does not apply to obligations issued or guaranteed by the U.S. government, its agencies or
instrumentalities;

6. Borrow money except from banks in amounts up to 33 1/3% of the Portfolio's total assets;

7. As to 75% of the value of its total assets, invest more than 5% of its total assets, at market value, in
the securities of any one issuer (except securities issued or guaranteed by the U.S. Government, its agencies or
instrumentalities); or

8. As to 75% of the value of its total assets, purchase more than 10% of any class of securities of any
single issuer or purchase more than 10% of the voting securities of any single issuer.

In applying the above restriction regarding investments in a single industry, the Portfolio uses
industry classifications based, where applicable, on Baseline, Bridge Information Systems, Reuters, the S&P Stock
-------- -------------------------- ------- ----------
Guide published by Standard & Poor's, information obtained from Bloomberg L.P. and Moody's International, and/or
-----
the prospectus of the issuing company. Selection of an appropriate industry classification resource will be made
by the Sub-advisor in the exercise of its reasonable discretion. (This note is not a fundamental policy.)
---

Investment Restrictions Applicable Only to the AST Janus Overseas Growth Portfolio:

1. The Portfolio may borrow money for temporary or emergency purposes (not for leveraging or investment) in
an amount not exceeding 33 1/3% of the value of its total assets (including the amount borrowed) less liabilities
(other than borrowings). If borrowings exceed 33 1/3% of the value of the Portfolio's total assets by reason of
a decline in net assets, the Portfolio will reduce its borrowings within three business days to the extent
necessary to comply with the 33 1/3% limitation. This policy shall not prohibit reverse repurchase agreements,
deposits of assets to margin or guarantee positions in futures, options, swaps or forward contracts, or the
segregation of assets in connection with such contracts.

2. The Portfolio will not, as to 75% of the value of its total assets, own more than 10% of the outstanding
voting securities of any one issuer, or purchase the securities of any one issuer (except cash items and
"government securities" as defined under the 1940 Act as amended), if immediately after and as a result of such
purchase, the value of the holdings of the Portfolio in the securities of such issuer exceeds 5% of the value of
its total assets.

3. The Portfolio will not invest more than 25% of the value of its assets in any particular industry (other
than U.S. government securities).

4. The Portfolio will not invest directly in real estate or interests in real estate; however, the
Portfolio may own debt or equity securities issued by companies engaged in those businesses.

5. The Portfolio will not purchase or sell physical commodities other than foreign currencies unless
acquired as a result of ownership of securities (but this limitation shall not prevent the Portfolio from
purchasing or selling options, futures, swaps and forward contracts or from investing in securities or other
instruments backed by physical commodities).

6. The Portfolio may not make loans, except that the Portfolio may (i) lend portfolio securities in
accordance with the Portfolio's investment policies in amounts up to 33-1/3% of the total assets of the Portfolio
taken at market value; (ii) purchase money market securities and enter into repurchase agreements; and (iii)
acquire publicly distributed or privately placed debt securities.

7. The Portfolio will not act as an underwriter of securities issued by others, except to the extent that
the Portfolio may be deemed an underwriter in connection with the disposition of its securities.

8. The Portfolio will not issue senior securities except in compliance with the 1940 Act.

Investment Restrictions Applicable Only to the AST American Century International Growth Portfolio:

As a matter of fundamental policy, the Portfolio will not:

1. The Portfolio may not make loans, except that the Portfolio may (i) lend portfolio securities in
accordance with the Portfolio's investment policies in amounts up to 33-1/3% of the total assets of the Portfolio
taken at market value; (ii) purchase money market securities and enter into repurchase agreements; and (iii)
acquire publicly distributed or privately placed debt securities;

2. With respect to 75% of the value of its total assets, purchase the security of any one issuer if such
purchase would cause more than 5% of the Portfolio's assets at market to be invested in the securities of such
issuer, except U.S. government securities, or if the purchase would cause more than 10% of the outstanding voting
securities of any one issuer to be held in the Portfolio;

3. Invest more than 25% of the assets of the Portfolio, exclusive of cash and U.S. government securities,
in securities of any one industry;

4. Issue any senior security except in compliance with the 1940 Act;

5. Underwrite any securities except to the extent that the Portfolio may be deemed an underwriter when
purchasing or selling securities;

6. Purchase or sell real estate. (In the opinion of the Sub-advisor, this restriction will not preclude
the Portfolio from investing in securities of corporations that deal in real estate);

7. The Portfolio may not purchase or sell physical commodities unless acquired as a result of the ownership
of securities or instruments; provided that this restriction shall not prohibit a Portfolio from (i) engaging in
permissable options and futures transactions and forward foreign currency contracts in accordance with the
Portfolio's investment policies or (ii) investing in securities of any kind; or

8. Borrow any money, except in an amount not in excess of 33 1/3% of the total assets of the Portfolio, and
then only for emergency and extraordinary purposes; this does not prohibit the escrow and collateral arrangements
in connection with investment in interest rate futures contracts and related options by the Portfolio.

In determining industry groups for purposes of the above restriction regarding investments in a single
industry, the SEC ordinarily uses the Standard Industry Classification codes developed by the United States
Office of Management and Budget. The Sub-advisor monitors industry concentration using a more restrictive list
of industry groups than that recommended by the SEC. The Sub-advisor believes that these classifications are
reasonable and are not so broad that the primary economic characteristics of the companies in a single class are
materially different. The use of these more restrictive industry classifications may, however, cause the
Portfolio to forego investment possibilities which may otherwise be available to it under the 1940 Act. (This
note is not a fundamental policy.)
---

Investment Restrictions Applicable Only to the AST American Century International Growth Portfolio II:

The following fundamental policies should be read in connection with the notes set forth below. The
notes are not fundamental policies. As a matter of fundamental policy, the Portfolio may not:

1. Borrow money except that the Portfolio may (i) borrow for non-leveraging, temporary or emergency
purposes and (ii) engage in reverse repurchase agreements and make other investments or engage in other
transactions, which may or may be deemed to involve a borrowing, in a manner consistent with the Portfolio's
investment objective and policies, provided that the combination of (i) and (ii) shall not exceed 33 1/3% of the
value of the Portfolio's total assets (including the amount borrowed) less liabilities (other than borrowings) or
such other percentage permitted by law. Any borrowings which come to exceed this amount will be reduced in
accordance with applicable law. The Portfolio may borrow from banks, other funds advised or sub-advised by the
Sub-advisor or other persons to the extent permitted by applicable law;

2. Purchase or sell physical commodities; except that the Portfolio may enter into futures contracts and
options thereon;

3. Purchase the securities of any issuer if, as a result, more than 25% of the value of the Portfolio's
total assets would be invested in the securities of issuers having their principal business activities in the
same industry;

4. Make loans, although the Portfolio may (i) purchase money market securities and enter into repurchase
agreements; (ii) acquire publicly-distributed or privately placed debt securities and purchase debt; (iii) lend
portfolio securities; and (iv) participate in an interfund lending program with other funds advised or
sub-advised by the Sub-advisor provided that no such loan may be made if, as a result, the aggregate of such
loans would exceed 33 1/3% of the value of the Portfolio's total assets;

5. Purchase a security if, as a result, with respect to 75% of the value of the Portfolio's total assets,
more than 5% of the value of its total assets would be invested in the securities of any one issuer (other than
obligations issued or guaranteed by the U.S. Government, its agencies or instrumentalities);

6. Purchase a security if, as a result, with respect to 75% of the value of the Portfolio's total assets,
more than 10% of the outstanding voting securities of any issuer would be held by the Portfolio (other than
obligations issued or guaranteed by the U.S. Government, its agencies or instrumentalities);

7. Purchase or sell real estate unless acquired as a result of ownership of securities or other instruments
(but this shall not prevent the Portfolio from investing in securities or other instruments back by real estate
or securities of companies engaged in the real estate business);

8. Issue senior securities except in compliance with the 1940 Act; or

9. Underwrite securities issued by other persons, except to the extent that the Portfolio may be deemed to
be an underwriter within the meaning of the Securities Act of 1933 in connection with the purchase and sale of
its portfolio securities in the ordinary course of pursuing its investment program.

Notes: The following notes should be read in connection with the above described fundamental policies.
The notes are not fundamental policies.
---

With respect to investment restrictions (1) and (4), the Portfolio will not borrow or lend to any other
fund unless it applies for and receives an exemptive order from the SEC, if so required, or the SEC issues rules
permitting such transactions. The Portfolio has no current intention of engaging in any such activity and there
is no assurance the SEC would grant any order requested by the Portfolio or promulgate any rules allowing the
transactions.

With respect to investment restriction (2), the Portfolio does not consider currency contracts or hybrid
investments to be commodities.

For the purposes of investment restriction (3), United States federal, state or local governments, or
related agencies and instrumentalities, are not considered an industry. Foreign governments are considered an
industry.

For purposes of investment restriction (4), the Portfolio will consider the acquisition of a debt
security to include the execution of a note or other evidence of an extension of credit with a term of more than
nine months.

Investment Restrictions Applicable Only to the AST Gabelli Small-Cap Value Portfolio:

The following fundamental policies should be read in connection with the notes set forth below. The
notes are not fundamental policies. As a matter of fundamental policy, the Portfolio may not:

1. Borrow money except that the Portfolio may (i) borrow for non-leveraging, temporary or emergency
purposes and (ii) engage in reverse repurchase agreements and make other investments or engage in other
transactions, which may involve a borrowing, in a manner consistent with the Portfolio's investment objective and
program, provided that the combination of (i) and (ii) shall not exceed 33 1/3% of the value of the Portfolio's
total assets (including the amount borrowed) less liabilities (other than borrowings) or such other percentage
permitted by law. Any borrowings which come to exceed this amount will be reduced in accordance with applicable
law. The Portfolio may borrow from banks, and other funds or other persons to the extent permitted by applicable
law;

2. Purchase or sell physical commodities; except that it may enter into futures contracts and options
thereon;

4. Make loans, although the Portfolio may (i) lend portfolio securities and participate in an interfund
lending program to the extent permitted by applicable law, provided that no such loan may be made if, as a
result, the aggregate of such loans would exceed 33 1/3% of the value of the Portfolio's total assets;
(ii) purchase money market securities and enter into repurchase agreements; and (iii) acquire publicly-distributed
or privately-placed debt securities and purchase debt;

5. Purchase a security if, as a result, with respect to 75% of the value of its total assets, more than 5%
of the value of the Portfolio's total assets would be invested in the securities of a single issuer, except
securities issued or guaranteed by the U.S. Government or any of its agencies or instrumentalities;

7. Purchase or sell real estate unless acquired as a result of ownership of securities or other instruments
(but this shall not prevent the Portfolio from investing in securities or other instruments backed by real estate
or in securities of companies engaged in the real estate business);

8. Issue senior securities except in compliance with the 1940 Act; or

Notes: The following notes should be read in connection with the above-described fundamental policies.
The notes are not fundamental policies.
---

With respect to investment restrictions (1) and (4), the Portfolio will not borrow from or lend to any
other fund unless it applies for and receives an exemptive order from the SEC, if so required, or the SEC issues
rules permitting such transactions. The Portfolio has no current intention of engaging in any such activity and
there is no assurance the SEC would grant any order requested by the Portfolio or promulgate any rules allowing
the transactions.

With respect to investment restriction (2), the Portfolio does not consider currency contracts or hybrid
investments to be commodities.

For purposes of investment restriction (3), U.S., state or local governments, or related agencies or
instrumentalities, are not considered an industry.

For purposes of investment restriction (4), the Portfolio will consider the acquisition of a debt

security to include the execution of a note or other evidence of an extension of credit with a term of more than
nine months.

Investment Restrictions Applicable Only to the AST T. Rowe Price Natural Resources Portfolio:

The following fundamental policies should be read in connection with the notes set forth below. The
notes are not fundamental policies. As a matter of fundamental policy, the Portfolio may not:

1. Borrow money except that the Portfolio may (i) borrow for non-leveraging, temporary or emergency
purposes and (ii) engage in reverse repurchase agreements and make other investments or engage in other
transactions, which may involve a borrowing, in a manner consistent with the Portfolio's investment objective and
program, provided that the combination of (i) and (ii) shall not exceed 33 1/3% of the value of the Portfolio's
total assets (including the amount borrowed) less liabilities (other than borrowings) or such other percentage
permitted by law. Any borrowings which come to exceed this amount will be reduced in accordance with applicable
law. The Portfolio may borrow from banks, other Price Portfolios or other persons to the extent permitted by
applicable law;

2. Purchase or sell physical commodities; except that it may enter into futures contracts and options
thereon;

4. Make loans, although the Portfolio may (i) lend portfolio securities and participate in an interfund
lending program with other Price Portfolios provided that no such loan may be made if, as a result, the aggregate
of such loans would exceed 33 1/3% of the value of the Portfolio's total assets; (ii) purchase money market
securities and enter into repurchase agreements; and (iii) acquire publicly-distributed or privately-placed debt
securities and purchase debt;

7. Purchase or sell real estate unless acquired as a result of ownership of securities or other instruments
(but this shall not prevent the Portfolio from investing in securities or other instruments backed by real estate
or in securities of companies engaged in the real estate business);

8. Issue senior securities except in compliance with the 1940 Act; or

Notes: The following notes should be read in connection with the above-described fundamental policies.
The notes are not fundamental policies.
---

With respect to investment restriction (2), the Portfolio does not consider currency contracts or hybrid
investments to be commodities.

For purposes of investment restriction (3), U.S., state or local governments, or related agencies or
instrumentalities, are not considered an industry. Industries are determined by reference to the classifications
of industries set forth in the Portfolio's semi-annual and annual reports.

Investment Restrictions Applicable Only to the AST JanCap Growth Portfolio:

1. The Portfolio will not purchase a security if as a result, that Portfolio would own more than 10% of the
outstanding voting securities of any issuer.

2. As to 75% of the value of its total assets, the Portfolio will not invest more than 5% of its total
assets, at market value, in the securities of any one issuer (except cash items and securities issued or
guaranteed by the U.S. Government, its agencies or instrumentalities).

3. The Portfolio will not purchase a security if as a result, more than 25% of its total assets, at market
value, would be invested in the securities of issuers principally engaged in the same industry (except securities
issued or guaranteed by the U.S. Government, its agencies or instrumentalities).

4. The Portfolio will not purchase or sell real estate (although it may purchase securities secured by real
estate interests or interests therein, or issued by companies or investment trusts which invest in real estate or
interests therein).

5. The Portfolio will not purchase or sell physical commodities other than foreign currencies unless
acquired as a result of ownership of securities (but this shall not prevent the Portfolio from purchasing or
selling options, futures, swaps and forward contracts or from investing in securities and other instruments
backed by physical commodities).

Investment Restrictions Applicable Only to the AST Alliance Growth and Income Portfolio:

1. The Portfolio will not purchase a security if as a result, that Portfolio would own more than 10% of the
outstanding voting securities of any issuer.

2. The Portfolio may not make loans, except that the Portfolio may (i) lend portfolio securities in
accordance with the Portfolio's investment policies in amounts up to 33-1/3% of the total assets of the Portfolio
taken at market value; (ii) purchase money market securities and enter into repurchase agreements; and (iii)
acquire publicly distributed or privately placed debt securities.

3. The Portfolio will not pledge, mortgage, or hypothecate its assets -- however, this provision does not
apply to the grant of escrow receipts or the entry into other similar escrow arrangements arising out of the
writing of covered call options.

4. The Portfolio will not purchase securities of any issuer unless it or its predecessor has a record of
three years' continuous operation, except that the Portfolio may purchase securities of such issuers through
subscription offers or other rights it receives as a security holder of companies offering such subscriptions or
rights, and such purchases will then be limited in the aggregate to 5% of the Portfolio's net assets at the time
of investment.

5. The Portfolio will not concentrate its investments in any one industry (the Portfolio's investment
policy of keeping its assets in those securities which are selling at the most reasonable prices in relation to
value normally results in diversification among many industries -- consistent with this, the Portfolio does not
intend to invest more than 25% of its assets in any one industry classification used by the Sub-advisor for
investment purposes, although such concentration could, under unusual economic and market conditions, amount to
30% or conceivably somewhat more).

6. The Portfolio will not borrow money except from banks and then in amounts not in excess of 33 1/3% of
its total assets. The Portfolio may borrow at prevailing interest rates and invest the Portfolios in additional
securities. The Portfolio's borrowings are limited so that immediately after such borrowing the value of the
Portfolio's assets (including borrowings) less its liabilities (not including borrowings) is at least three times
the amount of the borrowings. Should the Portfolio, for any reason, have borrowings that do not meet the above
test then, within three business days, the Portfolio must reduce such borrowings so as to meet the necessary
test. Under such a circumstance, the Portfolio have to liquidate securities at a time when it is disadvantageous
to do so.

7. The Portfolio will not make short sales except short sales made "against the box" to defer recognition
of taxable gains or losses.

8. The Portfolio will not purchase or sell real estate (although it may purchase securities secured by real
estate interests or interests therein, or issued by companies or investment trusts which invest in real estate or
interests therein).

9. The Portfolio will not invest directly in oil, gas, or other mineral exploration or development
programs; however, the Portfolio may purchase securities of issuers whose principal business activities fall
within such areas.

10. The Portfolio will not purchase a security if as a result, more than 5% of the value of that Portfolio's
assets, at market value, would be invested in the securities of issuers which, with their predecessors, have been
in business less than three years.

Investment Restrictions Applicable Only to the AST INVESCO Equity Income Portfolio:

As a matter of fundamental policy, the Portfolio may not:

1. Issue preference shares or create any funded debt;

2. Sell short;

3. Borrow money except from banks in excess of 5% of the value of its total net assets, and when borrowing,
it is a temporary measure for emergency purposes;

4. Buy or sell real estate, commodities, commodity contracts (however, the Portfolio may purchase
securities of companies investing in real estate);

5. Purchase any security or enter into a repurchase agreement, if as a result, more than 15% of its net
assets would be invested in repurchase agreements not entitling the holder to payment of principal and interest
within seven days and in securities that are illiquid by virtue of legal or contractual restrictions on resale or
the absence of a readily available market. The Trustees or the Investment Manager or the Sub-advisor, acting
pursuant to authority delegated by the Trustees, may determine that a readily available market exists for
securities eligible for resale pursuant to Rule 144A under the Securities Act of 1933, or any successor to that
rule, and therefore that such securities are not subject to the foregoing limitation;

6. Purchase securities if the purchase would cause the Portfolio, at the time, to have more than 5% of its
total assets invested in the securities of any one company or to own more than 10% of the voting securities of
any one company (except obligations issued or guaranteed by the U.S. Government);

7. The Portfolio may not make loans, except that the Portfolio may (i) lend portfolio securities in
accordance with the Portfolio's investment policies in amounts up to 33-1/3% of the total assets of the Portfolio
taken at market value; (ii) purchase money market securities and enter into repurchase agreements; and (iii)
acquire publicly distributed or privately placed debt securities; or

8. Invest more than 25% of the value of the Portfolio's assets in one particular industry.

Investment Restrictions Applicable Only to the AST American Century Strategic Balanced Portfolio:

As a matter of fundamental policy, the Portfolio will not:

2. With respect to 75% of the value of its total assets, purchase the security of any one issuer if such
purchase would cause more than 5% of the Portfolio's assets at market to be invested in the securities of such
issuer, except United States government securities, or if the purchase would cause more than 10% of the
outstanding voting securities of any one issuer to be held in the Portfolio;

3. Invest more than 25% of the assets of the Portfolio, exclusive of cash and U.S. government securities,
in securities of any one industry;

4. Issue any senior security except in compliance with the 1940 Act;

5. Underwrite any securities except to the extent that the Portfolio may be deemed an underwriter when
purchasing or selling securities;

6. Purchase or sell real estate. (In the opinion of the Sub-advisor, this restriction will not preclude
the Portfolio from investing in securities of corporations that deal in real estate.);

Investment Restrictions Only Applicable to the AST T. Rowe Price Asset Allocation Portfolio:

The following fundamental policies should be read in connection with the notes set forth below. The
notes are not fundamental policies. As a matter of fundamental policy, the Portfolio may not:

1. Borrow money except that the Portfolio may (i) borrow for non-leveraging, temporary or emergency
purposes and (ii) engage in reverse repurchase agreements and make other investments or engage in other
transactions, which may or may be deemed to involve a borrowing, in a manner consistent with the Portfolio's
investment objective and policies, provided that the combination of (i) and (ii) shall not exceed 33 1/3% of the
value of the Portfolio's total assets (including the amount borrowed) less liabilities (other than borrowings) or
such other percentage permitted by law. Any borrowings which come to exceed this amount will be reduced in
accordance with applicable law. The Portfolio may borrow from banks, other Price Portfolios or other persons to
the extent permitted by applicable law;

2. Purchase or sell physical commodities; except that it may enter into futures contracts and options
thereon;

4. Make loans, although the Portfolio may (i) purchase money market securities and enter into repurchase
agreements; (ii) acquire publicly- distributed or privately placed debt securities and purchase debt; (iii) lend
portfolio securities; and (iv) participate in an interfund lending program with other Price Portfolios provided
that no such loan may be made if, as a result, the aggregate of such loans would exceed 33 1/3% of the value of
the Portfolio's total assets;

5. Purchase a security if, as a result, with respect to 75% of the value of its total assets, more than 5%
of the value of the Portfolio's total assets would be invested in the securities of a single issuer, except
securities issued or guaranteed by the U.S. government, or any of its agencies or instrumentalities;

7. Purchase or sell real estate unless acquired as a result of ownership of securities or other instruments
(but this shall not prevent the Portfolio from investing in securities or other instruments backed by real estate
or securities of companies engaged in the real estate business);

8. Issue senior securities except in compliance with the 1940 Act; or

Notes: The following notes should be read in connection with the above described fundamental policies.
The notes are not fundamental policies.
---

With respect to investment restriction (2), the Portfolio does not consider currency contracts on hybrid
investments to be commodities.

Investment Restrictions Applicable Only to the AST T. Rowe Price Global Bond Portfolio:

As a matter of fundamental policy, the Portfolio may not:

1. Borrow money, except as a temporary measure for extraordinary or emergency purposes or except in
connection with reverse repurchase agreements provided that the Portfolio maintains asset coverage of 300% for
all borrowings;

2. Purchase or sell real estate (except that the Portfolio may invest in (i) securities of companies which
deal in real estate or mortgages, and (ii) securities secured by real estate or interests therein, and that the
Portfolio reserves freedom of action to hold and to sell real estate acquired as a result of the Portfolio's
ownership of securities) or purchase or sell physical commodities or contracts relating to physical commodities;

3. Act as underwriter of securities issued by others, except to the extent that it may be deemed an
underwriter in connection with the disposition of portfolio securities of the Portfolio;

4. Make loans to other persons, except (a) loans of portfolio securities, and (b) to the extent the entry
into repurchase agreements and the purchase of debt securities in accordance with its investment objectives and
investment policies may be deemed to be loans;

5. Issue senior securities except in compliance with the 1940 Act; or

6. Purchase any securities which would cause more than 25% of the market value of its total assets at the
time of such purchase to be invested in the securities of one or more issuers having their principal business
activities in the same industry, provided that there is no limitation with respect to investments in obligations
issued or guaranteed by the U.S. Government, its agencies or instrumentalities (for the purposes of this
restriction, telephone companies are considered to be in a separate industry from gas and electric public
utilities, and wholly-owned finance companies are considered to be in the industry of their parents if their
activities are primarily related to financing the activities of their parents).

Investment Restrictions Applicable Only to the AST Federated High Yield Portfolio:

1. The Portfolio will not purchase any securities on margin but may obtain such short-term credits as may
be necessary for the clearance of transactions.

2. The Portfolio will not borrow money except as a temporary measure for extraordinary or emergency
purposes and then only from banks and only in amounts not in excess of 5% of the value of its net assets, taken
at the lower of cost or market. In addition, to meet redemption requests without immediately selling portfolio
securities, the Portfolio may borrow up to one-third of the value of its total assets (including the amount
borrowed) less its liabilities (not including borrowings, but including the current fair market value of any
securities carried in open short positions). This practice is not for investment leverage but solely to
facilitate management of the portfolio by enabling the Portfolio to meet redemption requests when the liquidation
of portfolio securities is deemed to be inconvenient or disadvantageous. If, due to market fluctuations or other
reasons, the value of the Portfolio's assets falls below 300% of its borrowings, it will reduce its borrowings
within three business days. No more than 10% of the value of the Portfolio's total assets at the time of
providing such security may be used to secure borrowings.

3. The Portfolio will not invest more than 5% of its total assets in the securities of any one issuer
(except cash and cash instruments, securities issued or guaranteed by the U.S. government, its agencies, or
instrumentalities, or instruments secured by these money market instruments, such as repurchase agreements).

4. The Portfolio will not invest more than 5% of the value of its total assets in securities of companies,
including their predecessors, that have been in operation for less than three years.

5. The Portfolio will not invest more than 5% of the value of its total assets in foreign securities which
are not publicly traded in the United States.

6. The Portfolio will not purchase or sell real estate, although it may invest in marketable securities
secured by real estate or interests in real estate, and it may invest in the marketable securities of companies
investing or dealing in real estate.

7. The Portfolio will not purchase or sell commodities or commodity contracts or oil, gas, or other mineral
exploration or development programs. However, it may invest in the marketable securities of companies investing
in or sponsoring such programs.

8. The Portfolio may not make loans, except that the Portfolio may (i) lend portfolio securities in
accordance with the Portfolio's investment policies in amounts up to 33-1/3% of the total assets of the Portfolio
taken at market value; (ii) purchase money market securities and enter into repurchase agreements; and (iii)
acquire publicly distributed or privately placed debt securities.

9. The Portfolio will not write, purchase, or sell puts, calls, or any combination thereof.

10. The Portfolio will not make short sales of securities or maintain short positions, unless: during the
time the short position is open, it owns an equal amount of the securities sold or securities readily and freely
convertible into or exchangeable, without payment of additional consideration, for securities of the same issue
as, and equal in amount to, the securities sold short; and not more than 10% of the Portfolio's net assets (taken
at current value) is held as collateral for such sales at any one time.

11. The Portfolio will not purchase securities of a company for the purpose of exercising control or
management. However, the Portfolio may invest in up to 10% of the voting securities of any one issuer and may
exercise its voting powers consistent with the best interests of the Portfolio. From time to time, the Portfolio,
together with other investment companies advised by subsidiaries or affiliates of Federated Investors, may
together buy and hold substantial amounts of a company's voting stock. All such stock may be voted together. In
some such cases, the Portfolio and the other investment companies might collectively be considered to be in
control of the company in which they have invested. In some cases, Directors, agents, employees, officers, or
others affiliated with or acting for the Portfolio, its Sub-advisor, or affiliated companies might possibly
become directors of companies in which the Portfolio holds stock.

12. The Portfolio will not invest more than 25% of the value of its total assets in one industry. However,
for temporary defensive purposes, the Portfolio may at times invest more than that percentage in: cash and cash
items; securities issued or guaranteed by the U.S. government, its agencies, or instrumentalities; or instruments
secured by these money market instruments, such as repurchase agreements.

Investment Restrictions Applicable Only to the AST PIMCO Total Return Bond Portfolio:

1. The Portfolio will not invest in a security if, as a result of such investment, more than 25% of its
total assets (taken at market value at the time of investment) would be invested in securities of issuers of a
particular industry, except that this restriction does not apply to securities issued or guaranteed by the U.S.
government or its agencies or instrumentalities (or repurchase agreements with respect thereto);

2. The Portfolio will not, with respect to 75% of its total assets, invest in a security if, as a result of
such investment, more than 5% of its total assets (taken at market value at the time of investment) would be
invested in the securities of any one issuer, except that this restriction does not apply to securities issued or
guaranteed by the U.S. government or its agencies or instrumentalities (or repurchase agreements with respect
thereto);

3. The Portfolio will not, with respect to 75% of its assets, invest in a security if, as a result of such
investment, it would hold more than 10% (taken at the time of investment) of the outstanding voting securities of
any one issuer;

4. The Portfolio will not purchase or sell real estate (although it may purchase securities secured by real
estate or interests therein, or securities issued by companies which invest in real estate, or interests therein);

5. The Portfolio will not purchase or sell commodities contracts or oil, gas or mineral programs. This
restriction shall not prohibit the Portfolio, subject to restrictions stated in the Trust's Prospectus and
elsewhere in this Statement, from purchasing, selling or entering into futures contracts, options on futures
contracts, foreign currency forward contracts, foreign currency options, or any interest rate, securities related
or foreign currency-related hedging instrument, including swap agreements and other derivative instruments,
subject to compliance with any applicable provisions of the federal securities laws or commodities laws;

6. The Portfolio will not borrow money, issue senior securities, pledge, mortgage, hypothecate its assets,
except that the Portfolio may (i) borrow from banks or enter into reverse repurchase agreements, or employ
similar investment techniques, and pledge its assets in connection therewith, but only if immediately after each
borrowing there is an asset coverage of 300% and (ii) enter into transactions in options, futures and options on
futures and other derivative instruments as described in the Trust's Prospectus and this Statement (the deposit
of assets in escrow in connection with the writing of covered put and call options and the purchase of securities
on a when-issued or delayed delivery basis, collateral arrangements with respect to initial or variation margin
deposits for future contracts and commitments entered into under swap agreements or other derivative instruments,
will not be deemed to be pledges of the Portfolio's assets);

7. The Portfolio will not lend funds or other assets, except that the Portfolio may, consistent with its
investment objective and policies: (a) invest in debt obligations, including bonds, debentures or other debt
securities, bankers' acceptances and commercial paper, even though the purchase of such obligations may be deemed
to be the making of a loan, (b) enter into repurchase agreements, and (c) lend its Portfolio securities in an
amount not to exceed one-third the value of its total assets, provided such loans are and in accordance with
applicable guidelines established by the SEC and the Trust's Board of Trustees; or

8. The Portfolio will not maintain a short position, or purchase, write or sell puts, calls, straddles,
spreads or combinations thereof, except as set forth in the Trust's Prospectus and this Statement for
transactions in options, futures, and options on futures transactions arising under swap agreements or other
derivative instruments.

Investment Restrictions Applicable Only to the AST PIMCO Limited Maturity Bond Portfolio:

As a matter of fundamental policy, the Portfolio may not:

1. Invest in a security if, as a result of such investment, more than 25% of its total assets (taken at
market value at the time of such investment) would be invested in the securities of issuers in any particular
industry, except that this restriction does not apply to securities issued or guaranteed by the U.S. Government
or its agencies or instrumentalities (or repurchase agreements with respect thereto);

2. With respect to 75% of its assets, invest in a security if, as a result of such investment, more than 5%
of its total assets (taken at market value at the time of such investment) would be invested in securities of any
one issuer, except that this restriction does not apply to securities issued or guaranteed by the U.S. Government
or its agencies or instrumentalities;

3. With respect to 75% of its assets, invest in a security if, as a result of such investment, it would
hold more than 10% (taken at the time of such investment) of the outstanding voting securities of any one issuer;

4. Purchase or sell real estate (although it may purchase securities secured by real estate or interests
therein, or securities issued by companies which invest in real estate, or interests therein);

5. Purchase or sell commodities or commodities contracts or oil, gas or mineral programs. This restriction
shall not prohibit the Portfolio, subject to restrictions described in the Prospectus and elsewhere in this
Statement, from purchasing, selling or entering into futures contracts, options, or any interest rate,
securities-related or foreign currency-related hedging instrument, including swap agreements and other derivative
instruments, subject to compliance with any applicable provisions of the federal securities or commodities laws;

6. Borrow money, issue senior securities, or pledge, mortgage or hypothecate its assets, except that the
Portfolio may (i) borrow from banks or enter into reverse repurchase agreements, or employ similar investment
techniques, and pledge its assets in connection therewith, but only if immediately after each borrowing there is
asset coverage of 300% and (ii) enter into transactions in options, futures and options on futures and other
derivative instruments as described in the Prospectus and in this Statement (the deposit of assets in escrow in
connection with the writing of covered put and call options and the purchase of securities on a when-issued or
delayed delivery basis, collateral arrangements with respect to initial or variation margin deposits for futures
contracts and commitments entered into under swap agreements or other derivative instruments, will not be deemed
to be pledges of the Portfolio assets);

7. Lend any funds or other assets, except that a Portfolio may, consistent with its investment objective
and policies: (a) invest in debt obligations, including bonds, debentures or other debt securities, banker'
acceptance and commercial paper, even though the purchase of such obligations may be deemed to be the making of
loans, (b) enter into repurchase agreements, and (c) lend its portfolio securities in an amount not to exceed
one-third of the value of its total assets, provided such loans are made in accordance with applicable guidelines
established by the SEC and the Trust's Board of Trustees; or

8. Maintain a short position, or purchase, write or sell puts, calls, straddles, spreads or combinations
thereof, except on such conditions as may be set forth in the Prospectus and in this Statement.

Investment Restrictions Applicable Only to the AST Money Market Portfolio:

1. The Portfolio will not purchase a security if as a result, the Portfolio would own more than 10% of the
outstanding voting securities of any issuer.

2. As to 75% of the value of its total assets, the Portfolio will not invest more than 5% of its total
assets, at market value, in the securities of any one issuer (except securities issued or guaranteed by the U.S.
Government, its agencies or instrumentalities).

3. The Portfolio will not acquire any illiquid securities, such as repurchase agreements with more than
seven days to maturity or fixed time deposits with a duration of over seven calendar days, if as a result
thereof, more than 10% of the market value of the Portfolio's total assets would be in investments which are
illiquid.

4. The Portfolio will not purchase a security if as a result, more than 25% of its total assets, at market
value, would be invested in the securities of issuers principally engaged in the same industry (except securities
issued or guaranteed by the U.S. Government, its agencies or instrumentalities, negotiable certificates of
deposit, time deposits, and bankers' acceptances of United States branches of United States banks).

5. The Portfolio will not enter into reverse repurchase agreements exceeding in the aggregate one-third of
the market value of the Portfolio's total assets, less liabilities other than obligations created by reverse
repurchase agreements.

6. The Portfolio will not borrow money, except from banks for extraordinary or emergency purposes and then
only in amounts not to exceed 10% of the value of the Portfolio's total assets, taken at cost, at the time of
such borrowing. The Portfolio may not mortgage, pledge or hypothecate any assets except in connection with any
such borrowing and in amounts not to exceed 10% of the value of the Portfolio's net assets at the time of such
borrowing. The Portfolio will not purchase securities while borrowings exceed 5% of the Portfolio's total
assets. This borrowing provision is included to facilitate the orderly sale of securities, for example, in the
event of abnormally heavy redemption requests, and is not for investment purposes and shall not apply to reverse
repurchase agreements.

7. The Portfolio will not make loans, except through purchasing or holding debt obligations, or entering
into repurchase agreements, or loans of Portfolio securities in accordance with the Portfolio's investment
objectives and policies.

8. The Portfolio will not purchase securities on margin, make short sales of securities, or maintain a
short position, provided that this restriction shall not be deemed to be applicable to the purchase or sale of
when-issued securities or of securities for delivery at a future date.

9. The Portfolio will not purchase or sell puts, calls, straddles, spreads, or any combination thereof;
real estate; commodities; or commodity contracts or interests in oil, gas or mineral exploration or development
programs. However, the Portfolio may purchase bonds or commercial paper issued by companies which invest in real
estate or interests therein including real estate investment trusts.

Investment Restrictions Applicable Only to the AST Scudder Japan Portfolio, AST AIM International Equity
Portfolio, the AST MFS Global Equity Portfolio, the AST Janus Small-Cap Growth Portfolio, the AST Scudder
Small-Cap Growth Portfolio, the AST Federated Aggressive Growth Portfolio, the AST Goldman Sachs Small-Cap Value
Portfolio, the AST Janus Mid-Cap Growth Portfolio, the AST Neuberger Berman Mid-Cap Growth Portfolio, the AST
Neuberger Berman Mid-Cap Value Portfolio, the AST Alger All-Cap Growth Portfolio, the AST Gabelli All-Cap Value
Portfolio, the AST Kinetics Internet Portfolio, the AST Alliance Growth Portfolio, the AST MFS Growth Portfolio,
the AST Marsico Capital Growth Portfolio, the AST Janus Strategic Value Portfolio, the AST Alliance/Bernstein
Growth + Value Portfolio, the AST Sanford Bernstein Core Value Portfolio, the AST Cohen & Steers Realty
Portfolio, the AST Sanford Bernstein Managed Index 500 Portfolio, the AST American Century Income & Growth
Portfolio, the AST MFS Growth with Income Portfolio, the AST AIM Balanced Portfolio and the AST Lord Abbett
Bond-Debenture Portfolio.

1. No Portfolio may issue senior securities, except as permitted under the 1940 Act.

2. No Portfolio may borrow money, except that a Portfolio may (i) borrow money for non-leveraging,
temporary or emergency purposes, and (ii) engage in reverse repurchase agreements and make other investments or
engage in other transactions, which may involve a borrowing, in a manner consistent with the Portfolio's
investment objective and policies; provided that the combination of (i) and (ii) shall not exceed 33 1/3% of the
value of the Portfolio's assets (including the amount borrowed) less liabilities (other than borrowings) or such
other percentage permitted by law. Any borrowings which come to exceed this amount will be reduced in accordance
with applicable law. Subject to the above limitations, a Portfolio may borrow from banks or other persons to the
extent permitted by applicable law.

3. No Portfolio may underwrite securities issued by other persons, except to the extent that the
Portfolio may be deemed to be an underwriter (within the meaning of the Securities Act of 1933) in connection
with the purchase and sale of portfolio securities.

4. No Portfolio may purchase or sell real estate unless acquired as a result of the ownership of
securities or other instruments; provided that this restriction shall not prohibit a Portfolio from investing in
securities or other instruments backed by real estate or in securities of companies engaged in the real estate
business.

5. No Portfolio may purchase or sell physical commodities unless acquired as a result of the
ownership of securities or instruments; provided that this restriction shall not prohibit a Portfolio from (i)
engaging in permissible options and futures transactions and forward foreign currency contracts in accordance
with the Portfolio's investment policies, or (ii) investing in securities of any kind.

6. No Portfolio may make loans, except that a Portfolio may (i) lend portfolio securities in
accordance with the Portfolio's investment policies in amounts up to 33 1/3% of the total assets of the Portfolio
taken at market value, (ii) purchase money market securities and enter into repurchase agreements, and (iii)
acquire publicly distributed or privately placed debt securities.

7. No Portfolio other than the AST Kinetics Internet Portfolio and the AST Cohen & Steers Realty
Portfolio may purchase any security if, as a result, more than 25% of the value of the Portfolio's assets would
be invested in the securities of issuers having their principal business activities in the same industry;
provided that this restriction does not apply to investments in obligations issued or guaranteed by the U.S.
Government or any of its agencies or instrumentalities (or repurchase agreements with respect thereto). The AST
Kinetics Internet Portfolio will invest at least 25% of its total assets in securities of companies engaged in
the Internet and Internet-related activities. The AST Cohen & Steers Realty Portfolio will invest at least 25%
of its total assets in securities of companies engaged in the real estate business.

8. No Portfolio other than the AST Janus Mid-Cap Growth Portfolio, the AST Kinetics Internet
Portfolio, the AST Janus Strategic Value Portfolio and the AST Cohen & Steers Realty Portfolio may, with respect
to 75% of the value of its total assets, purchase the securities of any issuer (other than securities issued or
guaranteed by the U.S. Government or any of its agencies or instrumentalities) if, as a result, (i) more than 5%
of the value of the Portfolio's total assets would be invested in the securities of such issuer, or (ii) more
than 10% of the outstanding voting securities of such issuer would be held by the Portfolio. The AST Janus
Mid-Cap Growth Portfolio, the AST Kinetics Internet Portfolio, the AST Janus Strategic Value Portfolio and the
AST Cohen & Steers Realty Portfolio may not, with respect to 50% of a Portfolio's total assets, invest in the
securities of any one issuer (other than the U.S. Government and its agencies and instrumentalities), if
immediately after and as a result of such investment more than 5% of the total assets of the Portfolio would be
invested in such issuer.

If a restriction on a Portfolio's investments is adhered to at the time an investment is made, a
subsequent change in the percentage of Portfolio assets invested in certain securities or other instruments, or
change in average duration of the Portfolio's investment portfolio, resulting from changes in the value of the
Portfolio's total assets, will not be considered a violation of the restriction; provided, however, that the
asset coverage requirement applicable to borrowings shall be maintained in the manner contemplated by applicable
law.

With respect to investment restrictions (2) and (6), a Portfolio will not borrow or lend to any other
fund unless it applies for and receives an exemptive order from the SEC, if so required, or the SEC issues rules
permitting such transactions. There is no assurance the SEC would grant any order requested by a Portfolio or
promulgate any rules allowing the transactions.

With respect to investment restriction (6), the restriction on making loans is not considered to limit a
Portfolio's investments in loan participations and assignments.

With respect to investment restriction (7), the AST AIM International Equity Portfolio and the AST AIM
Balanced Portfolio will not consider a bank-issued guaranty or financial guaranty insurance as a separate
security for purposes of determining the percentage of the Portfolios' assets invested in the securities of
issuers in a particular industry.

CERTAIN RISK FACTORS AND INVESTMENT METHODS:

Some of the investment instruments, techniques and methods which may be used by one or more of the
Portfolios and the risks attendant thereto are described below. Other risk factors and investment methods may be
described in the "Investment Objectives and Policies" and "Certain Risk Factors and Investment Methods" section
in the Trust's Prospectus and in the "Investment Objectives and Policies" section of this Statement. The risks
and investment methods described below apply only to those Portfolios which may invest in such instruments or use
such techniques.

Debt Obligations:

Yields on short, intermediate, and long-term securities are dependent on a variety of factors,
including, the general conditions of the money and bond markets, the size of a particular offering, the maturity
of the obligation, and the rating of the issue. Debt securities with longer maturities tend to produce higher
yields and are generally subject to potentially greater capital appreciation and depreciation than obligations
with shorter maturities and lower yields. The market prices of debt securities usually vary, depending upon
available yields. An increase in interest rates will generally reduce the value of portfolio investments, and a
decline in interest rates will generally increase the value of portfolio investments. The ability of the
Portfolio to achieve its investment objectives is also dependent on the continuing ability of the issuers of the
debt securities in which the Portfolio invests to meet their obligations for the payment of interest and
principal when due.

Special Risks Associated with Low-Rated and Comparable Unrated Securities:

Low-rated and comparable unrated securities, while generally offering higher yields than
investment-grade securities with similar maturities, involve greater risks, including the possibility of default
or bankruptcy. They are regarded as predominantly speculative with respect to the issuer's capacity to pay
interest and repay principal. The special risk considerations in connection with such investments are discussed
below. See the Appendix of this Statement for a discussion of securities ratings.

Effect of Interest Rates and Economic Changes. The low-rated and comparable unrated securities market
is relatively new, and its growth paralleled a long economic expansion. As a result, it is not clear how this
market may withstand a prolonged recession or economic downturn. Such a prolonged economic downturn could
severely disrupt the market for and adversely affect the value of such securities.

All interest-bearing securities typically experience appreciation when interest rates decline and
depreciation when interest rates rise. The market values of low-rated and comparable unrated securities tend to
reflect individual corporate developments to a greater extent than do higher-rated securities, which react
primarily to fluctuations in the general level of interest rates. Low-rated and comparable unrated securities
also tend to be more sensitive to economic conditions than are higher-rated securities. As a result, they
generally involve more credit risks than securities in the higher-rated categories. During an economic downturn
or a sustained period of rising interest rates, highly leveraged issuers of low-rated and comparable unrated
securities may experience financial stress and may not have sufficient revenues to meet their payment
obligations. The issuer's ability to service its debt obligations may also be adversely affected by specific
corporate developments, the issuer's inability to meet specific projected business forecasts, or the
unavailability of additional financing. The risk of loss due to default by an issuer of low-rated and comparable
unrated securities is significantly greater than issuers of higher-rated securities because such securities are
generally unsecured and are often subordinated to other creditors. Further, if the issuer of a low-rated and
comparable unrated security defaulted, a Portfolio might incur additional expenses to seek recovery. Periods of
economic uncertainty and changes would also generally result in increased volatility in the market prices of
low-rated and comparable unrated securities and thus in a Portfolio's net asset value.

As previously stated, the value of such a security will decrease in a rising interest rate market and
accordingly, so will a Portfolio's net asset value. If a Portfolio experiences unexpected net redemptions in
such a market, it may be forced to liquidate a portion of its portfolio securities without regard to their
investment merits. Due to the limited liquidity of high-yield securities (discussed below) a Portfolio may be
forced to liquidate these securities at a substantial discount. Any such liquidation would reduce a Portfolio's
asset base over which expenses could be allocated and could result in a reduced rate of return for a Portfolio.

Payment Expectations. Low-rated and comparable unrated securities typically contain redemption, call,
or prepayment provisions which permit the issuer of such securities containing such provisions to, at their
discretion, redeem the securities. During periods of falling interest rates, issuers of high-yield securities
are likely to redeem or prepay the securities and refinance them with debt securities with a lower interest
rate. To the extent an issuer is able to refinance the securities, or otherwise redeem them, a Portfolio may
have to replace the securities with a lower-yielding security, which would result in a lower return for a
Portfolio.

Issuers of lower-rated securities are often highly leveraged, so that their ability to service their
debt obligations during an economic downturn or during sustained periods of rising interest rates may be
impaired. Such issuers may not have more traditional methods of financing available to them and may be unable to
repay outstanding obligations at maturity by refinancing. The risk of loss due to default in payment of interest
or repayment of principal by such issuers is significantly greater because such securities frequently are
unsecured and subordinated to the prior payment of senior indebtedness.

Credit Ratings. Credit ratings issued by credit-rating agencies evaluate the safety of principal and
interest payments of rated securities. They do not, however, evaluate the market value risk of low-rated and
comparable unrated securities and, therefore, may not fully reflect the true risks of an investment. In
addition, credit-rating agencies may or may not make timely changes in a rating to reflect changes in the economy
or in the condition of the issuer that affect the market value of the security. Consequently, credit ratings are
used only as a preliminary indicator of investment quality. Investments in low-rated and comparable unrated
securities will be more dependent on the Sub-advisor's credit analysis than would be the case with investments in
investment-grade debt securities. The Sub-advisor may employ its own credit research and analysis, which could
include a study of existing debt, capital structure, ability to service debt and to pay dividends, the issuer's
sensitivity to economic conditions, its operating history, and the current trend of earnings. The Sub-advisor
continually monitors the investments in a Portfolio and evaluates whether to dispose of or to retain low-rated
and comparable unrated securities whose credit ratings or credit quality may have changed.

Liquidity and Valuation. A Portfolio may have difficulty disposing of certain low-rated and comparable
unrated securities because there may be a thin trading market for such securities. Because not all dealers
maintain markets in all low-rated and comparable unrated securities, there is no established retail secondary
market for many of these securities. A Portfolio anticipates that such securities could be sold only to a
limited number of dealers or institutional investors. To the extent a secondary trading market does exist, it is
generally not as liquid as the secondary market for higher-rated securities. The lack of a liquid secondary
market may have an adverse impact on the market price of the security. As a result, a Portfolio's asset value
and a Portfolio's ability to dispose of particular securities, when necessary to meet a Portfolio's liquidity
needs or in response to a specific economic event, may be impacted. The lack of a liquid secondary market for
certain securities may also make it more difficult for the Portfolio to obtain accurate market quotations for
purposes of valuing a Portfolio. Market quotations are generally available on many low-rated and comparable
unrated issues only from a limited number of dealers and may not necessarily represent firm bids of such dealers
or prices for actual sales. During periods of thin trading, the spread between bid and asked prices is likely to
increase significantly. In addition, adverse publicity and investor perceptions, whether or not based on
fundamental analysis, may decrease the values and liquidity of low-rated and comparable unrated securities,
especially in a thinly-traded market.

Put and Call Options:

Writing (Selling) Call Options. A call option gives the holder (buyer) the "right to purchase" a
security or currency at a specified price (the exercise price), at expiration of the option (European style) or
at any time until a certain date (the expiration date) (American style). So long as the obligation of the writer
of a call option continues, he may be assigned an exercise notice by the broker-dealer through whom such option
was sold, requiring him to deliver the underlying security or currency against payment of the exercise price.
This obligation terminates upon the expiration of the call option, or such earlier time at which the writer
effects a closing purchase transaction by repurchasing an option identical to that previously sold.

When writing a call option, a Portfolio, in return for the premium, gives up the opportunity for profit
from a price increase in the underlying security or currency above the exercise price, but conversely retains the
risk of loss should the price of the security or currency decline. Unlike one who owns securities or currencies
not subject to an option, the Portfolio has no control over when it may be required to sell the underlying
securities or currencies, since it may be assigned an exercise notice at any time prior to the expiration of its
obligation as a writer. If a call option which the Portfolio has written expires, the Portfolio will realize a
gain in the amount of the premium; however, such gain may be offset by a decline in the market value of the
underlying security or currency during the option period. If the call option is exercised, a Portfolio will
realize a gain or loss from the sale of the underlying security or currency.

Writing (Selling) Put Options. A put option gives the purchaser of the option the right to sell, and
the writer (seller) has the obligation to buy, the underlying security or currency at the exercise price during
the option period (American style) or at the expiration of the option (European style). So long as the
obligation of the writer continues, he may be assigned an exercise notice by the broker-dealer through whom such
option was sold, requiring him to make payment of the exercise price against delivery of the underlying security
or currency. The operation of put options in other respects, including their related risks and rewards, is
substantially identical to that of call options.

Premium Received from Writing Call or Put Options. A Portfolio will receive a premium from writing a
put or call option, which increases such Portfolio's return in the event the option expires unexercised or is
closed out at a profit. The amount of the premium will reflect, among other things, the relationship of the
market price of the underlying security to the exercise price of the option, the term of the option and the
volatility of the market price of the underlying security. By writing a call option, a Portfolio limits its
opportunity to profit from any increase in the market value of the underlying security above the exercise price
of the option. By writing a put option, a Portfolio assumes the risk that it may be required to purchase the
underlying security for an exercise price higher than its then current market value, resulting in a potential
capital loss if the purchase price exceeds the market value plus the amount of the premium received, unless the
security subsequently appreciates in value.

Closing Transactions. Closing transactions may be effected in order to realize a profit on an
outstanding call option, to prevent an underlying security or currency from being called, or, to permit the sale
of the underlying security or currency. A Portfolio may terminate an option that it has written prior to its
expiration by entering into a closing purchase transaction in which it purchases an option having the same terms
as the option written. A Portfolio will realize a profit or loss from such transaction if the cost of such
transaction is less or more than the premium received from the writing of the option. In the case of a put
option, any loss so incurred may be partially or entirely offset by the premium received from a simultaneous or
subsequent sale of a different put option. Because increases in the market price of a call option will generally
reflect increases in the market price of the underlying security, any loss resulting from the repurchase of a
call option is likely to be offset in whole or in part by unrealized appreciation of the underlying security
owned by such Portfolio.

Furthermore, effecting a closing transaction will permit the Portfolio to write another call option on
the underlying security or currency with either a different exercise price or expiration date or both. If the
Portfolio desires to sell a particular security or currency from its portfolio on which it has written a call
option, or purchased a put option, it will seek to effect a closing transaction prior to, or concurrently with,
the sale of the security or currency. There is, of course, no assurance that the Portfolio will be able to
effect such closing transactions at a favorable price. If the Portfolio cannot enter into such a transaction, it
may be required to hold a security or currency that it might otherwise have sold. When the Portfolio writes a
covered call option, it runs the risk of not being able to participate in the appreciation of the underlying
securities or currencies above the exercise price, as well as the risk of being required to hold on to securities
or currencies that are depreciating in value. This could result in higher transaction costs. The Portfolio will
pay transaction costs in connection with the writing of options to close out previously written options. Such
transaction costs are normally higher than those applicable to purchases and sales of portfolio securities.

Purchasing Call Options. Call options may be purchased by a Portfolio for the purpose of acquiring the
underlying securities or currencies for its portfolio. Utilized in this fashion, the purchase of call options
enables the Portfolio to acquire the securities or currencies at the exercise price of the call option plus the
premium paid. At times the net cost of acquiring securities or currencies in this manner may be less than the
cost of acquiring the securities or currencies directly. This technique may also be useful to a Portfolio in
purchasing a large block of securities or currencies that would be more difficult to acquire by direct market
purchases. So long as it holds such a call option rather than the underlying security or currency itself, the
Portfolio is partially protected from any unexpected decline in the market price of the underlying security or
currency and in such event could allow the call option to expire, incurring a loss only to the extent of the
premium paid for the option.

Purchasing Put Options. A Portfolio may purchase a put option on an underlying security or currency (a
"protective put") owned by the Portfolio as a defensive technique in order to protect against an anticipated
decline in the value of the security or currency. Such hedge protection is provided only during the life of the
put option when the Portfolio, as the holder of the put option, is able to sell the underlying security or
currency at the put exercise price regardless of any decline in the underlying security's market price or
currency's exchange value. For example, a put option may be purchased in order to protect unrealized
appreciation of a security or currency where a Sub-advisor deems it desirable to continue to hold the security or
currency because of tax considerations. The premium paid for the put option and any transaction costs would
reduce any capital gain otherwise available for distribution when the security or currency is eventually sold.

By purchasing put options on a security or currency it does not own, the Portfolio seeks to benefit from
a decline in the market price of the underlying security or currency. If the put option is not sold when it has
remaining value, and if the market price of the underlying security or currency remains equal to or greater than
the exercise price during the life of the put option, the Portfolio will lose its entire investment in the put
option. In order for the purchase of a put option to be profitable, the market price of the underlying security
or currency must decline sufficiently below the exercise price to cover the premium and transaction costs, unless
the put option is sold in a closing sale transaction.

Dealer Options. Exchange-traded options generally have a continuous liquid market while dealer options
have none. Consequently, the Portfolio will generally be able to realize the value of a dealer option it has
purchased only by exercising it or reselling it to the dealer who issued it. Similarly, when the Portfolio
writes a dealer option, it generally will be able to close out the option prior to its expiration only by
entering into a closing purchase transaction with the dealer to which the Portfolio originally wrote the option.
While the Portfolio will seek to enter into dealer options only with dealers who will agree to and which are
expected to be capable of entering into closing transactions with the Portfolio, there can be no assurance that
the Portfolio will be able to liquidate a dealer option at a favorable price at any time prior to expiration.
Until the Portfolio, as a covered dealer call option writer, is able to effect a closing purchase transaction, it
will not be able to liquidate securities (or other assets) used as cover until the option expires or is
exercised. In the event of insolvency of the contra party, the Portfolio may be unable to liquidate a dealer
option. With respect to options written by the Portfolio, the inability to enter into a closing transaction may
result in material losses to the Portfolio. For example, since the Portfolio must maintain a secured position
with respect to any call option on a security it writes, the Portfolio may not sell the assets which it has
segregated to secure the position while it is obligated under the option. This requirement may impair the
Portfolio's ability to sell portfolio securities at a time when such sale might be advantageous.

The Staff of the SEC has taken the position that purchased dealer options and the assets used to secure
the written dealer options are illiquid securities. The Portfolio may treat the cover used for written OTC
options as liquid if the dealer agrees that the Portfolio may repurchase the OTC option it has written for a
maximum price to be calculated by a predetermined formula. In such cases, the OTC option would be considered
illiquid only to the extent the maximum repurchase price under the formula exceeds the intrinsic value of the
option. To this extent, the Portfolio will treat dealer options as subject to the Portfolio's limitation on
unmarketable securities. If the SEC changes its position on the liquidity of dealer options, the Portfolio will
change its treatment of such instruments accordingly.

Certain Risk Factors in Writing Call Options and in Purchasing Call and Put Options: During the option
period, a Portfolio, as writer of a call option has, in return for the premium received on the option, given up
the opportunity for capital appreciation above the exercise price should the market price of the underlying
security increase, but has retained the risk of loss should the price of the underlying security decline. The
writer has no control over the time when it may be required to fulfill its obligation as a writer of the option.
The risk of purchasing a call or put option is that the Portfolio may lose the premium it paid plus transaction
costs. If the Portfolio does not exercise the option and is unable to close out the position prior to expiration
of the option, it will lose its entire investment.

An option position may be closed out only on an exchange which provides a secondary market. There can
be no assurance that a liquid secondary market will exist for a particular option at a particular time and that
the Portfolio can close out its position by effecting a closing transaction. If the Portfolio is unable to
effect a closing purchase transaction, it cannot sell the underlying security until the option expires or the
option is exercised. Accordingly, the Portfolio may not be able to sell the underlying security at a time when
it might otherwise be advantageous to do so. Possible reasons for the absence of a liquid secondary market
include the following: (i) insufficient trading interest in certain options; (ii) restrictions on transactions
imposed by an exchange; (iii) trading halts, suspensions or other restrictions imposed with respect to particular
classes or series of options or underlying securities; (iv) inadequacy of the facilities of an exchange or the
clearing corporation to handle trading volume; and (v) a decision by one or more exchanges to discontinue the
trading of options or impose restrictions on orders. In addition, the hours of trading for options may not
conform to the hours during which the underlying securities are traded. To the extent that the options markets
close before the markets for the underlying securities, significant price and rate movements can take place in
the underlying markets that cannot be reflected in the options markets. The purchase of options is a highly
specialized activity which involves investment techniques and risks different from those associated with ordinary
portfolio securities transactions.

Each exchange has established limitations governing the maximum number of call options, whether or not
covered, which may be written by a single investor acting alone or in concert with others (regardless of whether
such options are written on the same or different exchanges or are held or written on one or more accounts or
through one or more brokers). An exchange may order the liquidation of positions found to be in violation of
these limits and it may impose other sanctions or restrictions.

Options on Stock Indices:

Options on stock indices are similar to options on specific securities except that, rather than the
right to take or make delivery of the specific security at a specific price, an option on a stock index gives the
holder the right to receive, upon exercise of the option, an amount of cash if the closing level of that stock
index is greater than, in the case of a call, or less than, in the case of a put, the exercise price of the
option. This amount of cash is equal to such difference between the closing price of the index and the exercise
price of the option expressed in dollars multiplied by a specified multiple. The writer of the option is
obligated, in return for the premium received, to make delivery of this amount. Unlike options on specific
securities, all settlements of options on stock indices are in cash and gain or loss depends on general movements
in the stocks included in the index rather than price movements in particular stocks. A stock index futures
contract is an agreement in which one party agrees to deliver to the other an amount of cash equal to a specific
amount multiplied by the difference between the value of a specific stock index at the close of the last trading
day of the contract and the price at which the agreement is made. No physical delivery of securities is made.

Risk Factors in Options on Indices. Because the value of an index option depends upon the movements in
the level of the index rather than upon movements in the price of a particular security, whether the Portfolio
will realize a gain or a loss on the purchase or sale of an option on an index depends upon the movements in the
level of prices in the market generally or in an industry or market segment rather than upon movements in the
price of the individual security. Accordingly, successful use of positions will depend upon a Sub-advisor's
ability to predict correctly movements in the direction of the market generally or in the direction of a
particular industry. This requires different skills and techniques than predicting changes in the prices of
individual securities.

Index prices may be distorted if trading of securities included in the index is interrupted. Trading in
index options also may be interrupted in certain circumstances, such as if trading were halted in a substantial
number of securities in the index. If this occurred, a Portfolio would not be able to close out options which it
had written or purchased and, if restrictions on exercise were imposed, might be unable to exercise an option it
purchased, which would result in substantial losses.

Price movements in Portfolio securities will not correlate perfectly with movements in the level of the
index and therefore, a Portfolio bears the risk that the price of the securities may not increase as much as the
level of the index. In this event, the Portfolio would bear a loss on the call which would not be completely
offset by movements in the prices of the securities. It is also possible that the index may rise when the value
of the Portfolio's securities does not. If this occurred, a Portfolio would experience a loss on the call which
would not be offset by an increase in the value of its securities and might also experience a loss in the market
value of its securities.

Unless a Portfolio has other liquid assets which are sufficient to satisfy the exercise of a call on the
index, the Portfolio will be required to liquidate securities in order to satisfy the exercise.

When a Portfolio has written a call on an index, there is also the risk that the market may decline
between the time the Portfolio has the call exercised against it, at a price which is fixed as of the closing
level of the index on the date of exercise, and the time the Portfolio is able to sell securities. As with
options on securities, the Sub-advisor will not learn that a call has been exercised until the day following the
exercise date, but, unlike a call on securities where the Portfolio would be able to deliver the underlying
security in settlement, the Portfolio may have to sell part of its securities in order to make settlement in
cash, and the price of such securities might decline before they could be sold.

If a Portfolio exercises a put option on an index which it has purchased before final determination of
the closing index value for the day, it runs the risk that the level of the underlying index may change before
closing. If this change causes the exercised option to fall "out-of-the-money" the Portfolio will be required to
pay the difference between the closing index value and the exercise price of the option (multiplied by the
applicable multiplier) to the assigned writer. Although the Portfolio may be able to minimize this risk by
withholding exercise instructions until just before the daily cutoff time or by selling rather than exercising an
option when the index level is close to the exercise price, it may not be possible to eliminate this risk
entirely because the cutoff time for index options may be earlier than those fixed for other types of options and
may occur before definitive closing index values are announced.

Trading in Futures:

A futures contract provides for the future sale by one party and purchase by another party of a
specified amount of a specific financial instrument (e.g., units of a stock index) for a specified price, date,
time and place designated at the time the contract is made. Brokerage fees are incurred when a futures contract
is bought or sold and margin deposits must be maintained. Entering into a contract to buy is commonly referred
to as buying or purchasing a contract or holding a long position. Entering into a contract to sell is commonly
referred to as selling a contract or holding a short position.

Unlike when the Portfolio purchases or sells a security, no price would be paid or received by the
Portfolio upon the purchase or sale of a futures contract. Upon entering into a futures contract, and to maintain
the Portfolio's open positions in futures contracts, the Portfolio would be required to deposit with its
custodian in a segregated account in the name of the futures broker an amount of cash, U.S. government
securities, suitable money market instruments, or other liquid securities, known as "initial margin." The margin
required for a particular futures contract is set by the exchange on which the contract is traded, and may be
significantly modified from time to time by the exchange during the term of the contract. Futures contracts are
customarily purchased and sold on margins that may range upward from less than 5% of the value of the contract
being traded.

If the price of an open futures contract changes (by increase in the case of a sale or by decrease in
the case of a purchase) so that the loss on the futures contract reaches a point at which the margin on deposit
does not satisfy margin requirements, the broker will require an increase in the margin. However, if the value
of a position increases because of favorable price changes in the futures contract so that the margin deposit
exceeds the required margin, the broker will pay the excess to the Portfolio.

These subsequent payments, called "variation margin," to and from the futures broker, are made on a
daily basis as the price of the underlying assets fluctuate making the long and short positions in the futures
contract more or less valuable, a process known as "marking to the market." A Portfolio may or may not earn
interest income on its margin deposits. Although certain futures contracts, by their terms, require actual
future delivery of and payment for the underlying instruments, in practice most futures contracts are usually
closed out before the delivery date. Closing out an open futures contract purchase or sale is effected by
entering into an offsetting futures contract purchase or sale, respectively, for the same aggregate amount of the
identical securities and the same delivery date. If the offsetting purchase price is less than the original sale
price, the Portfolio realizes a gain; if it is more, the Portfolio realizes a loss. Conversely, if the
offsetting sale price is more than the original purchase price, the Portfolio realizes a gain; if it is less, the
Portfolio realizes a loss. The transaction costs must also be included in these calculations. There can be no
assurance, however, that a Portfolio will be able to enter into an offsetting transaction with respect to a
particular futures contract at a particular time. If the Portfolio is not able to enter into an offsetting
transaction, the Portfolio will continue to be required to maintain the margin deposits on the futures contract.

For example, one contract in the Financial Times Stock Exchange 100 Index future is a contract to buy 25
pounds sterling multiplied by the level of the UK Financial Times 100 Share Index on a given future date.
Settlement of a stock index futures contract may or may not be in the underlying security. If not in the
underlying security, then settlement will be made in cash, equivalent over time to the difference between the
contract price and the actual price of the underlying asset at the time the stock index futures contract expires.

Options on futures are similar to options on underlying instruments except that options on futures give
the purchaser the right, in return for the premium paid, to assume a position in a futures contract (a long
position if the option is a call and a short position if the option is a put), rather than to purchase or sell
the futures contract, at a specified exercise price at any time during the period of the option. Upon exercise
of the option, the delivery of the futures position by the writer of the option to the holder of the option will
be accompanied by the delivery of the accumulated balance in the writer's futures margin account which represents
the amount by which the market price of the futures contract, at exercise, exceeds (in the case of a call) or is
less than (in the case of a put) the exercise price of the option on the futures contract. Alternatively,
settlement may be made totally in cash. Purchasers of options who fail to exercise their options prior to the
exercise date suffer a loss of the premium paid.

The writer of an option on a futures contract is required to deposit margin pursuant to requirements
similar to those applicable to futures contracts. Upon exercise of an option on a futures contract, the delivery
of the futures position by the writer of the option to the holder of the option will be accompanied by delivery
of the accumulated balance in the writer's margin account. This amount will be equal to the amount by which the
market price of the futures contract at the time of exercise exceeds, in the case of a call, or is less than, in
the case of a put, the exercise price of the option on the futures contract.

Although financial futures contracts by their terms call for actual delivery or acceptance of
securities, in most cases the contracts are closed out before the settlement date without the making or taking of
delivery. Closing out is accomplished by effecting an offsetting transaction. A futures contract sale is closed
out by effecting a futures contract purchase for the same aggregate amount of securities and the same delivery
date. If the sale price exceeds the offsetting purchase price, the seller immediately would be paid the
difference and would realize a gain. If the offsetting purchase price exceeds the sale price, the seller would
immediately pay the difference and would realize a loss. Similarly, a futures contract purchase is closed out by
effecting a futures contract sale for the same securities and the same delivery date. If the offsetting sale
price exceeds the purchase price, the purchaser would realize a gain, whereas if the purchase price exceeds the
offsetting sale price, the purchaser would realize a loss.

Commissions on financial futures contracts and related options transactions may be higher than those
which would apply to purchases and sales of securities directly.

A public market exists in interest rate futures contracts covering primarily the following financial
instruments: U.S. Treasury bonds; U.S. Treasury notes; Government National Mortgage Association ("GNMA") modified
pass-through mortgage-backed securities; three-month U.S. Treasury bills; 90-day commercial paper; bank
certificates of deposit; and Eurodollar certificates of deposit. It is expected that Futures contracts trading
in additional financial instruments will be authorized. The standard contract size is generally $100,000 for
Futures contracts in U.S. Treasury bonds, U.S. Treasury notes, and GNMA pass-through securities and $1,000,000
for the other designated Futures contracts. A public market exists in Futures contracts covering a number of
indexes, including, but not limited to, the Standard & Poor's 500 Index, the Standard & Poor's 100 Index, the
NASDAQ 100 Index, the Value Line Composite Index and the New York Stock Exchange Composite Index.

Regulatory Matters. The Staff of SEC has taken the position that the purchase and sale of futures
contracts and the writing of related options may give rise to "senior securities" for the purposes of the
restrictions contained in Section 18 of the 1940 Act on investment companies' issuing senior securities.
However, the Staff has taken the position that no senior security will be created if a Portfolio maintains in a
segregated account an amount of cash or other liquid assets at least equal to the amount of the Portfolio's
obligation under the futures contract or option. Similarly, no senior security will be created if a Portfolio
"covers" its futures and options positions by owning corresponding positions or securities underlying the
positions that enable the Portfolio to close out its futures and options positions without paying additional cash
consideration. Each Portfolio will conduct its purchases and sales of any futures contracts and writing of
related options transactions in accordance with these requirements.

Certain Risks Relating to Futures Contracts and Related Options. There are special risks involved in
futures transactions.

Volatility and Leverage. The prices of futures contracts are volatile and are influenced,
among other things, by actual and anticipated changes in the market and interest rates, which in turn are
affected by fiscal and monetary policies and national and international policies and economic events.

Most United States futures exchanges limit the amount of fluctuation permitted in futures contract
prices during a single trading day. The daily limit establishes the maximum amount that the price of a futures
contract may vary either up or down from the previous day's settlement price at the end of a trading session.
Once the daily limit has been reached in a particular type of futures contract, no trades may be made on that day
at a price beyond that limit. The daily limit governs only price movement during a particular trading day and
therefore does not limit potential losses, because the limit may prevent the liquidation of unfavorable
positions. Futures contract prices have occasionally moved to the daily limit for several consecutive trading
days with little or no trading, thereby preventing prompt liquidation of futures positions and subjecting some
futures traders to substantial losses.

