AMERICAN SKANDIA TRUST (Form: 485BPOS, Received: 04/30/2004 11:28:46)

File No. 33-24962
Investment Company No. 811-5186

As filed with the Securities and Exchange Commission on April 30, 2004
----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM N-1A

Registration Statement under The Securities Act of 1933

Post-Effective Amendment No. 49

Registration Statement under The Investment Company Act of 1940

Amendment No. 51

AMERICAN SKANDIA TRUST

(Exact Name of Registrant as Specified in Charter)

One Corporate Drive, Shelton, Connecticut 06484
-----------------------------------------------

(Address of Principal Executive Offices) (Zip Code)

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

EDWARD P. MACDONALD, ESQ., ASSISTANT SECRETARY
AMERICAN SKANDIA TRUST
ONE CORPORATE DRIVE, SHELTON, CONNECTICUT 06484
-----------------------------------------------

(Name and Address of Agent for Service)

Copies to:

Chris Palmer, Esq.
Shea & Gardner
1800 Massachusetts Avenue, NW
Washington, D.C. 20036

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

_____ immediately upon filing pursuant to paragraph (b).
X on May 1, 2004 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.
_____ 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, 2004

AMERICAN SKANDIA TRUST
One Corporate Drive, Shelton, Connecticut 06484
--------------------------------------------------------------------------------------------------------------------------

American Skandia Trust (the "Trust") is an investment company made up of the following 37 separate portfolios
("Portfolios"):

AST JPMorgan International Equity Portfolio
AST William Blair International Growth Portfolio
AST DeAM International Equity Portfolio
AST MFS Global Equity Portfolio
AST State Street Research Small-Cap Growth Portfolio
AST DeAM Small-Cap Growth Portfolio
AST Federated Aggressive Growth Portfolio
AST Goldman Sachs Small-Cap Value Portfolio
AST Gabelli Small-Cap Value Portfolio
AST DeAM Small-Cap Value Portfolio
AST Goldman Sachs 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 T. Rowe Price Natural Resources Portfolio
AST Alliance Growth Portfolio
AST MFS Growth Portfolio
AST Marsico Capital Growth Portfolio
AST Goldman Sachs Concentrated Growth Portfolio
AST DeAM Large-Cap Value Portfolio
AST Hotchkis & Wiley Large-Cap 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 DeAM Global Allocation Portfolio
AST American Century Strategic Balanced Portfolio
AST T. Rowe Price Asset Allocation Portfolio
AST T. Rowe Price Global Bond Portfolio
AST Goldman Sachs 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 or variable
life insurance policy for information regarding the contract or policy, including its fees and expenses.

The Trust received an order from the Securities and Exchange Commission permitting its Investment Managers, subject to
approval by its Board of Trustees, to change sub-advisors of each Portfolio without shareholder approval. For more
information, please see this Prospectus under "Management of the Trust."

TABLE OF CONTENTS
-----------------

Caption Page
------- ----

Risk/Return Summary................................................................................................................3
Past Performance..................................................................................................................19
FEES AND EXPENSES OF THE PORTFOLIOS...............................................................................................41
INVESTMENT OBJECTIVES AND POLICIES................................................................................................44
AST JPMORGAN INTERNATIONAL EQUITY PORTFOLIO....................................................................................45
AST WILLIAM BLAIR INTERNATIONAL GROWTH PORTFOLIO...............................................................................46
AST DeAM INTERNATIONAL EQUITY portfolio........................................................................................48
AST MFS GLOBAL EQUITY PORTFOLIO................................................................................................50
AST STATE STREET RESEARCH SMALL-CAP GROWTH PORTFOLIO...........................................................................51
AST DeAM SMALL-CAP GROWTH PORTFOLIO............................................................................................53
AST FEDERATED AGGRESSIVE GROWTH PORTFOLIO......................................................................................55
AST GOLDMAN SACHS SMALL-CAP VALUE PORTFOLIO....................................................................................56
AST Gabelli SMALL-Cap Value PORTFOLIO..........................................................................................58
AST DeAM Small-Cap Value Portfolio.............................................................................................60
AST GOLDMAN SACHS MID-CAP GROWTH PORTFOLIO.....................................................................................62
ASt Neuberger Berman Mid-Cap Growth portfolio..................................................................................64
AST NEUBERGER BERMAN MID-CAP VALUE PORTFOLIO...................................................................................65
AST ALGER ALL-CAP GROWTH portfolio.............................................................................................67
AST GABELLI ALL-CAP VALUE PORTFOLIO............................................................................................68
AST T. ROWE PRICE NATURAL RESOURCES PORTFOLIO..................................................................................69
AST ALLIANCE GROWTH PORTFOLIO..................................................................................................71
AST MFS GROWTH PORTFOLIO.......................................................................................................73
ASt Marsico Capital Growth portfolio...........................................................................................74
AST GOLDMAN SACHS CONCENTRATED GROWTH PORTFOLIO................................................................................76
AST DeAM LARGE-CAP VALUE PORTFOLIO.............................................................................................78
AST HOTCHKIS & WILEY LARGE-CAP VALUE PORTFOLIO.................................................................................80
AST ALLIANCE/BERNSTEIN GROWTH + VALUE PORTFOLIO................................................................................81
AST SANFORD BERNSTEIN CORE VALUE PORTFOLIO.....................................................................................83
AST COHEN & STEERS REALTY PORTFOLIO............................................................................................85
AST SANFORD BERNSTEIN MANAGED INDEX 500 PORTFOLIO..............................................................................87
AST AMERICAN CENTURY INCOME & GROWTH PORTFOLIO.................................................................................89
ASt alliance GROWTH AND INCOME portfolio.......................................................................................90
AST DeAm Global alLOCATION PORTFOLIO...........................................................................................91
ASt American century Strategic Balanced portfolio..............................................................................93
AST T. ROWE PRICE ASSET ALLOCATION PORTFOLIO...................................................................................95
AST T. ROWE PRICE GLOBAL BOND PORTFOLIO........................................................................................97
ASt Goldman Sachs High Yield Portfolio........................................................................................100
AST LORD ABBETT BOND-DEBENTURE PORTFOLIO......................................................................................101
AST PIMCO TOTAL RETURN BOND PORTFOLIO.........................................................................................103
AST PIMCO LIMITED MATURITY BOND PORTFOLIO.....................................................................................107
ASt Money Market portfolio....................................................................................................111
PORTFOLIO TURNOVER...............................................................................................................113
NET ASSET VALUE..................................................................................................................113
PURCHASE AND REDEMPTION OF SHARES................................................................................................113
MANAGEMENT OF THE TRUST..........................................................................................................114
TAX MATTERS......................................................................................................................121
FINANCIAL HIGHLIGHTS.............................................................................................................123
CERTAIN RISK FACTORS AND INVESTMENT METHODS......................................................................................135

Risk/Return Summary

American Skandia Trust (the "Trust") is comprised of thirty-seven 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:
--------- --------------- -------------------

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

William Blair Long-term capital growth The Portfolio invests primarily in equity securities of
International Growth foreign companies.

DeAM International Equity Capital growth The Portfolio invests primarily in equity securities of
foreign companies represented in the MSCI EAFE(R)Index.

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

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

The AST JPMorgan International Equity Portfolio (formerly, the AST Strong International Equity Portfolio) will invest,
under normal circumstances, at least 80% of the value of its assets in equity securities. The Portfolio seeks to meet
its investment objective by investing its total assets in a diversified portfolio of equity securities of companies
located or operating in developed non-U.S. countries and emerging markets of the world. The equity securities will
ordinarily be traded on a recognized foreign securities exchange or traded in a foreign over-the-counter market in the
country where the issuer is principally based, but may also be traded in other countries including the United States.
The Sub-advisor intends to focus on companies with an above-average potential for long-term growth and attractive
relative valuations. The Sub-advisor selects companies based on five key factors: growth, valuation, management, risk,
and sentiment. In addition, the Sub-advisor looks for companies with the following characteristics: (1) a
distinguishable franchise on a local, regional or global basis; (2) a history of effective management demonstrated by
expanding revenues and earnings growth; (3) prudent financial and accounting policies; and (4) an ability to capitalize
on a changing business environment.

The Portfolio will normally allocate assets among a variety of countries, regions and industry sectors, investing in at
least five countries outside of the United States. In selecting countries, the Sub-advisor considers such factors as
economic growth prospects, monetary and fiscal policies, political stability, currency trends and market liquidity. The
Portfolio may invest up to 40% of its total assets in any one country and up to 25% of its total assets in securities of
issuers located and operating primarily in emerging market countries.

The AST William Blair International Growth Portfolio will invest, under normal circumstances, at least 80% of the value
of its assets in securities of issuers that are economically tied to countries other than the United States. Equity
securities include common stocks, preferred stocks, warrants and securities convertible into or exchangeable for common
or preferred stocks. 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
primarily 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 companies 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 DeAM International Equity Portfolio will invest, under normal circumstances, at least 80% of the value of its
assets in equity securities. The Portfolio pursues its investment objective by primarily investing in the equity
securities of companies in developed countries outside the United States that are represented in the MSCI EAFE(R)Index.
The MSCI EAFE(R)Index tracks stocks in Australia, Austria, Belgium, Denmark, Finland, France, Germany, Hong Kong,
Ireland, Italy, Japan, the Netherlands, New Zealand, Norway, Portugal, Singapore, Spain, Sweden, Switzerland and the
United Kingdom. The Sub-advisor employs an investment strategy that seeks to maintain a portfolio of equity securities
which approximates the market risk of those stocks included in the MSCI EAFE(R)Index, but which outperforms the MSCI
EAFE(R)Index through active stock selection. The targeted tracking error of this Portfolio is 4% with a standard
deviation of +/- 4%. It is possible that the deviation may be higher. For purposes of this Portfolio, the strategy of
attempting to correlate a stock portfolio's market risk with that of a particular index, in this case the MSCI EAFE(R)
Index, while improving upon the return of the same index through active stock selection, is called a "managed alpha"
strategy.

In managing the Portfolio, the Sub-advisor emphasizes stock selection while attempting to maintain a similar level of
average market capitalization and regional and industry exposure as the MSCI EAFE(R)Index. The Sub-advisor considers a
number of factors in considering whether to invest in a stock, including earnings growth rate, analysts' estimates of
future earnings and industry-relative price multiples. Other factors are cash flow growth as well as earnings and price
momentum. The Sub-advisor generally takes a "bottom up" approach to building the Portfolio, searching for individual
companies that demonstrate the best potential for significant return.

The AST MFS Global Equity Portfolio invests, under normal circumstances, at least 80% of the value of its net assets in
equity securities. The Portfolio will invest in the securities of issuers located in the U.S. and foreign countries
(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:
---------------

o 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. Accordingly, loss of money is a
risk of investing in each of these funds.

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.

Capital Growth Portfolios:

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

State Street Research Capital growth The Portfolio invests primarily in common stocks of small
Small-Cap Growth capitalization companies.

DeAM Small-Cap Growth Maximum capital growth The Portfolio invests primarily in equity securities of small
capitalization companies included in the Russell 2000(R)Growth
Index.

Federated Aggressive Growth Capital growth The Portfolio invests primarily in the stocks of small
companies that are traded on national securities exchanges,
NASDAQ stock exchange and the over-the-counter market.

Goldman Sachs Small-Cap Long-term capital growth The Portfolio invests primarily in equity securities of small
Value 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.

DeAM Small-Cap Value Maximum capital growth The Portfolio invests primarily in equity securities of small
capitalization companies included in the Russell 2000(R)Value
Index.

Goldman Sachs Mid-Cap Growth Long-term capital growth The Portfolio invests primarily in equity securities of
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.

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.

T. Rowe Price Natural Long-term capital growth The Portfolio invests primarily in common stocks of companies
Resources 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.

Goldman Sachs Concentrated Capital growth The Portfolio invests primarily in equity securities.
Growth

DeAM Large-Cap Value Fund Maximum capital growth The Portfolio invests primarily in equity securities of large
capitalization companies included in the Russell 1000(R)Value
Index.

Hotchkis & Wiley Large-Cap Current income and The Portfolio invests at least 80% of its net assets plus
Value long-term growth of borrowings for investment purposes in common stocks of large
income, as well as cap U.S. companies.
capital appreciation

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

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

The AST State Street Research Small-Cap Growth Portfolio (formerly, the AST PBHG Small-Cap Growth Portfolio) will
invest, under normal circumstances, at least 80% of the value of its assets in small capitalization companies. For
purposes of the Portfolio, small-sized companies are those that have market capitalizations similar to the market
capitalizations of the companies in the Russell 2000(R)Growth Index at the time of the Portfolio's investment. The
Sub-advisor expects to focus primarily on those securities whose market capitalizations or annual revenues are less than
$1 billion at the time of purchase. The size of the companies in the Russell 2000(R)Growth Index and those on which the
Sub-advisor intends to focus the Portfolio's investments will change with market conditions. As of December 31, 2003,
the average market capitalization of the companies in the Russell 2000(R)Growth Index was $579 million and the median
market capitalization was $461 million. The size of the companies in the Russell 2000(R)Growth Index will change with
market conditions. The Sub-Advisor uses its own fundamental research, computer models and proprietary measures of
growth in determining which stocks to select for the Portfolio. The Sub-Advisor's investment strategy seeks to identify
stocks of companies which have strong business momentum, earnings growth, superior management teams as well as stocks of
those companies whose earnings growth potential may not be currently recognized by the market and whose stock may be
considered to be underpriced using various financial measurements employed by the Sub-advisor, such as price-to-earnings
ratios.

The AST DeAM Small-Cap Growth Portfolio will invest, under normal circumstances, at least 80% of the value of its assets
in small capitalization companies. The Portfolio pursues its investment objective by primarily investing in the equity
securities of small-sized companies included in the Russell 2000(R)Growth Index. Equity securities include common stocks
and securities convertible into or exchangeable for common stocks, including warrants and rights. The Sub-advisor
employs an investment strategy that seeks to maintain a portfolio of equity securities which approximates the market
risk of those stocks included in the Russell 2000(R)Growth Index, but which outperforms the Russell 2000(R)Growth Index
through active stock selection. The Russell 2000(R)Growth Index is a market capitalization index that measures the
performance of small-sized companies with above average growth prospects. As of December 31, 2003, the average market
capitalization of the companies in the Russell 2000(R)Growth Index was $579 million and the median market capitalization
was $461 million. The size of the companies in the Russell 2000(R)Growth Index will change with market conditions. The
targeted tracking error of this Portfolio is 4% with a standard deviation of +/- 4%. It is possible that the deviation
may be higher. For purposes of this Portfolio, the strategy of attempting to correlate a stock portfolio's market risk
with that of a particular index, in this case the Russell 2000(R)Growth Index, while improving upon the return of the
same index through active stock selection, is called a "managed alpha" strategy.

The Sub-advisor considers a number of factors in determining whether to invest in a growth stock, including earnings
growth rate, analysts' estimates of future earnings and industry-relative price multiples. Other factors are net income
growth versus cash flow growth as well as earnings and price momentum. 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. The Sub-advisor generally takes a "bottom up" approach to building
the Portfolio, searching for individual companies that demonstrate the best potential for significant return.

The AST Federated Aggressive Growth Portfolio pursues its investment objective by investing in the stocks of small
companies that are traded on national security exchanges, NASDAQ stock exchange and the over-the-counter market. Small
companies will be defined as companies with market capitalizations similar to companies in the Russell 2000(R)Index
(which had a market capitalization range of $16 million to $2.8 billion as of March 31, 2004) or the Standard & Poor's
Small Cap 600 Index (which had a market capitalization range of $63 million to $3 billion as of March 31, 2004. Such
definition will be applied at the time of investment and the Portfolio will not be required to sell a stock because the
company has grown outside the market capitalization range of small capitalization stocks. Up to 25% of the Portfolio's
net assets may be invested in foreign securities, which are typically denominated in foreign currencies.

The Sub-advisor's process for selecting investments is bottom-up and growth-oriented. There is an emphasis on
individual stock selection rather than trying to time the highs and lows of the market or concentrating in certain
industries or sectors. The Sub-advisor assesses individual companies from the perspective of a long-term investor. The
Sub-advisor seeks to purchase stocks of companies that it believes: are profitable and leaders in the industry; have
distinct products and services which address substantial markets; can rapidly grow annual earnings over the next three
to five years; or have superior proven management and solid balance sheets.

The AST Goldman Sachs 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.

The Portfolio will invest, under normal circumstances, at least 80% of the value of its assets in small capitalization
companies. The 80% investment requirement applies at the time the Portfolio invests its assets. The Portfolio
generally defines small capitalization stocks as stocks of companies with a capitalization of $4 billion or less. 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 will invest, under normal circumstances, at least 80% of the value of its
assets in small capitalization companies. The Portfolio generally defines small capitalization companies as companies
with a capitalization of $1.5 billion or less. 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 total capitalization/cash 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 $1.5 billion, and it may on occasion purchase
companies with a market cap of more than $1.5 billion.

The AST DeAM Small-Cap Value Portfolio will invest, under normal circumstances, at least 80% of the value of its assets
in small capitalization companies. The Portfolio pursues its objective by primarily investing in the equity securities
of small-sized companies included in the Russell 2000(R)Value Index. Equity securities include common stocks and
securities convertible into or exchangeable for common stocks, including warrants and rights. The Sub-advisor employs
an investment strategy that seeks to maintain a portfolio of equity securities which approximates the market risk of
those stocks included in the Russell 2000(R)Value Index, but which outperforms the Russell 2000(R)Value Index through
active stock selection. The Russell 2000(R)Value Index is a market capitalization index that measures the performance of
small-sized companies trading at discounts to their value. As December 31, 2003, the average market capitalization of
the companies in the Russell 2000(R)Value Index was $470 million and the median market capitalization was $576 million.
The targeted tracking error of this Portfolio is 4% with a standard deviation of +/- 4%. It is possible that the
deviation may be higher. For purposes of this Portfolio, the strategy of attempting to correlate a stock portfolio's
market risk with that of a particular index, in this case the Russell 2000(R)Value Index, while improving upon the return
of the same index through active stock selection, is called a "managed alpha" strategy.

The Sub-advisor considers a number of factors in determining whether to invest in a value stock, including earnings
growth rate, analysts' estimates of future earnings and industry-relative price multiples. Other factors are net income
growth versus cash flow growth as well as earnings and price momentum. 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. The Sub-advisor generally takes a "bottom up" approach to building
the Portfolio, searching for individual companies that demonstrate the best potential for significant return.

The AST Goldman Sachs Mid-Cap Growth Portfolio will invest, under normal circumstances, at least 80% of the value of its
assets in medium capitalization companies. The Fund pursues its objective by investing primarily in equity securities
selected for their growth potential. Equity securities include common stocks, preferred stocks, warrants and securities
convertible into or exchangeable for common or preferred stocks. 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(R)Index. As of December 31, 2003, the average market capitalization of the companies in the
Standard & Poor's MidCap 400(R)Index $3.3 billion and the median market capitalization was $2 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.

The AST Neuberger Berman Mid-Cap Growth Portfolio will invest, under normal circumstances, at least 80% of its net
assets in common stocks of mid-capitalization companies. For purposes of the Portfolio, a mid-capitalization company is
defined as a company whose market capitalization is within the range of market capitalizations of companies in the
Russell Midcap(R)Index. As of December 31, 2003, the average market capitalization of the companies in the Russell
Midcap(R)Index $4.28 billion and the median market capitalization was $3.3 billion. The Portfolio seeks to reduce risk by
diversifying among many companies, industries and sectors.

The Sub-advisor employs a disciplined investment strategy when selecting growth stocks. Using fundamental research and
quantitative analysis, the Sub-advisor looks for fast-growing companies with above average sales and competitive returns
on equity relative to their peers. In doing so, the Sub-advisor analyzes such factors as: financial condition (such as
debt to equity ratio); market share and competitive leadership of the company's products; earnings growth relative to
competitors; and market valuation in comparison to a stock's own historical norms and the stocks of other mid-cap
companies.

The Sub-advisor follows a disciplined selling strategy and may sell a stock when it fails to perform as expected or when
other opportunities appear more attractive.

The AST Neuberger Berman Mid-Cap Value Portfolio will invest, under normal circumstances, at least 80% of the value of
its assets in medium capitalization companies. Companies with equity market capitalizations that fall within the range
of the Russell Midcap(R)Index at the time of investment are considered mid-cap companies for purposes of the Portfolio.
As of December 31, 2003, the average market capitalization of the companies in the Russell MidCap(R)Index $4.28 billion
and the median market capitalization was $3.3 billion. 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. 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.

o 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.

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 but there is no guarantee that this
target return will be achieved. 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.

The AST T. Rowe Price Natural Resources Portfolio will invest, under normal circumstances, at least 80% of the value of
its assets in natural resource companies. 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,
maintain superior exploration programs and production facilities, and the potential to accumulate new resources.
Natural resource companies in which the Portfolio invests generally own, develop, refine, service or transport
resources, including 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.

Although at least 50% of Portfolio assets will be invested in U.S. securities, up to 50% of total assets also may be
invested in foreign securities. 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 a
minimum of approximately 70% of the Portfolio's net assets.

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. The research analysts seek to identify those
companies that have strong management, superior industry positions, excellent balance sheets and superior earnings
growth prospects. An emphasis is placed on identifying companies whose 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,
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, 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 circumstances, at least 80% of its net 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.

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 also 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 may be a suitable 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 , apparent use of conservative accounting standards, and transparent
financial disclosure), strong and ethical management, apparent commitment to shareholder interests and reasonable
valuations in the context of projected growth rates. This is called bottom-up stock selection.

The AST Goldman Sachs Concentrated Growth Portfolio will pursue its objective by investing primarily in equity
securities. Equities securities include common stocks, preferred stocks, warrants and securities convertible into or
exchangeable for common or preferred stocks. Investments will be in companies that the Sub-advisor believes have
potential to achieve capital appreciation over the long-term. The Portfolio seeks to achieve its investment objective
by investing, under normal circumstances, in approximately 30-45 companies that are considered by the Sub-adviser to be
positioned for long-term growth.

The AST DeAM Large-Cap Value Portfolio will invest, under normal circumstances, at least 80% of the value of its assets
in large capitalization companies. The Portfolio pursues its investment objective by primarily investing in the equity
securities of large sized companies included in the Russell 1000(R)Value Index. Equity securities include common stocks
and securities convertible into or exchangeable for common stocks, including warrants and rights. The Sub-advisor
employs an investment strategy that seeks to maintain a portfolio of equity securities which approximates the market
risk of those stocks included in the Russell 1000(R)Value Index, but which outperforms the Russell 1000(R)Value Index
through active stock selection. The Russell 1000(R)Value Index is a market capitalization index that measures the
performance of large, established companies trading at discounts to their fair value. As of December 31, 2002, the
average market capitalization of the companies in the Russell 1000(R)Value Index was approximately $7.9 billion and the
median market capitalization was approximately $2.6 billion. The size of the companies in the Russell 1000(R)Value Index
will change with market conditions. The targeted tracking error of this Portfolio is 4% with normal a deviation of +/-
1%. It is possible that the deviation may be higher. For purposes of this Portfolio, the strategy of attempting to
correlate a stock portfolio's market risk with that of a particular index, in this case the Russell 1000(R)Value Index,
while improving upon the return of the same index through active stock selection, is called a "managed alpha" strategy.

The AST Hotchkis & Wiley Large-Cap Value Portfolio seeks to achieve its objective by investing at least 80% of its net
assets plus borrowings for investment purposes in common stocks of large cap U.S. companies. The Sub-advisor considers
large cap companies to be those with market capitalizations like those found in the Russell 1000 Index. Market
capitalization range of the Index changes constantly, but as of June 30, 2003, the range was from $1.2 billion to $287
billion. Market capitalization is measured at the time of initial purchase. Some of these securities may be acquired
in IPOs. Normally, the Portfolio invests at least 80% of its net assets in stocks that have a high cash dividend or
payout yield relative to the market. Payout yield is defined as dividend yield plus net share repurchases.

The AST Alliance/Bernstein Growth + Value Portfolio will invest primarily in common stocks of large U.S. companies
included in the Russell 1000(R)Index (the "Russell 1000(R)"). The Russell 1000(R)is a market capitalization-weighted index
that measures the performance of the 1,000 largest U.S. companies. As of December 31, 2003, the average market
capitalization of the companies in the Russell 1000 Index was approximately $9.2 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(R)Value Index (the "Value Index") constituting the remainder of the Portfolio's net
assets. Daily purchases and reinvested distributions and 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. Accordingly, loss of money is a risk of investing in each of these Portfolios.

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 State Street Research Small-Cap
Growth Portfolio, the AST DeAM Small-Cap Growth Portfolio, the AST Federated Aggressive Growth Portfolio, the AST
Goldman Sachs Small-Cap Value Portfolio, the AST Gabelli Small-Cap Value Portfolio, and the AST DeAM 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 Goldman Sachs 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 Goldman
Sachs Concentrated Growth Portfolio, the AST DeAM Large-Cap Value Portfolio, the AST Hotchkis & Wiley Large-Cap
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 and the AST Gabelli
All-Cap Value 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 State Street Research Small-Cap Growth Portfolio, the AST DeAM Small-Cap Growth Portfolio, the AST
Federated Aggressive Growth Portfolio, the AST Goldman Sachs 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 Goldman Sachs Concentrated Growth Portfolio
take a growth approach to investing, while the AST Goldman Sachs Small-Cap Value Portfolio, the AST DeAM 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 Hotchkis & Wiley Large-Cap Value Portfolio the AST DeAM Large-Cap
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 T. Rowe Price Natural Resources 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 sector in which it invests. 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 T. Rowe Price Natural Resources Portfolio may invest a up to 50% of its total assets in non-U.S.
securities. Investments in non-U.S. securities 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.

o The AST Goldman Sachs Concentrated Growth Portfolio is a non-diversified fund in that it 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 the 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(R) The Portfolio invests primarily in common stocks included in
Index 500 Stock Index the S&P 500(R).

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.

DeAM Global Allocation A high level of total The Portfolio invests primarily in a diversified portfolio of
return mutual funds.

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 will invest, under normal circumstances, at least 80% of its net assets in
securities of real estate related issuers. 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 will invest, under normal circumstances, at least 80% of its net
assets in securities included in the Standard & Poor's 500 Composite Stock Price Index (the "S&P 500(R)"). The Portfolio
is actively managed and seeks to outperform the S&P 500(R)through the Sub-advisor's stock selection resulting in
different weightings of common stocks relative to the index. The S&P 500(R)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(R), 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(R). 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(R)that the stock represents. In addition, the Sub-advisor may determine based on the quantitative criteria that (1)
certain S&P 500(R)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(R)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(R).

While the Portfolio attempts to outperform the S&P 500(R), it is not expected that any outperformance will be
substantial. The Portfolio also may underperform the S&P 500(R)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 companies in the United States (measured by the value of the stock), from
most attractive to least attractive. This is determined by using a computer model that combines measures of at stock's
value as well as 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.

In the second step, the Sub-advisor uses a technique called portfolio optimization. In portfolio optimization, the
Sub-advisor uses a compute to build a portfolio of stocks from the ranking described above that it believes will provide
the optimal balance between risk and expected return. The goal is to create a portfolio that provides better returns
than its benchmark without taking on significant additional risk.

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 judgment 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 DeAM Global Allocation Portfolio seeks to achieve its investment objective by investing in several AST
Portfolios (the "Underlying Portfolios"), government securities and cash. The Trust may, in the future, seek exemptive
relief from the provisions of the Investment Company Act of 1940 at which time the Portfolio may invest in other
securities including derivatives. The Portfolio allocates its assets by investing in shares of a diversified group of
Underlying Portfolios. The Portfolio intends its strategy of investing in combinations of Underlying Portfolios to
result in investment diversification that an investor could otherwise achieve only by holding numerous investments. The
Portfolio is expected to be invested in at least six Underlying Portfolios at any time. The investment objectives of
such Underlying Portfolios will be diversified.

The precise mix of Underlying Portfolios, government securities and cash investments will depend on the Sub-advisor's
outlook for the markets. Shifts among Underlying Portfolios focused on different asset classes will normally be done
gradually and the Sub-advisor will not attempt to precisely "time" the market. The Portfolio's investments in
Underlying Portfolios that may invest significant portions of their assets in foreign equity and debt securities are
intended to provide additional diversification. The Sub-advisor will normally have at least three different countries
represented in the foreign equity category.

The Portfolio can change the allocations of its assets among Underlying Portfolios, government securities and cash at
any time, if the Sub-advisor believes that doing so would better enable the Portfolio to pursue its investment
objective. From time to time, the Portfolio adjusts its investments within set limits based on the Sub-advisor's
outlook for the economy, financial markets generally and relative market valuation of the asset classes represented by
each Underlying Portfolio. The intention is to re-balance the specific allocations periodically. Additionally the
Portfolio may deviate from set limits when, in the Sub-advisor's opinion, it is necessary to do so to pursue the
Portfolio's investment objective or for temporary defensive purposes. Shares of the Underlying Portfolios, 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.

The AST American Century Strategic Balanced Portfolio normally maintains approximately 60% of its assets in equity
securities and the remainder in bonds and other fixed income securities. For 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 companies in
the United States (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 as well as 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.

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 above that it believes will
provide the optimal balance between risk and expected return. The goal is to create an equity portfolio that provides
better returns than the S&P 500(R)Index without taking on significant additional risk.

The fixed-income portion of the Portfolio is invested primarily in a diversified portfolio of high-grade government,
corporate, asset-backed and similar securities payable in U.S. currency. At least 80% of the fixed-income assets will
be invested in securities that, at the time of purchase, are rated within the three highest categories by a nationally
recognized statistical rating organization. Up to 20% of the fixed-income portion may be invested in securities rated
in the fourth category, and up to 15% may be invested in securities rated in the fifth category. Under normal market
conditions, the weighted average maturity for the fixed income portion of the Portfolio will be in the 3- to 10-year
range.

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. When selecting
particular stocks to purchase, the Sub-advisor will examine relative values and prospects among growth and
value-oriented stocks, domestic and international stocks, and small-to large-cap stocks. Domestic stocks are drawn from
the overall U.S. market while international equities are selected primarily from large companies in developed countries.

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 are primarily investment grade (top four credit
ratings) and are chosen from across the entire government and corporate bond markets. A significant portion of the
Portfolio's fixed income investments may be in mortgage-related (including mortgage dollar rolls and 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. Maturities will reflect the sub-advisor's outlook
for interest rates.

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.

The Portfolio may also invest in other securities, including futures and options, in keeping with its objective.
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. Accordingly, loss of money is a risk of investing in each of these funds.

o The AST Cohen & Steers Realty Portfolio, the AST Sanford Bernstein Managed Index 500 Portfolio, the AST
American Century Income & Growth Portfolio, and the AST Alliance Growth and Income Portfolio invest primarily in
equity securities. 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. To the extent the Portfolio's fixed income component is
invested in mortgage-backed securities, there may be increased volatility due to interest-rate fluctuations.

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(R), 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.

o The AST DeAM Global Allocation Portfolio invests in mutual funds, which carry their own risks similar to those
of equity and fixed income securities described above.

Fixed Income Portfolios:

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

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

Goldman Sachs High Yield High current income and The Portfolio invests primarily in high yield fixed income
may consider potential for securities that, at the time of purchase, are non-investment
capital appreciation grade securities.

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.

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:
-------------------------------

The AST T. Rowe Price Global Bond Portfolio will invest, under normal circumstances, at least 80% of the value of its
assets in fixed income securities. The Portfolio will invest in all types of bonds including those issued or guaranteed
by the U.S. or foreign governments or their agencies and by foreign authorities, provinces and municipalities as well as
investment grade corporate bonds, mortgage and asset-backed securities and high-yield bonds of U.S. and foreign
issuers. 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.

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-related (including mortgage dollar
rolls and derivatives, such as collateralized mortgage obligations and stripped mortgage securities) and asset-backed
securities.

The AST Goldman Sachs High Yield Portfolio (formerly, the AST Federated High Yield Portfolio) will invest, under normal
circumstances, at least 80% of its net assets plus any borrowings for investment purposes (measured at time of purchase)
( "Net Assets ") in high-yield, fixed-income securities that, at the time of purchase, are non-investment grade
securities. Non-investment grade securities are securities rated BB, Ba or below by a Moody's Investors Services, Inc.
or Standard & Poor's Corporation, or, if unrated, determined by the Sub-Adviser to be of comparable quality. The Fund
may invest in all types of fixed income securities, including, senior and subordinated corporate debt obligations (such
as bonds, debentures, notes and commercial paper), convertible and non-convertible corporate debt obligations, loan
participations, custodial receipts, municipal Securities and preferred stock.

To pursue its objective, the AST Lord Abbett Bond-Debenture Portfolio will invest, under normal circumstances, at least
80% of the value of its assets in fixed income securities. To pursue its objective, the Portfolio normally invests
primarily in high yield and investment grade debt securities, securities convertible into common stock, and preferred
stocks. 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, under normal circumstances, at least 80% of the value of its
assets in fixed income securities, including:

(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;
(11) derivative instruments, including swap agreements; and
(12) 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, under normal circumstances, at least 80% of the value of its
assets in fixed income securities, including::

(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.

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 Trustees of the Trust, 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. Accordingly, loss of money is a risk of investing in each of these funds.

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, lack of liquidity, 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. The mortgage-related and asset-backed securities could subject the Portfolio to
increased volatility in the event of interest rate changes, which could cause prepayments to increase, and the
value of the securities to decrease.

o As a fund that invests primarily in lower-quality fixed income securities, the AST Goldman Sachs 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. Non-investment grade fixed-income securities (commonly known as
"junk bonds ") tend to offer higher yields than higher rated securities with similar maturities. Non-investment
grade fixed-income securities are, however, considered speculative and generally involve greater price volatility
and greater risk of loss of principal and interest than higher rated securities. The Fund may purchase the
securities of issuers that are in default. 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. 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 $1.00. 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, interest rates and other factors. In a low interest rate environment, the
yield for the Portfolio, after deduction of operating expenses, may be negative even though the yield before
deducting such expenses is positive. A negative yield may also cause the Portfolio's net asset value per share to
fall below $1.00. The Investment Managers may decide to reimburse certain of these expenses to the Portfolio in
order to maintain a positive yield, however they are under no obligation to do so and may cease doing so at any
time without prior notice.

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, 2003.

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; and the expenses shown would be higher if such charges were reflected.

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

Distribution Total Annual
and Service Other Portfolio Operating
Portfolio: Management Fees (12b-1) Fees(1) Expenses (2) Expenses
--------------------------------------------------------- ------------------- -------------------- ---------------- --------------------
AST JPMorgan International Equity 0.88 0.02 0.24 1.14
AST William Blair International Growth(3) 1.00 0.11 0.23 1.34
AST DeAM International Equity (3) 1.00 0.00 0.27 1.27
AST MFS Global Equity 1.00 0.00 0.40 1.40
AST State Street Research Small-Cap Growth 0.90 0.07 0.23 1.20
AST DeAM Small-Cap Growth(3) 0.95 0.00 0.22 1.17
AST Federated Aggressive Growth 0.95 0.00 0.27 1.22
AST Goldman Sachs Small-Cap Value 0.95 0.09 0.22 1.26
AST Gabelli Small-Cap Value 0.90 0.00 0.20 1.10
AST DeAM Small-Cap Value(3) 0.95 0.00 0.41 1.36
AST Goldman Sachs Mid-Cap Growth(3) 1.00 0.16 0.25 1.41
AST Neuberger Berman Mid-Cap Growth 0.90 0.06 0.21 1.17
AST Neuberger Berman Mid-Cap Value 0.90 0.08 0.17 1.15
AST Alger All-Cap Growth 0.95 0.25 0.20 1.40
AST Gabelli All-Cap Value 0.95 0.00 0.25 1.20
AST T. Rowe Price Natural Resources 0.90 0.02 0.25 1.17
AST Alliance Growth 0.90 0.04 0.22 1.16
AST MFS Growth 0.90 0.14 0.21 1.25
AST Marsico Capital Growth(3) 0.90 0.05 0.16 1.11
AST Goldman Sachs Concentrated Growth(3) 0.90 0.06 0.17 1.13
AST DeAM Large-Cap Value(3) 0.85 0.00 0.24 1.09
AST Hotchkis & Wiley Large-Cap Value(3) 0.75 0.04 0.19 0.98
AST Alliance/Bernstein Growth + Value 0.90 0.00 0.25 1.15
AST Sanford Bernstein Core Value 0.75 0.15 0.24 1.14
AST Cohen & Steers Realty 1.00 0.02 0.22 1.24
AST Sanford Bernstein Managed Index 500 0.60 0.06 0.18 0.84
AST American Century Income & Growth 0.75 0.00 0.24 0.99
AST Alliance Growth and Income(3) 0.75 0.08 0.16 0.99
AST DeAM Global Allocation(3) 0.97(4) 0.00(5) 0.29(5) 1.26(5)
AST American Century Strategic Balanced 0.85 0.00 0.26 1.11
AST T. Rowe Price Asset Allocation 0.85 0.00 0.27 1.12
AST T. Rowe Price Global Bond 0.80 0.00 0.26 1.06
AST Goldman Sachs High Yield 0.75 0.00 0.18 0.93
AST Lord Abbett Bond-Debenture 0.80 0.00 0.24 1.04
AST PIMCO Total Return Bond(3) 0.65 0.00 0.15 0.80
AST PIMCO Limited Maturity Bond 0.65 0.00 0.17 0.82
AST Money Market (3) 0.50 0.00 0.14 0.64

(1) 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 Managers to receive
brokerage commissions in connection with purchases and sales of securities held by the Portfolios, and to use these
commissions to promote the sale of shares of the Portfolio The chart above shows the amount of commissions paid during
2003 to the affiliate of the Investment Managers to promote distribution, shown as a percentage of Portfolio average
daily net assets. The Distribution Plan does not limit the amount of commissions that may be directed under the Plan,
so the amount directed in future years may be greater than or less than the percentage shown in the chart above.
Overall brokerage commission rates and amounts paid by the various Portfolios are not expected to increase as a result
of the Distribution Plan.
(2) As noted above, shares of the Portfolios generally are purchased through variable insurance products. The Trust has
entered into arrangements with the issuers of the variable insurance products offering the Portfolios under which the
Trust compensates the issuers for providing ongoing services to Portfolio shareholders in lieu of the Trust providing
such services directly to shareholders. Amounts paid under these arrangements are included under "Other Expenses". See
this Prospectus under "Management of the Trust - - Distribution Plans" for more information.
(3) The Portfolios' total actual annual operating expenses for the year ended December 31, 2003 were less than the
amount shown in the table due to fee waivers, reimbursement of expenses and expense offset arrangements. These waivers,
reimbursements, and offset arrangements are voluntary and may be terminated by American Skandia Investment Services,
Inc. and Prudential Investments LLC at any time. After accounting for the waivers, reimbursements and offset
arrangements, the Portfolio's actual annual operating expenses were as follows: AST William Blair International Growth:
1.24%; AST DeAM International Equity: 1.14%; AST DeAM Small-Cap Growth: 1.02%; AST DeAM Small-Cap Value: 1.15%; AST
Goldman Sachs Mid-Cap Growth: 1.31%; AST Marsico Capital Growth: 1.10%; AST Goldman Sachs Concentrated Growth: 1.06%;
AST DeAM Large-Cap Value Portfolio; 0.99%; AST Alliance Growth and Income: 0.97%; AST DeAM Global Allocation Portfolio:
0.14%; AST PIMCO Total Return Bond: 0.78%; AST Money Market: 0.59%. Effective May 1, 2004, the Investment Managers have
voluntarily agreed to waive a portion of their fee equal to .05% of the average daily net assets of the AST Hotchkis &
Wiley Large-Cap Value Portfolio. If such waiver had been in place at year-end, the Portfolio's actual annual operating
expenses would have been 0.93%.
(4) The DeAM Global Asset Allocation Portfolio invests primarily in shares of other AST Portfolios (the "Underlying
Portfolios"). The only management fee directly paid by the Portfolio is a 0.10% fee paid to American Skandia Investment
Services, Inc. and Prudential Investments LLC. The management fee shown in the chart for the Portfolio is (i) that
0.10% management fee paid by the Portfolio plus (ii) an estimate of the management fees paid by the Underlying
Portfolios, which are borne indirectly by investors in the Portfolio. The estimate was calculated based on the
percentage of the Portfolio invested in each Underlying Portfolio as of December 31, 2003 using the management fee rates
shown in the chart above.
(5) The DeAM Global Asset Allocation Portfolio invests primarily in shares of other AST Portfolios (the "Underlying
Portfolios"). The expense information shown in the chart for the Portfolio reflects (i) the expenses of the Portfolio
itself plus (ii) an estimate of the expenses paid by the Underlying Portfolios, which are borne indirectly by investors
in the Portfolio. The estimate was calculated based on the percentage of the Portfolio invested in each Underlying
Portfolio as of December 31, 2003 using the expense rates for the Underlying Portfolios shown in the above chart.

EXPENSE EXAMPLES:

These examples are intended to help you compare the cost of investing in the Portfolios with the cost of
investing in other mutual funds.

The Examples assume that you invest $10,000 in a Portfolio for the time periods indicated. The Examples also
assume that your investment has a 5% return each year, that the Portfolios' total operating expenses remain the same,
and that no expense waivers and reimbursements are in effect. 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 JPMorgan International Equity $116 $362 $628 $1,386
AST William Blair International Growth 136 425 734 1,613
AST DeAM International Equity 129 403 697 1,534
AST MFS Global Equity 143 443 766 1,680
AST State Street Research Small-Cap Growth 122 381 660 1,455
AST DeAM Small-Cap Growth 119 372 644 1,420
AST Federated Aggressive Growth 124 387 670 1,477
AST Goldman Sachs Small-Cap Value 128 400 692 1,523
AST Gabelli Small-Cap Value 112 350 606 1,340
AST DeAM Small-Cap Value 138 431 745 1,635
AST Goldman Sachs Mid-Cap Growth 144 446 771 1,691
AST Neuberger Berman Mid-Cap Growth 119 372 644 1,420
AST Neuberger Berman Mid-Cap Value 117 365 633 1,398
AST Alger All-Cap Growth 143 433 766 1,680
AST Gabelli All-Cap Value 122 381 660 1,455
AST T. Rowe Price Natural Resources 119 372 644 1,420
AST Alliance Growth 118 368 638 1,409
AST MFS Growth 127 397 686 1,511
AST Marsico Capital Growth 113 353 612 1,352
AST Goldman Sachs Concentrated Growth 115 359 622 1,375
AST DeAM Large-Cap Value 111 347 601 1,329
AST Hotchkis & Wiley Large-Cap Value 100 312 542 1,201
AST Alliance/Bernstein Growth + Value 117 365 633 1,398
AST Sanford Bernstein Core Value 116 362 628 1,386
AST Cohen & Steers Realty 126 393 681 1,500
AST Sanford Bernstein Managed Index 500 86 268 466 1,037
AST American Century Income & Growth 101 315 547 1,213
AST Alliance Growth and Income 101 315 547 1,213
AST DeAM Global Allocation 128 400 692 1,523
AST American Century Strategic Balanced 113 353 612 1,352
AST T. Rowe Price Asset Allocation 114 356 617 1,363
AST T. Rowe Price Global Bond 108 337 585 1,294
AST Goldman Sachs High Yield 95 296 515 1,143
AST Lord Abbett Bond-Debenture 106 331 574 1,271
AST PIMCO Total Return Bond 82 255 444 990
AST PIMCO Limited Maturity Bond 84 262 455 1,014
AST Money Market 65 205 357 798

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 JPMORGAN INTERNATIONAL EQUITY PORTFOLIO:

Investment Objective: The investment objective of the Portfolio is to seek long-term capital growth by investing in a
diversified portfolio of international equity securities.