Because of the low margin deposits required, futures trading involves an extremely high degree of
leverage. As a result, a relatively small price movement in a futures contract may result in immediate and
substantial loss, as well as gain, to the investor. For example, if at the time of purchase, 10% of the value of
the futures contract is deposited as margin, a subsequent 10% decrease in the value of the futures contract would
result in a total loss of the margin deposit, before any deduction for the transaction costs, if the account were
then closed out. A 15% decrease would result in a loss equal to 150% of the original margin deposit, if the
contract were closed out. Thus, a purchase or sale of a futures contract may result in losses in excess of the
amount invested in the futures contract. However, the Portfolio would presumably have sustained comparable
losses if, instead of the futures contract, it had invested in the underlying instrument and sold it after the
decline. Furthermore, in the case of a futures contract purchase, in order to be certain that the Portfolio has
sufficient assets to satisfy its obligations under a futures contract, the Portfolio earmarks to the futures
contract money market instruments equal in value to the current value of the underlying instrument less the
margin deposit.

Liquidity. The Portfolio may elect to close some or all of its futures positions at any time
prior to their expiration. The Portfolio would do so to reduce exposure represented by long futures positions or
increase exposure represented by short futures positions. The Portfolio may close its positions by taking
opposite positions which would operate to terminate the Portfolio's position in the futures contracts. Final
determinations of variation margin would then be made, additional cash would be required to be paid by or
released to the Portfolio, and the Portfolio would realize a loss or a gain.

Futures contracts may be closed out only on the exchange or board of trade where the contracts were
initially traded. Although the Portfolio intends to purchase or sell futures contracts only on exchanges or
boards of trade where there appears to be an active market, there is no assurance that a liquid market on an
exchange or board of trade will exist for any particular contract at any particular time. In such event, it
might not be possible to close a futures contract, and in the event of adverse price movements, the Portfolio
would continue to be required to make daily cash payments of variation margin. However, in the event futures
contracts have been used to hedge the underlying instruments, the Portfolio would continue to hold the underlying
instruments subject to the hedge until the futures contracts could be terminated. In such circumstances, an
increase in the price of the underlying instruments, if any, might partially or completely offset losses on the
futures contract. However, as described below, there is no guarantee that the price of the underlying
instruments will, in fact, correlate with the price movements in the futures contract and thus provide an offset
to losses on a futures contract.

Hedging Risk. A decision of whether, when, and how to hedge involves skill and judgment, and
even a well-conceived hedge may be unsuccessful to some degree because of unexpected market behavior, market or
interest rate trends. There are several risks in connection with the use by the Portfolio of futures contracts
as a hedging device. One risk arises because of the imperfect correlation between movements in the prices of the
futures contracts and movements in the prices of the underlying instruments which are the subject of the hedge.
Sub-advisor will, however, attempt to reduce this risk by entering into futures contracts whose movements, in its
judgment, will have a significant correlation with movements in the prices of the Portfolio's underlying
instruments sought to be hedged.

Successful use of futures contracts by the Portfolio for hedging purposes is also subject to a
Sub-advisor's ability to correctly predict movements in the direction of the market. It is possible that, when
the Portfolio has sold futures to hedge its portfolio against a decline in the market, the index, indices, or
underlying instruments on which the futures are written might advance and the value of the underlying instruments
held in the Portfolio's portfolio might decline. If this were to occur, the Portfolio would lose money on the
futures and also would experience a decline in value in its underlying instruments. However, while this might
occur to a certain degree, Sub-advisor may believe that over time the value of the Portfolio's portfolio will
tend to move in the same direction as the market indices which are intended to correlate to the price movements
of the underlying instruments sought to be hedged. It is also possible that if the Portfolio were to hedge
against the possibility of a decline in the market (adversely affecting the underlying instruments held in its
portfolio) and prices instead increased, the Portfolio would lose part or all of the benefit of increased value
of those underlying instruments that it has hedged, because it would have offsetting losses in its futures
positions. In addition, in such situations, if the Portfolio had insufficient cash, it might have to sell
underlying instruments to meet daily variation margin requirements. Such sales of underlying instruments might
be, but would not necessarily be, at increased prices (which would reflect the rising market). The Portfolio
might have to sell underlying instruments at a time when it would be disadvantageous to do so.

In addition to the possibility that there might be an imperfect correlation, or no correlation at all,
between price movements in the futures contracts and the portion of the portfolio being hedged, the price
movements of futures contracts might not correlate perfectly with price movements in the underlying instruments
due to certain market distortions. First, all participants in the futures market are subject to margin deposit
and maintenance requirements. Rather than meeting additional margin deposit requirements, investors might close
futures contracts through offsetting transactions which could distort the normal relationship between the
underlying instruments and futures markets. Second, the margin requirements in the futures market are less
onerous than margin requirements in the securities markets, and as a result the futures market might attract more
speculators than the securities markets do. Increased participation by speculators in the futures market might
also cause temporary price distortions. Due to the possibility of price distortion in the futures market and
also because of the imperfect correlation between price movements in the underlying instruments and movements in
the prices of futures contracts, even a correct forecast of general market trends by Sub-advisor might not result
in a successful hedging transaction over a very short time period.

Certain Risks of Options on Futures Contracts. The Portfolio may seek to close out an option position
by writing or buying an offsetting option covering the same index, underlying instruments, or contract and having
the same exercise price and expiration date. The ability to establish and close out positions on such options
will be subject to the maintenance of a liquid secondary market. Reasons for the absence of a liquid secondary
market on an exchange include the following: (i) there may be insufficient trading interest in certain options;
(ii) restrictions may be imposed by an exchange on opening transactions or closing transactions or both; (iii)
trading halts, suspensions or other restrictions may be imposed with respect to particular classes or series of
options, or underlying instruments; (iv) unusual or unforeseen circumstances may interrupt normal operations on
an exchange; (v) the facilities of an exchange or a clearing corporation may not at all times be adequate to
handle current trading volume; or (vi) one or more exchanges could, for economic or other reasons, decide or be
compelled at some future date to discontinue the trading of options (or a particular class or series of options),
in which event the secondary market on that exchange (or in the class or series of options) would cease to exist,
although outstanding options on the exchange that had been issued by a clearing corporation as a result of trades
on that exchange would continue to be exercisable in accordance with their terms. There is no assurance that
higher than anticipated trading activity or other unforeseen events might not, at times, render certain of the
facilities of any of the clearing corporations inadequate, and thereby result in the institution by an exchange
of special procedures which may interfere with the timely execution of customers' orders.

Foreign Futures and Options:

Participation in foreign futures and foreign options transactions involves the execution and clearing of
trades on or subject to the rules of a foreign board of trade. Neither the National Futures Association nor any
domestic exchange regulates activities of any foreign boards of trade, including the execution, delivery and
clearing of transactions, or has the power to compel enforcement of the rules of a foreign board of trade or any
applicable foreign law. This is true even if the exchange is formally linked to a domestic market so that a
position taken on the market may be liquidated by a transaction on another market. Moreover, such laws or
regulations will vary depending on the foreign country in which the foreign futures or foreign options
transaction occurs. For these reasons, customers who trade foreign futures or foreign options contracts may not
be afforded certain of the protective measures provided by the Commodity Exchange Act, the CFTC's regulations and
the rules of the National Futures Association and any domestic exchange, including the right to use reparations
proceedings before the Commission and arbitration proceedings provided by the National Futures Association or any
domestic futures exchange. In particular, funds received from customers for foreign futures or foreign options
transactions may not be provided the same protections as funds received in respect of transactions on United
States futures exchanges. In addition, the price of any foreign futures or foreign options contract and,
therefore, the potential profit and loss thereon may be affected by any variance in the foreign exchange rate
between the time your order is placed and the time it is liquidated, offset or exercised.

Forward Foreign Currency Exchange Contracts. A forward foreign currency exchange contract involves an
obligation to purchase or sell a specific currency at a future date, which may be any fixed number of days from
the date of the contract agreed upon by the parties, at a price set at the time of the contract. These contracts
are principally traded in the interbank market conducted directly between currency traders (usually large,
commercial banks) and their customers. A forward contract generally has no deposit requirement, and no
commissions are charged at any stage for trades.

Depending on the applicable investment policies and restrictions applicable to a Portfolio, a Portfolio
may generally enter into forward foreign currency exchange contracts under two circumstances. First, when a
Portfolio enters into a contract for the purchase or sale of a security denominated in or exposed to a foreign
currency, it may desire to "lock in" the U.S. dollar price of the security. By entering into a forward contract
for the purchase or sale, for a fixed amount of dollars, of the amount of foreign currency involved in the
underlying security transactions, the Portfolio may be able to protect itself against a possible loss resulting
from an adverse change in the relationship between the U.S. dollar and the subject foreign currency during the
period between the date the security is purchased or sold and the date on which payment is made or received.

Second, when a Sub-advisor believes that the currency of a particular foreign country may suffer or
enjoy a substantial movement against another currency, including the U.S. dollar, it may enter into a forward
contract to sell or buy the amount of the former foreign currency, approximating the value of some or all of the
Portfolio's securities denominated in or exposed to such foreign currency. Alternatively, where appropriate, the
Portfolio may hedge all or part of its foreign currency exposure through the use of a basket of currencies or a
proxy currency where such currencies or currency act as an effective proxy for other currencies. In such a case,
the Portfolio may enter into a forward contract where the amount of the foreign currency to be sold exceeds the
value of the securities denominated in or exposed to such currency. The use of this basket hedging technique may
be more efficient and economical than entering into separate forward contracts for each currency held in the
Portfolio. The precise matching of the forward contract amounts and the value of the securities involved will
not generally be possible since the future value of such securities in foreign currencies will change as a
consequence of market movements in the value of those securities between the date the forward contract is entered
into and the date it matures. The projection of short-term currency market movement is extremely difficult, and
the successful execution of a short-term hedging strategy is highly uncertain.

As indicated above, it is impossible to forecast with absolute precision the market value of portfolio
securities at the expiration of the forward contract. Accordingly, it may be necessary for a Portfolio to
purchase additional foreign currency on the spot market (and bear the expense of such purchase) if the market
value of the security is less than the amount of foreign currency the Portfolio is obligated to deliver and if a
decision is made to sell the security and make delivery of the foreign currency. Conversely, it may be necessary
to sell on the spot market some of the foreign currency received upon the sale of the portfolio security if its
market value exceeds the amount of foreign currency the Portfolio is obligated to deliver. However, as noted, in
order to avoid excessive transactions and transaction costs, the Portfolio may use liquid, high-grade debt
securities, denominated in any currency, to cover the amount by which the value of a forward contract exceeds the
value of the securities to which it relates.

Foreign Currency Contracts. A currency futures contract sale creates an obligation by a Portfolio, as
seller, to deliver the amount of currency called for in the contract at a specified future time for a special
price. A currency futures contract purchase creates an obligation by a Portfolio, as purchaser, to take delivery
of an amount of currency at a specified future time at a specified price. Unlike forward foreign currency
exchange contracts, currency futures contracts and options on currency futures contracts are standardized as to
amount and delivery period and are traded on boards of trade and commodities exchanges. Although the terms of
currency futures contracts specify actual delivery or receipt, in most instances the contracts are closed out
before the settlement date without the making or taking of delivery of the currency. Closing out of a currency
futures contract is effected by entering into an offsetting purchase or sale transaction. Unlike a currency
futures contract, which requires the parties to buy and sell currency on a set date, an option on a currency
futures contract entitles its holder to decide on or before a future date whether to enter into such a contract.
If the holder decides not to enter into the contract, the premium paid for the option is fixed at the point of
sale.

Interest Rate Swaps and Interest Rate Caps and Floors:

Interest rate swaps involve the exchange by the Portfolio with another party of their respective
commitments to pay or receive interest, e.g., an exchange of floating rate payments for fixed rate payments. The
exchange commitments can involve payments to be made in the same currency or in different currencies. The
purchase of an interest rate cap entitles the purchaser, to the extent that a specified index exceeds a
predetermined interest rate, to receive payments of interest on a contractually based principal amount from the
party selling the interest rate cap. The purchase of an interest rate floor entitles the purchaser, to the
extent that a specified index falls below a predetermined interest rate, to receive payments of interest on a
contractually based principal amount from the party selling the interest rate floor.

Hybrid Instruments:

Hybrid instruments combine the elements of futures contracts or options with those of debt, preferred
equity or a depositary instrument. The risks of investing in hybrid instruments reflect a combination of the
risks from investing in securities, futures and currencies, including volatility and lack of liquidity.
Reference is made to the discussion of futures and forward contracts in this Statement for a discussion of these
risks. Further, the prices of the hybrid instrument and the related commodity or currency may not move in the
same direction or at the same time. Hybrid instruments may bear interest or pay preferred dividends at below
market (or even relatively nominal) rates. In addition, because the purchase and sale of hybrid instruments
could take place in an over-the-counter market or in a private transaction between the Portfolio and the seller
of the hybrid instrument, the creditworthiness of the contra party to the transaction would be a risk factor
which the Portfolio would have to consider. Hybrid instruments also may not be subject to regulation of the
CFTC, which generally regulates the trading of commodity futures by U.S. persons, the SEC, which regulates the
offer and sale of securities by and to U.S. persons, or any other governmental regulatory authority.

Zero-Coupon Securities:

Zero-coupon securities pay no cash income and are sold at substantial discounts from their value at
maturity. When held to maturity, their entire income, which consists of accretion of discount, comes from the
difference between the issue price and their value at maturity. Zero-coupon securities are subject to greater
market value fluctuations from changing interest rates than debt obligations of comparable maturities which make
current distributions of interest (cash). Zero-coupon securities which are convertible into common stock offer
the opportunity for capital appreciation as increases (or decreases) in market value of such securities closely
follows the movements in the market value of the underlying common stock. Zero-coupon convertible securities
generally are expected to be less volatile than the underlying common stocks, as they usually are issued with
maturities of 15 years or less and are issued with options and/or redemption features exercisable by the holder
of the obligation entitling the holder to redeem the obligation and receive a defined cash payment.

Zero-coupon securities include securities issued directly by the U.S. Treasury, and U.S. Treasury bonds
or notes and their unmatured interest coupons and receipts for their underlying principal ("coupons") which have
been separated by their holder, typically a custodian bank or investment brokerage firm. A holder will separate
the interest coupons from the underlying principal (the "corpus") of the U.S. Treasury security. A number of
securities firms and banks have stripped the interest coupons and receipts and then resold them in custodial
receipt programs with a number of different names, including "Treasury Income Growth Receipts" (TIGRSTM) and
Certificate of Accrual on Treasuries (CATSTM). The underlying U.S. Treasury bonds and notes themselves are held
in book-entry form at the Federal Reserve Bank or, in the case of bearer securities (i.e., unregistered
securities which are owned ostensibly by the bearer or holder thereof), in trust on behalf of the owners
thereof. Counsel to the underwriters of these certificates or other evidences of ownership of the U.S. Treasury
securities have stated that, for federal tax and securities purposes, in their opinion purchasers of such
certificates, such as the Portfolio, most likely will be deemed the beneficial holder of the underlying U.S.
Government securities.

The U.S. Treasury has facilitated transfers of ownership of zero-coupon securities by accounting
separately for the beneficial ownership of particular interest coupon and corpus payments on Treasury securities
through the Federal Reserve book-entry record keeping system. The Federal Reserve program as established by the
Treasury Department is known as "STRIPS" or "Separate Trading of Registered Interest and Principal of
Securities." Under the STRIPS program, the Portfolio will be able to have its beneficial ownership of zero-coupon
securities recorded directly in the book-entry record-keeping system in lieu of having to hold certificates or
other evidences of ownership of the underlying U.S. Treasury securities.

When U.S. Treasury obligations have been stripped of their unmatured interest coupons by the holder, the
principal or corpus is sold at a deep discount because the buyer receives only the right to receive a future
fixed payment on the security and does not receive any rights to periodic interest (cash) payments. Once
stripped or separated, the corpus and coupons may be sold separately. Typically, the coupons are sold separately
or grouped with other coupons with like maturity dates and sold bundled in such form. Purchasers of stripped
obligations acquire, in effect, discount obligations that are economically identical to the zero-coupon
securities that the Treasury sells itself.

When-Issued Securities:

The price of when-issued securities, which may be expressed in yield terms, is fixed at the time the
commitment to purchase is made, but delivery and payment for the when-issued securities take place at a later
date. Normally, the settlement date occurs within 90 days of the purchase. During the period between purchase
and settlement, no payment is made by a Portfolio to the issuer and no interest accrues to the Portfolio.
Forward commitments involve a risk of loss if the value of the security to be purchased declines prior to the
settlement date, which risk is in addition to the risk of decline in value of a Portfolio's other assets. While
when-issued securities may be sold prior to the settlement date, the Portfolios generally will purchase such
securities with the purpose of actually acquiring them unless a sale appears desirable for investment reasons.

Mortgage-Backed Securities:

When a Portfolio owns a mortgage-backed security, principal and interest payments made on the mortgages
in an underlying mortgage pool are passed through to the Portfolio. Unscheduled prepayments of principal shorten
the securities' weighted average life and may lower their total return. (When a mortgage in the underlying
mortgage pool is prepaid, an unscheduled principal prepayment is passed through to the Portfolio. This principal
is returned to the Portfolio at par. As a result, if a mortgage security were trading at a premium, its total
return would be lowered by prepayments, and if a mortgage securities were trading at a discount, its total return
would be increased by prepayments.) The value of these securities also may change because of changes in the
market's perception of the creditworthiness of the federal agency that issued them. In addition, the mortgage
securities market in general may be adversely affected by changes in governmental regulation or tax policies.

Asset-Backed Securities:

Asset-backed securities directly or indirectly represent a participation interest in, or are secured by
and payable from, a stream of payments generated by particular assets such as motor vehicle or credit card
receivables. Payments of principal and interest may be guaranteed up to certain amounts and for a certain time
period by a letter of credit issued by a financial institution unaffiliated with the entities issuing the
securities. Asset-backed securities may be classified as pass-through certificates or collateralized obligations.

Pass-through certificates are asset-backed securities which represent an undivided fractional ownership
interest in an underlying pool of assets. Pass-through certificates usually provide for payments of principal and
interest received to be passed through to their holders, usually after deduction for certain costs and expenses
incurred in administering the pool. Because pass-through certificates represent an ownership interest in the
underlying assets, the holders thereof bear directly the risk of any defaults by the obligors on the underlying
assets not covered by any credit support. See "Types of Credit Support."

Asset-backed securities issued in the form of debt instruments, also known as collateralized
obligations, are generally issued as the debt of a special purpose entity organized solely for the purpose of
owning such assets and issuing such debt. Such assets are most often trade, credit card or automobile
receivables. The assets collateralizing such asset-backed securities are pledged to a trustee or custodian for
the benefit of the holders thereof. Such issuers generally hold no assets other than those underlying the
asset-backed securities and any credit support provided. As a result, although payments on such asset-backed
securities are obligations of the issuers, in the event of defaults on the underlying assets not covered by any
credit support (see "Types of Credit Support"), the issuing entities are unlikely to have sufficient assets to
satisfy their obligations on the related asset-backed securities.

Methods of Allocating Cash Flows. While many asset-backed securities are issued with only one class of
security, many asset-backed securities are issued in more than one class, each with different payment terms.
Multiple class asset-backed securities are issued for two main reasons. First, multiple classes may be used as a
method of providing credit support. This is accomplished typically through creation of one or more classes whose
right to payments on the asset-backed security is made subordinate to the right to such payments of the remaining
class or classes. See "Types of Credit Support." Second, multiple classes may permit the issuance of securities
with payment terms, interest rates or other characteristics differing both from those of each other and from
those of the underlying assets. Examples include so-called "strips" (asset-backed securities entitling the
holder to disproportionate interests with respect to the allocation of interest and principal of the assets
backing the security), and securities with a class or classes having characteristics which mimic the
characteristics of non-asset-backed securities, such as floating interest rates (i.e., interest rates which
adjust as a specified benchmark changes) or scheduled amortization of principal.

Asset-backed securities in which the payment streams on the underlying assets are allocated in a manner
different than those described above may be issued in the future. The Portfolio may invest in such asset-backed
securities if such investment is otherwise consistent with its investment objectives and policies and with the
investment restrictions of the Portfolio.

Types of Credit Support. Asset-backed securities are often backed by a pool of assets representing the
obligations of a number of different parties. To lessen the effect of failures by obligors on underlying assets
to make payments, such securities may contain elements of credit support. Such credit support falls into two
classes: liquidity protection and protection against ultimate default by an obligor on the underlying assets.
Liquidity protection refers to the provision of advances, generally by the entity administering the pool of
assets, to ensure that scheduled payments on the underlying pool are made in a timely fashion. Protection
against ultimate default ensures ultimate payment of the obligations on at least a portion of the assets in the
pool. Such protection may be provided through guarantees, insurance policies or letters of credit obtained from
third parties, through various means of structuring the transaction or through a combination of such approaches.
Examples of asset-backed securities with credit support arising out of the structure of the transaction include
"senior-subordinated securities" (multiple class asset-backed securities with certain classes subordinate to
other classes as to the payment of principal thereon, with the result that defaults on the underlying assets are
borne first by the holders of the subordinated class) and asset-backed securities that have "reserve portfolios"
(where cash or investments, sometimes funded from a portion of the initial payments on the underlying assets, are
held in reserve against future losses) or that have been "over collateralized" (where the scheduled payments on,
or the principal amount of, the underlying assets substantially exceeds that required to make payment of the
asset-backed securities and pay any servicing or other fees). The degree of credit support provided on each
issue is based generally on historical information respecting the level of credit risk associated with such
payments. Delinquency or loss in excess of that anticipated could adversely affect the return on an investment
in an asset-backed security. Additionally, if the letter of credit is exhausted, holders of asset-backed
securities may also experience delays in payments or losses if the full amounts due on underlying sales contracts
are not realized.

Automobile Receivable Securities. Asset-backed securities may be backed by receivables from motor
vehicle installment sales contracts or installment loans secured by motor vehicles ("Automobile Receivable
Securities"). Since installment sales contracts for motor vehicles or installment loans related thereto
("Automobile Contracts") typically have shorter durations and lower incidences of prepayment, Automobile
Receivable Securities generally will exhibit a shorter average life and are less susceptible to prepayment risk.

Most entities that issue Automobile Receivable Securities create an enforceable interest in their
respective Automobile Contracts only by filing a financing statement and by having the servicer of the Automobile
Contracts, which is usually the originator of the Automobile Contracts, take custody thereof. In such
circumstances, if the servicer of the Automobile Contracts were to sell the same Automobile Contracts to another
party, in violation of its obligation not to do so, there is a risk that such party could acquire an interest in
the Automobile Contracts superior to that of the holders of Automobile Receivable Securities. Also although most
Automobile Contracts grant a security interest in the motor vehicle being financed, in most states the security
interest in a motor vehicle must be noted on the certificate of title to create an enforceable security interest
against competing claims of other parties. Due to the large number of vehicles involved, however, the
certificate of title to each vehicle financed, pursuant to the Automobile Contracts underlying the Automobile
Receivable Security, usually is not amended to reflect the assignment of the seller's security interest for the
benefit of the holders of the Automobile Receivable Securities. Therefore, there is the possibility that
recoveries on repossessed collateral may not, in some cases, be available to support payments on the securities.
In addition, various state and federal securities laws give the motor vehicle owner the right to assert against
the holder of the owner's Automobile Contract certain defenses such owner would have against the seller of the
motor vehicle. The assertion of such defenses could reduce payments on the Automobile Receivable Securities.

Credit Card Receivable Securities. Asset-backed securities may be backed by receivables from revolving
credit card agreements ("Credit Card Receivable Securities"). Credit balances on revolving credit card
agreements ("Accounts") are generally paid down more rapidly than are Automobile Contracts. Most of the Credit
Card Receivable Securities issued publicly to date have been Pass-Through Certificates. In order to lengthen the
maturity of Credit Card Receivable Securities, most such securities provide for a fixed period during which only
interest payments on the underlying Accounts are passed through to the security holder and principal payments
received on such Accounts are used to fund the transfer to the pool of assets supporting the related Credit Card
Receivable Securities of additional credit card charges made on an Account. The initial fixed period usually may
be shortened upon the occurrence of specified events which signal a potential deterioration in the quality of the
assets backing the security, such as the imposition of a cap on interest rates. The ability of the issuer to
extend the life of an issue of Credit Card Receivable Securities thus depends upon the continued generation of
additional principal amounts in the underlying accounts during the initial period and the non-occurrence of
specified events. An acceleration in cardholders' payment rates or any other event which shortens the period
during which additional credit card charges on an Account may be transferred to the pool of assets supporting the
related Credit Card Receivable Security could shorten the weighted average life and yield of the Credit Card
Receivable Security.

Credit card holders are entitled to the protection of a number of state and federal consumer credit
laws, many of which give such holder the right to set off certain amounts against balances owed on the credit
card, thereby reducing amounts paid on Accounts. In addition, unlike most other asset-backed securities,
Accounts are unsecured obligations of the cardholder.

Warrants:

Investments in warrants is speculative in that warrants have no voting rights, pay no dividends, and
have no rights with respect to the assets of the corporation issuing them. Warrants basically are options to
purchase equity securities at a specific price valid for a specific period of time. They do not represent
ownership of the securities but only the right to buy them. Warrants differ from call options in that warrants
are issued by the issuer of the security which may be purchased on their exercise, whereas call options may be
written or issued by anyone. The prices of warrants do not necessarily move parallel to the prices of the
underlying securities.

Certain Risks of Foreign Investing:

Currency Fluctuations. Investment in securities denominated in foreign currencies involves certain
risks. A change in the value of any such currency against the U.S. dollar will result in a corresponding change
in the U.S. dollar value of a Portfolio's assets denominated in that currency. Such changes will also affect a
Portfolio's income. Generally, when a given currency appreciates against the dollar (the dollar weakens) the
value of a Portfolio's securities denominated in that currency will rise. When a given currency depreciates
against the dollar (the dollar strengthens), the value of a Portfolio's securities denominated in that currency
would be expected to decline.

Investment and Repatriation Restrictions. Foreign investment in the securities markets of certain
foreign countries is restricted or controlled in varying degrees. These restrictions may at times limit or
preclude investment in certain of such countries and may increase the cost and expenses of a Portfolio.
Investments by foreign investors are subject to a variety of restrictions in many developing countries. These
restrictions may take the form of prior governmental approval, limits on the amount or type of securities held by
foreigners, and limits on the types of companies in which foreigners may invest. Additional or different
restrictions may be imposed at any time by these or other countries in which a Portfolio invests. In addition,
the repatriation of both investment income and capital from several foreign countries is restricted and
controlled under certain regulations, including in some cases the need for certain government consents.

Market Characteristics. Foreign securities may be purchased in over-the-counter markets or on stock
exchanges located in the countries in which the respective principal offices of the issuers of the various
securities are located, if that is the best available market. Foreign stock markets are generally not as
developed or efficient as, and may be more volatile than, those in the United States. While growing in volume,
they usually have substantially less volume than U.S. markets and a Portfolio's securities may be less liquid and
more volatile than securities of comparable U.S. companies. Equity securities may trade at price/earnings
multiples higher than comparable U.S. securities and such levels may not be sustainable. Fixed commissions on
foreign stock exchanges are generally higher than negotiated commissions on U.S. exchanges, although a Portfolio
will endeavor to achieve the most favorable net results on its portfolio transactions. There is generally less
government supervision and regulation of foreign stock exchanges, brokers and listed companies than in the United
States. Moreover, settlement practices for transactions in foreign markets may differ from those in U.S.
markets, and may include delays beyond periods customary in the United States.

Political and Economic Factors. Individual foreign economies of certain countries may differ favorably
or unfavorably from the United States' economy in such respects as growth of gross national product, rate of
inflation, capital reinvestment, resource self-sufficiency and balance of payments position. The internal
politics of certain foreign countries are not as stable as in the United States.

Governments in certain foreign countries continue to participate to a significant degree, through
ownership interest or regulation, in their respective economies. Action by these governments could have a
significant effect on market prices of securities and payment of dividends. The economies of many foreign
countries are heavily dependent upon international trade and are accordingly affected by protective trade
barriers and economic conditions of their trading partners. The enactment by these trading partners of
protectionist trade legislation could have a significant adverse effect upon the securities markets of such
countries.

Information and Supervision. There is generally less publicly available information about foreign
companies comparable to reports and ratings that are published about companies in the United States. Foreign
companies are also generally not subject to uniform accounting, auditing and financial reporting standards,
practices and requirements comparable to those applicable to U.S. companies.

Taxes. The dividends and interest payable on certain of a Portfolio's foreign securities may be subject
to foreign withholding taxes, thus reducing the net amount of income available for distribution to the
Portfolio's shareholders. A shareholder otherwise subject to U.S. federal income taxes may, subject to certain
limitations, be entitled to claim a credit or deduction for U.S. federal income tax purposes for his or her
proportionate share of such foreign taxes paid by the Portfolio.

Costs. Investors should understand that the expense ratio of the Portfolio can be expected to be higher
than investment companies investing in domestic securities since the cost of maintaining the custody of foreign
securities and the rate of advisory fees paid by the Portfolio are higher.

Other. With respect to certain foreign countries, especially developing and emerging ones, there is the
possibility of adverse changes in investment or exchange control regulations, expropriation or confiscatory
taxation, limitations on the removal of funds or other assets of the Portfolio, political or social instability,
or diplomatic developments which could affect investments by U.S. persons in those countries.

Eastern Europe. Changes occurring in Eastern Europe and Russia today could have long-term potential
consequences. As restrictions fall, this could result in rising standards of living, lower manufacturing costs,
growing consumer spending, and substantial economic growth. However, investment in the countries of Eastern
Europe and Russia is highly speculative at this time. Political and economic reforms are too recent to establish
a definite trend away from centrally-planned economies and state owned industries. In many of the countries of
Eastern Europe and Russia, there is no stock exchange or formal market for securities. Such countries may also
have government exchange controls, currencies with no recognizable market value relative to the established
currencies of western market economies, little or no experience in trading in securities, no financial reporting
standards, a lack of a banking and securities infrastructure to handle such trading, and a legal tradition which
does not recognize rights in private property. In addition, these countries may have national policies which
restrict investments in companies deemed sensitive to the country's national interest. Further, the governments
in such countries may require governmental or quasi-governmental authorities to act as custodian of the
Portfolio's assets invested in such countries and these authorities may not qualify as a foreign custodian under
the 1940 Act and exemptive relief from such Act may be required. All of these considerations are among the
factors which could cause significant risks and uncertainties to investment in Eastern Europe and Russia.

Latin America. The political history of certain Latin American countries has been characterized by
political uncertainty, intervention by the military in civilian and economic spheres, and political corruption.
Such developments, if they were to reoccur, could reverse favorable trends toward market and economic reform,
privatization and removal of trade barriers and result in significant disruption in securities markets.
Persistent levels of inflation or in some cases, hyperinflation, have led to high interest rates, extreme
measures by governments to keep inflation in check and a generally debilitating effect on economic growth.
Although inflation in many countries has lessened, there is no guarantee it will remain at lower levels. In
addition, a number of Latin American countries are also among the largest debtors of developing countries. There
have been moratoria on, and reschedulings of, repayment with respect to these debts. Such events can restrict
the flexibility of these debtor nations in the international markets and result in the imposition of onerous
conditions on their economics.

Certain Latin American countries may have managed currencies which are maintained at artificial levels
to the U.S. dollar rather than at levels determined by the market. This type of system can lead to sudden and
large adjustments in the currency which, in turn, can have a disruptive and negative effect on foreign
investors. Certain Latin American countries also may restrict the free conversion of their currency into foreign
currencies, including the U.S. dollar. There is no significant foreign exchange market for certain currencies
and it would, as a result, be difficult for the Portfolio to engage in foreign currency transactions designed to
protect the value of the Portfolio's interests in securities denominated in such currencies.

Illiquid and Restricted Securities:

Subject to limitations discussed in the Trust's Prospectus under "Certain Risk Factors and Investment
Methods," the Portfolios generally may invest in illiquid securities. Illiquid securities include securities
subject to contractual or legal restrictions on resale (e.g., because they have not been registered under the
Securities Act of 1933, as amended (the "Securities Act")) and securities that are otherwise not readily
marketable (e.g., because trading in the security is suspended or because market makers do not exist or will not
entertain bids or offers). Securities that have not been registered under the Securities Act are referred to as
private placements or restricted securities and are purchased directly from the issuer or in the secondary
market. Foreign securities that are freely tradable in their principal markets are not considered to be illiquid.

Restricted and other illiquid securities may be subject to the potential for delays on resale and
uncertainty in valuation. A Portfolio might be unable to dispose of illiquid securities promptly or at
reasonable prices and might thereby experience difficulty in satisfying redemption requests from shareholders. A
Portfolio might have to register restricted securities in order to dispose of them, resulting in additional
expense and delay. Adverse market conditions could impede such a public offering of securities.

A large institutional market exists for certain securities that are not registered under the Securities
Act, including foreign securities. The fact that there are contractual or legal restrictions on resale to the
general public or to certain institutions may not be indicative of the liquidity of such investments.

Rule 144A under the Securities Act allows such a broader institutional trading market for securities
otherwise subject to restrictions on resale to the general public. Rule 144A establishes a "safe harbor" from
the registration requirements of the Securities Act for resales of certain securities to qualified institutional
buyers. Rule 144A has produced enhanced liquidity for many restricted securities, and market liquidity for such
securities may continue to expand as a result of this regulation and the consequent existence of the PORTAL
system, which is an automated system for the trading, clearance and settlement of unregistered securities of
domestic and foreign issuers sponsored by the National Association of Securities Dealers, Inc.

Under guidelines adopted by the Trust's Board of Trustees, a Portfolio's Sub-Advisor may determine that
particular Rule 144A securities, and commercial paper issued in reliance on the private placement exemption from
registration afforded by Section 4(2) of the Securities Act, are liquid even though they are not registered. A
determination of whether such a security is liquid or not is a question of fact. In making this determination,
the Sub-Advisor will consider, as it deems appropriate under the circumstances and among other factors: (1) the
frequency of trades and quotes for the security; (2) the number of dealers willing to purchase or sell the
security; (3) the number of other potential purchasers of the security; (4) dealer undertakings to make a market
in the security; (5) the nature of the security (e.g., debt or equity, date of maturity, terms of dividend or
interest payments, and other material terms) and the nature of the marketplace trades (e.g., the time needed to
dispose of the security, the method of soliciting offers, and the mechanics of transfer); and (6) the rating of
the security and the financial condition and prospects of the issuer. In the case of commercial paper, the
Sub-advisor will also determine that the paper (1) is not traded flat or in default as to principal and interest,
and (2) is rated in one of the two highest rating categories by at least two Nationally Recognized Statistical
Rating Organizations ("NRSROs") or, if only one NRSRO rates the security, by that NRSRO, or, if the security is
unrated, the Sub-advisor determines that it is of equivalent quality.

Rule 144A securities and Section 4(2) commercial paper that have been deemed liquid as described above
will continue to be monitored by the Sub-advisor to determine if the security is no longer liquid as the result
of changed conditions. Investing in Rule 144A securities or Section 4(2) commercial paper could have the effect
of increasing the amount of a Portfolio's assets invested in illiquid securities if institutional buyers are
unwilling to purchase such securities.

Repurchase Agreements:

As stated in the Prospectus under "Certain Risk Factors and Investment Methods," certain of the
Portfolios may enter into repurchase agreements. In a repurchase agreement, an investor (such as the Portfolio)
purchases a security (known as the "underlying security") from a securities dealer or bank. Any such dealer or
bank must be deemed creditworthy by the Sub-advisor. At that time, the bank or securities dealer agrees to
repurchase the underlying security at a mutually agreed upon price on a designated future date. The repurchase
price may be higher than the purchase price, the difference being income to the Portfolio, or the purchase and
repurchase prices may be the same, with interest at an agreed upon rate due to the Portfolio on repurchase. In
either case, the income to the Portfolio generally will be unrelated to the interest rate on the underlying
securities. Repurchase agreements must be "fully collateralized," in that the market value of the underlying
securities (including accrued interest) must at all times be equal to or greater than the repurchase price.
Therefore, a repurchase agreement can be considered a loan collateralized by the underlying securities.

Repurchase agreements are generally for a short period of time, often less than a week, and will
generally be used by a Portfolio to invest excess cash or as part of a temporary defensive strategy. Repurchase
agreements that do not provide for payment within seven days will be treated as illiquid securities. In the
event of a bankruptcy or other default by the seller of a repurchase agreement, the Portfolio could experience
both delays in liquidating the underlying security and losses. These losses could result from: (a) possible
decline in the value of the underlying security while the Portfolio is seeking to enforce its rights under the
repurchase agreement; (b) possible reduced levels of income or lack of access to income during this period; and
(c) expenses of enforcing its rights.

Securities Lending:

The Trust has made arrangements for certain Portfolios to lend securities. While a Portfolio may earn
additional income from lending securities, such activity is incidental to the investment objective of the
Portfolio. In addition to the compensation payable by borrowers under securities loans, a Portfolio would also
earn income from the investment of cash collateral for such loans. Any cash collateral received by a Portfolio
in connection with such loans normally will be invested in high-quality money market securities. However, any
losses resulting from the investment of cash collateral would be borne by the lending Portfolio. There is no
assurance that collateral for loaned securities will be sufficient to provide for recovery of interest,
dividends, or other distributions paid in respect of loaned securities and not received by a Portfolio or to pay
all expenses incurred by a Portfolio in arranging the loans or in exercising rights in the collateral in the
event that loaned securities are not returned.

PORTFOLIO TURNOVER: High turnover involves correspondingly greater brokerage commissions and other transaction
costs. Portfolio turnover information can be found in the Trust's Prospectus under "Financial Highlights" and
"Portfolio Turnover."

Over the past two fiscal years the following Portfolios experienced significant variation in their
portfolio turnover rates. The turnover rates for the AST Founders Passport Portfolio for the years ended
December 31, 1999 and 2000 were 309% and 514% respectively. The portfolio manager is expected to engage in more
frequent trading for the Portfolio than the prior portfolio manager. The turnover rates for the AST AIM International
Equity Portfolio for the year ended December 31, 1999 and the year ended December 31, 2000 were 159% and 86%,
respectively. A I M Capital Management, Inc. became the Portfolio's Sub-advisor on May 1, 1999 and trading
precipitated by this change resulted in the unusually high portfolio turnover for the year ended December 31, 1999.
The turnover rates for the AST American Century
International Growth Portfolio II for the year ended December 31, 1999 and the year ended December 31, 2000 were
29% and 166%, respectively. American Century Investment Management, Inc. became the Portfolio's Sub-advisor on
May 1, 2000 and trading precipitated by this change resulted in the unusually high portfolio turnover for the
year ended December 31, 2000. The turnover rates for the AST Janus Small-Cap Growth Portfolio for the year ended
December 31, 1999 and December 31, 2000 were 116% and 85%, respectively. The substantial reduction in the
portfolio turnover rate was caused in large part by the closing of the Portfolio to new investors in January
2000. The turnover rates for the AST Alliance Growth Portfolio for the year ended December 31, 1999 and the year
ended December 31, 2000 were 316% and 135%, respectively. Alliance Capital Management L.P. became the
Portfolio's Sub-advisor on May 1, 2000 and trading precipitated by this change resulted in the unusually low
portfolio turnover for the year ended December 31, 2000. The turnover rates for the AST MFS Growth Portfolio for
the year ended December 31, 1999 and the year ended December 31, 2000 were 60% and 243%, respectively. This
Portfolio commenced operations on October 18, 1999, which resulted in low portfolio turnover for the year ended
December 31, 1999. The turnover rates for the AST American Century Income & Growth Portfolio for the year
ended December 31, 1999 and the year ended December 31, 2000 were 125% and 61%, respectively. American
Century Investment Management, Inc. became the Portfolio's Sub-advisor on May 1, 1999 and trading precipitated
by this change resulted in the unusually high portfolio turnover for the year ended December 31, 1999. The turnover
rates for the AST Alliance Growth and Income Portfolio for the year ended December 31, 1999 and the year ended
December 31, 2000 were 69% and 144%, respectively. Alliance Capital Management L.P. became the Portfolio's
Sub-advisor on May 1, 2000 and trading precipitated by this change resulted in the unusually high portfolio
turnover for the year ended December 31, 2000. The turnover rates for the AST AIM Balanced Portfolio for the
year ended December 31, 1999 and the year ended December 31, 2000 were 154% and 60%, respectively. A I M Capital
Management, Inc. became the Portfolio's Sub-advisor on May 1, 1999 and trading precipitated by this change
resulted in the unusually high portfolio turnover for the year ended December 31, 1999. The turnover rates for
the AST T. Rowe Price Global Bond Portfolio for the year ended December 31, 1999 and December 31, 2000 were 106%
and 171%, respectively. The substantial increase in the portfolio turnover rate was caused in large part by a
change in the Portfolio's investment policy from international to global which resulted in the trading of various
foreign bonds for U.S. government bonds. The turnover rates for the AST PIMCO Total Return Bond Portfolio for
the year ended December 31, 1999 and the year ended December 31, 2000 were 227% and 365%, respectively. The
substantial increase in the portfolio turnover rate was caused in large part by the Portfolio's increased trading
in the forward market.

The policy of the AST Money Market Portfolio of investing only in securities maturing 397 days or less
from the date of acquisition or purchased pursuant to repurchase agreements that provide for repurchase by the
seller within 397 days from the date of acquisition will result in a high portfolio turnover rate.

ORGANIZATION AND MANAGEMENT OF THE TRUST: The Trust is a managed, open-end investment company organized as a
Massachusetts business trust, whose separate Portfolios are diversified, unless otherwise indicated. As of the
date of this Prospectus, forty-one Portfolios are available. The Trust may offer additional Portfolios with a
range of investment objectives that Participating Insurance Companies may consider suitable for variable
annuities and variable life insurance policies or that may be considered suitable for Qualified Plans. The
Trust's current approach to achieving this goal is to seek to have multiple organizations unaffiliated with each
other be responsible for conducting the investment programs for the Portfolios. Each such organization would be
responsible for the Portfolio or Portfolios to which such organization's expertise is best suited.

Formerly, the Trust was known as the Henderson International Growth Fund, which consisted of only one
Portfolio. The Investment Manager was Henderson International, Inc. Shareholders of what was, at the time, the
Henderson International Growth Fund, approved certain changes in a meeting held April 17, 1992. These changes
included engagement of a new Investment Manager, engagement of a Sub-advisor and election of new Trustees.
Subsequent to that meeting, the new Trustees adopted a number of resolutions, including, but not limited to,
resolutions renaming the Trust. Since that time the Trustees have adopted a number of resolutions, including,
but not limited to, making new Portfolios available and adopting forms of Investment Management Agreements and
Sub-advisory Agreements between the Investment Manager and the Trust and the Investment Manager and each
Sub-advisor, respectively.

American Skandia Life Assurance Corporation, a Participating Insurance Company, is also a wholly-owned
subsidiary of American Skandia, Incorporated. Certain officers of the Trust are officers and/or directors of one
or more of the following companies: ASISI, American Skandia Life Assurance Corporation, American Skandia
Marketing, Incorporated (the principal underwriter for various annuities deemed to be securities for American
Skandia Life Assurance Corporation) and American Skandia, Incorporated.

ASISI, a Connecticut corporation organized in 1991, is registered as an investment adviser with the
SEC. Prior to April 7, 1995, ASISI was known as American Skandia Life Investment Management, Inc.

The overall management of the business and affairs of the Trust is vested with the Board of Trustees.
The Board of Trustees approves all significant agreements between the Trust and persons or companies furnishing
services to the Trust, including the Trust's agreements with the Investment Manager, Administrator, Custodian and
Transfer and Shareholder Servicing Agent and the agreements between the Investment Manager and each Sub-advisor.
The day-to-day operations of the Trust are delegated to the Trust's officers subject always to the investment
objectives and policies of the Trust and to the general supervision of the Board of Trustees.

The Trustees and officers of the Trust and their principal occupations are listed below. Unless
otherwise indicated, the address of each Trustee and executive officer is One Corporate Drive, Shelton,
Connecticut 06484:

Name, Office and Age(1) Principal Occupation(2)
-------------------- --------------------

John Birch Chief Operating Officer:
Vice President (50) American Skandia Investment Services,
Incorporated
December 1997 to present

Executive Vice President and
Chief Operating Officer
International Fund Administration
Bermuda
August 1996 to October 1997

Senior Vice President and
Chief Administrative Officer
Gabelli Funds, Inc.
Rye, New York
March 1995 to August 1996

Gordon C. Boronow President and Chief Operating Officer:
Vice President (47) American Skandia Life Assurance
Corporation
June 1989 to present

Jan R. Carendi* Deputy Chief Executive Officer:
President, Principal Executive Officer Skandia Insurance Company Ltd.
and Trustee (55) September 1986 to present

David E. A. Carson Director
Trustee (66) People's Bank
850 Main Street
Bridgeport, Connecticut 06604
January 2000 to present

Chairman
People's Bank
January 1999 to December 1999

Chairman and Chief Executive Officer:
People's Bank
January 1998 to December 1998

President, Chairman and Chief Executive
Officer:
People's Bank
1983 to December 1997

Richard G. Davy, Jr. Vice President
Treasurer (52) (June 1997 to present)
Controller (September 1994 to June 1997)
American Skandia Investment
Services, Incorporated

Julian A. Lerner Retired since 1995; Senior Vice President
Trustee (75) and Portfolio Manager of AIM Charter Fund
and AIM Summit Fund from 1986 to 1995:
12850 Spurling Road -- Suite 208
Dallas, Texas 75230

Edward P. Macdonald Senior Counsel, Securities, Counsel and
Senior
Secretary (33) Associate Counsel
American Skandia, Incorporated
April 1999 to present

Branch Chief, Senior Counsel and Attorney
U.S. Securities and Exchange Commission
October 1994 to April 1999

Thomas M. Mazzaferro* Executive Vice President and
Trustee (48) Chief Financial Officer
American Skandia Life Assurance
Corporation
April 1988 to present

Thomas M. O'Brien President and Chief Executive Officer
Trustee (50) Atlantic Bank of New York
Two World Trade Center
New York, NY 10048
May 2000 to present

Vice Chairman
North Fork Bank
275 Broad Hollow Road
Melville, NY 11747;
January 1997 to April 2000

President and Chief Executive Officer:
North Side Savings Bank
170 Tulip Avenue
Floral Park, New York 11001
December 1984 to December 1996

John A. Pileski Retired since June 2000
Trustee (61) 43 Quaquanantuck Lane
Quogue, NY 11959

Tax Partner:
KPMG, LLP
757 Third Avenue
New York, NY 10017
(January 1995 to June 2000)

F. Don Schwartz Management Consultant:
Trustee (65) 6 Sugan Close Drive
New Hope, PA 18938
April 1985 to present

* Indicates a Trustee of the Trust who is an "interested person" within the meaning set forth in the 1940 Act.

(1) All of the officers and Trustees of the Trust listed above serve in similar capacities for American Skandia
Advisor Funds, Inc., and/or American Skandia Master Trust, which are also investment companies managed by the
Investment Manager.

(2) Unless otherwise indicated, each officer and Trustee listed above has held his/her principal occupation for
at least the last five years. In addition to the principal occupations noted above, the following officers and
Trustees of the Trust hold various positions with American Skandia Investment Services, Incorporated ("ASISI"),
the Trust's Investment Manager, and its affiliates, including American Skandia Advisory Services, Inc. ("ASASI"),
American Skandia Life Assurance Corporation ("ASLAC"), American Skandia Fund Services, Inc. ("ASFS") American
Skandia Marketing, Incorporated ("ASM"), American Skandia Information Services and Technology Corporation
("ASIST") or American Skandia, Incorporated ("ASI"): Mr. Boronow also serves as Deputy Chief Executive Officer
and a Director of ASASI, ASI, ASLAC, ASISI, ASM and ASIST; Mr. Birch also serves as Senior Vice President and
Chief Operating Officer of ASISI, Senior Vice President of ASI and ASFS and as a Director of ASASI, and ASFS.
Mr. Davy also serves as a Director of ASASI and ASISI. Mr. Mazzaferro also serves as Executive Vice President,
Chief Financial Officer and a Director of ASI, ASLAC, ASM, ASIST and ASFS, as President, Chief Financial Officer
and a Director of ASISI and a Director of ASFS.

The Trustees and officers of the Trust who are affiliates of the Investment Manager do not receive
compensation directly from the Trust for serving in such capacities. However, those officers and Trustees of the
Trust who are affiliated with the Investment Manager may receive remuneration indirectly, as the Investment
Manager will receive fees from the Trust for the services it provides. Each of the other Trustees receives
annual and per meeting fees paid by the Trust plus expenses for each meeting of the Board and of shareholders
which he attends. Compensation received during the year ended December 31, 2000 by the Trustees who are not
affiliates of the Investment Manager was as follows:

Aggregate Compensation from Total Compensation from Registrant and
Name of Trustee ---------------------------------------- Fund Complex Paid to Trustee(1)
Registrant
------------------------------------------- -----------------------------------------

David E. A. Carson $65,800 $112,150
Julian A. Lerner 66,300 113,550
Thomas M. O'Brien 65,300(2) 113,050(2)
F. Don Schwartz 65,300 110,750

(1) As of the date of this Statement, the "Fund Complex" consisted of the Trust, American Skandia Advisor
Funds, Inc. ("ASAF"), and American Skandia Master Trust ("ASMT").
(2) Mr. O'Brien deferred payment of this compensation. The total value of all deferred compensation, as of
December 31, 2000, was $74,267 from the Registrant and $124,082 from the Registrant and Fund Complex.

The Trust does not offer pension or retirement benefits to its Trustees.

Under the terms of the Massachusetts General Corporation Law, the Trust may indemnify any person who was
or is a Trustee, officer or employee of the Trust to the maximum extent permitted by the Massachusetts General
Corporation Law; provided, however, that any such indemnification (unless ordered by a court) shall be made by
the Trust only as authorized in the specific case upon a determination that indemnification of such persons is
proper in the circumstances. Such determination shall be made (i) by the Board of Trustees, by a majority vote
of a quorum which consists of Trustees who are neither "interested persons" of the Trust as defined in Section
2(a)(19) of the 1940 Act (the "1940 Act"), nor parties to the proceeding, or (ii) if the required quorum is not
obtainable or if a quorum of such Trustees so directs by independent legal counsel in a written opinion. No
indemnification will be provided by the Trust to any Trustee or officer of the Trust for any liability to the
Trust or its shareholders to which he or she would otherwise be subject by reason of willful misfeasance, bad
faith, gross negligence or reckless disregard of duty.

Codes of Ethics. The Trust, its Investment Manager, its Distributor and the Sub-advisors for the
Portfolios of the Trust have adopted codes of ethics under rule 17j-1 of the 1940 Act. While these codes contain
provisions reasonably necessary to prevent personnel subject to the codes from engaging in unlawful conduct, they
do not prohibit investments in securities, including securities that may be purchased or held by the Trust's
Portfolios, by such personnel.

INVESTMENT ADVISORY AND OTHER SERVICES:

Investment Advisory Services: The Trust has entered into investment management agreements with the
Investment Manager (the "Management Agreements"). The Investment Manager furnishes each Portfolio with
investment advice and certain administrative services with respect to the applicable Portfolio's assets subject
to the supervision of the Board of Trustees and in conformity with the stated policies of the applicable
Portfolio. The Investment Manager has engaged the Sub-advisors noted on the cover of this Statement to conduct
the various investment programs of each Portfolio pursuant to separate sub-advisory agreements with the
Investment Manager.

Under the terms of the Management Agreements, the Investment Manager furnishes, at its expense, such
personnel as is required by each Portfolio for the proper conduct of its affairs and engages the Sub-advisors to
conduct the investment programs pursuant to the Investment Manager's obligations under the Management
Agreements. The Investment Manager, not the Trust, is responsible for the expenses of conducting the investment
programs. The Sub-advisor is responsible for the expenses of conducting the investment programs in relation to
the applicable Portfolio pursuant to agreements between the Investment Manager and each Sub-advisor. Each
Portfolio pays all of its other expenses, including but not limited to, brokerage commissions, legal, auditing,
taxes or governmental fees, the cost of preparing share certificates, custodian, depositary, transfer and
shareholder servicing agent costs, expenses of issue, sale, redemption and repurchase of shares, expenses of
registering and qualifying shares for sale, insurance premiums on property or personnel (including officers and
Trustees if available) of the Trust which inure to its benefit, expenses relating to Trustee and shareholder
meetings, the cost of preparing and distributing reports and notices to shareholders, the fees and other expenses
incurred by the Trust in connection with membership in investment company organizations and the cost of printing
copies of prospectuses and statements of additional information distributed to shareholders. Expenses incurred
by the Trust not directly attributable to any specific Portfolio or Portfolios are allocated on the basis of the
net assets of the respective Portfolios.

Under the terms of the Management Agreements, the Investment Manager is permitted to render services to
others. The Management Agreements provide that neither the Investment Manager nor its personnel shall be liable
for any error of judgment or mistake of law or for any act or omission in the administration or management of the
applicable Portfolios, except for willful misfeasance, bad faith or gross negligence in the performance of its or
their duties or by reason of reckless disregard of its or their obligations and duties under the Management
Agreements.

The Investment Management fees payable by each Portfolio to the Investment Manager are as follows. Investment
Management fees are payable monthly and are accrued daily for purposes of determining the net asset values of the
Portfolios.

AST Founders Passport Portfolio: An annual rate of 1.0% of the average daily net assets of the
Portfolio.

AST Scudder Japan Portfolio: An annual rate of 1.0% of the average daily net assets of the Portfolio.

AST AIM International Equity Portfolio: An annual rate of 1.0% of the average daily net assets of the
Portfolio not in excess of $75 million; plus .85% of the Portfolio's average daily net assets over $75 million.

AST Janus Overseas Growth Portfolio: An annual rate of 1.0% of the average daily net assets of the
Portfolio.

AST American Century International Growth Portfolio: An annual rate of 1.0% of the average daily net
assets of the Portfolio.

AST American Century International Growth Portfolio II: An annual rate of 1.0% of the average daily net
assets of the Portfolio.

AST MFS Global Equity Portfolio: An annual rate of 1.0% of the average daily net assets of the
Portfolio.

AST Janus Small-Cap Growth Portfolio: An annual rate of .90% of the average daily net assets of the
Portfolio.

AST Scudder Small-Cap Growth Portfolio: An annual rate of .95% of the portion of the average daily net
assets of the Portfolio not in excess of $1 billion; plus .90% of the portion of the net assets over $1 billion.

AST Federated Aggressive Growth Portfolio: An annual rate of .95% of the average daily net assets of
the Portfolio.

AST Goldman Sachs Small-Cap Value Portfolio: An annual rate of .95% of the average daily net assets of
the Portfolio.

AST Gabelli Small-Cap Value Portfolio: An annual rate of .90% of the average daily net assets of the
Portfolio.

AST Janus Mid-Cap Growth Portfolio: An annual rate of 1.0% of the average daily net assets of the
Portfolio.

AST Neuberger Berman Mid-Cap Growth Portfolio: An annual rate of .90% of the portion of the average
daily net assets of the Portfolio not in excess of $1 billion; plus .85% of the portion of the net assets over $1
billion. Prior to May 1, 1998, the Investment Manager had engaged Berger Associates, Inc. as Sub-advisor for the
Portfolio (formerly, the Berger Capital Growth Portfolio), for a total Investment Management fee of .75% of the
average daily net assets of the Portfolio.

AST Neuberger Berman Mid-Cap Value Portfolio: An annual rate of .90% of the portion of the average
daily net assets of the Portfolio not in excess of $1 billion; plus .85% of the portion of the net assets over $1
billion. Prior to May 1, 1998, the Investment Manager had engaged Federated Investment Counseling as Sub-advisor
for the Portfolio (formerly, the Federated Utility Income Portfolio), for a total Investment Management fee equal
to .75% of the first $50 million of the average daily net assets of the Portfolio; plus .60% of the Portfolio's
average daily net assets in excess of $50 million.

AST Alger All-Cap Growth Portfolio: An annual rate of .95% of the average daily net assets of the
Portfolio.

AST Gabelli All-Cap Value Fund: An annual rate of .95% of the average daily net assets of the Portfolio.

AST Kinetics Internet Portfolio: An annual rate of 1.0% of the average daily net assets of the Portfolio.

AST T. Rowe Price Natural Resources Portfolio: An annual rate of .90% of the average daily net assets
of the Portfolio.

AST Alliance Growth Portfolio: An annual rate of .90% of the portion of the average daily net assets of
the Portfolio not in excess of $1 billion; plus .85% of the portion of the net assets over $1 billion. Prior to
January 1, 1999, the Investment Manager had engaged Robertson, Stephens & Company Investment Management, L.P. as
Sub-advisor for the Portfolio, for a total Investment Management fee of 1.0% of the average daily net assets of
the Portfolio.

AST MFS Growth Portfolio: An annual rate of .90% of the average daily net assets of the Portfolio.

AST Marsico Capital Growth Portfolio: An annual rate of .90% of the average daily net assets of the
Portfolio.

AST JanCap Growth Portfolio: An annual rate of .90% of the average daily net assets of the Portfolio.

AST Janus Strategic Value Portfolio: An annual rate of 1.0% of the average daily net assets of the
Portfolio.

AST Alliance/Bernstein Growth + Value Portfolio: An annual rate of .90% of the average daily net assets
of the Portfolio.

AST Sanford Bernstein Core Value Portfolio: An annual rate of .75% of the average daily net assets of
the Portfolio.

AST Cohen & Steers Realty Portfolio: An annual rate of 1.0% of the average daily net assets of the
Portfolio.

AST Sanford Bernstein Managed Index 500 Portfolio: An annual rate of .60% of the average daily net
assets of the Portfolio.

AST American Century Income & Growth Portfolio: An annual rate of .75% of the average daily net assets
of the Portfolio.

AST Alliance Growth and Income Portfolio: An annual rate of .75% of the average daily net assets of the
Portfolio.

AST MFS Growth with Income Portfolio: An annual rate of .90% of the average daily net assets of the
Portfolio.

AST INVESCO Equity Income Portfolio: An annual rate of .75% of the average daily net assets of the
Portfolio.

AST AIM Balanced Portfolio: An annual rate of .75% of the average daily net assets of the Portfolio not
in excess of $300 million; plus .70% of the Portfolio's average daily net assets in excess of $300 million.

AST American Century Strategic Balanced Portfolio: An annual rate of .85% of the average daily net
assets of the Portfolio.

AST T. Rowe Price Asset Allocation Portfolio: An annual rate of .85% of the average daily net assets of
the Portfolio.

AST T. Rowe Price Global Bond Portfolio: An annual rate of .80% of the average daily net assets of the
Portfolio.

AST Federated High Yield Portfolio: An annual rate of .75% of the average daily net assets of the
Portfolio.

AST Lord Abbett Bond-Debenture Portfolio: An annual rate of .80% of the average daily net assets of the
Portfolio.

AST PIMCO Total Return Bond Portfolio: An annual rate of .65% of the average daily net assets of the
Portfolio.

AST PIMCO Limited Maturity Bond Portfolio: An annual rate of .65% of the average daily net assets of
the Portfolio.

AST Money Market Portfolio: An annual rate of .50% of the average daily net assets of the Portfolio.
The Investment Manager has voluntarily agreed to waive a portion of its fee equal to .05% of the average daily
net assets of the Portfolio. The Investment Manager may terminate this voluntary agreement at any time after
April 30, 2002.

The Investment Manager has voluntarily agreed to waive a portion of its fee equal to .05% of the average
daily net assets in excess of $1 billion of the following Portfolios: AST Janus Overseas Growth Portfolio, AST
Janus Small-Cap Growth Portfolio, AST Marsico Capital Growth Portfolio, AST JanCap Growth Portfolio, AST Alliance
Growth and Income Portfolio, AST INVESCO Equity Income Portfolio, and AST PIMCO Total Return Bond Portfolio. The
Investment Manager may terminate these voluntary agreements at any time after April 30, 2002.

The investment management fee paid for each of the past three fiscal years by each Portfolio that was publicly
offered prior to January 2001 was as follows:

Investment Management Fees
-------------------------- ------------------------- ---------------------------
1998 1999 2000
-------------------------- ------------------------- ---------------------------
AST Founders Passport 1,219,424 1,222,849 3,269,601
AST Scudder Japan 0 0 7,223
AST AIM International Equity 4,130,785 4,695,735 6,275,789
AST Janus Overseas Growth 4,344,867 8,284,493 15,376,284
AST American Century International Growth 563,488 992,423 2,629,272
AST American Century International Growth II 4,652,136 4,492,741 4,470,031
AST MFS Global Equity 0 1,645 94,939
AST Janus Small-Cap Growth 2,287,914 4,980,643 9,715,081
AST Scudder Small-Cap Growth 0 3,958,710 8,982,531
AST Federated Aggressive Growth 0 0 1,028
AST Goldman Sachs Small-Cap Value 201,415 531,717 1,172,260
AST Gabelli Small-Cap Value 2,424,142 2,529,270 2,644,058
AST Janus Mid-Cap Growth 0 0 314,191
AST Neuberger Berman Mid-Cap Growth 1,781,639 2,440,843 6,409,535
AST Neuberger Berman Mid-Cap Value 1,715,060 4,969,319 6,612,407
AST Alger All-Cap Growth 0 0 1,830,869
AST Gabelli All-Cap Value 0 0 11,564
AST Kinetics Internet 0 0 1,589
AST T. Rowe Price Natural Resources 869,131 847,431 1,035,364
AST Alliance Growth 2,694,595 2,537,033 4,102,734
AST MFS Growth 0 3,675 371,052
AST Marsico Capital Growth 2,445,668 9,436,188 16,163,520
AST JanCap Growth 18,383,344 36,922,583 49,558,070
AST Janus Strategic Value 0 0 5,278
AST Cohen & Steers Realty 216,821 494,430 933,272
AST Sanford Bernstein Managed Index 500 765,065 2,856,541 4,234,284
AST American Century Income & Growth 1,164,962 1,854,825 3,480,798
AST Alliance Growth and Income 7,877,722 9,931,237 11,031,609
AST MFS Growth with Income 0 6,155 334,180
AST INVESCO Equity Income 5,340,931 7,204,789 8,434,414
AST AIM Balanced 2,860,309 3,145,086 4,278,297
AST American Century Strategic Balanced 431,573 1,399,707 1,881,967
AST T. Rowe Price Asset Allocation 2,280,871 3,419,374 3,598,294
AST T. Rowe Price Global Bond 1,125,770 1,178,024 1,044,696
AST Federated High Yield 4,021,190 4,761,157 4,178,156
AST Lord Abbett Bond-Debenture 0 0 2,471
AST PIMCO Total Return Bond 4,772,121 6,473,997 7,223,767
AST PIMCO Limited Maturity Bond 2,060,437 2,494,789 2,530,829
AST Money Market 4,190,913 7,174,127 9,088,801

The sub-advisory fee paid by the Investment Manager to the Sub-advisors for each such Portfolio for each of the
past three fiscal years was as follows:

Sub-advisory Fees
-------------------------- -------------------------- --------------------------
1998 1999 2000
-------------------------- -------------------------- --------------------------
AST Founders Passport 709,671 711,424 1,795,026
AST Scudder Japan 0 0 3,250
AST AIM International Equity(1) 2,557,327 2,876,419 3,335,134
AST Janus Overseas Growth 2,646,039 4,692,246 8,317,803
AST American Century International Growth 394,441 688,553 1,303,908
AST American Century International Growth 2,221,182 2,133,458 2,011,514
II(2)
AST MFS Global Equity 0 699 58,018
AST Janus Small-Cap Growth(3) 1,510,669 2,427,349 4,456,437
AST Scudder Small-Cap Growth 0 1,842,324 4,002,862
AST Federated Aggressive Growth 0 0 541
AST Goldman Sachs Small-Cap Value(4) 105,944 279,851 584,790
AST Gabelli Small-Cap Value(5) 1,366,746 1,405,150 1,175,137
AST Janus Mid-Cap Growth 0 0 259,208
AST Neuberger Berman Mid-Cap Growth(6) 894,756 1,134,819 2,898,682
AST Neuberger Berman Mid-Cap Value(7) 915,253 2,754,647 3,659,113
AST Alger All-Cap Growth 0 0 772,603
AST Gabelli All-Cap Value 0 0 30,198
AST Kinetics Internet 0 0 636
AST T. Rowe Price Natural Resources 482,850 470,795 575,202
AST Alliance Growth(8) 1,547,298 985,165 1,756,312
AST MFS Growth 0 1,633 164,912
AST Marsico Capital Growth 1,222,834 4,718,094 8,292,452
AST JanCap Growth 10,017,653 19,832,544 23,083,815
AST Janus Strategic Value 0 0 2,903
AST Cohen & Steers Realty 130,090 296,658 545,142
AST Sanford Bernstein Managed Index 500(9) 216,767 738,621 823,159
AST American Century Income & Growth(10) 693,921 1,062,132 1,728,399
AST Alliance Growth and Income(11) 4,113,786 4,991,959 4,109,231
AST MFS Growth with Income 0 3,180 148,945
AST INVESCO Equity Income 2,592,435 3,462,235 3,807,575
AST AIM Balanced(12) 1,580,154 1,722,543 2,251,648
AST American Century Strategic Balanced 252,933 766,021 818,414
AST T. Rowe Price Asset Allocation 758,344 1,093,198 1,145,822
AST T. Rowe Price Global Bond 562,885 589,012 522,348
AST Federated High Yield 1,457,896 1,704,552 1,510,219
AST Lord Abbett Bond-Debenture 0 0 1,081
AST PIMCO Total Return Bond 1,910,431 2,564,999 2,876,139
AST PIMCO Limited Maturity Bond 867,476 1,034,534 995,826
AST Money Market 1,113,545 1,492,378 1,209,010

(1) For fiscal year 1998, the entire fee noted was paid to Putnam Investment Management, Inc. ("Putnam"), the
prior Sub-advisor for the Portfolio. For fiscal year 1999, $921,003 was paid to Putnam and $1,955,416 was paid
to A I M Capital Management, Inc. ("AIM"). For fiscal year 2000, the entire fee noted above was paid to AIM.
(2) For fiscal years 1998 and 1999, the entire fee noted above was paid to T. Rowe Price International, Inc. ("T.
Rowe Price"), the prior Sub-advisor for the Portfolio. For fiscal year 2000 $725,288 was paid to T. Rowe Price
and $1,286,226 was paid to American Century Investment Management, Inc.
(3) For fiscal year 1998, the entire fee noted above was paid to Founders Asset Management LLC, the prior
Sub-advisor for the Portfolio. For fiscal years 1999 and 2000, the entire fee noted was paid to Janus Capital
Corporation.
(4) For the fiscal years 1998, 1999 and 2000, the entire fee noted above was paid to Lord, Abbett & Co. ("Lord
Abbett"), the prior Sub-advisor for the Portfolio.
(5) For fiscal years 1998 and 1999, the entire fee noted above was paid to T. Rowe Price Associates, Inc. ("T.
Rowe Price"), the prior Sub-advisor for the Portfolio. For fiscal year 2000, $968,668 was paid to T. Rowe Price
and $206,469 was paid to GAMCO Investors, Inc.
(6) For fiscal year 1998, $313,389 was paid to Berger Associates, Inc., the prior Sub-advisor for the Portfolio,
and $581,367 was paid to Neuberger Berman Management Inc. ("Neuberger Berman"), the current Sub-advisor for the
Portfolio. For fiscal years 1999 and 2000, the entire fee noted was paid to Neuberger Berman.
(7) For fiscal year 1998, $186,645 was paid to Federated Investment Counseling, the prior Sub-advisor for the
Portfolio, and $728,608 was paid to Neuberger Berman Management Inc. ("Neuberger Berman"), the current
Sub-advisor for the Portfolio. For fiscal years 1999 and 2000, the entire fee noted was paid to Neuberger Berman.
(8) For fiscal year 1998, $1,542,651 was paid to Robertson, Stephens & Company Investment Management, L.P.
and $4,657 was paid to OppenheimerFunds, Inc. ("Oppenheimer"). For fiscal year 1999, the entire fee was paid to
Oppenheimer, the prior Sub-advisor for the Portfolio. For fiscal year 2000, $469,876 was paid to Oppenheimer and
$1,286,436 was paid to Alliance Capital Management, Inc.
(9) For fiscal year 1999, the entire fee noted above was paid to Bankers Trust Company ("Bankers Trust"), the
prior Sub-advisor for the Portfolio. For fiscal year 2000, $289,101 was paid to Banker Trust and $534,058 was
paid to Sanford C. Bernstein & Co. LLC.
(10) For fiscal year 1998, the entire fee noted above was paid to Putnam, Investment Management, Inc. ("Putnam"),
the prior Sub-advisor for the Portfolio. For fiscal year 1999, $297,067 was paid to Putnam and $765,065 was paid
to American Century Investment Management, Inc. ("American Century"), the current the Sub-advisor for the
Portfolio. For fiscal year 2000, the entire fee noted was paid to American Century.
(11) For the fiscal years 1998 and 1999, the entire fee noted above was paid to Lord, Abbett & Co. ("Lord
Abbett"), the prior Sub-advisor for the Portfolio. For fiscal year 2000, $1,525,780 was paid to Lord Abbett and
$2,583,451 was paid to Alliance Capital Management, Inc.
(12) For fiscal year 1998, the entire fee noted above was paid to Putnam, Investment Management, Inc. ("Putnam"),
the prior Sub-advisor for the Portfolio. For fiscal year 1999, $559,542 was paid to Putnam and $1,163,001 was
paid to A I M Capital Management, Inc. ("AIM"), the current the Sub-advisor for the Portfolio. For fiscal year
2000, the entire fee noted was paid to AIM.