Principal Investment Objectives and Risks:

The Portfolio will invest, under normal circumstances, at least 80% of the value of its assets in equity
securities. The 80% investment requirement applies at the time the Portfolio invests its assets. Equity securities
include common stocks, securities convertible into common stocks and securities having common stock characteristics or
other derivative instruments whose value is based on common stocks, such as rights, warrants or options to purchase
common stock, preferred stock, convertible preferred stock, convertible bonds, convertible debentures, convertible
notes, depository receipts, futures contracts and swaps investments.

The Portfolio seeks to meet its investment objective by normally investing primarily in a diversified portfolio
of equity securities of companies located or operating in developed non-U.S. countries and emerging markets of the
world. The equity securities will ordinarily be traded on a recognized foreign securities exchange or traded in a
foreign over-the-counter market in the country where the issuer is principally based, but may also be traded in other
countries including the United States.

The Portfolio will normally diversify its investments among a variety of countries, regions and industry
sectors, investing in several countries outside of the United States. However, the Portfolio may invest a substantial
part of its assets in just one country. The Portfolio intends to invest in companies (or governments) in the following
countries or regions: the Far East including Japan, Europe including the UK and other countries or areas that the
Sub-advisor may select from time to time. The Portfolio may invest up to 15% of its total assets in securities of
issuers located and operating primarily in emerging market countries.

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
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 WILLIAM BLAIR INTERNATIONAL 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 will have a non-fundamental policy to invest, under normal circumstances, at least 80% of the
value of its assets in securities of issuers that are economically tied to countries other than the United States. The
80% investment requirement applies at the time the Portfolio invests its assets.

The Portfolio pursues its objective primarily through investments in equity securities of issuers located outside
the United States. Equity securities include common stocks, preferred stocks, warrants and securities convertible into
or exchangeable for common or preferred stocks. 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.

Under normal circumstances, the Portfolio primarily invests 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 companies 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 fund investing primarily in equity securities, the fundamental risk associated with the Portfolio
is the risk that the value of the equity securities 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 debt securities, including bonds rated below investment grade
("junk" bonds), mortgage and asset-backed securities and 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 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 DeAM INTERNATIONAL EQUITY PORTFOLIO:

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

Principal Investment Policies and Risks:

The Portfolio will have a non-fundamental policy to invest, under normal circumstances, at least 80% of the
value of its assets in equity securities. The 80% investment requirement applies at the time the Portfolio invests its
assets. Equity securities include common stocks, securities convertible into common stocks and securities having common
stock characteristics or other derivative instruments whose value is based on common stocks, such as rights, warrants or
options to purchase common stock, preferred stock, convertible preferred stock, convertible bonds, convertible
debentures, convertible notes, depository receipts, futures contracts and swaps.

The Portfolio pursues its investment objective, under normal market conditions, by investing primarily in
issuers located in developed countries outside the United States that are represented in the MSCI EAFE(R)Index. The MSCI
EAFE(R)Index tracks stocks in Australia, Austria, Belgium, Denmark, Finland, France, Germany, Hong Kong, Ireland, Italy,
Japan, the Netherlands, New Zealand, Norway, Portugal, Singapore, Spain, Sweden, Switzerland and the United Kingdom.
The Sub-advisor employs an investment strategy that seeks to maintain a portfolio of equity securities which
approximates the market risk of those stocks included in the MSCI EAFE(R)Index, but which outperforms the MSCI EAFE(R)
Index through active stock selection. The targeted tracking error of this Portfolio is 4% with a standard deviation of
+/- 4%. It is possible that the deviation may be higher. For purposes of this Portfolio, the strategy of attempting to
correlate a stock portfolio's market risk with that of a particular index, in this case the MSCI EAFE(R)Index, while
improving upon the return of the same index through active stock selection, is called a "managed alpha" strategy.

In managing the Portfolio, the Sub-advisor emphasizes stock selection. The Sub-advisor considers a number of
factors in determining whether to invest in a stock, including earnings growth rate, analysts' estimates of future
earnings and industry-relative price multiples. Other factors are cashflow growth as well as earnings and price
momentum.

The Sub-advisor generally takes a "bottom up" approach to building the Portfolio, searching for individual
companies that demonstrate the best potential for significant return. The allocation to regions, capitalizations and
industries is targeted to be similar to that of the MSCI EAFE(R)Index while individual stock positions will vary with the
objective to produce superior performance relative to the Index through stock selection. 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.

Like all equity securities, the market values of the securities held by the Portfolio can fluctuate
significantly, reflecting the business performance of the issuing company, investor perception or general economic or
financial market movements. 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.

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.

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

Other Investments:

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 including forward currency transactions and swaps 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. Up to 100% of the assets of the Portfolio may be invested temporarily in cash or cash
equivalents in response to extraordinary adverse political, economic or stock market events. Temporary investments may
include U.S. or foreign 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 MFS GLOBAL EQUITY PORTFOLIO:

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

Principal Investment Policies and Risks:

The Portfolio will have a non-fundamental policy to invest, under normal circumstances, at least 80% of the
value of its net assets in equity securities. The 80% investment requirement applies at the time the Portfolio invests
its assets. Equity securities include common stocks, securities convertible into common stocks and securities having
common stock characteristics or other derivative instruments whose value is based on common stocks, such as rights,
warrants or options to purchase common stock, preferred stock, convertible preferred stock, convertible bonds,
convertible debentures, convertible notes, depositary receipts, futures contracts and swaps. The Portfolio will invest
in the securities of issuers located in the U.S. and foreign countries (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 STATE STREET RESEARCH SMALL-CAP GROWTH PORTFOLIO:

Investment Objective: The investment objective of the Portfolio (formerly, the AST PBHG Small-Cap Growth Portfolio) is
capital growth.

Principal Investment Policies and Risks:

The Portfolio will have a non-fundamental policy to invest, under normal circumstances, at least 80% of the
value of its assets in small capitalization companies. The 80% investment requirement applies at the time the Portfolio
invests its assets.

The Portfolio normally pursues its objective by investing primarily in the common stocks of small-sized
companies. For purposes of the Portfolio, small-sized companies are generally those that have market capitalizations
similar to the market capitalizations of the companies in the Russell 2000(R)Growth Index at the time of the Portfolio's
investment. The Sub-advisor expects to focus primarily on those securities whose market capitalizations or annual
revenues are less than $1 billion at the time of purchase. The size of the companies in the Russell 2000(R)Growth Index
and those on which the Sub-advisor intends to focus the Portfolio's investments will change with market conditions.

The Sub-Advisor believes that discipline and consistency are important to long-term investment success. This
belief is reflected in its investment process. For this Portfolio, the Sub-Advisor uses a fundamental and quantitative
investment process that is extremely focused on business momentum, as demonstrated by such things as earnings or revenue
and sales growth. Using its own fundamental research and bottom-up approach to investing, the Sub-Advisor also
identifies those companies which are currently out of favor in the market place but have the potential to achieve
significant appreciation as the market place recognizes their fundamental value and their growth potential. The
Sub-Advisor begins its investment process by creating a universe for companies that possess the growth characteristics
it seeks. The universe is continually updated. The Sub-Advisor then ranks each company in its universe using
proprietary software and research models that incorporate attributes for successful growth like positive earnings
surprises, upward earnings estimate revisions and accelerating sales and earnings growth. The Sub-Advisor will also
review its universe to identify companies which possess growth attributes but whose growth potential and fundamental
value have not been recognized by the market and whose stock may be considered underpriced using certain financial
measurements such as its earning power vs. current stock price, its dividend income potential, its price-to-earnings
ratio vs. similar companies, its competitive advantages like brand or market niche, its management team and its current
and future business prospects. Finally, using its own fundamental research and a bottom-up approach to investing, the
Sub-Advisor evaluates each company's business momentum to determine whether the company can sustain its current growth
trend, or if the company is currently out of market favor, whether it has the potential to achieve significant
appreciation as the marketplace recognizes its growth potential and fundamental value.

The Sub-Advisor's decision to sell a security depends on many factors. Generally speaking, however, the
Sub-Advisor considers selling a security when anticipated future appreciation is no longer probable, alternative
investments offer superior appreciation prospects, the risk of a decline in its market price is too great or a
deterioration in business momentum or fundamentals occurs or is expected by the Sub-advisor to occur.

Because the Portfolio invests primarily in common stocks, the primary risk of investing in the Portfolio is
that the value of the stocks it holds might decrease and you could lose money. The prices of the securities in the
Portfolios will fluctuate. These price movements may occur because of changes in the financial markets as a whole, a
company's individual situation or industry changes. These risks are greater for companies with smaller market
capitalizations because they tend to have more limited product lines, markets and financial resources and may be
dependent on a smaller management group than larger, more established companies.

Other Investments:

The Portfolio may invest to a lesser degree in types of securities other than common stocks, including
preferred stocks, warrants, and convertible securities.

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 up to 15% of its total assets in foreign 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. American Depository Receipts and foreign issuers traded in the United States are not considered to
be Foreign Securities for purposes of this investment limitation.

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 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 other equity securities. 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 or others. While the Portfolio is in a defensive position, the opportunity to achieve
its investment objective of capital growth will be limited.

AST DeAM 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:

The Portfolio pursues its investment objective, under normal market conditions, by investing primarily in the
equity securities of small sized companies included in the Russell 2000(R)Growth Index. Equity securities include common
stocks and securities convertible into or exchangeable for common stocks, including warrants and rights. The
Sub-advisor employs an investment strategy that seeks to maintain a portfolio of equity securities which approximates
the market risk of those stocks included in the Russell 2000(R)Growth Index, but which outperforms the Russell 2000(R)
Growth Index through active stock selection. The Russell 2000(R)Growth Index is a market capitalization index that
measures the performance of small-sized companies with above average growth prospects. As of December 31, 2003, the
average market capitalization of the companies in the Russell 2000(R)Growth Index was $410 million and the median market
capitalization was $320 million. The size of the companies in the Russell 2000(R)Growth Index will change with market
conditions. The targeted tracking error of this Portfolio is 4% with a standard deviation of +/- 4%. It is possible
that the deviation may be higher. For purposes of this Portfolio, the strategy of attempting to correlate a stock
portfolio's market risk with that of a particular index, in this case the Russell 2000(R)Growth Index, while improving
upon the return of the same index through active stock selection, is called a "managed alpha" strategy.

The Sub-advisor generally takes a bottom-up approach to building the Portfolio, searching for individual
companies that demonstrate the best potential for significant returns. The allocation to industries and capitalization
is targeted to be similar to that of the Russell 2000(R)Growth Index. The Sub-advisor considers a number of factors in
considering whether to invest in a growth stock, including earnings growth rate, analysts' estimates of future earnings
and industry-relative price multiples. Other factors are net income growth versus cash flow growth as well as earnings
and price momentum. 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.

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. While the Portfolio attempts to outperform the Russell 2000(R)Growth Index, the Portfolio also
may under-perform the Russell 2000(R)Growth Index over short or extended periods.

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.

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 the stocks of small companies that are traded on
national security exchanges, NASDAQ stock exchange and on the over-the-counter market. Small companies will be defined
as companies with market capitalizations similar to companies in the Russell 2000 Index (which had a market
capitalization range of $16 million to $2.8 billion as of March 31, 2004) or the Standard & Poor's Small Cap 600 Index
(which had a market capitalization range of $63 million to $3 billion as of March 31, 2004). Such definition will be
applied at the time of investment and the Portfolio will not be required to sell a stock because the company has grown
outside the market capitalization range of small capitalization stocks. Up to 25% of the Portfolio's net assets may be
invested in foreign securities, which are typically denominated in foreign currencies.

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:

Short Sales. The Portfolio may make short sales of securities listed on one or more national exchanges or on
the NASDAQ stock exchange. A short sale means selling a security the Portfolio does not own to take advantage of an
anticipated decline in the stock's price. Once the Portfolio sells the security short, it has an obligation to replace
the borrowed security. If it can buy the security back at a lower price, a profit results. In no event will the
Portfolio engage in short sales transactions if it would cause the market value of all of the Portfolio's securities
sold short to exceed 25% of its net assets. The value of the securities of any one issuer that may be shorted by the
Portfolio is limited to the lesser of 2% of the value of the Portfolio's net assets or 2% of the securities of any class
of the issuer. The Portfolio may also "sell short against the box," i.e., the Portfolio owns securities identical to
those sold short. Short sales against the box are not subject to the 25% limitation. A capital gain is recognized
immediately upon entering into a short sale against the box with respect to an appreciated security. Short sales are
speculative in nature, and may reduce returns or increase volatility.

The Portfolio may attempt to manage market risk and cash 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, Exchange
Traded Funds and foreign securities, including 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 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 Portfolio has a non-fundamental policy to invest, under normal circumstances, at least 80% of the value of its
assets in small capitalization companies. The 80% investment requirement applies at the time the Portfolio invests its
assets. The Portfolio generally defines small capitalization companies as companies with a capitalization of $4 billion
or less. 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. 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 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 has a non-fundamental policy to invest, under normal circumstances, at least 80% of the value of
its assets in small capitalization companies. The 80% investment requirement applies at the time the Portfolio invests
its assets. The Portfolio generally defines small capitalization companies as companies with a capitalization of $1.5
billion or less.

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 total capitalization/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 $1.5 billion, and it may on occasion purchase companies with a market cap of more
than $1.5 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 DeAM Small-Cap Value Portfolio:

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

Principal Investment Policies and Risks:

The Portfolio pursues its investment objective, under normal market conditions, by investing primarily in the
equity securities of small-sized companies included in the Russell 2000(R)Value Index. Equity securities include common
stocks and securities convertible into or exchangeable for common stocks, including warrants and rights. The
Sub-advisor employs an investment strategy that seeks to maintain a portfolio of equity securities which approximates
the market risk of those stocks included in the Russell 2000(R)Value Index, but which outperforms the Russell 2000(R)Value
Index through active stock selection. The Russell 2000(R)Value Index is a market capitalization index that measures the
performance of small-sized companies trading at discounts to their value. As of December 31, 2003, the average market
capitalization of the companies in the Russell 2000(R)Value Index was $470 million and the median market capitalization
was $576 million. The size of the companies in the Russell 2000(R)Value Index will change with market conditions. The
targeted tracking error of this Portfolio is 4% with a standard deviation of +/- 4%. It is possible that the deviation
may be higher. For purposes of this Portfolio, the strategy of attempting to correlate a stock portfolio's market risk
with that of a particular index, in this case the Russell 2000(R)Value Index, while improving upon the return of the same
index through active stock selection, is called a "managed alpha" strategy.

The Sub-advisor generally takes a bottom-up approach to building the Portfolio, searching for individual
companies that demonstrate the best potential for significant returns. The allocation to industries and capitalization
is targeted to be similar to that of the Russell 2000(R)Value Index. The Sub-advisor considers a number of factors in
determining whether to invest in a value stock, including earnings growth rate, analysts' estimates of future earnings
and industry-relative price multiples. Other factors are net income growth versus cash flow growth as well as earnings
and price momentum. 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.

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 small-cap companies, investment in the
Portfolio may involve substantially greater than average share price fluctuation and investment risk. While value
investing historically has involved less risk than investing in growth companies, investing in value stocks carries the
risk 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. While the Portfolio attempts to outperform the Russell 2000(R)Value
Index, the Portfolio also may under-perform the Russell 2000(R)Value Index over short or extended periods.

Other Investments:

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

AST GOLDMAN SACHS 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 will have a non-fundamental policy to invest, under normal circumstances, at least 80% of the
value of its assets in medium capitalization companies. The 80% investment requirement applies at the time the
Portfolio invests its assets.

The Portfolio pursues its objective by investing primarily in equity securities selected for their growth
potential. Equity securities include common stocks, preferred stocks, warrants and securities convertible into or
exchangeable for common or preferred stocks. 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(R)Index. As of December 31, 2003, the average market capitalization of the companies in the Standard & Poor's
MidCap 400(R)Index was $3.3 billion and the median market capitalization was $2 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 equity securities, the main risk of
investing in the Portfolio is that the value of the equity securities 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.

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, the Portfolio
may also invest to a lesser degree in other types of securities, such as debt securities. Debt securities may include
bonds rated below investment grade ("junk" bonds), mortgage and-asset backed securities and zero coupon, pay-in-kind and
step coupon 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:

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 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 may 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:

The Portfolio will have a non-fundamental policy to invest, under normal circumstances, at least 80% of the
value of its assets in common stocks mid-capitalization companies. The 80% investment requirement applies at the time
the Portfolio invests its assets.

Generally, companies with equity market capitalizations that fall within the range of the Russell Mid-Cap(R)
Index at the time of investment are considered mid-cap companies for purposes of the Portfolio. As of December 31,
2003, the average market capitalization of the companies in the Russell Mid-Cap(R)Index was $4.3 billion and the median
market capitalization was $3.3 billion. The Portfolio seeks to reduce risk by diversifying among many companies,
industries and sectors.

The Sub-advisor employs a disciplined investment strategy when selecting growth stocks. Using fundamental
research and quantitative analysis, the Sub-advisor looks for fast-growing companies with above average sales and
competitive returns on equity relative to their peers. In doing so, the Sub-advisor analyzes such factors as: financial
condition (such as debt to equity ratio); market share and competitive leadership of the company's products; earnings
growth relative to competitors; and market valuation in comparison to a stock's own historical norms and the stocks of
other mid-cap companies.

The Sub-advisor follows a disciplined selling strategy, and may sell a stock 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. 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 also invest 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.

Real Estate Investment Trusts (REITs). The Portfolio may invest in REITs. REITs are pooled investment
vehicles which invest primarily in real estate or real estate loans. Additional information about these investments and
the special risk factors that apply to them is included in this Prospectus and the Trust's SAI under "Certain Risk
Factors and Investment Methods."

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:

The Portfolio will have a non-fundamental policy to invest, under normal circumstances, at least 80% of the value
of its assets in medium capitalization companies. The 80% investment requirement applies at the time the Portfolio
invests its assets.

Generally, companies with equity market capitalizations that fall within the range of the Russell Midcap(R)Index
at the time of investment are considered mid-cap companies for purposes of the Portfolio. As of December 31, 2003, the
average market capitalization of the companies in the Russell MidCap(R)Index was $4.2 billion and the median market
capitalization was $3.3 billion. 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 also invest 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 primarily
invests 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 Portfolio may 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 but there is no guarantee
that such return will be achieved. 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 T. ROWE PRICE NATURAL RESOURCES PORTFOLIO:

Investment Objective: The investment objective of the Portfolio is to seek long-term capital growth primarily through
the investment in 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 will have a non-fundamental policy to invest, under normal circumstances, at least 80% of the
value of its assets in the securities of natural resource companies. The 80% investment requirement applies at the time
the Portfolio invests its assets.

The Portfolio invests primarily 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. The relative percentages invested in natural resource and non-resource companies can vary
depending on economic and monetary conditions and the sub-advisor's outlook for inflation. 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, develop, refine, service or transport resources, including 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, since the Portfolio attempts to invest in companies that may benefit from accelerating inflation,
low inflation could lessen returns. 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 or common stock for capital
appreciation where the issuer has omitted, or is in danger of omitting, payment of the dividend on the stock, or is in
default on its debt securities. 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 a minimum of approximately
70% of the Portfolio's net assets.

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. The research analysts seek to identify those companies that have strong
management, superior industry positions, excellent balance sheets and superior earnings growth prospects. An emphasis
is placed on identifying companies whose 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, 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, 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(R)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 net 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 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 also 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 may be a suitable 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 apparent use of conservative accounting standards, and
transparent financial disclosure), strong and ethical management, apparent commitment to shareholder interests 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, discount notes 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 GOLDMAN SACHS CONCENTRATED 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 equity securities. Equity securities include
common stocks, preferred securities, warrants and securities convertible into or exchangeable for common or preferred
stocks. Investments will be in companies that the Sub-advisor believes have potential to achieve capital appreciation
over the long-term. The Portfolio seeks to achieve its investment objective by investing, under normal circumstances,
in approximately 30-45 companies that are considered by the Sub-advisor to be positioned for long-term growth.

Because the Portfolio invests a substantial portion (or all) of its assets in equity securities, the Portfolio
is subject to the risks associated with investments in equity securities, and the Portfolio's share price therefore may
fluctuate substantially. This is true despite the Portfolio's focus on the securities 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.

Non-diversified Status. The Portfolio is "non-diversified" under the Investment Company Act of 1940 and may
invest a large percentage of its assets in few issuers than "diversified" mutual funds. Therefore, the Portfolio may be
more susceptible to adverse developments affecting any single issuer held in its portfolio, and may be more susceptible
to greater losses because of these developments.

Other Investments:

Although the Sub-advisor expects to invest primarily in equity securities, the Portfolio may also invest to a
lesser degree in 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:

-- 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:

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 DeAM LARGE-CAP VALUE PORTFOLIO:

Investment Objective: The investment objective of the Portfolio is to seek maximum growth of capital by investing
primarily in the value stocks of larger companies.

Principal Investment Policies and Risks:

The Portfolio will have a non-fundamental policy to invest, under normal circumstances, at least 80% of the
value of its assets in securities issued by large capitalization companies. The 80% investment requirement applies at
the time the Portfolio invests its assets.

The Portfolio pursues its investment objective, under normal market conditions, by investing primarily in the
equity securities of large-sized companies included in the Russell 1000(R)Value Index. Equity securities include common
stocks and securities convertible into or exchangeable for common stocks, including warrants and rights. The
Sub-advisor employs an investment strategy that seeks to maintain a portfolio of equity securities which approximates
the market risk of those stocks included in the Russell 1000(R)Value Index, but which outperforms the Russell 1000(R)Value
Index through active stock selection. The Russell 1000(R)Value Index is a market capitalization index that measures the
performance of large, established companies trading at discounts to their fair value. As of December 31, 2003, the
average market capitalization of the companies in the Russell 1000(R)Value Index was approximately $7.9 billion and the
median market capitalization was approximately $2.6 billion. The size of the companies in the Russell 1000(R)Value Index
will change with market conditions. The targeted tracking error of this Portfolio is 4% with a standard deviation of
+/- 4%. It is possible that the deviation may be higher. For purposes of this Portfolio, the strategy of attempting to
correlate a stock portfolio's market risk with that of a particular index, in this case the Russell 1000(R)Value Index,
while improving upon the return of the same index through active stock selection, is called a "managed alpha" strategy.

The Sub-advisor generally takes a bottom-up approach to building the Portfolio, searching for individual
companies that demonstrate the best potential for significant returns. The allocation to industries and capitalization
is targeted to be similar to that of the Russell 1000(R)Value Index. The Sub-advisor considers a number of factors in
determining whether to invest in a value stock, including earnings growth rate, analysts' estimates of future earnings
and industry-relative price multiples. Other factors are net income growth versus cash flow growth as well as earnings
and price momentum. 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.

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. The Portfolio's focus on the stocks of large, more established companies may mean that its
level of risk is lower than a portfolio investing primarily in smaller companies. While value investing historically
has involved less risk than investing in growth companies, investing in value stocks carries the risk 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. While the Portfolio attempts to outperform the Russell 1000(R)Value Index, the Portfolio also may
under-perform the Russell 1000(R)Value Index over short or extended periods.

Other Investments:

Futures, Options, and Other Derivative Instruments. The Portfolio may purchase and write put and call 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.

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

AST HOTCHKIS & WILEY LARGE-CAP VALUE PORTFOLIO:

Investment Objective: The investment objective of the Portfolio (formerly, the AST INVESCO Capital Income Portfolio) is
to seek current income and long-term growth of income, as well as capital appreciation.

Principal Investment Policies and Risks:

The Portfolio seeks to achieve its objective by investing at least 80% of its net assets plus borrowings for
investment purposes in common stocks of large cap U.S. companies. The Sub-advisor considers large cap companies to be
those with market capitalizations like those found in the Russell 1000 Index. Market capitalization range of the Index
changes constantly, but as of June 30, 2003, the range was from $1.2 billion to $287 billion. Market capitalization is
measured at the time of initial purchase. Some of these securities may be acquired in IPOs. Normally, the Portfolio
invests at least 80% of its net assets in stocks that have a high cash dividend or payout yield relative to the market.
Payout yield is defined as dividend yield plus net share repurchases.

In addition to these principal investments, the Portfolio can invest up to 20% of its total assets in foreign
securities. It also may invest in stocks that don't pay dividends, but have growth potential unrecognized by the market
or changes in business or management that indicate growth potential.

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 held in cash. While the Portfolio is in a defensive position, the opportunity to
achieve its investment objective 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(R)
Index (the "Russell 1000(R)"). The Russell 1000(R)is a market capitalization-weighted index that measures the performance
of the 1,000 largest U.S. companies. As of December 31, 2002, the average market capitalization of the companies in the
Russell 1000(R)was approximately $9.2 billion. The size of the companies in the Russell 1000(R)will change with market
conditions.

Normally, about 65-105 companies will be represented in the Portfolio, with 25-35 companies primarily from the
Russell 1000(R)Growth Index (the "Growth Index") constituting approximately 50% of the Portfolio's net assets, and 40-70
companies primarily from the Russell 1000(R)Value Index (the "Value Index") constituting the remainder of the Portfolio's
net assets. Daily purchases and reinvested distributions and 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(R)companies with higher price-to-book ratios and
higher forecasted growth values. The Value Index measures the performance of the Russell 1000(R)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.

Other Investments:

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 will have a non-fundamental policy to invest, under normal circumstances, at least 80% of the value
of its assets in securities of real estate related issuers. The Portfolio pursues its investment objective of
maximizing total return by seeking, with approximately equal emphasis, capital growth and current income.

Generally, the equity securities of real estate related issuers 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 related issuers include companies that derive at least 50% of revenues from the ownership,
construction, financing, management or sale of real estate or that have at least 50% of 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. 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.

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 Investment Company Act of 1940 in the proportion of its assets that
may be invested in the securities of a single issuer. However, the Portfolio intends to meet certain diversification
standards under the Internal Revenue Code that must be met to relieve the Portfolio of liability for Federal income tax
if its earnings are distributed to shareholders. As a non-diversified 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 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 active stock selection resulting in different weightings of common stocks
relative to the index.

Principal Investment Policies and Risks:

The Portfolio will invest, under normal circumstances, at least 80% of the value of its assets in securities
included in the S&P 500(R). The 80% investment requirement applies at the time the Portfolio invests its assets.

The S&P 500(R)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(R)is representative of the performance of publicly traded common
stocks in the U.S. in general.

In seeking to outperform the S&P 500(R), 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(R). 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(R)that the stock represents. In addition, the Sub-advisor may determine based on the
quantitative criteria that (1) certain S&P 500(R)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(R)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(R). The Portfolio is an actively
managed fund.

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

About the S&P 500(R). The S&P 500(R)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(R)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(R)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(R)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(R)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(R), 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(R). 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(R)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(R)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(R)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(R)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(R). 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(R).
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 companies in the United States (measured by the value of the stock), from most attractive to least
attractive. This is determined by using a computer model that combines measures of at stock's value as well as 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.

In the second step, the Sub-advisor uses a technique called portfolio optimization. In portfolio optimization,
the Sub-advisor uses a compute to build a portfolio of stocks from the ranking described above that it believes will
provide the optimal balance between risk and expected return. The goal is to create a portfolio that provides better
returns than its benchmark without taking on significant additional risk.

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.

The value of the Portfolio's shares depends on the value of the stocks and other securities it owns. The value
of the individual securities the Portfolio owns will up and down depending on the performance of the companies that
issued them, general market and economic conditions, and investor confidence.

The Portfolio's performance will be closely tied to the performance of its benchmark. If the Portfolio's
benchmark goes down, it is likely that the Portfolio's performance will go down.

Although current income is an objective for the Portfolio, if the stocks that make up its benchmark do not have
a high dividend yield, the Portfolio's dividend will not be high.

The Portfolio's performance also may be affected by investments in initial public offerings (IPOs). The impact
of IPOs on the Portfolio's performance depends on the strength of the IPO market and the size of the Portfolio. IPOs
may have impact on the Portfolio's performance as its assets grow.

Market performance tends to be cyclical, and, in the various cycles, certain investment styles may fall in and
out of favor. If the market is not favoring the quantitative style used by the Portfolio and/or the stocks contained in
the Portfolios' respective benchmark, the Portfolios' gains may not be as big as, or their losses may be bigger than,
other equity funds using different investment styles.

Other Investments:

When the Sub-advisor believes that it is prudent, the Portfolio may invest a portion of their assets in
convertible debt securities, equity equivalent securities, foreign securities, short-term securities, non-leveraged
futures contracts and other similar securities. Futures contracts, a type of derivative security, can help the
Portfolios' cash assets remain liquid while performing more like stocks. The Sub-advisor has a policy governing futures
contracts and similar derivative securities to help manage the risk of these types of investments. For example, the
Sub-advisor cannot invest in a derivative security if it would be possible for the Portfolio to lose more money than it
invested.

AST Alliance GROWTH AND INCOME Portfolio:

Investment Objective: The investment objective of the 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 judgment 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).

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 DeAm Global 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 mutual funds.

Principal Investment Policies and Risks:

The Portfolio seeks to achieve its investment objective by investing in several AST Portfolios (the "Underlying
Portfolios") selected by the Investment Manager, government securities and cash. The Sub-advisor does not exercise any
judgment or discretion in the selection of any Underlying Portfolio and shall have no responsibility to oversee, monitor
or otherwise direct the management of the Underlying Portfolios. The Trust may, in the future, seek exemptive relief
from the provisions of the Investment Company Act of 1940 at which time the Portfolio may invest in other securities
including derivatives. The Portfolio allocates its assets by investing in shares of a diversified group of Underlying
Portfolios. The Portfolio intends its strategy of investing in combinations of Underlying Portfolios to result in
investment diversification that an investor could otherwise achieve only by holding numerous investments. The Portfolio
is expected to be invested in at least six Underlying Portfolios at any time. The investment objectives of such
Underlying Portfolios will be diversified.

The precise allocation among the Underlying Portfolios, government securities and cash investments will depend
on the Sub-advisor's outlook for the markets. Shifts among Underlying Portfolios focused on different asset classes
will normally be done gradually and the Sub-advisor will not attempt to precisely "time" the market. The Portfolio's
investments in Underlying Portfolios that may invest significant portions of their assets in foreign equity and debt
securities are intended to provide additional diversification. The Sub-advisor will normally have at least three
different countries represented in the foreign equity category.

The Portfolio can change the allocations of its assets among Underlying Portfolios, government securities and
cash at any time, if the Investment Manager believes that doing so would better enable the Portfolio to pursue its
investment objective. From time to time, the Portfolio adjusts its investment allocation within set limits based on the
Sub-advisor's outlook for the economy, financial markets generally and relative market valuation of the asset classes
represented by each Underlying Portfolio. The intention is to re-balance the specific allocations periodically.
Additionally the Portfolio may deviate from set limits when, in the Sub-advisor's opinion, it is necessary to do so to
pursue the Portfolio's investment objective or for temporary defensive purposes. Shares of the Underlying Portfolios,
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.

The Portfolio is subject to a number of risks inherent in certain types of securities held by the Underlying
Portfolios. Some of these risks include, but are not limited to the following risks: equity securities may decline
because the stock market as a whole declines, or because of reasons specific to a 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 allocated to investment in securities of small-cap companies; and, any fixed income allocation of
the Portfolio may be subject to changes in market interest rates and changes in the credit quality of specific issuers.
Investment allocation in fixed income securities with intermediate to long maturities, could subject the Portfolio to
the risk of substantial declines in the Portfolio's share price when there are significant changes in market interest
rates. The Portfolio's level of risk will increase if a significant portion of the Portfolio is allocated to investment
in lower-rated high yield bonds or in foreign securities. The Portfolio's allocation of 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.

As a fund that invests in mutual funds (i.e., a fund of funds), the Portfolio would be considered "diversified"
because it invests in the securities of the Underlying Portfolios, each of which is a diversified investment company,
and excluding securities held by the Underlying Portfolios, the Portfolio may "look through" to the Underlying
Portfolios to determine its diversification status.

It is expected that the Portfolio normally will be invested in six Underlying Portfolios. It is expected that,
at most times, each of these six portfolios will invest primarily in particular asset classes designated by the
Investment Manager, and that the Portfolio will be invested in at least one AST Portfolio focused on each of these asset
classes. These asset classes are "large cap value", "small cap value", "large cap growth", "small cap growth",
international equity and domestic bond ("cap" is short for capitalization, and refers to the level of capitalization of
the companies in which a portfolio invests). It also is expected that, the Sub-advisor also will be the Sub-advisor for
each of the following Underlying Portfolios in which assets may be allocated provided, however, the Investment Manager
may direct the Sub-advisor from time to time to cease investments in any of the Underlying Portfolios and to commence
investment in one or more other Underlying Portfolios chosen by the Investment Manager, including an Underlying
Portfolio for which the Sub-advisor does not serve as Sub-advisor: the DeAM Large-Cap Value Portfolio; the DeAM Small
Cap-Growth Portfolio; the DeAM Small-Cap Value Portfolio and the DeAM International Equity Portfolio. The Sub-advisor
is also expected to invest in the AST PIMCO Total Return Bond Portfolio and the AST Alliance Growth Portfolio.

Government Securities. Government securities investments may include, but are not limited to, U.S. Treasury
and agency issues. Any cash reserves component will consist of high quality domestic and foreign money market
instruments. For additional information about the risks involved with fixed income securities, see this Prospectus under
"Certain Risks Factors and Investment Methods."

Mutual Fund Shares. Mutual fund shares have risks, and the value of those shares fluctuate. Since the assets
of the Portfolio may be invested in shares of the Underlying Portfolios, the investment performance of the Portfolio may
be related to the investment performance of the Underlying Portfolios in which the Portfolio may invest. The Portfolio
has no control over the Underlying Portfolios' investment strategies. The policy of the Portfolio in part is to
allocate assets among the Underlying Portfolios within certain limits. Therefore, the Portfolio may have less
flexibility to invest than a mutual fund without such constraints. Finally, the Portfolio, to the extent that it
invests in mutual fund shares, may be exposed to the same risks as the Underlying Portfolios in direct proportion to the
allocation of its assets among the Underlying Portfolios. These risks include the risks associated with a multi-manager
approach to investing (should assets be allocated to Underlying Portfolios that do not have as Sub-advisor the
Sub-advisor of this Portfolio).

The Portfolio's exposure, through the Underlying Portfolios, to international investments subjects the
Portfolio to risks posed by political or economic conditions and regulatory requirements of a particular country which
may be less stable or mature than in the U.S.

The officers and Trustees of the Portfolio presently serve as officers and Trustees of the Underlying
Portfolios. ASISI serves as the investment manager for all the Underlying Portfolios in which this Portfolio may
invest, and DeAM is the Sub-advisor for certain of the Underlying Portfolios. Therefore conflicts may arise as those
persons fulfill their fiduciary responsibilities to the Portfolio and to the Underlying Portfolios.

For additional information about the risks involved with mutual funds, see this Prospectus under "Certain Risks
Factors and Investment Methods."

Temporary Investments. The Portfolio may maintain cash reserves without limitation for temporary defensive or
transition purposes. While the Portfolio is in a defensive or transition 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 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 Portfolio intends to maintain approximately 60% of its assets in equity securities and the remainder in
bonds and other fixed income securities. Both the Portfolio's equity and fixed income investments will go up and down
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 continued ability of the issuers of these securities to make payments of
interest and principal as they become due. As a Portfolio 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.

Generally, when interest rates rise, the value of the Portfolio's fixed-income securities will decline. The
opposite is true when interest rates decline. The interest rate risk is higher for the fixed-income portion of the
Portfolio than for funds that have a shorter weighted average maturity, such as money market and short-term bond funds.

The lowest rated bonds in which the portfolio may invest, BBB- and BB-rated bonds, contain some speculative
characteristics. Having these bonds in the portfolio means the Portfolio's value may go down more if interest rates or
other economic conditions change than if the Portfolio contained only higher-rated bonds.

Because the equity portion of the Portfolio uses quantitative management techniques to try to achieve a total
return that exceeds the total return of the S&P 500 Index, its performance will correlate to the index's performance.
If the index goes down, it is likely that the Portfolio's performance will go down.

Equity Investments. For 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 companies in the United States (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 above 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(R)Index without taking on significant additional risk.

Fixed Income Investments. The fixed-income portion of the Portfolio is invested primarily in a diversified
portfolio of high-grade government, corporate, asset-backed and similar securities payable in U.S. currency. At least
80% of the fixed-income assets will be invested in securities that, at the time of purchase, are rated within the three
highest categories by a nationally recognized statistical rating organization. Up to 20% of the fixed-income portion
may be invested in securities rated in the fourth category, and up to 15% may be invested in securities rated in the
fifth category. Under normal market conditions, the weighted average maturity of the fixed-income portion of the
Portfolio will be in the three- to 10-year range.

Other Investments:

When the Sub-advisor believes it is prudent, the Portfolio may invest a portion of its assets in convertible
debt securities, equity-equivalent securities, foreign securities, short-term securities and other similar securities.
The Portfolio also may invest in derivative instruments such as options, futures contracts, options on futures
contracts, and swap agreements (including, but not limited to, credit default swap agreements), or in mortgage- or
asset-backed securities, provided that such investments are in keeping with the Portfolio 's investment objective.
Futures contracts, a type of derivative security, can help the Portfolio 's cash assets remain liquid while performing
more like stocks. The Sub-advisor has a policy governing futures contracts and similar derivative securities to help
manage the risk of these types of investments. For example, the Sub-advisor cannot invest in a derivative security if
it would be possible for the Portfolio to lose more money than it invested. The Sub-advisor does not attempt to time
the market. Instead, under normal market conditions, they intend to keep the equity portion of the portfolio
essentially fully invested in stocks regardless of the movement of stock prices generally.

The use of derivative instruments involves risks different from, or possibly greater than, the risks associated
with investing directly in securities and other traditional instruments. Derivatives are subject to a number of risks
including, liquidity, interest rate, market, and credit risk. They also involve the risk of mispricing or improper
valuation, the risk that changes in the value of the derivative may not correlate perfectly with the underlying asset,
rate or index, and the risk of default or bankruptcy of the other party to the swap agreement. Gains or losses
involving some futures, options, and other derivatives may be substantial - in part because a relatively small price
movement in these securities may result in an immediate and substantial gain or loss for the Portfolio.

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 equity and fixed-income 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. When deciding upon asset allocations, the Sub-advisor may favor fixed income securities if the economy is
expected to slow sufficiently to hurt corporate profit growth. The opposite may be true when strong economic growth is
expected. 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. Because a significant portion of the Portfolio's fixed income
investments may be in mortgage-related and asset-backed securities, this could add increased volatility and 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. When selecting particular stocks to purchase, the Sub-advisor will examine relative values
and prospects among growth and value-oriented stocks, domestic and international stocks, and small-to large-cap stocks.
Domestic stocks are drawn from the overall U.S. market while international equities are selected primarily from large
companies in developed countries. 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 also 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 are primarily investment grade (top four credit ratings) and are
chosen from across the entire government and corporate bond markets. A significant portion of the Portfolio's fixed
income investments may be in mortgage-related (including mortgage dollar rolls and 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. Maturities will reflect the sub-advisor's outlook for
interest rates. The cash reserves component will consist of high quality domestic and foreign money market instruments,
including money market funds managed by the Sub-advisor.

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 including repurchase agreements. 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. dollar-denominated bonds.

Principal Investment Policies and Risks:

The Portfolio will have a non-fundamental policy to invest, under normal circumstances, at least 80% of the
value of its assets in fixed income securities. The 80% investment requirement applies at the time the Portfolio
invests its assets. To achieve its objectives, the Portfolio intends to invest primarily in all types of high quality
bonds including those issued or guaranteed by the U.S. or foreign governments or their agencies and by foreign
authorities, provinces and municipalities as well as investment grade corporate bonds and mortgage-related and
asset-backed securities of U.S. and foreign issuers.

The Portfolio may also invest in convertible securities and corporate commercial paper; inflation-indexed bonds
issued by both governments and corporations; structured notes, including hybrid or "indexed" securities, event-linked
bonds and loan participations; delayed portfolio loans and revolving credit securities; bank certificates of deposit,
fixed time deposits and bankers' acceptances; repurchase agreements and reverse repurchase agreements; debt securities
issued by federal, state or local governments and their agencies and government-sponsored enterprises; obligations of
foreign governments or their subdivisions, agencies and government-sponsored enterprises; and obligations of
international agencies or supranational entities.

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. These bonds must, at the time of purchase, have received an
investment-grade rating from at least one rating agency (or if unrated, must have a Sub-advisor equivalent rating) but
could be rated below investment-grade by other agencies. Such bonds are called "split-rated").

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 Sub-advisor may use foreign forward currency contracts ("forwards") to hedge the risk to the Portfolio
when foreign currency exchange rate movements are expected to be unfavorable to U.S. investors. The Sub-adviser may use
forwards in an effort to benefit from a currency believed to be appreciating in value versus other currencies. The
Sub-advisor may also invest in currencies or forwards in cases where the Portfolio does not hold bonds denominated in
that currency, for example, in situations where the Sub-advisor wants currency exposure to a particular market but
believes that the bonds are unattractive. Under certain circumstances, the Sub-advisor may commit a substantial portion
of the Portfolio to currencies and forwards If the Sub-advisor's forecast of currency movements proves wrong, this
investment activity may cause a loss. Also, for emerging markets, it is often not possible to hedge the currency risk
associated with emerging market bonds because their currency markets are not sufficiently developed.

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-related (including
mortgage-dollar rolls and 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:

Swap Agreements. The Portfolio may enter into interest rate, index, total return, credit default 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 or for the purpose of hedging a
portfolio position. 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.

There are risks in the use of swaps. 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. Interest rate and currency swaps could result in losses if interest rate or currency changes
are not correctly anticipated. Total return swaps could result in losses if the reference index, security or
investments do not perform as anticipated. Credit default swaps could result in losses if the sub-advisor does not
correctly evaluate the creditworthiness of the company on which the credit default swap is based. 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 Portfolio will not enter into a swap agreement with any single counterparty if the net amount
owed or to be received under existing contracts with that party would exceed 5% of total assets, or if the net amount
owed or to be received by the Portfolio under all outstanding swap agreements will exceed 10% of total assets.

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 Goldman Sachs High Yield Portfolio:

Investment Objective: The investment objective of the Portfolio is to seek a high level of current income and may also
consider the potential for capital appreciation.