The Investment Manager has agreed by the terms of the Management Agreements for the following Portfolios of the
Trust to reimburse the Portfolio for any fiscal year in order to prevent Portfolio expenses (exclusive of taxes,
interest, brokerage commissions and extraordinary expenses, determined by the Trust or the Investment Manager,
but inclusive of the management fee) from exceeding a specified percentage of the Portfolio's average daily net
assets, as follows:

AST Founders Passport Portfolio: 1.75%

AST AIM International Equity Portfolio: 1.75%

AST Janus Small-Cap Growth Portfolio: 1.30%

AST T. Rowe Price Natural Resources Portfolio: 1.35%

AST Alliance Growth Portfolio: 1.45%

AST JanCap Growth Portfolio: 1.35%. Commencing September 4, 1996, the Investment Manager has
voluntarily agreed to reimburse certain operating expenses in excess of 1.33% for the AST JanCap Growth
Portfolio. This voluntary agreement may be terminated by the Investment Manager at any time.

AST Alliance Growth and Income Portfolio: 1.25%

AST INVESCO Equity Income Portfolio: 1.20%

AST AIM Balanced Portfolio: 1.25%

AST T. Rowe Price Asset Allocation Portfolio: 1.25%

AST T. Rowe Price Global Bond Portfolio: 1.75%

AST Federated High Yield Portfolio: 1.15%

AST PIMCO Total Return Bond Portfolio: 1.05%

AST PIMCO Limited Maturity Bond Portfolio: 1.05%

AST Money Market Portfolio: .65%. The Investment Manager has voluntarily agreed to reimburse certain
operating expenses in excess of .60% for the AST Money Market Portfolio. This voluntary agreement may be
terminated by the Investment Manager at any time after April 30, 2002.

The Investment Manager has also voluntarily agreed to reimburse the other Portfolios of the Trust for
any fiscal year in order to prevent Portfolio expenses (exclusive of taxes, interest, brokerage commissions and
extraordinary expenses, determined by the Trust or the Investment Manager, but inclusive of the management fee)
from exceeding a specified percentage of each Portfolio's average daily net assets, as follows:

AST Scudder Japan Portfolio: 1.75%

AST Janus Overseas Growth Portfolio: 1.75%

AST American Century International Growth Portfolio: 1.75%

AST American Century International Growth Portfolio II: 1.75%

AST MFS Global Equity Portfolio: 1.75%

AST Scudder Small-Cap Growth Portfolio: 1.35%

AST Federated Aggressive Growth Portfolio: 1.35%

AST Goldman Sachs Small-Cap Value Portfolio: 1.35%

AST Gabelli Small-Cap Value Portfolio: 1.30%

AST Janus Mid-Cap Growth Portfolio: 1.35%

AST Neuberger Berman Mid-Cap Value Portfolio: 1.25%

AST Neuberger Berman Mid-Cap Growth Portfolio: 1.25%

AST Alger All-Cap Growth Portfolio: 1.45%

AST Gabelli All-Cap Value Portfolio: 1.45%

AST Kinetics Internet Portfolio: 1.40%

AST Marsico Capital Growth Portfolio: 1.35%

AST MFS Growth Portfolio: 1.35%

AST American Century Income & Growth Portfolio: 1.25%

AST MFS Growth with Income Portfolio: 1.35%

AST Janus Strategic Value Portfolio: 1.40%

AST Alliance/Bernstein Growth + Value Portfolio: 1.35%

AST Sanford Bernstein Core Value Portfolio: 1.25%

AST Sanford Bernstein Managed Index 500 Portfolio: .80%

AST Cohen & Steers Realty Portfolio: 1.45%

AST American Century Strategic Balanced Portfolio: 1.25%

AST Lord Abbett Bond-Debenture Portfolio: 1.20%

Except with respect to the AST MFS Global Equity Portfolio, for which the Investment Manager has
committed to keep the above limitation in effect until at least April 30, 2002, the Investment Manager may
terminate the above voluntary agreements at any time. Voluntary payments of Portfolio expenses by the Investment
Manager are subject to reimbursement by the Portfolio at the Investment Manager's discretion within the two year
period following such payment to the extent permissible under applicable law and provided that the Portfolio is
able to effect such reimbursement and remain in compliance with applicable expense limitations.

Each Management Agreement will continue in effect from year to year, provided it is approved, at least
annually, in the manner stipulated in the 1940 Act. This requires that each Management Agreement and any renewal
be approved by a vote of the majority of the Trustees who are not parties thereto or interested persons of any
such party, cast in person at a meeting specifically called for the purpose of voting on such approval. Each
Management Agreement may be terminated without penalty on sixty days' written notice by vote of a majority of the
Board of Trustees or by the Investment Manager, or by holders of a majority of the applicable Portfolio's
outstanding shares, and will automatically terminate in the event of its "assignment" as that term is defined in
the 1940 Act.

Sub-advisory Agreements: The Investment Manager pays each Sub-advisor for the performance of
sub-advisory services out of its Investment Management fee and at no additional cost to any Portfolio. The fee
paid to the Sub-advisors differs from Portfolio to Portfolio, reflecting the objectives, policies and
restrictions of each Portfolio and the nature of each Sub-advisory Agreement. Each Sub-advisor's fee is accrued
daily for purposes of determining the amount payable to the Sub-advisor. The fees payable to the present
Sub-advisors are as follows:

Founders Asset Management LLC for the AST Founders Passport Portfolio: An annual rate of .60% of the
portion of the average net assets of the Portfolio not in excess of $100 million; plus .50% of the portion of the
average net assets of the Portfolio in excess of $100 million.

Zurich Scudder Investments, Inc. for the AST Scudder Japan Portfolio: An annual rate of .45% of the
portion of the average daily net assets not in excess of $500 million; plus .40% of the portion of the net assets
over $500 million but not in excess of $1 billion; plus .35% of the portion of the net assets over $1 billion.

A I M Capital Management, Inc. for the AST AIM International Equity Portfolio: An annual rate equal to
the following percentages of the combined average daily net assets of the Portfolio and the series of American
Skandia Advisor Funds, Inc. that is managed by the Sub-advisor and identified by the Sub-advisor and the
Investment Manager as being similar to the Portfolio : .55% of the portion of the combined average daily net
assets not in excess of $75 million; plus .45% of the portion in excess of $75 million.

Janus Capital Corporation for the AST Janus Overseas Growth Portfolio: An annual rate of .65% of the
portion of the average daily net assets of the Portfolio not in excess of $100 million; plus .60% of the portion
of the net assets over $100 million but not in excess of $500 million; and .50% of the portion of the net assets
over $500 million.

American Century Investment Management, Inc. for the AST American Century International Growth Portfolio
and the AST American Century International Growth Portfolio II: Because of the large amount of assets being
sub-advised for the Investment Manager by American Century Investment Management, Inc., the Investment Manager
was able to negotiate a reduction to American Century's standard fee schedule. Such reduced fee schedule is an
annual rate of .45% of the combined average daily net assets of the Portfolios and the series of American Skandia
Advisor Funds, Inc. that is managed by the Sub-advisor and identified by the Sub-advisor and the Investment
Manager as being similar to the Portfolios. Prior to May 1, 2000, the Investment Manager had engaged T. Rowe
Price International, Inc. as Sub-advisor for the AST American Century International Growth Portfolio II (formerly
the AST T. Rowe Price International Equity Portfolio), for a total Sub-advisory fee of .75% of the portion of the
average daily net assets of the Portfolio not in excess of $20 million; plus .60% of the portion of the net
assets over $20 million but not in excess of $50 million; plus .50% of the portion of the net assets over $50
million.

Massachusetts Financial Services for the AST MFS Global Equity Portfolio: An annual rate of .425% of
average daily net assets of the Portfolio.

Janus Capital Corporation for the AST Janus Small-Cap Growth Portfolio: An annual rate of .50% of the
portion of the average daily net assets of the Portfolio not in excess of $100 million; plus .45% of the portion
of the net assets over $100 million but not in excess of $500 million; plus .40% of the portion of the net assets
over $500 million but not in excess of $1 billion; plus .35% of the portion of the net assets over $1 billion.
Commencing January 1, 1999, the Sub-advisor has voluntarily agreed to waive a portion of its fee equal to .05% of
the portions of the Portfolio's average daily net assets over $400 million but not in excess of $500 million and
over $900 million but not in excess of $1 billion. The Sub-advisor may terminate this voluntary agreement at any
time. Prior to January 1, 1999, the Investment Manager had engaged Founders Asset Management LLC as Sub-advisor
for the Portfolio (formerly the Founders Capital Appreciation Portfolio), for a total Sub-advisory fee of .65% of
the portion of the average daily net assets of the Portfolio not in excess of $75 million; plus .60% of the
portion of the net assets over $75 million but not in excess of $150 million; plus .55% of the portion of the net
assets over $150 million.

Zurich Scudder Investments, Inc. for the AST Scudder Small-Cap Growth Portfolio: An annual rate of .50%
of the average daily net assets of the Portfolio not in excess of $100 million; plus .45% of the portion of the
net assets over $100 million but not in excess of $400 million; plus .40% of the portion of the net assets over
$400 million but not in excess of $900 million; plus .35% of the portion of the net assets over $900 million.

Federated Investment Counseling for the AST Federated Aggressive Growth Portfolio: An annual rate of
.50% of the portion of the average daily net assets not in excess of $100 million; plus .45% of the portion of
the net assets over $100 million but not in excess of $400 million; plus .40% of the portion of the net assets
over $400 million but not in excess of $900 million; plus .35% of the portion of the net assets over $900 million.

Goldman Sachs Asset Management for the AST Goldman Sachs Small-Cap Value Portfolio: An annual rate of
.50% of the average daily net assets of the Portfolio.

GAMCO Investors, Inc. for the AST Gabelli Small-Cap Value Portfolio: An annual rate equal to the
following percentages of the combined average daily net assets of the Portfolio and the series of American
Skandia Advisor Funds, Inc. that is managed by the Sub-advisor and identified by the Sub-advisor and the
Investment Manager as being similar to the Portfolio: .40% of the portion of the combined average daily net
assets not in excess of $1 billion; plus .30% of the portion of the net assets over $1 billion. Prior to October
13, 2000, the Investment Manager had engaged T. Rowe Price Associates, Inc. as Sub-advisor for the Portfolio
(formerly the AST T. Rowe Price Small Company Value Portfolio), for a total Sub-advisory fee of .60% of the
portion of the average daily net assets of the Portfolio not in excess of $20 million; plus .50% of the portion
of the net assets over $20 million but not in excess of $50 million. When the net assets of the Portfolio
exceeded $50 million, the fee was an annual rate of .50% of the average daily net assets of the Portfolio.

Janus Capital Corporation for the AST Janus Mid-Cap Growth Portfolio: An annual rate equal to the
following percentages of the combined average daily net assets of the Portfolio and the series of American
Skandia Advisor Funds, Inc. that is managed by the Sub-advisor and identified by the Sub-advisor and the
Investment Manager as being similar to the Portfolio: .55% of the portion of the combined average daily net
assets not in excess of $100 million; plus .50% of the portion of the net assets over $100 million but not in
excess of $500 million; plus .45% of the portion of the net assets over $500 million but not in excess of $2
billion; plus .40% of the portion of the net assets over $2 billion but not in excess of $5 billion; plus .375%
of the portion of the net assets over $5 billion but not in excess of $10 billion; plus .35% of the portion of
the net assets over $10 billion.

Neuberger Berman Management Inc. for the AST Neuberger Berman Mid-Cap Growth Portfolio: An annual rate
of .45% of the portion of the average daily net assets of the Portfolio not in excess of $100 million; plus .40%
of the portion of the net assets over $100 million. Prior to May 1, 1998, the Investment Manager had engaged
Berger Associates, Inc. as Sub-advisor for the Portfolio (formerly, the Berger Capital Growth Portfolio), for a
total Sub-advisory fee of .55% of the average daily net assets of the Portfolio not in excess of $25 million;
plus .50% of the portion of average daily net assets over $25 million but not in excess of $50 million; plus .40%
of the portion of the average daily net assets over $50 million.

Neuberger Berman Management Inc. for the AST Neuberger Berman Mid-Cap Value Portfolio: An annual rate
of .50% of the portion of the average daily net assets of the Portfolio not in excess of $750 million; plus .45%
of the portion of the net assets over $750 million but not in excess of $1 billion; plus .40% of the portion in
excess of $1 billion. Prior to May 1, 1998, the Investment Manager had engaged Federated Investment Counseling
as Sub-advisor for the Portfolio (formerly, the Federated Utility Income Portfolio), for a total Sub-advisory fee
of .50% of the portion of the average daily net assets of the Portfolio not in excess $25 million; plus .35% of
the portion in excess of $25 million but not in excess of $50 million; plus .25% of the portion in excess of $50
million.

Commencing April 1, 2001 to December 31, 2001, Neuberger Berman Management, Inc. has voluntarily agreed
to waive a portion of its fee so that the following fee schedule based on the combined average daily net assets
of the AST Neuberger Berman Mid-Cap Growth Portfolio, the AST Neuberger Berman Mid-Cap Value Portfolio (together,
the "Portfolios"), and the series of American Skandia Advisor Funds, Inc. that are managed by the Sub-advisor and
identified by the Sub-advisor and Investment Manager as being similar to the Portfolios is in effect: .40% of
the portion of the combined average daily net assets not in excess of $2 billion; plus .35% of the portion over
$2 billion. Commencing January 1, 2002, the following fee schedule will be in effect: .40% of the portion of the
combined average daily net assets not in excess of $1 billion; plus .35% of the portion over $1 billion.

Fred Alger Management, Inc. for the AST Alger All-Cap Growth Portfolio: An annual rate equal to the
following percentages of the combined average daily net assets of all Portfolios of the Trust and all series of
American Skandia Advisor Funds, Inc. that are managed by the Sub-advisor: .40% of the portion of the combined
average daily net assets not in excess of $500 million; plus .35% of the portion of the net assets over $500
million but not in excess of $1 billion; plus .30% of the portion of the net assets over $1 billion but not in
excess of $1.5 billion; plus .25% of the portion of the net assets over $1.5 billion

GAMCO Investors, Inc. for the AST Gabelli All-Cap Value Portfolio: An annual rate equal to the
following percentages of the combined average daily net assets of the Portfolio and the series of American
Skandia Advisor Funds, Inc. that is managed by the Sub-advisor and identified by the Sub-advisor and the
Investment Manager as being similar to the Portfolio: .50% of the portion of the combined average daily net
assets not in excess of $500 million; plus .40% of the portion of the net assets over $500 million. Commencing
October 23, 2000, GAMCO Investors, Inc. has voluntarily agreed to waive a portion of its fee equal to the
following percentages of the combined average daily net assets of the Portfolio and the corresponding series of
American Skandia Advisor Funds, Inc. referenced above: .10% of the portion of the combined average daily net
assets not in excess of $500 million, .05% of the combined assets over $500 million but not in excess of $1
billion, and .10% of the combined assets over $1 billion. The Sub-advisor may terminate this voluntary agreement
at any time.

Kinetics Asset Management, Inc. for the AST Kinetics Internet Portfolio: An annual rate of .40% of the
portion of the average daily net assets of the Portfolio not in excess of $250 million; plus .35% of the portion
over $250 million but not in excess of $500 million; plus .30% of the portion over $500 million but not in excess
of $1.2 billion; plus .25% of the portion of the net assets over $1.2 billion.

T. Rowe Price Associates, Inc. for the AST T. Rowe Price Natural Resources Portfolio: An annual rate of
.60% of the portion of the average daily net assets of the Portfolio not in excess of $20 million; plus .50% of
the portion of the net assets over $20 million but not in excess of $50 million. When the net assets of the
Portfolio exceed $50 million, the fee is an annual rate of .50% of the average daily net assets of the
Portfolio.

Alliance Capital Management L.P. for the AST Alliance Growth Portfolio: An annual rate equal to .40% of
the combined average daily net assets of the Portfolio and the series of American Skandia Advisor Funds, Inc.
that is managed by the Sub-advisor and identified by the Sub-advisor and the Investment Manager as being similar
to the Portfolio. Between December 31, 1998 and April 30, 2000 the Investment Manager had engaged
OppenheimerFunds, Inc. as Sub-advisor for the Portfolio at a total Sub-advisory fee of .35% of the portion of the
average daily net assets of the Portfolio not in excess of $500 million; plus .30% of the portion of the net
assets over $500 million but not in excess of $1 billion; plus .25% of the portion of the net assets over $1
billion. Prior to January 1, 1999, the Investment Manager had engaged Robertson, Stephens & Company Investment
Management, L.P. as Sub-advisor for the Portfolio, at a total Sub-advisory fee of .60% of the portion of the
average daily net assets of the Portfolio not in excess of $200 million; plus .50% of the portion of the net
assets over $200 million.

Massachusetts Financial Services Company for the AST MFS Growth Portfolio: An annual rate equal to the
following percentages of the combined average daily net assets of the Portfolio, the AST MFS Growth with Income
Portfolio and the domestic equity series of American Skandia Advisor Funds, Inc. that is managed by Massachusetts
Financial Services Company: .40% of the portion of the combined average daily net assets not in excess of $300
million; plus .375% of the portion over $300 million but not in excess of $600 million; plus .35% of the portion
over $600 million but not in excess of $900 million; plus .325% of the portion over $900 million, but not over
$1.5 billion; plus .25% of the portion in excess of $1.5 billion.

Marsico Capital Management, LLC for the AST Marsico Capital Growth Portfolio: An annual rate of 0.45%
of the average daily net assets of the Portfolio.

Janus Capital Corporation for the AST JanCap Growth Portfolio: An annual rate of .60% of the portion of
the average daily net assets of the Portfolio not in excess of $100 million; plus .55% of the portion over $100
million but not in excess of $1 billion; plus .50% of the portion over $1 billion. Commencing March 1, 2000,
Janus Capital Corporation, the Sub-advisor for the AST JanCap Growth Portfolio, has voluntarily agreed to the
following revised fee schedule based on the combined average daily net assets of the Portfolio and the ASMT Janus
Capital Growth Portfolio of American Skandia Master Trust: .55% of the portion of the combined average daily net
assets not in excess of $100 million; plus .50% of the portion over $100 million but not in excess of $500
million; plus .45% of the portion over $500 million but not in excess of $2 billion; plus .40% of the portion
over $2 billion but not in excess of $5 billion; plus.375% of the portion over $5 billion but not in excess of
$10 billion; plus .35% of the portion in excess of $10 billion.

Janus Capital Corporation for the AST Janus Strategic Value Portfolio: An annual rate of .55% of the
portion of the average daily net assets of the Portfolio not in excess of $100 million; plus .50% of the portion
of the net assets over $100 million but not in excess of $500 million; plus .45% of the portion of the net assets
over $500 million but not in excess of $2 billion; plus .40% of the portion of the net assets over $2 billion but
not in excess of $5 billion; plus .375% of the portion of the net assets over $5 billion but not in excess of $10
billion; plus .35% of the portion of the net assets over $10 billion.

Alliance Capital Management L.P. for the growth portion of the AST Alliance/Bernstein Growth + Value
Portfolio: An annual rate equal to .40% of the combined average daily net assets of the Growth Portfolio of the
Portfolio and the Growth Portfolio of the series of American Skandia Advisor Funds, Inc. that is managed by the
Sub-Adviser and identified by the Sub-Adviser and the Investment Manager as being similar to the Portfolio
(specifically, the Growth portion of the ASAF Alliance/Bernstein Growth + Value Fund).

Sanford C. Bernstein & Co., LLC for the value portion of the AST Alliance/Bernstein Growth + Value
Portfolio: An annual rate equal to .40% of the combined average daily net assets of the Value Portfolio of the
Portfolio and the Value Portfolio of the series of American Skandia Advisor Funds, Inc. that is managed by the
Sub-Adviser and identified by the Sub-Adviser and the Investment Manager as being similar to the Portfolio
(specifically, the Value portion of the ASAF Alliance/Bernstein Growth + Value Fund)

Sanford C. Bernstein & Co., LLC for the AST Sanford Bernstein Core Value Portfolio: An annual rate
equal to the following percentages of the combined average daily net assets of the Portfolio and the series of
American Skandia Advisor Funds, Inc. that is managed by the Sub-Advisor and identified by the Sub-advisor and the
Investment Manager as being similar to the Portfolio: .25% of the portion of the combined average daily net
assets not in excess of $500 million; plus .20% of the portion over $500 million.

Cohen & Steers Capital Management, Inc. for the AST Cohen & Steers Realty Portfolio: An annual rate of
.60% of the portion of the average daily net assets of the Portfolio not in excess of $100 million; plus .40% of
the portion of the net assets over $100 million but not in excess of $250 million; plus .30% of the portion of
the net assets over $250 million.

Sanford C. Bernstein & Co., LLC for the AST Sanford Bernstein Managed Index 500 Portfolio: An annual
rate equal to the following percentages of the combined average daily net assets of the Portfolio and the series
of American Skandia Advisor Funds, Inc. that is managed by the Sub-advisor and identified by the Sub-advisor and
the Investment Manager as being similar to the Portfolio: .1533% of the portion of the combined average daily net
assets not in excess of $300 million; plus .10% of the portion of the net assets over $300 million.
Notwithstanding the foregoing, the following annual rate will apply for each day that the combined average daily
net assets are not in excess of $300 million: .40% of the first $10 million of the combined average daily net
assets; plus .30% of the next $40 million of the combined average daily net assets; plus .20% of the next $50
million of the combined average daily net assets; plus .10% of the next $200 million of the combined average
daily net assets. Prior to May 1, 2000, the Investment Manager had engaged Bankers Trust Company as Sub-advisor
for the Portfolio at a total Sub-advisory fee equal to the following percentages of the combined average daily
net assets of the Portfolio and the series of American Skandia Advisor Funds, Inc. that is managed by the
Sub-advisor and identified by the Sub-advisor and the Investment Manager as being similar to the Portfolio: .17%
of the portion of the combined average daily net assets not in excess of $300 million; plus .13% of the portion
of the net assets over $300 million but not in excess of $1 billion; plus .08% of the net assets over $1 billion.

American Century Investment Management, Inc. for the AST American Century Income & Growth Portfolio:
Because of the large amount of assets being sub-advised for the Investment Manager by American Century Investment
Management, Inc., the Investment Manager was able to negotiate a reduction to American Century's standard fee
schedule. Such reduced fee schedule is an annual rate of: .40% of the portion of the average daily net assets of
the Portfolio not in excess of $100 million; plus .35% of the portion of the net assets over $100 million but not
in excess of $500 million; plus .30% of the portion of the net assets over $500 million.

Alliance Capital Management L.P. for the AST Alliance Growth and Income Portfolio: An annual rate equal
to the following percentages of the combined average daily net assets of the Portfolio and the series of American
Skandia Advisor Funds, Inc. that is managed by the Sub-advisor and identified by the Sub-advisor and the
Investment Manager as being similar to the Portfolio: .30% of the portion of the combined average daily net
assets not in excess of $1 billion; plus .25% of the portion over $1 billion but not in excess of $1.5 billion;
plus .20% of the portion in excess of $1.5 billion. Prior to May 1, 2000 the Investment Manager had engaged
Lord, Abbett & Co. as Sub-advisor for the Portfolio at a total Sub-advisory fee of .50% of the portion of the
average daily net assets of the Portfolio not in excess of $200 million; plus .40% of the portion over $200
million but not in excess of $500 million; plus .375% of the portion over $500 million but not in excess of $700
million; plus .35% of the portion over $700 million but not in excess of $900 million; plus .30% of the portion
in excess of $900 million.

Massachusetts Financial Services Company for the AST MFS Growth with Income Portfolio: An annual rate
equal to the following percentages of the combined average daily net assets of the Portfolio, the AST MFS Growth
Portfolio and the domestic equity series of American Skandia Advisor Funds, Inc. that is managed by Massachusetts
Financial Services Company: .40% of the portion of the combined average daily net assets not in excess of $300
million; plus .375% of the portion over $300 million but not in excess of $600 million; plus .35% of the portion
over $600 million but not in excess of $900 million; plus .325% of the portion over $900 million but not over
$1.5 billion; plus .25% of the portion in excess of $1.5 billion.

INVESCO Funds Group, Inc. for the AST INVESCO Equity Income Portfolio: An annual rate of .50% of the
portion of the average daily net assets of the Portfolio not in excess of $25 million; plus .45% of the portion
of the net assets over $25 million but not in excess of $75 million; plus .40% of the portion of the net assets
in excess of $75 million but not in excess of $100 million; and .35% of the portion of the net assets over $100
million. Commencing May 1, 2000, INVESCO Funds Group, Inc. has voluntarily agreed to waive a portion of its
fee so that the following fee schedule based on the combined average daily net assets of the Portfolio and the
ASMT INVESCO Equity Income Portfolio is in effect: .35% of the portion of the combined average daily net assets
not in excess of $1 billion; plus .30% of the portion over $1 billion. The Sub-advisor may terminate this
voluntary agreement at any time.

A I M Capital Management, Inc. for the AST AIM Balanced Portfolio: An annual rate of .45% of the
portion of the average daily net assets of the Portfolio not in excess of $75 million; plus .40% of the portion
of the average daily net assets of the Portfolio over $75 million but not in excess of $150 million; plus .35% of
the portion of the average daily net assets of the Portfolio in excess of $150 million. Commencing March 31,
2001, AIM Capital Management, Inc. has voluntarily agreed to waive a portion of its fee so that the following fee
schedule based on the average daily net assets of the Portfolio is in effect: .45% of the portion of the average
daily net assets not in excess of $75 million; plus .40% of the portion over $75 million but not in excess of
$150 million; plus .35% of the portion over $150 million but not in excess of $500 million; plus .30% of the
portion over $500 million.

American Century Investment Management, Inc. for the AST American Century Strategic Balanced Portfolio:
Because of the large amount of assets being sub-advised for the Investment Manager by American Century Investment
Management, Inc., the Investment Manager was able to negotiate a reduction to American Century's standard fee
schedule. Such reduced fee schedule is an annual rate equal to the following percentages of the combined average
daily net assets of the Portfolio and the series of American Skandia Advisor Funds, Inc. that is managed by the
Sub-advisor and identified by the Sub-advisor and the Investment Manager as being similar to the Portfolio: .45%
of the portion of the combined average daily net assets of the Portfolio not in excess of $50 million; plus .40%
of the portion over $50 million but not in excess of $100 million; plus .35% of the portion over $100 million but
not in excess of $500 million; plus .30% of the portion over $500 million.

T. Rowe Price Associates, Inc. for the AST T. Rowe Price Asset Allocation Portfolio: An annual rate of
.50% of the portion of the average daily net assets of the Portfolio not in excess of $25 million; plus .35% of
the portion in excess of $25 million but not in excess of $50 million; and .25% of the portion in excess of $50
million.

T. Rowe Price International, Inc. for the AST T. Rowe Price Global Bond Portfolio: An annual rate of
.40% of the average daily net assets of the Portfolio.

Federated Investment Counseling for the AST Federated High Yield Portfolio: An annual rate of .50% of
the portion of the average daily net assets of the Portfolio under $30 million; plus .40% of the portion of the
net assets equal to or in excess of $30 million but under $50 million; plus .30% of the portion equal to or in
excess of $50 million but under $75 million; and .25% of the portion equal to or in excess of $75 million.
Commencing January 1, 2001, Federated Investment Counseling has voluntarily agreed to waive a portion of its fee
so that the following fee schedule based on the combine average daily net assets of the Portfolio and the series
of American Skandia Advisor Funds, Inc. that is managed by the Sub-advisor and identified by the Sub-advisor and
Investment Manager as being similar to the Portfolio is in effect: .25% of the portion of the combined average
daily net assets net assets not in excess of $200 million; plus .20% of the portion over $200 million but not in
excess of $500 million; plus .15% of the portion over $500 million.

Lord, Abbett & Co. for the AST Lord Abbett Bond-Debenture Portfolio: An annual rate of .35% of the
portion of the average daily net assets of the Portfolio not in excess of $1 billion; plus .25% of the portion of
the net assets over $1 billion but not in excess of $1.5 billion; and .20% of the portion over $1.5 million.
Commencing October 23, 2000, Lord, Abbett & Co. has voluntarily agreed to waive a portion of its fee equal to:
.10% of the portion of the Portfolio's average daily net assets not in excess of $200 million, .15% of the
portion over $200 million but not in excess of $1 billion, and .05% of the portion over $1 billion but not in
excess of $1.5 billion. The Sub-advisor may terminate this voluntary agreement at any time.

Pacific Investment Management Company LLC for the AST PIMCO Total Return Bond Portfolio: An annual rate
of .30% of the average daily net assets of the Portfolio not in excess of $150 million; and .25% on the portion
of the net assets over $150 million. Commencing March 31, 2000, the Sub-advisor has voluntarily agreed to waive
a portion of its fee equal to .05% of the portion of the Portfolio's average daily net assets not in excess of
$150 million. The Sub-advisor may terminate this voluntary agreement at any time.

Pacific Investment Management Company LLC for the AST PIMCO Limited Maturity Bond Portfolio: An annual
rate of .30% of the average daily net assets of the Portfolio not in excess of $150 million; and .25% on the
portion of the net assets over $150 million. Commencing March 31, 2000, the Sub-advisor has voluntarily agreed
to waive a portion of its fee equal to .05% of the portion of the Portfolio's average daily net assets not in
excess of $150 million. The Sub-advisor may terminate this voluntary agreement at any time.

J.P. Morgan Investment Management Inc. for the AST Money Market Portfolio: An annual rate equal to the
following percentages of the combined average daily net assets of the Portfolio and the series of American
Skandia Master Trust that is managed by J.P. Morgan Investment Management, Inc. and identified by it and ASISI as
being similar to the Portfolio: .09% of the portion of the combined average daily net assets not in excess of
$500 million; plus .06% of the portion over $500 million but not in excess of $1.5 billion; plus .04% of the
portion over $1.5 billion.

Corporate Structure. Several of the Sub-advisors are controlled by other parties as noted below:

Founders is a 90%-owned subsidiary of Mellon Bank, N.A., with the remaining 10% held by certain Founders
executives and portfolio managers. Mellon Bank is a wholly owned subsidiary of Mellon Bank Corporation, a
publicly owned multibank holding company which provides a comprehensive range of financial products and services
in domestic and selected international markets.

A I M Capital Management, Inc. is a wholly-owned subsidiary of A I M Advisors, Inc., also a registered
investment adviser. A I M Advisors, Inc. is wholly owned by A I M Management Group Inc., a holding company
engaged in the financial services business and an indirect wholly-owned subsidiary of AMVESCAP PLC. AMVESCAP PLC
and its subsidiaries are an independent investment management group engaged in institutional investment
management and retail mutual fund businesses in the United States, Europe and the Pacific Region.

Stilwell Financial ("Stilwell") owns approximately 81.5% of the outstanding voting stock of Janus
Capital Corporation. Stilwell is a publicly traded holding company with principal operations in financial asset
management businesses. Thomas H. Bailey, President and Chairman of the Board of Janus Capital, owns
approximately 12% of its voting stock and, by agreement with Stilwell, selects a majority of Janus Capital's
Board subject to the approval of Stilwell, which approval can not be unreasonably withheld.

Upon the completion of a pending stock sale transaction between Thomas. H. Bailey and Stilwell, Stilwell
will own approximately 88.7% of Janus Capital's outstanding voting stock and Mr. Bailey will own approximately
6.2%. The transaction is anticipated to close during the first half of 2001.

American Century Companies, Inc. ("ACC") is the parent of American Century Investment Management, Inc.

GAMCO Investors, Inc. ("GAMCO") is a New York corporation organized in 1999 as successor to the
investment advisory business of a New York corporation of the same name that was organized in 1978. GAMCO is a
wholly-owned subsidiary of Gabelli Asset Management Inc. ("GAMI"), a publicly held company listed on the New York
Stock Exchange. Mr. Mario J. Gabelli may be deemed a "controlling person" of GAMCO on the basis of his
controlling interest in GAMI. GAMCO has several affiliates that also provide investment advisory services.

T. Rowe Price Associates, Inc. is a wholly-owned subsidiary of T. Rowe Price Group, Inc., a
publicly-traded holding company engaged in the financial services and asset management business.

Alliance Capital Management Corporation ("ACMC") is the general partner of Alliance Capital Management,
L.P. ("Alliance") and a wholly owned subsidiary of The Equitable Life Assurance Society of the United States
("Equitable"). Equitable is the beneficial owner of an approximately 55.4% partnership interest in Alliance.
Alliance Capital Management Holding L.P., a publicly-traded company, owns an approximately 41.9% partnership
interest in Alliance. Equitable is a wholly owned subsidiary of AXA Financial, Inc., and AXA, a French insurance
holding company, owned as of June 30, 1999 approximately 58.2% of the issued and outstanding shares of common
stock of AXA Financial, Inc.

Massachusetts Financial Services Company is a subsidiary of Sun Life of Canada (US) Financial Services
Holdings, Inc. whose ultimate parent is Sun Life Assurance Co. of Canada.

Zurich Insurance Company, a leading provider of insurance and financial services, owns approximately 70%
of Zurich Scudder, with the balance owned by Zurich Scudder's officers and employees.

Lord, Abbett & Co. ("Lord Abbett") is a general partnership with the following partners, all of whom are
actively involved in the management of Lord Abbett: Stephen I. Allen, Joan A. Binstock, Zane E. Brown, Daniel E.
Carper, Robert S. Dow, John E. Erard, Robert P. Fetch, Daria L. Foster, Robert I. Gerber, Paul A. Hilstad, W.
Thomas Hudson, Stephen J. McGruder, Michael B. McLaughlin, Robert G. Morris, Robert J. Noelke, R. Mark
Pennington, Eli M. Salzmann and Christopher Towle.

All of the voting stock of Neuberger Berman Management Inc. is owned by Neuberger Berman Inc., a
publicly-traded company listed on the NYSE.

Bank of America, N.A., a national bank subsidiary of Bank of America Corporation, indirectly owns 50% of
the voting control of Marsico Capital Management, LLC ("Marsico Capital"). Mr. Thomas F. Marsico and a company
controlled by Mr. Marsico own the remainder of Marsico Capital's voting interests. Bank of America, N.A. has
agreed to purchase the Marsico Capital voting interests that are currently owned or controlled by Mr. Marsico.
It is expected that this purchase will occur in early 2001.

Martin Cohen and Robert H. Steers may be deemed "controlling persons" of Cohen & Steers Capital
Management, Inc. on the basis of their ownership of Cohen & Steers' stock.

Sanford C. Bernstein & Co., LLC is an indirect wholly owned subsidiary of Alliance.

INVESCO Funds Group, Inc. is a subsidiary of AMVESCAP PLC.

T. Rowe Price International, Inc. is a wholly owned subsidiary of T. Rowe Price Associates, Inc. ("T.
Rowe Price").

Federated Investment Counseling, organized as a Delaware business trust in 1989 is a wholly owned
subsidiary of Federated Investors.

Pacific Investment Management Company LLC ("PIMCO") is a subsidiary general partnership of PIMCO
Advisors L.P. ("PIMCO Advisors"). Allianz AG ("Allianz") is the majority owner of PIMCO Advisors and its
subsidiaries, including PIMCO. Allianz is the world's second largest insurance company and is represented in 68
countries world-wide through subsidiaries, branch and representative offices and other affiliated entities.
Pacific Life Insurance Company holds an approximately 30% interest in PIMCO Advisors.

J.P. Morgan Investment Management, Inc is a wholly-owned subsidiary of J.P. Morgan & Co. Incorporated, a
bank holding company organized under the laws of Delaware.

The Administrator and Transfer and Shareholder Servicing Agent: PFPC Inc. (the "Administrator"), 103
Bellevue Parkway, Wilmington, Delaware 19809, a Delaware corporation that is an indirect wholly-owned subsidiary
of PNC Financial Corp., serves as the Administrator and Transfer and Shareholder Servicing Agent for the Trust.
Pursuant to a Trust Accounting and Administration Agreement between the Trust and the Administrator, dated May 1,
1992 (the "Administration Agreement"), the Administrator has agreed to provide certain fund accounting and
administrative services to the Trust, including, among other services, accounting relating to the Trust and
investment transactions of the Trust; computation of daily net asset values; maintaining the Trust's books of
account; assisting in monitoring, in conjunction with the Investment Manager, compliance with the Portfolios'
investment objectives, policies and restrictions; providing office space and equipment necessary for the proper
administration and accounting functions of the Trust; monitoring investment activity and income of the Trust for
compliance with applicable tax laws; preparing and filing Trust tax returns; preparing financial information in
connection with the preparation of the Trust's annual and semi-annual reports and making requisite filings
thereof; preparing schedules of Trust share activity for footnotes to financial statements; furnishing financial
information necessary for the completion of certain items to the Trust's registration statement and necessary to
prepare and file Rule 24f-2 notices; providing an administrative interface between the Investment Manager and the
Trust's custodian; creating and maintaining all necessary records in accordance with applicable laws, rules and
regulations, including, but not limited to, those records required to be kept pursuant to the 1940 Act; and
performing such other duties related to the administration of the Trust as may be requested by the Board of
Trustees of the Trust. The Administrator does not have any responsibility or authority for the management of the
assets of the Trust, the determination of its investment policies, or for any matter pertaining to the
distribution of securities issued by the Trust.

Under the terms of the Administration Agreement, the Administrator shall not be liable for any error of
judgment or mistake of law or for any loss or expense suffered by the Trust, in connection with the matters to
which the Administration Agreement relates, except for a loss or expense resulting from willful misfeasance, bad
faith, or gross negligence on its part in the performance of its duties or from reckless disregard by it of its
obligations and duties under the Agreement. Any person, even though also an officer, director, partner, employee
or agent of the Administrator, who may be or become an officer, Trustee, employee or agent of the Trust, shall be
deemed when rendering services to the Trust or acting on any business of the Trust (other than services or
business in connection with the Administrator's duties under the Administration Agreement) to be rendering such
services to or acting solely for the Trust and not as an officer, director, partner, employee or agent or one
under the control or direction of the Administrator even though paid by them.

As compensation for the services and facilities provided by the Administrator under the Administration
Agreement, the Trust has agreed to pay to the Administrator the greater of certain percentages of the average
daily net assets of each Portfolio or certain specified minimum annual amounts calculated for each Portfolio.
Except for the AST Sanford Bernstein Managed Index 500 Portfolio, the percentages of the average daily net assets
are: (a) 0.10% of the first $200 million; (b) 0.06% of the next $200 million; (c) 0.0275% of the next $200
million; (d) 0.02% of average daily net assets over $1 billion. The percentages for the AST Sanford Bernstein
Managed Index 500 Portfolio are: (a) 0.05% of the first $200 million; (b) 0.03% of the next $200 million; (c)
0.0275 of the next $200 million; (d) 0.02% of the next $400 million; and (e) 0.01% of average daily net assets
over $1 billion.

The minimum amount is $75,000 for each of the AST Janus Small-Cap Growth Portfolio, the AST Goldman
Sachs Small-Cap Value Portfolio, the AST Gabelli Small-Cap Value Portfolio, the AST Neuberger Berman Mid-Cap
Growth Portfolio, the AST Neuberger Berman Mid-Cap Value Portfolio, the AST T. Rowe Price Natural Resources
Portfolio, the AST Oppenheimer Large-Cap Growth Portfolio, the AST Marsico Capital Growth Portfolio, the AST
JanCap Growth Portfolio, the AST Cohen & Steers Realty Portfolio, the AST Sanford Bernstein Managed Index 500
Portfolio, the AST American Century Income & Growth Portfolio, the AST Lord Abbett Growth and Income Portfolio,
the AST INVESCO Equity Income Portfolio, the AST AIM Balanced Portfolio, the AST American Century Strategic
Balanced Portfolio, the AST T. Rowe Price Asset Allocation Portfolio, the AST Federated High Yield Portfolio, the
AST PIMCO Total Return Bond Portfolio, the AST PIMCO Limited Maturity Bond Portfolio and the AST Money Market
Portfolio. The minimum amount is $100,000 for the AST Founders Passport Portfolio, the AST AIM International
Equity Portfolio, the AST Janus Overseas Growth Portfolio, the AST American Century International Growth
Portfolio, the AST American Century International Growth Portfolio II and the AST T. Rowe Price Global Bond
Portfolio. For all of these Portfolios, monthly fees have been frozen at the amounts paid for the month of
December 1999. Monthly fees for the AST MFS Global Equity Portfolio, the AST MFS Growth Portfolio and the MFS
Growth with Income Portfolio have been frozen at levels determined under the asset-based fee schedule set forth
above based on December 1999 asset levels, without regard to any minimum amounts. The fees payable to the
Administrator for those Portfolios that commenced operations during 2000 (the AST Scudder Japan Portfolio, the
AST Federated Aggressive Growth Portfolio, the AST Janus Mid-Cap Growth Portfolio, the AST Alger All-Cap Growth
Portfolio, the AST Gabelli All-Cap Value Portfolio, the AST Kinetics Internet Portfolio, the AST Janus Strategic
Value Portfolio, and the AST Lord Abbett Bond-Debenture Portfolio) are not subject to any freeze and each such
Portfolio will pay the Administrator the greater of the asset based fee or a phased-in minimum amount equal to
$34,375 for the first twelve months of the Portfolio's operations. The fees payable to the Administrator for
those Portfolios that commenced operations during 2000 (the AST Scudder Japan Portfolio, the AST Federated
Aggressive Growth Portfolio, the AST Janus Mid-Cap Growth Portfolio, the AST Alger All-Cap Growth Portfolio, the
AST Gabelli All-Cap Value Portfolio, the AST Kinetics Internet Portfolio, the AST Janus Strategic Value
Portfolio, and the AST Lord Abbett Bond-Debenture Portfolio) are not subject to any freeze and each such
Portfolio will pay the Administrator the greater of the asset based fee or a phased-in minimum amount equal to
$34,375 for the first twelve months of the Portfolio's operations. The fees payable to the Administrator for
those Portfolios that have not commenced operations prior to the date of this Statement (the AST
Alliance/Bernstein Growth + Value Portfolio and the AST Sanford Bernstein Core Value Portfolio) are not subject
to any freeze and each such Portfolio will pay the Administrator the greater of the asset based fee or a
phased-in minimum amount equal to $34,375 for the first twelve months of the Portfolio's operations. These fee
arrangements will remain in effect until such time as the aggregate fee resulting from the application of revised
fee schedules based on the combined average daily net assets of each Portfolio and the corresponding series of
American Skandia Advisor Funds, Inc. or American Skandia Master Trust would result in a lower fee, at which point
the revised fee schedules will take effect.

Reimbursable "out-of-pocket" expenses of the Administrator include, but are not limited to, postage and
mailing, forms, envelopes, checks, toll-free lines (if requested by the Trust), telephone, hardware and telephone
lines for remote terminals (if required by the Trust), wire fees, certificate issuance fees, microfiche and
microfilm, telex, federal express, outside independent pricing service charges, record retention/storage and
proxy solicitation, mailing and tabulation expenses (if required by the Trust). For the years ended December 31,
1998, 1999 and 2000, the Trust paid the Administrator $6,582,808, $8,445,050 and $9,929,219 respectively. These
amounts do not included out-of-pocket expenses for which the Administrator was reimbursed.

The Administration Agreement provides that it will continue in effect from year to year. The
Administration Agreement is terminable, without penalty, by the Board of Trustees, by vote of a majority (as
defined in the 1940 Act) of the outstanding voting securities, or by the Administrator, on not less than sixty
days' notice. The Administration Agreement shall automatically terminate upon its assignment by the
Administrator without the prior written consent of the Trust, provided, however, that no such assignment shall
release Administrator from its obligations under the Agreement.

BROKERAGE ALLOCATION: Subject to the supervision of the Board of Trustees of the Trust, decisions to buy and
sell securities for the Trust are made for each Portfolio by its Sub-advisor. Generally, the primary
consideration in placing Portfolio securities transactions with broker-dealers is to obtain, and maintain the
availability of, execution at the best net price available and in the most effective manner possible. Each
Sub-advisor is authorized to allocate the orders placed by it on behalf of the applicable Portfolio to brokers
who also provide research or statistical material, or other services to the Portfolio or the Sub-advisor for the
use of the applicable Portfolio or the Sub-advisor's other accounts. Such allocation shall be in such amounts
and proportions as the Sub-advisor shall determine and the Sub-advisor will report on said allocations either to
the Investment Manager, which will report on such allocations to the Board of Trustees, or, if requested,
directly to the Board of Trustees. Such reports will indicate the brokers to whom such allocations have been
made and the basis therefor. The Sub-advisor may consider sale of shares of the Portfolios or variable insurance
products that use the Portfolios as investment vehicles, or may consider or follow recommendations of the
Investment Manager that take such sales into account, as factors in the selection of brokers to effect portfolio
transactions for a Portfolio, subject to the requirements of best net price available and most favorable
execution. In this regard, the Investment Manager has directed certain of the Sub-advisors to try to effect a
portion of their Portfolios' transactions through broker-dealers that give prominence to variable insurance
products using the Portfolios as investment vehicles, to the extent consistent with best net price available and
most favorable execution.

Subject to the rules promulgated by the SEC, as well as other regulatory requirements, a Sub-advisor
also may allocate orders to brokers or dealers affiliated with the Sub-advisor or the Investment Manager. Such
allocation shall be in such amounts and proportions as the Sub-advisor shall determine and the Sub-advisor will
report on said allocations either to the Investment Manager, which will report on such allocations to the Board
of Trustees, or, if requested, directly to the Board of Trustees.

In selecting a broker to execute each particular transaction, each Sub-advisor will take the following
into consideration: the best net price available; the reliability, integrity and financial condition of the
broker; the size and difficulty in executing the order; and the value of the expected contribution of the broker
to the investment performance of the Portfolio on a continuing basis. Accordingly, the cost of the brokerage
commissions in any transaction may be greater than that available from other brokers if the difference is
reasonably justified by other aspects of the brokerage services offered. Subject to such policies and procedures
as the Board of Trustees may determine, a Sub-advisor shall not be deemed to have acted unlawfully or to have
breached any duty solely by reason of its having caused a Portfolio to pay a broker that provides research
services to the Sub-advisor an amount of commission for effecting an investment transaction in excess of the
amount of commission another broker would have charged for effecting that transaction, if the Sub-advisor
determines in good faith that such amount of commission was reasonable in relation to the value of the research
service provided by such broker viewed in terms of either that particular transaction or the Sub-advisor's
ongoing responsibilities with respect to a Portfolio or its managed accounts generally. For the years ended
December 31, 1998, 1999 and 2000, aggregate brokerage commissions of $15,887,946, $24,608,079 and $25,389,537,
respectively, were paid in relation to brokerage transactions for the Trust. The increase in commissions paid
corresponds roughly to the increase in the Trust's net assets during those periods.

For the year ended December 31, 1998, brokerage commissions were paid to J.P. Morgan Securities Inc. and
other affiliates of American Century Investment Management, Inc. by the AST American Century International Growth
Portfolio in the amount of $91. During the years ended December 31, 1998, December 31, 1999 and December 31,
2000, brokerage commissions were paid to certain affiliates of T. Rowe Price International, Inc. by the AST
American Century International Growth Portfolio II (formerly, the AST T. Rowe Price International Equity
Portfolio) in the amounts of $26,497, $15,833 and $5,748, respectively. For the year ended December 31, 2000,
1.82% of the total brokerage commissions paid by this Portfolio were paid to the affiliated brokers, with respect
to transactions representing 2.61% of the Portfolio's total dollar amount of transactions involving the payment
of commissions. For the year ended December 31, 2000, brokerage commissions were paid to Prudential Securities
Incorporated, an affiliate of GAMCO Investors, Inc. by the AST Gabelli Small-Cap Value Portfolio in the amount of
$375,070. For that period, 88.78% of the total brokerage commissions paid by this Portfolio were paid to the
affiliated broker, with respect to transactions representing 87.84% of the total amount of the Portfolio's
transactions involving the payment of commissions. Brokerage commissions in the amounts of $82,199, $35,545 and
$37,579 were paid to Neuberger Berman, LLC, an affiliate of Neuberger Berman Management Inc., by the AST
Neuberger Berman Mid-Cap Growth Portfolio for the period from May 1, 1998 (when Neuberger Berman Management Inc.
became the Portfolio's Sub-advisor) until December 31, 1998 and for the years ended December 31, 1999 and
December 31, 2000, respectively. For the year ended December 31, 2000, 4.88% of the total brokerage commissions
paid by this Portfolio were paid to Neuberger Berman, LLC, with respect to transactions representing 5.30% of the
total amount of the Portfolio's transactions involving the payment of commissions. Brokerage commissions in the
amounts of $277,961, $652,436 and $456,860 were paid to Neuberger Berman, LLC, by the AST Neuberger Berman
Mid-Cap Value Portfolio for the period from May 1, 1998 (when Neuberger Berman Management Inc. became the
Portfolio's Sub-advisor) until December 31, 1998 and for the years ended December 31, 1999 and December 31, 2000,
respectively. For the year ended December 31, 2000, 10.11% of the total brokerage commissions paid by this
Portfolio were paid to Neuberger Berman, LLC, with respect to transactions representing 9.16% of the total amount
of the Portfolio's transactions involving the payment of commissions. For the year ended December 31, 2000,
brokerage commissions were paid to an affiliate of Fred Alger Management, Inc. by the AST Alger All-Cap Growth
Portfolio in the amount of $149,999. For that period, 55.08% of the total brokerage commissions paid by this
Portfolio were paid to the affiliated broker, with respect to transactions representing 59.75% of the total
amount of the Portfolio's transactions involving the payment of commissions. For the year ended December 31,
2000, brokerage commissions were paid to Prudential Securities Incorporated, an affiliate of GAMCO Investors,
Inc. by the AST Gabelli All-Cap Value Portfolio in the amount of $20,790. For that period, 98.58% of the total
brokerage commissions paid by this Portfolio were paid to the affiliated broker, with respect to transactions
representing 97.66% of the total amount of the Portfolio's transactions involving the payment of commissions.
Similarly, brokerage commissions were paid to Robertson Stephens & Co., an affiliate of Robertson, Stephens &
Company Investment Management L.P., by the AST Alliance Growth Portfolio (formerly, the Robertson Stephens Value
+ Growth Portfolio) in the aggregate amount of $71,751 for the year ended December 31, 1998. For the years ended
December 31, 1999 and December 31, 2000, brokerage commissions were paid to NationsBanc Montgomery Services, LLC,
an affiliate of Marsico Capital Management, LLC, by the AST Marsico Capital Growth Portfolio in the amounts of
$37,919 and $136,969. For the year ended December 31, 2000, 6.16% of the total brokerage commissions paid by
this Portfolio were paid to the affiliated broker, with respect to transactions representing 6.14% of the
Portfolio's total dollar amount of transactions involving the payment of commissions. For the year ended
December 31, 2000, brokerage commissions were paid to an affiliate of Sanford C. Bernstein & Co., LLC by the AST
Sanford Bernstein Managed Index 500 Portfolio in the amount of $506,617. For that period, 52.49% of the total
brokerage commissions paid by this Portfolio were paid to the affiliated broker, with respect to transactions
representing 49.53% of the total amount of the Portfolio's transactions involving the payment of commissions.
During the years ended December 31, 1999 and December 31, 2000, brokerage commissions were paid to J.P. Morgan
Securities Inc. and other affiliates of American Century Investment Management, Inc. by the AST American Century
Income and Growth Portfolio in the amounts of $5,455 and $8,653. For the year ended December 31, 2000, 2.02% of
the total brokerage commissions paid by this Portfolio were paid to the affiliated brokers, with respect to
transactions representing 0.92% of the total amount of the Portfolio's transactions involving the payment of
commissions. For the year ended December 31, 2000, brokerage commissions were paid to Donaldson Lufkin Jenrette
Securities Corporation, Inc., an affiliate of Alliance Capital Management, L.P. by the AST Alliance Growth and
Income Portfolio in the amount of $4,758. For that period, 0.10% of the total brokerage commissions paid by this
Portfolio were paid to the affiliated broker, with respect to transactions representing 0.14% of the total amount
of the Portfolio's transactions involving the payment of commissions. During the years ended December 31, 1998,
December 31, 1999 and December 31, 2000, brokerage commissions were paid to J.P. Morgan Securities Inc. and other
affiliates of American Century Investment Management, Inc. by the AST American Century Strategic Balanced
Portfolio in the amount of $3,265, $1,355 and $2,200, respectively. For the year ended December 31, 2000, 1.97%
of the total brokerage commissions paid by this Portfolio were paid to the affiliated brokers, with respect to
transactions representing 1.13% of the total amount of the Portfolio's transactions involving the payment of
commissions.

In addition, as described below under "Distribution Plan," certain Portfolios directed brokerage
transactions to a broker-dealer acting as the clearing firm for the Trust's Distributor, which acted as
introducing broker in connection with the transactions. The table below reflects the commission amounts directed
to such clearing firm for each such Portfolio, the percentage of the Portfolio's total commissions this
represents, and the percentage of the Portfolio's total transaction value involving the payment of commissions
that was directed in this manner.

------------------------------------------------------------- --------------- ------------------------ ------------------------
Portfolio Name Commissions % of Total Portfolio % of Dollar Amount of
Commissions Portfolio Transactions
------------------------------------------------------------- --------------- ------------------------ ------------------------
------------------------------------------------------------- --------------- ------------------------ ------------------------
AST AIM International Equity Portfolio $617,330 24.50% 22.51%
------------------------------------------------------------- --------------- ------------------------ ------------------------
------------------------------------------------------------- --------------- ------------------------ ------------------------
AST Janus Overseas Growth Portfolio 294,019 10.74% 9.67%
------------------------------------------------------------- --------------- ------------------------ ------------------------
------------------------------------------------------------- --------------- ------------------------ ------------------------
AST American Century International Growth Portfolio II 6,569 2.08% 1.84%
------------------------------------------------------------- --------------- ------------------------ ------------------------
------------------------------------------------------------- --------------- ------------------------ ------------------------
AST Janus Small-Cap Growth Portfolio 18,849 4.00% 1.67%
------------------------------------------------------------- --------------- ------------------------ ------------------------
------------------------------------------------------------- --------------- ------------------------ ------------------------
AST Scudder Small-Cap Growth Portfolio 145,656 38.40% 19.74%
------------------------------------------------------------- --------------- ------------------------ ------------------------
------------------------------------------------------------- --------------- ------------------------ ------------------------
AST Gabelli Small-Cap Value Portfolio 15,060 3.56% 5.02%
------------------------------------------------------------- --------------- ------------------------ ------------------------
------------------------------------------------------------- --------------- ------------------------ ------------------------
AST Neuberger Berman Mid-Cap Growth Portfolio 208,960 27.12% 29.62%
------------------------------------------------------------- --------------- ------------------------ ------------------------
------------------------------------------------------------- --------------- ------------------------ ------------------------
AST Neuberger Berman Mid-Cap Value Portfolio 1,419,630 31.42% 34.84%
------------------------------------------------------------- --------------- ------------------------ ------------------------
------------------------------------------------------------- --------------- ------------------------ ------------------------
AST Alger All-Cap Growth Portfolio 96,370 35.39% 31.32%
------------------------------------------------------------- --------------- ------------------------ ------------------------
------------------------------------------------------------- --------------- ------------------------ ------------------------
AST Kinetics Internet Portfolio 512 93.94% 94.57%
------------------------------------------------------------- --------------- ------------------------ ------------------------
------------------------------------------------------------- --------------- ------------------------ ------------------------
AST T. Rowe Price Natural Resources Portfolio 76,097 16.78% 19.45%
------------------------------------------------------------- --------------- ------------------------ ------------------------
------------------------------------------------------------- --------------- ------------------------ ------------------------
AST Alliance Growth Portfolio 398,987 49.89% 53.28%
------------------------------------------------------------- --------------- ------------------------ ------------------------
------------------------------------------------------------- --------------- ------------------------ ------------------------
AST Marsico Capital Growth Portfolio 308,157 13.87% 13.84%
------------------------------------------------------------- --------------- ------------------------ ------------------------
------------------------------------------------------------- --------------- ------------------------ ------------------------
AST JanCap Growth Portfolio 278,676 15.34% 8.62%
------------------------------------------------------------- --------------- ------------------------ ------------------------
------------------------------------------------------------- --------------- ------------------------ ------------------------
AST Sanford Bernstein Managed Index 500 Portfolio 268,464 27.81% 32.79%
------------------------------------------------------------- --------------- ------------------------ ------------------------
------------------------------------------------------------- --------------- ------------------------ ------------------------
AST Alliance Growth and Income Portfolio 2,534,884 52.13% 53.17%
------------------------------------------------------------- --------------- ------------------------ ------------------------
------------------------------------------------------------- --------------- ------------------------ ------------------------
AST Cohen & Steers Realty Portfolio 72,058 20.46% 20.43%
------------------------------------------------------------- --------------- ------------------------ ------------------------
------------------------------------------------------------- --------------- ------------------------ ------------------------
AST INVESCO Equity Income Portfolio 430,913 46.00% 47.90%
------------------------------------------------------------- --------------- ------------------------ ------------------------
------------------------------------------------------------- --------------- ------------------------ ------------------------
AST AIM Balanced Portfolio 10,225 10.86% 10.16%
------------------------------------------------------------- --------------- ------------------------ ------------------------

ALLOCATION OF INVESTMENTS: The Sub-advisors have other advisory clients, some of which have similar investment
objectives to one or more Portfolios for which advisory services are being provided. In addition, a Sub-advisor
may be engaged to provide advisory services for more than one of the Trust's Portfolios. There will be times
when a Sub-advisor may recommend purchases and/or sales of the same securities for a Portfolio and such
Sub-advisor's other clients. In such circumstances, it will be the policy of each Sub-advisor to allocate
purchases and sales among a Portfolio and its other clients, including other Trust Portfolios for which it
provides advisory services, in a manner which the Sub-advisor deems equitable, taking into consideration such
factors as size of account, concentration of holdings, investment objectives, tax status, cash availability,
purchase costs, holding period and other pertinent factors relative to each account.

COMPUTATION OF NET ASSET VALUES: The Trust determines the net asset values of a Portfolio's shares at the close
of the New York Stock Exchange (the "Exchange"), currently 4:00 p.m. Eastern time, on each day that the Exchange
is open for business. Currently, the Exchange is closed on Saturdays and Sundays and on New Year's Day, Martin
Luther King, Jr. Day, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving and
Christmas.

All Portfolios with the exception of the AST Money Market Portfolio: The net asset value per share of
all of the Portfolios with the exception of the AST Money Market Portfolio is determined by dividing the market
value of its securities as of the close of trading plus any cash or other assets (including dividends and accrued
interest receivable) less all liabilities (including accrued expenses), by the number of shares outstanding.
Portfolio securities, including open short positions and options written, are valued at the last sale price on
the securities exchange or securities market on which such securities primarily are traded. Securities not
listed on an exchange or securities market, or securities in which there were not transactions on that day, are
valued at the average of the most recent bid and asked prices, except in the case of open short positions where
the asked price is available. Any securities or other assets for which recent market quotations are not readily
available are valued at fair market value as determined in good faith by or under procedures established by the
Board of Trustees. Short-term obligations with sixty days or less remaining to maturity are valued on an
amortized cost basis. Expenses and fees, including the investment management fees, are accrued daily and taken
into account for the purpose of determining net asset value of shares.

Generally, trading in foreign securities, as well as U.S. Government securities, money market
instruments and repurchase agreements, is substantially completed each day at various times prior to the close of
the Exchange. The values of such securities used in computing the net asset value of the shares of a Portfolio
generally are determined as of such earlier times. Foreign currency exchange rates are also generally determined
prior to the close of the Exchange. Occasionally, events affecting the value of such securities and such
exchange rates may occur between the times at which they usually are determined and the close of the Exchange.
If such extraordinary events occur, their effects may not be reflected in the net asset value of a Portfolio
calculated as of the close of the Exchange on that day.

Foreign securities are valued on the basis of quotations from the primary market in which they are
traded. All assets and liabilities initially expressed in foreign currencies will be converted into U.S. dollars
at an exchange rate quoted by a major bank that is a regular participant in the foreign exchange market or on the
basis of a pricing service that takes into account the quotes provided by a number of such major banks.

AST Money Market Portfolio: For the AST Money Market Portfolio, all securities are valued by the
amortized cost method. The amortized cost method of valuation values a security at its cost at the time of
purchase and thereafter assumes a constant amortization to maturity of any discount or premium, regardless of the
impact of fluctuating interest rates on the market value of the instrument. The purpose of this method of
calculation is to attempt to maintain a constant net asset value per share of $1.00. No assurance can be given
that this goal can be attained. If a difference of more than 1/2 of 1% occurs between valuation based on the
amortized cost method and valuation based on market value, the Trustees will take steps necessary to reduce such
deviation or any unfair results to shareholders, such as changing dividend policy, shortening the average
maturity of the investments in the Portfolio or valuing securities on the basis of current market prices if
available or, if not, at fair market value.

SALE OF SHARES: The Trust has entered into separate agreements for the sale of shares with American Skandia Life
Assurance Corporation ("ASLAC") and Kemper Investors Life Insurance Company ("Kemper"), respectively. Pursuant
to these agreements, the Trust will pay ASLAC and Kemper for printing and delivery of certain documents to the
beneficial owners of Trust shares who are holders of variable annuity and variable life insurance policies issued
by ASLAC and Kemper. Such documents include prospectuses, semi-annual and annual reports and any proxy
materials. The Trust will pay ASLAC 0.1%, on an annualized basis, of the net asset value of the shares legally
owned by any separate account of ASLAC, and will pay Kemper 0.1%, on an annualized basis, of the net asset value
of the shares legally owned by the separate accounts of Kemper named in the sales agreement. A complete
description of the manner by which the Trust's shares may be purchased and redeemed appears in the Prospectus
under the heading "Purchase and Redemption of Shares."

Distribution Plan. The Trust has adopted a Distribution Plan (the "Distribution Plan") under Rule 12b-1
under the 1940 Act to permit American Skandia Marketing, Inc. ("ASM"), an affiliate of the Investment Manager, to
receive brokerage commissions in connection with purchases and sales of securities held by the Portfolios, and to
use these commissions to promote the sale of shares of the Portfolios. Under the Distribution Plan, ASM may use
the brokerage commissions received to pay various distribution-related expenses, such as advertising, printing of
sales materials, training sales personnel, and paying marketing fees requested by broker-dealers who sell
variable annuity contracts and variable life insurance policies the premiums for which are invested in Shares of
the Trust ("variable contracts"). ASM may receive compensation under the Distribution Plan regardless of whether
it actually uses such compensation to pay distribution expenses. However, it is anticipated that amounts
received by ASM under the Distribution Plan will be used entirely to pay distribution expenses and administrative
expenses relating to implementation and operation of the Distribution Plan, and that ASM likely will not earn a
profit directly from the compensation received under the Distribution Plan. During the year ended December 31,
2000, ASM received $6,054,509 from the Portfolios under the Distribution Plan, all of which was used by ASM to
provide compensation to broker-dealers.

The Distribution Plan was adopted by a majority vote of the Trustees of the Trust, including at least a
majority of Trustees who are not "interested persons" of the Portfolios (as defined in the 1940 Act) and who do
not have any direct or indirect financial interest in the operation of the Distribution Plan, cast in person at a
meeting called for the purpose of voting on the Plan. In approving the Distribution Plan, the Trustees of the
Trust considered, among other factors, that the Distribution Plan could improve ASM's ability to attract new
investments in the Portfolios by enabling it to compensate broker-dealers selling variable products adequately
and in the most effective manner, and that the resulting increase in the Portfolios' assets should enable the
Portfolios to achieve greater economies of scale and lower their per-share operating expenses. The Trustees of
the Trust believe that there is a reasonable likelihood that the Distribution Plan will benefit each Portfolio
and its current and future shareholders in the manner contemplated. The Distribution Plan was also approved by a
majority of the outstanding voting securities of each Portfolio.

The Distribution Plan, pursuant to its terms, remains in effect from year to year provided such
continuance is approved annually by vote of the Trustees in the manner described above. The Distribution Plan
may not be amended to materially change the source of monies from which distribution expenses are paid under the
Plan without approval of the shareholders of each Portfolio affected thereby entitled to vote thereon under the
1940 Act, and material amendments to the Distribution Plan must also be approved by the Trustees of the Trust in
the manner described above. The Distribution Plan may be terminated at any time, without payment of a penalty,
by vote of the majority of the Trustees of the Trust who are not interested persons of a Portfolio and have no
direct or indirect financial interest in the operations of the Plan, or by a vote of a "majority of the
outstanding voting securities" (as defined in the 1940 Act) of each Portfolio affected thereby entitled to vote
thereon under the 1940 Act. The Distribution Plan will automatically terminate in the event of its "assignment"
(as defined in the 1940 Act).

Under the terms of the Distribution Plan, ASM provides to each Portfolio, for review by the Trustees of
the Trust, a quarterly written report of the amounts received by ASM under the Plan, the amounts expended under
the Plan, and the purposes for which such expenditures were made. The Trustees of the Trust will review such
information on compensation and expenditures in considering the continued appropriateness of the Distribution
Plan.

The distribution expenses paid under the Distribution Plan will be intended to result in the sale of
variable products, the assets attributable to which may be invested in various Portfolios of the Trust. As a
result, brokerage commissions incurred by a Portfolio under the Distribution Plan may be used in a manner that
promotes the sale of shares of other Portfolios. Certain Portfolios of the Trust may not be available for new or
additional investments. Distribution expenses will be allocated among the Portfolios on different bases (e.g.,
relative asset size and relative new sales of the Portfolios) depending on the nature of the expense and the
manner in which the amount of such expense is determined.

DESCRIPTION OF SHARES OF THE TRUST: The amendment and restatement of the Trust's Declaration of Trust dated
October 31, 1988, which governs certain Trust matters, permits the Trust's Board of Trustees to issue multiple
classes of shares, and within each class, an unlimited number of shares of beneficial interest with a par value
of $.001 per share. Each share entitles the holder to one vote for the election of Trustees and on all other
matters that are not specific to one class of shares, and to participate equally in dividends, distributions of
capital gains and net assets of each applicable Portfolio. Only shareholders of shares of a specific Portfolio
may vote on matters specific to that Portfolio. Shares of one class may not bear the same economic relationship
to the Trust as shares of another class. In the event of dissolution or liquidation, holders of shares of a
Portfolio will receive pro rata, subject to the rights of creditors, the proceeds of the sale of the assets held
in such Portfolio less the liabilities attributable to such Portfolio. Shareholders of a Portfolio will not be
liable for the expenses, obligations or debts of another Portfolio.

There are no preemptive or conversion rights applicable to any of the Trust's shares. The Trust's
shares, when issued, will be fully paid, non-assessable and transferable. The Trustees may at any time create
additional series of shares without shareholder approval.

Generally, there will not be annual meetings of shareholders. A Trustee may, in accordance with certain
rules of the SEC, be removed from office when the holders of record of not less than two-thirds of the
outstanding shares either present a written declaration to the Trust's custodian or vote in person or by proxy at
a meeting called for this purpose. In addition, the Trustees will promptly call a meeting of shareholders to
remove a Trustee(s) when requested to do so in writing by record holders of not less than 10% of the outstanding
shares. Finally, the Trustees shall, in certain circumstances, give such shareholders access to a list of the
names and addresses of all other shareholders or inform them of the number of shareholders and the cost of
mailing their request.

Under Massachusetts law, shareholders could, under certain circumstances, be held liable for the
obligations of the Trust. However, the Declaration of Trust disclaims shareholder liability for acts or
obligations of the Trust and requires that notice of such disclaimer be given in each agreement, obligation or
instrument entered into or executed by the Trust or the Trustees to all parties, and each party thereto must
expressly waive all rights of action directly against shareholders. The Declaration of Trust provides for
indemnification out of the Trust's property for all loss and expense of any shareholder of the Trust held liable
on account of being or having been a shareholder. Thus, the risk of a shareholder incurring financial loss on
account of shareholder liability is limited to circumstances in which the Trust would be unable to meet its
obligations wherein the complaining party was held not to be bound by the disclaimer.

The Declaration of Trust further provides that the Trustees will have no personal liability to any
person in connection with the Trust property or affairs of the Trust except for that arising from his bad faith,
willful misfeasance, gross negligence or reckless disregard of his duty to that person. All persons must look
solely to the Trust property for satisfaction of claims of any nature arising in connection with the Trust's
affairs. In general, the Declaration of Trust provides for indemnification by the Trust of the Trustees and
officers of the Trust except with respect to any matter as to which the Trustee or officer acted in bad faith, or
with willful misfeasance, gross negligence or reckless disregard of his duties.

UNDERWRITER: The Trust is presently used for funding variable annuities and variable life insurance. Pursuant
to an exemptive order of the SEC, the Trust may also sell its shares directly to qualified plans. If the Trust
does sell its shares to qualified plans other than the profit sharing plan covering employees of American Skandia
Life Assurance Corporation and its affiliates, it intends to use American Skandia Marketing, Incorporated ("ASM,
Inc.") or another affiliated broker-dealer as underwriter, if so required by applicable law. ASM, Inc. is
registered as a broker-dealer with the SEC and the National Association of Securities Dealers. It is an
affiliate of American Skandia Life Assurance Corporation and the Investment Manager, being a wholly-owned
subsidiary of American Skandia, Incorporated. As of the date of this Statement, ASM, Inc. has not received
payments from the Trust in connection with any brokerage or underwriting services provided to the Trust.

TAX MATTERS: This discussion of federal income tax consequences applies to the Participating Insurance Companies
and qualified plans because these entities are the shareholders of the Trust. The Trust intends to qualify as a
regulated investment company by satisfying the requirements under Subchapter M of the Internal Revenue Code of
1986, as amended (the "Code"), including requirements with respect to diversification of assets, distribution of
income and sources of income. It is the Trust's policy to distribute to shareholders all of its investment
income (net of expenses) and any capital gains (net of capital losses) in accordance with the timing requirements
imposed by the Code so that the Trust will satisfy the distribution requirement of Subchapter M and not be
subject to federal income taxes or the 4% excise tax.

Distributions by the Trust of its net investment income and the excess, if any, of its net short-term
capital gain over its net long-term capital loss are taxable to shareholders as ordinary income. These
distributions are treated as dividends for federal income tax purposes, but will qualify for the 70%
dividends-received deduction for corporate shareholders only to the extent designated as attributable to
dividends received by the Trust in a notice from the Trust. Distributions by the Trust of the excess, if any, of
its net long-term capital gain over its net short-term capital loss are designated as capital gain dividends and
are taxable to shareholders as long-term capital gains, regardless of the length of time the shareholder held his
shares.

Portions of certain Portfolio's investment income may be subject to foreign income taxes withheld at
source. The Trust may elect to "pass-through" to the shareholders of such Portfolios these foreign taxes, in
which event each shareholder will be required to include his pro rata portion thereof in his gross income, but
will be able to deduct or (subject to various limitations) claim a foreign tax credit for such amount.

Distributions to shareholders are treated in the same manner for federal income tax purposes whether
received in cash or reinvested in additional shares of the Trust. In general, distributions by the Trust are
taken into account by the shareholders in the year in which they are made. However, certain distributions made
during January will be treated as having been paid by the Trust and received by the shareholders on December 31
of the preceding year. A statement setting forth the federal income tax status of all distributions made or
deemed made during the year, including any amount of foreign taxes "passed through," will be sent to shareholders
promptly after the end of each year. Notwithstanding the foregoing, distributions by the Trust to certain
Qualified Plans may be exempt from federal income tax.

Under Code Section 817(h), a segregated asset account upon which a variable annuity contract or variable
life insurance policy is based must be "adequately diversified." A segregated asset account will be adequately
diversified if it satisfies one of two alternative tests set forth in Treasury regulations. For purposes of
these alternative diversification tests, a segregated asset account investing in shares of a regulated investment
company will be entitled to "look-through" the regulated investment company to its pro rata portion of the
regulated investment company's assets, provided the regulated investment company satisfies certain conditions
relating to the ownership of its shares. The Trust intends to satisfy these ownership conditions. Further, the
Trust intends that each Portfolio separately will be adequately diversified. Accordingly, a segregated asset
account investing solely in shares of a Portfolio will be adequately diversified, and a segregated asset account
investing in shares of one or more Trust Portfolios and shares of other adequately diversified funds generally
will be adequately diversified.

The foregoing discussion of federal income tax consequences is based on tax laws and regulations in
effect on the date of this Statement, and is subject to change by legislative or administrative action. A
description of other tax considerations generally affecting the Trust and its shareholders is found in the
section of the Prospectus entitled "Tax Matters." No attempt is made to present a detailed explanation of the
tax treatment of the Trust or its shareholders. The discussion herein in the Prospectus is not intended as a
substitute for careful tax planning.

PERFORMANCE: The Portfolios may measure performance in terms of total return, which is calculated for any
specified period of time by assuming the purchase of shares of the Portfolio at the net asset value at the
beginning of the period. Quotations of average annual return for a Portfolio will be expressed in terms of the
average annual compounded rate of return of a hypothetical investment in such Portfolio over periods of 1, 5, and
10 years (up to the life of the Portfolio) and for such other periods as deemed appropriate by the Investment
Manager. These are the annual total rates of return that would equate the initial amount invested to the ending
redeemable value. These rates of return are calculated pursuant to the following formula: P(1+T)n = ERV (where P
= a hypothetical initial payment of $1,000, T = the average annual total return, n = the number of years and ERV
= the ending redeemable value of a hypothetical $1,000 payment made at the beginning of the period). Each
dividend or other distribution paid by each Portfolio during such period is assumed to have been reinvested at
the net asset value on the reinvestment date. The shares then owned as a result of this process are valued at
the net asset value at the end of the period. The percentage increase is determined by subtracting the initial
value of the investment from the ending value and dividing the remainder by the initial value. All total return
figures reflect the deduction of a proportional share of Portfolio expenses on an annual basis.

Each Portfolio's cumulative total return shows a Portfolio's overall dollar or percentage change in
value, including changes in share price and assuming each Portfolio's dividends and capital gains distributions
are reinvested. An average annual total return reflects the hypothetical annually compounded return that would
have produced the same cumulative return if a Portfolio's performance had been constant over the entire period.
Because average annual returns for more than one year tend to smooth out variations in each Portfolio's return,
investors should recognize that such figures are not the same as actual year-by-year results. To illustrate the
components of overall performance, a Portfolio may separate its cumulative and average annual returns into income
results and capital gains or losses. The average annual total return of each Portfolio that had commenced
operations as of December 31, 2000, computed as of that date, is shown in the table below. Such performance
information is historical and is not intended to indicate future performance of the Portfolio. The performance
information does not reflect any charges associated with the variable insurance contracts through which Portfolio
shares are purchased, and would be lower if it did.

Total Return
------------
Date Since
Available One Year Three Years Five Years Ten Inception
for Sale Years
---------------------------------------------- ------------- ------------- ------------ ----------- ------------ ------------

AST Founders Passport Portfolio(1) 05/02/95 (30.28%) 13.63% 11.07% N/A 10.32%
AST Scudder Japan Portfolio* 10/23/00 N/A N/A N/A N/A (17.26%)
AST AIM Internat'l Equity Portfolio(2) 05/17/89 (26.49%) 13.16% 13.42% 10.96% 12.01%
AST Janus Overseas Growth Portfolio 01/02/97 (24.62%) 16.97% N/A N/A 17.39%
AST American Century Internat'l Growth 01/02/97 (16.10%) 18.09% N/A N/A 17.32%
Portfolio
AST American Century Internat'l Growth 01/04/94 (17.38%) 7.53% 7.55% N/A 6.34%
Portfolio II(3)
AST MFS Global Equity Portfolio 10/18/99 (7.17%) N/A N/A N/A 2.05%
AST Janus Small-Cap Growth Portfolio(4) 01/04/94 (48.16%) 9.09% 10.56% N/A 13.15%
AST Scudder Small-Cap Growth Portfolio 01/04/99 (20.95%) N/A N/A N/A 11.04%
AST Federated Aggressive Growth Portfolio* 10/23/00 N/A N/A N/A N/A (9.00%)
AST Goldman Sachs Small-Cap Value 01/02/98 33.85% 13.32% N/A N/A 13.29%
Portfolio(5)
AST Gabelli Small-Cap Value Portfolio(6) 01/02/97 21.86% 3.12% N/A N/A 9.01%
AST Janus Mid-Cap Growth Portfolio* 05/01/00 N/A N/A N/A N/A (33.60%)
AST Neuberger Berman Mid-Cap Growth 10/20/94 (8.07%) 18.85% 17.91% N/A 18.23%
Portfolio(7)
AST Neuberger Berman Mid-Cap Value 05/04/93 27.49% 9.58% 13.16% N/A 11.78%
Portfolio(8)
AST Alger All-Cap Growth Portfolio* 01/03/00 N/A N/A N/A N/A (33.60%)
AST Gabelli All-Cap Value Portfolio* 10/23/00 N/A N/A N/A N/A 0.90%
AST Kinetics Internet Portfolio* 10/23/00 N/A N/A N/A N/A (19.70%)
AST T. Rowe Price Natural Resources Portfolio 05/02/95 26.79% 12.72% 14.12% N/A 14.45%
AST Alliance Growth Portfolio(9) 05/02/96 (13.74%) 13.73% N/A N/A 14.16%
AST MFS Growth Portfolio 10/18/99 N/A N/A N/A N/A 4.63%
AST Marsico Capital Growth Portfolio 12/22/97 (14.25%) 22.82% N/A N/A 22.69%
AST JanCap Growth Portfolio 11/06/92 (30.97%) 21.66% 24.35% N/A 20.61%
AST Janus Strategic Value Portfolio* 10/23/00 N/A N/A N/A N/A (1.50%)
AST Cohen & Steers Realty Portfolio 01/02/98 26.19% 2.72% N/A N/A 2.72%
AST Sanford Bernstein Managed Index 500 01/02/98 (8.82%) 12.24% N/A N/A 12.21%
Portfolio(10)
AST American Century Income & Growth 01/02/97 (10.77%) 7.20% N/A N/A 10.78%
Portfolio(11)
AST Alliance Growth and Income Portfolio(12) 05/01/92 5.52% 11.28% 15.15% N/A 14.53%
AST MFS Growth with Income Portfolio 10/18/99 0.19% N/A N/A N/A 4.45%
AST INVESCO Equity Income Portfolio 01/04/94 4.74% 9.98% 13.88% N/A 13.52%
AST AIM Balanced Portfolio(13) 05/04/93 (40.36%) 9.26% 11.40% N/A 11.00%
AST American Century Strategic Balanced 01/02/97 (3.11%) 9.91% N/A N/A 10.76%
Portfolio
AST T. Rowe Price Asset Allocation Portfolio 01/04/94 (0.48%) 9.11% 11.72% N/A 11.44%
AST T. Rowe Price Global Bond Portfolio(14) 05/03/94 (0.45%) 1.54% 1.39% N/A 2.15%
AST Federated High Yield Portfolio 01/04/94 (9.69%) (1.86%) 4.05% N/A 5.06%
AST Lord Abbett Bond-Debenture Portfolio* 10/23/00 N/A N/A N/A N/A 1.50%
AST PIMCO Total Return Bond Portfolio 01/04/94 11.57% 6.50% 6.54% N/A 6.85%
AST PIMCO Limited Maturity Bond Portfolio 05/02/95 8.43% 5.82% 5.76% N/A 5.91%

* Returns for these Portfolios are not annualized.
(1) Prior to October 15, 1996, Seligman Henderson Co. served as Sub-advisor to the Portfolio. The performance
information provided in the above chart reflects that of the Portfolio for periods during part of which the
Portfolio was sub-advised by the prior Sub-advisor.
(2) Prior to October 15, 1996, Seligman Henderson Co. served as Sub-advisor to the Portfolio. From October 15,
1996 to May 3, 1999, Putnam Investment Management, Inc. served as Sub-advisor to the Portfolio. The performance
information provided in the above chart reflects that of the Portfolio for periods during part of which the
Portfolio was sub-advised by the prior Sub-advisors.
(3) Prior to May 1, 2000, T. Rowe Price International, Inc. served as Sub-advisor to the Portfolio. The
performance information provided in the above chart reflects that of the Portfolio for periods during part of
which the Portfolio was sub-advised by the prior Sub-advisor.
(4) Prior to January 1, 1999, Founders Asset Management LLC served as Sub-advisor to the Portfolio. The
performance information provided in the above chart reflects that of the Portfolio for periods during part of
which the Portfolio was sub-advised by the prior Sub-advisor.
(5) Prior to May 1, 2001, Lord, Abbett & Co., Inc. served as Sub-advisor to the Portfolio. The performance
information provided in the above chart reflects that of the Portfolio for periods during part of which the
Portfolio was sub-advised by the prior Sub-advisor.
(6) Prior to October 23, 2000, T. Rowe Price Associates, Inc. served as Sub-advisor to the Portfolio. The
performance information provided in the above chart reflects that of the Portfolio for periods during which the
Portfolio was sub-advised by the prior Sub-advisor.
(7) Prior to May 1, 1998, Berger Associates, Inc. served as Sub-advisor to the Portfolio. The performance
information provided in the above chart reflects that of the Portfolio for periods during part of which the
Portfolio was sub-advised by the prior Sub-advisor.
(8) Prior to May 1, 1998, Federated Investment Counseling served as Sub-advisor to the Portfolio. The
performance information provided in the above chart reflects that of the Portfolio for periods during part of
which the Portfolio was sub-advised by the prior Sub-advisor.
(9) Prior to December 31, 1998, Robertson, Stephens & Company Investment Management L.P. served as Sub-advisor to
the Portfolio. From December 31, 1999 to April 30, 2000, OppenheimerFunds, Inc. served as Sub-advisor to the
Portfolio. The performance information provided in the above chart reflects that of the Portfolio for periods
during part of which the Portfolio was sub-advised by the prior Sub-advisors.
(10) Prior to May 1, 2000, Bankers Trust Company served as Sub-advisor to the Portfolio. The performance
information provided in the above chart reflects that of the Portfolio for periods during part of which the
Portfolio was sub-advised by the prior Sub-advisor.
(11) Prior to May 4, 1999, Putnam Investment Management, Inc. served as Sub-advisor to the Portfolio. The
performance information provided in the above chart reflects that of the Portfolio for periods during part of
which the Portfolio was sub-advised by the prior Sub-advisor.
(12) Prior to May 1, 2000, Lord, Abbett & Co., Inc. served as Sub-advisor to the Portfolio. The performance
information provided in the above chart reflects that of the Portfolio for periods during part of which the
Portfolio was sub-advised by the prior Sub-advisor.
(13) Prior to October 15, 1996, Phoenix Investment Counsel, Inc. served as Sub-advisor to the Portfolio. From
October 15, 1996 to May 3, 1999, Putnam Investment Management served as Sub-advisor to the Portfolio. The
performance information provided in the above chart reflects that of the Portfolio for periods during part of
which the Portfolio was sub-advised by the prior Sub-advisors.
(14) Prior to May 1, 1996, Scudder, Stevens & Clark, Inc. served as Sub-advisor to the Portfolio. The performance
information provided in the above chart reflects that of the Portfolio for periods during part of which the
Portfolio was sub-advised by the prior Sub-advisor.

The Portfolios may also measure performance in terms of yield. Each Portfolio's yield shows the rate of
income the Portfolio earns on its investments as a percentage of the Portfolio's share price. Quotations of a
Portfolio's yield (other than the AST Money Market Portfolio) are based on the investment income per share earned
during a particular 30-day period (including dividends, if any, and interest), less expenses accrued during the
period ("net investment income"), and are computed by dividing net investment income by the net asset value per
share on the last day of the period, according to the following formula:

YIELD = 2[(a-b + 1)6 -1]
---
cd

where: a = dividend and interest income
b = expenses accrued for the period
c = average daily number of shares outstanding during the period that were entitled to receive dividends
d = maximum net asset value per share on the last day of the period

For the Portfolio's investments denominated in foreign currencies, income and expenses are calculated in
their respective currencies and then converted to U.S. dollars. Yields are calculated according to methods that
are standardized for all stock and bond funds. Because yield calculation methods differ from the method used for
other accounting purposes (for instance, currency gains and losses are not reflected in the yield calculation), a
Portfolio's yield may not equal the income paid to shareholders' accounts or the income reported in the
Portfolio's financial statements.

The AST Money Market Portfolio yield refers to the income generated by an investment in the Portfolio
over a seven-day period expressed as an annual percentage rate. Such Portfolio also may calculate an effective
yield by compounding the base period return over a one-year period. The effective yield will be slightly higher
than the yield because of the compounding effect on this assumed reinvestment.

The current yield and effective yield calculations for shares of the AST Money Market Portfolio are
illustrated for the seven-day period ended December 31, 2000:

Current Yield Effective Yield
------------- ---------------
6.06% 6.25%

Such Portfolio's total return is based on the overall dollar or percentage change in value of a
hypothetical investment in the Portfolio assuming dividend distributions are reinvested.

The Portfolios impose no sales or other charges that would impact the total return or yield
computations. Portfolio performance figures are based upon historical results and are not intended to indicate
future performance. The investment return and principal value of an investment in any of the Portfolios will
fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost.

Yield and total returns quoted from the Portfolios include the effect of deducting each Portfolio's
expenses, but may not include charges and expenses attributable to any particular insurance product. Because
shares of the Portfolios may be purchased through variable insurance contracts, the prospectus of the
Participating Insurance Company sponsoring such contract should be carefully reviewed for information on relevant
charges and expenses. Excluding these charges from quotations of each Portfolio's performance has the effect of
increasing the performance quoted. The effect of these charges should be considered when comparing a Portfolio's
performance to that of other mutual funds. In advertising and sales literature, these figures will be
accompanied by figures that reflect the applicable contract charges.

From time to time in advertisements or sales material, the Portfolios (or Participating Insurance
Companies) may discuss their performance ratings or other information as published by recognized mutual fund
statistical or rating services, such as Lipper Analytical Services, Inc., Morningstar or by publications of
general interest, such as Forbes or Money. The Portfolios may also compare their performance to that of other
------ -----
selected mutual funds, mutual fund averages or recognized stock market indicators, including the Standard &
Poor's 500 Stock Index, the Standard & Poor Midcap Index, the Dow Jones Industrial Average, the Russell 2000 and
the NASDAQ composite. In addition, the Portfolios may compare their total return or yield to the yield on U.S.
Treasury obligations and to the percentage change in the Consumer Price Index. Each of the AST Janus Overseas
Growth Portfolio, AST T. Rowe Price Global Bond Portfolio, AST Founders Passport Portfolio, AST American Century
International Growth Portfolio, AST American Century International Growth Portfolio II and AST AIM International
Equity Portfolio may compare its performance to the record of global market indicators such as Morgan Stanley
Capital International Europe, Australia, Far East Index (EAFE Index), an unmanaged index of foreign common stock
prices translated into U.S. dollars. Such performance ratings or comparisons may be made with funds that may
have different investment restrictions, objectives, policies or techniques than the Portfolios and such other
funds or market indicators may be comprised of securities that differ significantly from the Portfolios'
investments.

CUSTODIAN:

The custodian for all cash and securities holdings of the AST Founders Passport Portfolio, AST Scudder
Japan Portfolio, AST AIM International Equity Portfolio, AST Janus Overseas Growth Portfolio, AST American
Century International Growth Portfolio, AST American Century International Growth Portfolio II, AST MFS Global
Equity Portfolio and AST T. Rowe Price Global Bond Portfolio is The Chase Manhattan Bank, One Pierrepont,
Brooklyn, New York. The custodian for all cash and securities holdings of the other Portfolios is PFPC Trust
Company, Airport Business Center, International Court 2, 200 Stevens Drive, Philadelphia, Pennsylvania 19113.
For these Portfolios, The Chase Manhattan Bank will serve as co-custodian with respect to foreign securities
holdings.

OTHER INFORMATION:

Principal Holders: As of April 15, 2001, more than 99% of each Portfolio was owned of record by
American Skandia Life Assurance Corporation ("ASLAC") on behalf of the owners of variable insurance products
issued by ASLAC. As of October 2, 2000, the amount of shares of the Trust owned by the ten persons who were the
officers and directors of the Trust at that time and who are shown as such in the section of this Statement
entitled "Management," was less than one percent of the shares. To the knowledge of the Trust, no person owned
beneficially more than 5% of any class of the Trust's outstanding shares as of April 15, 2001.

The Participating Insurance Companies are not obligated to continue to invest in shares of any Portfolio
under all circumstances. Variable annuity and variable life insurance policy holders should refer to the
prospectuses for such products for a description of the circumstances in which such a change might occur.

Reports to Holders: Holders of variable annuity contracts or variable life insurance policies issued by
Participating Insurance Companies for which shares of the Trust are the investment vehicle will receive from the
Participating Insurance Companies, unaudited semi-annual financial statements and audited year-end financial
statements. Participants in the Skandia Qualified Plan may request such information from the plan's trustees.
Each report will show the investments owned by the Trust and the market values of the investments and will
provide other information about the Trust and its operations.

FINANCIAL STATEMENTS:

The Trust's audited financial statements are incorporated in this Statement of Additional Information by
reference to Annual Report to Shareholders for each Portfolio for the period ended December 31, 2000. These
financial statements have been audited by Deliotte & Touche, LLP, independent accountants. You may obtain,
without charge, a copy of any or all the documents incorporated by reference in this Statement, including any
exhibits to such documents which have been specifically incorporated by reference. We send such documents upon
receipt of your written or oral request. Please address your request to American Skandia Trust, P.O. Box 883,
Shelton, Connecticut, 06484 or call (203) 926-1888.

APPENDIX

Description of Certain Debt Securities Ratings
----------------------------------------------

Moody's Investors Service, Inc. ("Moody's")

Aaa -- Bonds which are rated Aaa are judged to be of the best quality. They carry the smallest degree
of investment risk and are generally referred to as "gilt edge." Interest payments are protected by a large, or
exceptionally stable, margin, and principal is secure. While the various protective elements are likely to
change, such changes as can be visualized are most unlikely to impair the fundamentally strong position of such
issues.

Aa -- Bonds which are rated Aa are judged to be of high quality by all standards. Together with the Aaa
group they comprise what are generally known as high grade bonds. They are rated lower than the best bonds
because margins of protection may not be as large as in Aaa securities or fluctuation of protective elements may
be of greater amplitude or there may be other elements present which make the long-term risk appear somewhat
larger than the Aaa securities.

A -- Bonds which are rated A possess many favorable investment attributes and are to be considered as
upper-medium-grade obligations. Factors giving security to principal and interest are considered adequate, but
elements may be present which suggest a susceptibility to impairment some time in the future.

Baa -- Bonds which are rated Baa are considered as medium grade obligations (i.e., they are neither
highly protected nor poorly secured). Interest payments and principal security appear adequate for the present
but certain protective elements may be lacking or may be characteristically unreliable over any great length of
time. Such bonds lack outstanding investment characteristics and in fact have speculative characteristics as
well.

Ba -- Bonds which are rated Ba are judged to have speculative elements; their future cannot be
considered as well assured. Often the protection of interest and principal payments may be very moderate and
thereby not well safeguarded during both good and bad times over the future. Uncertainty of position
characterizes bonds in this class.

B -- Bonds which are rated B generally lack characteristics of a desirable investment. Assurance of
interest and principal payments or of maintenance of other terms of the contract over any long period of time may
be small.

Caa -- Bonds which are rated Caa are of poor standing. Such issues may be in default or there may be
present elements of danger with respect to principal or interest.

Ca -- Bonds which are rated Ca represent obligations which are speculative in a high degree. Such
issues are often in default or have other marked shortcomings.

C -- Bonds which are rated C are the lowest rated class of bonds and issues so rated can be regarded as
having extremely poor prospects of ever attaining any real investment standing.

Standard & Poor's Corporation ("Standard & Poor's")

AAA -- Debt rated AAA has the highest rating assigned by Standard & Poor's. Capacity to pay interest
and repay principal is extremely strong.

AA -- Debt rated AA has a strong capacity to pay interest and repay principal, and differs from the
highest rated issues only in a small degree.

A -- Debt rated A has a strong capacity to pay interest and repay principal, although it is somewhat
more susceptible to the adverse effects of changes in circumstances and economic conditions than debt in higher
rated categories.

BBB - Debt rated BBB is regarded as having an adequate capacity to pay interest and repay principal.
Whereas they normally exhibit adequate protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay interest and repay principal for debt in this
category than in higher rated categories.

BB, B, CCC, CC, C -- Debt rated BB, B, CCC, CC and C is regarded as having predominantly speculative
characteristics with respect to capacity to pay interest and repay principal. BB indicates the least degree of
speculation and C the highest. While such debt will likely have some quality and protective characteristics,
these are outweighed by large uncertainties of major risk exposures to adverse conditions.

BB -- Debt rated BB has less near-term vulnerability to default than other speculative issues. However,
it faces major ongoing uncertainties or exposure to adverse business, financial, or economic conditions which
could lead to inadequate capacity to meet timely interest and principal payments. The BB rating is also used for
debt subordinated to senior debt that is assigned an actual or implied BBB rating.

B -- Debt rated B has a greater vulnerability to default but currently has the capacity to meet interest
payments and principal repayments. Adverse business, financial, or economic conditions will likely impair
capacity or willingness to pay interest and repay principal. The B rating category is also used for debt
subordinated to senior debt that is assigned an actual or implied BB or BB-rating.

CCC -- Debt rated CCC has a currently identifiable vulnerability to default, and is dependent upon
favorable business, financial, and economic conditions to meet timely payment of interest and repayment of
principal. In the event of adverse business, economic or financial conditions, it is not likely to have the
capacity to pay interest and repay principal. The CCC rating category is also used for debt subordinated to
senior debt that is assigned an actual or implied B or B- rating.

CC -- The rating CC typically is applied to debt subordinated to senior debt that is assigned an actual
or implied CCC rating.

C -- The C rating may be used to cover a situation where a bankruptcy petition has been filed, but debt
service payments are continued.

CI -- The rating CI is reserved for income bonds on which no interest is being paid.

D -- Debt rated D is in payment default. The D rating category is used when interest payments or
principal payments are not made on the date due, even if the applicable grace period has not expired, unless
Standard & Poor's believes that such payments will be made during such grace period. The D rating also will be
used upon the filing of bankruptcy petition if debt service payments are jeopardized.

Plus (+) or minus (-) -- Ratings from AA to CCC may be modified by the addition of a plus of minus sign
to show relative standing within the major rating categories.

Description of Certain Commercial Paper Ratings
-----------------------------------------------

Moody's

Prime-1 -- Issuers rated Prime-1 (or supporting institutions) have a superior ability for repayment of
senior short-term debt obligations. Prime-1 repayment ability will often be evidenced by many of the following
characteristics: leading market positions in well-established industries; high rates of return on funds
employed; conservative capitalization structures with moderate reliance on debt and ample asset protection; broad
margins in earnings coverage of fixed financial charges and high internal cash generation; and well-established
access to a range of financial markets and assured sources of alternate liquidity.

Prime-2 -- Issuers rated Prime-2 (or related supporting institutions) have a strong ability for
repayment of senior short-term debt obligations. This will normally be evidenced by many of the characteristics
cited above, but to a lesser degree. Earnings trends and coverage ratios, while sound, may be more subject to
variation. Capitalization characteristics, while still appropriate, may be more affected by external
conditions. Ample alternate liquidity is maintained.

Prime-3 -- Issuers rated Prime-3 (or related supporting institutions) have an acceptable ability for
repayment of senior short-term debt obligations. The effect of industry characteristics and market compositions
may be more pronounced. Variability in earnings and profitability may result in changes in the level of debt
protection measurements and may require relatively high financial leverage. Adequate alternate liquidity is
maintained.

Not Prime - Issuers rated Not Prime do not fall within any of the Prime rating categories.

Standard & Poor's

A-1 -- This highest category indicates that the degree of safety regarding time payment is strong.
Those issues determined to possess extremely strong safety characteristics are denoted with a plus sign
designation.

A-2 -- Capacity for timely payment on issues with this designation is satisfactory. However, the
relative degree of safety is not as high as for issues designated "A-1".

A-3 -- Issues carrying this designation have adequate capacity for timely payment. They are, however,
more vulnerable to the adverse effects of the changes in circumstances than obligations carrying the higher
designations.

B -- Issues rated B are regarded as having only speculative capacity for timely payment.

C -- This rating is assigned to short-term debt obligations with a doubtful capacity for payment.

D - Debt rated D is in payment default. The D rating category is used when interest payments or
principal payments are not made on the date due, even if the applicable grace period has not expired, unless
Standard & Poor's believes that such payments will be made during such grace period.

PART C. OTHER INFORMATION
------------------------------

ITEM 23. Exhibits
--------

xii (a). (1) Amended and Restated Declaration of Trust of Registrant.

xv (b). By-laws of Registrant.

vi (c). Articles III and VI of the Registrant's Declaration of Trust and Article 11 of the Registrant's By-laws.

vi (d). (1) Investment Management Agreement between Registrant and American Skandia Life Investment
Management, Inc. for the AST JanCap Growth Portfolio.

vi (2) Investment Management Agreement between Registrant and American Skandia Life Investment
Management, Inc. for the AST Money Market Portfolio.

vi (3) Investment Management Agreement between Registrant and American Skandia Life Investment
Management, Inc. for the AST Federated High Yield Portfolio.

vi (4) Investment Management Agreement between Registrant and American Skandia Life Investment
Management, Inc. for the AST T. Rowe Price Asset Allocation Portfolio.

vi (5) Investment Management Agreement between Registrant and American Skandia Life Investment
Management, Inc. for the AST INVESCO Equity Income Portfolio.

vi (6) Investment Management Agreement between Registrant and American Skandia Life Investment
Management, Inc. for the AST PIMCO Total Return Portfolio.

vi (7) Investment Management Agreement between Registrant and American Skandia Life Investment
Management, Inc. for AST T. Rowe Price Natural Resources Portfolio.

vi (8) Investment Management Agreement between Registrant and American Skandia Life Investment
Management, Inc. for AST PIMCO Limited Maturity Bond Portfolio.

i (9) Investment Management Agreement between Registrant and American Skandia Investment Services,
Incorporated for the AST T. Rowe Price International Bond Portfolio.

ii (10) Investment Management Agreement between Registrant and American Skandia Investment Services,
Incorporated for the AST Janus Overseas Growth Portfolio.

ii (11) Investment Management Agreement between Registrant and American Skandia Investment Services,
Incorporated for the AST Founders Passport Portfolio.

ii (12) Investment Management Agreement between Registrant and American Skandia Investment Services,
Incorporated for the AST American Century International Growth Portfolio.

ii (13) Investment Management Agreement between Registrant and American Skandia Investment Services,
Incorporated for the AST American Century Strategic Balanced Portfolio.

x (14) Investment Management Agreement between Registrant and American Skandia Investment Services,
Incorporated for the AST American Century Income & Growth Portfolio.

x (15) Investment Management Agreement between Registrant and American Skandia Investment Services,
Incorporated for the AST AIM International Equity Portfolio.

x (16) Investment Management Agreement between Registrant and American Skandia Investment Services,
Incorporated for the AST AIM Balanced Portfolio.

(17) Investment Management Agreement between Registrant and American Skandia Investment Services,
Incorporated for the AST Goldman Sachs Small-Cap Value Portfolio.

v (18) Investment Management Agreement between Registrant and American Skandia Investment Services,
Incorporated for the AST Cohen & Steers Realty Portfolio.

v (19) Investment Management Agreement between Registrant and American Skandia Investment Services,
Incorporated for the AST Marsico Capital Growth Portfolio.

vii (20) Investment Management Agreement between Registrant and American Skandia Investment Services,
Incorporated for the AST Neuberger Berman Mid-Cap Value Portfolio.

vii (21) Investment Management Agreement between Registrant and American Skandia Investment Services,
Incorporated for the AST Neuberger Berman Mid-Cap Growth Portfolio.

ix (22) Investment Management Agreement between Registrant and American Skandia Investment Services,
Incorporated for the AST Janus Small-Cap Growth Portfolio.

ix (23) Investment Management Agreement between Registrant and American Skandia Investment Services,
Incorporated for the AST Kemper Small-Cap Growth Portfolio.

xii (24) Investment Management Agreement between Registrant and American Skandia Investment Services,
Incorporated for the AST MFS Global Equity Portfolio.

xii (25) Investment Management Agreement between Registrant and American Skandia Investment Services,
Incorporated for the AST MFS Growth Portfolio.

xii (26) Investment Management Agreement between Registrant and American Skandia Investment Services,
Incorporated for the AST MFS Growth with Income Portfolio.

xiii (27) Investment Management Agreement between Registrant and American Skandia Investment Services,
Incorporated for the AST Alger All-Cap Growth Portfolio.

xv (28) Investment Management Agreement between Registrant and American Skandia Investment Services,
Incorporated for the AST American Century International Growth Portfolio II.

xv (29) Investment Management Agreement between Registrant and American Skandia Investment Services,
Incorporated for the AST Janus Mid-Cap Growth Portfolio.

xv (30) Investment Management Agreement between Registrant and American Skandia Investment Services,
Incorporated for the AST Alliance Growth Portfolio.

xv (31) Investment Management Agreement between Registrant and American Skandia Investment Services,
Incorporated for the AST Sanford Bernstein Managed Index 500 Portfolio.

xv (32) Investment Management Agreement between Registrant and American Skandia Investment Services,
Incorporated for the AST Alliance Growth and Income Portfolio.

xvii (33) Investment Management Agreement between Registrant and American Skandia Investment Services,
Incorporated for the AST Scudder Japan Portfolio.

xvii (34) Investment Management Agreement between Registrant and American Skandia Investment Services,
Incorporated for the AST Federated Aggressive Growth Portfolio.

xvii (35) Investment Management Agreement between Registrant and American Skandia Investment Services,
Incorporated for the AST Gabelli Small-Cap Value Portfolio.

xvii (36) Investment Management Agreement between Registrant and American Skandia Investment Services,
Incorporated for the AST Gabelli All-Cap Value Portfolio.

xvii (37) Investment Management Agreement between Registrant and American Skandia Investment Services,
Incorporated for the AST Kinetics Internet Portfolio.

xvii (38) Investment Management Agreement between Registrant and American Skandia Investment Services,
Incorporated for the AST Janus Strategic Value Portfolio.

xvii (39) Investment Management Agreement between Registrant and American Skandia Investment Services,
Incorporated for the AST Lord Abbett Bond-Debenture Portfolio.

(40) Investment Management Agreement between Registrant and American Skandia Investment Services,
Incorporated for the AST Alliance/Bernstein Growth + Value Portfolio.

(41) Investment Management Agreement between Registrant and American Skandia Investment Services,
Incorporated for the AST Sanford Bernstein Core Value Portfolio.

vi (42) Sub-advisory Agreement between American Skandia Life Investment Management, Inc. and Janus Capital
Corporation for the AST JanCap Growth Portfolio.

xiv (43) Sub-advisory Agreement between American Skandia Investment Services, Inc. and J.P. Morgan
Investment Management Inc. for the AST Money Market Portfolio.

vi (44) Sub-advisory Agreement between American Skandia Investment Services, Inc. and Federated Investment
Counseling for the AST Federated High Yield Portfolio.

vii (45) Sub-advisory Agreement between American Skandia Investment Services, Inc. and T. Rowe Price
Associates, Inc. for the AST T. Rowe Price Asset Allocation Portfolio.

xvi (46) Sub-advisory Agreement between American Skandia Investment Services Inc. and Pacific Investment
Management Company for the AST PIMCO Total Return Portfolio.

vi (47) Sub-advisory Agreement between American Skandia Investment Services, Inc. and T. Rowe Price
Associates, Inc. for the AST T. Rowe Price Natural Resources Portfolio.

xvi (48) Sub-advisory Agreement between American Skandia Investment Services, Inc. and Pacific Investment
Management Company for the AST PIMCO Limited Maturity Bond Portfolio.

xvii (49) Sub-advisory Agreement between American Skandia Investment Services, Incorporated and T. Rowe
Price International, Inc. for the AST T. Rowe Price Global Bond Portfolio.

ii (50) Sub-advisory Agreement between American Skandia Investment Services, Incorporated and Janus
Capital Corporation for the AST Janus Overseas Growth Portfolio.

vii (51) Sub-advisory Agreement between American Skandia Investment Services, Incorporated and Founders
Asset Management LLC for the AST Founders Passport Portfolio.

xvi (52) Sub-advisory Agreement between American Skandia Investment Services, Incorporated and American
Century Investment Management, Inc. for the AST American Century International Growth Portfolio.

xvi (53) Sub-advisory Agreement between American Skandia Investment Services, Incorporated and American
Century Investment Management, Inc. for the AST American Century Strategic Balanced Portfolio.

xvi (54) Sub-advisory Agreement between American Skandia Investment Services, Incorporated and American
Century Investment Management, Inc. for the AST American Century Income & Growth Portfolio.

xv (55) Sub-advisory Agreement between American Skandia Investment Services, Incorporated and A I M
Capital Management, Inc. for the AST AIM International Equity Portfolio.

xv (56) Sub-advisory Agreement between American Skandia Investment Services, Incorporated and A I M
Capital Management, Inc. for the AST AIM Balanced Portfolio.

iv (57) Sub-advisory Agreement between American Skandia Investment Services, Incorporated and INVESCO
Trust Company for the AST INVESCO Equity Income Portfolio.

viii (58) Amendment to Sub-advisory Agreement between American Skandia Investment Services, Incorporated,
INVESCO Trust Company and INVESCO Funds Group, Inc. for the AST INVESCO Equity Income Portfolio.

(59) Sub-advisory Agreement between American Skandia Investment Services, Incorporated and Goldman
Sachs Asset Management for the AST Goldman Sachs Small-Cap Value Portfolio.

v (60) Sub-advisory Agreement between American Skandia Investment Services, Incorporated and Cohen &
Steers Capital Management, Inc. for the AST Cohen & Steers Realty Portfolio.

xviii (61) Sub-advisory Agreement between American Skandia Investment Services, Incorporated and Marsico
Capital Management, LLC for the AST Marsico Capital Growth Portfolio.

vii (62) Sub-advisory Agreement between American Skandia Investment Services, Incorporated and
Neuberger&Berman Management, Incorporated for the AST Neuberger Berman Mid-Cap Value Portfolio.

vii (63) Sub-advisory Agreement between American Skandia Investment Services, Incorporated and
Neuberger&Berman Management, Incorporated for the AST Neuberger Berman Mid-Cap Growth Portfolio.

ix (64) Sub-advisory Agreement between American Skandia Investment Services, Incorporated and Janus
Capital Corporation for the AST Janus Small-Cap Growth Portfolio.

ix (65) Sub-advisory Agreement between American Skandia Investment Services, Incorporated and Scudder
Kemper Investments, Inc. for the AST Kemper Small-Cap Growth Portfolio.

xii (66) Sub-advisory Agreement between American Skandia Investment Services, Incorporated and
Massachusetts Financial Services Company for the AST MFS Global Equity Portfolio.

xii (67) Sub-advisory Agreement between American Skandia Investment Services, Incorporated and
Massachusetts Financial Services Company for the AST MFS Growth Portfolio.

xii (68) Sub-advisory Agreement between American Skandia Investment Services, Incorporated and
Massachusetts Financial Services Company for the AST MFS Growth with Income Portfolio.

xvii (69) Sub-advisory Agreement between American Skandia Investment Services, Incorporated and Fred Alger
Management, Inc. for the AST Alger All-Cap Growth Portfolio.

xv (70) Sub-advisory Agreement between American Skandia Investment Services, Incorporated and American
Century Investment Management, Inc. for the AST American Century International Growth Portfolio II.

xv (71) Sub-advisory Agreement between American Skandia Investment Services, Incorporated and Janus
Capital Corporation. for the AST Janus Mid-Cap Growth Portfolio.

xv (72) Sub-advisory Agreement between American Skandia Investment Services, Incorporated and Alliance
Capital Management L.P. for the AST Alliance Growth Portfolio.

xvii (73) Sub-advisory Agreement between American Skandia Investment Services, Incorporated and Sanford C.
Bernstein & Co., LLC for the AST Sanford Bernstein Managed Index 500 Portfolio.

xv (74) Sub-advisory Agreement between American Skandia Investment Services, Incorporated and Alliance
Capital Management L.P. for the AST Alliance Growth and Income Portfolio.

xvii (75) Sub-advisory Agreement between American Skandia Investment Services, Incorporated and Scudder
Kemper Investments, Inc. for the AST Scudder Japan Portfolio.

xvii (76) Sub-advisory Agreement between American Skandia Investment Services, Inc. and Federated Investment
Counseling for the AST Federated Aggressive Growth Portfolio.

xvii (77) Sub-advisory Agreement between American Skandia Investment Services, Inc. and GAMCO Investors,
Inc. for the AST Gabelli Small-Cap Value Portfolio.

xvii (78) Sub-advisory Agreement between American Skandia Investment Services, Inc. and GAMCO Investors,
Inc. for the AST Gabelli All-Cap Value Portfolio.

xvii (79) Sub-advisory Agreement between American Skandia Investment Services, Inc. and Kinetics Asset
Management, Inc. for the AST Kinetics Internet Portfolio.

xvii (80) Sub-advisory Agreement between American Skandia Investment Services, Inc. and Janus Capital
Corporation for the AST Janus Strategic Value Portfolio.

xvii (81) Sub-advisory Agreement between American Skandia Investment Services, Inc. and Lord Abbett & Co.
for the AST Lord Abbett Bond-Debenture Portfolio.

(82) Sub-advisory Agreement between American Skandia Investment Services, Incorporated, Alliance
Capital Management L.P. and Sanford C. Bernstein & Co., LLC for the AST Alliance/Bernstein Growth
+ Value Portfolio.

(83) Sub-advisory Agreement between American Skandia Investment Services, Incorporated and Sanford C.
Bernstein & Co., LLC for the AST Sanford Bernstein Core Value Portfolio.

vi (e). (1) Sales Agreement between Registrant and American Skandia Life Assurance Corporation.

ii (2) Sales Agreement between Registrant and Kemper Investors Life Insurance Company.

(f). None.

viii (g). (1) Amended and Restated Custody Agreement between Registrant and Morgan Stanley Trust Company.

viii (2) Foreign Custody Manager Delegation Amendment

vi (3) Amended Custodian Agreement between Registrant and Provident National Bank.

viii (4) Amendment to Custodian Services Agreement between Registrant and PNC Bank, N.A.

xv (5) Amendment to Custodian Services Agreement between Registrant and PFPC Trust Company

vi (6) Amended Transfer Agency Agreement between Registrant and Provident Financial Processing
Corporation.

vi (h). (1) Amended Administration Agreement between Registrant and Provident Financial Processing Corporation.

iii (2) Service Agreement between American Skandia Investment Services, Incorporated and Kemper Investors
Life Insurance Company.

xviii (i). Consent of Counsel for the Registrant.

(j). Independent Auditors' Consent.

(k). None.

vi (l). Certificate re: initial $100,000 capital.

xv (m) Form of Rule 12b-1 plan

(n). None.

xvi (p) (1) Form of Code of Ethics of Registrant pursuant to Rule 17j-1.

xvi (2) Form of Code of Ethics of American Skandia Investment Services, Incorporated.

xvi (3) Form of Code of Ethics of American Skandia Marketing, Incorporated.

xviii (4) Form of Code of Ethics of AIM Capital Management, Inc.

xviii (5) Form of Code of Ethics of Alliance Capital Management L.P.

xviii (6) Form of Code of Ethics of American Century Investment Management, Inc.

xviii (7) Form of Code of Ethics of Cohen & Steers Capital Management, Inc.

xviii (8) Form of Code of Ethics of Federated Investment Counseling

xviii (9) Form of Code of Ethics of Founders Asset Management LLC

xviii (10) Form of Code of Ethics of Fred Alger Management, Inc.

xviii (11) Form of Code of Ethics of GAMCO Investors, Inc.

(12) Form of Code of Ethics of Goldman Sachs Asset Management

(13) Form of Code of Ethics Kinetics Asset Management, Inc.

xviii (14) Form of Code of Ethics of INVESCO Funds Group, Inc.

xviii (15) Form of Code of Ethics of Janus Capital Corporation

xviii (16) Form of Code of Ethics of J.P. Morgan Investment Management, Inc.

xviii (17) Form of Code of Ethics of Lord, Abbett & Co.

xviii (18) Form of Code of Ethics of Marsico Capital Management, LLC

xviii (19) Form of Code of Ethics of Massachusetts Financial Services Company

xviii (20) Form of Code of Ethics of Neuberger Berman Management, Inc.

(21) Form of Code of Ethics of Pacific Investment Management Company LLC

xviii (22) Form of Code of Ethics of Sanford C. Bernstein & Co., LLC

(23) Form of Code of Ethics of Zurich Scudder Investments, Inc.

xviii (24) Form of Code of Ethics of T. Rowe Price Associates, Inc.

xviii (25) Form of Code of Ethics of T. Rowe Price International, Inc.
--------------------------
i Filed as an Exhibit to Post-Effective Amendment No. 18 to Registration Statement, which Amendment was filed via EDGAR on
April 30, 1996, and is incorporated herein by reference.

ii Filed as an Exhibit to Post-Effective Amendment No. 20 to Registration Statement, which Amendment was filed via EDGAR on
December 24, 1996, and is incorporated herein by reference.

iii Filed as an Exhibit to Post-Effective Amendment No. 21 to Registration Statement, which Amendment was filed via EDGAR on
February 28, 1997, and is incorporated herein by reference.

iv Filed as an Exhibit to Post-Effective Amendment No. 23 to Registration Statement, which Amendment was filed via EDGAR on
October 7, 1997, and is incorporated herein by reference.

v Filed as an Exhibit to Post-Effective Amendment No. 24 to Registration Statement, which Amendment was filed via EDGAR on
December 19, 1997, and is incorporated herein by reference.

vi Filed as an Exhibit to Post-Effective Amendment No. 25 to Registration Statement, which Amendment was filed via EDGAR on
March 2, 1998, and is incorporated herein by reference.

vii Filed as an Exhibit to Post-Effective Amendment No. 26 to Registration Statement, which Amendment was filed via EDGAR on May
1, 1998, and is incorporated herein by reference.

viii Filed as an Exhibit to Post-Effective Amendment No. 27 to Registration Statement, which Amendment was filed via EDGAR on
October 16, 1998, and is incorporated herein by reference.

ix Filed as an Exhibit to Post-Effective Amendment No. 28 to Registration Statement, which Amendment was filed via EDGAR on
December 28, 1998, and is incorporated herein by reference.

x Filed as an Exhibit to Post-Effective Amendment No. 30 to Registration Statement, which Amendment was filed via EDGAR on
April 28, 1999, and is incorporated herein by reference.

xi Filed as an Exhibit to Post-Effective Amendment No. 31 to Registration Statement, which Amendment was filed via EDGAR on
August 4, 1999, and is incorporated herein by reference.

xii Filed as an Exhibit to Post-Effective Amendment No. 32 to Registration Statement, which Amendment was filed via EDGAR on
October 15, 1999, and is incorporated herein by reference.

xiii Filed as an Exhibit to Post-Effective Amendment No. 33 to Registration Statement, which Amendment was filed via EDGAR on
October 19, 1999, and is incorporated herein by reference.

xiv Filed as an Exhibit to Post-Effective Amendment No. 34 to Registration Statement, which Amendment was filed via EDGAR on
February 16, 2000, and is incorporated herein by reference.

xv Filed as an Exhibit to Post-Effective Amendment No. 35 to Registration Statement, which Amendment was filed via EDGAR on
April 27, 2000, and is incorporated herein by reference.

xvi Filed as an Exhibit to Post-Effective Amendment No. 36 to Registration Statement, which Amendment was filed via EDGAR on
July 28, 2000, and is incorporated herein by reference.

xvii Filed as an Exhibit to Post-Effective Amendment No. 37 to Registration Statement, which Amendment was filed via EDGAR on
October 10, 2000, and is incorporated herein by reference.

xviii Filed as an Exhibit to Post-Effective Amendment No. 38 to Registration Statement, which Amendment was filed via EDGAR on
February 15, 2001, and is incorporated herein by reference.

ITEM 24. Persons Controlled By or Under Common Control with Registrant
-------------------------------------------------------------

Registrant does not control any person within the meaning of the Investment Company Act of 1940. Registrant may be deemed
to be under common control with its investment manager and its affiliates because a controlling interest in Registrant is held of
record by American Skandia Life Assurance Corporation. See Registrant's Statement of Additional Information under "Organization and
Management of the Trust" and "Other Information."

ITEM 25. Indemnification
---------------

Section 5.2 of the Registrant's Amended and Restated Declaration of Trust provides as follows:

The Trust shall indemnify each of its Trustees, officers, employees, and agents (including persons who serve at its request
as directors, officers, employees, agents or trustees of another organization in which it has any interest as a shareholder,
creditor or otherwise) against all liabilities and expenses (including amounts paid in satisfaction of judgments, in
compromise, as fines and penalties, and as counsel fees) reasonably incurred by him in connection with the defense or
disposition of any action, suit or other proceeding, whether civil or criminal, in which he may be involved or with which he
may be threatened, while in office or thereafter, by reason of his being or having been such a trustee, officer, employee or
agent, except with respect to any matter as to which he shall have been adjudicated to be liable to the Trust or its
Shareholders by reason of having acted in bad faith, willful misfeasance, gross negligence or reckless disregard of his
duties; provided, however, that as to any matter disposed of by a compromise payment by such person, pursuant to a consent
decree or otherwise, no indemnification either for said payment or for any other expenses shall be provided unless approved
as in the best interests of the Trust, after notice that it involves such indemnification, by at least a majority of the
disinterested Trustees acting on the matter (provided that a majority of the disinterested Trustees then in office act on
the matter) upon a determination, based upon a review of readily available facts, that (i) such person acted in good faith
in the reasonable belief that his or her action was in the best interests of the Trust and (ii) is not liable to the Trust
or the Shareholders by reason of willful misfeasance, bad faith, gross negligence or reckless disregard of duties; or the
trust shall have received a written opinion from independent legal counsel approved by the Trustees to the effect that (x)
if the matter of good faith and reasonable belief as to the best interests of the Trust, had been adjudicated, it would have
been adjudicated in favor of such person, and (y) based upon a review of readily available facts such trustee, officer,
employee or agent did not engage in willful misfeasance, gross negligence or reckless disregard of duty. The rights
accruing to any Person under these provisions shall not exclude any other right to which he may be lawfully entitled;
provided that no Person may satisfy any right of indemnity or reimbursement granted herein or in Section 5.1 or to which he
may be otherwise entitled except out of the property of the Trust, and no Shareholder shall be personally liable to any
Person with respect to any claim for indemnity or reimbursement or otherwise. The Trustees may make advance payments in
connection with indemnification under this Section 5.2, provided that the indemnified person shall have given a written
undertaking to reimburse the Trust in the event it is subsequently determined that he is not entitled to such
indemnification and, provided further, that the Trust shall have obtained protection, satisfactory in the sole judgement of
the disinterested Trustees acting on the matter (provided that a majority of the disinterested Trustees then in office act
on the matter), against losses arising out of such advance payments or such Trustees , or independent legal counsel, in a
written opinion, shall have determined, based upon a review of readily available facts that there is reason to believe that
such person will be found to be entitled to such indemnification.

With respect to liability of the Investment Manager to Registrant or to shareholders of Registrant's Portfolios under the
Investment Management Agreements, reference is made to Section 13 or 14 of each form of Investment Management Agreement filed
herewith or incorporated by reference herein.

With respect to the Sub-Advisors' indemnification of the Investment Manager and its affiliated and controlling persons, and
the Investment Manager's indemnification of each Sub-advisor and its affiliated and controlling persons, reference is made to Section
14 (Section 9 in the case of the Sub-Advisory Agreement for the AST JanCap Growth Portfolio) of each form of Sub-Advisory Agreement
filed herewith or incorporated by reference herein.

Insofar as indemnification for liability arising under the Securities Act of 1933 may be permitted to trustees, 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 (the "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 or expenses incurred or paid by a trustee, 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.

ITEM 26. Business and Other Connections of Investment Adviser
----------------------------------------------------

American Skandia Investment Services, Incorporated ("ASISI"), One Corporate Drive, Shelton, Connecticut 06484, serves as the
investment manager to the Registrant. Information as to the officers and directors of ASISI is included in ASISI's Form ADV (File
No. 801-40532), including the amendments to such Form ADV filed with the Commission on February 28, 2001 and is incorporated herein
by reference.

ITEM 27. Principal Underwriter
---------------------

Registrant's shares are presently offered exclusively as an investment medium for life insurance companies writing both
variable annuity and variable life insurance policies. Pursuant to an exemptive order of the Commission, Registrant may also sell
its shares directly to the Skandia Qualified Plan and other qualified plans. If Registrant sells its shares to other qualified
plans, it intends to use American Skandia Marketing, Incorporated ("ASM, Inc.") or another affiliated broker-dealer as underwriter,
if so required by applicable law. ASM, Inc. is registered as a broker-dealer with the Commission and the National Association of
Securities Dealers. It is an affiliate of ASISI and American Skandia Life Assurance Corporation, being a wholly-owned subsidiary of
American Skandia Investment Holding Corporation.

The following individuals, all of whom have as their principal business address, One Corporate Drive, Shelton, Connecticut
06484, are the current officers and/or directors of ASM, Inc.:

Wade A. Dokken President, Chairman, Chief Executive Officer & Director
Gordon C. Boronow Deputy Chief Executive Officer & Director
Thomas M. Mazzaferro Executive Vice President, Chief Financial Officer & Director
Patricia J. Abram Senior Vice President
Lori Allen Vice President
Robert Brinkman Senior Vice President
Carl Cavaliere Vice President
Y.K. Chan Senior Vice President, Chief Information Officer & Director
Lucinda C. Ciccarello Vice President
Timothy S. Cronin Vice President
Lincoln R. Collins Director
Jacob Herschler Vice President
Ian Kennedy Senior Vice President & Director
David R. Monroe Senior Vice President, Treasurer & Corporate Controller
Michael A. Murray Senior Vice President
Carl E. Oberholter Vice President
William O'Loughlin Vice President
Polly Rae Vice President
Rebecca Ray Senior Vice President
Hayward L. Sawyer Senior Vice President
Leslie S. Sutherland Vice President
Amanda C. Sutyak Vice President
Christian W. Thwaites Senior Vice President & Director
Bayard F. Tracy Senior Vice President & Director
Mary Toumpas Vice President & Compliance Director
Deborah G. Ullman Senior Vice President & Director
Brett M. Winson Director
Kathleen A. Chapman Assistant Corporate Secretary

Of the above, the following individuals are also officers and/or trustees of Registrant: Gordon C. Boronow (Vice President)
and Thomas M. Mazzaferro (Trustee).

ITEM 28. Location of Accounts and Records
--------------------------------

Records regarding the Registrant's securities holdings are maintained at Registrant's Custodians, PFPC Trust Company,
Airport Business Center, International Court 2, 200 Stevens Drive, Philadelphia, Pennsylvania 19113, and The Chase Manhattan Bank,
One Pierrepont Plaza, Brooklyn, New York 11201. Certain records with respect to the Registrant's securities transactions are
maintained at the offices of the various sub-advisors to the Registrant. The Registrant's corporate records are maintained at its
offices at One Corporate Drive, Shelton, Connecticut 06484. The Registrant's financial and interestholder ledgers and similar
financial records are maintained at the offices of its Administrator, PFPC Inc., 103 Bellevue Parkway, Wilmington, DE 19809.

ITEM 29. Management Services
-------------------

None.

ITEM 30. Undertakings
------------

None.

SIGNATURES
----------

Pursuant to the requirements of the Securities Act of 1933, as amended, and the Investment Company Act of 1940, as amended,
the Registrant has duly caused this Amendment to its Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Shelton and State of Connecticut, on the 30th day of April, 2001. This Amendment meets all the
requirements for effectiveness under paragraph (b) of rule 485 under the Securities Act of 1933.

By: /s/ Edward P. Macdonald
-----------------------
Edward P. Macdonald
Secretary

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

Signature Title Date
--------- ----- ----

/s/ Jan R. Carendi* President (Principal 4/30/01
------------------ -------
Jan R. Carendi Executive Officer)
and Trustee

/s/ Edward P. Macdonald Secretary 4/30/01
----------------------- -------
Edward P. Macdonald

/s/ Richard G. Davy, Jr. Treasurer (Chief 4/30/01
------------------------ -------
Richard G. Davy, Jr. Financial and Accounting
Officer)

/s/ David E. A. Carson* Trustee 4/30/01
---------------------- -------
David E. A. Carson

/s/ Julian A. Lerner* Trustee 4/30/01
--------------------- -------
Julian A. Lerner

/s/ Thomas M. O'Brien* Trustee 4/30/01
--------------------- -------
Thomas M. O'Brien

/s/ F. Don Schwartz* Trustee 4/30/01
------------------- -------
F. Don Schwartz

*By: /s/ Susann A. Palumbo
---------------------
Susann A. Palumbo

*Pursuant to Powers of Attorney previously filed with Post-Effective Amendment No. 22
to the Registration Statement, as filed with the Commission on April 30, 1997.

Registration No. 33-24962

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

EXHIBITS
FILED WITH POST-EFFECTIVE AMENDMENT NO. 39
TO FORM N-1A

REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933 AND
INVESTMENT COMPANY ACT OF 1940

AMERICAN SKANDIA TRUST

Exhibits
--------

Table of Contents
-----------------

Exhibit Number Description
-------------- -----------

(d)(17) Investment Management Agreement between American Skandia Trust and American
Skandia Investment Services, Incorporated for the AST Goldman Sachs Small-Cap
Value Portfolio.

(d)(40) Investment Management Agreement between American Skandia Trust and American
Skandia Investment Services, Incorporated for the AST Alliance/Bernstein Growth
+ Value Portfolio.

(d)(41) Investment Management Agreement between American Skandia Trust and American
Skandia Investment Services, Incorporated for the AST Sanford Bernstein Core
Value Portfolio.

(d)(59) Sub-advisory Agreement between American Skandia Investment Services,
Incorporated and Goldman Sachs Asset Management for the AST Goldman Sachs
Small-Cap Value Portfolio.

(d)(82) Sub-advisory Agreement between American Skandia Investment Services,
Incorporated, Alliance Capital Management L.P. and Sanford C Bernstein & Co.,
LLC for the AST Alliance/Bernstein Growth + Value Portfolio.

(d)(83) Sub-advisory Agreement between American Skandia Investment Services,
Incorporated and Sanford C Bernstein & Co., LLC for the AST Sanford Bernstein
Core Value Portfolio.

(j) Independent Auditor's Consent.

(p)(12) Form of Code of Ethics of Goldman Sachs Asset Management

(p)(13) Form of Code of Ethics of Kinetics Asset Management, Inc.

(p)(21) Form of Code of Ethics of Pacific Investment Management Company LLC

(p)(22) Form of Code of Ethics Zurich Scudder Investments, Inc.


                                                        AMERICAN SKANDIA TRUST
                                                    INVESTMENT MANAGEMENT AGREEMENT
                                                    -------------------------------

THIS AGREEMENT is made this 1st day of May, 2001 by and between American  Skandia Trust, a Massachusetts  business trust (the "Trust"),
and American Skandia Investment Services, Incorporated, a Connecticut corporation (the "Investment Manager").

                                                          W I T N E S S E T H
                                                          - - - - - - - - - -

WHEREAS,  the Trust is registered as an open-end  management  investment  company under the Investment  Company Act of 1940, as amended
(the "ICA"), and the rules and regulations promulgated thereunder; and

WHEREAS,  the  Investment  Manager is an  investment  adviser  registered  under the  Investment  Advisers Act of 1940, as amended (the
"Advisers Act"); and

WHEREAS,  the Trust and the  Investment  Manager  desire to enter into an agreement to provide for the  management of the assets of the
AST Goldman Sachs Small Cap Value Portfolio (the "Portfolio") on the terms and conditions hereinafter set forth.

NOW,  THEREFORE,  in consideration of the mutual  covenants  herein  contained and other good and valuable  consideration,  the receipt
whereof is hereby acknowledged, the parties hereto agree as follows:

1.       Management.  The Investment  Manager shall act as investment  manager for the Portfolio and shall,  in such  capacity,  manage
         ----------
the investment operations of the Portfolio,  including the purchase, retention,  disposition and lending of securities,  subject at all
times to the  policies  and control of the Board of Trustees  of the Trust (the  "Trustees").  The  Investment  Manager  shall give the
Portfolio the benefit of its best judgments, efforts and facilities in rendering its services as investment manager.

2.       Duties of Investment Manager.  In carrying out its obligation under paragraph 1 hereof, the Investment Manager shall:
         ----------------------------

         (a)  supervise and manage all aspects of the Portfolio's operations:

         (b)  provide  the  Portfolio  or obtain for it,  and  thereafter  supervise,  such  executive,  administrative,  clerical  and
shareholder servicing services as are deemed advisable by the Trustees;

         (c) arrange,  but not pay for, the periodic  updating of prospectuses and supplements  thereto,  proxy material,  tax returns,
reports  to the  Portfolio's  shareholders,  reports  to and  filings  with the  Securities  and  Exchange  Commission,  state Blue Sky
authorities and other applicable regulatory authorities;

         (d)  provide to the  Trustees on a regular  basis,  written  financial  reports and  analyses  on the  Portfolio's  securities
transactions and the operations of comparable investment companies;

         (e) determine what issuers and  securities  shall be represented  in the  Portfolio's  portfolio and regularly  report them in
writing to the Trustees;

         (f) formulate and implement  continuing  programs for the purchases and sales of the  securities of such issuers and regularly
report in writing thereon to the Trustees; and

         (g) take,  on behalf of the  Portfolio,  all actions  which appear to the Trust  necessary to carry into effect such  purchase
and sale  programs and  supervisory  functions  as  aforesaid,  including  the placing of orders for the purchase and sale of portfolio
securities.

3.       Broker-Dealer  Relationships.  The  Investment  Manager  is  responsible  for  decisions  to buy and sell  securities  for the
         ----------------------------
Portfolio,  broker-dealer  selection,  and negotiation of the Portfolio's  brokerage  commission  rates.  The Investment  Manager shall
determine  the  securities  to be purchased  or sold by the  Portfolio  pursuant to its  determinations  with or through such  persons,
brokers or dealers,  in conformity  with the policy with respect to brokerage as set forth in the Trust's  Prospectus  and Statement of
Additional Information as in effect from time to time (together, the "Registration  Statement"),  or as the Trustees may determine from
time  to  time.  Generally,  the  Investment  Manager's  primary  consideration  in  placing  Portfolio  securities  transactions  with
broker-dealers  for execution will be to obtain,  and maintain the  availability  of, best execution at the best available  price.  The
Investment Manager may consider the sale of shares of the Portfolio in allocating  Portfolio  securities  transactions,  subject to the
requirements of best net price available and most favorable execution.

         Consistent with this policy, the Investment Manager, in allocating Portfolio securities  transactions,  will take all relevant
factors  into  consideration,  including,  but not limited to: the best price  available;  the  reliability,  integrity  and  financial
condition of the  broker-dealer;  the size of and difficulty in executing the order; and the value of the expected  contribution of the
broker-dealer  to the  investment  performance of the Portfolio on a continuing  basis.  Subject to such policies and procedures as the
Trustees may determine,  the Investment  Manager shall have  discretion to effect  investment  transactions  for the Portfolio  through
broker-dealers  (including,  to the extent  permissible under applicable law,  broker-dealers  affiliated with the Investment  Manager)
qualified to obtain best execution of such  transactions who provide brokerage and/or research  services,  as such services are defined
in section  28(e) of the  Securities  Exchange Act of 1934,  as amended (the "1934  Act"),  and to cause the  Portfolio to pay any such
broker-dealers an amount of commission for effecting a portfolio  investment  transaction in excess of the amount of commission another
broker-dealer  would have charged for effecting that transaction,  if the Investment  Manager determines in good faith that such amount
of commission is reasonable in relation to the value of the brokerage or research  services provided by such  broker-dealer,  viewed in
terms of either that  particular  investment  transaction  or the Investment  Manager's  overall  responsibilities  with respect to the
Portfolio and other accounts as to which the Investment  Manager  exercises  investment  discretion (as such term is defined in section
3(a)(35) of the 1934 Act).  Allocation of orders  placed by the  Investment  Manager on behalf of the Portfolio to such  broker-dealers
shall  be in such  amounts  and  proportions  as the  Investment  Manager  shall  determine  in  good  faith  in  conformity  with  its
responsibilities  under  applicable  laws,  rules and  regulations.  The  Investment  Manager  will report on such  allocations  to the
Trustees  regularly as requested by the Trustees,  indicating the  broker-dealers to whom such allocations have been made and the basis
therefor.

4.       Control by the Trustees.  Any investment program  undertaken by the Investment Manager pursuant to this Agreement,  as well as
         -----------------------
any other  activities  undertaken by the Investment  Manager on behalf of the Trust pursuant  hereto,  shall at all times be subject to
any directives of the Trustees.

5.       Compliance with Applicable  Requirements.  In carrying out its obligations under this Agreement,  the Investment Manager shall
         ----------------------------------------
at all times conform to:

         (a)  all applicable provisions of the ICA and the Advisers Act and any rules and regulations adopted thereunder; and

         (b) the  provisions of the  Registration  Statement,  including the  investment  objectives,  policies and  restrictions,  and
permissible investments specified therein; and

         (c)  the provisions of the Agreement and Declaration of Trust of the Trust, as amended; and

         (d)  the provisions of the By-laws of the Trust, as amended; and

         (e)  any other applicable provisions of state and federal law.

6.       Expenses.  The expenses connected with the Trust shall be allocable between the Trust and the Investment Manager as follows:
         --------

         (a) The  Investment  Manager  shall  furnish,  at its expense  and without  cost to the Trust,  the  services of a  President,
Secretary,  and one or more Vice Presidents of the Trust, to the extent that such additional  officers may be required by the Trust for
the proper conduct of its affairs.

         (b) The  Investment  Manager  shall  further  maintain,  at its expense and without cost to the Trust,  a trading  function in
order to carry out its  obligations  under  subparagraphs  (e),  (f) and (g) of paragraph 2 hereof to place orders for the purchase and
sale of portfolio securities for the Portfolio.

         (c)  Nothing in subparagraph (a) hereof shall be construed to require the Investment Manager to bear:

                  (i) any of the costs  (including  applicable  office space,  facilities and equipment) of the services of a principal
                  financial  officer of the Trust whose normal  duties  consist of  maintaining  the  financial  accounts and books and
                  records of the Trust, including the reviewing of calculations of net asset value and preparing tax returns; or

                  (ii) any of the costs  (including  applicable  office space,  facilities and equipment) of the services of any of the
                  personnel operating under the direction of such principal financial officer.

         Notwithstanding  the obligation of the Trust to bear the expense of the functions  referred to in clauses (i) and (ii) of this
subparagraph (c), the Investment  Manager may pay the salaries,  including any applicable  employment or payroll taxes and other salary
costs,  of the  principal  financial  officer and other  personnel  carrying  out such  functions,  and the Trust shall  reimburse  the
Investment Manager therefor upon proper accounting.

         (d) All of the ordinary  business  expenses  incurred in the  operations  of the Trust and the offering of its shares shall be
borne by the Trust unless  specifically  provided  otherwise in this paragraph 6. These expenses  include,  but are not limited to: (i)
brokerage  commissions,  legal, auditing,  taxes or governmental fees; (ii) the cost of preparing share certificates;  (iii) custodian,
depository,  transfer and  shareholder  service agent costs;  (iv) expenses of issue,  sale,  redemption and repurchase of shares;  (v)
expenses of  registering  and qualifying  shares for sale;  (vi) insurance  premiums on property or personnel  (including  officers and
trustees if available) of the Trust which inure to the Trust's benefit;  (vii) expenses  relating to trustee and shareholder  meetings;
(viii) the cost of preparing and  distributing  reports and notices to shareholders;  (ix) the fees and other expenses  incurred by the
Trust in connection with membership in investment  company  organizations;  and (x) and the cost of printing copies of prospectuses and
statements of additional information, as well as any supplements thereto, distributed to shareholders.