Principal Investment Strategies and Risks:

The Portfolio will invest, under normal circumstances, at least 80% of its net assets plus any borrowings for
investment purposes (measured at time of purchase) ( "Net Assets ") in high-yield, fixed-income securities that, at the
time of purchase, are non-investment grade securities. Non-investment grade securities are securities rated BB, Ba or
below by Moody's Investors Services, Inc. or Standard & Poor's Corporation, or, if unrated, determined by the
Sub-Adviser to be of comparable quality.

The Portfolio may invest in all types of fixed income securities, including, senior and subordinated corporate
debt obligations (such as bonds, debentures, notes and commercial paper), convertible and non-convertible corporate debt
obligations, loan participations, custodial receipts, municipal Securities and preferred stock. The Portfolio may
purchase the securities of issuers that are in default.

The Portfolio may invest up to 25% of its total assets in obligations of domestic and foreign issuers which are
denominated in currencies other than the U.S. dollar and in securities of issuers located in emerging countries
denominated in any currency. However, to the extent that the Sub-Adviser has entered into transactions that are
intended to hedge the Fund's position in a non-U.S. dollar denominated obligation against currency risk, such obligation
will not be counted when calculating compliance with the 25% limitation on obligations in non-U.S. currency.

Under normal market conditions, the Portfolio may invest up to 20% of its Net Assets in investment grade
fixed-income securities, including U.S. Government Securities. The Portfolio may also invest in common stocks,
warrants, rights and other equity securities, but will generally hold such equity investments only when debt or
preferred stock of the issuer of such equity securities is held by the Portfolio or when the equity securities are
received by the Portfolio in connection with a corporate restructuring of an issuer.

To the extent the Portfolio invests in sovereign debt obligations the Portfolio will be subject to the risk
that the issuer of the sovereign debt or the governmental authorities that control the repayment of the debt may be
unable or unwilling to repay the principal or interest when due. There are also risks associated with the general
political and social environment of a country. These factors may include among other things government instability, poor
socioeconomic conditions, corruption, lack of law and order, lack of democratic accountability, poor quality of the
bureaucracy, internal and external conflict, and religious and ethnic tensions. High political risk can impede the
economic welfare of a country. The risks associated with the general economic environment of a country can encompass,
among other things, low quality and growth rate of Gross Domestic Product ( "GDP "), high inflation or deflation, high
government deficits as a percentage of GDP, weak financial sector, overvalued exchange rate, and high current account
deficits as a percentage of GDP. The risk factors associated with the inability of a country to pay its external debt
obligations in the immediate future may include but are not limited to high foreign debt as a percentage of GDP, high
foreign debt service as a percentage of exports, low foreign exchange reserves as a percentage of short-term debt or
exports, and an unsustainable exchange rate structure.

Foreign Risk -The Portfolio will be subject to risks of loss with respect to their foreign investments that are
not typically associated with domestic issuers. Loss may result because of less foreign government regulation, less
public information and less economic, political and social stability. Loss may also result from the imposition of
exchange controls, confiscations and other government restrictions. The Portfolio will also be subject to the risk of
negative foreign currency rate fluctuations. Foreign risks will normally be greatest when the Portfolio invests in
issuers located in emerging countries.

Emerging Countries Risk--The Portfolio may invest in emerging countries. The securities markets of Asian, Latin,
Central and South American, Eastern European, Middle Eastern, African and other emerging countries are less liquid, are
especially subject to greater price volatility, have smaller market capitalizations, have less government regulation and
are not subject to as extensive and frequent accounting, financial and other reporting requirements as the securities
markets of more developed countries. These risks are not normally associated with investments in more developed
countries.

"Junk Bond" Risk--The Portfolio will invest in non-investment grade fixed-income securities (commonly known as
"junk bonds ") that are considered predominantly speculative by traditional investment standards. Non-investment grade
fixed-income securities and unrated securities of comparable credit quality are subject to the increased risk of an
issuer's inability to meet principal and interest payment obligations. These securities may be subject to greater price
volatility due to such factors as specific corporate or municipal developments, interest rate sensitivity, negative
perceptions of the junk bond markets generally and less secondary market liquidity.

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:

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

To pursue its objective, the Portfolio normally invests primarily in high yield and investment grade debt
securities, securities convertible into common stock and preferred stocks. 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 five to twelve years, there are no maturity restrictions
on the overall portfolio or on individual securities.

The Portfolio may invest up to 20% of its net assets in equity securities. These include common stocks,
preferred stocks, convertible preferred stocks, warrants, stock purchase rights and similar instruments.

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.

To the extent that the Portfolio invests in equity securities, it will be subject to the risks associated with
investing in such securities. In general, stock values fluctuate in response to the activities of individual companies
and in response to general market and economic conditions. The stock markets tend to be cyclical, with periods of
generally rising stock prices and other periods of generally declining prices. Accordingly, the value of the equity
securities that the Portfolio holds may decline over short or extended periods.

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 are 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:

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;
o derivative instruments, including swap agreements; and
o 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. The Funds may also use foreign currency options and foreign currency forward
contracts to increase exposure to a foreign currency or to shift exposure to foreign currency fluctuations from one
country to another.

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, credit 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. The Portfolio may also enter into options on swap
agreements. A swap option is a contract that gives a counterparty the right (but not the obligation) in return for
payment of a premium, to enter into a new swap agreement or to shorten, extend, cancel or otherwise modify an existing
swap agreement, at some designated future time on specified terms. 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.

The Portfolio may enter into credit default swap agreements. The "buyer" in a credit default contract is
obligated to pay the "seller" a periodic stream of payments over the term of the contract provided that no event of
default on an underlying reference obligation has occurred. If an event of default occurs, the seller must pay the
buyer the full notional value, or "par value," of the reference obligation in exchange for the reference obligation.
The Portfolio may be either the buyer or seller in a credit default swap transaction. If the Portfolio is a buyer and
no event of default occurs, the Portfolio will lose its investment and recover nothing. However, if an event of default
occurs, the Portfolio (if the buyer) will receive the full notional value of the reference obligation that may have
little or no value. As a seller, the Portfolio receives a fixed rate of income throughout the term of the contract,
which typically is between six months and three years, provided that there is no default event. If an event of default
occurs, the seller must pay the buyer the full notional value of the reference obligation. Credit default swap
transactions involve greater risks than if the Portfolio had invested in the reference obligation directly.

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.

For purposes of applying the Portfolio's investment policies and restrictions (as stated in this Prospectus and
the Trust's SAI) swap agreements are generally valued by the Portfolios at market value. In the case of a credit
default swap sold by a Portfolio (i.e., where the Portfolio is selling credit default protection), however, the
Portfolio will generally value the swap at its notional amount. The manner in which certain securities or other
instruments are valued by the Portfolios for purposes of applying investment policies and restrictions may differ from
the manner in which those investments are valued by other types of investors.

Collateralized Debt Obligations. The Portfolio may invest in collateralized debt obligations ("CDOs"), which
includes collateralized bond obligations ("CBOs"), collateralized loan obligations ("CLOs") and other similarly
structured securities. CBOs and CLOs are types of asset-backed securities. A CBO is a trust which is backed by a
diversified pool of high risk, below investment grade fixed income securities. A CLO is a trust typically
collateralized by a pool of loans, which may include, among others, domestic and foreign senior secured loans, senior
unsecured loans, and subordinate corporate loans, including loans that may be rated below investment grade or equivalent
unrated loans.

For both CBOs and CLOs, the cashflows from the trust are split into two or more portions, called tranches,
varying in risk and yield. The riskiest portion is the "equity" tranche which bears the bulk of defaults from the bonds
or loans in the trust and serves to protect the other, more senior tranches from default in all but the most severe
circumstances. Since it is partially protected from defaults, a senior tranche from a CBO trust or CLO trust typically
have higher ratings and lower yields than their underlying securities, and can be rated investment grade. Despite the
protection from the equity tranche, CBO or CLO tranches can experience substantial losses due to actual defaults,
increased sensitivity to defaults due to collateral default and disappearance of protecting tranches, market
anticipation of defaults, as well as aversion to CBO or CLO securities as a class.

The risks of an investment in a CDO depend largely on the type of the collateral securities and the class of
the CDO in which a Fund invests. Normally, CBOs, CLOs and other CDOs are privately offered and sold, and thus, are not
registered under the securities laws. As a result, investments in CDOs may be characterized by the Portfolios as
illiquid securities, however an active dealer market may exist for CDOs allowing a CDO to qualify for Rule 144A
transactions. In addition to the normal risks associated with fixed income securities discussed elsewhere in this
Prospectus and the Trust's SAI (e.g., interest rate risk and default risk), CDOs carry additional risks including, but
are not limited to: (i) the possibility that distributions from collateral securities will not be adequate to make
interest or other payments; (ii) the quality of the collateral may decline in value or default; (iii) the Portfolio may
invest in CDOs that are subordinate to other classes; and (iv) the complex structure of the security may not be fully
understood at the time of investment and may produce disputes with the issuer or unexpected investment results.

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:

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
o obligations of international agencies or supranational entities.

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.

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. The
Funds may also use foreign currency options and foreign currency forward contracts to increase exposure to a foreign
currency or to shift exposure to foreign currency fluctuations from one country to another.

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."

The Portfolio may enter into credit default swap agreements. The "buyer" in a credit default contract is
obligated to pay the "seller" a periodic stream of payments over the term of the contract provided that no event of
default on an underlying reference obligation has occurred. If an event of default occurs, the seller must pay the buyer
the full notional value, or "par value," of the reference obligation in exchange for the reference obligation. The
Portfolio may be either the buyer or seller in a credit default swap transaction. If the Portfolio is a buyer and no
event of default occurs, the Portfolio will lose its investment and recover nothing. However, if an event of default
occurs, the Portfolio (if the buyer) will receive the full notional value of the reference obligation that may have
little or no value. As a seller, the Portfolio receives a fixed rate of income throughout the term of the contract,
which typically is between six months and three years, provided that there is no default event. If an event of default
occurs, the seller must pay the buyer the full notional value of the reference obligation. Credit default swap
transactions involve greater risks than if the Portfolio had invested in the reference obligation directly.

The risks of an investment in a CDO depend largely on the type of the collateral securities and the class of the
CDO in which a Fund invests. Normally, CBOs, CLOs and other CDOs are privately offered and sold, and thus, are not
registered under the securities laws. As a result, investments in CDOs may be characterized by the Portfolios as
illiquid securities, however an active dealer market may exist for CDOs allowing a CDO to qualify for Rule 144A
transactions. In addition to the normal risks associated with fixed income securities discussed elsewhere in this
Prospectus and the Trust's SAI (e.g., interest rate risk and default risk), CDOs carry additional risks including, but
are not limited to: (i) the possibility that distributions from collateral securities will not be adequate to make
interest or other payments; (ii) the quality of the collateral may decline in value or default; (iii) the Portfolio may
invest in CDOs that are subordinate to other classes; and (iv) the complex structure of the security may not be fully
understood at the time of investment and may produce disputes with the issuer or unexpected investment results.

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 per share to fall below $1. In addition, the income
earned by the Portfolio will fluctuate based on market conditions, interest rates and other factors. In a low interest
rate environment, the yield for the Portfolio, after deduction of operating expenses, may be negative even though the
yield before deducting such expenses is positive. A negative yield may also cause the Portfolio's net asset value per
share to fall below $1.00. The Investment Manager may decide to reimburse certain of these expenses to the Portfolio in
order to maintain a positive yield, however it is under no obligation to do so and may cease doing so at any time
without prior notice.

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 issuers. 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.

Synthetic Instruments. As may be permitted by current laws and regulations and if expressly permitted by the
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 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, the following Portfolios had annual rates of
turnover exceeding 100% as of December 31, 2003:

AST DeAM International Equity Portfolio
AST State Street Research Small-Cap Growth Portfolio
AST DeAM Small-Cap Growth Portfolio
AST DeAM Small-Cap Value Portfolio
AST Neuberger Berman Mid-Cap Growth Portfolio
AST Alger All-Cap Growth Portfolio
AST MFS Growth Portfolio
AST DeAM Large-Cap Value Portfolio
AST Hotchkis & Wiley Large-Cap Value Portfolio
AST American Century Strategic Balanced Portfolio
AST T. Rowe Price Global 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.

NET ASSET VALUE:

.........The net asset value per share ("NAV") of each Portfolio is determined as of the time of the close of regular
trading on the New York Stock Exchange (the "NYSE") (which is 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 the regular trading on the NYSE (which is normally 4:00 P.M. Eastern Standard Time) are effected
at the NAV determined as of the NYSE close on that same day. Orders received after the NYSE close 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 transaction or other surrender 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.

The Portfolios offered by the Trust are not designed to provide Contractholders with a means of speculating on
short-term market movements. Frequent trading by Contractholders may, under certain circumstances, disrupt the
management of the Portfolios, negatively affect the Portfolios' performance and increase transaction costs for all
Contractholders. The Participating Insurance Companies maintain the individual Contractholder records and submit to the
Portfolios only aggregate orders combining the transactions of many Contractholders. The Portfolios themselves
generally cannot monitor trading by particular Contractholders. The vast majority of the assets of the Portfolios are
held in separate accounts of the American Skandia Life Assurance Corporation ("ASLAC"), which imposes restrictions on
transfers by its Contractholders. For more information about the limits, please see the prospectus for your variable
contract or contact your insurance company.

.........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 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 Managers: ASISI, One Corporate Drive, Shelton, Connecticut, has served as Investment Manager to the Trust
since 1992, and serves as co-investment manager to a total of 60 investment company portfolios (including the Portfolios
of the Trust). ASISI serves as co-manager of the Trust along with Prudential Investments LLC ("PI") (each an
"Investment Manager" and together the "Investment Managers"). PI is located at Gateway Center Three, 100 Mulberry
Street, Newark, New Jersey, and also serves as investment manager to the investment companies that comprise the
Prudential mutual funds. As co-manager, PI also provides supervision and oversight of ASISI's investment management
responsibilities with respect to the Trust.

.........The Trust's Investment Management Agreements, on behalf of each Portfolio, with ASISI and PI, (the "Management
Agreements"), provide that the Investment Managers 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 Managers have engaged Sub-advisors to conduct the investment programs of
each Portfolio, including the purchase, retention and sale of portfolio securities. The Investment Managers are
responsible for monitoring the activities of the Sub-advisors and reporting on such activities to the Trustees. The
Investment Managers 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 the Investment
Managers, 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 the Investment Managers and the
Trustees.

Sub-advisors:

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 global investment
adviser supervising client accounts with assets as of December 31, 2003 totaling more than $475 billion.

Syed J. Hansen is the individual primarily responsible for the management of the AST Alliance Growth
Portfolio. Mr. Hasnain has been managing the portfolio since May 2003 and is a Senior Vice President, U.S. Large Cap
Growth Portfolio Manager and a member of the U.S. Large Cap Growth Equity Team. He has been associated with Alliance
since 1994. The U.S. Large Cap Growth Portfolio Management Team has been responsible for the Portfolio since Alliance
became the Portfolio's Sub-Advisor in May 2000.

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
have been made by Syed Hasnain, Stephanie Simon and Dan Nordby since the Portfolio commenced operations. Seth J.
Masters, Chief Investment Officer for Style Blend Services, has overall responsibility for rebalancing and
administration of the growth and value components of the Portfolio. Mr. Hasnain has been managing the Portfolio since
May 2003 and is Senior Vice President, U. S. Large Cap Portfolio Manager and a member of the Global Large Cap Growth
Equity Team. He has been associated with Alliance since 1995. Ms. Simon is Senior 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. Mr. Nordby, Senior Vice President, has been with Alliance since 1996. Mr. Masters has been with Alliance
and, prior to that, Sanford C. Bernstein & Co. LLC, since 1991 and is the chairman of the firm's US and Global Style
Blend Investment Policy Groups and a member of the Bernstein Global, International and Emerging Markets Value Investment
Policy Group.

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 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, 2003, American Century and its affiliates
managed assets totaling approximately $87.4 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 the day-to-day management of the AST
American Century Income & Growth Portfolio are John Schniedwind, Jeffrey R. Tyler and Thomas Vaiana. Mr. Schniedwind is
Chief Investment Officer - Quantitative Equity for American Century, and has been with American Century since 1982. He
is a CFA charterholder. Mr. Tyler, Senior Vice President and Senior Portfolio Manager, joined American Century in
1988. He is a CFA charterholder. Mr. Vaiana, Portfolio Manager, has been a member of the team that manages the Fund
since February 2001. He joined American Century in February 1997 as a Credit Analyst and was promoted to Portfolio
Manager in August 2000.

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 managers responsible for the day-to-day management of the fixed income portion of the Fund are Jeffrey L.
Houston and John F. Walsh. Mr. Houston, Vice President and Senior Portfolio Manager, has been a member of the team that
manages the fixed income portion of the Balanced Fund since June 1995. He joined American Century as an Investment
Analyst in November 1990 and was promoted to Portfolio Manager in 1994. He is a CFA charterholder. Mr. Walsh,
Portfolio Manager, has been a member of the team since January 1999. He joined American Century in February 1996 as an
Investment Analyst.

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, 2003, Cohen & Steers managed
approximately $11.7 billion in assets.

Robert H. Steers, and Martin Cohen, Co-Chairmen and Co-Chief Executive Officers, 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.

Deutsche Asset Management, Inc. ("DAMI"), 345 Park Avenue, New York, New York 10154, serves as Sub-advisor to
the AST DeAM International Equity Portfolio, the AST DeAM Small-Cap Growth Portfolio, the AST DeAM Small-Cap Value
Portfolio and the AST DeAM Global Allocation Portfolio. DAMI was founded in 1838 as Morgan Grenfell Inc. and has
provided asset management services since 1953. As of December 31, 2003, as part of Deutsche Asset Management group
("DeAM"), DAMI managed approximately $41 billion of DeAM Americas' $305.8 billion in assets.

Janet Campagna and Robert Wang are the co-portfolio managers for the AST DeAM International Equity Portfolio,
the AST DeAM Small-Cap Growth Portfolio, the AST DeAM Small-Cap Value Portfolio and the AST DeAM Large-Cap Value
Portfolio since May 2003. Ms. Campagna, a Managing Director, joined DAMI in 1999 and is head of global and tactical
asset allocation. Prior to joining DAMI, she served as investment strategist and manager of the asset allocation
strategies group for Barclays Global Investors from 1994 to 1999. Mr. Wang, a Managing Director, joined DAMI in 1995 as
portfolio manager for asset allocation and serves as senior portfolio manager for multi asset class quantitative
strategies.

Janet Campagna, a Managing Director, has been managing the AST DeAM Global Allocation Portfolio since its DAMI
became the Portfolio's Sub-advisor in May 2002. Ms. Campagna joined DAMI in 1999 after 11 years as an investment
strategist and manager of the Asset Allocation group at Barclays Global Investors and global asset allocation research
director at First Quadrant Corp.

Federated Equity Management Company of Pennsylvania ("Federated Equity"), Federated Investors Tower,
Pittsburgh, Pennsylvania 15222-3779, serves as Sub-advisor for the AST Federated Aggressive Growth Portfolio. Federated
Advisory Services Company ("Federated Services"), an affiliate of the Adviser, provides research, quantitative analysis,
equity trading and transaction settlement and certain support services to Federated Equity. The fee for these services
is paid by the Federated Equity and not by the Portfolio. Federated Global Investment Management Corp. ("Federated
Global"), 450 Lexington Avenue, Suite 3700, New York, New York 10017-3943 serves as Sub-Sub-advisor for the AST
Federated Aggressive Growth Portfolio. Federated Equity was organized in 2003, and Federated Global was organized in
1995. Federated Equity, Federated Global and their 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, 2003 were approximately $198 billion.

The portfolio managers responsible for management of the AST Federated Aggressive Growth Portfolio are Aash M.
Shah, Lawrence Auriana, Hans P. Utsch and John Ettinger. Mr. Shah has managed the Portfolio since its inception in
October 2000. Mr. Shah joined Federated Equity'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. Auriana has managed the portfolio since May 2002. He and Mr. Utsch are
Co-Heads of Federated Global's Kaufman Investment Area. They joined Federated Global's parent company in April 2001.
Mr. Auriana was the portfolio manager of The Kaufmann Fund, from 1985 to 2001. From 1984 to 2001, he was the President
and Treasurer of Edgemont Asset Management Corp., the adviser to The Kaufmann Fund. Mr. Auriana has been engaged in
the securities business since 1965. Mr. Utsch has managed the portfolio since May 2002. Mr. Utsch was the portfolio
manager of The Kaufmann Fund, from 1985 to 2001. From 1984 to 2001, he was Chairman of the Board and Secretary of
Edgemont Asset Management Corp. Mr. Utsch has been engaged in the securities business since 1962. Mr. Ettinger was
named a portfolio manager of the Portfolio in May 2004. Mr. Ettinger has been an investment analyst with Federated
Equity's parent company since April 2001. He served as an investment analyst with Edgemont Asset Management Corp. from
1996 to 2001.

Fred Alger Management, Inc. ("Alger"), 111 Fifth Avenue, New York, NY 10003, 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, 2003 managed
mutual fund and other assets totaling approximately $10.9 billion.

Fred M. Alger III is the chief market strategist for the Portfolio, overseeing the investments of the
Portfolio. Mr. Alger, who founded Alger, has served as Chairman of the Board since 1964, and co-managed all of Alger's
portfolios prior to 1995. David Hyun is the individual responsible for the day-to-day management of the Portfolio and
has served in that capacity since September 2001. Mr. Hyun has been employed by Alger as an Executive Vice President
since September 2001, prior to which he was employed by Alger as an analyst from 1991 until 1997, as a Senior Vice
President and portfolio manager from 1997 until June 2000, and a portfolio manager at Oppenheimer Funds from June 2000
until September 2001.