7.       Delegation of  Responsibilities.  Upon the request of the Trustees,  the Investment  Manager may perform services on behalf of
         -------------------------------
the Trust  which are not  required  by this  Agreement.  Such  services  will be  performed  on behalf of the Trust and the  Investment
Manager's  cost in rendering  such  services may be billed  monthly to the Trust,  subject to  examination  by the Trust's  independent
accountants.  Payment or assumption by the Investment  Manager of any Trust expense that the Investment  Manager is not required to pay
or assume  under this  Agreement  shall not relieve the  Investment  Manager of any of its  obligations  to the Trust nor  obligate the
Investment Manager to pay or assume any similar Trust expense on any subsequent occasion.

8.       Engagement of Sub-Advisers  and  Broker-Dealers.  The Investment  Manager may engage,  subject to approval of the Trustees and
         -----------------------------------------------
where required,  the  shareholders of the Portfolio,  a sub-adviser to provide  advisory  services in relation to the Portfolio.  Under
such sub-advisory  agreement,  the Investment Manager may delegate to the sub-adviser the duties outlined in subparagraphs (e), (f) and
(g) of paragraph 2 hereof.

9.       Compensation.  The Trust shall pay the  Investment  Manager in full  compensation  for services  rendered  hereunder an annual
         ------------
investment  advisory  fee. The fee shall be payable  monthly in arrears,  based on the average  daily net assets of the  Portfolio  for
each month, at the annual rate set forth in Exhibit A to this Agreement.

10.      Non-Exclusivity.  The  services of the  Investment  Manager to the  Portfolio  are not to be deemed to be  exclusive,  and the
         ---------------
Investment  Manager shall be free to render  investment  advisory and corporate  administrative  or other services to others (including
other  investment  companies)  and to engage in other  activities.  It is  understood  and agreed  that  officers or  directors  of the
Investment  Manager may serve as officers  or trustees of the Trust,  and that  officers or trustees of the Trust may serve as officers
or directors of the Investment  Manager to the extent  permitted by law; and that the officers and directors of the Investment  Manager
are not prohibited  from engaging in any other business  activity or from  rendering  services to any other person,  or from serving as
partners, officers or directors of any other firm or corporation, including other investment companies.

11.      Term and Approval.  This Agreement  shall become  effective on May 1, 2001 and by shall continue in force and effect from year
         -----------------
to year, provided that such continuance is specifically approved at least annually by:

         (a) the Trustees or the vote of a majority of the Portfolio's  outstanding  voting  securities (as defined in Section 2(a)(42)
of the ICA); and

         (b) the  affirmative  vote of a majority of the Trustees  who are not parties to this  Agreement  or  interested  persons of a
party to this Agreement (other than as Trust trustees), by votes cast in person at a meeting specifically called for such purpose.

12.      Termination.  This  Agreement may be terminated at any time without the payment of any penalty or prejudice to the  completion
         -----------
of any transactions  already initiated on behalf of the Portfolio,  by vote of the Trustees or by vote of a majority of the Portfolio's
outstanding  voting  securities,  or by the  Investment  Manager,  on sixty (60) days'  written  notice to the other party.  The notice
provided for herein may be waived by either party.  This Agreement  automatically  terminates in the event of its "assignment," as such
term is defined in the ICA.

13.      Liability of Investment Manager and  Indemnification.  In the absence of willful  misfeasance,  bad faith, gross negligence or
         ----------------------------------------------------
reckless  disregard of  obligations  or duties  hereunder on the part of the  Investment  Manager or any of its officers,  directors or
employees,  it shall not be subject to liability to the Trust or to any  shareholder  of the  Portfolio  for any act or omission in the
course of, or connected with,  rendering  services  hereunder or for any losses that may be sustained in the purchase,  holding or sale
of any security.

14.      Liability of the Trustees and  Shareholders.  A copy of the  Agreement and  Declaration  of Trust of the Trust is on file with
         -------------------------------------------
the  Secretary of the  Commonwealth  of  Massachusetts,  and notice is hereby given that this  instrument  is executed on behalf of the
Trustees as trustees and not  individually  and that the  obligations  of this  instrument  are not binding upon any of the Trustees or
shareholders  individually  but are  binding  only  upon  the  assets  and  property  of the  Trust.  Federal  and  state  laws  impose
responsibilities  under  certain  circumstances  on persons who act in good  faith,  and  therefore,  nothing  herein  shall in any way
constitute a waiver of limitation of any rights which the Trust or the Investment Manager may have under applicable law.

15.      Notices.  Any notices under this  Agreement  shall be in writing,  addressed and delivered or mailed postage paid to the other
         -------
party at such address as such other party may designate for the receipt of such notice.  Until  further  notice,  it is agreed that the
address of the Trust and the Investment Manager shall be One Corporate Drive, Shelton, Connecticut 06484.

16.      Questions of  Interpretation.  Any question of  interpretation of any term or provision of this Agreement having a counterpart
         ----------------------------
in or otherwise  derived  from a term or provision of the ICA,  shall be resolved by reference to such term or provision of the ICA and
to interpretations  thereof,  if any, by the United States courts or, in the absence of any controlling  decision of any such court, by
rules,  regulations or orders of the Securities and Exchange  Commission  issued pursuant to the ICA. In addition,  where the effect of
a requirement of the ICA,  reflected in any provision of this  Agreement,  is released by rules,  regulation or order of the Securities
and Exchange Commission, such provision shall be deemed to incorporate the effect of such rule, regulation or order.

         IN WITNESS  WHEREOF,  the parties hereto have caused this Agreement to be executed in duplicate by their  respective  officers
on the day and year first above written.




                                                                  AMERICAN SKANDIA TRUST


Attest:                                                           By: ____________________________________
Gordon C. Boronow
____________________________________                                            Vice President






                                                                  AMERICAN SKANDIA INVESTMENT
                                                                  SERVICES, INCORPORATED


Attest:                                                           By: ____________________________________
                                                                                John Birch
____________________________________                                            Senior Vice President & Chief Operating Officer

                                                        American Skandia Trust
                                              AST Goldman Sachs Small Cap Value Portfolio
                                                    Investment Management Agreement

                                                               EXHIBIT A
                                                               ---------





         An annual rate of .95% of the average daily net assets of the Portfolio.

                                                  AMERICAN SKANDIA TRUST
                                              INVESTMENT MANAGEMENT AGREEMENT
                                              -------------------------------

THIS AGREEMENT is made this 1st day of May, 2001 by and between  American  Skandia Trust,  a  Massachusetts  business trust
(the  "Trust"),  and American  Skandia  Investment  Services,  Incorporated,  a Connecticut  corporation  (the  "Investment
Manager").

                                                    W I T N E S S E T H
                                                    - - - - - - - - - -

WHEREAS,  the Trust is registered as an open-end  management  investment  company under the Investment Company Act of 1940,
as amended (the "ICA"), and the rules and regulations promulgated thereunder; and

WHEREAS,  the Investment Manager is an investment adviser registered under the Investment  Advisers Act of 1940, as amended
(the "Advisers Act"); and

WHEREAS,  the Trust and the  Investment  Manager  desire to enter into an  agreement to provide for the  management  of the
assets of the AST  Alliance/Bernstein  Growth + Value Portfolio (the  "Portfolio") on the terms and conditions  hereinafter
set forth.

NOW, THEREFORE,  in consideration of the mutual covenants herein contained and other good and valuable  consideration,  the
receipt whereof is hereby acknowledged, the parties hereto agree as follows:

1.       Management.  The  Investment  Manager  shall act as  investment  manager  for the  Portfolio  and  shall,  in such
         ----------
capacity,  manage the investment operations of the Portfolio,  including the purchase,  retention,  disposition and lending
of  securities,  subject at all times to the policies  and control of the Board of Trustees of the Trust (the  "Trustees").
The  Investment  Manager shall give the Portfolio the benefit of its best  judgments,  efforts and  facilities in rendering
its services as investment manager.

2.       Duties of Investment  Manager.  In carrying out its obligation  under paragraph 1 hereof,  the Investment  Manager
         -----------------------------
shall:

         (a)  supervise and manage all aspects of the Portfolio's operations:

         (b) provide the Portfolio or obtain for it, and thereafter  supervise,  such executive,  administrative,  clerical
and shareholder servicing services as are deemed advisable by the Trustees;

         (c) arrange, but not pay for, the periodic updating of prospectuses and supplements thereto,  proxy material,  tax
returns,  reports to the  Portfolio's  shareholders,  reports to and filings with the Securities  and Exchange  Commission,
state Blue Sky authorities and other applicable regulatory authorities;

         (d)  provide to the  Trustees on a regular  basis,  written  financial  reports  and  analyses on the  Portfolio's
securities transactions and the operations of comparable investment companies;

         (e) determine what issuers and securities  shall be represented in the Portfolio's  portfolio and regularly report
them in writing to the Trustees;

         (f)  formulate  and implement  continuing  programs for the purchases and sales of the  securities of such issuers
and regularly report in writing thereon to the Trustees; and

         (g) take, on behalf of the  Portfolio,  all actions which appear to the Trust  necessary to carry into effect such
purchase and sale programs and  supervisory  functions as  aforesaid,  including the placing of orders for the purchase and
sale of portfolio securities.

3.       Broker-Dealer  Relationships.  The Investment  Manager is responsible for decisions to buy and sell securities for
         ----------------------------
the Portfolio,  broker-dealer  selection,  and negotiation of the Portfolio's  brokerage  commission  rates. The Investment
Manager shall  determine the  securities to be purchased or sold by the Portfolio  pursuant to its  determinations  with or
through  such  persons,  brokers or dealers,  in  conformity  with the policy with respect to brokerage as set forth in the
Trust's  Prospectus and Statement of Additional  Information as in effect from time to time  (together,  the  "Registration
Statement"),  or  as  the  Trustees  may  determine  from  time  to  time.  Generally,  the  Investment  Manager's  primary
consideration  in placing  Portfolio  securities  transactions  with  broker-dealers  for execution will be to obtain,  and
maintain the  availability  of, best execution at the best available  price.  The Investment  Manager may consider the sale
of shares of the Portfolio in allocating Portfolio securities  transactions,  subject to the requirements of best net price
available and most favorable execution.

         Consistent with this policy, the Investment Manager, in allocating  Portfolio securities  transactions,  will take
all  relevant  factors  into  consideration,  including,  but not limited to: the best price  available;  the  reliability,
integrity and financial  condition of the  broker-dealer;  the size of and difficulty in executing the order; and the value
of the expected  contribution of the  broker-dealer to the investment  performance of the Portfolio on a continuing  basis.
Subject to such policies and procedures as the Trustees may  determine,  the  Investment  Manager shall have  discretion to
effect  investment  transactions for the Portfolio  through  broker-dealers  (including,  to the extent  permissible  under
applicable  law,  broker-dealers  affiliated  with the  Investment  Manager)  qualified  to obtain best  execution  of such
transactions  who provide  brokerage  and/or  research  services,  as such  services  are  defined in section  28(e) of the
Securities  Exchange Act of 1934, as amended (the "1934 Act"),  and to cause the  Portfolio to pay any such  broker-dealers
an amount of commission  for effecting a portfolio  investment  transaction  in excess of the amount of commission  another
broker-dealer  would have charged for effecting that transaction,  if the Investment  Manager determines in good faith that
such amount of commission is  reasonable  in relation to the value of the brokerage or research  services  provided by such
broker-dealer,  viewed in terms of either that  particular  investment  transaction  or the  Investment  Manager's  overall
responsibilities  with respect to the Portfolio and other accounts as to which the Investment Manager exercises  investment
discretion  (as such term is defined in section  3(a)(35) of the 1934 Act).  Allocation of orders placed by the  Investment
Manager on behalf of the  Portfolio to such  broker-dealers  shall be in such  amounts and  proportions  as the  Investment
Manager  shall  determine  in good  faith  in  conformity  with its  responsibilities  under  applicable  laws,  rules  and
regulations.  The  Investment  Manager  will report on such  allocations  to the  Trustees  regularly  as  requested by the
Trustees, indicating the broker-dealers to whom such allocations have been made and the basis therefor.

4.       Control by the Trustees.  Any investment  program undertaken by the Investment Manager pursuant to this Agreement,
         -----------------------
as well as any other activities  undertaken by the Investment Manager on behalf of the Trust pursuant hereto,  shall at all
times be subject to any directives of the Trustees.

5.       Compliance with Applicable  Requirements.  In carrying out its  obligations  under this Agreement,  the Investment
         ----------------------------------------
Manager shall at all times conform to:

         (a) all applicable  provisions of the ICA and the Advisers Act and any rules and regulations  adopted  thereunder;
and

         (b)  the  provisions  of  the  Registration   Statement,   including  the  investment  objectives,   policies  and
restrictions, and permissible investments specified therein; and

         (c)  the provisions of the Agreement and Declaration of Trust of the Trust, as amended; and

         (d)  the provisions of the By-laws of the Trust, as amended; and

         (e)  any other applicable provisions of state and federal law.

6.       Expenses.  The expenses  connected with the Trust shall be allocable between the Trust and the Investment  Manager
         --------
as follows:

         (a) The  Investment  Manager  shall  furnish,  at its  expense and without  cost to the Trust,  the  services of a
President,  Secretary,  and one or more Vice Presidents of the Trust,  to the extent that such  additional  officers may be
required by the Trust for the proper conduct of its affairs.

         (b) The  Investment  Manager  shall  further  maintain,  at its expense and without  cost to the Trust,  a trading
function in order to carry out its obligations under  subparagraphs  (e), (f) and (g) of paragraph 2 hereof to place orders
for the purchase and sale of portfolio securities for the Portfolio.

         (c)  Nothing in subparagraph (a) hereof shall be construed to require the Investment Manager to bear:

                  (i) any of the costs (including  applicable office space,  facilities and equipment) of the services of a
                  principal  financial  officer of the Trust whose  normal  duties  consist of  maintaining  the  financial
                  accounts and books and records of the Trust,  including the reviewing of  calculations of net asset value
                  and preparing tax returns; or

                  (ii) any of the costs (including  applicable  office space,  facilities and equipment) of the services of
                  any of the personnel operating under the direction of such principal financial officer.

         Notwithstanding  the  obligation of the Trust to bear the expense of the functions  referred to in clauses (i) and
(ii) of this  subparagraph  (c), the  Investment  Manager may pay the  salaries,  including  any  applicable  employment or
payroll taxes and other salary costs, of the principal  financial officer and other personnel  carrying out such functions,
and the Trust shall reimburse the Investment Manager therefor upon proper accounting.

         (d) All of the ordinary  business  expenses incurred in the operations of the Trust and the offering of its shares
shall be borne by the Trust unless  specifically  provided  otherwise in this paragraph 6. These expenses include,  but are
not limited to: (i) brokerage commissions,  legal,  auditing,  taxes or governmental fees; (ii) the cost of preparing share
certificates;  (iii) custodian,  depository,  transfer and shareholder  service agent costs; (iv) expenses of issue,  sale,
redemption and repurchase of shares;  (v) expenses of registering and qualifying  shares for sale; (vi) insurance  premiums
on property or personnel  (including  officers and trustees if available) of the Trust which inure to the Trust's  benefit;
(vii) expenses  relating to trustee and shareholder  meetings;  (viii) the cost of preparing and  distributing  reports and
notices  to  shareholders;  (ix) the fees and  other  expenses  incurred  by the Trust in  connection  with  membership  in
investment  company  organizations;  and (x) and the cost of printing copies of  prospectuses  and statements of additional
information, as well as any supplements thereto, distributed to shareholders.

7.       Delegation of Responsibilities.  Upon the request of the Trustees,  the Investment Manager may perform services on
         ------------------------------
behalf of the Trust which are not required by this  Agreement.  Such  services will be performed on behalf of the Trust and
the Investment  Manager's  cost in rendering  such services may be billed  monthly to the Trust,  subject to examination by
the Trust's  independent  accountants.  Payment or  assumption  by the  Investment  Manager of any Trust  expense  that the
Investment  Manager is not required to pay or assume under this Agreement  shall not relieve the Investment  Manager of any
of its  obligations  to the Trust nor obligate the  Investment  Manager to pay or assume any similar  Trust  expense on any
subsequent occasion.

8.       Engagement of  Sub-Advisers  and  Broker-Dealers.  The Investment  Manager may engage,  subject to approval of the
         ------------------------------------------------
Trustees and where required,  the shareholders of the Portfolio,  a sub-adviser to provide advisory services in relation to
the Portfolio.  Under such  sub-advisory  agreement,  the  Investment  Manager may delegate to the  sub-adviser  the duties
outlined in subparagraphs (e), (f) and (g) of paragraph 2 hereof.

9.       Compensation.  The Trust shall pay the Investment  Manager in full compensation for services rendered hereunder an
         ------------
annual  investment  advisory  fee. The fee shall be payable  monthly in arrears,  based on the average  daily net assets of
the Portfolio for each month, at the annual rate set forth in Exhibit A to this Agreement.

10.      Non-Exclusivity.  The services of the  Investment  Manager to the  Portfolio are not to be deemed to be exclusive,
         ---------------
and the Investment  Manager shall be free to render investment  advisory and corporate  administrative or other services to
others  (including  other  investment  companies)  and to engage in other  activities.  It is  understood  and agreed  that
officers or  directors  of the  Investment  Manager may serve as  officers or trustees of the Trust,  and that  officers or
trustees of the Trust may serve as officers or  directors  of the  Investment  Manager to the extent  permitted by law; and
that the officers and directors of the Investment  Manager are not prohibited from engaging in any other business  activity
or from  rendering  services to any other person,  or from serving as partners,  officers or directors of any other firm or
corporation, including other investment companies.

11.      Term and  Approval.  This  Agreement  shall  become  effective  on May 1, 2001 and by shall  continue in force and
         ------------------
effect from year to year, provided that such continuance is specifically approved at least annually by:

         (a) the  Trustees  or the vote of a majority  of the  Portfolio's  outstanding  voting  securities  (as defined in
Section 2(a)(42) of the ICA); and

         (b) the  affirmative  vote of a majority of the  Trustees  who are not  parties to this  Agreement  or  interested
persons of a party to this  Agreement  (other than as Trust  trustees),  by votes cast in person at a meeting  specifically
called for such purpose.

12.      Termination.  This  Agreement may be terminated at any time without the payment of any penalty or prejudice to the
         -----------
completion  of any  transactions  already  initiated  on behalf of the  Portfolio,  by vote of the Trustees or by vote of a
majority of the  Portfolio's  outstanding  voting  securities,  or by the Investment  Manager,  on sixty (60) days' written
notice to the other party.  The notice  provided for herein may be waived by either  party.  This  Agreement  automatically
terminates in the event of its "assignment," as such term is defined in the ICA.

13.      Liability of Investment  Manager and  Indemnification.  In the absence of willful  misfeasance,  bad faith,  gross
         -----------------------------------------------------
negligence or reckless  disregard of  obligations or duties  hereunder on the part of the Investment  Manager or any of its
officers,  directors  or  employees,  it shall  not be  subject  to  liability  to the Trust or to any  shareholder  of the
Portfolio  for any act or omission in the course of, or  connected  with,  rendering  services  hereunder or for any losses
that may be sustained in the purchase, holding or sale of any security.

14.      Liability of the Trustees and  Shareholders.  A copy of the Agreement and  Declaration of Trust of the Trust is on
         -------------------------------------------
file with the Secretary of the Commonwealth of  Massachusetts,  and notice is hereby given that this instrument is executed
on behalf of the Trustees as trustees and not  individually  and that the  obligations  of this  instrument are not binding
upon any of the  Trustees or  shareholders  individually  but are binding  only upon the assets and  property of the Trust.
Federal  and state laws  impose  responsibilities  under  certain  circumstances  on  persons  who act in good  faith,  and
therefore,  nothing  herein  shall in any way  constitute  a waiver  of  limitation  of any  rights  which the Trust or the
Investment Manager may have under applicable law.

15.      Notices.  Any notices under this Agreement shall be in writing,  addressed and delivered or mailed postage paid to
         -------
the other party at such address as such other party may  designate for the receipt of such notice.  Until  further  notice,
it is agreed that the address of the Trust and the Investment  Manager shall be One Corporate Drive,  Shelton,  Connecticut
06484.

16.      Questions of  Interpretation.  Any question of  interpretation of any term or provision of this Agreement having a
         ----------------------------
counterpart  in or otherwise  derived  from a term or provision of the ICA,  shall be resolved by reference to such term or
provision  of the ICA and to  interpretations  thereof,  if any,  by the United  States  courts  or, in the  absence of any
controlling  decision of any such court, by rules,  regulations or orders of the Securities and Exchange  Commission issued
pursuant  to the ICA. In  addition,  where the effect of a  requirement  of the ICA,  reflected  in any  provision  of this
Agreement,  is released by rules,  regulation or order of the Securities and Exchange  Commission,  such provision shall be
deemed to incorporate the effect of such rule, regulation or order.

         IN WITNESS WHEREOF,  the parties hereto have caused this Agreement to be executed in duplicate by their respective
officers on the day and year first above written.




                                                                  AMERICAN SKANDIA TRUST


Attest:                                                           By: ____________________________________
Gordon C. Boronow
____________________________________                                            Vice President






                                                                  AMERICAN SKANDIA INVESTMENT
                                                                  SERVICES, INCORPORATED


Attest:                                                           By: ____________________________________
                                                                                John Birch
____________________________________                                            Senior Vice President & Chief
                                                                                Operating Officer
                                                  American Skandia Trust
                                      AST Alliance/Bernstein Growth + Value Portfolio
                                              Investment Management Agreement

                                                         EXHIBIT A
                                                         ---------





         An annual rate of 0.90% of the average daily net assets of the Portfolio.

                                                  AMERICAN SKANDIA TRUST
                                              INVESTMENT MANAGEMENT AGREEMENT
                                              -------------------------------

THIS AGREEMENT is made this 1st day of May, 2001 by and between  American  Skandia Trust,  a  Massachusetts  business trust
(the  "Trust"),  and American  Skandia  Investment  Services,  Incorporated,  a Connecticut  corporation  (the  "Investment
Manager").

                                                    W I T N E S S E T H
                                                    - - - - - - - - - -

WHEREAS,  the Trust is registered as an open-end  management  investment  company under the Investment Company Act of 1940,
as amended (the "ICA"), and the rules and regulations promulgated thereunder; and

WHEREAS,  the Investment Manager is an investment adviser registered under the Investment  Advisers Act of 1940, as amended
(the "Advisers Act"); and

WHEREAS,  the Trust and the  Investment  Manager  desire to enter into an  agreement to provide for the  management  of the
assets of the AST Sanford  Bernstein Core Value  Portfolio (the  "Portfolio")  on the terms and conditions  hereinafter set
forth.

NOW, THEREFORE,  in consideration of the mutual covenants herein contained and other good and valuable  consideration,  the
receipt whereof is hereby acknowledged, the parties hereto agree as follows:

1.       Management.  The  Investment  Manager  shall act as  investment  manager  for the  Portfolio  and  shall,  in such
         ----------
capacity,  manage the investment operations of the Portfolio,  including the purchase,  retention,  disposition and lending
of  securities,  subject at all times to the policies  and control of the Board of Trustees of the Trust (the  "Trustees").
The  Investment  Manager shall give the Portfolio the benefit of its best  judgments,  efforts and  facilities in rendering
its services as investment manager.

2.       Duties of Investment  Manager.  In carrying out its obligation  under paragraph 1 hereof,  the Investment  Manager
         -----------------------------
shall:

         (a)  supervise and manage all aspects of the Portfolio's operations:

         (b) provide the Portfolio or obtain for it, and thereafter  supervise,  such executive,  administrative,  clerical
and shareholder servicing services as are deemed advisable by the Trustees;

         (c) arrange, but not pay for, the periodic updating of prospectuses and supplements thereto,  proxy material,  tax
returns,  reports to the  Portfolio's  shareholders,  reports to and filings with the Securities  and Exchange  Commission,
state Blue Sky authorities and other applicable regulatory authorities;

         (d)  provide to the  Trustees on a regular  basis,  written  financial  reports  and  analyses on the  Portfolio's
securities transactions and the operations of comparable investment companies;

         (e) determine what issuers and securities  shall be represented in the Portfolio's  portfolio and regularly report
them in writing to the Trustees;

         (f)  formulate  and implement  continuing  programs for the purchases and sales of the  securities of such issuers
and regularly report in writing thereon to the Trustees; and

         (g) take, on behalf of the  Portfolio,  all actions which appear to the Trust  necessary to carry into effect such
purchase and sale programs and  supervisory  functions as  aforesaid,  including the placing of orders for the purchase and
sale of portfolio securities.

3.       Broker-Dealer  Relationships.  The Investment  Manager is responsible for decisions to buy and sell securities for
         ----------------------------
the Portfolio,  broker-dealer  selection,  and negotiation of the Portfolio's  brokerage  commission  rates. The Investment
Manager shall  determine the  securities to be purchased or sold by the Portfolio  pursuant to its  determinations  with or
through  such  persons,  brokers or dealers,  in  conformity  with the policy with respect to brokerage as set forth in the
Trust's  Prospectus and Statement of Additional  Information as in effect from time to time  (together,  the  "Registration
Statement"),  or  as  the  Trustees  may  determine  from  time  to  time.  Generally,  the  Investment  Manager's  primary
consideration  in placing  Portfolio  securities  transactions  with  broker-dealers  for execution will be to obtain,  and
maintain the  availability  of, best execution at the best available  price.  The Investment  Manager may consider the sale
of shares of the Portfolio in allocating Portfolio securities  transactions,  subject to the requirements of best net price
available and most favorable execution.

         Consistent with this policy, the Investment Manager, in allocating  Portfolio securities  transactions,  will take
all  relevant  factors  into  consideration,  including,  but not limited to: the best price  available;  the  reliability,
integrity and financial  condition of the  broker-dealer;  the size of and difficulty in executing the order; and the value
of the expected  contribution of the  broker-dealer to the investment  performance of the Portfolio on a continuing  basis.
Subject to such policies and procedures as the Trustees may  determine,  the  Investment  Manager shall have  discretion to
effect  investment  transactions for the Portfolio  through  broker-dealers  (including,  to the extent  permissible  under
applicable  law,  broker-dealers  affiliated  with the  Investment  Manager)  qualified  to obtain best  execution  of such
transactions  who provide  brokerage  and/or  research  services,  as such  services  are  defined in section  28(e) of the
Securities  Exchange Act of 1934, as amended (the "1934 Act"),  and to cause the  Portfolio to pay any such  broker-dealers
an amount of commission  for effecting a portfolio  investment  transaction  in excess of the amount of commission  another
broker-dealer  would have charged for effecting that transaction,  if the Investment  Manager determines in good faith that
such amount of commission is  reasonable  in relation to the value of the brokerage or research  services  provided by such
broker-dealer,  viewed in terms of either that  particular  investment  transaction  or the  Investment  Manager's  overall
responsibilities  with respect to the Portfolio and other accounts as to which the Investment Manager exercises  investment
discretion  (as such term is defined in section  3(a)(35) of the 1934 Act).  Allocation of orders placed by the  Investment
Manager on behalf of the  Portfolio to such  broker-dealers  shall be in such  amounts and  proportions  as the  Investment
Manager  shall  determine  in good  faith  in  conformity  with its  responsibilities  under  applicable  laws,  rules  and
regulations.  The  Investment  Manager  will report on such  allocations  to the  Trustees  regularly  as  requested by the
Trustees, indicating the broker-dealers to whom such allocations have been made and the basis therefor.

4.       Control by the Trustees.  Any investment  program undertaken by the Investment Manager pursuant to this Agreement,
         -----------------------
as well as any other activities  undertaken by the Investment Manager on behalf of the Trust pursuant hereto,  shall at all
times be subject to any directives of the Trustees.

5.       Compliance with Applicable  Requirements.  In carrying out its  obligations  under this Agreement,  the Investment
         ----------------------------------------
Manager shall at all times conform to:

         (a) all applicable  provisions of the ICA and the Advisers Act and any rules and regulations  adopted  thereunder;
and

         (b)  the  provisions  of  the  Registration   Statement,   including  the  investment  objectives,   policies  and
restrictions, and permissible investments specified therein; and

         (c)  the provisions of the Agreement and Declaration of Trust of the Trust, as amended; and

         (d)  the provisions of the By-laws of the Trust, as amended; and

         (e)  any other applicable provisions of state and federal law.

6.       Expenses.  The expenses  connected with the Trust shall be allocable between the Trust and the Investment  Manager
         --------
as follows:

         (a) The  Investment  Manager  shall  furnish,  at its  expense and without  cost to the Trust,  the  services of a
President,  Secretary,  and one or more Vice Presidents of the Trust,  to the extent that such  additional  officers may be
required by the Trust for the proper conduct of its affairs.

         (b) The  Investment  Manager  shall  further  maintain,  at its expense and without  cost to the Trust,  a trading
function in order to carry out its obligations under  subparagraphs  (e), (f) and (g) of paragraph 2 hereof to place orders
for the purchase and sale of portfolio securities for the Portfolio.

         (c)  Nothing in subparagraph (a) hereof shall be construed to require the Investment Manager to bear:

                  (i) any of the costs (including  applicable office space,  facilities and equipment) of the services of a
                  principal  financial  officer of the Trust whose  normal  duties  consist of  maintaining  the  financial
                  accounts and books and records of the Trust,  including the reviewing of  calculations of net asset value
                  and preparing tax returns; or

                  (ii) any of the costs (including  applicable  office space,  facilities and equipment) of the services of
                  any of the personnel operating under the direction of such principal financial officer.

         Notwithstanding  the  obligation of the Trust to bear the expense of the functions  referred to in clauses (i) and
(ii) of this  subparagraph  (c), the  Investment  Manager may pay the  salaries,  including  any  applicable  employment or
payroll taxes and other salary costs, of the principal  financial officer and other personnel  carrying out such functions,
and the Trust shall reimburse the Investment Manager therefor upon proper accounting.

         (d) All of the ordinary  business  expenses incurred in the operations of the Trust and the offering of its shares
shall be borne by the Trust unless  specifically  provided  otherwise in this paragraph 6. These expenses include,  but are
not limited to: (i) brokerage commissions,  legal,  auditing,  taxes or governmental fees; (ii) the cost of preparing share
certificates;  (iii) custodian,  depository,  transfer and shareholder  service agent costs; (iv) expenses of issue,  sale,
redemption and repurchase of shares;  (v) expenses of registering and qualifying  shares for sale; (vi) insurance  premiums
on property or personnel  (including  officers and trustees if available) of the Trust which inure to the Trust's  benefit;
(vii) expenses  relating to trustee and shareholder  meetings;  (viii) the cost of preparing and  distributing  reports and
notices  to  shareholders;  (ix) the fees and  other  expenses  incurred  by the Trust in  connection  with  membership  in
investment  company  organizations;  and (x) and the cost of printing copies of  prospectuses  and statements of additional
information, as well as any supplements thereto, distributed to shareholders.

7.       Delegation of Responsibilities.  Upon the request of the Trustees,  the Investment Manager may perform services on
         ------------------------------
behalf of the Trust which are not required by this  Agreement.  Such  services will be performed on behalf of the Trust and
the Investment  Manager's  cost in rendering  such services may be billed  monthly to the Trust,  subject to examination by
the Trust's  independent  accountants.  Payment or  assumption  by the  Investment  Manager of any Trust  expense  that the
Investment  Manager is not required to pay or assume under this Agreement  shall not relieve the Investment  Manager of any
of its  obligations  to the Trust nor obligate the  Investment  Manager to pay or assume any similar  Trust  expense on any
subsequent occasion.

8.       Engagement of  Sub-Advisers  and  Broker-Dealers.  The Investment  Manager may engage,  subject to approval of the
         ------------------------------------------------
Trustees and where required,  the shareholders of the Portfolio,  a sub-adviser to provide advisory services in relation to
the Portfolio.  Under such  sub-advisory  agreement,  the  Investment  Manager may delegate to the  sub-adviser  the duties
outlined in subparagraphs (e), (f) and (g) of paragraph 2 hereof.

9.       Compensation.  The Trust shall pay the Investment  Manager in full compensation for services rendered hereunder an
         ------------
annual  investment  advisory  fee. The fee shall be payable  monthly in arrears,  based on the average  daily net assets of
the Portfolio for each month, at the annual rate set forth in Exhibit A to this Agreement.

10.      Non-Exclusivity.  The services of the  Investment  Manager to the  Portfolio are not to be deemed to be exclusive,
         ---------------
and the Investment  Manager shall be free to render investment  advisory and corporate  administrative or other services to
others  (including  other  investment  companies)  and to engage in other  activities.  It is  understood  and agreed  that
officers or  directors  of the  Investment  Manager may serve as  officers or trustees of the Trust,  and that  officers or
trustees of the Trust may serve as officers or  directors  of the  Investment  Manager to the extent  permitted by law; and
that the officers and directors of the Investment  Manager are not prohibited from engaging in any other business  activity
or from  rendering  services to any other person,  or from serving as partners,  officers or directors of any other firm or
corporation, including other investment companies.

11.      Term and  Approval.  This  Agreement  shall  become  effective  on May 1, 2001 and by shall  continue in force and
         ------------------
effect from year to year, provided that such continuance is specifically approved at least annually by:

         (a) the  Trustees  or the vote of a majority  of the  Portfolio's  outstanding  voting  securities  (as defined in
Section 2(a)(42) of the ICA); and

         (b) the  affirmative  vote of a majority of the  Trustees  who are not  parties to this  Agreement  or  interested
persons of a party to this  Agreement  (other than as Trust  trustees),  by votes cast in person at a meeting  specifically
called for such purpose.

12.      Termination.  This  Agreement may be terminated at any time without the payment of any penalty or prejudice to the
         -----------
completion  of any  transactions  already  initiated  on behalf of the  Portfolio,  by vote of the Trustees or by vote of a
majority of the  Portfolio's  outstanding  voting  securities,  or by the Investment  Manager,  on sixty (60) days' written
notice to the other party.  The notice  provided for herein may be waived by either  party.  This  Agreement  automatically
terminates in the event of its "assignment," as such term is defined in the ICA.

13.      Liability of Investment  Manager and  Indemnification.  In the absence of willful  misfeasance,  bad faith,  gross
         -----------------------------------------------------
negligence or reckless  disregard of  obligations or duties  hereunder on the part of the Investment  Manager or any of its
officers,  directors  or  employees,  it shall  not be  subject  to  liability  to the Trust or to any  shareholder  of the
Portfolio  for any act or omission in the course of, or  connected  with,  rendering  services  hereunder or for any losses
that may be sustained in the purchase, holding or sale of any security.

14.      Liability of the Trustees and  Shareholders.  A copy of the Agreement and  Declaration of Trust of the Trust is on
         -------------------------------------------
file with the Secretary of the Commonwealth of  Massachusetts,  and notice is hereby given that this instrument is executed
on behalf of the Trustees as trustees and not  individually  and that the  obligations  of this  instrument are not binding
upon any of the  Trustees or  shareholders  individually  but are binding  only upon the assets and  property of the Trust.
Federal  and state laws  impose  responsibilities  under  certain  circumstances  on  persons  who act in good  faith,  and
therefore,  nothing  herein  shall in any way  constitute  a waiver  of  limitation  of any  rights  which the Trust or the
Investment Manager may have under applicable law.

15.      Notices.  Any notices under this Agreement shall be in writing,  addressed and delivered or mailed postage paid to
         -------
the other party at such address as such other party may  designate for the receipt of such notice.  Until  further  notice,
it is agreed that the address of the Trust and the Investment  Manager shall be One Corporate Drive,  Shelton,  Connecticut
06484.

16.      Questions of  Interpretation.  Any question of  interpretation of any term or provision of this Agreement having a
         ----------------------------
counterpart  in or otherwise  derived  from a term or provision of the ICA,  shall be resolved by reference to such term or
provision  of the ICA and to  interpretations  thereof,  if any,  by the United  States  courts  or, in the  absence of any
controlling  decision of any such court, by rules,  regulations or orders of the Securities and Exchange  Commission issued
pursuant  to the ICA. In  addition,  where the effect of a  requirement  of the ICA,  reflected  in any  provision  of this
Agreement,  is released by rules,  regulation or order of the Securities and Exchange  Commission,  such provision shall be
deemed to incorporate the effect of such rule, regulation or order.

         IN WITNESS WHEREOF,  the parties hereto have caused this Agreement to be executed in duplicate by their respective
officers on the day and year first above written.




                                                                  AMERICAN SKANDIA TRUST


Attest:                                                           By: ____________________________________
Gordon C. Boronow
____________________________________                                            Vice President






                                                                  AMERICAN SKANDIA INVESTMENT
                                                                  SERVICES, INCORPORATED


Attest:                                                           By: ____________________________________
                                                                                John Birch
____________________________________                                            Senior Vice President & Chief
                                                                                Operating Officer
                                                  American Skandia Trust
                                        AST Sanford Bernstein Core Value Portfolio
                                              Investment Management Agreement

                                                         EXHIBIT A
                                                         ---------





         An annual rate of 0.75% of the average daily net assets of the Portfolio.

                                                  AMERICAN SKANDIA TRUST
                                                  SUB-ADVISORY AGREEMENT
                                                  ----------------------


THIS AGREEMENT is between American Skandia Investment Services,  Incorporated (the "Investment  Manager") and Goldman Sachs
Asset Management, a unit of the Investment Management Division of Goldman, Sachs & Co. (the "Sub-Adviser").

                                                    W I T N E S S E T H
                                                    - - - - - - - - - -

WHEREAS,  American  Skandia Trust (the "Trust") is a  Massachusetts  business  trust  organized  with one or more series of
shares and is  registered  as an open-end  management  investment  company  under the  Investment  Company Act of 1940,  as
amended (the "ICA"); and

WHEREAS,  the  Investment  Manager and the  Sub-Adviser  each is an  investment  adviser  registered  under the  Investment
Advisers Act of 1940, as amended (the "Advisers Act"); and

WHEREAS,  the Board of Trustees of the Trust (the  "Trustees")  have engaged the  Investment  Manager to act as  investment
manager for the Goldman Sachs Small Cap Value Portfolio (the  "Portfolio"),  one series of the Trust,  under the terms of a
management agreement, dated May 1, 2001, with the Trust (the "Management Agreement"); and

WHEREAS, the Investment Manager,  acting pursuant to the Management  Agreement,  wishes to engage the Sub-Adviser,  and the
Trustees have approved the engagement of the Sub-Adviser,  to provide  investment advice and other investment  services set
forth below.

NOW, THEREFORE, the Investment Manager and the Sub-Adviser agree as follows:

1.       Investment  Services.  The  Sub-Adviser  will  formulate  and  implement a continuous  investment  program for the
         --------------------
Portfolio  conforming to the investment  objective,  investment  policies and restrictions of the Portfolio as set forth in
the  Prospectus  and  Statement  of  Additional  Information  of the Trust as in effect  from time to time  (together,  the
"Registration  Statement"),  the Agreement and Declaration of Trust and By-laws of the Trust, and any investment guidelines
or other  instructions  received  by the  Sub-Adviser  in  writing  from the  Investment  Manager  from  time to time.  Any
amendments  to  the  foregoing  documents  will  not  be  deemed  effective  with  respect  to the  Sub-Adviser  until  the
Sub-Adviser's  receipt  thereof.  The appropriate  officers and employees of the  Sub-Adviser  will be available to consult
with the  Investment  Manager,  the Trust and  Trustees at  reasonable  times and upon  reasonable  notice  concerning  the
business of the Trust,  including  valuations of securities  which are not  registered  for public sale,  not traded on any
securities  market or  otherwise  may be deemed  illiquid  for  purposes  of the ICA;  provided it is  understood  that the
Sub-Adviser is not responsible for daily pricing of the Portfolio's assets.

         Subject to the supervision and control of the Investment Manager,  which in turn is subject to the supervision and
control of the Trustees,  the  Sub-Adviser in its discretion will determine which issuers and securities will be purchased,
held,  sold or exchanged by the Portfolio or otherwise  represented in the  Portfolio's  investment  portfolio from time to
time and,  subject to the  provisions of paragraph 3 of this  Agreement,  will place orders with and give  instructions  to
brokers,  dealers  and  others  for all such  transactions  and cause  such  transactions  to be  executed.  Custody of the
Portfolio  will be  maintained  by a custodian  bank (the  "Custodian")  and the  Investment  Manager  will  authorize  the
Custodian to honor  orders and  instructions  by  employees of the  Sub-Adviser  designated  by the  Sub-Adviser  to settle
transactions  in respect of the  Portfolio.  No assets may be withdrawn  from the  Portfolio  other than for  settlement of
transactions  on behalf of the Portfolio  except upon the written  authorization  of appropriate  officers of the Trust who
shall have been certified as such by proper authorities of the Trust prior to the withdrawal.

         The Sub-Adviser will not be responsible for the provision of  administrative,  bookkeeping or accounting  services
to the  Portfolio  except  as  specifically  provided  herein,  as  required  by the ICA or the  Advisers  Act or as may be
necessary for the  Sub-Adviser to supply to the  Investment  Manager,  the Portfolio or the  Portfolio's  shareholders  the
information  required to be provided by the Sub-Adviser  hereunder.  Any records maintained hereunder shall be the property
of the Portfolio and surrendered promptly upon request.

         In furnishing  the services under this  Agreement,  the  Sub-Adviser  will comply with and use its best efforts to
enable the  Portfolio to conform to the  requirements  of: (i) the ICA and the  regulations  promulgated  thereunder;  (ii)
Subchapters L and M, to the extent applicable,  (including,  respectively,  Section 817(h) and Sections 851(b)(1), (2), and
(3)) of the Internal Revenue Code and the regulations  promulgated  thereunder;  (iii) other applicable provisions of state
or  federal  securities  laws;  (iv) the  Agreement  and  Declaration  of Trust and  By-laws of the  Trust;  (v)  policies,
procedures,  and  determinations of the Trust and the Investment  Manager provided to the Sub-Adviser in writing,  provided
that with respect to procedures  governing  transactions  involving affiliates (such as those adopted pursuant to ICA Rules
17a-7,  17e-1 and 10f-3),  such procedures  will identify any affiliate of the Investment  Manager and the Trust other than
affiliates of the Sub-Adviser;  (vi) the fundamental and non-fundamental  investment  policies and restrictions  applicable
to the Portfolio,  as set out in the  Registration  Statement in effect,  or as such investment  policies and  restrictions
from time to time may be amended by the  Portfolio's  shareholders  or the Trustees and  communicated to the Sub-Adviser in
writing;  (vii) the Registration  Statement;  and (viii) investment  guidelines or other  instructions  received in writing
from the Investment  Manager.  Notwithstanding  the foregoing,  the  Sub-Adviser  shall have no  responsibility  to monitor
compliance with limitations or restrictions for which  information from the Investment  Manager or its authorized agents is
required to enable the Sub-Adviser to monitor  compliance with such limitations or restrictions  unless such information is
provided  to  the  Sub-adviser  in  writing.   The   Sub-Adviser   shall  supervise  and  monitor  the  activities  of  its
representatives, personnel and agents in connection with the investment program of the Portfolio.

         Nothing in this Agreement shall be implied to prevent the Investment  Manager from engaging other  sub-advisers to
provide  investment  advice and other  services  to the  Portfolio  or to series or  portfolios  of the Trust for which the
Sub-Adviser  does not provide such services,  or to prevent the Investment  Manager from providing such services  itself in
relation to the Portfolio or such other series or portfolios.

         The Sub-Adviser  shall be responsible for the preparation and filing of Schedule 13-G and Form 13-F reflecting the
Portfolio's  securities  holdings.  The  Sub-Adviser  shall not be responsible  for the  preparation or filing of any other
reports required of the Portfolio by any governmental or regulatory agency, except as expressly agreed to in writing.

2.       Investment  Advisory  Facilities.  The  Sub-Adviser,  at  its  expense,  will  furnish  all  necessary  investment
         --------------------------------
facilities, including salaries of personnel, required for it to execute its duties hereunder.

3.       Execution of Portfolio  Transactions.  In connection  with the  investment and  reinvestment  of the assets of the
         ------------------------------------
Portfolio,  the Sub-Adviser is responsible for the selection of  broker-dealers  to execute purchase and sale  transactions
for the Portfolio in conformity with the policy regarding brokerage as set forth in the Registration  Statement,  or as the
Trustees may determine  from time to time, as well as the  negotiation  of brokerage  commission  rates with such executing
broker-dealers.  Generally,  the  Sub-Adviser's  primary  consideration in placing Portfolio  investment  transactions with
broker-dealers  for execution  will be to obtain,  and maintain the  availability  of, best execution at the best available
price.

         Consistent  with this policy,  the  Sub-Adviser,  in selecting  broker-dealers  and futures  commission  merchants
("FCMs") and negotiating brokerage commission rates, will take all relevant factors into consideration,  including, but not
limited to: the best price available;  the reliability,  integrity and financial  condition of the broker-dealer;  the size
of and  difficulty  in  executing  the  order;  and the value of the  expected  contribution  of the  broker-dealer  to the
investment  performance  of the Portfolio on a continuing  basis.  Subject to such policies and  procedures as the Trustees
may  determine,  the  Sub-Adviser  shall have  discretion  to effect  investment  transactions  for the  Portfolio  through
broker-dealers  and FCM's (including,  to the extent  permissible under applicable law,  broker-dealers and FCMs affiliated
with the  Sub-Adviser)  qualified to obtain best  execution of such  transactions  who provide  brokerage  and/or  research
services,  as such  services are defined in section  28(e) of the  Securities  Exchange Act of 1934,  as amended (the "1934
Act"),  and to cause the  Portfolio  to pay any such  broker-dealers  an amount of  commission  for  effecting  a portfolio
investment  transaction in excess of the amount of commission another  broker-dealer  would have charged for effecting that
transaction,  if the  Sub-Adviser  determines in good faith that such amount of commission is reasonable in relation to the
value of the  brokerage or research  services  provided by such  broker-dealer,  viewed in terms of either that  particular
investment  transaction or the Sub-Adviser's  overall  responsibilities with respect to the Portfolio and other accounts as
to which the Sub-Adviser  exercises  investment  discretion (as such term is defined in section  3(a)(35) of the 1934 Act).
Allocation of orders placed by the Sub-Adviser on behalf of the Portfolio to such  broker-dealers  shall be in such amounts
and proportions as the Sub-Adviser shall determine in good faith in conformity with its  responsibilities  under applicable
laws, rules and regulations.  The Sub-Adviser will submit reports on such allocations to the Investment  Manager  regularly
as requested by the Investment  Manager,  in such form as may be mutually agreed to by the parties  hereto,  indicating the
broker-dealers to whom such allocations have been made and the basis therefor.

         Subject to the foregoing  provisions of this paragraph 3, the Sub-Adviser may also consider sales of shares of the
Portfolio,  or may consider or follow  recommendations  of the  Investment  Manager that take such sales into  account,  as
factors in the selection of broker-dealers to effect the Portfolio's  investment  transactions.  Notwithstanding the above,
nothing shall require the  Sub-Adviser  to use a  broker-dealer  which  provides  research  services or to use a particular
broker-dealer which the Investment Manager has recommended.

4.       Reports by the Sub-Adviser.  The Sub-Adviser  shall furnish the Investment  Manager monthly,  quarterly and annual
         --------------------------
reports,  as may  reasonably  be  requested  by the  Investment  Manager  concerning  the  transactions,  performance,  and
compliance  of the  Portfolio  so that the  Investment  Manager may review such matters and discuss the  management  of the
Portfolio.  The  Sub-Adviser  shall permit the books and records  maintained  with respect to the Portfolio to be inspected
and  audited by the Trust,  the  Investment  Manager or their  respective  agents at all  reasonable  times  during  normal
business hours upon  reasonable  notice.  The  Sub-Adviser  shall  immediately  notify both the Investment  Manager and the
Trust of any legal process served upon it in connection with its activities  hereunder,  including any legal process served
upon it on behalf of the  Investment  Manager,  the  Portfolio or the Trust.  The  Sub-Adviser  shall  promptly  notify the
Investment  Manager of (1) any changes in any  information  regarding the  Sub-Adviser  or the  investment  program for the
Portfolio  required to be  disclosed  in the Trust's  Registration  Statement,  or (2) any  violation  of any  requirement,
provision, policy or restriction that the Sub-advisor is required to comply with under Section 1 of this Agreement.

5.       Compensation  of the  Sub-Adviser.  The amount of the  compensation  to the  Sub-Adviser  is computed at an annual
         ---------------------------------
rate.  The fee shall be payable  monthly in  arrears,  based on the  average  daily net  assets of the  Portfolio  for each
month, at the annual rate set forth in Exhibit A to this Agreement.

         In computing the fee to be paid to the  Sub-Adviser,  the net asset value of the Portfolio  shall be valued as set
forth in the Registration  Statement.  If this Agreement is terminated,  the payment  described herein shall be prorated to
the date of termination.

         The  Investment  Manager and the  Sub-Adviser  shall not be  considered  as partners  or  participants  in a joint
venture.  The  Sub-Adviser  will pay its own expenses for the services to be provided  pursuant to this  Agreement and will
not be  obligated  to pay any  expenses  of the  Investment  Manager,  the  Portfolio  or the  Trust.  Except as  otherwise
specifically  provided  herein,  the  Investment  Manager,  the  Portfolio  and the Trust will not be  obligated to pay any
expenses of the Sub-Adviser.

6.       Delivery of  Documents to the  Sub-Adviser.  The  Investment  Manager has  furnished  the  Sub-Adviser  with true,
         ------------------------------------------
correct and complete copies of each of the following documents:

         (a)      The Agreement and Declaration of Trust of the Trust, as in effect on the date hereof;

         (b)      The By-laws of the Trust, as in effect on the date hereof;

         (c)      The resolutions of the Trustees  approving the engagement of the Sub-Adviser as portfolio  manager of the
                  Portfolio and approving the form of this Agreement;

         (d)      The resolutions of the Trustees  selecting the Investment  Manager as investment manager to the Portfolio
                  and approving the form of the Management Agreement;

         (e)      The Management Agreement;

         (f)      The Code of Ethics of the Trust and of the Investment Manager, as in effect on the date hereof; and

         (g)      A list of companies the securities of which are not to be bought or sold for the Portfolio.

         The  Investment  Manager  will  furnish the  Sub-Adviser  from time to time with  copies,  properly  certified  or
otherwise  authenticated,  of all amendments of or supplements to the foregoing,  if any. Such amendments or supplements as
to items (a)  through  (f)  above  will be  provided  within 30 days of the time such  materials  become  available  to the
Investment  Manager.  Such  amendments or  supplements  as to item (g) above will be provided not later than the end of the
business  day next  following  the date  such  amendments  or  supplements  become  known to the  Investment  Manager.  Any
amendments  or  supplements  to the  foregoing  will not be deemed  effective  with  respect to the  Sub-Adviser  until the
Sub-Adviser's  receipt  thereof.  The Investment  Manager will provide such  additional  information as the Sub-Adviser may
reasonably request in connection with the performance of its duties hereunder.

7.       Delivery of Documents to the Investment  Manager.  The Sub-Adviser has furnished the Investment Manager with true,
         ------------------------------------------------
correct and complete copies of each of the following documents:

         (a)      The Sub-Adviser's Form ADV as filed with the Securities and Exchange Commission as of the date hereof;

         (b)      The Sub-Adviser's most recent balance sheet;

         (c)      Separate  lists of persons who the  Sub-Adviser  wishes to have  authorized  to give written  and/or oral
                  instructions to Custodians of Trust assets for the Portfolio; and

         (d)      The Code of Ethics of the Sub-Adviser, as in effect on the date hereof.

         The  Sub-Adviser  will  furnish the  Investment  Manager  from time to time with  copies,  properly  certified  or
otherwise  authenticated,  of all amendments of or supplements  to the  foregoing,  if any. Such  amendments or supplements
will be  provided  within 30 days of the time such  materials  become  available  to the  Sub-Adviser.  Any  amendments  or
supplements  to the foregoing  will not be deemed  effective  with respect to the  Investment  Manager until the Investment
Manager's receipt thereof.  The Sub-Adviser will provide  additional  information as the Investment  Manager may reasonably
request in connection with the Sub-Adviser's performance of its duties under this Agreement.

8.       Confidential  Treatment.  The parties hereto  understand  that any information or  recommendation  supplied by the
         -----------------------
Sub-Adviser in connection with the performance of its obligations  hereunder is to be regarded as confidential  and for use
only by the  Investment  Manager,  the Trust or such persons the  Investment  Manager may designate in connection  with the
Portfolio.  The  parties  also  understand  that  any  information  supplied  to the  Sub-Adviser  in  connection  with the
performance  of its  obligations  hereunder,  particularly,  but not  limited to, any list of  securities  which may not be
bought or sold for the  Portfolio,  is to be regarded as  confidential  and for use only by the  Sub-Adviser  in connection
with its obligation to provide investment advice and other services to the Portfolio.

9.       Representations  of the Parties.  Each party hereto hereby further  represents and warrants to the other that: (i)
         -------------------------------
it is  registered as an  investment  adviser under the Advisers Act and is registered or licensed as an investment  adviser
under the laws of all  jurisdictions in which its activities  require it to be so registered or licensed;  and (ii) it will
use its  reasonable  best efforts to maintain each such  registration  or license in effect at all times during the term of
this  Agreement;  and (iii) it will promptly  notify the other if it ceases to be so  registered,  if its  registration  is
suspended for any reason,  or if it is notified by any regulatory  organization or court of competent  jurisdiction that it
should show cause why its  registration  should not be suspended or  terminated;  and (iv) it is duly  authorized  to enter
into this Agreement and to perform its obligations hereunder.

         The Sub-Adviser  further  represents that it has adopted a written Code of Ethics in compliance with Rule 17j-1(c)
of the ICA.  The  Sub-Adviser  shall be  subject  to such Code of Ethics  and shall  not be  subject  to any other  Code of
Ethics,  including  the  Investment  Manager's  Code  of  Ethics,  unless  specifically  adopted  by the  Sub-Adviser.  The
Investment  Manager further  represents and warrants to the Sub-Adviser  that (i) the appointment of the Sub-Adviser by the
Investment  Manager  has been duly  authorized  and (ii) it has  acted  and will  continue  to act in  connection  with the
transactions  contemplated  hereby, and the transactions  contemplated  hereby are, in conformity with the ICA, the Trust's
governing documents and other applicable law.

10.      Liability.  In the absence of willful  misfeasance,  bad faith,  gross  negligence  or reckless  disregard for its
         ---------
obligations  hereunder,  the Sub-Adviser shall not be liable to the Trust, the Portfolio,  the Portfolio's  shareholders or
the  Investment  Manager  for any act or  omission  resulting  in any  loss  suffered  by the  Trust,  the  Portfolio,  the
Portfolio's  shareholders  or the  Investment  Manager in connection  with any service to be provided  herein.  The Federal
laws impose  responsibilities  under certain circumstances on persons who act in good faith, and therefore,  nothing herein
shall in any way constitute a waiver or limitation of any rights which the Trust,  the Portfolio or the Investment  Manager
may have under applicable law.

11.      Other  Activities of the Sub-Adviser.  The Investment  Manager agrees that the Sub-Adviser and any of its partners
         ------------------------------------
or employees,  and persons  affiliated  with the  Sub-Adviser or with any such partner or employee,  may render  investment
management or advisory  services to other investors and  institutions,  and that such investors and  institutions  may own,
purchase or sell,  securities  or other  interests in property  that are the same as,  similar to, or different  from those
which are selected for purchase,  holding or sale for the Portfolio.  The Investment Manager further  acknowledges that the
Sub-Adviser  shall be in all respects free to take action with respect to investments  in securities or other  interests in
property  that are the same as,  similar  to, or  different  from  those  selected  for  purchase,  holding or sale for the
Portfolio.  The Investment  Manager  understands that the Sub-Adviser  shall not favor or disfavor any of the Sub-Adviser's
clients  or class of  clients  in the  allocation  of  investment  opportunities,  so that to the  extent  practical,  such
opportunities  will be  allocated  among the  Sub-Adviser's  clients over a period of time on a fair and  equitable  basis.
Nothing in this  Agreement  shall impose upon the  Sub-Adviser  any  obligation  (i) to purchase or sell,  or recommend for
purchase or sale,  for the  Portfolio  any security  which the  Sub-Adviser,  its  partners,  affiliates  or employees  may
purchase or sell for the  Sub-Adviser or such  partner's,  affiliate's or employee's own accounts or for the account of any
other client of the  Sub-Adviser,  advisory or otherwise,  or (ii) to abstain from the purchase or sale of any security for
the  Sub-Adviser's  other  clients,  advisory or otherwise,  which the  Investment  Manager has placed on the list provided
pursuant to paragraph 6(g) of this Agreement.

12.      Continuance  and  Termination.  This  Agreement  shall  remain in full force and effect for one year from the date
         -----------------------------
hereof,  and is  renewable  annually  thereafter  by  specific  approval  of the  Trustees  or by vote of a majority of the
outstanding  voting  securities  of the  Portfolio.  Any such  renewal  shall be  approved by the vote of a majority of the
Trustees who are not  interested  persons  under the ICA,  cast in person at a meeting  called for the purpose of voting on
such renewal.  This Agreement may be terminated  without  penalty at any time by the Investment  Manager or the Sub-Adviser
upon 60 days written  notice,  and will  automatically  terminate in the event of (i) its  "assignment"  by either party to
this  Agreement,  as such term is defined in the ICA,  subject to such  exemptions as may be granted by the  Securities and
Exchange  Commission by rule,  regulation or order,  or (ii) upon  termination  of the Management  Agreement,  provided the
Sub-Adviser has received prior written notice thereof.

13.      Notification.  The  Sub-Adviser  will notify the Investment  Manager within a reasonable time of any change in the
         ------------
personnel  of the  Sub-Adviser  with  responsibility  for making  investment  decisions in relation to the  Portfolio  (the
"Portfolio  Manager(s)")  or who have been  authorized to give  instructions  to the Custodian.  The  Sub-Adviser  shall be
responsible  for  reasonable  out-of-pocket  costs and expenses  incurred by the Investment  Manager,  the Portfolio or the
Trust to amend or  supplement  the Trust's  Prospectus  to reflect a change in Portfolio  Manager(s) or otherwise to comply
with the ICA,  the  Securities  Act of 1933,  as amended (the "1933 Act") or any other  applicable  statute,  law,  rule or
regulation,  as a result of such change;  provided,  however,  that the Sub-Adviser shall not be responsible for such costs
and expenses where the change in Portfolio  Manager(s)  reflects the termination of employment of the Portfolio  Manager(s)
with the  Sub-Adviser  and its  affiliates  or is the  result of a request  by the  Investment  Manager  or is due to other
circumstances beyond the Sub-Adviser's control.

         Any notice,  instruction or other  communication  required or  contemplated by this Agreement shall be in writing.
All such  communications  shall be addressed to the  recipient at the address set forth below,  provided  that either party
may, by notice, designate a different recipient and/or address for such party.



Investment Manager:        American Skandia Investment Services, Incorporated
                           One Corporate Drive
                           Shelton, Connecticut  06484
                           Attention:  John Birch
                           Senior Vice President & Chief Operating Officer

Sub-Adviser:               Goldman Sachs Asset Management
                           32 Old Slip - 17th floor
                           1 Financial Square
                           New York, NY  10005
                           Attention: Dan Dumont

Trust:                     American Skandia Trust
                           One Corporate Drive
                           Shelton, Connecticut 06484
                           Attention: Edward P. Macdonald


14.      Indemnification.  The  Sub-Adviser  agrees to indemnify and hold harmless the Investment  Manager,  any affiliated
         ---------------
person within the meaning of Section 2(a)(3) of the ICA  ("affiliated  person") of the Investment  Manager and each person,
if any who,  within the meaning of Section 15 of the 1933 Act,  controls  ("controlling  person") the  Investment  Manager,
against any and all losses,  claims,  damages,  liabilities or litigation  (including reasonable legal and other expenses),
to which the  Investment  Manager or such  affiliated  person or controlling  person of the  Investment  Manager may become
subject under the 1933 Act, the ICA, the Advisers Act, under any other statute,  law, rule or regulation,  at common law or
otherwise,  arising  out of the  Sub-Adviser's  responsibilities  hereunder  (1) to the  extent  of and as a result  of the
willful  misconduct,  bad  faith,  or  gross  negligence  by  the  Sub-Adviser,  any  of  the  Sub-Adviser's  employees  or
representatives  or any  affiliate of or any person acting on behalf of the  Sub-Adviser,  or (2) as a result of any untrue
statement or alleged untrue statement of a material fact contained in the Registration  Statement,  including any amendment
thereof or any  supplement  thereto,  or the omission or alleged  omission to state  therein a material fact required to be
stated  therein or  necessary to make the  statement  therein not  misleading,  if such a statement or omission was made in
reliance upon and in conformity  with written  information  furnished by the  Sub-Adviser  to the Investment  Manager,  the
Portfolio,  the Trust or any  affiliated  person of the  Investment  Manager,  the  Portfolio  or the Trust or upon  verbal
information  confirmed  by the  Sub-Adviser  in  writing,  or (3) to the extent of, and as a result of, the  failure of the
Sub-Adviser to execute, or cause to be executed,  portfolio  investment  transactions  according to the requirements of the
ICA;  provided,  however,  that in no case is the  Sub-Adviser's  indemnity  in  favor  of the  Investment  Manager  or any
      --------   -------
affiliated  person or controlling  person of the Investment  Manager deemed to protect such person against any liability to
which any such person would  otherwise be subject by reason of willful  misconduct,  bad faith or gross  negligence  in the
performance of its duties or by reason of its reckless disregard of its obligations and duties under this Agreement.

         The  Investment  Manager  agrees to indemnify  and hold harmless the  Sub-Adviser,  any  affiliated  person of the
Sub-Adviser  and each  controlling  person  of the  Sub-Adviser,  if any,  against  any and all  losses,  claims,  damages,
liabilities or litigation  (including  reasonable  legal and other  expenses),  to which the Sub-Adviser or such affiliated
person or  controlling  person of the  Sub-Adviser  may become subject under the 1933 Act, the ICA, the Advisers Act, under
any  other  statute,  law,  rule or  regulation,  at common  law or  otherwise,  arising  out of the  Investment  Manager's
responsibilities  as investment  manager of the  Portfolio (1) to the extent of and as a result of the willful  misconduct,
bad faith, or gross negligence by the Investment Manager,  any of the Investment  Manager's employees or representatives or
any affiliate of or any person acting on behalf of the Investment  Manager,  or (2) as a result of any untrue  statement or
alleged untrue statement of a material fact contained in the  Registration  Statement,  including any amendment  thereof or
any  supplement  thereto,  or the  omission or alleged  omission  to state  therein a material  fact  required to be stated
therein or necessary to make the statement  therein not misleading,  if such a statement or omission was made other than in
reliance upon and in conformity with written  information  furnished by the  Sub-Adviser,  or any affiliated  person of the
Sub-Adviser or other than upon verbal information  confirmed by the Sub-Adviser in writing;  provided,  however, that in no
                                                                                             --------   -------
case is the Investment  Manager's  indemnity in favor of the Sub-Adviser or any affiliated person or controlling  person of
the  Sub-Adviser  deemed to protect such person  against any liability to which any such person would  otherwise be subject
by reason of  willful  misconduct,  bad faith or gross  negligence  in the  performance  of its  duties or by reason of its
reckless  disregard  of its  obligations  and duties  under this  Agreement.  It is agreed  that the  Investment  Manager's
indemnification  obligations under this Section 14 will extend to expenses and costs (including  reasonable attorneys fees)
incurred by the  Sub-Adviser as a result of any litigation  brought by the Investment  Manager  alleging the  Sub-Adviser's
failure to perform its obligations  and duties in the manner required under this Agreement  unless judgment is rendered for
the Investment Manager.

15.      Conflict of Laws. The provisions of this Agreement shall be subject to all applicable  statutes,  laws,  rules and
         ----------------
regulations,  including,  without limitation,  the applicable  provisions of the ICA and rules and regulations  promulgated
thereunder.  To the extent that any provision  contained  herein  conflicts  with any such  applicable  provision of law or
regulation,  the latter shall control.  The terms and provisions of this  Agreement  shall be interpreted  and defined in a
manner  consistent  with the  provisions and  definitions  of the ICA. If any provision of this Agreement  shall be held or
made invalid by a court  decision,  statute,  rule or otherwise,  the remainder of this  Agreement  shall  continue in full
force and effect and shall not be affected by such invalidity.

16.      Amendments,  Waivers, etc. Provisions of this Agreement may be changed,  waived,  discharged or terminated only by
         --------------------------
an instrument in writing signed by the party against which enforcement of the change,  waiver,  discharge or termination is
sought.  This Agreement  (including  Exhibit A hereto) may be amended at any time by written mutual consent of the parties,
subject to the requirements of the ICA and rules and regulations promulgated and orders granted thereunder.

17.      Governing  State Law. This  Agreement is made under,  and shall be governed by and  construed in accordance  with,
         --------------------
the laws of the State of Connecticut.







18.      Severability.  Each  provision of this  Agreement is intended to be severable.  If any provision of this Agreement
         ------------
is held to be illegal or made invalid by court  decision,  statute,  rule or otherwise,  such illegality or invalidity will
not affect the validity or enforceability of the remainder of this Agreement.

The effective date of this agreement is May 1, 2001.

FOR THE INVESTMENT MANAGER:                                   FOR THE SUB-ADVISER:




___________________________________                           ____________________________________
John Birch
Senior Vice President & Chief Operating Officer



Date:    ____________________________                         Date:    ____________________________




Attest:  ____________________________                                  Attest:  ____________________________









                                                  American Skandia Trust
                                        AST Goldman Sachs Small Cap Value Portfolio
                                                  Sub-Advisory Agreement

                                                         EXHIBIT A
                                                         ---------





         An annual rate of .50% of the average daily net assets of the Portfolio.

                                              AMERICAN SKANDIA TRUST
                                              SUB-ADVISORY AGREEMENT
                                              ----------------------


THIS AGREEMENT is between  American  Skandia  Investment  Services,  Incorporated  (the  "Investment  Manager") and
Sanford C.  Bernstein & Co.,  LLC (the "Value  Sub-Adviser")  and Alliance  Capital  Management  L.P.  (the "Growth
Sub-Adviser") (each a "Sub-Adviser" and collectively, the "Sub-Advisers") .

                                                W I T N E S S E T H
                                                - - - - - - - - - -

WHEREAS,  American Skandia Trust (the "Trust") is a Massachusetts  business trust organized with one or more series
of shares and is registered  as an open-end  management  investment  company  under the  Investment  Company Act of
1940, as amended (the "ICA"); and

WHEREAS,  the Investment Manager is an investment adviser registered under the Investment  Advisers Act of 1940, as
amended (the "Advisers Act"); and

WHEREAS,  the Board of  Trustees  of the Trust (the  "Trustees")  have  engaged  the  Investment  Manager to act as
investment manager for the AST Alliance/  Bernstein Growth + Value Portfolio (the  "Portfolio"),  one series of the
Trust, under the terms of a management agreement,  dated May 1, 2001, with the Trust (the "Management  Agreement");
and

WHEREAS,  the  Investment  Manager,  acting  pursuant  to the  Management  Agreement,  wishes to  engage  the Value
Sub-Adviser to provide  investment  advice and other  investment  services set forth below for the value portion of
the Portfolio (the "Value  Portfolio")  which will consist of approximately 50 per cent of the investable assets of
the Portfolio and to engage the Growth Sub-Adviser to provide  investment advice and other investment  services for
the remainder of the investable  assets of the Portfolio (the "Growth  Portfolio")  (together,  the  "Portfolios"),
and the Trustees have approved the  engagement of the  Sub-Advisers,  to provide such  investment  advice and other
investment services.

NOW, THEREFORE, the Investment Manager and the Sub-Advisers agree as follows:

1.       Investment  Services.  The  Sub-Advisers  together will  formulate  and implement a continuous  investment
         --------------------
program for the Portfolio  conforming to the investment  objective,  investment  policies and  restrictions  as set
forth in the  Prospectus  and  Statement  of  Additional  Information  of the Trust as in effect  from time to time
(together,  the  "Registration  Statement"),  the Agreement and Declaration of Trust and By-laws of the Trust,  and
any  investment  guidelines  or other  instructions  received by the  Sub-Advisers  in writing from the  Investment
Manager from time to time.  Any  amendments to the foregoing  documents  will not be deemed  effective with respect
to either of the Sub-Advisers  until such  Sub-Adviser's  receipt thereof.  The appropriate  officers and employees
of the  Sub-Advisers  will be  available  to consult  with the  Investment  Manager,  the Trust and the Trustees at
reasonable  times and upon  reasonable  notice  concerning  the  business  of the Trust,  including  valuations  of
securities  which are not  registered  for public sale,  not traded on any  securities  market or otherwise  may be
deemed illiquid for purposes of the ICA;  provided it is understood that the  Sub-Advisers  are not responsible for
daily pricing of the Portfolio's assets.

         Subject  to the  supervision  and  control  of the  Investment  Manager,  which in turn is  subject to the
supervision  and control of the Trustees,  the  Sub-Advisers  in their  discretion will determine which issuers and
securities will be purchased,  held,  sold or exchanged by the portions of the Portfolio under their  management or
otherwise  represented in the Portfolio's  investment  portfolios from time to time and,  subject to the provisions
of  paragraphs 3 and 4 of this  Agreement,  will place orders with and give  instructions  to brokers,  dealers and
others for all such  transactions  and cause such  transactions  to be  executed.  Either of the  Sub-Advisers  may
delegate its investment  advisory and other  responsibilities  and duties hereunder to an affiliated person of such
Sub-Adviser,  subject to such Sub-Adviser  retaining overall  responsibility  for such powers and functions and any
and all obligations and liabilities in connection  therewith.  The Value  Sub-Adviser  shall be responsible for and
supervise the activities of the Sub-Advisers,  including the Sub-Advisers'  compliance  responsibilities  hereunder
and  allocation  of Portfolio  assets  between the Growth and Value  Portfolios  as  described in the  Registration
Statement.  The Sub-Advisers  shall be jointly  responsible for the provision of the investment  advisory and other
services  contemplated  by this  Agreement.  Custody of the Portfolio  will be maintained by a custodian  bank (the
"Custodian")  and the  Investment  Manager  will  authorize  the  Custodian  to honor  orders and  instructions  by
employees of the Sub-Advisers  designated by the  Sub-Advisers to settle  transactions in respect of the Portfolios
under their  respective  management,  and to honor orders and  instructions  by employees of the Value  Sub-Adviser
regarding  allocation of daily net Portfolio  purchase proceeds between the Growth and Value Portfolios.  No assets
may be withdrawn from the Portfolio  other than for settlement of  transactions  on behalf of the Portfolio  except
upon the  written  authorization  of  appropriate  officers of the Trust who shall have been  certified  as such by
proper authorities of the Trust prior to the withdrawal.

         The Sub-Advisers  will not be responsible for the provision of  administrative,  bookkeeping or accounting
services to the Portfolio  except as specifically  provided  herein,  as required by the ICA or the Advisers Act or
as may be necessary for the  Sub-Advisers  to supply to the Investment  Manager,  the Portfolio or the  Portfolio's
shareholders  the  information  required to be  provided  by the  Sub-Advisers  hereunder.  Any records  maintained
hereunder shall be the property of the Portfolio and surrendered promptly upon request.

         In  furnishing  the services  under this  Agreement,  the  Sub-Advisers  will comply with and use its best
efforts to enable the  Portfolio to conform to the  requirements  of: (i) the ICA and the  regulations  promulgated
thereunder;  (ii)  Subchapter M of the Internal  Revenue Code and the  regulations  promulgated  thereunder;  (iii)
other  applicable  provisions of state or federal law; (iv) the Agreement and  Declaration  of Trust and By-laws of
the Trust;  (v) policies and  determinations  of the Trust and the Investment  Manager provided to the Sub-Advisers
in writing;  (vi) the  fundamental  and  non-fundamental  investment  policies and  restrictions  applicable to the
Portfolio,  as set out in the  Registration  Statement of the Trust in effect,  or as such investment  policies and
restrictions  from time to time may be amended by the Portfolio's  shareholders or the Trustees and communicated to
the  Sub-Advisers  in  writing;  (vii) the  Registration  Statement;  and  (viii)  investment  guidelines  or other
instructions  received in writing from the Investment  Manager.  Notwithstanding  the foregoing,  the  Sub-Advisers
shall have no  responsibility  to monitor  compliance with limitations or restrictions  for which  information from
the Investment  Manager or its authorized agents is required to enable the Sub-Advisers to monitor  compliance with
such  limitations  or  restrictions  unless  such  information  is  provided to the  Sub-advisers  in writing.  The
Sub-Advisers shall supervise and monitor the activities of their respective  representatives,  personnel and agents
in connection with the investment program of the Portfolio.

         Nothing in this  Agreement  shall be implied  to  prevent  the  Investment  Manager  from  engaging  other
sub-advisers  to provide  investment  advice and other  services to the Portfolio or to series or portfolios of the
Trust for which the  Sub-Advisers  do not  provide  such  services,  or to  prevent  the  Investment  Manager  from
providing  such  services  itself in relation to the  Portfolio  or such other series or  portfolios.  In the event
that the Investment  Manager  engages  another  sub-adviser  to provide  investment  advice and/or  services to the
Portfolio or to the Portfolios,  the Investment  Manager agrees to provide the Sub-Advisers  with written notice of
such engagement.

         The  Sub-Advisers  shall be responsible  for exercising any voting rights on any securities  held by their
respective  Portfolios of the Portfolio.  The  Sub-Advisers  shall be responsible for the preparation and filing of
Schedule 13G and Form 13-F  reflecting the Portfolio's  securities  holdings as part of the  Sub-Advisers'  overall
holdings.  The  Sub-Advisers  shall not be responsible for the preparation or filing of any other reports  required
of the Portfolio by any governmental or regulatory agency, except as expressly agreed in writing.

2.       Investment  Advisory  Facilities.  The  Sub-Advisers,   at  their  expense,  will  furnish  all  necessary
         --------------------------------
investment  facilities,  including  salaries of  personnel,  required for them to execute their  respective  duties
hereunder.

3.       Execution of Portfolio  Transactions.  In connection  with the investment and  reinvestment  of the assets
         ------------------------------------
of the Portfolio,  the  Sub-Advisers  are responsible for the selection of  broker-dealers  to execute purchase and
sale  transactions  for their  respective  Portfolios  of the  Portfolio in  conformity  with the policy  regarding
brokerage as set forth in the Registration  Statement,  or as the Trustees may determine from time to time, as well
as  the  negotiation  of  brokerage   commission  rates  with  such  executing   broker-dealers.   Generally,   the
Sub-Advisers' primary consideration in placing Portfolio investment  transactions with broker-dealers for execution
will be to obtain,  and maintain the  availability  of, best execution at the best available  price.  To the extent
permitted by  applicable  law, the Value  Sub-Adviser  may receive  investment  transactions/instructions  from the
Growth Sub-Adviser for execution on behalf of the Growth Portfolio.

         Consistent with this policy,  the  Sub-Advisers,  in selecting  broker-dealers  and negotiating  brokerage
commission  rates,  will take all relevant  factors  into  consideration,  including,  but not limited to: the best
price  available;  the  reliability,  integrity  and  financial  condition  of the  broker-dealer;  the size of and
difficulty  in  executing  the  order;  and the value of the  expected  contribution  of the  broker-dealer  to the
investment  performance  of the Portfolio on a continuing  basis.  Subject to such  policies and  procedures as the
Trustees  may  determine,  the  Sub-Advisers  shall  have  discretion  to effect  investment  transactions  for the
respective  Portfolios of the Portfolio under their management  through  broker-dealers  (including,  to the extent
permissible  under  applicable  law,  broker-dealers  affiliated  with the  Sub-Advisers)  qualified to obtain best
execution of such  transactions  who provide  brokerage and/or research  services,  as such services are defined in
Section 28(e) of the  Securities  Exchange Act of 1934, as amended (the "1934 Act"),  and to cause the Portfolio to
pay any such broker-dealers an amount of commission for effecting a portfolio  investment  transaction in excess of
the  amount of  commission  another  broker-dealer  would have  charged  for  effecting  that  transaction,  if the
Sub-Advisers  determine in good faith that such amount of  commission is reasonable in relation to the value of the
brokerage  or  research  services  provided  by such  broker-dealer,  viewed  in terms of  either  that  particular
investment  transaction  or the  Sub-Advisers'  overall  responsibilities  with respect to the  Portfolio and other
accounts as to which the Sub-Advisers  exercise investment  discretion (as such term is defined in Section 3(a)(35)
of  the  1934  Act).  Allocation  of  orders  placed  by the  Sub-Advisers  on  behalf  of the  Portfolio  to  such
broker-dealers  shall be in such  amounts and  proportions  as the  Sub-Advisers  shall  determine in good faith in
conformity with its  responsibilities  under applicable laws, rules and regulations.  The Sub-Advisers  will submit
joint  or  individual  reports  on such  allocations  to the  Investment  Manager  regularly  as  requested  by the
Investment  Manager,  in  such  form  as  may  be  mutually  agreed  to  by  the  parties  hereto,  indicating  the
broker-dealers to whom such allocations have been made and the basis therefor.

         Subject to the  foregoing  provisions of this  paragraph 3, the  Sub-Advisers  may also consider  sales of
shares of the Portfolio and of other  portfolios of the Trust managed by either  Sub-Adviser  or their  affiliates,
or may consider or follow  recommendations of the Investment Manager that such sales take into account,  as factors
in the selection of broker-dealers to effect the Portfolio's  investment  transactions.  Notwithstanding the above,
nothing  shall  require the  Sub-Advisers  to use a  broker-dealer  which  provides  research  services or to use a
particular broker-dealer which the Investment Manager has recommended.

         In lieu of selecting  broker-dealers to execute transactions for the Portfolio,  the Value Sub-Adviser may
execute such transactions for the Portfolio  provided that the Value  Sub-Adviser  "steps-out" such transactions to
the  broker-dealers  selected  by the Value  Sub-Adviser.  A step-out  is a service  provided by the New York Stock
Exchange and other markets  which allows the Value  Sub-Adviser  to provide the  Portfolio  with the benefit of the
Value Sub-Adviser's  execution  capabilities at no additional charge and then transfer or step-out the confirmation
and settlement  responsibilities  of such transactions to the  broker-dealer(s)  selected by the Value Sub-Adviser.
In connection with a step-out,  transaction  charges shall be paid by the Portfolio to the broker-dealers  selected
by the Value Sub-Adviser and not to the Value Sub-Adviser.

         In  addition  to  selecting  brokers  or  dealers to execute  transactions  for the  Portfolio,  the Value
Sub-Adviser may,  subject to its duty to seek best execution at the best available price,  also act as a broker for
the Portfolio from time to time at rates not exceeding the usual and customary broker's  commission.  Under Federal
law, the Value  Sub-Adviser must obtain the Investment  Manager's  consent to effect agency cross  transactions for
the Portfolio,  which consent is hereby granted. The Value Sub-Adviser represents,  warrants and covenants that all
agency cross  transactions for the Portfolio will be effected by the Value Sub-Adviser  strictly in accordance with
Rule  206(3)-2  under the Advisers Act. An agency cross  transaction  is where the Value  Sub-Adviser  purchases or
sells  securities  from or to a  non-managed  account on behalf of a client's  managed  account.  Pursuant  to this
consent,  the Value  Sub-Adviser will only effect an agency cross  transaction for the Portfolio with a non-managed
account.  When the Value  Sub-Adviser  crosses  transactions in connection with a step-out,  the Value  Sub-Adviser
will receive a commission  from the transaction  only with respect to the non-managed  account and will not receive
a commission from the transaction  with respect to the Portfolio.  In an agency cross  transaction  where the Value
Sub-Adviser acts as broker for the Portfolio,  the Value  Sub-Adviser  receives  commissions from both sides of the
trade and there is a potentially  conflicting  division of loyalties and  responsibilities.  However, as both sides
to the trade  want to  execute  the  transaction  at the best  price  without  moving  the  market  price in either
direction,  the Value  Sub-Adviser  believes that an agency cross  transaction  will aid both sides to the trade in
obtaining  the best price for the trade.  THE TRUST OR THE  INVESTMENT  MANAGER MAY REVOKE THIS  CONSENT BY WRITTEN
NOTICE TO THE VALUE SUB-ADVISER AT ANY TIME.

4.       Re-Allocation  of  Portfolio  Assets.  The Value  Sub-Adviser  shall  furnish  and  maintain  systems  and
         ------------------------------------
procedures to monitor and maintain as reasonably  practicable an allocation of net assets of the Portfolio  between
the Value  Portfolio and the Growth  Portfolio to conform to the investment  objectives  and policies  described in
the Registration  Statement,  as may be necessary (the "Target Allocation").  Purchases and sales of securities for
the Portfolio  resulting from purchases and  redemptions  of Portfolio  shares shall be coordinated  and managed by
the Sub-Advisers  for purposes of maintaining the Target  Allocation.  The  Sub-Advisers  shall cooperate with each
other and take any and all such actions as may be necessary or appropriate  for purposes of maintaining  the Target
Allocation.

5.       Reports by the  Sub-Advisers.  The Sub-Advisers  shall furnish the Investment  Manager  individual  and/or
         ----------------------------
joint monthly,  quarterly and annual reports,  as may reasonably be requested by the Investment  Manager concerning
the  transactions,  performance,  and  compliance of the Portfolio so that the  Investment  Manager may review such
matters  and  discuss  the  management  of the  Portfolio.  The  Sub-Advisers  shall  permit the books and  records
maintained  with respect to the  Portfolio  to be inspected  and audited by the Trust,  the  Investment  Manager or
their  respective  agents at all  reasonable  times during  normal  business  hours upon  reasonable  notice.  Each
Sub-Adviser  severally  shall  immediately  notify both the  Investment  Manager and the Trust of any legal process
served upon it in connection  with its activities  hereunder,  including any legal process served upon it on behalf
of the  Investment  Manager,  the  Portfolio,  the  Value  Portfolio,  the  Growth  Portfolio  or the  Trust.  Each
Sub-Adviser  severally  shall  immediately  notify the  Investment  Manager of (1) any  changes in any  information
regarding  each  Sub-Adviser or the  investment  program for the Portfolio  required to be disclosed in the Trust's
Registration  Statement,  or (2) any  violation  of any  requirement,  provision,  policy or  restriction  that the
Sub-Advisers are required to comply with under Section 1 of this Agreement.

6.       Compensation of the  Sub-Advisers.  The amount of the  compensation to each  Sub-Adviser is computed at an
         ---------------------------------
annual  rate.  The fee  shall be  payable  monthly  in  arrears,  based on the  average  daily  net  assets of each
Portfolio  for each  month,  at the  annual  rate set forth in  Exhibit  A to this  Agreement.  For  administrative
convenience, the parties may agree to have the aggregate fee due to the Sub-Advisers remitted to one Sub-Adviser.

         In  computing  the fee to be paid to each  Sub-Adviser,  the net asset  value of each  Portfolio  shall be
valued as set forth in the  Registration  Statement.  If this Agreement is terminated,  the payment of compensation
described herein shall be prorated to the date of termination.

         The  Investment  Manager shall not be considered as a partner or  participant  in a joint venture with the
Sub-Advisers.  The  Sub-Advisers  will pay their own  expenses  for the  services to be  provided  pursuant to this
Agreement  and will not be obligated to pay any expenses of the  Investment  Manager,  the  Portfolio or the Trust.
Except as otherwise  specifically  provided herein, the Investment Manager, the Portfolio and the Trust will not be
obligated to pay any expenses of either Sub-Adviser.

7.       Delivery of Documents to the  Sub-Advisers.  The Investment  Manager has furnished the  Sub-Advisers  with
         ------------------------------------------
true, correct and complete copies of each of the following documents:

         (a)      The Agreement and Declaration of Trust of the Trust, as in effect on the date hereof;

         (b)      The By-laws of the Trust, as in effect on the date hereof;

         (c)      The  resolutions  of the Trustees  approving  the  engagement  of the  Sub-Advisers  as portfolio
                  managers of the Portfolio and approving the form of this Agreement;
                         -

         (d)      The  resolutions of the Trustees  selecting the Investment  Manager as investment  manager to the
                  Portfolio and approving the form of the Management Agreement;

         (e)      The Management Agreement;

         (f)      The Code of Ethics of the Trust and of the Investment Manager, as in effect on the date hereof;

(g)      The Registration Statement; and

         (h)      A list of companies the securities of which are not to be bought or sold for the Portfolio.

         The Investment  Manager will furnish the Sub-Advisers  from time to time with copies,  properly  certified
or otherwise  authenticated,  of all  amendments of or supplements  to the  foregoing,  if any. Such  amendments or
supplements  as to items (a) through (g) above will be provided  within 30 days of the time such  materials  become
available to the  Investment  Manager.  Such  amendments or  supplements  as to item (h) above will be provided not
later than the end of the business day next following the date such  amendments or supplements  become known to the
Investment  Manager.  Any amendments or  supplements to the foregoing will not be deemed  effective with respect to
the  Sub-Advisers  until the Value  Sub-Adviser's  receipt  thereof.  The  Investment  Manager  will  provide  such
additional  information  as the  Sub-Advisers  may  reasonably  request in connection  with the  performance of its
duties hereunder.

8.       Delivery of Documents to the Investment  Manager.  Each  Sub-Adviser has furnished the Investment  Manager
         ------------------------------------------------
with true, correct and complete copies of each of the following documents:

(a)      The Sub-Adviser's Form ADV as filed with the Securities and Exchange Commission as of the date hereof;

(b)      The Sub-Adviser's most recent balance sheet;

(c)      Separate  lists of persons who each  Sub-Adviser  wishes to have  authorized  to give written  and/or oral
                  instructions to Custodians of Trust assets for the Portfolio; and

(d)      The Code of Ethics of each Sub-Adviser, as in effect on the date hereof.

         Each Sub-Adviser  will furnish the Investment  Manager from time to time with copies,  properly  certified
or otherwise  authenticated,  of all  amendments of or supplements  to the  foregoing,  if any. Such  amendments or
supplements will be provided within 30 days of the time such materials become  available to the  Sub-Advisers.  Any
amendments or  supplements to the foregoing  will not be deemed  effective  with respect to the Investment  Manager
until the Investment  Manager's receipt thereof.  Each Sub-Adviser  severally will provide  additional  information
as the Investment Manager may reasonably  request in connection with each  Sub-Adviser's  performance of its duties
under this Agreement.

9.       Confidential  Treatment.  Except  as may be  required  by law,  the  parties  hereto  understand  that any
         -----------------------
information  or  recommendation  supplied  by  either  Sub-Adviser  in  connection  with the  performance  of their
obligations  hereunder is to be regarded as confidential and for use only by the Investment  Manager,  the Trust or
such persons the Investment  Manager may designate in connection  with the Portfolio.  The parties also  understand
that any  information  supplied  to either  Sub-Adviser  in  connection  with the  performance  of its  obligations
hereunder,  particularly,  but not  limited  to,  any list of  securities  which  may not be bought or sold for the
Portfolio,  is to be  regarded  as  confidential  and for use  only  by the  Sub-Adviser  in  connection  with  its
obligation to provide investment advice and other services to the Portfolio.

10.      Representations  of the Parties.  Each party hereto hereby  further  represents  and warrants to the other
         -------------------------------
that:  (i) it is  registered  as an  investment  adviser under the Advisers Act and is registered or licensed as an
investment  adviser under the laws of all  jurisdictions in which its activities  require it to be so registered or
licensed;  and (ii) it will use its  reasonable  best  efforts to  maintain  each such  registration  or license in
effect at all times during the term of this  Agreement;  and (iii) it will  promptly  notify the other if it ceases
to be so  registered,  if its  registration  is suspended  for any reason,  or if it is notified by any  regulatory
organization  or court of  competent  jurisdiction  that it should  show cause why its  registration  should not be
suspended  or  terminated;  and  (iv) it is duly  authorized  to enter  into  this  Agreement  and to  perform  its
obligations hereunder.

         Each Sub-Adviser  further  represents that it has adopted a written Code of Ethics in compliance with Rule
17j-1(b)  of the ICA.  Each  Sub-Adviser  shall be  subject  to such Code of Ethics and shall not be subject to any
other Code of Ethics,  including  the  Investment  Manager's  Code of Ethics,  unless  specifically  adopted by the
Sub-Adviser.  The Investment  Manager further  represents and warrants to each Sub-Adviser that (i) the appointment
of the  Sub-Adviser by the Investment  Manager has been duly  authorized and (ii) it has acted and will continue to
act in connection with the transactions  contemplated  hereby,  and the  transactions by the Investment  Manager or
Portfolio  contemplated  hereby  are,  in  conformity  with the ICA,  the  Trust's  governing  documents  and other
applicable law.

11.      Liability.  In the absence of willful  misfeasance,  bad faith, gross negligence or reckless disregard for
         ---------
their  obligations  hereunder,  the Sub-Advisers  shall not be liable to the Trust, the Portfolio,  the Portfolio's
     --
shareholders  or the Investment  Manager for any act or omission  resulting in any loss suffered by the Trust,  the
Portfolio,  the Portfolio's  shareholders  or the Investment  Manager in connection with any service to be provided
herein.  The Federal laws impose  responsibilities  under certain  circumstances  on persons who act in good faith,
and  therefore,  nothing  herein shall in any way  constitute a waiver or limitation of any rights which the Trust,
the Portfolio or the Investment  Manager may have under  applicable  law. The liability of the  Sub-Advisers  under
this Agreement shall be joint and several.

12.      Other  Activities of the  Sub-Advisers.  The Investment  Manager agrees that the  Sub-Advisers  and any of
         --------------------------------------
their partners or employees,  and persons  affiliated  with the  Sub-Advisers or with any such partner or employee,
may  render  investment  management  or  advisory  services  to other  investors  and  institutions,  and that such
investors and institutions may own,  purchase or sell,  securities or other interests in property that are the same
as,  similar to, or different from those which are selected for purchase,  holding or sale for the  Portfolio.  The
Investment  Manager further  acknowledges  that the Sub-Advisers  shall be in all respects free to take action with
respect  to  investments  in  securities  or other  interests  in  property  that are the same as,  similar  to, or
different from those selected for purchase,  holding or sale for the Portfolio.  The Investment Manager understands
that the  Sub-Advisers  shall not favor or  disfavor  any of the  Sub-Advisers'  clients or class of clients in the
allocation of investment  opportunities,  so that to the extent  practical,  such  opportunities  will be allocated
among the  Sub-Advisers'  clients over a period of time on a fair and equitable  basis.  Nothing in this  Agreement
shall impose upon the  Sub-Advisers  any obligation to (i) purchase or sell, or recommend for purchase or sale, for
the Portfolio any security which the  Sub-Advisers,  their  partners,  affiliates or employees may purchase or sell
for the  Sub-Advisers  or such  partner's,  affiliate's  or employee's own accounts or for the account of any other
client of the  Sub-Advisers,  advisory or  otherwise,  or (ii) to abstain from the purchase or sale of any security
for the Sub-Advisers'  other clients,  advisory or otherwise,  which the Investment  Manager has placed on the list
provided pursuant to paragraph 7(h) of this Agreement.

13.      Continuance  and  Termination.  This Agreement shall remain in full force and effect for one year from the
         -----------------------------
date hereof,  and is renewable  annually  thereafter by specific  approval of the Trustees or by vote of a majority
of the  outstanding  voting  securities  of the  Portfolio.  Any such  renewal  shall be  approved by the vote of a
majority of the Trustees who are not  interested  persons under the ICA, cast in person at a meeting called for the
purpose  of  voting  on  such  renewal.  This  Agreement  may be  terminated  without  penalty  at any  time by the
Investment Manager or each Sub-Adviser upon 60 days written notice,  and will automatically  terminate in the event
of (i) its  "assignment"  by each party to this  Agreement,  as such term is  defined  in the ICA,  subject to such
exemptions as may be granted by the Securities and Exchange  Commission by rule,  regulation or order, or (ii) upon
termination of the Management Agreement, provided that each Sub-Adviser has received prior written notice thereof.

14.      Notification.  Each Sub-Adviser will notify the Investment  Manager within a reasonable time of any change
         ------------
in the  personnel  of the  Sub-Adviser  with  responsibility  for making  investment  decisions  in relation to the
Portfolio (the  "Portfolio  Manager(s)") or who have been  authorized to give  instructions  to the Custodian.  The
Growth  Sub-Adviser  will notify the Investment  Manager of any changes in the  membership of its general  partners
within a  reasonable  time  after such  change.  The  Sub-Advisers  shall be  responsible  jointly  for  reasonable
out-of-pocket  costs and  expenses  incurred by the  Investment  Manager,  the  Portfolio  or the Trust to amend or
supplement  the Trust's  Prospectus  to reflect a change in  Portfolio  Manager(s)  or otherwise to comply with the
ICA,  the  Securities  Act of 1933,  as amended  (the "1933 Act") or any other  applicable  statute,  law,  rule or
regulation,  as a result of such change;  provided,  however,  that the  Sub-Advisers  shall not be responsible for
such costs and expenses  where the change in Portfolio  Manager(s)  reflects the  termination  of employment of the
Portfolio  Manager(s) with the  Sub-Advisers  and their  affiliates or is the result of a request by the Investment
Manager or is due to other circumstances beyond the Sub-Advisers' control.

         Any notice,  instruction or other  communication  required or  contemplated  by this Agreement shall be in
writing.  All such  communications  shall be  addressed to the  recipient at the address set forth below,  provided
that either party may, by notice, designate a different recipient and/or address for such party.



Investment Manager:        American Skandia Investment Services, Incorporated
                           One Corporate Drive
                           Shelton, Connecticut 06484
                           Attention:  John Birch
                           Senior Vice President & Chief Operating Officer

Value Sub-Adviser:         Sanford C. Bernstein & Co., LLC
                           767 Fifth Avenue
                           New York, New York 10153
                           Attention:  J. Philip Clark

                           With Copy to:  Louis T. Mangan, Senior Vice President and Counsel


Growth Sub-Adviser:        Alliance Capital Management L.P.
                           1345 Avenue of the Americas
                           New York, NY 10105
                           Attention:  Richard Winge

                           With Copy to:  Mark R. Manley, Senior Vice President and Counsel

Trust:                     American Skandia Trust
                           One Corporate Drive
                           Shelton, Connecticut 06484
                           Attention:  Edward P. Macdonald, Esq.


15.      Indemnification.  The  Sub-Advisers,  jointly and  severally,  agree to  indemnify  and hold  harmless the
         ---------------
Investment  Manager,  any affiliated person within the meaning of Section 2(a)(3) of the ICA ("affiliated  person")
of the Investment  Manager and each person,  if any who, within the meaning of Section 15 of the 1933 Act, controls
("controlling  person")  the  Investment  Manager,  against any and all losses,  claims,  damages,  liabilities  or
litigation  (including  reasonable  legal and other expenses),  to which the Investment  Manager or such affiliated
person or  controlling  person of the  Investment  Manager  may become  subject  under the 1933 Act,  the ICA,  the
Advisers Act,  under any other statute,  law, rule or regulation at common law or otherwise,  arising out of either
Sub-Adviser's  responsibilities  hereunder  (1) to the  extent of and as a result of the  willful  misconduct,  bad
faith, or gross  negligence by such  Sub-Adviser,  any of the  Sub-Advisers'  employees or  representatives  or any
affiliate  of or any person  acting on behalf of such  Sub-Adviser,  or (2) as a result of any untrue  statement or
alleged  untrue  statement of a material  fact  contained in the  Registration  Statement,  including any amendment
thereof or any supplement  thereto,  or the omission or alleged  omission to state therein a material fact required
to be stated  therein or necessary to make the statement  therein not  misleading,  if such a statement or omission
was made in reliance  upon and in  conformity  with  written  information  furnished by either  Sub-Adviser  to the
Investment Manager,  the Portfolio,  the Trust or any affiliated person of the Investment Manager, the Portfolio or
the Trust or upon verbal  information  confirmed by such Sub-Adviser in writing,  or (3) to the extent of, and as a
result  of,  the  failure  of  either  Sub-Adviser  to  execute,  or cause  to be  executed,  portfolio  investment
transactions  according to the requirements of the ICA;  provided,  however,  that in no case is the  Sub-Adviser's
                                                         --------   -------
joint and several indemnity in favor of the Investment  Manager or any affiliated  person or controlling  person of
the  Investment  Manager  deemed to protect  such person  against  any  liability  to which any such  person  would
otherwise be subject by reason of willful  misconduct,  bad faith or gross  negligence  in the  performance  of its
duties or by reason of its reckless disregard of its obligations and duties under this Agreement.

         The Investment  Manager agrees to indemnify and hold harmless each  Sub-Adviser,  any affiliated person of
each  Sub-Adviser and each controlling  person of each  Sub-Adviser,  if any,  against any and all losses,  claims,
damages,  liabilities or litigation (including  reasonable legal and other expenses),  to which such Sub-Adviser or
such affiliated  person or controlling  person of each  Sub-Adviser may become subject under the 1933 Act, the ICA,
the Advisers Act, under any other  statute,  law, rule or  regulation,  at common law or otherwise,  arising out of
the  Investment  Manager's  responsibilities  as investment  manager of the Portfolio (1) to the extent of and as a
result of the willful misconduct,  bad faith, or gross negligence by the Investment Manager,  any of the Investment
Manager's  employees  or  representatives  or any  affiliate  of or any person  acting on behalf of the  Investment
Manager,  or (2) as a result of any untrue  statement or alleged  untrue  statement of a material fact contained in
the Registration  Statement,  including any amendment thereof or any supplement  thereto or the omission or alleged
omission  to state  therein a material  fact  required  to be stated  therein or  necessary  to make the  statement
therein not  misleading,  if such a statement  or omission was made other than in reliance  upon and in  conformity
with written  information  furnished by either  Sub-Adviser,  or any affiliated person of such Sub-Adviser or other
than upon verbal information  confirmed by such Sub-Adviser in writing;  provided,  however, that in no case is the
                                                                         --------   -------
Investment  Manager's  indemnity in favor of such  Sub-Adviser  or any affiliated  person or controlling  person of
each  Sub-Adviser  deemed to protect such person against any liability to which any such person would  otherwise be
subject by reason of willful  misconduct,  bad faith or gross  negligence  in the  performance  of its duties or by
reason of its  reckless  disregard  of its  obligations  and duties  under this  Agreement.  It is agreed  that the
Investment  Manager's  indemnification  obligations  under  this  Section  15 will  extend  to  expenses  and costs
(including  reasonable  attorneys fees) incurred by either Sub-Adviser as a result of any litigation brought by the
Investment  Manager  alleging  such  Sub-Adviser's  failure to  perform  its  obligations  and duties in the manner
required under this Agreement unless judgment is rendered for the Investment Manager.

16.      Conflict of Laws.  The provisions of this Agreement  shall be subject to all  applicable  statutes,  laws,
         ----------------
rules  and  regulations,  including,  without  limitation,  the  applicable  provisions  of the ICA and  rules  and
regulations  promulgated  thereunder.  To the extent that any provision  contained  herein  conflicts with any such
applicable  provision of law or regulation,  the latter shall  control.  The terms and provisions of this Agreement
shall be interpreted  and defined in a manner  consistent  with the  provisions and  definitions of the ICA. If any
provision of this Agreement  shall be held or made invalid by a court  decision,  statute,  rule or otherwise,  the
remainder of this Agreement shall continue in full force and effect and shall not be affected by such invalidity.

17.      Amendments,  Waivers, etc. Provisions of this Agreement may be changed,  waived,  discharged or terminated
         --------------------------
only by an instrument in writing  signed by the party against which  enforcement of the change,  waiver,  discharge
or  termination  is  sought.  This  Agreement  (including  Exhibit A hereto)  may be amended at any time by written
mutual consent of the parties,  subject to the  requirements of the ICA and rules and  regulations  promulgated and
orders granted thereunder.

18.      Governing  State Law. This  Agreement is made under,  and shall be governed by and construed in accordance
         --------------------
with, the laws of the State of Connecticut.







                                    (Balance of Page Left Blank Intentionally)






19.      Severability.  Each  provision of this  Agreement is intended to be  severable.  If any  provision of this
         ------------
Agreement is held to be illegal or made invalid by court decision,  statute, rule or otherwise,  such illegality or
invalidity will not affect the validity or enforceability of the remainder of this Agreement.


The effective date of this Agreement is May 1, 2001.



FOR THE INVESTMENT MANAGER:

AMERICAN SKANDIA INVESTMENT SERVICES, INCORPPRATED



___________________________________
John Birch
Senior Vice President & Chief Operating Officer

Date:    ____________________________

Attest:  ____________________________



FOR THE VALUE SUB-ADVISER:

SANFORD C. BERNSTEIN & CO., LLC





__________________________________
Name:
Title:

Date:    ____________________________

Attest:  ____________________________




FOR THE GROWTH SUB-ADVISER:

ALLIANCE CAPITAL MANAGEMENT L.P.

BY:      Alliance Capital Management
         Corporation, its General Partner


___________________________________
Mark R. Manley
Assistant Secretary

Date:    ____________________________

Attest:  ____________________________








                                              American Skandia Trust
                                  AST Alliance/Bernstein Growth + Value Portfolio
                                              Sub-Advisory Agreement

                                                     EXHIBIT A
                                                     ---------


The following annual rate is applicable to the Growth Sub-Adviser:
------------------------------------------------------------------

         An annual rate equal to .40% of the combined average daily net assets of the Growth Portfolio of the
Portfolio and the Growth Portfolio of the series of American Skandia Advisor Funds that is managed by the
Sub-Adviser and identified by the Sub-Adviser and the Investment Manager as being similar to the Portfolio
(specifically, the Growth portion of the ASAF Alliance/Bernstein Growth + Value Fund).



The following annual rate is applicable to the Value Sub-Adviser:
-----------------------------------------------------------------

         An annual rate equal to .40% of the combined average daily net assets of the Value Portfolio of the
Portfolio and the Value Portfolio of the series of American Skandia Advisor Funds that is managed by the
Sub-Adviser and identified by the Sub-Adviser and the Investment Manager as being similar to the Portfolio
(specifically, the Value portion of the ASAF Alliance/Bernstein Growth + Value Fund).

                                                  AMERICAN SKANDIA TRUST
                                                  SUB-ADVISORY AGREEMENT
                                                  ----------------------


THIS AGREEMENT is between American Skandia  Investment  Services,  Incorporated  (the "Investment  Manager") and Sanford C.
Bernstein & Co., LLC (the "Sub-Advisor").

                                                    W I T N E S S E T H
                                                    - - - - - - - - - -

WHEREAS,  American  Skandia Trust (the "Trust") is a  Massachusetts  business  trust  organized  with one or more series of
shares and is  registered  as an open-end  management  investment  company  under the  Investment  Company Act of 1940,  as
amended (the "ICA"); and

WHEREAS,  the  Investment  Manager and the  Sub-Advisor  each is an  investment  Advisor  registered  under the  Investment
Advisors Act of 1940, as amended (the "Advisors Act"); and

WHEREAS,  the Board of Trustees of the Trust (the  "Trustees")  have engaged the  Investment  Manager to act as  investment
manager for the AST Sanford Bernstein Core Value Portfolio (the  "Portfolio"),  one series of the Trust, under the terms of
a management agreement, dated May 1, 2001, with the Trust (the "Management Agreement"); and

WHEREAS, the Investment Manager,  acting pursuant to the Management  Agreement,  wishes to engage the Sub-Advisor,  and the
Trustees have approved the engagement of the Sub-Advisor,  to provide  investment advice and other investment  services set
forth below.

NOW, THEREFORE, the Investment Manager and the Sub-Advisor agree as follows:

1.       Investment  Services.  The  Sub-Advisor  will  formulate  and  implement a continuous  investment  program for the
         --------------------
Portfolio  conforming to the investment  objective,  investment  policies and restrictions of the Portfolio as set forth in
the  Prospectus  and  Statement  of  Additional  Information  of the Trust as in effect  from time to time  (together,  the
"Registration  Statement"),  the Agreement and Declaration of Trust and By-laws of the Trust, and any investment guidelines
or other  instructions  received  by the  Sub-Advisor  in  writing  from the  Investment  Manager  from  time to time.  Any
amendments  to  the  foregoing  documents  will  not  be  deemed  effective  with  respect  to the  Sub-Advisor  until  the
Sub-Advisor's  receipt  thereof.  The appropriate  officers and employees of the  Sub-Advisor  will be available to consult
with the Investment  Manager,  the Trust and the Trustees at reasonable  times and upon  reasonable  notice  concerning the
business of the Trust,  including  valuations of securities  which are not  registered  for public sale,  not traded on any
securities  market or  otherwise  may be deemed  illiquid  for  purposes  of the ICA;  provided it is  understood  that the
Sub-Advisor is not responsible for daily pricing of the Portfolio's assets.

         Subject to the supervision and control of the Investment Manager,  which in turn is subject to the supervision and
control of the Trustees,  the  Sub-Advisor in its discretion will determine which issuers and securities will be purchased,
held,  sold or exchanged by the Portfolio or otherwise  represented in the  Portfolio's  investment  portfolio from time to
time and,  subject to the  provisions of paragraph 3 of this  Agreement,  will place orders with and give  instructions  to
brokers,  dealers and others for all such  transactions  and cause such  transactions  to be executed.  The Sub-Advisor may
delegate  its  investment  advisory  and  other  responsibilities  and  duties  hereunder  to an  affiliated  person of the
Sub-Advisor,  subject to the Sub-Advisor  retaining  overall  responsibility  for such powers and functions and any and all
obligations  and  liabilities  in connection  therewith.  Custody of the Portfolio  will be maintained by a custodian  bank
(the  "Custodian")  and the Investment  Manager will authorize the Custodian to honor orders and  instructions by employees
of the  Sub-Advisor  designated by the  Sub-Advisor to settle  transactions  in respect of the Portfolio.  No assets may be
withdrawn from the Portfolio other than for settlement of  transactions on behalf of the Portfolio  except upon the written
authorization  of  appropriate  officers of the Trust who shall have been  certified as such by proper  authorities  of the
Trust prior to the withdrawal.

         The Sub-Advisor will not be responsible for the provision of  administrative,  bookkeeping or accounting  services
to the  Portfolio  except  as  specifically  provided  herein,  as  required  by the ICA or the  Advisors  Act or as may be
necessary for the  Sub-Advisor to supply to the  Investment  Manager,  the Portfolio or the  Portfolio's  shareholders  the
information  required to be provided by the Sub-Advisor  hereunder.  Any records maintained hereunder shall be the property
of the Portfolio and surrendered promptly upon request.

         In furnishing  the services under this  Agreement,  the  Sub-Advisor  will comply with and use its best efforts to
enable the  Portfolio to conform to the  requirements  of: (i) the ICA and the  regulations  promulgated  thereunder;  (ii)
Subchapter M of the Internal Revenue Code and the regulations  promulgated  thereunder;  (iii) other applicable  provisions
of state or  federal  law;  (iv) the  Agreement  and  Declaration  of Trust and  By-laws  of the Trust;  (v)  policies  and
determinations  of the Trust and the Investment  Manager  provided to the Sub-Advisor in writing;  (vi) the fundamental and
non-fundamental  investment  policies  and  restrictions  applicable  to  the  Portfolio,  as set  out in the  Registration
Statement of the Trust in effect,  or as such investment  policies and restrictions from time to time may be amended by the
Portfolio's  shareholders  or the  Trustees  and  communicated  to the  Sub-Advisor  in  writing;  (vii)  the  Registration
Statement;  and (viii)  investment  guidelines  or other  instructions  received in writing  from the  Investment  Manager.
Notwithstanding  the foregoing,  the Sub-Advisor  shall have no  responsibility  to monitor  compliance with limitations or
restrictions  for which  information  from the  Investment  Manager  or its  authorized  agents is  required  to enable the
Sub-Advisor  to monitor  compliance  with such  limitations  or  restrictions  unless such  information  is provided to the
Sub-Advisor in writing.  The Sub-Advisor shall supervise and monitor the activities of its  representatives,  personnel and
agents in connection with the investment program of the Portfolio.

         Nothing in this Agreement shall be implied to prevent the Investment  Manager from engaging other  sub-Advisors to
provide  investment  advice and other  services  to the  Portfolio  or to series or  portfolios  of the Trust for which the
Sub-Advisor  does not provide such services,  or to prevent the Investment  Manager from providing such services  itself in
relation to the Portfolio or such other series or portfolios.

         The  Sub-Advisor  shall be responsible  for the  preparation and filing of Schedule 13G and Form 13-F on behalf of
the Portfolio.  The Sub-Advisor  shall not be responsible  for the  preparation or filing of any other reports  required of
the Portfolio by any governmental or regulatory agency, except as expressly agreed in writing.

2.       Investment  Advisory  Facilities.  The  Sub-Advisor,  at  its  expense,  will  furnish  all  necessary  investment
         --------------------------------
facilities, including salaries of personnel, required for it to execute its duties hereunder.

3.       Execution of Portfolio  Transactions.  In connection  with the  investment and  reinvestment  of the assets of the
         ------------------------------------
Portfolio,  the Sub-Advisor is responsible for the selection of  broker-dealers  to execute purchase and sale  transactions
for the Portfolio in conformity with the policy regarding brokerage as set forth in the Registration  Statement,  or as the
Trustees may determine  from time to time, as well as the  negotiation  of brokerage  commission  rates with such executing
broker-dealers.  Generally,  the  Sub-Advisor's  primary  consideration in placing Portfolio  investment  transactions with
broker-dealers  for execution  will be to obtain,  and maintain the  availability  of, best execution at the best available
price.

         Consistent with this policy, the Sub-Advisor,  in selecting  broker-dealers and negotiating  brokerage  commission
rates,  will take all relevant factors into  consideration,  including,  but not limited to: the best price available;  the
reliability,  integrity and financial  condition of the  broker-dealer;  the size of and difficulty in executing the order;
and the value of the expected  contribution  of the  broker-dealer  to the  investment  performance  of the  Portfolio on a
continuing  basis.  Subject to such  policies and  procedures as the Trustees may  determine,  the  Sub-Advisor  shall have
discretion  to  effect  investment  transactions  for  the  Portfolio  through  broker-dealers  (including,  to the  extent
permissible  under applicable law,  broker-dealers  affiliated with the Sub-Advisor)  qualified to obtain best execution of
such  transactions  who provide  brokerage and/or research  services,  as such services are defined in section 28(e) of the
Securities  Exchange Act of 1934, as amended (the "1934 Act"),  and to cause the  Portfolio to pay any such  broker-dealers
an amount of commission  for effecting a portfolio  investment  transaction  in excess of the amount of commission  another
broker-dealer  would have charged for effecting that  transaction,  if the  Sub-Advisor  determines in good faith that such
amount of  commission  is  reasonable  in relation to the value of the  brokerage  or  research  services  provided by such
broker-dealer,   viewed  in  terms  of  either  that  particular  investment   transaction  or  the  Sub-Advisor's  overall
responsibilities  with  respect to the  Portfolio  and other  accounts  as to which the  Sub-Advisor  exercises  investment
discretion (as such term is defined in section  3(a)(35) of the 1934 Act).  Allocation of orders placed by the  Sub-Advisor
on behalf of the  Portfolio  to such  broker-dealer  shall be in such  amounts and  proportions  as the  Sub-Advisor  shall
determine  in good faith in  conformity  with its  responsibilities  under  applicable  laws,  rules and  regulations.  The
Sub-Advisor  will submit reports on such  allocations to the  Investment  Manager  regularly as requested by the Investment
Manager,  in such form as may be mutually  agreed to by the parties  hereto,  indicating  the  broker-dealers  to whom such
allocations have been made and the basis therefor.

         Subject to the foregoing  provisions of this paragraph 3, the Sub-Advisor may also consider sales of shares in the
Portfolio,  and  recommendations by the Investment  Manager that such sales take into account,  as factors in the selection
of broker-dealers  to effect the Portfolio's  investment  transactions.  Notwithstanding  the above,  nothing shall require
the Sub-Advisor to use a broker-dealer  which provides  research  services or to use a particular  broker-dealer  which the
Investment Manager has recommended.

         In lieu of selecting  broker-dealers to execute  transactions for the Portfolio,  the Sub-Advisor may execute such
transactions  for the Portfolio  provided that it  "steps-out"  such  transactions  to the  broker-dealers  selected by the
Sub-Advisor.  A  step-out  is a service  provided  by the New York  Stock  Exchange  and other  markets  which  allows  the
Sub-Advisor to provide the Portfolio with the benefit of the Sub-Advisor's  execution  capabilities at no additional charge
and  then  transfer  or  step-out  the  confirmation  and  settlement   responsibilities   of  such   transactions  to  the
broker-dealer(s)  selected by the  Sub-Advisor.  In connection  with a step-out,  transaction  charges shall be paid by the
Portfolio to the broker-dealers selected by the Sub-Advisor and not to the Sub-Advisor.

         In addition to selecting  brokers or dealers to execute  transactions  for the  Portfolio,  the  Sub-Advisor  may,
subject to its duty to seek best  execution at the best available  price,  also act as a broker for the Portfolio from time
to time at rates not  exceeding the usual and  customary  broker's  commission.  Under  Federal law, the  Sub-Advisor  must
obtain the Investment  Manager's  consent to effect agency cross  transactions  for the Portfolio,  which consent is hereby
granted.  The Sub-Advisor  represents,  warrants and covenants that all agency cross transactions for the Portfolio will be
effected  by the  Sub-Advisor  strictly  in  accordance  with  Rule  206(3)-2  under the  Advisors  Act.  An  agency  cross
transaction  is where the  Sub-Advisor  purchases  or sells  securities  from or to a  non-managed  account  on behalf of a
client's managed account.  Pursuant to this consent,  the Sub-Advisor will only effect an agency cross  transaction for the
Portfolio  with a non-managed  account.  When the  Sub-Advisor  crosses  transactions  in connection  with a step-out,  the
Sub-Advisor  will receive a commission  from the  transaction  only with  respect to the  non-managed  account and will not
receive a  commission  from the  transaction  with  respect to the  Portfolio.  In an agency  cross  transaction  where the
Sub-Advisor acts as broker for the Portfolio,  the Sub-Advisor  receives commissions from both sides of the trade and there
is a  potentially  conflicting  division of loyalties  and  responsibilities.  However,  as both sides to the trade want to
execute the transaction at the best price without moving the market price in either  direction,  the  Sub-Advisor  believes
that an agency  cross  transaction  will aid both sides to the trade in obtaining  the best price for the trade.  THE TRUST
OR THE INVESTMENT MANAGER MAY REVOKE THIS CONSENT BY WRITTEN NOTICE TO THE SUB-ADVISOR AT ANY TIME.

4.       Reports by the Sub-Advisor.  The Sub-Advisor  shall furnish the Investment  Manager monthly,  quarterly and annual
         --------------------------
reports,  as may  reasonably  be  requested  by the  Investment  Manager  concerning  the  transactions,  performance,  and
compliance  of the  Portfolio  so that the  Investment  Manager may review such matters and discuss the  management  of the
Portfolio.  The  Sub-Advisor  shall permit the books and records  maintained  with respect to the Portfolio to be inspected
and  audited by the Trust,  the  Investment  Manager or their  respective  agents at all  reasonable  times  during  normal
business hours upon  reasonable  notice.  The  Sub-Advisor  shall  immediately  notify both the Investment  Manager and the
Trust of any legal process served upon it in connection with its activities  hereunder,  including any legal process served
upon it on behalf of the  Investment  Manager,  the  Portfolio or the Trust.  The  Sub-Advisor  shall  promptly  notify the
Investment  Manager of (1) any changes in any  information  regarding the  Sub-Advisor  or the  investment  program for the
Portfolio disclosed in the Trust's Registration  Statement, or (2) any violation of any requirement,  provision,  policy or
restriction that the Sub-Advisor is required to comply with under Section 1 of this Agreement.

5.       Compensation  of the  Sub-Advisor.  The amount of the  compensation  to the  Sub-Advisor  is computed at an annual
         ---------------------------------
rate.  The fee shall be payable  monthly in  arrears,  based on the  average  daily net  assets of the  Portfolio  for each
month, at the annual rate set forth in Exhibit A to this Agreement.

         In computing the fee to be paid to the  Sub-Advisor,  the net asset value of the Portfolio  shall be valued as set
forth in the Registration  Statement.  If this Agreement is terminated,  the payment  described herein shall be prorated to
the date of termination.

         The  Investment  Manager and the  Sub-Advisor  shall not be  considered  as partners  or  participants  in a joint
venture.  The  Sub-Advisor  will pay its own expenses for the services to be provided  pursuant to this  Agreement and will
not be  obligated  to pay any  expenses  of the  Investment  Manager,  the  Portfolio  or the  Trust.  Except as  otherwise
specifically  provided  herein,  the  Investment  Manager,  the  Portfolio  and the Trust will not be  obligated to pay any
expenses of the Sub-Advisor.






6.       Delivery of  Documents to the  Sub-Advisor.  The  Investment  Manager has  furnished  the  Sub-Advisor  with true,
         ------------------------------------------
correct and complete copies of each of the following documents:

         (a)      The Agreement and Declaration of Trust of the Trust, as in effect on the date hereof;

         (b)      The By-laws of the Trust, as in effect on the date hereof;

         (c)      The resolutions of the Trustees  approving the engagement of the Sub-Advisor as portfolio  manager of the
                  Portfolio and approving the form of this Agreement;

         (d)      The resolutions of the Trustees  selecting the Investment  Manager as investment manager to the Portfolio
                  and approving the form of the Management Agreement;

         (e)      The Management Agreement;

         (f)      The Code of Ethics of the Trust and of the Investment Manager, as in effect on the date hereof; and

         (g)      A list of companies the securities of which are not to be bought or sold for the Portfolio.

         The  Investment  Manager  will  furnish the  Sub-Advisor  from time to time with  copies,  properly  certified  or
otherwise  authenticated,  of all amendments of or supplements to the foregoing,  if any. Such amendments or supplements as
to items (a)  through  (f)  above  will be  provided  within 30 days of the time such  materials  become  available  to the
Investment  Manager.  Such  amendments or  supplements  as to item (g) above will be provided not later than the end of the
business  day next  following  the date  such  amendments  or  supplements  become  known to the  Investment  Manager.  Any
amendments  or  supplements  to the  foregoing  will not be deemed  effective  with  respect to the  Sub-Advisor  until the
Sub-Advisor's  receipt  thereof.  The Investment  Manager will provide such  additional  information as the Sub-Advisor may
reasonably request in connection with the performance of its duties hereunder.

7.       Delivery of Documents to the Investment  Manager.  The Sub-Advisor has furnished the Investment Manager with true,
         ------------------------------------------------
correct and complete copies of each of the following documents:

(a)      The Sub-Advisor's Form ADV as filed with the Securities and Exchange Commission as of the date hereof;

(b)      The Sub-Advisor's most recent balance sheet;

(c)      Separate lists of persons who the Sub-Advisor  wishes to have authorized to give written and/or oral  instructions
                  to Custodians of Trust assets for the Portfolio; and

(d)      The Code of Ethics of the Sub-Advisor, as in effect on the date hereof.

         The  Sub-Advisor  will  furnish the  Investment  Manager  from time to time with  copies,  properly  certified  or
otherwise  authenticated,  of all amendments of or supplements  to the  foregoing,  if any. Such  amendments or supplements
will be  provided  within 30 days of the time such  materials  become  available  to the  Sub-Advisor.  Any  amendments  or
supplements  to the foregoing  will not be deemed  effective  with respect to the  Investment  Manager until the Investment
Manager's receipt thereof.  The Sub-Advisor will provide  additional  information as the Investment  Manager may reasonably
request in connection with the Sub-Advisor's performance of its duties under this Agreement.

8.       Confidential  Treatment.  The parties hereto  understand  that any information or  recommendation  supplied by the
         -----------------------
Sub-Advisor in connection with the performance of its obligations  hereunder is to be regarded as confidential  and for use
only by the  Investment  Manager,  the Trust or such persons the  Investment  Manager may designate in connection  with the
Portfolio.  The  parties  also  understand  that  any  information  supplied  to the  Sub-Advisor  in  connection  with the
performance  of its  obligations  hereunder,  particularly,  but not  limited to, any list of  securities  which may not be
bought or sold for the  Portfolio,  is to be regarded as  confidential  and for use only by the  Sub-Advisor  in connection
with its obligation to provide investment advice and other services to the Portfolio.

9.       Representations  of the Parties.  Each party hereto hereby further  represents and warrants to the other that: (i)
         -------------------------------
it is  registered as an  investment  Advisor under the Advisors Act and is registered or licensed as an investment  Advisor
under the laws of all  jurisdictions in which its activities  require it to be so registered or licensed;  and (ii) it will
use its  reasonable  best efforts to maintain each such  registration  or license in effect at all times during the term of
this  Agreement;  and (iii) it will promptly  notify the other if it ceases to be so  registered,  if its  registration  is
suspended for any reason,  or if it is notified by any regulatory  organization or court of competent  jurisdiction that it
should show cause why its  registration  should not be suspended or  terminated;  and (iv) it is duly  authorized  to enter
into this Agreement and to perform its obligations hereunder.

         The Sub-Advisor  further  represents that it has adopted a written Code of Ethics in compliance with Rule 17j-1(b)
of the ICA.  The  Sub-Advisor  shall be  subject  to such Code of Ethics  and shall  not be  subject  to any other  Code of
Ethics,  including  the  Investment  Manager's  Code  of  Ethics,  unless  specifically  adopted  by the  Sub-Advisor.  The
Investment  Manager further  represents and warrants to the Sub-Advisor  that (i) the appointment of the Sub-Advisor by the
Investment  Manager  has been duly  authorized  and (ii) it has  acted  and will  continue  to act in  connection  with the
transactions  contemplated  hereby, and the transactions  contemplated  hereby are, in conformity with the ICA, the Trust's
governing documents and other applicable law.

10.      Liability.  In the absence of willful  misfeasance,  bad faith,  gross  negligence  or reckless  disregard for its
         ---------
obligations  hereunder,  the Sub-Advisor shall not be liable to the Trust, the Portfolio,  the Portfolio's  shareholders or
the  Investment  Manager  for any act or  omission  resulting  in any  loss  suffered  by the  Trust,  the  Portfolio,  the
Portfolio's  shareholders  or the  Investment  Manager in connection  with any service to be provided  herein.  The Federal
laws impose  responsibilities  under certain circumstances on persons who act in good faith, and therefore,  nothing herein
shall in any way constitute a waiver or limitation of any rights which the Trust,  the Portfolio or the Investment  Manager
may have under applicable law.

11.      Other  Activities of the Sub-Advisor.  The Investment  Manager agrees that the Sub-Advisor and any of its partners
         ------------------------------------
or employees,  and persons  affiliated  with the  Sub-Advisor or with any such partner or employee,  may render  investment
management or advisory  services to other investors and  institutions,  and that such investors and  institutions  may own,
purchase or sell,  securities  or other  interests in property  that are the same as,  similar to, or different  from those
which are selected for purchase,  holding or sale for the Portfolio.  The Investment Manager further  acknowledges that the
Sub-Advisor  shall be in all respects free to take action with respect to investments  in securities or other  interests in
property  that are the same as,  similar  to, or  different  from  those  selected  for  purchase,  holding or sale for the
Portfolio.  The Investment  Manager  understands that the Sub-Advisor  shall not favor or disfavor any of the Sub-Advisor's
clients  or class of  clients  in the  allocation  of  investment  opportunities,  so that to the  extent  practical,  such
opportunities  will be  allocated  among the  Sub-Advisor's  clients over a period of time on a fair and  equitable  basis.
Nothing in this  Agreement  shall impose upon the  Sub-Advisor  any  obligation  (i) to purchase or sell,  or recommend for
purchase or sale,  for the  Portfolio  any security  which the  Sub-Advisor,  its  partners,  affiliates  or employees  may
purchase or sell for the  Sub-Advisor or such  partner's,  affiliate's or employee's own accounts or for the account of any
other client of the  Sub-Advisor,  advisory or otherwise,  or (ii) to abstain from the purchase or sale of any security for
the  Sub-Advisor's  other  clients,  advisory or otherwise,  which the  Investment  Manager has placed on the list provided
pursuant to paragraph 6(g) of this Agreement.

12.      Continuance  and  Termination.  This  Agreement  shall  remain in full force and effect for one year from the date
         -----------------------------
hereof,  and is  renewable  annually  thereafter  by  specific  approval  of the  Trustees  or by vote of a majority of the
outstanding  voting  securities  of the  Portfolio.  Any such  renewal  shall be  approved by the vote of a majority of the
Trustees who are not  interested  persons  under the ICA,  cast in person at a meeting  called for the purpose of voting on
such renewal.  This Agreement may be terminated  without  penalty at any time by the Investment  Manager or the Sub-Advisor
upon 60 days written  notice,  and will  automatically  terminate in the event of (i) its  "assignment"  by either party to
this  Agreement,  as such term is defined in the ICA,  subject to such  exemptions as may be granted by the  Securities and
Exchange  Commission by rule,  regulation or order,  or (ii) upon  termination  of the Management  Agreement,  provided the
Sub-Advisor has received prior written notice thereof.

13.      Notification.  The  Sub-Advisor  will notify the Investment  Manager within a reasonable time of any change in the
         ------------
personnel  of the  Sub-Advisor  with  responsibility  for making  investment  decisions in relation to the  Portfolio  (the
"Portfolio  Manager(s)")  or who have been  authorized to give  instructions  to the Custodian.  The  Sub-Advisor  shall be
responsible  for  reasonable  out-of-pocket  costs and expenses  incurred by the Investment  Manager,  the Portfolio or the
Trust to amend or  supplement  the Trust's  Prospectus  to reflect a change in Portfolio  Manager(s) or otherwise to comply
with the ICA,  the  Securities  Act of 1933,  as amended (the "1933 Act") or any other  applicable  statute,  law,  rule or
regulation,  as a result of such change;  provided,  however,  that the Sub-Advisor shall not be responsible for such costs
and expenses where the change in Portfolio  Manager(s)  reflects the termination of employment of the Portfolio  Manager(s)
with the  Sub-Advisor  and its  affiliates  or is the  result of a request  by the  Investment  Manager  or is due to other
circumstances beyond the Sub-Advisor's control.

         Any notice,  instruction or other  communication  required or  contemplated by this Agreement shall be in writing.
All such  communications  shall be addressed to the  recipient at the address set forth below,  provided  that either party
may, by notice, designate a different recipient and/or address for such party.



Investment Manager:        American Skandia Investment Services, Incorporated
                           One Corporate Drive
                           Shelton, Connecticut 06484
                           Attention:  John Birch
                           Senior Vice President & Chief Operating Officer

Sub-Advisor:               Sanford C. Bernstein & Co., LLC
                           767 Fifth Avenue
                           New York, New York 10153
                           Attention:  J. Philip Clark

                           With Copy to: Louis T. Mangan, Senior Vice President and Counsel

Trust:                     American Skandia Trust
                           One Corporate Drive
                           Shelton, Connecticut 06484
                           Attention: Edward P. Macdonald, Esq.


14.      Indemnification.  The  Sub-Advisor  agrees to indemnify and hold harmless the Investment  Manager,  any affiliated
         ---------------
person within the meaning of Section 2(a)(3) of the ICA  ("affiliated  person") of the Investment  Manager and each person,
if any who,  within the meaning of Section 15 of the 1933 Act,  controls  ("controlling  person") the  Investment  Manager,
against any and all losses,  claims,  damages,  liabilities or litigation  (including reasonable legal and other expenses),
to which the  Investment  Manager or such  affiliated  person or controlling  person of the  Investment  Manager may become
subject under the 1933 Act, the ICA, the Advisors Act,  under any other  statute,  law, rule or regulation at common law or
otherwise,  arising  out of the  Sub-Advisor's  responsibilities  hereunder  (1) to the  extent  of and as a result  of the
willful  misconduct,  bad  faith,  or  gross  negligence  by  the  Sub-Advisor,  any  of  the  Sub-Advisor's  employees  or
representatives  or any  affiliate of or any person acting on behalf of the  Sub-Advisor,  or (2) as a result of any untrue
statement or alleged untrue statement of a material fact contained in the Registration  Statement,  including any amendment
thereof or any  supplement  thereto,  or the omission or alleged  omission to state  therein a material fact required to be
stated  therein or  necessary to make the  statement  therein not  misleading,  if such a statement or omission was made in
reliance upon and in conformity  with written  information  furnished by the  Sub-Advisor  to the Investment  Manager,  the
Portfolio,  the Trust or any  affiliated  person of the  Investment  Manager,  the  Portfolio  or the Trust or upon  verbal
information  confirmed  by the  Sub-Advisor  in  writing,  or (3) to the extent of, and as a result of, the  failure of the
Sub-Advisor to execute, or cause to be executed,  portfolio  investment  transactions  according to the requirements of the
ICA;  provided,  however,  that in no case is the  Sub-Advisor's  indemnity  in  favor  of the  Investment  Manager  or any
      --------   -------
affiliated  person or controlling  person of the Investment  Manager deemed to protect such person against any liability to
which any such person would  otherwise be subject by reason of willful  misconduct,  bad faith or gross  negligence  in the
performance of its duties or by reason of its reckless disregard of its obligations and duties under this Agreement.

         The  Investment  Manager  agrees to indemnify  and hold harmless the  Sub-Advisor,  any  affiliated  person of the
Sub-Advisor  and each  controlling  person  of the  Sub-Advisor,  if any,  against  any and all  losses,  claims,  damages,
liabilities or litigation  (including  reasonable  legal and other  expenses),  to which the Sub-Advisor or such affiliated
person or  controlling  person of the  Sub-Advisor  may become subject under the 1933 Act, the ICA, the Advisors Act, under
any  other  statute,  law,  rule or  regulation,  at common  law or  otherwise,  arising  out of the  Investment  Manager's
responsibilities  as investment  manager of the  Portfolio (1) to the extent of and as a result of the willful  misconduct,
bad faith, or gross negligence by the Investment Manager,  any of the Investment  Manager's employees or representatives or
any affiliate of or any person acting on behalf of the Investment  Manager,  or (2) as a result of any untrue  statement or
alleged untrue statement of a material fact contained in the  Registration  Statement,  including any amendment  thereof or
any supplement  thereto or the omission or alleged  omission to state therein a material fact required to be stated therein
or  necessary  to make the  statement  therein  not  misleading,  if such a statement  or  omission  was made other than in
reliance upon and in conformity with written  information  furnished by the  Sub-Advisor,  or any affiliated  person of the
Sub-Advisor or other than upon verbal information  confirmed by the Sub-Advisor in writing;  provided,  however, that in no
                                                                                             --------   -------
case is the Investment  Manager's  indemnity in favor of the Sub-Advisor or any affiliated person or controlling  person of
the  Sub-Advisor  deemed to protect such person  against any liability to which any such person would  otherwise be subject
by reason of  willful  misconduct,  bad faith or gross  negligence  in the  performance  of its  duties or by reason of its
reckless  disregard  of its  obligations  and duties  under this  Agreement.  It is agreed  that the  Investment  Manager's
indemnification  obligations under this Section 14 will extend to expenses and costs (including  reasonable attorneys fees)
incurred by the  Sub-Advisor as a result of any litigation  brought by the Investment  Manager  alleging the  Sub-Advisor's
failure to perform its obligations  and duties in the manner required under this Agreement  unless judgment is rendered for
the Investment Manager.

15.      Conflict of Laws. The provisions of this Agreement shall be subject to all applicable  statutes,  laws,  rules and
         ----------------
regulations,  including,  without limitation,  the applicable  provisions of the ICA and rules and regulations  promulgated
thereunder.  To the extent that any provision  contained  herein  conflicts  with any such  applicable  provision of law or
regulation,  the latter shall control.  The terms and provisions of this  Agreement  shall be interpreted  and defined in a
manner  consistent  with the  provisions and  definitions  of the ICA. If any provision of this Agreement  shall be held or
made invalid by a court  decision,  statute,  rule or otherwise,  the remainder of this  Agreement  shall  continue in full
force and effect and shall not be affected by such invalidity.

16.      Amendments,  Waivers, etc. Provisions of this Agreement may be changed,  waived,  discharged or terminated only by
         --------------------------
an instrument in writing signed by the party against which enforcement of the change,  waiver,  discharge or termination is
sought.  This Agreement  (including  Exhibit A hereto) may be amended at any time by written mutual consent of the parties,
subject to the requirements of the ICA and rules and regulations promulgated and orders granted thereunder.



17.      Governing  State Law. This  Agreement is made under,  and shall be governed by and  construed in accordance  with,
         --------------------
the laws of the State of Connecticut.

18.      Severability.  Each  provision of this  Agreement is intended to be severable.  If any provision of this Agreement
         ------------
is held to be illegal or made invalid by court  decision,  statute,  rule or otherwise,  such illegality or invalidity will
not affect the validity or enforceability of the remainder of this Agreement.

The effective date of this agreement is May 1, 2001

FOR THE INVESTMENT MANAGER:                                   FOR THE SUB-ADVISOR:




___________________________________                            ______________________________________
John Birch




Senior Vice President & Chief Operating Officer


Date:    ____________________________                                  Date:    ____________________________


Attest:  ____________________________                                  Attest:  ____________________________






                                                  American Skandia Trust
                                        AST Sanford Bernstein Core Value Portfolio
                                                  Sub-Advisory Agreement

                                                         EXHIBIT A
                                                         ---------




         An annual rate equal to the following  percentages  of the combined  average daily net assets of the Portfolio and
the series of  American  Skandia  Trust that is  managed by the  Sub-Adviser  and  identified  by the  Sub-adviser  and the
Investment  Manager as being similar to the Portfolio:  .25% of the portion of the combined average daily net assets not in
excess of $500 million; plus .20% of the portion in excess of $500 million.

INDEPENDENT AUDITOR'S CONSENT

We consent to the use in this Post-Effective Amendment No. 38 to Registration Statement No. 33-24962 of the American
Skandia Trust of our report dated February 9, 2001, appearing in the Statement of Additional Information which is a part
of such Registration Statement, and to the reference to us under the caption "Financial Highlights" appearing in the
Prospectus, which is also a part of such Registration Statement.




/s/Deliotte & Touche LLP
Deloitte & Touche LLP
New York, New York
April 27, 2001

                                              GOLDMAN SACHS ASSET MANAGEMENT
                                           GOLDMAN SACHS FUNDS MANAGEMENT, L.P.
                                       GOLDMAN SACHS ASSET MANAGEMENT INTERNATIONAL


         CODE OF ETHICS
         --------------

                                                              Effective January 23, 1991
                                                              (as revised April 1, 2000)

I.       DEFINITIONS

A.       "Access Person" with respect to Goldman Sachs Asset Management ("GSAM") means (because GSAM is a unit within the
                  Investment Management Division, a separate operating division, of Goldman, Sachs & Co., and Goldman,
                  Sach & Co. is primarily engaged in a business other than advising registered investment companies or
                  other advisory clients) only those officers, general partners or Advisory Persons (as defined below) of
                  GSAM who, with respect to any Investment Company (as defined below), make recommendations or participate
                  in the determination of which recommendation shall be made to any Investment Company, or whose principal
                  function or duties relate to the determination of which recommendation shall be made to any Investment
                  Company, or who, in connection with their duties, obtain any information concerning such recommendations
                  on Covered Securities (as defined below) which are being made to the Investment Company.  "Access
                  Person" with respect to Goldman Sachs Asset Management International ("GSAMI") and Goldman Sachs Funds
                  Management, L.P. ("GSFM") means any director, officer, general partner or Advisory Person of GSAMI or
                  GSFM, as the case may be.

B.       "Adviser" means each of GSAM, GSAMI and GSFM.

C.       "Advisory Person" means (i) any officer or employee of the Adviser or any company in a control relationship to
                  the Adviser who, in connection with his or her regular functions or duties, makes, participates in or
                  obtains information regarding the purchase or sale of a Covered Security by an Investment Company, or
                  whose functions relate to the making of any recommendations with respect to such purchases or sales; and
                  (ii) any natural person in a control relationship to the Adviser who obtains information concerning the
                  recommendations made to an Investment Company with regard to the purchase or sale of a Covered Security.

D.       "Beneficial ownership" of a security shall be interpreted in the same manner as it would be under Rule 16a-1 (a)
                  (2) of the Securities Exchange Act of 1934, as amended ("Exchange Act"), in determining whether a person
                  is the beneficial owner of a security for purposes of Section 16 of the Exchange Act and the rules and
                  regulations promulgated thereunder.

E.       "Board of Trustees" means the board of trustees or directors, including a majority of the disinterested
                  trustees/directors, of any Investment Company for which an Adviser serves as an investment adviser,
                  sub-adviser or principal underwriter.