Due to the impact on Alger as a result of the World Trade Center destruction on September 11, 2001,
Massachusetts Financial Services Company acted as interim Sub-Sub-advisor in conjunction with Alger for the AST Alger
All-Cap Growth Portfolio from September 17, 2001 through December 9, 2001. Effective December 10, 2001, Alger resumed
the role as the sole Sub-advisor for the Portfolio.

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 $27.6 billion in assets as of December 31, 2003 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.

Goldman Sachs Asset Management, L.P. ("GSAM"), is located at 32 Old Slip, New York, New York 10005. GSAM
registered as an investment advisor in 1990. GSAM serves as investment Sub-advisor for the AST Goldman Sachs Small-Cap
Value Portfolio, the AST Goldman Sachs Mid-Cap Growth Portfolio, the AST Goldman Sachs Concentrated Growth Portfolio,
and the AST Goldman Sachs High Yield Portfolio (formerly, the AST Federated High Yield Portfolio). GSAM serves as
investment manager for a wide range of clients including pension funds, foundations and insurance companies and
individual investors. GSAM, along with other units of the Investment Management Division of Goldman Sachs, managed
approximately $375.7 billion in assets as of December 31, 2003.

Among the portfolio managers responsible for management of the AST Goldman Sachs Small-Cap Value Portfolio are
Eileen Rominger, Chip Otness, Lisa Parisi and Kelly Flynn. 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, Managing Director, 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. Parisi, Managing Director, joined Goldman Sachs as a portfolio manager in August
2001. From December 2000 to August 2001, she was a portfolio manager at John A. Levin & Co. Mr. Flynn, Vice President,
joined Goldman Sachs as a portfolio manager in April 2002. Prior to joining Goldman Sachs, Kelly spent 3 years at
Lazard Asset Management where he was a portfolio manager for Small Cap/Mid Cap Value products.

The portfolio managers responsible for the day-to-day management of the AST Goldman Sachs Concentrated Growth
Portfolio and the AST Goldman Sachs Mid-Cap Growth Portfolio since Goldman Sachs became each Portfolio's Sub-advisor in
November 2002 are Herbert Ehlers, David Shell, CFA, Steven M. Barry, Gregory H. Ekizian, CFA, Kenneth Berents, Ernest
C. Segundo, Jr., CFA, Andrew F. Pyne, Scott Kolar, CFA and Mark D. Shattan. Mr. Ehlers began his investment career in
the 1960s and is a Managing Director/Partner of Goldman, Sachs & Co. He is the Chief Investment Officer for the Growth
Team. He served as CEP of Liberty Investment Management ("Liberty") prior to Goldman Sachs' acquisition of Liberty in
1997. Mr. Ehlers joined Liberty's predecessor firm, Eagle Asset Management, in 1980. Mr. Shell, Mr. Barry and Mr.
Ekizian are Co-Chief Investment Officers and senior portfolio managers for the Growth Team. Mr. Shell served as a
senior portfolio manager at Liberty prior to Goldman Sachs' acquisition of Liberty and had been employed by Liberty and
its predecessor firm since 1987. Mr. Ekizian served as a senior portfolio manager at Liberty prior to Goldman Sachs'
acquisition of Liberty and had been employed by Liberty and its predecessor firm since 1990. Prior to joining Goldman
Sachs in 1999, Mr. Barry was a portfolio manager at Alliance Capital Management where he served for eleven years. Mr.
Berents is a senior portfolio manager. Prior to joining Goldman Sachs in 2000, he served for seven years as Managing
Director and Director of Research for First Union Securities, Inc. Mr. Segundo is a senior portfolio manager. Prior
to Goldman Sachs' acquisition of Liberty, Mr. Segundo served as a senior portfolio manager at Liberty and had been with
Liberty and its predecessor firm since 1992. Mr. Pyne is a senior portfolio manager and joined the firm in 1997. Mr.
Kolar is a senior portfolio manager and has been with the firm since 1994. Mr. Shattan is a senior portfolio manager
and joined the firm in 1999. From 1997 to 1999, Mr. Shattan was an equity research analyst for Salomon Smith Barney.

The portfolio managers responsible for the day-to-day management of the Portfolio are Andrew Jessop, Diana
Gordon and Rob Cignarella. Mr. Jessop, Managing Director and Head of the High Yield Team, joined GSAM in 1997 as a
portfolio manager. He is responsible for managing high yield assets. Previously, he worked six years managing high
yield portfolios at Saudi International Bank in London. Ms. Gordon, Vice President, joined GSAM in 1999 covering the
high yield technology and communications sectors in addition to trading. Before joining GSAM, she was a high yield
portfolio manager at Saudi International Bank. Mr. Cignarella, Vice President, joined GSAM in 1998 as a high yield
credit research analyst. Prior to his current position he worked in investment banking at Salomon Brothers. Mr.
Jessop, Ms. Gordon and Mr. Cignarella have managed the Portfolio since GSAM became the Portfolio's sub-adviser in May
2004.

Hotchkis and Wiley Capital Management, LLC ("Hotchkis & Wiley"), 725 South Figueroa Street, Suite 3900, Los
Angeles, California 90017-5439, serves as the sub-adviser for the AST Hotchkis & Wiley Large-Cap Value Portfolio
(formerly, AST INVESCO Capital Income Portfolio). Hotchkis & Wiley is a registered investment adviser, the primary
members of which are HWCap Holdings, a limited liability company whose members are employees of Hotchkis & Wiley, and
Stephens Group, Inc. and affiliates, which is a diversified holding company. As of December 31, 2003, Hotchkis & Wiley
managed approximately $9.6 billion in assets.

Sheldon Lieberman is responsible for the day-to-day management of the Portfolio. Mr. Lieberman, a principal
and portfolio manager, joined Hotchkis & Wiley in 1994. Mr. Lieberman has managed the Portfolio since Hotchkis & Wiley
became the Portfolio's sub-adviser in May 2004.

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 JPMorgan International Equity Portfolio (formerly, AST Strong
International Equity 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 $559 billion as of December 31, 2003.

The portfolio managers responsible for the day-to-day management of the AST JPMorgan International Equity
Portfolio are James WT Fisher and Timothy Leask. Mr. Fisher, a Managing Director of J.P. Morgan, is a portfolio manager
in the Global Portfolios Group based in London. He joined J.P. Morgan in 1985. Mr. Leask, a Vice President of J.P.
Morgan, is a client portfolio manager in the International Equity Portfolios group based in New York. He joined J.P.
Morgan in 1997. They have managed the Portfolio since J. P. Morgan became its sub-advisor in February 2004.

Lord, Abbett & Co. LLC ("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 since 1929. As of
December 31, 2003, Lord Abbett managed over $72 billion in a family of mutual funds and other advisory accounts.

Christopher J. Towle, CFA and Partner of Lord Abbett, heads the management team for the AST Lord Abbett
Bond-Debenture Portfolio. Mr. Towle has been with Lord Abbett since 1987.

Marsico Capital Management, LLC ("MCM"), located at 1200 17th Street, Suite 1300, Denver, CO 80202, serves as
Sub-adviser to the AST Marsico Capital Growth Portfolio. MCM was organized in September 1997 as a registered investment
adviser. MCM provides investment management services to other mutual funds, institutional accounts and private accounts
and, as of December 31, 2003, had approximately $30.1 billion under management. Thomas F. Marsico is the founder and
Chief Executive Officer of the Adviser.

Thomas F. Marsico is the Chief Investment Officer of Marsico Capital Management, and manages the investment
program of the AST Marsico Capital Growth Portfolio. Mr. Marsico has over 20 years of experience as a securities analyst
and a portfolio manager. Prior to forming Marsico Capital, Mr. Marsico served as the portfolio manager of the Janus
Twenty Fund from January 31, 1988 through August 11, 1997 and served in the same capacity for the Janus Growth and
Income Fund from May 31, 1991 (the Fund's inception date) through August 11, 1997.

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 and the AST MFS Growth Portfolio.
MFS and its predecessor organizations have a history of money management dating from 1924. As of December 31, 2003, the
net assets under the management of the MFS organization were approximately $140.3 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, Irfan
Ali and Gregory Locraft. Mr. Pesek, 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 1994. Both Mr. Ali and Mr. Locraft have managed the
Portfolio since October 2003. Mr. Ali has been employed in the investment management area at MFS since 1993. Mr.
Locraft has been employed by MFS in the investment management area since 1998.

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 $70.5 billion of assets as of December 31, 2003. NB Management
is a subsidiary of Lehman Brothers Holdings Inc.

The AST Neuberger Berman Mid-Cap Growth Portfolio is managed by a team lead by Jon D. Brorson, consisting of
the following lead portfolio managers, each of whom has managed the Portfolio since January 2003. Jon D. Brorson has
co-managed an equity mutual fund and managed other equity portfolios since 1990 at two other investment managers, where
he also had responsibility for investment research, sales and trading. Kenneth J. Turek has managed or co-managed two
equity mutual funds and other equity portfolios for several other investment managers since 1985. Each team member is a
Vice President of NB Management and a Managing Director of Neuberger Berman, LLC.

The portfolio manager responsible for the day-to-day management of the AST Neuberger Berman Mid-Cap Value
Portfolio is Andrew Wellington and David M. DiDomenico. Mr. Wellington has been managing the Portfolio since May 2003.
Mr. Wellington has been with NB Management since 2001, where he is currently a Managing Director and a Portfolio
Manager. From 2000 until 2001, Mr. Wellington served as a Portfolio Manager at Pzena Investment Management ("Pzena").
From 1996 until 1999, he served as a Senior Research Analyst at Pzena. Mr. DiDomenico is a Vice President of NB
Management and Neuberger Berman LLC. He has been an associate manager of the Portfolio since December 2003. He held a
position at a private equity firm from 1999 to 2002. Prior to 1999 he was an analyst at another investment firm.

Pacific Investment Management Company LLC ("PIMCO") serves as Sub-advisor for the AST PIMCO Total Return Bond
Portfolio and the AST PIMCO Limited Maturity Bond Portfolio. PIMCO, located at 840 Newport Center Drive, Suite 300,
Newport Beach, California 92660 is an investment counseling firm founded in 1971. As of December 31, 2003, had
approximately $373.7 billion of assets under management.

William H. Gross, Managing Director, Chief Investment Officer and founding partner of PIMCO has, since the
inception of each portfolio, led a portfolio management team responsible for developing and implementing each
portfolio's investment strategy.

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 Ranji H. Nagaswami, CFA and Marilyn
Goldstein Fedak. Ms. Nagaswami is a senior portfolio manager and a member of the U.S. Value Equity Investment Policy
Group and the Risk Investment Policy Group. Ms. Nagaswami has been with Alliance since 1999. From 1986 until 1999, she
was at UBS Brinson and its predecessor organizations, where she progressed from quantitative analyst to managing
director to co-head of U.S. fixed income. 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 ASAF Sanford Bernstein Managed Index 500 Fund will be made
by Bernstein's Structured Equity Investment Policy Group, which is chaired by Drew W. Demakis. Mr. Demakis is a Senior
Vice President of Alliance Capital and Chairman of the Risk Investment Policy Group. The Structured Equity Investment
Policy Group has managed the Fund since Bernstein became the Fund's Sub-advisor in May 2000. Mr. Demakis joined the
firm in 1998 from BARRA RogersCasey, where he was most recently Managing Director and Head of Research. He has been
responsible for the Fund since May 2003.

State Street Research and Management Company ("State Street"), One Financial Center, Boston, Massachusetts
02111, serves as Sub-advisor for the AST State Street Research Small-Cap Growth Portfolio (formerly, AST PBHG Small-Cap
Growth Portfolio). State Street traces its heritage back to 1924 and the founding of one of America's first mutual
funds. As of December 31, 2003, State Street managed approximately $47.5 billion in assets.

Tucker Walsh is the lead portfolio manager and is responsible for the day-to-day management of the Portfolio.
Andrew Morey is portfolio manager of the Portfolio. Mr. Walsh, a managing director, joined State Street in 1997. Mr.
Morey, a senior vice president, joined State Street in 1995. Mr. Walsh and Mr. Morey have managed the Portfolio since
State Street became the Portfolio's sub-adviser in May 2004.

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, 2003, the firm and its
affiliates managed approximately $190 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 Chairman for the AST T. Rowe Price Natural Resources Portfolio is Charles M.
Ober. 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 Chairman for the AST T. Rowe Price Asset Allocation Portfolio is Edmund M.
Notzon. 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.

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 $22.9 billion under management as of December 31, 2003 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, ,
Daniel O. Shackelford, Ian Kelson, Brian Brennan and Michael Conelius. Mr. Rothery joined T. Rowe International in
1994 and has 13 years of experience managing multi-currency fixed-income portfolios. Mr. 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. From 1989 to 2000 Mr. Fisher was Chief Investment Officer for Morgan Grenfell. Mr. Brennan joined T.
Rowe Price in 2000. Mr. Conelius joined T. Rowe International in 1995.

Wells Capital Management, Inc. ("Wells"), 525 Market Street, San Francisco, CA 94105 serves as Sub-advisor for
the AST Money Market Portfolio. Wells is a wholly-owned subsidiary of Wells Fargo & Co., which was founded in 1852 and,
as of December 31, 2003, had approximately $124 billion in assets under management.

The co-portfolio managers responsible for management of the AST Money Market Portfolio are David D. Sylvester and
Laurie R. White. Mr. Sylvester, Executive Vice President of Wells Capital and Head of Liquidity Investments, has over
25 years of investment experience and has been with the firm since 1979. Ms. White, Executive Vice President of Wells
Capital, has over 15 years of investment experience and has been with the firm since 1991. Mr. Sylvester and Ms. White
have managed the Portfolio since Wells became the Portfolio's Sub-advisor in September 2001.

William Blair & Company, L.L.C., located at 222 West Adams Street, Chicago, Illinois 60606, serves as
Sub-advisor to the AST William Blair International Growth Portfolio. Since its founding in 1935, the firm has been
dedicated to researching, financing and investing in high quality growth companies through four primary divisions:
investment banking, sales and trading, asset management and private capital. As of December 31, 2003, William Blair
managed approximately $17.3 billion in assets.

The portfolio manager responsible for the day-today management of the AST William Blair International Growth
Portfolio is W. George Greig. Mr. Greig is a principal of William Blair and joined the firm in 1996 as an international
portfolio manager and has managed the Fund since William Blair became its sub-advisor in November 2002.

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 Portfolios do not pay any fee to PI.

The fees paid to ASISI for the fiscal year ended December 31, 2003, stated as a percentage of the Portfolio's
average daily net assets, were as follows:

Portfolio: Annual Rate:
---------- ------------
AST JPMorgan International Equity 0.88
AST William Blair International Growth 1.00
AST DeAM International Equity 1.00
AST MFS Global Equity 1.00
AST State Street Research Small-Cap Growth 0.90
AST DeAM Small-Cap Growth 0.95
AST Federated Aggressive Growth 0.95
AST Goldman Sachs Small-Cap Value 0.95
AST Gabelli Small-Cap Value 0.90
AST DeAM Small-Cap Value 0.95
AST Goldman Sachs Mid-Cap Growth 1.00
AST Neuberger Berman Mid-Cap Growth 0.90
AST Neuberger Berman Mid-Cap Value 0.90
AST Alger All-Cap Growth 0.95
AST Gabelli All-Cap Value 0.95
AST T. Rowe Price Natural Resources 0.90
AST Alliance Growth 0.90
AST MFS Growth 0.90
AST Marsico Capital Growth 0.90
AST Goldman Sachs Concentrated Growth 0.90
AST DeAM Large-Cap Value 0.85
AST Hotchkis & Wiley Large-Cap Value 0.75
AST Alliance/Bernstein Growth + Value 0.90
AST Sanford Bernstein Core Value 0.75
AST Cohen & Steers Realty 1.00
AST Sanford Bernstein Managed Index 500 0.60
AST American Century Income & Growth 0.75
AST Alliance Growth and Income 0.75
AST DeAM Global Allocation(1) 0.97
AST American Century Strategic Balanced 0.85
AST T. Rowe Price Asset Allocation 0.85
AST T. Rowe Price Global Bond 0.80
AST Goldman Sachs High Yield 0.75
AST Lord Abbett Bond-Debenture 0.80
AST PIMCO Total Return Bond 0.65
AST PIMCO Limited Maturity Bond 0.65
AST Money Market 0.50

(1) The DeAM Global Asset Allocation Portfolio invests primarily in shares of other AST Portfolios (the "Underlying
Portfolios"). The only management fee directly paid by the Portfolio is a 0.10% fee paid to American Skandia
Investment Services, Inc. and Prudential Investments LLC. The management fee shown in the chart for the Portfolio
is (i) that 0.10% management fee paid by the Portfolio plus (ii) an estimate of the management fees paid by the
Underlying Portfolios, which are borne indirectly by investors in the Portfolio. The estimate was calculated as
based on the percentage of the Portfolio invested in each Underlying Portfolio as of December 31, 2003 using the
management fee rates shown in the chart above.

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 as well as for other services.
Currently, each Portfolio pays each Participating Insurance Company 0.10% on assets attributable to that company.

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, Incorporated ("ASM") and Prudential Investment
Management Services LLC ("PIMS"), both affiliates of ASISI and PI (each a "Distributor" and together the "Distributors")
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 a Distributor for
"introducing" transactions to the clearing broker. In turn, a Distributor 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. The Portfolios do not pay any separate fees or charges under the Distribution Plan, and it is
expected that the brokerage commissions paid by a Portfolio will not increase as the result 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.

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 for the year ended December 31, 2003 has
been audited by KPMG LLP, the Trust's independent auditors. The periods presented through December 31, 2002 were
audited by other 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.

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 JPMorgan 12/31/03 $12.22 $0.14 $3.56 $3.70 $(0.11) $ -- $(0.11) $15.81
International Equity** 12/31/02 15.07 0.10 (2.87) (2.77) (0.08) -- (0.08) 12.22
12/31/01 22.03 0.08 (4.75) (4.67) (0.03) (2.26) (2.29) 15.07
12/31/00 34.23 0.22 (8.09) (7.87) (0.07) (4.26) (4.33) 22.03
12/31/99 22.67 0.05 13.36 13.41 -- (1.85) (1.85) 34.23

AST William Blair 12/31/03 $7.46 $0.06 $3.04 $2.98 $ -- $ -- $-- $10.44
International 12/31/02 10.39 0.11 (2.71) (2.60) (0.33) -- (0.33) 7.46
Growth***
12/31/01 18.72 0.12 (3.73) (3.61) (0.82) (3.90) (4.72) 10.39
12/31/00 25.10 (0.04) (6.03) (6.07) (0.13) (0.18) (0.31) 18.72
12/31/99 13.74 (0.03) 11.39 11.36 -- -- -- 25.10

AST DeAM 12/31/03 $8.38 $0.11 $2.71 $2.82 $(0.05) $ -- $(0.05) $11.15
International Equity+ 12/31/02 10.10 0.06 (1.78) (1.72) -- -- -- 8.38
12/31/01 14.91 (0.01) (4.80) (4.81) -- -- -- 10.10
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

AST MFS Global Equity 12.31.03 $8.08 $0.02 $2.17 $2.19 $(0.02) $ -- $(0.02) $10.25
12/31/02 9.21 0.02 (1.15) (1.13) --? -- -- 8.08
12/31/01 10.23 -- (1.02) (1.02) -- -- -- 9.21
12/31/00 11.03 0.01 (0.79) (0.78) (0.01) (0.01) (0.02) 10.23
12/31/99(1) 10.00 0.01 1.02 1.03 -- -- -- 11.03

AST State Street 12/31/03 $10.41 $(0.09) $4.80 $4.71 $ -- $ -- $ -- $15.12
Research Small-Cap 12/31/02 15.87 (0.13) (5.33) (5.46) -- -- -- 10.41
Growth*+ 12/31/01 20.30 (0.07) (1.27) (1.34) -- (3.09) (3.09) 15.87
12/31/00 42.61 (0.22) (18.08) (18.30) -- (4.01) (4.01) 20.30
12/31/99 17.61 (0.03) 25.03 25.00 -- -- -- 42.61

--------------------------------------------------------------------------------------------------------------------------
(1) Commenced operations on October 18, 1999.
* 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 December 10, 2001 to February 23, 2004, the Portfolio was known as the AST Strong International Equity Portfolio
and Strong Capital Management, Inc. served as its Sub-advisor. From May 4, 1999 to December 10, 2001, A I M Capital
Management, Inc. served as Sub-advisor to the Portfolio. From October 15, 1996 to May 4, 1999, Putnam Investment
Management, Inc. served as Sub-advisor to the Portfolio. J. P. Morgan Investment Management, Inc. has served as
Sub-advisor to the Portfolio since January 20, 2004.
*** Prior to November 11, 2002, the Portfolio was known as the AST Janus Overseas Growth Portfolio and Janus Capital
Management Served as its Sub-advisor.
+ Prior to May 1, 2002, Portfolio was known as the Founders Passport Portfolio and Founders Asset Management, Inc.
served as its Sub-advisor. Deutsche Asset Management Inc. has served as Sub-advisor to the Portfolio since May 1, 2002.
*+ From September 17, 2001 to April 29, 2004, the Portfolio was known as the AST PBHG Small-Cap Growth Portfolio and
Pilgrim Baxter & Associates, Ltd. served as its Sub-advisor. From January 1, 1999 to September 17, 2001, Janus Capital
Management LLC served as its Sub-advisor. Prior to January 1, 1999, Founders Asset Management LLC served as Sub-advisor
to the Portfolio. State Street Research and Management Company has served as Sub-advisor to the Portfolio since May
1, 2004.
? Amount represents less than a penny per share.