F.       "Control" shall have the same meaning as that set forth in Section 2(a)(9) of the Investment Company Act of 1940,
                  as amended (the "Investment Company Act").  Section 2(a)(9) generally provides that "control" means the
                  power to exercise a controlling influence over the management or policies of a company, unless such
                  power is solely the result of an official position with such company.

G.       "Covered Security" means a security as defined in Section 2(a) (36) of the Investment Company Act, except that it
                  does not include:  (i)  direct obligations of the Government of the United States;   (ii) banker's
                  acceptances, bank certificates of deposit, commercial paper and high quality short-term debt instruments
                  (any instrument having a maturity at issuance of less than 366 days and that is in one of the two
                  highest rating categories of a nationally recognized statistical rating organization), including
                  repurchase agreements; and (iii) shares of registered open-end investment companies.

H.       "Initial Public Offering" means an offering of securities registered under the Securities Act of 1933, the issuer
                  of which, immediately before the registration, was not subject to the reporting requirements of Sections
                  13 or 15(d) of the Exchange Act.

I.       "Investment Company" means a company registered as such under the Investment Company Act, or any series thereof,
                  for which the Adviser is the investment adviser, sub-adviser or principal underwriter.

J.       "Investment Personnel" of the Adviser means (i) any employee of the Adviser (or of any company in a control
                  relationship to the Adviser) who, in connection with his or her regular functions or duties, makes or
                  participates in making recommendations regarding the purchase or sale of securities by an Investment
                  Company or (ii)  any natural person who controls the Adviser and who obtains information concerning
                  recommendations made to an Investment Company regarding the purchase or sale of securities by an
                  Investment Company.

K.       A "Limited Offering" means an offering that is exempt from registration under the Securities Act of 1933 pursuant
                  to Section 4(2) or Section 4(6) or pursuant to Rule 504, Rule 505 or Rule 506 under the Securities Act
                  of 1933.

L.       "Purchase or sale of Covered Security" includes, among other things, the writing of an option to purchase or sell
                  a Covered Security or any security that is exchangeable for or convertible into another security.

M.       "Review Officer" means the officer of the Adviser designated from time to time by the Adviser to receive and
                  review reports of purchases and sales by Access Persons.  The term "Alternative Review Officer" shall
                  mean the officer of the Adviser designated from time to time by the Adviser to receive and review
                  reports of purchases and sales by the Review Officer, and who shall act in all respects in the manner
                  prescribed herein for the Review Officer.  It is recognized that a different Review Officer and
                  Alternative Review Officer may be designated with respect to each Adviser.

N.       A security is "being considered for purchase or sale" when a recommendation to purchase or sell a security has
                  been made and communicated and, with respect to the person making the recommendation, when such person
                  seriously considers making such a recommendation.  With respect to an analyst of the Adviser, the
                  foregoing period shall commence on the day that he or she decides to recommend the purchase or sale of
                  the security to the Adviser for an Investment Company.

O.       A security is "held or to be acquired" if within the most recent 15 days it (1) is or has been held by the
                  Investment Company, or (2) is being or has been considered by the Adviser for purchase by the Investment
                  Company.

II.      LEGAL REQUIREMENTS

         Section 17(j) of the Investment Company Act provides,  among other things,  that it is unlawful for any affiliated
person of the  Adviser to engage in any act,  practice  or course of  business  in  connection  with the  purchase or sale,
directly or  indirectly,  by such  affiliated  person of any security  held or to be acquired by an  Investment  Company in
contravention  of such rules and  regulations as the Securities and Exchange  Commission  (the  "Commission")  may adopt to
define and prescribe means reasonably  necessary to prevent such acts,  practices or courses of business as are fraudulent,
deceptive or manipulative.  Pursuant to Section 17(j),  the Commission has adopted  Rule 17j-1 which provides,  among other
things,  that it is unlawful for any affiliated person of the Adviser in connection with the purchase or sale,  directly or
indirectly, by such person of a Covered Security held or to be acquired by an Investment Company:

                  (1)      To employ any device, scheme or artifice to defraud such Investment Company;

                  (2)      To make any untrue  statement of a material fact to such  Investment  Company or omit to state a
                           material fact  necessary in order to make the statements  made to such  Investment  Company,  in
                           light of the circumstances under which they are made, not misleading;

                  (3)      To engage in any act, practice,  or course of business that operates or would operate as a fraud
                           or deceit upon any such Investment Company; or

                  (4)      To engage in any manipulative practice with respect to such Investment Company.

III.     STATEMENT OF POLICY

         It is the policy of the Adviser that no Access Person shall engage in any act,  practice or course of conduct that
would violate the  provisions of Rule 17j-1.  The  fundamental  position of the Adviser is, and has been,  that each Access
Person  shall  place at all times the  interests  of each  Investment  Company  and its  shareholders  first in  conducting
personal securities  transactions.  Accordingly,  private securities  transactions by Access Persons of the Adviser must be
conducted  in a manner  consistent  with this Code and so as to avoid any actual or  potential  conflict of interest or any
abuse of an Access Person's position of trust and  responsibility.  Further,  Access Persons should not take  inappropriate
advantage of their positions with, or relationship to, any Investment Company, the Adviser or any affiliated company.

         Without  limiting in any manner the  fiduciary  duty owed by Access  Persons to the  Investment  Companies  or the
provisions  of this Code,  it should be noted  that the  Adviser  and the  Investment  Companies  consider  it proper  that
purchases  and  sales be made by Access  Persons  in the  marketplace  of  securities  owned by the  Investment  Companies;
provided,  however,  that such  securities  transactions  comply  with the  spirit of, and the  specific  restrictions  and
limitations  set forth in, this Code.  Such  personal  securities  transactions  should also be made in amounts  consistent
with the normal  investment  practice of the person involved and with an investment,  rather than a trading,  outlook.  Not
only does this policy encourage  investment freedom and result in investment  experience,  but it also fosters a continuing
personal  interest in such  investments by those  responsible for the continuous  supervision of the Investment  Companies'
portfolios.  It is also evidence of confidence  in the  investments  made. In making  personal  investment  decisions  with
respect to any  security,  however,  extreme care must be exercised by Access  Persons to ensure that the  prohibitions  of
this Code are not  violated.  Further,  personal  investing by an Access  Person should be conducted in such a manner so as
to  eliminate  the  possibility  that the Access  Person's  time and  attention  is being  devoted  to his or her  personal
investments  at the  expense of time and  attention  that  should be  devoted  to  management  of an  Investment  Company's
portfolio.  It bears emphasis that technical  compliance  with the  procedures,  prohibitions  and limitations of this Code
will not automatically  insulate from scrutiny personal securities  transactions which show a pattern of abuse by an Access
Person of his or her fiduciary duty to any Investment Company.

IV.      EXEMPTED TRANSACTIONS

         The  Statement of Policy set forth above shall be deemed not to be violated by and the  prohibitions  of Section V
of this Code shall not apply to:

         A.       Purchases or sales of  securities  effected for, or held in, any account over which the Access Person has
                  no direct or indirect influence or control;

         B.       Purchases or sales of securities which are not eligible for purchase or sale by an Investment Company;

         C.       Purchases or sales of securities which are  non-volitional  on the part of either the Access Person or an
                  Investment Company;

         D.       Purchases or sales of securities which are part of an automatic dividend  reinvestment,  cash purchase or
                  withdrawal plan provided that no adjustment is made by the Access Person to the rate at which  securities
                  are  purchased or sold,  as the case may be, under such a plan during any period in which the security is
                  being considered for purchase or sale by an Investment Company;

         E.       Purchases of securities  effected upon the exercise of rights issued by an issuer pro rata to all holders
                                                                                                    --- ----
                  of a class of its  securities,  to the extent such rights were  acquired  from such issuer,  and sales of
                  such rights so acquired;

         F.       Tenders of securities  pursuant to tender offers which are expressly  conditioned  on the tender  offer's
                  acquisition of all of the securities of the same class;

         G.       Purchases or sales of publicly-traded  shares of companies that have a market capitalization in excess of
                  $10 billion; and

         H.       Other  purchases or sales which,  due to factors  determined by the Adviser,  only  remotely  potentially
                  impact the interests of an Investment Company because the securities  transaction involves a small number
                  of shares of an issuer with a large market  capitalization and high average daily trading volume or would
                  otherwise be very unlikely to affect a highly institutional market.

V.       PROHIBITED PURCHASES AND SALES

A.       While the scope of actions which may violate the Statement of Policy set forth above cannot be exactly defined,
                  such actions would always include at least the following prohibited activities:

(1)      No Access Person shall purchase or sell, directly or indirectly, any Covered Security in which he or she has, or
                           by reason of such transaction acquires, any direct or indirect beneficial ownership and which
                           to his or her actual knowledge at the time of such purchase or sale the Covered Security:


(i)      is being considered for purchase or sale by an Investment Company; or

(ii)     is being purchased or sold by an Investment Company.

(2)      No Access Person shall reveal to any other person (except in the normal course of his or her duties on behalf of
                           an Investment Company) any information regarding securities transactions by an Investment
                           Company or consideration by an Investment Company or the Adviser of any such securities
                           transaction.

(3)      No Access Person shall engage in, or permit anyone within his or her control to engage in, any act, practice or
                           course of conduct which would operate as a fraud or deceit upon, or constitute a manipulative
                           practice with respect to, an Investment Company or an issuer of a any security owned by an
                           Investment Company.

(4)      No Access Person shall enter an order for the purchase or sale of a Covered Security which an Investment Company
                           is purchasing or selling or considering for purchase or sale until the later of (1) the day
                           after the Investment Company's transaction in that Covered Security is completed or (2) after
                           the Investment Company is no longer considering the security for purchase or sale, unless the
                           Review Officer determines that it is clear that, in view of the nature of the Covered Security
                           and the market for such Covered Security, the order of the Access Person will not adversely
                           affect the price paid or received by the Investment Company.  Any securities transactions by an
                           Access Person in violation of this Subsection D must be unwound, if possible, and the profits,
                           if any, will be subject to disgorgement based on the assessment of the appropriate remedy as
                           determined by the Adviser.

(5)      No Access Person shall, in the absence of prior approval by the Review Officer, sell any Covered Security that
                           was purchased, or purchase a Covered Security that was sold, within the prior 30 calendar days
                           (measured on a last-in first-out basis).

B.       In addition to the foregoing, the following provision will apply to Investment Personnel of the Adviser:


(1)      Investment Personnel must, as a regulatory requirement and as a requirement of this Code, obtain prior approval
                           before directly or indirectly acquiring beneficial ownership in any securities in an Initial
                           Public Offering or in a Limited Offering.  In addition, Investment Personnel must comply with
                           any additional restrictions or prohibitions that may be adopted by the Adviser from time to
                           time.


(2)      No Investment Personnel shall accept any gift or personal benefit valued in excess of such de minimis amount
                           established by the Adviser from time to time in its discretion (currently this amount is $100
                           annually) from any single person or entity that does business with or on behalf of an
                           Investment Company.  Gifts of a de minimis value (currently these gifts are limited to gifts
                           whose reasonable value is no more than $100 annually from any single person or entity), and
                           customary business lunches, dinners and entertainment at which both the Investment Personnel
                           and the giver are present, and promotional items of de minimis value may be accepted.  Any
                           solicitation of gifts or gratuities is unprofessional and is strictly prohibited.


(3)      No Investment Personnel shall serve on the board of directors of any publicly traded company, absent prior
                           written authorization and determination by the Review Officer that the board service would be
                           consistent with the interests of the Investment Companies and their shareholders.  Such
                           interested Investment Personnel may not participate in the decision for any Investment Company
                           to purchase and sell securities of such company.

VI.      BROKERAGE ACCOUNTS

         Access Persons are required to direct their brokers to supply for the Review  Officer on a timely basis  duplicate
copies of confirmations of all securities  transactions in which the Access Person has a beneficial  ownership interest and
related periodic  statements,  whether or not one of the exemptions  listed in Section IV  applies.  If an Access Person is
unable to arrange for duplicate copies of confirmations  and periodic account  statements to be sent to the Review Officer,
he or she must immediately notify the Review Officer.

VII.     PRECLEARANCE PROCEDURE

         With such  exceptions and conditions as the Adviser deems to be appropriate  from time to time and consistent with
the  purposes of this Code (for  example,  exceptions  based on an  issuer's  market  capitalization,  the amount of public
trading activity in a security, the size of a particular  transaction or other factors),  prior to effecting any securities
transactions  in which an Access Person has a beneficial  ownership  interest,  the Access Person must receive  approval by
the  Adviser.  Any  approval  is valid  only for such  number  of  day(s)  as may be  determined  from  time to time by the
Adviser.  If an Access Person is unable to effect the securities  transaction  during such period, he or she must re-obtain
approval prior to effecting the securities transaction.

         The  Adviser  will  decide  whether  to approve a  personal  securities  transaction  for an Access  Person  after
considering  the specific  restrictions  and  limitations  set forth in, and the spirit of, this Code of Ethics,  including
whether the  security at issue is being  considered  for  purchase or sale for an  Investment  Company.  The Adviser is not
required to give any explanation for refusing to approve a securities transaction.

VIII.    REPORTING

A.       Every Access Person shall report to the Review Officer the information (1) described in Section VIII-C of this
                  Code with respect to transactions in any Covered Security in which such Access Person has, or by reason
                  of such transaction acquires or disposes of, any direct or indirect beneficial ownership in the Covered
                  Security or (2) described in Sections VIII-D or VIII-E of this Code with respect to securities holdings
                  beneficially owned by the Access Person.

B.       Notwithstanding Section VIII-A of this Code, an Access Person need not make a report where the report would
                  duplicate information recorded pursuant to Rules 204-2(a)(12) or 204-2(a)(13) under the Investment
                  Advisers Act of 1940 or if the report would duplicate information contained in broker trade
                  confirmations or account statements received by the Review Officer and all of the information required
                  by Section VIII-C, D or E is contained in such confirmations or account statements.  The quarterly
                  transaction reports required under Section VIII-A(1) shall be deemed made with respect to (1) any
                  account where the Access Person has made provisions for transmittal of all daily trading information
                  regarding the account to be delivered to the designated Review Officer for his or her review or (2) any
                  account maintained with the Adviser or an affiliate.  With respect to Investment Companies for which the
                  Adviser does not act as investment adviser or sub-adviser, reports required to be furnished by officers
                  and trustees of such Investment Companies who are Access Persons of the Adviser must be made under
                  Section VIII-C of this Code and furnished to the designated review officer of the relevant investment
                  adviser.

C.       Quarterly Transaction Reports.  Unless quarterly transaction reports are deemed to have been made under
                  Section VIII-B of this Code, every quarterly transaction report shall be made not later than 10 days
                  after the end of the calendar quarter in which the transaction to which the report relates was effected,
                  and shall contain the following information:

                  (1)      The date of the  transaction,  the title,  the interest rate and maturity date (if  applicable),
                           class and the number of shares, and the principal amount of each Covered Security involved;

                  (2)      The  nature of the  transaction  (i.e.,  purchase,  sale or any  other  type of  acquisition  or
                           disposition);

                  (3)      The price of the Covered Security at which the transaction was effected;

                  (4)      The name of the broker, dealer or bank with or through whom the transaction was effected;

                  (5)      The date that the report was submitted by the Access Person; and

                  (6)      With respect to any account  established by an Access Person in which any  securities  were held
                           during the quarter for the direct or indirect benefit of the Access Person:

                           (1)      The name of the  broker,  dealer or bank with whom the Access  Person  established  the
                                    account;

                           (2)      The date the account was established; and

                           (3)      The date that the report was submitted by the Access Person.

D.       Initial Holdings Reports.  No later than 10 days after becoming an Access Person, each Access Person must submit
                  a report containing the following information:

                           (1)      The title,  number of shares and principal amount of each Covered Security in which the
                                    Access Person had any direct or indirect  beneficial  ownership  when the person became
                                    an Access Person;

                           (2)      The name of any  broker,  dealer or bank  with whom the  Access  Person  maintained  an
                                    account in which any  securities  were held for the direct or  indirect  benefit of the
                                    Access Person as of the date the person became an Access Person; and

                           (3)      The date that the report is submitted by the Access Person.

E.       Annual Holdings Reports.  Between January 1st and January 30th of each calendar year, every Access Person shall
                  submit the following information (which information must be current as of a date no more than 30 days
                  before the report is submitted):

                           (1)      The title,  number of shares and principal amount of each Covered Security in which the
                                    Access Person had any direct or indirect beneficial ownership;

                           (2)      The name of any  broker,  dealer or bank  with  whom the  Access  Person  maintains  an
                                    account in which any Covered  Securities are held for the direct or indirect benefit of
                                    the Access Person; and

                           (3)      The date that the report is submitted by the Access Person.

F.       If no transactions in any securities required to be reported under Section VIII-A(1) were effected during a
                  quarterly period by an Access Person, such Access Person shall report to the Review Officer not later
                  than 10 days after the end of such quarterly period stating that no reportable securities transactions
                  were effected.

G.       These reporting requirements shall apply whether or not one of the exemptions listed in Section IV applies except
                  that an Access Person shall not be required to make a report with respect to securities transactions
                  effected for, and any Covered Securities held in, any account over which such Access Person does not
                  have any direct or indirect influence or control.

H.       Any such report may contain a statement that the report shall not be construed as an admission by the person
                  making such report that (1) he or she has or had any direct or indirect beneficial ownership in the
                  Covered Security to which the report relates (a "Subject Security") or (2) he or she knew or should have
                  known that the Subject Security was being purchased or sold, or considered for purchase or sale, by an
                  Investment Company on the same day.

IX.      APPROVAL OF CODE OF ETHICS AND AMENDMENTS TO THE CODE OF
         ETHICS

         The Board of Trustees of each  Investment  Company shall approve this Code of Ethics.  Any material  amendments to
this Code of Ethics must be approved by the Board of  Trustees of each  Investment  Company no later than six months  after
the adoption of the material change.  Before their approval of this Code of Ethics and any material  amendments hereto, the
Adviser  shall  provide a  certification  to the Board of Trustees  of each such  Investment  Company  that the Adviser has
adopted procedures reasonably necessary to prevent Access Persons from violating the Code of Ethics.

X.       ANNUAL CERTIFICATION OF COMPLIANCE

         Each Access Person shall certify to the Review  Officer  annually on the form annexed  hereto as Form A that he or
she (A) has read and understands  this Code of Ethics and any procedures  that are adopted by the Adviser  relating to this
Code, and recognizes that he or she is subject  thereto;  (B) has complied with the requirements of this Code of Ethics and
such procedures;  (C)  has disclosed or reported all personal  securities  transactions and beneficial  holdings in Covered
Securities  required to be  disclosed  or  reported  pursuant  to the  requirements  of this Code of Ethics and any related
procedures.

XI.      CONFIDENTIALITY

         All reports of securities transactions,  holding reports and any other information filed with the Adviser pursuant
to this Code shall be treated as  confidential,  except  that  reports of  securities  transactions  and  holdings  reports
hereunder  will  be  made  available  to the  Investment  Companies  and to the  Commission  or  any  other  regulatory  or
self-regulatory  organization to the extent required by law or regulation or to the extent the Adviser considers  necessary
or advisable in cooperating with an  investigation or inquiry by the Commission or any other regulatory or  self-regulatory
organization.

XII.     REVIEW OF REPORTS

A.       The Review Officer shall be responsible for the review of the quarterly transaction reports required under VIII-C
                  and VIII-F, and the initial and annual holdings reports required under Sections VIII-D and VIII-E,
                  respectively, of this Code of Ethics.  In connection with the review of these reports, the Review
                  Officer or the Alternative Review Officer shall take appropriate measures to determine whether each
                  reporting person has complied with the provisions of this Code of Ethics and any related procedures
                  adopted by the Adviser.

B.       On an annual basis, the Review Officer shall prepare for the Board of Trustees of each Investment Company and the
                  Board of Trustees of each Investment Company shall consider:

                           (1)      A report on the level of  compliance  during the  previous  year by all Access  Persons
                  with this Code and any related  procedures  adopted by the  Adviser,  including  without  limitation  the
                  percentage  of reports  timely filed and the number and nature of all material  violations  and sanctions
                  imposed in response to material  violations.  An Alternative  Review  Officer shall prepare  reports with
                  respect to compliance by the Review Officer;

                           (2)      A report  identifying  any recommended  changes to existing  restrictions or procedures
                  based upon the Adviser's  experience  under this Code,  evolving  industry  practices and developments in
                  applicable laws or regulations; and

                           (3)      A report  certifying to the Board of Trustees  that the Adviser has adopted  procedures
                  that are reasonably necessary to prevent Access Persons from violating this Code of Ethics.

XIII.    SANCTIONS

         Upon  discovering  a violation  of this Code,  the Adviser may impose such  sanction(s)  as it deems  appropriate,
including,  among other things,  a letter of censure,  suspension or termination  of the employment of the violator  and/or
restitution  to the affected  Investment  Company of an amount equal to the advantage  that the offending  person gained by
reason of such  violation.  In  addition,  as part of any  sanction,  the Adviser  may  require the Access  Person or other
individual  involved  to reverse the  trade(s)  at issue and  forfeit  any profit or absorb any loss from the trade.  It is
noted that  violations of this Code may also result in criminal  prosecution  or civil action.  All material  violations of
this Code and any sanctions  imposed with respect  thereto shall be reported  periodically  to the Board of Trustees of the
Investment Company with respect to whose securities the violation occurred.

XIV.     INTERPRETATION OF PROVISIONS

         The Adviser may from time to time adopt such interpretations of this Code as it deems appropriate.

XV.      IDENTIFICATION OF ACCESS PERSONS AND INVESTMENT PERSONNEL

         The Adviser shall  identify all persons who are  considered to be Access  Persons and  Investment  Personnel,  and
shall inform such persons of their respective  duties and provide them with copies of this Code and any related  procedures
adopted by the Adviser.

XVI.     EXCEPTIONS TO THE CODE

         Although  exceptions to the Code will rarely,  if ever,  be granted,  a designated  Officer of the Adviser,  after
consultation  with the Review  Officer,  may make  exceptions on a case by case basis,  from any of the  provisions of this
Code upon a  determination  that the conduct at issue involves a negligible  opportunity  for abuse or otherwise  merits an
exception  from the Code. All such  exceptions  must be received in writing by the person  requesting the exception  before
becoming  effective.  The Review  Officer  shall report any  exception to the Board of Trustees of the  Investment  Company
with respect to which the exception applies at its next regularly scheduled Board meetings.

XVII.    RECORDS

         The  Adviser  shall  maintain  records  in the manner and to the extent  set forth  below,  which  records  may be
maintained on microfilm  under the conditions  described in  Rule 31a-2(f)(1)  and Rule 17j-1 under the Investment  Company
Act and shall be available for examination by representatives of the Commission.

         A.       A copy of this Code and any other code which is, or at any time  within the past five years has been,  in
                  effect shall be preserved for a period of not less than five years in an easily accessible place;

         B.       A record of any  violation  of this Code and of any action taken as a result of such  violation  shall be
                  preserved in an easily  accessible  place for a period of not less than five years  following  the end of
                  the fiscal year in which the violation occurs;

         C.       A copy of each initial holdings report,  annual holdings report and quarterly  transaction report made by
                  an Access Person  pursuant to this Code  (including  any  brokerage  confirmation  or account  statements
                  provided in lieu of the  reports)  shall be  preserved  for a period of not less than five years from the
                  end of the fiscal year in which it is made, the first two years in an easily accessible place;

         D.       A list of all  persons  who are,  or within  the past five  years have  been,  required  to make  initial
                  holdings,  annual holdings or quarterly  transaction reports pursuant to this Code shall be maintained in
                  an easily accessible place;

         E.       A list of all persons,  currently or within the past five years who are or were responsible for reviewing
                  initial  holdings,  annual  holdings or quarterly  transaction  reports  shall be maintained in an easily
                  accessible place;

         F.       A record of any decision and the reason  supporting the decision to approve the acquisition by Investment
                  Personnel of Initial Public  Offerings and Limited  Offerings shall be maintained for at least five years
                  after the end of the fiscal year in which the approval is granted; and

         G.       A copy of each report  required by Section XII-B of this Code must be maintained  for at least five years
                  after the end of the fiscal year in which it was made, the first two years in an easily accessible plan.

XVIII.   SUPPLEMENTAL COMPLIANCE AND REVIEW PROCEDURES

         The Adviser may establish,  in its discretion,  supplemented  compliance and review procedures (the  "Procedures")
that are in addition to those set forth in this Code in order to provide  additional  assurance  that the  purposes of this
Code are fulfilled  and/or assist the Adviser in the  administration  of this Code.  The  Procedures may be more, but shall
not be less,  restrictive  than the provisions of this Code. The  Procedures,  and any amendments  thereto,  do not require
the approval of the Board of Trustees of an Investment Company.

                                                   CODE OF ETHICS

                                                        for

                                           KINETICS ASSET MANAGEMENT, INC.

                                            KINETICS MUTUAL FUNDS, INC.

                                                        and

                                             KINETICS PORTFOLIOS TRUST



         Kinetics  Portfolios  Trust (the  "Trust"),  on behalf  each of its series  listed on  Schedule A attached
                                                                                                ----------
hereto and any other series that may hereafter be created (each a "Portfolio" and collectively  the  "Portfolios"),
Kinetics  Mutual Funds,  Inc. (the "Company") on behalf each of its series listed on Schedule B attached hereto and
                                                                                     ----------
any other series that may  hereafter be created  (each a "Fund" and  collectively  the "Funds")  (the Trust and the
Company sometimes  referred to hereinafter as the "Companies") and Kinetics Asset Management,  Inc. (the "Adviser")
have  adopted  this Code of Ethics  (the  "Code") to specify and  prohibit  certain  types of  personal  securities
transactions  deemed to create a conflict  of interest  and to  establish  reporting  requirements  and  preventive
procedures  pursuant to the  provisions of Rule  17j-1(b)(1)  under the  Investment  Company Act of 1940 (the "1940
Act").

         This Code is adopted  by the Board of  Trustees  of the Trust and the Board of  Directors  of the  Company
(collectively  the  "Boards")  pursuant to Rule 17j-1 (the  "Rule") of the 1940 Act which makes it unlawful for any
affiliated  person of the Companies,  or any affiliated  person of the Adviser,  in connection with the purchase or
sale,  directly or  indirectly,  by the person,  of a security  held or to be  acquired  (as defined  below) by the
Companies:

         (i) to employ any device, scheme or artifice to defraud the Companies;

         (ii) to make any untrue  statement of a material  fact to the  Companies or omit to state a material  fact
necessary in order to make the statements  made to the Companies,  in light of the  circumstances  under which they
are made, not misleading;

         (iii) to engage in any act,  practice or course of business  that  operates or would operate as a fraud or
deceit on the Companies; or

         (iv) to engage in any manipulative practice with respect to the Companies.

                  In compliance  with  paragraph  (c)(1) of Rule 17j-1,  this Code has been adopted and approved by
the Boards,  including by a majority of the Trustees and  Directors  (hereinafter  collectively  referred to as the
"Board  Members")  who are not  "interested  persons",  for the purpose of  implementing  policies  and  procedures
reasonably  necessary to prevent Access  Persons (as defined  below) of the Trust,  the Company or the Adviser from
engaging  in any  conduct  prohibited  by the Rule.  We ask that all  personnel  follow not only the letter of this
Code but also abide by the spirit of this Code and the principles articulated herein.


I.       DEFINITIONS
         -----------

         A.        An "Access  Person"  means (i) any  trustee,  director,  officer or Advisory  Person (as defined
below) of the  Trust,  the  Company or the  Adviser,  or (ii) any  trustee,  director  or  officer  of a  principal
underwriter  of the Trust or the Company who, in the ordinary  course of his or her business,  makes,  participates
in or obtains  information  regarding the purchase or sale of Covered  Securities  (as defined below) for the Trust
or the Company for which the  principal  underwriter  so acts or whose  functions or duties as part of the ordinary
course of his or her  business  relate to the making of any  recommendation  to the Trust or the Company  regarding
the  purchase  or sale of Covered  Securities  or (iii)  notwithstanding  the  provisions  of clause (i) above with
respect to the Adviser,  where the Adviser is primarily  engaged in a business or  businesses  other than  advising
registered  investment  companies  or other  Advisory  clients,  any  director,  officer or Advisory  Person of the
Adviser  who,  with  respect  to the  Trust  or the  Company,  makes  any  recommendation  or  participates  in the
determination  of  which  recommendation  shall be made,  or whose  principal  function  or  duties  relate  to the
determination of which  recommendation  shall be made to the Trust or the Company or who, in connection with his or
her duties,  obtains any information  concerning Covered Securities  recommendations being made by the Adviser. The
President  of the  Companies  will  maintain a list of all Access  Persons and will  notify  each Access  Person in
writing that such person is an Access  Person.  Once a person has been so  identified,  he or she shall continue to
be an Access Person until otherwise  notified in writing by the President,  provided however,  if such person is an
Access  Person solely  because he or she is a Board  Member,  such person shall cease to be an Access Person at the
time such person ceases to be a Board Member.  Each Access Person shall receive a copy of this Code.

B.       "Advisory Person" means

(i)      any  employee of the Trust,  the Company or the  Adviser (or of any company in a control  relationship  to
                           the Trust,  the  Company or the  Adviser),  who, in  connection  with his or her regular
                           functions  or duties,  makes,  participates  in or  obtains  information  regarding  the
                           purchase or sale of Covered  Securities  by the Trust or the Company or whose  functions
                           relate to any  recommendations  with respect to such  purchases or sales and any natural
                           person  in a control  relationship  with the  Trust,  the  Company  or the  Adviser  who
                           obtains information regarding the purchase or sale of Covered Securities;

(ii)     any natural person who controls the Trust, the Company or the Adviser and who obtains  information  (other
                           than publicly available  information)  concerning  recommendations  made to the Trust or
                           the Company with regard to the purchase or sale of Covered Securities.

         C.       "Access  Persons" and "Advisory  Persons" shall not include any individual who is required to and
does file quarterly  reports with any sub-adviser,  administrator or the principal  underwriter of the Trust or the
Company  substantially  in conformity with Rule 17j-1 of the 1940 Act or Rule 204-2 of the Investment  Advisers Act
of 1940,  provided however,  that the legal compliance officer or president of any sub-adviser,  administrator,  or
the  principal  underwriter  shall (i) file an annual  certification  with the Boards  stating that such entity has
adopted or approved  the  continuation  of its code of ethics,  substantially  in the form that was provided to the
Boards;  and (ii) notify the Legal Compliance  Officer (as defined below) of any violation of such entity's code of
ethics upon actual  knowledge  by such  compliance  officer that a violation  had  occurred.  The Legal  Compliance
Officer shall report any such  violations to the Boards in  accordance  with the  provisions of this Code as if the
report of the violation(s) had been made under this Code.

         D.       "Affiliated Persons" or "Affiliate" means

                  (i)      any  employee  or Access  Person,  and any member of the  immediate  family  (defined as
                           spouse,  child mother,  father,  brother,  sister-in-law  or any other  relative) of any
                           such  person  who  lives in the same  household  as such  person  or who is  financially
                           dependent upon such person;

                  (ii)     any account for which any of the persons described in D(i) hereof is a custodian,
                           director, trustee or otherwise acting in a fiduciary capacity, or with respect to
                           which any such person either has the authority to make investment decisions or from
                           time to time gives investment advice;

(iii)    any partnership,  corporation,  joint venture, trust or other entity in which any employee of the Trust or
                           the Company or Access  Person of the Trust or the Company  directly  or  indirectly,  in
                           the aggregate,  has a 10% or more beneficial  interest or for which any such person is a
                           general partner or an executive officer.

         E.       A security is "being  considered  for  purchase or sale" or is "being  purchased  or sold" when a
recommendation  to purchase or sell a Covered  Security has been made and  communicated to the Trading Desk,  which
includes  when the Trust or the Company has a pending  "buy" or "sell"  order with  respect to a Covered  Security,
and, with respect to the person  making the  recommendation,  when such person  seriously  considers  making such a
recommendation.

         F.       The term  "beneficial  ownership"  shall be defined in and  interpreted  in the same manner as it
would be in  determining  whether a person is subject to the  provisions of Section 16 of the  Securities  Exchange
Act of 1934 and the rules and regulations  thereunder  which,  generally  speaking,  encompasses  those  situations
where the beneficial  owner has the right to enjoy some economic  benefit from the ownership of a Covered  Security
regardless of the identity of the registered owner. This would include:

(i)      Covered  Securities  which a person holds for his or her own benefit either in bearer form,  registered in
                           his  or  her  name  or  otherwise,  regardless  of  whether  the  securities  are  owned
                           individually or jointly;

(ii)     Covered  Securities held in the name of a member of his or her immediately  family (spouse or minor child)
                           sharing the same household;

(iii)    Covered Securities held by a trustee, executor, administrator, custodian or broker;

(iv)     Covered  Securities  owned by a  general  partnership  of  which  the  person  is a  member  or a  limited
                           partnership of which such person is a general partner;

(v)      Covered  Securities held by a corporation  (other than with respect to treasury shares of the corporation)
                           of which  such  person is an  officer,  director,  trustee  or 10%  stockholder  or by a
                           corporation which can be regarded as a personal holding company of a person;

(vi)     Covered Securities recently purchased by a person and awaiting transfer into his or her name;

(vii)    Covered  Securities  held by any other  person  if, by reason of  contract,  understanding,  relationship,
                           agreement or other  arrangement,  such person obtains therefrom  benefits  substantially
                           equivalent to those of ownership or which ; and

(viii)   Covered  Securities  held by such person's  spouse or minor children or any other person,  if, even though
                           such person does not obtain therefrom the  above-mentioned  benefits of ownership,  such
                           person can vest or revest title in himself or herself at once or at some future time.

         A beneficial  owner of a security also includes any person who directly or indirectly,  through  contract,
arrangement,  understanding,  relationship or otherwise,  has or shares voting power and/or  investment  power with
respect to such  security.  Voting  power  includes  the power to vote,  or includes  the power to  dispose,  or to
direct disposition of such security.

         G.       "Control" shall have the same meaning as set forth in Section 2(a)(9) of the 1940 Act.

         H.       "Covered  Security"  means a security as defined in section  2(a)(36) of the 1940 Act,  and shall
include any note, stock,  treasury stock,  bond,  debenture,  evidence of indebtedness,  certificate of interest or
participation  in any  profit-sharing  agreement,  collateral-trust  certificate,  preorganization  certificate  or
subscription,  transferable  share,  investment  contract,  voting trust  certificate,  certificate of deposit of a
security,  fractional  undivided interest in oil, gas, or other mineral rights, any put, call straddle,  option, or
privilege on any security  (including a certificate of deposit) or any group or index of securities  (including any
interest therein or based on the value thereof),  or any put, call,  straddle,  option or privilege entered into in
a national  securities  exchange  relating to a foreign  currency,  or, in  general,  any  interest  or  instrument
commonly  known as a  "security",  or any  certificate  of  interest  or  participation  in,  temporary  or interim
certificate  for,  receipt  for,  guarantee  of,  or  warrant  or right to  subscribe  to or  purchase,  any of the
foregoing, except,  however, that it shall not include:
                                     ---------

                  (i)      Direct obligations of the Government of the United States;

                  (ii)     Bankers'  acceptances,  bank certificates of deposit,  commercial paper and high quality
                           short-term debt instruments, including repurchase agreements; and

                  (iii)    Shares issued by open-end Funds.

         I.       "Disinterested  Board  Member"  means a Trustee of the Trust or a Director  of the Company who is
not an "interested person" within the meaning of Section 2(a)(19) of the 1940 Act.

         J.       "Investment Personnel" means:

                  (i)      any  employee  of the Trust,  the Company or the Adviser (or of any company in a control
                           relationship  to the Trust,  the Company or the Adviser) who, in connection  with his or
                           her  regular  functions  or  duties,  makes or  participates  in making  recommendations
                           regarding the purchase or sale of securities by the Fund.

                  (ii)     any natural  person who controls  the Trust,  the Company or the Adviser and who obtains
                           information  concerning  recommendations  made to the Trust or the Company regarding the
                           purchase or sale of securities by the Trust or the Company.

         K.       "Initial  Public  Offering"  ("IPO")  means  an  offering  of  securities  registered  under  the
Securities  Act of 1933,  the  issuer of  which,  immediately  before  the  registration,  was not  subject  to the
reporting requirements of Sections 13 or 15(d) of the Securities Exchange Act of 1934.

         L.       "Legal  Compliance  Officer"  means Andrew Fishman or his successor  appointed by the Boards.  In
the absence of any such  designation,  the Legal  Compliance  Officer  shall be the  President of the Trust and the
Company.



         M.       "Limited  Offering" means an offering that is exempt from  registration  under the Securities Act
of 1933  pursuant  to  Section  4(2) or  section  4(6) or  pursuant  to rule 504,  rule 505,  or rule 506 under the
Securities Act of 1933


         N.       "Purchase or Sale of a Covered Security"  includes,  among other things, the writing of an option
to purchase or sell a Covered Security.

         O.       "Purchase  or sale of a security"  includes,  among other  things,  the purchase or writing of an
option  to  purchase  or sell a  security  or the  purchase  or sale of a future or index on a  security  or option
thereon.

         P.       "Security Held or to be Acquired" means:

                  (i)      any Covered Security which, within the most recent 15 days:

                           (A)      is or has been held by the Trust or the Company; or

                           (B)      is being or has been  considered  by the Trust,  the Company or the Adviser for
                                    purchase by the Trust or the Company; and

                  (ii)     any option to purchase or sell, and any security  convertible into or exchangeable  for,
                           a Covered Security described in paragraph (i) of this definition.


II.      STATEMENT OF GENERAL PRINCIPLES
         -------------------------------

         The following general fiduciary  principles shall govern the personal investment  activities of all Access
Persons.

         Each Access Person shall adhere to the highest ethical standards and shall:

         A.       at all  times,  place the  interests  of the Trust and the  Company  before  his or her  personal
                  interests;

         B.       conduct all personal  securities  transactions  in a manner  consistent  with this Code, so as to
                  avoid any  actual or  potential  conflicts  of  interest,  or an abuse of  position  of trust and
                  responsibility; and

         C.       not take any  inappropriate  advantage  of his  position  with or on  behalf  of the Trust or the
                  Company.

III.     RESTRICTIONS ON PERSONAL INVESTING ACTIVITIES
         ---------------------------------------------

         A.       Blackout Periods
                  ----------------

                  1.       No Access  Person  (other than  Disinterested  Board  Members)  shall  purchase or sell,
directly or  indirectly,  any Covered  Security in which he or she has or by reason of such  transaction  acquires,
any direct or indirect  beneficial  ownership  and which at the time of such  purchase or sale is being  considered
for purchase or sale by the Trust or the Company or is being  purchased or sold by the Trust or the Company  before
the  expiration  of five (5)  business  days during which the Trust or the Company is  considering  the purchase or
sale or has a pending buy or sell order in that same Covered  Security  until that order is executed or  withdrawn.
Any profits  realized on trades  within the  proscribed  periods are  required to be  disgorged to the Trust or the
Company, as the case may be.

                  2.       No Advisory  Person shall  engage in a purchase or sale,  directly or  indirectly,  of a
Covered  Security in which he has, or by reason of such  transaction  acquires,  any direct or indirect  beneficial
ownership at any time within the period  beginning  seven (7) calendar days before the Trust or the Company  trades
in that  security and ending seven (7)  calendar  days after the Trust or the Company has traded in that  security,
without first obtaining the written  authorization  of the Boards or the Legal Compliance  Officer,  unless he, she
or it shall determine,  in their sole discretion,  that such transactions would be permissible under Section III.G.
hereof in terms of their  effect  on the Trust and the  Company  or are  non-volitional  on the part of the  Access
Person.

                  3.       No Access Person shall  recommend to, or cause to or attempt to cause,  the Trust or the
Company to  acquire,  dispose of or hold any Covered  Security  (including  any option,  warranty or other right or
interest  relating to such Covered Security) which such Access Person has direct or indirect  beneficial  ownership
unless such Access Person or Affiliate  shall first disclose in writing to the Legal  Compliance  Officer all facts
reasonably  necessary  to identify the nature of the  ownership of such Access  Person or Affiliate in such Covered
Security.

                  4.       If, as a result of  fiduciary  obligations  to other  persons  or  entities,  and Access
Persons  believes  that such person or an Affiliate of such person is unable to comply with certain  provisions  of
the Code,  such Access Person or Affiliate  thereof shall so advise the Boards or the Legal  Compliance  Officer in
writing,  setting forth with reasonable  specificity  the nature of such fiduciary  obligations and the reasons why
such Access Person or Affiliate  believes such person is unable to comply with any such  provisions.  The Boards or
the Legal  Compliance  Officer may, in its or his discretion,  exempt such Access Person or Affiliate from any such
provisions,  if it or he shall  determine  that the services of such Access Person are valuable to the Trust or the
Company  and the  failure to grant such  exemptions  is likely to cause such  Access  Person to be unable to render
services to the Trust and/or  Company.  Any Access  Person  granted an exemption  (including,  an exception  for an
Affiliate  of such  person),  pursuant  to this  paragraph  4 shall,  within 3 business  days after  engaging  in a
purchase  or sale of a Covered  Security  held or to be  acquired  by the Trust or the  Company,  furnish the Board
Members or the Legal  Compliance  Officer with a written  report  concerning  such  transaction  setting  forth the
information specified in Section VI.B.2. hereof.

                  5.       From time to time,  Trustees,  officers or employees of the Trust may establish  special
"insider"  relationships  with one or more  issuers of  Covered  Securities  (i.e.  director,  trustee,  officer or
employee  may  become an  officer,  director,  or trustee of an issuer,  a member of a  creditors  committee  which
engages in material  negotiations  with an issuer,  etc.). In such cases, the Board Members or the Legal Compliance
Officer may include such issues on a restricted  list  containing  the names of issuers  whose  securities  are not
eligible for purchase or sale by the Trust, the Company or by Access Persons.

         B.       Initial Public Offerings
                  ------------------------

                  Investment  Personnel may not acquire,  directly or indirectly,  any beneficial  ownership in any
securities in an initial public  offering  without prior approval in writing from the Legal  Compliance  Officer or
other person  designated by the Boards.  Furthermore,  should  written  consent of the Boards be given,  Investment
Personnel  are required to disclose  such  investment  when  participating  in the Trust's or Company's  subsequent
consideration  of an  investment  in such  issuer.  In such  circumstances,  the Trust's or  Company's  decision to
purchase  securities  of the issuer should be subject to an  independent  review by  Investment  Personnel  with no
personal interest in the issuer.

         C.       Limited Offering
                  ----------------

                  Investment  Personnel may not acquire,  directly or indirectly,  any beneficial  ownership in any
securities in a limited  offering  without the prior written consent of the Companies'  Legal  Compliance  Officer.
Furthermore,  should  written  consent of the Fund be given,  Investment  Personnel  are required to disclose  such
investment when  participating  in the Fund's  subsequent  consideration  of an investment in such issuer.  In such
circumstances,  the Fund's  decision  to  purchase  securities  of the issuer  should be subject to an  independent
review by Investment Personnel of the Fund with no personal interest in the issuer.

                  Any express prior written  approval  received  from the Legal  Compliance  Officer shall be valid
only on the day on which it was issued.  If the Trust or the Company  decides to purchase  securities  of an issuer
the shares of which have been  previously  obtained for personal  investment  by such  Investment  Personnel,  that
decision  shall be subject to an  independent  review by  Investment  Personnel  with no  personal  interest in the
issuer.

         D.       Short-Term Trading Profits
                  --------------------------

                  No Advisory  Person  thereof shall profit from the purchase and sale,  or sale and  purchase,  of
the same (or  equivalent)  securities  of which such Advisory  Person has  beneficial  ownership  within sixty (60)
calendar days,  except for the excluded  securities set forth in section I-H, and for any Exempted  Transactions or
pre-cleared  trades as defined in section  III-G.  Any profit so realized  on Covered  Securities  not  exempted or
pre-cleared shall, unless the Boards approve otherwise, be disgorged as directed by the Boards.

         E.       Gifts
                  -----

                  No Advisory  Person  shall  receive  any gift or other  things of value from any person or entity
that does business with or on behalf of the Trust or the Company that poses a potential conflict of interest.

         F.       Service as a Trustee
                  --------------------

                  1.       No Advisory  Person shall serve on a board of  trustees/directors  of a publicly  traded
company without prior  authorization  from the Boards,  based upon a determination that such board service would be
consistent with the interests of the Trust, the Company and their respective investors.

                  2.       If board  service  of an  Advisory  Person is  authorized  by the Boards  such  Advisory
Person  shall be isolated  from the  investment  making  decisions of the Trust and the Company with respect to the
company of which he or she is a trustee/director.

         G.       Exempted Transactions
                  ---------------------

                  The prohibition of Section III shall not apply to:

                  1.       purchases or sales  effected in any account  over which the Access  Person has no direct
or indirect influence or control;

                  2.       purchases or sales that are  non-volitional on the part of the Access Person,  including
mergers, recapitalizations or similar transactions;

                  3.       purchases which are part of an automatic dividend reinvestment plan;

                  4.       purchases effected upon the exercise of rights issued by an issuer pro rata to all
holders of a class of its securities, to the extent such rights were acquired from such issuer, and sales of such
rights so acquired;

5.       purchases and sales of shares of index or sector basket  "proxies"  (eg. SPX, QQQ,  Merrill  holders [BBH,
IIH, HHH], etc.); and

                  6.       purchases  and sales that  receive  prior  approval  in writing by the Legal  Compliance
Officer as (a) only remotely  potentially  harmful to the Trust and the Company because they would be very unlikely
to affect a highly  institutional  market,  (b) clearly not economically  related to the securities to be purchased
or sold or held by the Trust or the Company or (c) not  representing  any danger of the abuses  prescribed  by Rule
17j-l,  but only if in each case the  prospective  purchaser  has  identified to the Legal  Compliance  Officer all
factors of which he or she is aware which are potentially  relevant to a conflict of interest  analysis,  including
the existence of any  substantial  economic  relationship  between his or her transaction and securities held or to
be held by the Trust or the Company.


IV.      COMPLIANCE PROCEDURES
         ---------------------

         A.       Preclearance
                  ------------

                  An Access  Person (other than a  Disinterested  Board  Member) may not,  directly or  indirectly,
acquire or dispose of beneficial ownership of a Covered Security except as provided below unless:

                  1.       such purchase or sale has been approved by the Legal Compliance Officer;

                  2.       the  approved  transaction  is  completed on the same day approval is received or within
the time frame  approved  for such  proposed  transaction  (which may  include a bona fide stop loss order GTC on a
held security that has been pre-cleared for sale) ; and

                  3.       the Legal  Compliance  Officer has not rescinded such approval prior to execution of the
transaction.

         B.       Reporting
                  ---------

                  1.       Quarterly  Reporting:  Each Access  Person  (other  than  Disinterested  Board  Members)
                           --------------------
shall file with the Legal Compliance Officer  confidential  quarterly reports  containing the information  required
in Section IV.B.2.  of this Code with respect to all  transactions  during the preceding  quarter in any securities
                                                 ---
in which such person has, or by reason of such transaction  acquires,  any direct or indirect beneficial  ownership
in a Covered  Security,  provided that no Access Person shall be required to report  transactions  effected for any
                         --------
account over which such Access  Person has no direct or indirect  influence or control  (except that such an Access
Person must file a written  certification  stating  that he or she has no direct or indirect  influence  or control
over the account in question).  All such Access  Persons shall file reports,  even when no  transactions  have been
effected, representing that no transactions subject to reporting requirements were effected.

                  2.       Filings:  Every  report made  pursuant to Section  IV.B.1 shall be made no later than 10
                           -------
days after the end of the calendar  quarter in which the transaction to which the report relates was effected,  and
shall contain the following information:

                           (a)      the date of any transactions  involving Covered  Securities,  the title and the
number of shares and the principal amount of each Covered Security involved;

                           (b)      the  nature of the  transaction  (i.e.,  purchase,  sale or any  other  type of
acquisition or disposition);

                           (c)      the price at which the transaction was effected; and

                           (d)      the name of the  broker,  dealer or bank with or through  whom the  transaction
was effected.

                  3.       Annual Reporting.  No later than 10 days after becoming an Access Person, and
                           ----------------
thereafter on an annual basis as of December 31 of each year, each Access Person shall report to the Boards or
the Legal Compliance Officer annually the following information, which information must be current as of a date
no more than 30 days before the report is submitted:

(i)      the title, number of shares and principle amount of each Covered Security in which the Access Person had
                                    any direct or indirect beneficial ownership;

(ii)     the name of any broker, dealer or bank with whom the Access Person maintains an account in which any
                                    Covered Securities are held for the direct or indirect benefit of the Access
                                    Person; and

(iii)    a statement that he or she (1) has reviewed and understands the Code of Ethics, (2) recognizes that he
                                    or she is subject to it, and (3) if such Access Person was subject to the Code
                                    of Ethics during the past year, has complied with its requirements, including
                                    the requirements regarding reporting of personal securities transactions.

                  4.       No  Admission  of  Ownership:  Any  report  filed  with the  Boards or Legal  Compliance
                           ----------------------------
Officer  pursuant to this  Section IV. may contain a statement  that it shall not be  construed  as an admission by
the person  making the report that he or she has any direct or indirect  beneficial  ownership  in the  security to
which the report relates.

                  5.       Confirmations:  All Access  Persons  shall  direct  any  brokerage  firm,  bank or other
                           -------------
concern at which the Access  Person has a brokerage  account or Affiliated  brokerage  account to supply the Boards
or the Legal  Compliance  Officer,  on a timely  basis,  duplicate  copies of the  confirmation  of all  securities
transactions in such account and copies of all periodic  statements for such account.  All Access  Persons,  except
a Disinterested  Board Member who is not an "interested  person" within the meaning of Section 2(a)(19) of the 1940
Act and would not be  required  to make  reports  under this  Section IV solely by reason of being a  Disinterested
Board Member  (unless such Board Member knew or, in the ordinary  course of fulfilling  his or her official  duties
as a Board Member,  should have known that during the 15 day period immediately  preceding or after the date of the
transaction  in a Covered  Security by the Board  Members,  such Covered  Security is or was  purchased or sold, or
considered  for  purchase  or sale by the  Trust or the  Company),  and such  other  persons  as the  Boards  shall
determine  shall promptly  inform the Boards or the Legal  Compliance  Officer of any newly  established  brokerage
account or Affiliated brokerage account at any brokerage firm, bank or other concern.

         C.       Review
                  ------

                  1.       The Legal  Compliance  Officer shall notify each Access Person that he or she is subject
to the  reporting  requirements  set forth herein and shall  deliver a copy of this Code to each such Access Person
upon request.

                  2.       The Legal  Compliance  Officer  or his  designate  shall  review all  personal  holdings
reports submitted by each Access Person,  including  confirmations of personal  securities  transaction,  to ensure
that no  trading  has taken  place in  violation  of Rule  17j-1 or the Code.  In  addition,  the Legal  Compliance
Officer shall compare the reported  personal  securities  transactions  with completed and  contemplated  portfolio
transactions  of the Trust and the Company to  determine  whether a violation  of this Code may have  occurred.  In
reviewing  transactions,  the Legal Compliance Officer shall take into account the exemptions allowed under Section
III.G.  Before making any  determination  that a violation has been committed by any person,  the Legal  Compliance
Officer  shall give such person an  opportunity  to supply  additional  information  regarding the  transaction  in
question.  The Legal Compliance  Officer shall maintain a list of personnel  responsible for reviewing  transaction
and personal holdings reports.

V.       REQUIREMENTS FOR DISINTERESTED BOARD MEMBER
         -------------------------------------------

         A.       Every  Disinterested  Board  Member  shall  file with the Legal  Compliance  Officer a  quarterly
report  indicating that he or she had no reportable  transactions or a report  containing the information  required
in Section IV.B. of this Code with respect to transactions  (other than exempted  transactions listed under Section
III.G.) in any Covered Security in which such person has, or by reason of such  transactions  acquires,  any direct
or indirect  beneficial  ownership,  if such Board  Member,  at the time of that  transaction,  knew or should have
known,  in the ordinary  course of pursuing his or her official  duties as a Board Member,  that during the fifteen
(15) day period immediately preceding or after the transaction by the Board Member:

                  1.       such security was being purchased or sold by the Trust or the Company; or

                  2.       such security was being considered for purchase or sale by the Trust or the Company.

         B.       Notwithstanding  the  preceding  section,  any  Disinterested  Board  Member  may,  at his or her
option,  report the  information  described in section IV.B. with respect to any one or more  transactions  and may
include a statement  that the report shall not be  construed  as an  admission  that the person knew or should have
known of portfolio transactions by the Trust or the Company in such securities.






VI.      REVIEW BY THE BOARDS
         --------------------

                  Annually,  the Legal  Compliance  Officer shall submit for review by the Boards a written  report
containing the following:

(i)      A copy of the existing Code of Ethics;

(ii)     All existing  procedures  concerning  Access  Persons'  personal  trading  activities  and any  procedural
                           changes made during the past year;

(iii)    A report  completed  by the Legal  Compliance  Officer  identifying  any  issues  arising  under the Code,
                           including  any  material  violations  of the Code during the past year and  sanctions or
                           other remedial action imposed in response to such material violations of the Code; and

(iv)     A list of  recommendations,  if any, to change the existing Code based upon experience,  evolving industry
                           practices or developments in applicable laws or regulations.

VII.     ANNUAL APPROVAL BY THE BOARDS
         -----------------------------

         Annually,  the Boards,  including a majority of the Disinterested  Board Members,  shall approve this Code
and any material  changes to the Code.  The Boards  shall each  approve any  material  change to this Code no later
than 6 months after the adoption of the material change,  provided however,  that before approving this Code or any
amendment  to this Code the Boards  shall have  received a  certification  from the  Adviser  that the  Adviser has
adopted procedures reasonably necessary to prevent Access Persons of the Adviser from violating the Code.

VIII.    ANNUAL CERTIFICATION OF COMPLIANCE
         ----------------------------------

         Each Access  Person and Adviser is required  to certify  annually  that he or she has read and  understood
this Code and  recognizes  that he or she is subject to such Code.  Further,  each  Access  Person is  required  to
certify  annually  that he or she has  complied  with  all the  requirements  of this  Code  and that he or she has
disclosed or reported all personal securities transactions pursuant to the requirements of this Code.

IX.      PRINCIPAL UNDERWRITER
         ---------------------

         At least  annually,  each  principal  underwriter of the Trust and the Company must submit a copy of their
Code of Ethics to the Legal  Compliance  Officer,  provided  however,  that such copy shall not be  required  to be
submitted,  if the  principal  underwriter  is an  Affiliate  of the Trust,  the  Company or the  Adviser or if any
officer,  director,  or general  partner of the  principal  underwriter  serves as an officer,  director or general
partner of the Trust, the Company or the Adviser.

III.     SANCTIONS
         ---------

         A.       Sanctions for Violations by Access Persons
                  ------------------------------------------

                  If the Legal  Compliance  Officer  determines  that a violation of this Code has occurred,  he or
she shall so advise the Boards and the Boards may impose such sanctions as it deems appropriate,  including,  inter
                                                                                                              -----
alia,  disgorgement  of profits,  censure,  suspension  or  termination  of the  employment  of the  violator.  All
----
material  violations of this Code and any sanctions imposed as a result thereto shall be reported  quarterly to the
Boards.

         B.       Sanctions for Violations by Disinterested Board Members
                  -------------------------------------------------------

                  If the Legal  Compliance  Officer  determines  that any  Disinterested  Board Member has violated
this Code,  he shall so advise the  President of the Trust and the Company and also a committee  consisting  of the
Disinterested  Board Members (other than the person whose  transaction is at issue) and shall provide the committee
with a report,  including the record of pertinent  actual or  contemplated  portfolio  transactions of the Trust or
the Company and any additional  information  supplied by the person whose  transaction is at issue.  The committee,
at its  option,  shall  either  impose  such  sanctions  as it deems  appropriate  or refer the  matter to the full
complement of each Board, which shall impose such sanctions as it deems appropriate.

VIII.    RECORDS
         -------

         A.       Records
                  -------

                  The  Administrator  for the Trust and the Company shall maintain records in the manner and to the
extent set forth below,  which  records may be  maintained  on  microfilm  under the  conditions  described in Rule
31a-2(f)  under the 1940 Act, and shall be available for  examination  by  representatives  of the  Securities  and
Exchange Commission ("SEC"):

1.       a copy of this Code and any other  code of the Trust  which is, or at any time  within the past five years
         has been, in effect shall be preserved in an easily accessible place;

2.        a record of any decision and the reasons  supporting  the decision to approve any  acquisition or sale by
         Access Persons of Covered Securities in an IPO or Limited Offering;

                  3.       each memorandum made by the Legal Compliance Officer hereunder;

                  4.       a record  of any  violation  of this  Code and of any  action  taken as a result of such
         violation  shall be preserved in an easily  accessible  place for a period of not less than five (5) years
         following the end of the fiscal year in which the violation occurs;

                  5.       a copy of each report  made  pursuant  to this Code shall be  preserved  for a period of
         not less  than  five (5)  years  from the end of the  fiscal  year in which it is made,  the first two (2)
         years in an easily accessible place; and

                  6.       a list of all  persons  who are  required,  or within  the past five (5) years have been
         required, to make reports pursuant to this Code shall be maintained in an easily accessible place.

         B.       Confidentiality
                  ---------------

                  The current  portfolio  positions of the Companies  managed,  advised and/or  administered by the
Adviser and current portfolio transactions, programs and analyses must be kept confidential.

                  If nonpublic  information  regarding the Companies'  investment portfolios should become known to
any Access  Person,  whether in the line of duty or  otherwise,  he or she should not reveal it to anyone unless it
is properly part of his or her work to do so.

                  If anyone is asked about the  Companies'  investment  portfolios  or whether a security  has been
sold or bought,  his or her reply  should be that this is an improper  question  and that this answer does not mean
that the Companies have bought, sold or retained the particular security.  Reference,  however,  may, of course, be
made to the latest published report of the Companies' investment portfolios.

         C.       Nonpublic Material Information
                  ------------------------------

                  From time to time the  Adviser  has  circulated  and  discussed  with  Access  Persons the latest
administrative  and judicial  decisions  regarding the absolute  prohibition  against the use of nonpublic material
information,  also known as "inside  information."  In view of the many forms in which the subject  can arise,  the
Adviser must  reiterate that a careful and  conservative  approach must prevail and no action should be taken where
"inside information" may be involved without a thorough review by the Legal Compliance Officer.

                  Material inside  information is any  information  about a company or the market for the company's
securities  which has come directly or indirectly  from the company and which has not been  disclosed  generally to
the  marketplace,  the  dissemination  of which is  likely  to  affect  the  market  price of any of the  company's
securities  or is likely to be considered  important by  reasonable  investors,  including  reasonable  speculative
investors, in determining whether to trade in such securities.

                  Information  should be presumed  "material"  if it relates to such matters as dividend  increases
or decreases,  earnings  estimates,  changes in previously released earnings  estimates,  significant  expansion or
curtailment  of  operations,  a  significant  increase  or  decline of orders,  significant  merger or  acquisition
proposals or agreements,  significant  new products or  discoveries,  extraordinary  borrowing,  major  litigation,
liquidity problems, extraordinary management developments, purchase or sale of substantial assets, etc.

                  "Inside  information" is information that has not been publicly disclosed.  Information  received
about a  company  under  circumstances  which  indicate  that it is not yet in  general  circulation  and that such
information may be  attributable,  directly or indirectly,  to the company (or its insiders) should be deemed to be
inside information.

                  Whenever an Access Person  receives  material  information  about a company which he or she knows
or has reason to believe is directly or  indirectly  attributable  to such  company (or its  insiders),  the Access
Person must determine that the  information is public before trading or  recommending  trading on the basis of such
information  or before  divulging  such  information to any person who is not an employee of the Adviser or a party
to the  transaction.  As a rule,  one  should  be able to  point  to some  fact to show  that  the  information  is
generally  available;  for example,  its  announcement on the broad tape or by Reuters,  The Wall Street Journal or
                                                                               -------   -----------------------
trade  publications.  If the Access  Person has any  question at all as to whether the  information  is material or
whether  it is  inside  and  not  public,  he or she  must  resolve  the  question  or  questions  before  trading,
recommending  trading or divulging  the  information.  If any doubt at all remains,  the Access Person must consult
with the Legal Compliance Officer.

         D.       Interpretation of Provisions
                  ----------------------------

                  The  Boards  may  from  time  to time  adopt  such  interpretations  of  this  Code as they  deem
appropriate.








                                           KINETICS ASSET MANAGEMENT, INC.

                                            KINETICS MUTUAL FUNDS, INC.

                                                        and

                                             KINETICS PORTFOLIOS TRUST




                                                 TRANSACTION REPORT


To:      _________________________, Legal Compliance Officer

From:    _______________________________________________
                                    (Your Name)

         This Transaction  Report (the "Report") is submitted  pursuant to Section IV. of the Code of Ethics of the

Trust, the Company and the Adviser,  and supplies (below)  information with respect to transactions in any security
in which I may be deemed to have,  or by reason of such  transaction  acquire,  any direct or  indirect  beneficial
ownership  interest  (whether or not such security is a Covered Security held or to be acquired by the Trust or the
Company) for the calendar quarter ended _____________________.

         Unless the context  otherwise  requires,  all terms used in the Report  shall have the same meaning as set
forth in the Code of Ethics.

         For purposes of the Report  beneficial  ownership  shall be  interpreted  subject to the provisions of the
Code of Ethics and Rule  16a-l(a)  (exclusive  of Section  (a)(1) of such Rule) of the  Securities  Exchange Act of
1934.


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


                                   Nature of
                                  Transaction
                                   (whether                                              Name of the
                                Purchase, Sale                           Price At     Broker, Dealer Or
                                 or Other Type   Principal Amount of     Which the      Bank With Whom      Nature Of
    Title of         Date of    of Disposition   Securities Acquired    Transaction    The Transaction    Ownership of
   Securities      Transaction  Or Acquisition      or Disposed Of     Was Effected      Was Effected     Securities*
   ----------      -----------  --------------      --------------     ------------      ------------     ----------
------------------ ------------ ---------------- --------------------- -------------- ------------------- --------------
------------------ ------------ ---------------- --------------------- -------------- ------------------- --------------

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









TRANSACTION REPORT                                                                                          Page 2



         I HEREBY  CERTIFY  THAT I (1) HAVE READ AND  UNDERSTAND  THE CODE OF ETHICS OF THE TRUST,  THE COMPANY AND
THE ADVISER,  DATED  __________________,(2)  RECOGNIZE  THAT I AM SUBJECT TO THE CODE OF ETHICS,  (3) HAVE COMPLIED
WITH THE  REQUIREMENTS  OF THE CODE OF ETHICS  OVER THE PAST  YEAR,  (4) HAVE  DISCLOSED  ALL  PERSONAL  SECURITIES
TRANSACTIONS,  OVER THE PAST YEAR,  REQUIRED TO BE  DISCLOSED  BY THE CODE OF ETHICS,  (5) HAVE SOUGHT AND OBTAINED
PRECLEARANCE  WHENEVER  REQUIRED  BY THE  CODE OF  ETHICS  AND (6)  CERTIFY  THAT TO THE BEST OF MY  KNOWLEDGE  THE
INFORMATION FURNISHED IN THIS REPORT IS TRUE AND CORRECT.

Name (Print)               _____________________________________________

Signature                  _____________________________________________

Date                       _____________________________________________













                                           KINETICS ASSET MANAGEMENT, INC.

                                             KINETICS MUTUAL FUNDS, INC.

                                              KINETICS PORTFOLIOS TRUST



                                    PERSONAL TRADING REQUEST AND AUTHORIZATION


Personal Trading Request (to be completed by Access Person prior to any personal trade):
---------------------------------------------------------------------------------------

Name:
      -------------------------------------------------------------------------------------------------------------
Date For Which You Seek Approval:
                                 ----------------------------------------------------------------------------------


Name of the issuer and dollar amount or number of securities of the issuer to be purchased or sold:
                                                                                                    ---------------

Nature of the transaction (i.e., purchase, sale): 1
                                                    ---------------------------------------------------------------


Are you or is a member of your immediate  family an officer,  trustee,  or director of the issuer of the securities
or any affiliate2 of the issuer? Yes __ No __

If yes, please describe:
                         ------------------------------------------------------------------------------------------



Describe  the nature of any direct or indirect  professional  or business  relationship  that you may have with the
issuer of the securities.3

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

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

Do you have any material nonpublic information concerning the issuer?

                           Yes ___  No___


Are you aware of any  facts  regarding  the  proposed  transaction,  including  the  existence  of any  substantial
economic  relationship,  between the proposed transaction and any securities held or to be acquired by the Trust or
the Company that may be relevant to a determination as to the existence of a potential conflict of interest?4

                           Yes___   No___

         If                                               yes,                                               please
describe:
-----------------------------------------------------------------------------------------------------

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

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

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

         To the best of my knowledge and belief, the answers that I have provided above are true and correct.


                                                              Signature:__________________________






                                Approval or Disapproval of Personal Trading Request
                                ---------------------------------------------------
                                  (to be completed by Legal Compliance Officer):


                  I confirm  that the  above-described  proposed  transaction  appears  to be  consistent  with the
                  policies described in the Code and that the conditions necessary 5 for  approval of the  proposed
                  transaction have been satisfied.

                  I do not believe  the  above-described  proposed  transaction  is  consistent  with the  policies
                  described in the Code or that the conditions  necessary for approval of the proposed  transaction
                  have been satisfied.




Dated:                                      Signed:
       -----------------------------                ----------------------------------------------

                                                     Title:
                                                           ------------------------------------------------





134131.2


--------
                                                                                                          *               if appropriate, you may disclaim beneficial ownership of any security listed in this report.
         1 If other than market order, please describe any proposed limits.
         2 For purposes of this  question,  "affiliate"  includes (i) any entity that directly or indirectly  owns,
controls or holds with power to vote 5% or more of the  outstanding  voting  securities  of the issuer and (ii) any
entity under common control with the issuer.
         3 A  "professional  relationship"  includes,  for example,  the  provision of legal  counsel or accounting
services.  A, "business  relationship"  includes,  for example,  the provision of consulting  services or insurance
coverage.
         4 Facts that would be responsive to this question  include,  for example,  the receipt of "special favors"
from a stock promoter,  such as participation in a private  placement or initial public offering,  as an inducement
to purchase other  securities of the Trust or the Company.  Another  example would be investment in securities of a
limited  partnership  that in turn owned  warrants  of a company  formed for the  purpose of  effecting a leveraged
buy-out in  circumstances  where the Trust or the  Company  might  invest in  securities  related to the  leveraged
buy-out.  The  foregoing  are only  examples of pertinent  facts and in no way limit the types of facts that may be
responsive to this question.
         5 In the case of a personal  securities  transaction by an Access Person of the Trust,  the Company or the
Adviser (other than  Disinterested  Board Members),  the Code of Ethics requires that the Legal Compliance  Officer
determine  that the proposed  personal  securities  transaction  (a) is only  remotely  potentially  harmful to the
Trust and the Company because they would be very unlikely to affect a highly  institutional  market, (b) is clearly
not  economically  related to the  securities  to be  purchased or sold or held by the Trust or Company or (c) does
not  represent  any  danger of the  abuses  prescribed  by Rule  17j-l,  but only if in each  case the  prospective
purchaser  has  identified  to the Legal  Compliance  Officer  all  factors  of which he or she is aware  which are
potentially  relevant to a conflict of interest  analysis,  including  the  existence of any  substantial  economic
relationship between his or her transaction and securities held or to be held by the Trust or the Company.

                                         Scudder Kemper Investments, Inc.