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
------

30.60% $339,039 50% 1.14% 1.14% 1.02%
(18.42%) 316,192 50% 1.21% 1.21% 0.84%
(22.75%) 444,271 162% 1.09% 1.14% 0.45%
(26.53%) 637,131 86% 1.16% 1.16% 0.63%
64.13% 770,512 159% 1.18% 1.18% 0.18%

39.95% $641,549 88% 1.24% 1.34% 0.46%
(25.67%) 318,832 94% 1.32% 1.32% 0.41%
(23.55%) 587,377 74% 1.24% 1.24% 0.64%
(24.62%) 1,094,019 75% 1.18% 1.19% (0.02%)
82.68% 1,551,045 76% 1.23% 1.23% (0.18%)

33.91% $172,059 138% 1.12% 1.27% 1.22%
(17.03%) 129,004 354% 1.34% 1.44% 0.59%
(32.21%) 154,991 712% 1.66% 1.60% (0.07%)
(30.28%) 276,037 514% 1.34% 1.38% (0.44%)
89.71% 217,397 309% 1.29% 1.29% (0.54%)

27.14% $102,938 54% 1.40% 1.40% 0.32%
(12.26%) 60,167 74% 1.41% 1.41% 0.25%
(9.97%) 55,882 89% 1.50% 1.40% 0.02%
(7.19%) 29,514 100% 1.56% 1.87% 0.08%
10.40% 1,291 142% 1.75% 2.11% 0.75%

45.24% $338,191 107% 1.20% 1.20% (0.65%)
(34.41%) 254,026 123% 1.23% 1.23% (0.74%)
(6.47%) 494,900 136% 1.16% 1.16% (0.51%)
(48.16%) 592,038 85% 1.07% 1.07% (0.54%)
141.96% 1,443,211 116% 1.08% 1.08% (0.46%)

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

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 DeAM Small-Cap 12/31/03 $5.17 $(0.01) $2.47 $2.46 $ -- $ -- $ -- $7.63
Growth** 12/31/02 7.03 (0.01) (1.85) (1.86) -- -- -- 5.17
12/31/01 11.72 (0.05) (2.95) (3.00) -- (1.69) (1.69) 7.03
12/31/00 15.59 (0.08) (2.90) (2.98) -- (0.89) (0.89) 11.72
12/31/99(1) 10.00 (0.05) 5.64 5.59 -- -- -- 15.59

AST Federated 12/31/03 $5.09 $(0.05) $3.57 $3.52 $ -- $ -- $ -- $8.61
Aggressive Growth 12/31/02 7.22 (0.04) (2.05) (2.09) -- (0.04) (0.04) 5.09
12/31/01 9.10 (0.03) (1.85) (1.88) --? -- --? 7.22
12/31/00(2) 10.00 0.01 (0.91) (0.90) -- -- -- 9.10

AST Goldman Sachs 12/31/03 $12.96 $0.08 $5.19 $5.27 $(0.11) $ -- $(0.11) $18.12
Small-Cap Value*** 12/31/02 15.55 0.11 (1.21) (1.10) (0.06) (1.43) (1.49) 12.96
12/31/01 14.55 0.08 1.34 1.42 -- (0.42) (0.42) 15.55
12/31/00 10.87 0.01 3.67 3.68 -- -- -- 14.55
12/31/99 9.99 (0.03) 0.91 0.88 -- -- -- 10.87

AST Gabelli Small-Cap 12/31/03 $11.59 $0.01 $4.13 $4.14 $(0.03) $ -- $(0.03) $15.70
Value+ 12/31/02 13.07 0.03 (1.23) (1.20) (0.06) (0.22) (0.28) 11.59
12/31/01 13.02 0.04 0.84 0.88 (0.07) (0.76) (0.83) 13.07
12/31/00 11.39 0.10 2.23 2.33 (0.07) (0.63) (0.70) 13.02
12/31/99 11.44 0.08 (0.03) 0.05 (0.10) -- (0.10) 11.39

AST DeAM 12/31/03 $7.75 $0.03 $3.33 $3.36 $(0.01) $ -- $(0.01) $11.10
Small-Cap Value 12/31/02 10.00 0.02 (2.27) (2.25) -- -- -- 7.75

AST Goldman Sachs 12/31/03 $2.88 $(0.01) $0.92 $0.91 $ -- $ -- $ -- $ 3.79
Mid-Cap Growth++ 12/31/02 3.97 (0.02) (1.07) (1.09) -- -- -- 2.88
12/31/01 6.64 (0.03) (2.64) (2.67) --? -- --? 3.97
12/31/00(3) 10.00 0.01 (3.37) (3.36) -- -- -- 6.64

--------------------------------------------------------------------------------------------------------------------------
(1) Commenced operations on January 4, 1999.
(2) Commenced operations on October 23, 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 December 10, 2001, the Portfolio was known as the AST Scudder Small-Cap Growth Portfolio and Zurich Scudder
Investments, Inc. served as its Sub-advisor. Deutsche Asset Management, Inc. has served as Sub-advisor to the Portfolio
since December 10, 2001.
*** Prior to May 1, 2001, the Portfolio was known as the AST Lord Abbett Small Cap Value Portfolio and Lord, Abbett &
Co. LLC served as its Sub-advisor. Goldman Sachs Asset Management has served as Sub-advisor to the Portfolio since May
1, 2001.
+ Prior to October 23, 2000, the Portfolio was known as the AST T. Rowe Price Small Company Value Portfolio and T. Rowe
Price Associates, Inc. served as its Sub-advisor. GAMCO Investors, Inc. has served as Sub-advisor to the Portfolio
since October 23, 2000.
++ Prior to November 11, 2002, Janus Capital Management served as Sub-advisor to the AST Goldman Sachs Mid-Cap Growth
Portfolio (formerly, the AST Janus Mid-Cap Growth Portfolio). Goldman Sachs Asset Management has served as Sub-advisor
to the Portfolio since November 11, 2002.

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
------

47.58% $403,430 185% 1.02% 1.17% (0.19%)
(26.46%) 293,297 132% 1.00% 1.15% (0.12%)
(28.43%) 537,324 196% 1.16% 1.17% (0.64%)
(20.95%) 791,839 136% 1.11% 1.13% (0.67%)
55.90% 841,984 133% 1.14% 1.14% (0.67%)

69.16% $187,565 96% 1.22% 1.22% (0.99%)
(29.19%) 39,072 250% 1.35% 1.38% (1.02%)
(20.61%) 49,489 244% 1.35% 1.78% (0.84%)
(9.00%) 1,938 49% 1.35% 7.22% 2.67%

41.08% $343,442 67% 1.26% 1.26% 0.40%
(7.93%) 315,101 129% 1.27% 1.27% 0.62%
9.91% 432,511 159% 1.18% 1.18% 0.69%
33.85% 227,759 67% 1.15% 1.15% (0.13%)
8.81% 74,192 85% 1.24% 1.24% (0.36%)

35.78% $774,416 26% 1.10% 1.10% 0.04%
(9.38%) 501,070 24% 1.10% 1.10% 0.20%
6.98% 538,479 59% 1.08% 1.08% 0.54%
21.86% 333,586 88% 1.12% 1.12% 0.87%
0.58% 261,493 26% 1.11% 1.11% 0.64%

43.46% $51,980 193% 1.15% 1.36% 0.62%
(22.50%) 13,419 122% 1.15% 1.48% 0.43%

31.60% $160,549 59% 1.31% 1.41% (0.54%)
(27.46%) 61,373 162% 1.31% 1.33% (0.65%)
(40.17%) 71,039 203% 1.34% 1.34% (0.63%)
(33.60%) 65,098 55% 1.28% 1.28% 0.18%

AMERICAN SKANDIA TRUST

FINANCIAL HIGHLIGHTS

PER SHARE DATA (FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)

INCREASE (DECREASE) FROM
INVESTMENT OPERATIONS LESS DISTRIBUTIONS
----------------------------------------- -----------------------------------

AST Neuberger Berman 12/31/03 $9.39 $(0.09) $2.96 $2.87 $ -- $ -- $ -- $12.26
Mid-Cap Growth 12/31/02 13.65 (0.13) (4.13) (4.26) -- -- -- 9.39
12/31/01 21.63 (0.06) (5.02) (5.08) -- (2.90) (2.90) 13.65
12/31/00 24.03 (0.04) (1.74) (1.78) -- (0.62) (0.62) 21.63
12/31/99 17.26 (0.11) 8.21 8.10 -- (1.33) (1.33) 24.03

AST Neuberger Berman 12/31/03 $13.09 $0.02 $4.72 $4.74 $(0.03) $ -- $(0.03) $17.80
Mid-Cap Value 12/31/02 15.41 0.03 (1.56) (1.53) (0.08) (0.71) (0.79) 13.09
12/31/01 16.85 0.08 (0.60) (0.52) (0.02) (0.90) (0.92) 15.41
12/31/00 13.32 0.02 3.60 3.62 (0.04) (0.05) (0.09) 16.85
12/31/99 13.16 0.10 0.60 0.70 (0.24) (0.30) (0.54) 13.32

AST Alger All-Cap 12/31/03 $3.66 $(0.02) $1.32 $1.30 $ -- $ -- $ -- $4.96
Growth 12/31/02 5.70 (0.04) (2.00) (2.04) -- -- -- 3.66
12/31/01 6.84 (0.02) (1.12) (1.14) -- -- -- 5.70
12/31/00(1) 10.00 -- (3.16) (3.16) -- -- -- 6.84

AST Gabelli All-Cap 12/31/03 $7.77 $0.04 $2.72 $2.76 $(0.07) $ -- $(0.07) $10.46
Value 12/31/02 9.86 0.06 (2.09) (2.03) (0.06) -- (0.06) 7.77
12/31/01 10.09 0.04 (0.25) (0.21) (0.01) (0.01) (0.02) 9.86
12/31/00(2) 10.00 0.03 0.06 0.09 -- -- -- 10.09

AST T. Rowe Price 12/31/03 $13.56 $0.12 $4.25 $4.37 $(0.20) $(0.28) $(0.48) $17.45
Natural Resources 12/31/02 15.12 0.07 (0.85) (0.78) (0.24) (0.54) (0.78) 13.56
12/31/01 16.50 0.15 (0.04) 0.11 (0.20) (1.29) (1.49) 15.12
12/31/00 13.16 0.17 3.31 3.48 (0.14) -- (0.14) 16.50
12/31/99 11.97 0.14 2.67 2.81 (0.18) (1.44) (1.62) 13.16

AST Alliance Growth+ 12/31/03 $6.75 $(0.01) $1.61 $1.60 $ -- $ -- $ -- $ 8.35
12/31/02 9.78 (0.03) (3.00) (3.03) -- -- -- 6.75
12/31/01 15.15 (0.02) (1.93) (1.95) -- (3.42) (3.42) 9.78
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

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

30.56% $360,010 150% 1.17% 1.17% (0.83%)
(31.21%) 287,458 104% 1.16% 1.16% (0.84%)
(25.79%) 518,580 117% 1.12% 1.12% (0.60%)
(8.07%) 719,405 121% 1.09% 1.09% (0.55%)
51.37% 394,325 148% 1.13% 1.13% (0.71%)

36.32% $1,027,374 70% 1.15% 1.15% 0.15%
(10.56%) 760,973 92% 1.16% 1.16% 0.20%
(3.03%) 1,003,034 221% 1.22% 1.22% 0.55%
27.49% 978,649 220% 1.24% 1.24% 0.19%
5.67% 664,383 176% 1.13% 1.13% 0.39%

35.52% $402,505 159% 1.40% 1.40% (0.53%)
(35.79%) 323,286 182% 1.29% 1.29% (0.67%)
(16.67%) 743,059 150% 1.20% 1.20% (0.37%)
(31.60%) 205,079 123% 1.24% 1.24% (0.05%)

35.85% $181,874 30% 1.20% 1.20% 0.41%
(20.71%) 113,557 28% 1.19% 1.19% 0.63%
(2.18%) 158,886 68% 1.20% 1.20% 0.89%
0.90% 14,165 31% 1.45% 1.59% 2.71%

33.52% $170,860 43% 1.17% 1.17% 0.77%
(5.53%) 122,686 56% 1.16% 1.16% 0.54%
0.70% 135,550 36% 1.08% 1.11% 0.85%
26.79% 134,644 96% 1.14% 1.20% 1.13%
28.11% 102,225 72% 1.16% 1.16% 1.11%

23.70% $237,056 63% 1.16% 1.16% (0.14%)
(30.98%) 240,490 59% 1.13% 1.13% (0.31%)
(14.72%) 452,984 106% 1.13% 1.13% (0.22%)
(13.74%) 467,362 135% 1.16% 1.16% (0.46%)
33.91% 364,454 316% 1.11% 1.11% (0.50%)

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

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

AST MFS Growth** 12/31/03 $5.94 $(0.01) $1.37 $1.36 $ -- $ -- $ -- $7.30
12/31/02 8.27 (0.02) (2.31) $(2.33) -- -- -- 5.94
12/31/01 10.56 (0.01) (2.28) (2.29) --? -- -- 8.27
12/31/00 11.30 0.01 (0.75) (0.74) -- -- -- 10.56
12/31/99(1) 10.00 0.01 1.29 1.30 -- -- -- 11.30

AST Marsico Capital 12/31/03 $11.72 $(0.02) $3.74 $3.72 $ -- $ -- $ -- $15.44
Growth 12/31/02 13.88 (0.04) (2.12) (2.16) -- -- -- 11.72
12/31/01 18.10 (0.04) (3.84) (3.88) -- (0.34) (0.34) 13.88
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

AST Goldman Sachs 12/31/03 $16.71 $(0.05) $4.25 $4.20 $(0.06) $ -- $(0.06) $20.85
Concentrated Growth*+ 12/31/02 23.97 0.06 (7.18) (7.12) (0.14) -- (0.14) 16.71
12/31/01 35.08 0.13 (11.24) (11.11) -- -- -- 23.97
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

AST DeAM Large-Cap 12/31/03 $7.85 $0.09 $1.98 $2.07 $(0.07) $ -- $(0.07) $9.85
Value*+ 12/31/02 9.30 0.06 (1.48) (1.42) (0.03) -- (0.03) 7.85
12/31/01 9.85 0.01 (0.55) (0.54) (0.01) -- (0.01) 9.30
12/31/00(2) 10.00 0.03 (0.18) (0.15) -- -- -- 9.85

AST 12/31/03 $7.25 $0.03 $1.85 $1.88 $(0.05) $ -- $(0.05) $9.08
Alliance/Bernstein
Growth + Value 12/31/02 9.71 0.06 (2.47) (2.41) (0.01) (0.04) (0.05) 7.25
12/31/01(3) 10.00 0.01 (0.30) (0.29) -- -- -- 9.71

--------------------------------------------------------------------------------------------------------------------------
(1) Commenced operations on October 18, 1999.
(2) Commenced operations on October 23, 2000.
(3) Commenced operations on May 1, 2001.
* 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".
** Acquired the AST Alger Growth Portfolio on February 16, 2001.
*+ Prior to November 11, 2002, the Portfolio was known as the AST JanCap Growth Portfolio and Janus Capital Management
served as its Sub-advisor. Goldman Sachs Asset Management has served as Sub-advisor to the Portfolio since November 11,
2002.
? Amount represents less than a penny per share.

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
------

22.90% $593,307 262% 1.25% 1.25% (0.20%)
(28.17%) 526,085 198% 1.18% 1.18% (0.28%)
(21.68%) 974,397 210% 1.11% 1.11% (0.12%)
(6.53%) 82,051 243% 1.24% 1.24% 0.08%
13.00% 4,868 60% 1.35% 1.35% 0.76%

31.74% $1,710,581 82% 1.10% 1.11% (0.21%)
(15.56%) 1,081,101 109% 1.09% 1.10% (0.29%)
(21.71%) 1,252,427 111% 1.06% 1.08% (0.25%)
(14.25%) 1,770,849 118% 1.04% 1.06% (0.09%)
52.58% 1,723,736 115% 1.08% 1.08% (0.25%)

25.25% $1,151,200 21% 1.06% 1.13% (0.26%)
(29.84%) 1,147,612 109% 1.06% 1.09% 0.23%
(31.67%) 2,452,732 46% 1.04% 1.07% 0.45%
(30.97%) 4,262,410 34% 1.00% 1.04% (0.13%)
55.01% 5,923,778 35% 1.00% 1.04% 0.12%

26.59% $133,821 161% 0.99% 1.09% 1.13%
(15.30%) 109,994 202% 1.07% 1.15% 0.96%
(5.53%) 45,357 134% 1.35% 1.35% 0.51%
(1.50%) 6,351 1% 1.35% 2.41% 3.39%

26.10% $63,837 25% 1.15% 1.15% 0.50%
(25.00%) 32,065 43% 1.15% 1.15% 0.60%
(2.80%) 34,007 95% 1.35% 1.45% 0.46%

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

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 Sanford Bernstein 12/31/03 $8.77 $0.18 $2.28 $2.46 $(0.06) $ -- $(0.06) $11.17
Core Value 12/31/02 10.14 0.09 (1.43) (1.34) (0.03) -- (0.03) 8.77
12/31/01(1) 10.00 0.04 0.10 0.14 -- -- -- 10.14

AST Cohen & Steers 12/31/03 $10.05 $0.49 $3.02 $3.51 $(0.41) $(0.24) $(0.65) $12.91
Realty 12/31/02 10.11 0.49 (0.22) 0.27 (0.33) -- (0.33) 10.05
12/31/01 10.18 0.50 (0.23) 0.27 (0.34) -- (0.34) 10.11
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

AST Sanford Bernstein 12/31/03 $8.75 $0.11 $2.24 $2.35 $(0.12) $ -- $(0.12) $10.98
Managed Index 500+ 12/31/02 11.14 0.11 (2.39) (2.28) (0.11) -- (0.11) 8.75
12/31/01 12.63 0.11 (1.36) (1.25) (0.11) (0.13) (0.24) 11.14
12/31/00 14.96 0.10 (1.40) (1.30) (0.08) (0.95) (1.03) 12.63
12/31/99 12.78 0.08 2.56 2.64 (0.06) (0.40) (0.46) 14.96

AST American Century 12/31/03 $9.41 $0.15 $2.51 $2.66 $(0.12) $ -- $(0.12) $11.95
Income & Growth++ 12/31/02 11.84 0.12 (2.45) (2.33) (0.10) -- (0.10) 9.41
12/31/01 13.02 0.10 (1.19) (1.09) (0.09) -- (0.09) 11.84
12/31/00 15.65 0.07 (1.74) (1.67) (0.08) (0.88) (0.96) 13.02
12/31/99 13.47 0.09 2.84 2.93 (0.11) (0.64) (0.75) 15.65

AST Alliance 12/31/03 $13.57 $0.14 $4.19 $4.33 $(0.19) $ -- $(0.19) $17.71
Growth and Income** 12/31/02 18.70 0.18 (4.35) (4.17) (0.13) (0.83) (0.96) 13.57
12/31/01 21.38 0.12 (0.15) (0.03) (0.19) (2.46) (2.65) 18.70
12/31/00 23.50 0.19 0.57 0.76 (0.23) (2.65) (2.88) 21.38
12/31/99 21.68 0.23 3.04 3.27 (0.25) (1.20) (1.45) 23.50

AST Hotchkis & Wiley 12/31/03 $12.55 $0.24 $2.18 $2.42 $(0.31) $ -- $(0.31) $14.66
Large-Cap Value*** 12/31/02 15.59 0.30 (2.96) (2.66) 0.38) -- (0.38) 12.55
12/31/01 17.59 0.34 (1.82) (1.48) (0.36) (0.16) (0.52) 15.59
12/31/00 18.65 0.38 0.32 0.70 (0.36) (1.40) (1.76) 17.59
12/31/99 17.50 0.36 1.61 1.97 (0.32) (0.50) (0.82) 18.65

AST DeAM Global 12/31/03 $9.38 $0.12 $1.69 $1.81 $(0.12) $ -- $(0.12) $11.07
Allocation++ 12/31/02 11.46 0.11 (1.84) (1.73) (0.35) -- (0.35) 9.38
12/31/01 13.30 0.34 (1.87) (1.53) (0.31) -- (0.31) 11.46
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

--------------------------------------------------------------------------------------------------------------------------
(1) Commenced operations on May 1, 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".
+ Prior to May 1, 2000, the Portfolio was known as the AST Bankers Trust Managed Index 500 Portfolio and Bankers Trust
Company served as its Sub-advisor. Sanford C. Bernstein & Co. has served as Sub-advisor to the Portfolio since May 1,
2000.
++ Prior to May 4, 1999, the Portfolio was known as the AST Putnam Value Growth and Income Portfolio and Putnam
Investment Management, Inc. served as its Sub-advisor. American Century Investment Management, Inc. has served as
Sub-advisor to the Portfolio since May 4, 1999.
**Prior to May 1, 2000, Lord, Abbett & Co. LLC 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, 2004, the Portfolio was known as the AST INVESCO Capital Income Portfolio and INVESCO Funds Group,
Inc. served as its Sub-advisor. Hotchkis and Wiley Capital Management, LLC has served as Sub-advisor to the Portfolio
since May 1, 2004.