                                                  Code of Ethics


                                                 December 15, 2000




























16991





                                                     Contents



Preamble

Part 1:           Conflicts of Interest

Part 2:           Personal Investments
o        Definitions
o        Specific Rules and Regulations Applicable to Employees
o        Specific Rules and Regulations Applicable to Access Persons
o        Specific Rules and Regulations Applicable to Investment Personnel
o        Specific Rules and Regulations Applicable to Portfolio Managers
o        General
o        Excessive Trading
o        Disgorgement; Other Penalties

Part 3:           Insider Trading
o        Introduction
o        General Guidelines
o        Definitions

Part 4:           Confidentiality

Part 5:           Proprietary Rights of the Firm

Part 6:           Gifts and Entertainment
o        Overview
o        General Guidelines
o        Reporting and Supervision

Part 7:           Fiduciary and Corporate Activities
o        Executorships
o        Trusteeships
o        Custodianships for Minors
o        Directorships and Consultant Positions in Business Corporations
o        Public and Charitable Positions
o        Outside Activities
o        New Employees
o        Written Approval

Part 8:           External Communications

Part 9:           Reporting Apparent Violations

Part 10:          Condition of Employment or Service









Form 1   Quarterly Personal Trading Report


Form 2   Personal Transaction Preclearance Form

Form 3   Special Transaction Preclearance Form

Form 4   Annual Acknowledgment of Obligations Under Code of Ethics


Form 5   Affiliated Persons Letter (407 Letter)


Form 6   Report of Gifts and Entertainment

Form 7   Request for Approval of Fiduciary, Corporate or Other Outside Activity

Form 8   Annual Review of Personal Activities

Form 9   Personal Securities Holdings Form















SCUDDER KEMPER INVESTMENTS, INC.                                                SP&P #16-1
                                                                                Effective Date: 12/15/00
                                                                                Distribution:  General



STANDARD POLICY AND PROCEDURE MEMORANDUM #16-1
(Replaces SP&P #16-1 dtd 1/1/00, SP&P #16-2 dated 3/1/95,
SP&P #16-3 dated 3/15/89, SP&P #16-4 dated 5/18/88, SP&P #16-5 dated 4/29/91, SP&P #16-6 dated 6/27/88, and SP&P
#16-8 dated 2/13/90)




                                                  CODE OF ETHICS

                                                     Preamble

We will at all times conduct ourselves with integrity and distinction, putting first the interests of our
clients.

From the time of our Firm's inception, we have looked on our obligations to our clients as fiduciary in nature.
Our relationships were to be unencumbered in fact or appearance by conflicts of interest, and the needs of our
clients thus represented a benchmark for assessing our own business decisions.

We believe and have always believed that our own long-term business interests are best served by strict adherence
to these principles.  They are reflected in the following internal policies and are implicit in the judgment that
our responsibilities exceed in scope and depth the literal restrictions imposed by law on investor behavior
(e.g., the prohibition on use of inside information.).


The rules set forth in this Code have been adopted by Scudder Kemper Investments, Inc. ("Scudder Kemper") and
certain of its subsidiaries (the "Covered Companies"), including Scudder Investor Services, Inc. ("SIS"), Kemper
Distributors, Inc. ("KDI"), Scudder Financial Services, Inc., Kemper Service Company, Scudder Service
Corporation, Scudder Trust Company, Scudder Fund Accounting Corporation, and by Scudder Kemper-sponsored
investment companies as their codes of ethics applicable to Scudder Kemper-affiliated personnel.







Part 1:           Conflicts of Interest


This Code does not attempt to spell out all possible cases of conflicts of interest and we believe that members
of the organization should be conscious that areas other than personal investment transactions may involve
conflicts of interest.  One such area would be accepting favors from brokers or other vendors or service
providers.  We are a natural object of cultivation by Firms wishing to do business with us and it is possible
that this consideration could impair our objectivity.


A conflict of interest could also occur in securities which have a thin market or are being purchased or sold in
volume by any client or clients.  Likewise, the purchase of stocks or bonds in anticipation of (1) an upwards change
to "Buy" in the price rating, (2) their being added to the Investment Universe with a "Buy" rating, or (3) their
being purchased by a large account or group of accounts would clearly be in conflict with our clients' interest.

Other examples of such conflicts would include the purchase or sale of a security by a member of the
organization  prior to initiating a similar recommendation to a client. Analysts occupy a particularly visible
position.  It follows that analysts should be particularly careful to avoid the appearance of "jumping the gun"
before recommending a change in the rating on one of the stocks for which he or she is responsible.

Accordingly, all personnel are required to adhere to the following rules governing their investment activities.
These rules cannot cover all situations which may involve a possible conflict of interest.  If an employee
becomes aware of a personal interest that is, or might be, in conflict with the interest of a client, that person
should disclose the potential conflict to the Legal Department for appropriate consideration, before any
transaction is executed.

We are anxious to give every member of the Firm reasonable freedom with respect to his/her own and family's
investment activities.  Furthermore, we believe that we will be stronger and our product better if the members of
the organization have a personal interest in investing and the courage of their convictions with respect to
investment decisions.  At the same time, in a profession such as ours, it is possible to abuse the trust which
has been placed in us and there could be conflicts of interest between our clients and our personal investment
activities.  In many cases such conflicts might be somewhat theoretical.  On the other hand, in a matter of this
nature we must be almost as careful of appearances as we are of the actual facts.

Our underlying philosophy has always been to avoid conflicts of interest wherever possible and, where they
unavoidably occur, to resolve them in favor of the client.  When a conflict does occur, an individual in an
investment counsel organization must recognize that the client's interests supercede the interests of the Firm's
employees and those of any members of the person's family whom he or she may advise.  This condition inevitably
places some restriction on freedom of investment for members of the organization and their families.


Quarterly Personal Trading Report Quarterly Personal Trading Reports are reviewed by designees of the Ethics
Committee, who are responsible for determining whether violations have occurred, giving the person involved an
opportunity to supply additional information, and recommending appropriate follow-up action including
disciplinary measures for late reports or other infractions.








Part 2:  Personal Investments

Definitions


(a)      Access Person includes officers and directors of Scudder Kemper, SIS, KDI and Scudder Kemper sponsored
                  investment companies as well as employees of Covered Companies who have access to timely
                  information relating to investment management activities, research and/or client portfolio
                  holdings.

(b)      Affiliated person letter (407 letter) is a letter from the Legal Department on behalf of Scudder Kemper
                  Investments, Inc. authorizing an employee to open a brokerage account and providing for the
                  direction of duplicate trade confirmations and account statements to the Legal Department.  All
                  Access Persons must apply for an affiliated person letter for each personal account prior to
                  making any  trades in the account.  Employees who are not deemed Access Persons can obtain an
                  affiliated person letter on request, but such letter will NOT require the direction of
                  duplicate trade confirmations and account statements.

         (c)               Beneficial Interest.  You will be considered to have a Beneficial Interest in any
                  investment that is (whether directly or indirectly) held by you, or by others for your benefit
                  (such as custodians, trustees, executors, etc.); held by you as a trustee for members of your
                  immediate family (spouse, children, stepchildren, grandchildren, parents, stepparents,
                  grandparents, siblings, parents-in-law, children-in-law, siblings-in-law); or held in the name
                  of your spouse, or minor children (including custodians under the Uniform Gifts to Minors Act)
                  or any relative of yours or of your spouse (including an adult child) who is sharing your home,
                  whether or not you supervise such investments.  You will also be considered to have a
                  Beneficial Interest in any investment as to which you have a contract, understanding,
                  relationship, agreement or other arrangement that gives you, or any person described above, a
                  present or future direct or indirect benefit substantially equivalent to an ownership interest
                  in that investment.  For example, you would be considered to have a Beneficial Interest in the

                  following:




o        an investment held by a trust of which you are the settlor, if you have the power to revoke the trust
                         without obtaining the consent of all the beneficiaries;

o        an investment held by any partnership in which you are a partner;

o        an investment held by an investment club of which you are a member;

o        an investment held by a personal holding company controlled by you alone or jointly with others.

                  If you have any question as to whether you have a Beneficial Interest in an investment, you
                  should review it with the Legal Department.

(d)      Covered Company is defined in the Preamble.

         (e)               Derivative includes options, futures contracts, options on futures contracts, swaps,
                  caps and the like, where the underlying instrument is a Security, a securities index, a
                  financial indicator, or a precious metal.

         (f)               Employees includes all employees of each of the Covered Companies who do not fall
                  within the definition of Access Person, Investment Personnel or Portfolio Manager.


         (g)                Initial Public Offering shall include initial offerings in equities to the public.


         (h)                Investment Personnel are traders, analysts, and other  employees who work directly with
                  Portfolio Managers in an assistant capacity, as well as those who in the course of their job
                  regularly receive access to client trading activity (this would generally include members of the
                  Investment Operations and Mutual Fund Accounting groups).  As those responsible for providing
                  information or advice to Portfolio Managers or otherwise helping to execute or implement the
                  Portfolio Managers' recommendations, Investment Personnel occupy a comparably sensitive position,
                  and thus additional rules outlined herein apply to such individuals.

         (i)               Personal Account means an account through which an employee of a Covered Company has a
                  Beneficial Interest in any Security or Derivative.

         (j)               Personal Transaction means an investment transaction in a Security or Derivative in which
                  an employee of a Covered Company has a Beneficial Interest.

         (k)               Portfolio Managers are those employees of a Covered Company entrusted with the direct
                  responsibility and authority to make investment decisions affecting a client.  PIC Consultants
                  are included in this definition.  In their capacities as fiduciaries, Portfolio Managers occupy a
                  more sensitive position than many members of the Scudder Kemper organization because they are
                  originating transactions for their clients.

(l)               Private Placement is defined as an offering of a security, which is being acquired in
                  connection with an offering not being made to "the public" but to a limited number of investors
                  and which has been deemed not to require registration with the SEC.


(m)             Reportable Transaction includes any transaction in a Security or Derivative; except such term
                  does not include any transaction in (i) direct obligations of the U.S. Government, (ii)
                  bankers' acceptances, bank certificates of deposit, commercial paper and high quality short-term
                  debt instruments, including repurchase agreements, or (iii) shares of open-end investment
                  companies (mutual funds).



(n)      Security includes without limitation stocks, bonds, debentures, notes, bills and any interest commonly
                  known as a security, and all rights or contracts to purchase or sell a security.




(o)      Scudder Kemper Funds means each registered investment company to which a Scudder Kemper affiliated
                  Adviser renders advisory services.

         (p)               Waiver from preclearance exempts certain accounts from the preclearance requirements
                  (provided, that no waiver shall be granted for Investment Personnel or Portfolio Managers from
                  the prior approval requirements with respect to  IPOs or private placements).  An Access Person
                  may apply for a certificate of waiver from preclearance under the following circumstances:
                  (i)               Account under the exclusive discretion of an access person's spouse, where the

                           spouse is employed by an investment firm where the spouse is subject to comparable
                           preclearance requirements;

                  (ii)              The account is under the exclusive discretion of an outside money manager; or


(iii)                      Any other situation where a waiver of preclearance is deemed appropriate by the Ethics
                           Committee.

                  A certificate of waiver from preclearance is available at the discretion of the Ethics
                  Committee.  All accounts receiving a certificate of waiver from preclearance must still apply for
                  a 407 letter.  Transactions occurring in accounts which have obtained a waiver from preclearance
                  are not exempt from the quarterly reporting requirement or annual personal securities holdings
                  reporting requirement.




Specific Rules and Restrictions Applicable to all Employees, Access Persons, Investment Personnel and Portfolio
                                                  --------------------------------------------------------------
         Managers
         --------


          (a)     Every Employee must file by the seventh day of the month following the end of each calendar
                  quarter a Quarterly Personal Trading Report for the immediately preceding quarter (Form 1:
                  Quarterly Personal Trading Report).  Each report must set forth every Reportable Transaction
                  for any Personal Account in which the Employee has any Beneficial Interest.  This report must
                  be filed electronically for those with access to the Firm's intranet.


                  In filing the reports for accounts within these rules please note:


(i)      You must file a report every quarter whether or not there were any Reportable Transactions.  For every
                           Security listed on the report, the information called for in each column must be
                           completed by all reporting individuals.


(ii)     Reports must show sales, purchases, or other acquisitions or dispositions, including gifts, exercise of
                           conversion rights and the exercise or sale of subscription rights.

(iii)    Quarterly reports on family and other accounts that are fee-paying firm clients need merely list the
                           Scudder Kemper account number under Item #1 of the report; these securities
                           transactions do not have to be itemized.

                   (iv)    Employees may not purchase securities issued as part of an initial public offering
                           until three business days after the public offering date (i.e., the settlement date),
                           and then only at the prevailing market price.  In addition, employees may not
                           participate in new issues of municipal bonds until a CUSIP number has been identified.


         (b)      Employees are not permitted to serve on the boards of publicly traded companies unless such
                  service is approved in advance by the Ethics Committee or its designee on the basis that it
                  would be consistent with the interests of the Firm. In the case of Investment Personnel and
                  Portfolio Mangers service on the board of a public company must be consistent with the
                  interests of the Fund with which such person is associated as well as the shareholders of such
                  Fund, and the Investment Personnel/Portfolio Manager must be isolated from participating in
                  investment decisions relating to that company.  See Part 7: Fiduciary and Corporate Activities
                  for further detail on the approval process.


          (c)     For purposes of this Code, a prohibition or requirement applicable to any given person applies
                  also to transactions in securities for any of that person's Personal Accounts, including
                  transactions executed by that person's spouse or relatives living in that person's household,
                  unless such account is specifically exempted from such requirement by the Ethics Committee or
                  its designee.

         (d)      Employees may not purchase or sell securities on the Restricted List absent a special exception
                  from the Legal Department. Employees may not disclose the identities of issuers on the
                  Restricted List to others outside the Firm.  Please See Part 3:  Insider Trading, which is
                  incorporated by reference.

         (e)      Employees shall submit an Annual Acknowledgement of Obligations Under the Code of Ethics (Form
                  4).  This report must be filed electronically for those with access to the Firm's intranet.


Additional Specific Rules and Restrictions Applicable to all Access Persons
                                                             --------------

         (a)      Access Persons are subject to each of the foregoing rules and restrictions.

         (b)      Access Persons may not purchase or sell a Private Placement security or holding in a hedge fund
                  without the prior written approval of the Ethics Committee or its designee and, in the case of
                  Portfolio Managers and research analysts, in each case the additional approval of their
                  supervisor (see Form 3: Special Preclearance Form).  Typically, such purchases will not be
                  approved where any part of the offering is being acquired by a client.

         (c)      All Access Persons must disclose promptly to the Ethics Committee or its designee the existence
                  of any Personal Account and must direct their brokers to supply duplicate confirmations of all
                  Reportable Transactions and copies of periodic statements for all such accounts to an
                  individual designated by the Ethics Committee.  (Use Form 5: Affiliated Persons Letter.)  These
                  confirmations will be used to check for conflicts of interest by comparing the information on
                  the confirmations against the Firm's pre-clearance records and Quarterly  Personal Trading
                  Reports.

         (d)      All Access Persons are required to "pre-clear" their personal transactions with the Ethics
                  Committee's designee.  (Use Form 2: Preclearance Form.)  If circumstances are such that the
                  Firm lacks the ability to preclear a particular transaction, permission to execute that
                  transaction will not be granted.  Submissions for request of trade approval must be submitted
                  no later than 3:30pm.  If preclearance is granted, the Access Person has until the end of the
                  day preclearance is granted to execute his or her trade.  After such time the Access Person
                  must obtain preclearance again.  Prior approval is not required for acquisitions by gift in an
                  account, or dispositions by gift to an account, in which the Access Person has no Beneficial
                  Interest, the rounding out of fractional shares and the receipt of stock dividends or stock
                  splits.  Similarly, prior approval is not required for transactions in Securities excepted from
                  the definition of "Reportable Transaction."

          (e)     Access Persons may not purchase any Security where the investment rating is upgraded to
                  "Neutral" or "Buy" (or any Security added to the Investment Universe with a "Neutral" or "Buy"
                  rating until two weeks after the date of the rating change or addition.

         (f)      Access Persons may not sell any Security where the investment rating is downgraded to "Neutral"
                  or "Unattractive" until two weeks after the date of the rating change.

         (g)      Access Persons may not purchase securities that are added to the PIC Universe until two weeks
                  after the date of the addition.

         (h)      In the event that an Access Person desires to trade less than $10,000 of a Security that has a
                  market capitalization of at least $5 billion, pre-clearance will be granted absent special
                  circumstances.  (However, please note that even trades falling within this de minimus exception
                  must be pre-cleared with the Ethics Committee or its designee.)

         (i)      No Access Person will receive approval to execute a Securities transaction when any client has
                  a pending "buy" or "sell" order in that same (or a related) Security until all such client
                  orders are executed or withdrawn.  Examples of related Securities include options, warrants,
                  rights, convertible securities and American Depository Receipts, each of which is considered
                  "related" to the Security into which it can be converted or exchanged.


(l)      Within 10 days of the commencement of employment (or within 10 days of obtaining Access Person status)
                  all Access Persons must disclose, through use of a Form 9, all holdings of Securities and/or
                  Derivatives in which they have a Beneficial Interest (and indicate which of those holdings are
                  private placements). Holdings in direct obligations of the U.S. Government, shares of mutual
                  (i.e., open-end) funds, bankers' acceptances, bank certificates of deposit, commercial paper
                  and high quality short-term debt instruments, including repurchase agreements, need not be
                  listed.


Additional Specific Rules and Restrictions Applicable to Investment Personnel
                                                         --------------------


         (a)      Investment Personnel are subject to each of the foregoing rules and restrictions applicable to
                  Employees and Access Persons.


         (b)      Investment Personnel are prohibited from profiting from the buying and selling, or selling and
                  buying, of the same (or related) Securities within a 60 calendar-day period.

         (c)      Investment Personnel who hold a  security offered in a Private Placement of an issuer whose
                  securities are being considered for purchase by a client must disclose to their supervisor that
                  preexisting interest where they are involved in the consideration of the investment by the
                  client (using Form 3:  Special Transaction Preclearance Form).  The client's purchase of such
                  securities must be approved by the relevant supervisor.

         (d)      Research analysts are required to obtain special preclearance (using Form 3:  Special
                  Transaction Preclearance Form) and approval from their supervisor prior to purchasing or
                  selling a Security in an industry or country that he or she follows.

Additional Specific Rules and Restrictions Applicable to Portfolio Managers
                                                         ------------------


         (a)      Portfolio Managers are subject to each of the foregoing rules and restrictions applicable to
                  Employees, Access Persons and Investment Personnel.

         (b)      Portfolio Managers may not buy or sell a Security within seven calendar days before and after a
                  portfolio that he or she manages trades in that Security.


         (c)      When a Portfolio Manager wants to sell from his or her Personal Account Securities held by his
                  or her clients, the Portfolio Manager must receive prior written approval from the Ethics
                  Committee or its designee (using Form 3) before acting for the Personal Account.  The Portfolio
                  Manager must explain his or her reasons for selling the securities.

(d)      When a Portfolio Manager wants to purchase for a Personal Account a Security eligible for purchase by
                  one of his or her clients, the Portfolio Manager must receive prior written approval from the
                  Ethics Committee or its designee (using Form 3) before acting for the Personal Account.  The
                  Portfolio Manager must explain his or her reasons for purchasing the securities.


(e)      A Portfolio Manager may not engage in short sales other than "short sales against the box" for which
                  both Regular and Special Preclearance are required.


General

         (a)      Apart from these specific rules, purchases and sales should be arranged in such a way as to
                  avoid any conflict with clients in order to implement the intent of this Code.  Any attempt by
                  an employee to do indirectly what this Code is meant to prohibit will be deemed a direct
                  violation of the Code.  If there is any doubt whether you may be in conflict with clients,
                  particularly with respect to securities with thin markets, you should check before buying or
                  selling with the Ethics Committee or its designee.

         (b)      Hardship exceptions may be granted, in the sole discretion of the Ethics Committee or its
                  designee, with respect to certain provisions of this Code in rare instances where unique
                  circumstances exist.


         (c)      The Ethics Committee or its designee, on behalf of the Firm, will report annually to each
                  Scudder Kemper Fund's board of directors concerning material issues arising under Part 1-3,
                  Part 6, Part 9 and 10 of this Code, existing procedures and any material changes to those
                  procedures as well as any instances requiring significant remedial action during the past year
                  which relate to that Fund.  Such report will be in writing and include any certification
                  required by law.


(d)      Access Persons are permitted to maintain Margin Accounts.  Nonetheless, sales by Access Persons pursuant
                  to margin calls must be precleared in accordance with standard preclearance procedures.

Excessive Trading


The Firm believes that it is appropriate for its members to participate in the public securities markets as part
of their overall personal investment programs.  As in other areas, however, this should be done in a way that
creates no potential conflicts with the interests of our clients or our Firm.  Further, it is important that
members recognize that otherwise appropriate trading, if excessive (measured in terms of frequency, complexity of
trading programs or number of trades), or if conducted during work-time or using Firm resources, can give rise to
conflicts of a different category such as by distracting time, focus, and energy from our efforts on behalf of
our clients or by exceeding a reasonable standard of Firm accommodation of members' basic personal needs.
Accordingly, personal trading rising to such dimension as to create this possibility is not consistent with the
Code of Ethics, should be avoided, may be reported to supervisors, and may ultimately not be approved.



Disgorgement; Other Penalties

Any profits realized from a transaction that was not precleared or from a transaction that otherwise violates a
provision of this Code will be disgorged to an appropriate charity.  The Ethics Committee, in its discretion, may
waive disgorgement in exceptional circumstances.  The Ethics Committee also reserves the right to impose other
penalties for violations of the Code, including requiring reversal of a trade, fines, suspension of trading
privileges and, under the most serious of violations, termination of employment.

Part 3:  Insider Trading

I.       Introduction


Scudder Kemper has traditionally stressed research in depth and avoided using or seeking "hot tips" or "material
non-public information" (defined below) about securities as a basis for recommendations to our clients or for our
own investment transactions.  Various SEC rules, and Federal and State Laws prohibit the misuse of confidential
non-public information.  Accordingly, Scudder Kemper has developed a comprehensive insider trading policy which
defines insider trading, as well as offers guidance on steps employees must take when they believe they are in
possession of material non-public information.  Violations of this policy can not only lead to job termination,
but could expose both you and the Firm to criminal and civil liability.

Employees may not transact in a security while in possession of material, nonpublic information relating to the
issuer of the security.  This prohibition applies to trading on behalf of client accounts and personal accounts.
In addition, employees may not convey material, nonpublic information about publicly traded issuers to others
outside the company.

The Restricted List is a document disseminated by the Legal and Compliance Department setting forth securities
which employees may not buy and/or sell for personal and client accounts.

Employees must not disclose the identities of issuers on the Restricted List to others outside the Firm.

SP&P 16 - 11B sets forth the company policy on Insider Trading, and is incorporated into this Code of Ethics by
reference.


II.      General guidelines

Employees may not transact in a security, on behalf of a client account or a personal account, while in
possession of material, nonpublic information concerning the issuer of the security.


a.       Employees who receive information which they believe may be material and nonpublic are required to
         contact Kevin Medina in the Legal Department immediately.  In such circumstances, employees should not
         share the information with other employees, including supervisors.  Employees may not share material,
         nonpublic information with others outside the Firm.

b.       Employees may not purchase or sell securities on the Restricted List absent a special exception from the
         Legal Department.  Employees may not disclose the identities of issuers on the Restricted List to others
         outside the Firm.


c.       Employees may not solicit material, nonpublic information from officers, directors or employees of
         public issuers.

d.       Employees may not knowingly transact in securities prior to trades made on behalf of clients, or prior
         to the publication of research relating to the security.


e.       Employees may not cause nonpublic information about a security to be passed across a firewall (defined
         below).


III.     Definitions

Material information is information that a reasonable investor would find relevant to making an investment
decision.  Any information which if announced to the public, would likely cause a change in the price of a
security, is likely to be material.
The following types of information are likely to be material: earnings, mergers and acquisitions, dividends and
special dividends, product developments, licenses, changes in management, major litigation or regulatory action,
and/or actions by prominent investors.

Nonpublic information is information that has not been disclosed to the public.  Information available in
newspapers, magazines, radio, television, and/or news services is generally public information.

Restricted List is a document disseminated by the Legal Department setting forth securities which employees may
not buy and/or sell for personal and client accounts.


A firewall is a procedure designed to prevent the misuse of material, nonpublic information received by the Firm
in the course of its business.  Employees with questions concerning firewall procedures and their applicability
should contact the Legal Department for further guidance.  SP&P 16 - 11C sets forth the company policy on
Firewall Procedures, and is incorporated into the Code of Ethics by reference.


Part 4:  Confidentiality


Our obligation as fiduciaries to act at all times in our clients' best interests requires that we share
information concerning our clients -- including particularly information concerning their identities, holdings
and account transactions -- with those outside the Firm only on a "need to know" basis.  Accordingly, no member
of the organization may discuss with, or otherwise inform others of, the identity of any client, or any actual or
contemplated transaction for the account of a client, except in the performance of employment duties or in an
official capacity and then only for the benefit of the client, and in no event for a direct or indirect personal
benefit.


Part 5:  Proprietary Rights of the Firm


Three key elements - our clients, our employees, and the proprietary knowledge we have created through our
collective efforts over the years - are central to the Firm's value.  The information that relates to our
activities is owned solely by the Firm, and we undertake extensive measures to ensure the confidentiality and
integrity of this information, which is proprietary to the Firm.


Moreover, because we act as fiduciaries for our clients, all of us are subject to special ethical, regulatory,
legal and professional duties and considerations, not all of which are specifically addressed below, but which
are made known to you throughout the term of your employment.  In addition to these fundamental considerations,
the Firm requires that you, as an employee, acknowledge and abide by the terms and conditions set forth below:

A.       Non-Disclosure of Confidential, Non-Public and/or Proprietary Information
----------------------------------------------------------------------------------

         Unless authorized in writing by the Firm, you shall not, during or at any time after your employment
with the Firm, disclose to others, use, copy or remove any confidential, non-public or proprietary information
concerning the Firm, its clients or its third-party suppliers ("Confidential Information"), except as required in
the conduct of the Firm's business.

         Confidential Information includes, but is not limited to, the following:

o        names, addresses, telephone numbers and other client contact and correspondence information and
                  procedures;
o        records and files of our clients' accounts, including the computer database;
o        account operational procedures and instructions;
o        asset listings for clients and prospects, including cost prices, dates of acquisition and the like;
o        all Firm research memoranda, procedures and files, including drafts thereof, as well as procedures,
                  notes or tapes of research interviews, discussions, annual reports and company releases,
                  brokers' reports, outside consultants' reports and any other material pertaining to investments;
o        all operating memoranda such as Standard Policy and Procedures memoranda, operations manuals, procedures
                  and memoranda, and compliance checklists;
o        all computer software programs, databases and related documentation pertaining to account or research
                  operations;
o        presentation materials (including drafts, memoranda and other materials related thereto) prepared for
                  marketing purposes or client meetings;
o        all information pertaining to investment counsel and fund prospects, including lists and contact logs;
o        account performance data for any accounts which have been or are under the supervision of the Firm;
o        internal analyses, management information reports and worksheets such as marketing and business plans,
                  profit margin studies and compensation reviews;
o        all information pertaining to potential investments, dispositions or other transactions by or on behalf
                  of clients or the Firm; and
o        financial models, discoveries and inventions and the like.

         These restrictions apply to all Confidential Information that you obtain in connection with your
employment, whether or not developed by you or others in the Firm or obtained by the Firm from third parties, and
whether or not any of the information was identified as secret or confidential.

B.       Non-Solicitation of the Firm's Clients and Employees
         ----------------------------------------------------

         In order to protect Confidential Information (as defined above) obtained during your employment, and to
protect the Firm's relationship with Firm Clients (as defined below), you agree that during the term of your
employment and for twelve months thereafter, you will not:

         (i) directly or indirectly solicit or facilitate obtaining business from any Firm Client, or participate
in any discussions relating to the obtaining of business from any Firm Client, in any case other than for Scudder
Kemper during your employment,

         (ii) induce or attempt to induce any Firm Client to reduce or terminate its business with the Firm, or

         (iii) solicit or encourage any employee to leave the Firm.

         A "Firm Client" is any person, Firm or entity (a) that was a client of the Firm, or that the Firm has
solicited or with which the Firm has had active discussions concerning potential business, at any time during the
twelve months preceding the termination of your employment, and (b) with which you or your business unit had any
involvement or contact.


C.       Inventions, Discoveries, Writings and other Proprietary Information
         --------------------------------------------------------------------

         You acknowledge that the Firm shall own all right, title and interest (including patent rights,
copyrights, trade secret rights and other rights throughout the world) in any inventions, works of authorship,
ideas or information made or conceived or reduced to practice, in whole or in part, by you (either alone or with
others) during your employment with the Firm (collectively, "Developments").  However, the term "Developments"
does not include inventions, works of authorship, ideas or information for which no equipment, supplies,
facilities or trade secret information of the Firm was used, which were developed entirely on your time, and (i)
which do not relate to the business of the Firm or to the Firm's actual or demonstrably anticipated research or
development, (ii) which do not result from any work performed by you for the Firm, or (iii) for California
employees, which qualifies fully under the provisions of California Labor Code Section 2870.

         You will promptly and fully disclose to the Firm any and all Developments.  You hereby assign to the
Firm all rights, title and interest in and to any and all Developments.  You shall assist the Firm to evidence,
record and perfect these assignments, and to perfect, obtain, maintain, enforce, and defend any rights to
Developments, without further charge during your employment.  After termination of employment, we will compensate
you for this assistance on an hourly basis at the base salary rate (excluding any bonuses, deferred compensation
or other benefits) you had during your last year of employment.

         You irrevocably appoint the Firm and its agents as attorneys-in-fact, to act for and on your behalf, to
execute and file any document, and to do all other lawfully permitted acts to protect our rights to Developments,
with the same legal force and effect as if executed by you.  In addition, you acknowledge that all original works
of authorship made by you (solely or jointly with others) within the scope of employment and which are
protectable by copyright are "works made for hire," as that term is defined in the United States Copyright Act (17
USCA,ss.101).

D.       Return of Documents
         -------------------

         You acknowledge that all originals and copies of all lists, materials, catalogs, binders, client lists
and other client information, supplier lists, financial information, and other records or documents containing
Confidential Information prepared by you or coming into your possession in connection with your employment are
and shall remain the property of the Firm.  Within three business days of termination of your employment, you
will (i) return to the Firm any of the above items that are within your custody or control, and (ii) delete all
Confidential Information from any computer or electronic storage device medium owned by you.

E.       Enforcement
         -----------

You acknowledge that:

(a)      the Firm may enforce the rights set forth above pursuant to appropriate judicial proceedings, or that,
alternatively, the Firm, in its discretion, may initiate proceedings before the American Arbitration Association
in New York, New York, in order to resolve any controversy or claim it may have arising out of this policy or any
breach of this policy;

         (b)  judgment on an award entered by the arbitrator may be entered in any court having jurisdiction; and

         (c) an application to a court for temporary or preliminary or interim relief shall not be considered
incompatible with or in derogation of the Firm's right to compel arbitration.

         To the extent the provisions of this policy are governed by state law, you agree that the laws of the
State of New York, without regard to New York's principles of conflicts of laws, shall govern.

         The invalidity or unenforceability of any provision of this policy shall not affect the validity or
enforceability of any other provision of this policy.  If any provision of this policy shall be held invalid or
unenforceable in part, the remaining portion of that provision, together with all other provisions of this
policy, shall remain valid and enforceable and continue in full force and effect to the fullest extent consistent
with law.








Part 6:  Gifts and Entertainment

I.       Overview

It is appropriate for employees to maintain friendly but professional relationships with persons with whom
Scudder Kemper conducts its business.  These business counterparts may include persons who are associated with
Scudder Kemper's vendors, contractors, providers of service, and members of the investment community.  It is
appropriate for employees to give and/or receive gifts, business meals and/or entertainment from such business
counterparts, provided that they are not excessive in value or frequency.  The good judgment of our employees and
their supervisors is of paramount importance in ensuring compliance with this provision.

SP&P 16 - 11A sets forth the company policy on Gifts and Entertainment, and is incorporated into the Code of
Ethics by reference.

II.      General Guidelines

(a)      Employees may not accept gifts that are excessive in value or frequency.

(b)      The following types of transactions should be approved by a supervisor using Form 6 (The Scudder Kemper
                  Gift Form; See Section III):

i.       Gifts valued in excess of  $100;

ii.      Business meals valued in excess of $200; and

iii.     Entertainment valued in excess of $300.

(c)      Invitations which involve the payment of substantial expenses generally should be avoided (See SP&P
                  16-2A).  Under most circumstances lodging and transportation charges should be considered the
                  obligation of Scudder Kemper.

(d)      The frequency of invitations should also be taken into account, especially entertainment.  Employees
                  generally should not accept more than three invitations a year from any single individual,
                  group or organization, subject to approval from a supervisor.

(e)      When analysts and product leaders accept broker invitations to research and investment meetings, an
                  effort should be made to use firms on our "Approved List" or those which are bona fide
                  candidates for the list.  It is not good business practice to accept assistance and invitations
                  from firms with which we are not likely to do business.

(f)      Employees may not accept gifts of cash.  Employees may not accept gifts of favorable rates on financial
                  transactions such as loans or brokerage commissions.


III.     Reporting and Supervision


As described above, gifts valued at over $100 and the other items outlined in II(b) hereof, must be approved by a
supervisor.  The supervisor must have a corporate title of Managing Director or Senior Vice President, and must
be in the same department as the employee receiving the gift. The Scudder Kemper Gift Form (Form 6) must be
completed within ten days of receipt of the gift.  Completed gift forms are sent to Marlo Goodman, at 345 Park
Avenue, NY, NY 10154.  In addition, gifts subject to Form 6 must be reported on the Quarterly Quarterly Personal
Trading Report.


Part 7:           Fiduciary and Corporate Activities

In many fiduciary and corporate activities, members of the organization are, or will become, engaged in
responsible duties involving the expenditure of time and the application of information and experience which
properly belong to the firm or are derived from the Scudder Kemper relationship.  With certain exceptions
referred to below, any compensation or profits from these activities are, accordingly, considered to be Scudder
Kemper's income.

The Ethics Committee must give written approval to all existing or prospective relationships and activities as
described below, and no new relationship should be initiated without written authorization on Form 7: Request For
Approval of Fiduciary, Corporate or Other Outside Activity.  In those instances when approval of a prospective
fiduciary relationship, e.g., executor or trustee, has been given and the individual subsequently is in a
position to qualify and act in the fiduciary capacity, that person is required to reapply for approval if the
character of the activity changes.  The same procedures should be followed as those for the approval of any
fiduciary activity except that reference should be made to the earlier obtained approval under "Salient Facts" on
the approval form.

Executorships


The duties of an executor are often arduous, time consuming and, to a considerable extent, foreign to our
business.  As a general rule, Scudder Kemper wishes to discourage acceptance of executorships by members of the
organization.  However, business considerations or family relationships may make it desirable to accept
executorships under certain wills.  In these instances follow the procedures set forth in SP&P #16-15, Acting As
Executor Under A Client's Will.  In all cases (other than when acting as Executor for one's own spouse, or parent
or spouse's parent), it is necessary for the individual to have the written authorization of the firm to act as
an executor. All such existing or prospective relationships should be reported in writing.


When members of the organization accept executorships under clients' wills, the organization has consistently
held to the belief that these individuals are acting for Scudder Kemper and that fees received for executors'
services rendered while associated with the firm are exclusively Scudder Kemper income.  In such instances, the
firm will indemnify the individual, and the individual will be required at the time of qualifying as executor to
make a written assignment to the firm of any executor's fees due under such executorship.  Copies of this
assignment and Scudder Kemper's authorization to act as executor are to be filed in the client's file.


Generally speaking, it is not desirable for members of the organization to accept executorships under the wills
of persons other than a client, a spouse, or a parent.  Authorization may be given in other situations assuming
that arrangements for the anticipated workload can be made without undue interference with the individual's
responsibilities to Scudder Kemper. (For example, this may require the employment of an agent to handle the large
amount of detail which is usually involved.)  In such a case, the Firm would expect the individual to retain the
commission.  There may be other exceptions which will be determined based upon the facts of each case.


Trusteeships


It is often desirable for members of the organization to act individually as trustees for clients' trusts.  Such
relationships are not inconsistent with the nature of our business.  As a general rule, Scudder Kemper does not
accept trustee's commissions where it acts as investment counsel.  As in the case of most executorships, all
trusteeships must have the written approval of the firm.


It is our standard practice to indemnify those individuals who act as trustees for clients' trusts at the request
of the firm. In this connection, the individual member of the organization acting as a trustee will be asked to
agree not to claim or accept trustee's commissions for acting.  This applies to trusts which employ Scudder
Kemper as investment counsel or those which are invested in one or more of the Funds administered by Scudder
Kemper.


It is recognized that individuals may be asked to serve as trustees of trusts which do not employ Scudder
Kemper.  The Firm will normally authorize individuals to act as trustees for trusts of their immediate family.
Other non-client trusteeships can conflict with our clients' interests so that acceptance of such trusteeships
will be authorized only in unusual circumstances.

Custodianships and Powers of Attorney

It is expected that most custodianships will be for minors of an individual's immediate family.  These will be
considered as automatically authorized and do not require written approval of the Firm.  However, the written
approval of Scudder Kemper is required for all other custodianships.

Entrustment with a Power of Attorney to execute Securities transactions on behalf of another requires written
approval of the Firm.  Authorization will only be granted if Scudder Kemper believes such role will not be unduly
time consuming or create conflicts of interest.


Directorships and Consultant Positions in Business Corporations


Occasionally, members of the organization are asked to serve as directors or consultants in business
organizations.  As a general policy, Scudder Kemper considers it inadvisable for such individuals to serve in
these capacities.  No such position may be accepted without the written authorization of the Ethics Committee or
its designee.  In the exceptional instances where such authorization is granted, the fees or other income
resulting from such a relationship are to be turned over to Scudder Kemper (unless the firm decides otherwise) to
compensate it for the resources made available.  Scudder Kemper reserves the right to require that any member of
the organization relinquish any outside business connection when it believes that such connection is unduly time
consuming or conflicts with the interests of the Firm or its clients.


Public and Charitable Positions

Scudder Kemper has consistently encouraged members of the organization to take part in community activities and
to take an active role in public and charitable organizations.  The firm expects that when accepting such duties,
members of the organization will consider possible conflicts of interest with our business as well as the demands
that such positions make upon their time.  Several examples of possible conflicts might be helpful.

When agreeing to serve in a public or charitable position, a member of the organization should clarify in advance
in writing that he or she will not provide free continuous investment advice and management.  This should be made
particularly clear where Investment Committee responsibilities are considered.  Serving without compensation on
the Investment Committee of a charity which might appropriately employ Scudder Kemper would ordinarily not be in
our best interest and prior written approval is required.


Another example of a possible conflict which should be avoided arises when a charity is involved in fund
raising.  Our work gives us access to detailed knowledge of each client's capacity to contribute and is
compounded by the close relationship which should exist between consultant and client.  For any member of the
organization in the course of a charitable solicitation to take advantage of this confidential relationship -- or
even to seem to do so -- would be unprofessional.  Even under the best circumstances, the solicitation of a
client by a member of the organization is awkward and discouraged.  Members of the organization should also make
it clear in writing to the public or charitable organization that they will not participate in any search or
selection process for a future investment adviser.  It is expected that the participation of a member of the
Scudder Kemper organization in a charitable organization will not preclude the firm from being a candidate for
employment as investment counsel to that organization.


Outside Activities

The foregoing does not cover all situations in which a member of the organization may be in a position to realize
financial gain which should be treated as belonging to Scudder Kemper.  It is expected that opportunities for
substantial compensation or profit from sources outside of the firm may, for example, be offered to a member of
the organization by reason of his association with the firm or because of his investment and financial skill or
experience.  Scudder Kemper reserves the right to decide if such compensation or profit should be accepted and,
if accepted, whether or not it should be turned over to Scudder Kemper.  All such cases must be reported promptly
in writing for Ethics Committee review and before they are operative.

New Employees

It is desirable that any fiduciary or corporate activities of a prospective employee be reviewed by Scudder
Kemper prior to the conclusion of arrangements for employment.  However, if such activities have not been
reported prior to employment, they should be reported in writing as promptly as possible thereafter.  It is
recognized that there may be justification for treating such activities which ante-date the individual's
association with the firm on a different basis than might otherwise apply.  However, Scudder Kemper reserves the
right to make what it considers an appropriate determination in each case.  It also reserves the right to require
that any employee give up any fiduciary or corporate activity which it finds in conflict with the best interests
of the firm or any of its clients.

Written Approval


Where written approval is required, Form 7 should be filed with the Ethics Committee or its designee.  A separate
form should be filed for each trust, executorship and the like.  Note that once an activity has been approved, no
additional requests for approval need be filed unless the character of the activity changes.







Part 8:           External Communications
In our sales, marketing, client reporting and corporate communications activities, the Firm's products, services,
capabilities, and past and potential accomplishments must be presented fairly, accurately and clearly.  All
marketing materials must be reviewed by the Global Compliance Group in accordance with SP&P #12-7.  All press
interviews must be cleared in advance by Public Relations.  Reports to clients, including client account
valuation and performance data, must be fair.

Part 9:           Reporting Apparent Violations

Scudder Kemper believes that maintaining a strong compliance culture is in the best interest of the firm and its
clients, in that it helps both to maintain client and employee confidence, and to avoid the costs (both
reputational and monetary) associated with compliance violations.  While reducing compliance violations to a
minimum is our goal, realistically speaking, violations may occur from time to time in an organization as large
as ours.  When violations occur, it is important that they be dealt with immediately by the appropriate members
of the organization.  We encourage all Scudder Kemper employees to report apparent compliance violations to the
Director of Global Compliance.   Violations that go unreported have the potential to cause far more damage than
violations that are taken care of immediately upon discovery.


It is extremely important that apparent compliance violations be reported through the appropriate channels.  The
Legal Department should be contacted in all cases except cases involving potential violations of Human Resources
policies, which should be reported directly to Human Resources.  While resolving apparent compliance violations
should virtually always involve the management of the business unit involved, it is not necessarily appropriate
(nor is it required) that an employee report apparent violations to his or her manager, as well as to the Legal
Department.

Reports of apparent compliance violations will be treated confidentially to the fullest extent possible.  In no
event will the firm tolerate retaliation against persons who report apparent compliance violations.   We realize
that employees may lack the training to distinguish actual from apparent compliance violations, and accordingly,
the fact that a reported incident proves, after investigation, not to have involved a compliance violation will
not result in any sanction against the reporter, provided that the report was made in good faith.


Part 10: Condition of Employment or Service
Compliance with the Code of Ethics is a condition of employment or continued affiliation with a Covered Company,
and conduct not in accordance with the Code of Ethics shall constitute grounds for actions including termination
of employment or removal from office.

Employees must certify annually that they have read and agree to comply in all respects with this Code of Ethics
and that they have disclosed or reported all personal transactions and accounts/holdings it requires to be
disclosed or reported.  (See Form 4: Annual Acknowledgement of Obligations Under Code of Ethics).  In addition,
each year every member of the organization is required to file with the Legal Department a complete list of all
fiduciary, corporate, and other relationships of the nature described in Part 7 above.  The report is titled Form
8: Annual Review of Personal Activities and is attached to this memorandum.








CONFIDENTIAL - File Completed Form by 7th day of start of  subsequent quarter
Return Completed Form to:  Quarterly Reporting / Legal Dept NY
*Reportable Transactions are all transactions, regardless of size, in Securities or Derivatives (including
futures & options), except transactions in (a) direct obligations of the U.S. Government, (b)bankers'
acceptances, bank certificates of deposit, commercial paper and high quality short-term debt instruments,
including repurchase agreements, (c) shares of registered open-end investment companies (mutual funds), and (d)
transactions in clients' accounts listed under #1 above.  Non-volitional transactions are not required to be
reported.  The following types of trades will be deemed non-volitional: stock split, automatic tender offer,
stock gained from mergers or spin-off companies, dividends received in shares, demutualizations, trust
distributions and dividend reinvestment plans.



                                                                                Form 1
SCUDDER KEMPER INVESTMENTS                           December 15th, 2000

                                                                                Replaces A#1 to SP&P #16-1
                                                                                dated 1/1/00


                                    QUARTERLY PERSONAL TRADING REPORT

                                                                                       , 20
                                   ----------------------------------------------------    -------
                                                       Quarter

Check one:        |_| Employee      |_| Access Person    |_| Investment Personnel    |_| Portfolio Manager

                  ----------------------------                --------------            ---------------
-------------
          Name                                    Office                    Employee No.     Extension


This form must be filed quarterly, whether or not you have had any transactions, by the 7th day of the start of
the subsequent quarter and must cover all Personal Accounts in which you have a direct or indirect Beneficial
Interest.  These would include any accounts, including those of clients, in which you have a "Beneficial
Interest," including those of your spouse and relatives living in your household (unless you obtain written
permission from the Ethics Committee or its designee to exclude these accounts), and all non-client accounts over
which you act in an advisory capacity.  Refer to SP&P #16-1 (Code of Ethics) for a full explanation of reporting
requirements.




Please answer all three questions.  If it is not applicable write N/A.

1.       Scudder Kemper client account numbers in which I have a "Beneficial Interest"(do not report Scudder
                                                                                       ------
     Kemper mutual fund accounts here):




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


               ACCOUNT NUMBER                                 ACCOUNT NAME                                PIC CONSULTANT

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

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

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

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



2.       I (had) (had no) Reportable Transactions* during the above quarter.  (List all Reportable Transactions
     on the reverse.)  If any such purchases or sales were transacted without obtaining preclearance, so indicate
     under Name of Account on the reverse.

3.       I (received) (did not receive) any gifts or entertainment from brokers, dealers, investment bankers,
     vendors or other service providers during the above quarter with a value in excess of $100; if any such
     gifts or entertainment (as defined in SP&P #16-1, Part 6) were received, complete and attach Form 6.





                                                                                Signature






SALES
----------------- ---------- ------------ ----------------- --------- ---------- ------------- -------------------- ----------------- ----------- -------------- -------------------

  Security Type   Units      Ticker/       Issuer/ Company  Trade       Price      Principal         Broker/             Acct #        Interest      Maturity    Gift/Waiver/
                             Cusip                            Date                  Amount     Dealer/Bank(3)                           Rate(1)      Date(1)     AIP/NBI(2)

================= ========== ============ ================= ========= ========== ============= ==================== ================= =========== ============== ===================

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

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

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

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

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

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

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

PURCHASES

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

  Security Type   Units      Ticker/           Issuer/      Trade       Price      Principal         Broker/             Acct #        Interest      Maturity    Gift/Waiver/AIP/NBI(2)
                             Cusip             Company        Date                  Amount     Dealer/Bank(3)                           Rate(1)      Date(1)

================= ========== ============ ================= ========= ========== ============= ==================== ================= =========== ============== ===================

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

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

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

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

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

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

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



DID YOU ESTABLISH ANY BROKERAGE A CCOUNTS THIS QUARTER?  IF SO INSERT THE FOLLOWING INFORMATION BELOW:

Name of Brokerage Firm
                      ------------------------------------------------------------------------------------

Account Number
              --------------------------------------------------------------------------------------------

Date Account was opened
                       -----------------------------------------------------------------------------------


FOOTNOTES

(1)       (1) For Fixed Income securities only.
(2) Indicate here if transaction is a Gift, Waiver, Automatic Investment Plan, or No Beneficial Interest (you do
not have any direct or indirect beneficial ownership in such transactions).
 (3) If you have made a direct issuer trade (i.e. traded directly with the company) enter N/A in this column


NOTE (Use additional forms if necessary to report all transactions.)







SCUDDER KEMPER INVESTMENTS, INC.             SP&P 16-1 - December 15, 2000
                                                                       Personal Transaction Preclearance Form 2
                                                                  (Replaces Att. #2 to SP&P #16-1 dated 1/1/00)


 TO: Preclearance Officer/Fax Number (212) 486-9281





 From:   __________________________________       __________________       ____________        ___________
                  Applicant's Name                      Employee Number            Office
Extension

  I.     Description of Proposed Transaction


 I wish to:  [   ] BUY  [   ] SELL     the following: [ ] Common Stock  [ ] Fixed Income   [ ] Option [ ] Other
(specify):_______


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

--------------------
 Issuer/Company Name                        Units           Expected Price      Ticker/CUSIP    Option/Fixed
Income
                                                           (in US dollars)      (underlying Ticker

Description

                                                                                for Options)



 This Transaction is for:  [   ] My Own Account                 [   ]  An account of which the investment is
attributed to

                                                                                        me (See Code Part 2:
Definitions) (e.g., spouse, trust for which I
                                                                                        am trustee)
-------------------------                                              ----------------------
Account Number                                                                  Account Number



 II.     Certifications

 A.       By signing this form, I certify that the information stated above is accurate and the following
statements are true:


         o        The security identified above is not part of an IPO (initial public offering), nor has the
                  issuer completed an IPO within the past three- (3) business days (this statement applies to
                  proposed purchases only).

         o        The security identified above has not been upgraded to a Neutral or a Buy rating, nor added to
                  the Scudder Investment Universe with a Neutral or Buy rating, within the past two weeks (this
                  statement applies to proposed purchases only).

         o        The security identified above has not been downgraded to a Neutral or an Unattractive rating
                  within the past two weeks (this statement applies to proposed sales only).


         o        The security identified above has not been added to the PIC Universe within the past two weeks
                  (this statement applies to proposed purchases only).

         o        I believe that this transaction is not in conflict with the interests of any client, unless
                  otherwise described in the attached Special Transaction  Preclearance Form.

 B.      If I am in the Investment Personnel or Portfolio Manager category (as defined in the Code of Ethics), I
         certify that the statements in  Part II A and the following statements are true:

         o        I have not, for my own account or for any account the investments of which are attributed to
                  me, entered into any transaction within the past sixty (60) days in the security identified
                  above or a related security (within the meaning of the Code) which, together with the proposed
                  transaction, would result in a profit prohibited under the Code.

               o  Unless otherwise explained in the attached Special Transaction Preclearance Form, I do not
believe this

                         (i) security is appropriate for inclusion in, or sale by, the portfolio of any client
account that I manage.


                   (ii) is a security in an industry (or, for country analysts, a country) which I follow in my
                  capacity as a research analyst.


C.       If I am a portfolio Manager (as defined in the Code of Ethics) for one or more registered investment
         companies, I certify that the statements in Part II A and B and the following statement are true:

         o        No registered investment company of which I am a Portfolio Manager has executed a transaction
                  in the security identified above within the past seven days.

         o        I have determined (by checking with the Lead Portfolio Manager, if other than myself) that no
                  registered investment company of which I am a Portfolio Manager intends to place a transaction
                  in the security identified above within the next seven days.

 III.     Special Transactions:   Check one of the following:

 [    ]  The proposed transaction does not involve:

     (a) the sale of a security for my own account or an account attributable to me which is currently held in
         the  portfolio of a client account that I manage,

     (b) the purchase for my account or an account attributable to me of a security which is eligible for
         purchase by a client account which I manage,

     (c) a private placement transaction,


     (d) a transaction in a hedge fund,

     (e) the purchase or sale for my account or an account attributable to me of a security in an industry (or
         for country analysts, a country) which I follow in my capacity as research analyst.


[    ]   The proposed transaction involves a "special transaction", and I have attached a completed Special
Transaction Preclearance                                           Form.  I understand that special  transactions
are prohibited unless specifically approved as provided in the Code of Ethics.




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


  Signature
 VI.     Approval

  The proposed transaction described above is [   ]   Approved     [   ]   Disapproved




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

 Date and Time of Approval                            Reviewer







                                                                                                             Form 3
                                                                                                      to SP&P #16-1

                                                                                        (December 15, 2000 version)
                                                                      (Replaces Att. #3 to SP&P #16-1 dated 1/1/00)




                                       SPECIAL TRANSACTION PRECLEARANCE FORM



TO:      Preclearance Officer/Fax (212) 486-9281 (This form should be submitted along with Form 2)
                                                                                ----- ----






FROM:  _______________________      _______________  ___________                _________
             Applicant's Name               Employee Number   Extension                 Office

Date Submitted:  _________________


I.       Description of Proposed Transaction
         -----------------------------------

                    |_| buy
1.       I wish to  |_| sell the following:

--------------------------          ---------------------              ------------------
Issuer (company name)                       Security description/type                   Ticker Symbol/CUSIP

-------------------                         --------------------------
Units                                       Expected price (in US Dollars)


2.       This transaction is for:


|_|   My Own Account                           |_|  An account of which the investment is attributed to
                                                                          me (See Code Part 2: Definitions)

(e.g., spouse, trust for which I
                                                                          am trustee)
-------------------------                                              ----------------------
Account Number                                                                  Account Number



3.       This transaction involves (check all that apply):


         |_|      a private placement
         |_|      a hedge fund

         |_|      the purchase for my own account (or an account attributed to me) of a security which is
                  eligible for purchase by a client account which I manage.
         |_|      the sale by me for my own account (or an account attributed to me) of securities which are
                  currently held in client accounts which I manage.

         |_|      the purchase by me for my own account (or an account attributed to me) of a security in an
                  industry (or, for country analysts, a country) which I follow in my capacity as a research
                  analyst.
         |_|      the sale by me for my own account (or an account attributed to me) of a security in an industry
                  (or, for country analysts, a country) which I follow in my capacity as a research analyst.


|_|      a "short sale against the box" and I am a Portfolio Manager.

         |_|      other (describe):
         ------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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



II.      Potential Conflicts
         -------------------
1.       Describe any beneficial interest that you (or any accounts attributed to you) currently have in the
         security described in Section I.1 above or any related securities.

Account                Issuer and Security         #Units        Date Acquired          Cost
-------                -------------------         ------        -------------          ----



2.       Describe generally any interest that any account(s) managed by you currently have in the security
         described above or any related securities.


3.       Describe any personal or professional relationship you may have with the issuer of the security
         described in I above, its officers, directors, controlling persons or affiliates.


4.       If the proposed transaction involves the sale for your own (or an attributed) account of securities held
         in one or more client accounts managed by you, explain why you believe it is appropriate for you to sell
         that security when the client is not.


5.       If the proposed transaction involves the sale for your own (or an attributed) account of securities held
         in one or more client accounts managed by you, give transaction details (account(s), units, date
         acquired, cost) of any client accounts which have acquired the security within the last 14 days.


6.       If the proposed transaction involves the purchase for your own (or an attributed) account of a security
         which is eligible for purchase by one or more client accounts that you manage, explain why you believe
         this security is not appropriate for inclusion in the client's portfolio.



7.       If the proposed transaction involves a purchase or sale by you of a security in an industry (or, for
         country analysts, a country) you follow in your capacity as a research analyst, explain why you have not
         recommended such security for purchase or sale, as applicable, by a client account.



8.       Describe any potential conflict of interest presented by the proposed transaction that has not been
         described above.


9.       To the best of your knowledge, is any client a co-investor or co-partner with you in this venture or
         does any client have a pre-existing interest or propose to invest in this venture?


10.      Describe how this investment opportunity came to your attention and any personal or professional
         relationship you may have to any underwriter or placement agent for the transaction.


III.     Certification
         -------------

         I hereby certify that the foregoing information is correct and complete to the best of my knowledge.



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

                                                                         signature



IV.      Approval by Supervisor (To be Obtained Prior to Submission for Preclearance):
--------------------------------                                                      --

         (applicable only for: (a) Portfolio Managers and research analysts desiring to purchase or sell a
         private placement holding or hedge fund holding, (b) research analysts purchasing/selling a security in
         an industry/country they cover, or (c) any Investment Personnel involved in a contemplated client
         purchase of a security of an issuer in the event that such Investment Personnel also holds a privately
         placed security of such issuer.)





         ---------------------                       -----------------------
         date and time of approval                   BY:

                                                              Supervisor's Name:
                                                              Ext.:

V.       To be completed by Pre-clearance Officer
         -----------------------------------------






Approval
--------


                      |_|  Purchase          described above is:               |_|  Approved

The proposed          |_|  Sale                                                |_|  Disapproved.


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


date and time of approval                                    Reviewer



|_|      The proposed transaction has been discussed with the following investment supervisory personnel:

         --------------------------------------------------------
                                            names
         Reviewer analysis:










SCUDDER KEMPER INVESTMENTS, INC.

                                                                                             Form 4

Return Completed Form to:  Glory Ekpe/NY                                   December 15, 2000
                                                                      (Replaces Att. #4 to SP&P #16-1 dated 1/1/00)


                          Annual Acknowledgement of Obligations Under the Code of Ethics

-----------------------   ------------   ---------  -----------------  ------
--------
Applicant's Name (print clearly)    Employee Number   Dept Code        Employee Type            Office
Extension
                                                                       (i.e. Employee, Access Person,
                                                                       Investment Personnel, Portfolio Mgr.)


All employees are asked to sign this form and return the original to Glory Ekpe in New York.  Your signature
indicates that you have read/reread and understand the memoranda referred to, and have complied and agreed to
continue to comply with the rules and concepts discussed in them.



 1.      CODE OF ETHICS


          I have read/reread Standard Policy & Procedure Memorandum #16-1 "Code of Ethics" including the material
         on "Personal Investments" (SP&P# 16-1, Part 2) and "Gifts and Entertainment," (SP&P# 16-1, Part 6) and
         attachments thereto and understand them and recognize that I am subject to them.  Further, I have
         disclosed or reported all personal transactions required to be disclosed or reported pursuant to the
         requirements of the Code and I certify that I complied with the provisions of the Code of Ethics
         applicable to me over the past year.

         (a)      CHECK THE APPROPRIATE STATEMENT (check only one):

                  [   ]  I am not an access person, investment personnel or portfolio manager; or

                  [   ]  I have arranged for provision to the Legal Department of a complete report of all my
                  holdings information in the form of duplicate account statements for all of my covered
                  accounts.  I have disclosed the existence of all brokerage accounts to the Legal Department,
                  and have filed Affiliated Person Letters (Form 5) for each account directing that duplicate
                  confirms and account statements be forwarded to the Legal Department. (Holdings of direct
                  obligations of the U.S. Government, shares of open-end investment companies (mutual funds),
                  bankers' acceptances, bank certificates of deposit, commercial paper and high quality
                  short-term debt instruments, including repurchase agreements, are not required to be reported
                  to the Legal Department); or

                  [   ]  I have not arranged for provision to the Legal Department of all of my holdings, so I
                  have submitted a supplemental report of all current holdings which the Legal Department has not
                  thus far received, concurrently herewith (Use Form 9 to list additional holdings not on file
                  with the Legal Department).








         (b)      The following is a complete list of all brokerage accounts that contain holdings wherein I have
                  a Beneficial Interest:

                         Account Number                                           Broker Name





 2.      INSIDER TRADING

         I have read/reread Standard Policy & Procedure Memorandum #16-1 "Code of Ethics," including the Material
         on Insider Trading (SP&P# 16-1, Part 3). I understand and agree to conform with the policies and
         procedures set forth in it.

3.       OTHER CODE PROVISIONS

         I have read/reread Standard Policy & Procedure Memorandum #16-1 "Code of Ethics" including the material
         on "Conflicts of Interest," (SP&P# 16-1) "Confidentiality," (SP&P# 16-1, Part 4) "Proprietary Rights of
         the Firm," (SP&P# 16-1, Part 5) "Fiduciary and Corporate Activities," (SP&P# 16-1, Part 7) "External
         Communications," (SP&P# 16-1, Part 8) "Reporting Apparent Violations," (SP&P# 16-1, Part 9) and
         "Condition of Employment or Service," (SP&P# 16-1, Part 10) understand them and agree to comply with
         their content and spirit.




4.       EMPLOYEE COMPLIANCE QUESTIONNAIRE

         I have read/reread Standard Policy & Procedure Memorandum #16-12 (Compliance Questionnaire) regarding
         disciplinary, legal, or administrative matters.  There have been no changes to answers that I have
         previously reported.



-------------------                                          -------------------------------------
Date                                                                                   Signature










                                                                                                             Form 5
                                                                                                  December 15, 2000


                                                                          (Replaces Att. #5 to SP&P #16-1 dated

                                                                                     1/1/00)

SCUDDER KEMPER INVESTMENTS, INC.


Return Completed Form To:  Chelsa Cruz (NY)/ x63976 / Facsimile Number: 212-486-9281



                                     FORM 407/3050: AFFILIATED PERSONS LETTER
                  (A separate form must be used to supply information for each brokerage account.)



Account Name:*
                                                       ----------------------------------------------------------

Employee's Office Location:
                                                       ----------------------------------------------------------


Employee's extension

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

Employee Designation / Dept Number:
(i.e. Employee, Access Person, Invest. Personnel,
Port. Mgr.)
                                                       ----------------------------------------------------------

Employee ID Number:
                                                       ----------------------------------------------------------

Broker (Company Name):
                                                       ----------------------------------------------------------

Contact at Broker:
                                                       ----------------------------------------------------------

Mailing Address (Broker):
                                                       ----------------------------------------------------------
                                                       City                         State               Zip


Fax Number of Broker:
                                                       ----------------------------------------
                                                       ----------------------------------------

Telephone Number of Broker:
                                                       ----------------------------------------
                                                       ----------------------------------------

Account Number:
                                                       ----------------------------------------
                                                       ----------------------------------------

Additional Names on Account:
(if any)
                                                       ----------------------------------------


*If this form is being used to complete information regarding the account of a spouse or relative of a Scudder
employee, please supply the account name above and information regarding the Scudder employee below:



    Employee Name:
                                                          ----------------------------------------
                                                          ----------------------------------------
    Office Location:
                                                          ----------------------------------------
                                                          ----------------------------------------
    Employee Number:
                                                          ----------------------------------------
                                                          ----------------------------------------
    Department Number:
                                                          ----------------------------------------






SCUDDER KEMPER INVESTMENTS, INC.                                       Form 6
                                                                                                 December 15,

                                                                                        2000

Return To:  Marlo Goodman - NY                                 (Replaces Att. #6 to SP&P #16-1 dated 1/1/00)



                                            GIFT AND ENTERTAINMENT FORM
                                            ---------------------------


1)       _____________________________                        2)       _________________________
               Name of Employee                                                 Provider / Receiver of gift
                                                                                                 (circle one)

3)       GIFT / BUSINESS MEAL / ENTERTAINMENT
                              (circle one)

4)       _______________________
         Date of gift / entertainment


5)       Description of gift / entertainment (include restaurant name, address, business reason, etc.):

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

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

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


6)       Other attendees (if any)                                      7)       $___________________
                                                                                Approximate value of
         ___________________________________                           gift / entertainment

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

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


8)       I attest that the gift and/or entertainment activity listed above complies with all company rules and
         regulations concerning giving and receiving gifts.

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


                     Employee                                                      Date


         Reminder: This form must be submitted within ten business days of the activity, gift, etc.

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

                                                     APPROVAL
                                                     --------

         ---------------------------------                    ----------------------
                  Supervisor                                                                Date
         (Must be a Senior Vice President or Managing Director)


Comments of Legal Department:






                                                                                                             Form 7
                                                                                                  December 15, 2000
                                                                      (Replaces Att. #7 to SP&P #16-1 dated 1/1/00)


RETURN TO:  Pat Fiore - NY




                                   REQUEST FOR APPROVAL OF FIDUCIARY, CORPORATE
                                             OR OTHER OUTSIDE ACTIVITY


FROM:  ___________________________          _______________   __________        ____________
           Applicant's Name (print clearly)                   Employee Number   Extension        Office

1.   I believe that the activity described below is not in conflict with the interests of the firm or its clients
     and I request that it be approved.



2.   Activity  (check one)*
                                [  ]  Trustee                                       [  ]  Business Consultant
                                [  ]  Executor                                      [  ]  Director
                                [  ]  Custodian                                     [  ] Other
                                [  ] Power of Attorney (over investments)           (describe)_______________
                                                                                    -------------------------


3.       Name of trust, estate, account, corporation or other entity




4.   Timing/Status  (check one)                      [  ]  I am currently serving.

                                                     [  ]  I anticipate serving.  (Must be reviewed and
                                                     reapproved when actual service begins.)



5.   Salient Facts  (relationship, nature of duties, client status and any facts indicating possible conflict or
     lack thereof):



6.   Assignment Status  (check one)
                  [  ]  I hereby assign any income from this activity to the firm.
                  [  ]  I believe any income should appropriately be retained by me.
                  [  ]  No income is expected from this activity.





Date                                                          Signature



The above activity is approved.  It is/is not (circle one) to be considered subject to the firm's standard
indemnification.  The firm reserves the right to withdraw this approval at any time.


                                                              By
---------------------------                                     ------------------------------------------
Date                                                             On Behalf of the Ethics Committee





*If applicable, I have filled out Form 5 for the account(s) I oversee.





                                                                                                             Form 8
                                                                                                  December 15, 2000
                                                                      (Replaces Att. #8 to SP&P #16-1 dated 1/1/00)



SCUDDER KEMPER INVESTMENTS


TO:      Glory Ekpe - NY


-----------------------   ------------   ---------  -----------------  ------
--------
Applicant's Name (print clearly)    Employee Number   Dept Code        Employee Type            Office
Extension
                                                                       (i.e. Employee, Access Person,
                                                                       Investment Personnel, Portfolio Mgr.)

                                     Annual Review of Personal Activities Form


As  required  annually  of all  members of Scudder  Kemper  Investments  and its  affiliated  corporations,  please
indicate all fiduciary,  corporate and outside relationships,  positions and responsibilities.  Below you are asked
to refer to SP&P  #16-1,  Part 7 where your  reporting  obligations  are  examined in greater  detail.  This report
includes all activities covered in SP&P #16-1, Part 7 whether or not previously authorized by the firm.


If necessary, attach extra sheets for categories requiring lengthy answers and use heading as outlined below.


1.     EXECUTORSHIPS*:  (including those in which you are currently serving and all known or future appointments
       as Executor.)


       List co-executors if other than clients or members of the organization:



                                                                                       Client          Authorized
                                                                                       of Firm          by Firm
Estate                                                       Date of Death              Yes/No           Yes/No





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


*Reporting unnecessary if position held with respect to the estate of one's spouse or parent.
---------------------------------------------------------------------------------------------




2.     TRUSTEESHIPS:           (including T-1, T-10 and Scudder Directed Trusts (Internal Trusts)* and other
                               client Trusteeships and all known or assumed future appointments as Trustee.)

       List co-trustees if other than clients or members of the organization:

                                                                   Client of Firm            Authorized by Firm
Trust Title                                                            Yes/No                       Yes/No





  * Please indicate under Section 2 the account numbers of any Internal Trusts with which you are associated.
----------------------------------------------------------------------------------------------------------------








3.   CUSTODIANSHIPS *


                                                                   Relationship             Authorized by Firm*
Name of Minor                                                       To Custodian                   Yes/No







*Reporting unnecessary in the case of members of one's family

-------------------------------------------------------------------------------------------------------------------
4.   DIRECTORSHIPS*                                                       Year                              Are Fees
                                                         Authorized

                                      Name of            by Firm           First             Estimated      Turned Over
                                     Organization        Yes/No             Elected       Annual Fees       To Firm?
                                     ------------






-------------------------------------------------------------------------------------------------------------------
*Other than Scudder Kemper Funds or affiliated corporations.
5.   BUSINESS CONSULTING POSITIONS



                                                                Authorized by    Year         EstimatedAnnualAre Fees
                                                                Firm             First                       Turned Over

Corporation or Institution                                      Yes/No           Retained     Fees





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


6.       PUBLIC AND CHARITABLE POSITIONS - Describe position and organization briefly.
Also indicate whether authorized by the Firm or not.



7.   POWERS OF ATTORNEY OVER INVESTMENTS- Describe position briefly.  Also indicate whether authorized by the
Firm or not.



8.   OUTSIDE ACTIVITIES - For additional information about rules applicable to outside activities refer to
Standard Policy and Procedure Memorandum #16-1 Part 7 on Fiduciary and Corporate Activities.





---------------------
        Date                                                           Signature
         (Attach extra sheets if needed)





PERSONAL SECURITIES HOLDINGS REPORT / FORM #9

December 15, 2000
Return To: Glory Ekpe - NY



-------------------------------------------------------------------------------------------------------------------
Employee Name____________________________________________     Dept. Name &
Number_______________________________________
                                    (print)
(print)


Employee Number ____________________________________

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






The undersigned does not by this report admit that he/she has any direct beneficial ownership in the securities
listed.
?  I certify that the securities listed above and/or the holdings statements attached reflect all my Reportable
                                                                                              ---
     Securities holdings as of the date I submit this Form.
?  I currently have no Reportable Securities holdings to report.

Not all Securities are required to be reported.  Reportable  Securities holdings do not include direct
obligations of the U.S. Government, shares of open-end investment companies (mutual funds), bankers' acceptances,
bank certificates of deposit, commercial paper and high quality short-term debt instruments, including repurchase
agreements.




                                                                                Signature
____________________________  Date _____________________

------------------ ----------------------------- ----------------- ------------------------------------------------------------ ------------------------ -----------------------
                          AccountCNumber          Namerinywhich       Principal Amt.             Number of                                                                 Name of
-----------------                                 Security/Acct.                                   Shares                                                               Broker/Dealer
     Symbol                                          is held                                                                                                               or Bank
   (or CUSIP)
------------------ ----------------------------- ----------------- ------------------------------------------------------------ ------------------------ -----------------------
------------------ ----------------------------- ----------------- ----------------- --------------------- -------------------- ------------------------ -----------------------


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