RATIOS OF EXPENSES
SUPPLEMENTAL DATA TO AVERAGE NET ASSETS*
---------------------------------------- ---------------------------------------

ASSETS
------

28.31% $192,547 90% 1.14% 1.14% 1.55%
(13.24%) 199,176 28% 1.00% 1.00% 1.63%
1.40% 44,100 25% 1.15% 1.15% 1.36%

37.43% $289,502 34% 1.24% 1.24% 5.43%
2.65% 177,520 60% 1.26% 1.26% 5.11%
2.85% 139,631 59% 1.21% 1.21% 5.01%
26.19% 132,486 59% 1.28% 1.28% 5.21%
2.26% 56,697 51% 1.27% 1.27% 4.95%

27.32% $541,492 45% 0.84% 0.84% 1.03%
(20.64%) 441,169 36% 0.84% 0.84% 1.04%
(10.01%) 623,363 54% 0.77% 0.78% 0.95%
(8.82%) 704,897 84% 0.78% 0.78% 0.84%
21.23% 633,567 101% 0.79% 0.77% 0.74%

28.78% $305,810 81% 0.99% 0.99% 1.46%
(19.81%) 259,122 83% 0.98% 0.98% 1.04%
(8.44%) 374,739 55% 0.94% 0.94% 0.76%
(10.77%) 487,880 61% 0.94% 0.94% 0.68%
22.98% 360,630 125% 0.98% 0.98% 0.86%

32.43% $1,836,529 62% 0.97% 0.99% 1.01%
(23.28%) 1,169,698 79% 0.96% 0.98% 0.99%
(0.48%) 1,875,230 103% 0.94% 0.96% 0.74%
5.52% 1,595,755 144% 1.05% 1.06% 0.96%
16.09% 1,498,306 69% 0.92% 0.94% 1.09%

19.94% $640,112 100% 0.98% 0.98% 1.50%
(17.49%) 660,533 32% 0.95% 0.95% 1.80%
(8.59%) 1,029,069 26% 0.91% 0.92% 2.17%
4.74% 1,173,070 55% 0.94% 0.95% 2.25%
11.74% 1,048,064 76% 0.93% 0.93% 2.10%

19.53% $264,808 18% 0.14% 0.14% 1.08%
(15.43%) $284,362 160% 0.47% 0.47% 0.91%
(11.73%) 481,159 77% 0.89% 0.95% 2.68%
(4.36%) 622,641 60% 0.95% 0.95% 2.70%
20.85% 499,571 154% 1.00% 1.00% 2.37%

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

AST American Century 12/31/03 $11.14 $0.18 $1.87 $2.05 $(0.27) $ -- $(0.27) $12.92
Strategic Balanced 12/31/02 12.62 0.26 (1.47) (1.21) (0.27) -- (0.27) 11.14
12/31/01 13.70 0.27 (0.78) (0.51) (0.25) (0.32) (0.57) 12.62
12/31/00 15.30 0.32 (0.81) (0.49) (0.23) (0.88) (1.11) 13.70
12/31/99 13.66 0.20 1.56 1.76 (0.12) -- (0.12) 15.30

AST T. Rowe Price 12/31/03 $12.74 $0.24 $2.73 $2.97 $(0.35) $ -- $(0.35) $15.36
Asset Allocation 12/31/02 15.05 0.34 (1.76) (1.42) (0.39) (0.50) (0.89) 12.74
12/31/01 18.12 0.41 (1.21) (0.80) (0.52) (1.75) (2.27) 15.05
12/31/00 18.86 0.52 (0.63) (0.11) (0.45) (0.18) (0.63) 18.12
12/31/99 17.47 0.44 1.32 1.76 (0.36) (0.01) (0.37) 18.86

AST T. Rowe Price 12/31/03 $11.10 $0.27 $1.12 $1.39 $(0.37) $(0.02) $(0.39) $12.10
Global Bond++ 12/31/02 9.65 0.05 1.40 1.45 -- -- -- 11.10
12/31/01 9.40 0.56 (0.31) 0.25 -- -- -- 9.65
12/31/00 9.60 0.48 (0.53) (0.05) (0.15) -- (0.15) 9.40
12/31/99 11.46 0.33 (1.25) (0.92) (0.71) (0.23) (0.94) 9.60

AST Goldman Sachs 12/31/03 $7.89 $0.62 $0.95 $1.57 $(0.69) $ -- $(0.69) $8.77
High Yield** 12/31/02 8.86 0.69 (0.70) (0.01) (0.96) -- (0.96) 7.89
12/31/01 9.71 0.74 (0.66) 0.08 (0.93) -- (0.93) 8.86
12/31/00 11.92 1.18 (2.23) (1.05) (1.16) -- (1.16) 9.71
12/31/99 12.65 1.03 (0.77) 0.26 (0.91) (0.08) (0.99) 11.92

AST Lord Abbett Bond 12/31/03 $10.07 $0.44 $1.37 $1.81 $(0.44) $ -- $(0.44) $11.44
Debenture 12/31/02 10.45 0.42 (0.39) 0.03 (0.41) -- (0.41) 10.07
12/31/01 10.15 0.39 (0.08) 0.31 (0.01) -- (0.01) 10.45
12/31/00(1) 10.00 0.02 0.13 0.15 -- -- -- 10.15

AST PIMCO Total 12/31/03 $12.24 $0.35 $0.27 $0.62 $(0.43) $(0.44) $(0.87) $11.99
Return Bond 12/31/02 11.93 0.39 0.66 1.05 (0.52) (0.22) (0.74) 12.24
12/31/01 11.60 0.56 0.42 0.98 (0.65) -- (0.65) 11.93
12/31/00 10.99 0.65 0.56 1.21 (0.60) -- (0.60) 11.60
12/31/99 12.02 0.58 (0.71) (0.13) (0.52) (0.38) (0.90) 10.99

AST PIMCO Limited 12/31/03 $11.36 $0.22 $0.14 $0.36 $(0.22) $(0.13) $(0.35) $11.37
Maturity Bond 12/31/02 11.30 0.24 0.43 0.67 (0.47) (0.14) (0.61) 11.36
12/31/01 11.07 0.50 0.36 0.86 (0.63) -- (0.63) 11.30
12/31/00 10.84 0.68 0.17 0.85 (0.62) -- (0.62) 11.07
12/31/99 11.08 0.59 (0.22) 0.37 (0.61) -- (0.61) 10.84

AST Money Market+++ 12/31/03 $1.00 $ --? $ -- $ --? $ --? --? $ --? $1.00
12/31/02 1.00 0.01 -- 0.01 (0.01) --? (0.01) 1.00
12/31/01 1.00 0.04 -- 0.04 (0.04) --? (0.04) 1.00
12/31/00 1.00 0.06 -- 0.06 (0.06) --? (0.06) 1.00
12/31/99 1.00 0.04 -- 0.04 (0.04) --? (0.04) 1.00
---------------------- ----------- ---------- ------------ ------------ ---------- ------------- ------------ ------------ -------------

(1) Commenced operations on October 23, 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 May 1, 2000, the AST T. Rowe Price Global Bond Portfolio was known as the AST T. Rowe Price International
Bond Portfolio.
** Prior to May 1, 2004, the Portfolio was known as the AST Federated High Yield Portfolio and Federated Investment
Counseling served as its Sub-advisor. Goldman Sachs Asset Management has served as the Portfolio's Sub-advisor since
May 1, 2004.
+++Prior to September 22, 2001, J.P. Morgan Investment Management Inc. served as Sub-advisor to the Portfolio. Wells
Capital Management, Incorporated has served as Sub-advisor to the Portfolio since September 22, 2001.
? Amount represents less than a penny per share.

RATIOS OF EXPENSES
SUPPLEMENTAL DATA TO AVERAGE NET ASSETS*
---------------------------------------- ---------------------------------------

ASSETS
------

18.87% $235,818 145% 1.11% 1.11% 1.57%
(9.74%) $179,368 126% 1.10% 1.10% 2.16%
(3.80%) 210,722 124% 1.08% 1.08% 2.19%
(3.11%) 217,483 125% 1.10% 1.10% 2.23%
12.97% 216,748 104% 1.10% 1.10% 1.93%

24.02% $360,152 94% 1.12% 1.12% 1.84%
(9.89%) 269,119 107% 1.11% 1.11% 2.37%
(4.79%) 332,791 103% 1.10% 1.10% 2.46%
(0.48%) 395,375 43% 1.08% 1.08% 2.64%
10.28% 447,542 17% 1.07% 1.07% 2.65%

12.86% $229,630 196% 1.06% 1.06% 2.57%
15.03% 209,594 323% 1.06% 1.06% 3.13%
2.66% 108,014 187% 0.87% 1.08% 4.83%
(0.45%) 122,200 171% 1.12% 1.12% 4.35%
(8.33%) 138,144 106% 1.11% 1.11% 3.51%

21.59% $868,511 65% 0.93% 0.93% 7.56%
0.04% 576,441 41% 0.94% 0.94% 9.02%
0.14% 525,821 48% 0.95% 0.95% 10.22%
(9.69%) 497,882 20% 0.96% 0.96% 10.36%
2.00% 623,788 39% 0.94% 0.94% 9.09%

18.74% $346,412 84% 1.04% 1.04% 6.31%
0.41% 164,939 43% 1.04% 1.04% 7.16%
3.04% 62,456 102% 1.10% 1.10% 7.23%
1.50% 6,783 9% 1.20% 3.07% 4.39%

5.32% $2,107,944 222% 0.78% 0.80% 2.85%
9.22% 2,255,048 229% 0.78% 0.80% 3.90%
8.87% 1,638,346 343% 0.79% 0.81% 5.02%
11.57% 1,258,218 365% 0.82% 0.82% 6.14%
(1.09%) 1,005,763 227% 0.82% 0.82% 5.46%

3.28% $1,005,924 208% 0.82% 0.82% 1.74%
6.21% 1,058,843 271% 0.83% 0.83% 2.87%
7.97% 611,197 445% 0.83% 0.83% 5.10%
8.43% 417,842 171% 0.87% 0.87% 6.14%
3.37% 406,604 178% 0.86% 0.86% 5.51%

0.63% $1,762,117 N/A 0.59% 0.64% 0.63%
1.29% 2,744,716 N/A 0.58% 0.63% 1.27%
3.77% 2,652,093 N/A 0.59% 0.64% 3.60%
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%
--------------------------------------------------------------------------------------------------------------------------

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 or, if additional cash
consideration is required, cash or other assets determined to be liquid in such amount are segregated on the Portfolios'
records). 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 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 to increase
exposure to a foreign currency 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 unless open positions in forwards used for non-hedging purposes are covered by the segregation
on the Portfolios' records of assets determined to be liquid and marked to market daily. 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 Trust'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 DeAM Small-Cap Growth Portfolio, the AST Neuberger Berman Mid-Cap Growth
Portfolio, the AST Neuberger Berman Mid-Cap Value 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. The AST
Goldman Sachs High Yield Portfolio may enter into repurchase agreements collateralized by securities issued by foreign
governments. 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 JPMorgan International Equity Portfolio, AST William Blair
International Growth Portfolio, the AST State Street Research Small-Cap Growth Portfolio, the AST Goldman Sachs 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 Goldman Sachs Concentrated Growth Portfolio, the AST DeAM Large-Cap
Value Portfolio, the AST Lord Abbett Bond-Debenture Portfolio, the AST Goldman Sachs High Yield Portfolio, 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 or broker/dealers. 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 DeAM International Equity Portfolio, the AST JPMorgan
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 DeAM Global Allocation 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 (collectively, a "Borrower") 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. Any cash collateral received by a Portfolio in connection
with such loans normally will be invested in short-term instruments, which may not be immediately liquid under certain
circumstances. Any losses resulting from the investment of cash collateral would be borne by the lending Portfolio. The
Portfolio could also suffer a loss where the value of the collateral falls below the market value of the borrowed
securities, in the event of a Borrower's default. These events could trigger adverse tax consequences to a Portfolio.
Lending securities involves certain other risks, including the risk that the Portfolio will be delayed or prevented from
recovering the collateral if the borrower fails to timely return a loaned security and the risk that an increase in
interest rates may result in unprofitable securities loans made to Borrowers.

OTHER INVESTMENT COMPANIES:

The Trust 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, including investment management fees, and the Portfolios, as
shareholders in these mutual funds, will indirectly pay their proportionate share of such funds' expenses. Furthermore,
the AST DeAM Global Allocation Portfolio, focuses its investments in mutual funds including other AST portfolios.

EXCHANGE-TRADED FUNDS (ETFs):

ETFs are a type of investment company bought and sold on a securities exchange. An ETF represents a fixed
portfolio of securities designed to track a particular market index. Consistent with their respective investment
objectives and when otherwise permissible, the various portfolios could purchase an ETF to temporarily gain exposure to
a portion of the U.S. or a foreign market while awaiting purchase of underlying securities. The risks of owning an ETF
generally reflect the risks of owning the underlying securities they are designed to track, although lack of liquidity
in an ETF could result in it being more volatile. ETFs have management fees which increase their costs.

SHORT SALES "AGAINST THE BOX":

The AST JPMorgan International Equity Portfolio, the AST William Blair International Growth Portfolio, the AST
State Street Research Small-Cap Growth Portfolio, the AST Goldman Sachs Small-Cap Value Portfolio, the AST Goldman Sachs
Mid-Cap Growth Portfolio, the AST Goldman Sachs Concentrated Growth Portfolio, the AST DeAM Large-Cap Value Portfolio,
the AST American Century Income & Growth Portfolio, the AST Gabelli All-Cap Value Portfolio, the AST Hotchkis & Wiley
Large-Cap Value Portfolio, the AST DeAM Global Allocation Portfolio, the AST American Century Strategic Balanced
Portfolio, the AST Goldman Sachs High Yield Portfolio, the AST PIMCO Total Return Bond Portfolio, the AST PIMCO Limited
Maturity Bond Portfolio and the AST Federated Aggressive Growth Portfolio 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.

INITIAL PUBLIC OFFERINGS:

Certain Portfolios may participate in the initial public offering ("IPO") market, and a portion of a
Portfolio's returns may be attributable to Portfolio investments in IPOs. There is no guarantee that as a Portfolio's
assets grow it will be able to experience significant improvement in performance by investing in IPOs. A Portfolio's
purchase of shares issued as part of, or a short period after, companies' IPOs, exposes it to the risks associated with
companies that have little operating history as public companies, as well as to the risks inherent in those sectors of
the market where these new issuers operate. The market for IPO issuers has been volatile, and share prices of
newly-public companies have fluctuated in significant amounts over short periods of time.

NOTES

Mailing Address
American Skandia Trust
One Corporate Drive
Shelton, CT 06484

Investment Managers
American Skandia Investment Services, Incorporated Prudential Investments LLC
One Corporate Drive Gateway Center Three, 100 Mulberry Street
Shelton, CT 06484 Newark, NJ 07102

Sub-Advisors
Alliance Capital Management L.P.
American Century Investment Management, Inc.
Cohen & Steers Capital Management, Inc.
Deutsche Asset Management, Inc.
Federated Equity Management Company
Fred Alger Management, Inc.
GAMCO Investors, Inc.
Goldman Sachs Asset Management, L.P.
Hotchkis and Wiley Capital Management, LLC
J.P. Morgan Investment Management, Inc.
Lord, Abbett & Co. LLC
Marsico Capital Management, LLC
Massachusetts Financial Services Company
Neuberger Berman Management Inc.
Pacific Investment Management Company LLC
Sanford C. Bernstein & Co., LLC
State Street Research and Management Company
T. Rowe Price Associates, Inc.
T. Rowe Price International, Inc.
Wells Capital Management, Inc.
William Blair & Company L.L.C.

Custodians
PFPC Trust Company JP Morgan Chase Bank
400 Bellevue Parkway 4 MetroTech Center
Wilmington, DE 19809 Brooklyn, NY 11245

Administrator
Transfer and Shareholder Servicing Agent
PFPC Inc.
103 Bellevue Parkway
Wilmington, DE 19809

Independent Accountants
KPMG LLP
757 Third Avenue
New York, NY 10017

Legal Counsel
Shea & Gardner
1800 Massachusetts Ave, N.W.
Washington, D.C. 20036

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 or 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, 2004

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 JPMorgan International Equity Portfolio (formerly, the AST Strong International
Equity Portfolio), the AST William Blair International Growth Portfolio, the AST DeAM International Equity Portfolio, the
AST MFS Global Equity Portfolio, the AST State Street Research Small-Cap Growth Portfolio (formerly, the AST PBHG
Small-Cap Growth Portfolio), the AST DeAM Small-Cap Growth Portfolio, the AST Federated Aggressive Growth Portfolio, the
AST Goldman Sachs Small-Cap Value Portfolio, the AST Gabelli Small-Cap Value Portfolio, the DeAM Small-Cap Value
Portfolio, the AST Goldman Sachs 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 T. Rowe Price Natural Resources Portfolio, the AST Alliance Growth Portfolio, the AST MFS Growth
Portfolio, the AST Marsico Capital Growth Portfolio, the AST Goldman Sachs Concentrated Growth Portfolio, the AST DeAM
Large-Cap Value Portfolio, the AST Hotchkis & Wiley Large-Cap Value Portfolio (formerly, the AST INVESCO Capital Income
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 DeAM Global Allocation 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 Goldman Sachs High Yield Portfolio (formerly, 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") serves as co-manager of the Trust along with Prudential
Investments LLC ("PI") (each an "Investment Manager" and together the "Investment Managers"). The Investment Managers
engage a sub-advisor ("Sub-advisor") for each Portfolio. The Sub-advisor for each Portfolio is as follows: (a) J.P.
Morgan Investment Management Inc.: AST JP Morgan International Equity Portfolio; (b) William Blair & Company LLC: AST
William Blair International Growth Portfolio: (c) American Century Investment Management, Inc.: AST American Century
Income & Growth Portfolio, AST American Century Strategic Balanced Portfolio; (d) Deutsche Asset Management, Inc.: AST
DeAM International Equity Portfolio, AST DeAM Small-Cap Growth Portfolio, AST DeAM Small-Cap Value Portfolio, AST DeAM
Large-Cap Value Portfolio, DeAM Global Allocation Portfolio; (e) Massachusetts Financial Services Company: AST MFS Global
Equity Portfolio, AST MFS Growth Portfolio; (f) State Street Research and Management Company: AST State Street Research
Small-Cap Growth Portfolio; (g) Federated Equity Management Company of Pennsylvania: AST Federated Aggressive Growth
Portfolio; (h) Goldman Sachs Asset Management, L.P.: AST Goldman Sachs Small-Cap Value Portfolio, AST Goldman Sachs
Mid-Cap Growth Portfolio, AST Goldman Sachs Concentrated Growth Portfolio, AST Goldman Sachs High Yield 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) T. Rowe Price Associates, Inc.: AST T. Rowe Price
Natural Resources Portfolio, AST T. Rowe Price Asset Allocation Portfolio; (m) 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; (n) Marsico Capital Management, LLC: AST Marsico Capital Growth Portfolio; (o) Sanford C. Bernstein
& Co., LLC: the value portion of the AST Alliance/Bernstein Growth + Value Portfolio, AST Sanford Bernstein Managed Index
500 Portfolio, AST Sanford Bernstein Core Value Portfolio; (p) Cohen & Steers Capital Management, Inc.: AST Cohen &
Steers Realty Portfolio; (q) Hotchkis and Wiley Capital Management, LLC: AST Hotchkis & Wiley Large-Cap Value Portfolio;
(r) T. Rowe Price International, Inc.: AST T. Rowe Price Global Bond Portfolio (s) Lord, Abbett & Co. LLC: AST Lord
Abbett Bond-Debenture Portfolio; (t) Pacific Investment Management Company LLC: AST PIMCO Total Return Bond Portfolio,
AST PIMCO Limited Maturity Bond Portfolio; and (u) Wells Capital Management, Incorporated: AST Money Market Portfolio.

This Statement of Additional Information ("SAI" or "Statement") 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 SAI relates to the Trust's Prospectus
dated May 1, 2004.

TABLE OF CONTENTS
-----------------
Caption Page
------- ----
GENERAL INFORMATION AND HISTORY:...................................................................................................3
INVESTMENT OBJECTIVES AND POLICIES:................................................................................................3
AST JP Morgan International Equity Portfolio:...................................................................................4
AST William Blair International Growth Portfolio:...............................................................................9
AST DeAM International Equity Portfolio:.......................................................................................12
AST MFS Global Equity Portfolio:...............................................................................................19
AST State Street Research Small-Cap Growth Portfolio:..........................................................................28
AST DeAM Small-Cap Growth Portfolio:...........................................................................................30
AST Federated Aggressive Growth Portfolio:.....................................................................................33
AST Goldman Sachs Small-Cap Value Portfolio:...................................................................................37
AST Gabelli Small-Cap Value Portfolio:.........................................................................................41
AST DeAM Small-Cap Value Portfolio:............................................................................................50
AST Goldman Sachs Mid-Cap Growth Portfolio:....................................................................................54
AST Neuberger Berman Mid-Cap Growth Portfolio:.................................................................................57
AST Neuberger Berman Mid-Cap Value Portfolio:..................................................................................64
AST Alger All-Cap Growth Portfolio:............................................................................................70
AST Gabelli All-Cap Value Portfolio:...........................................................................................73
AST T. Rowe Price Natural Resources Portfolio:.................................................................................78
AST Alliance Growth Portfolio:.................................................................................................87
AST MFS Growth Portfolio:......................................................................................................91
AST Marsico Capital Growth Portfolio:.........................................................................................100
AST Goldman Sachs Concentrated Growth Portfolio:..............................................................................102
AST DeAM Large-Cap Value Portfolio:...........................................................................................104
AST Hotchkis & Wiley Large-Cap Value Portfolio:...............................................................................108
AST Alliance/Bernstein Growth + Value Portfolio:..............................................................................111
AST Sanford Bernstein Core Value Portfolio:...................................................................................114
AST Cohen & Steers Realty Portfolio:..........................................................................................116
AST Sanford Bernstein Managed Index 500 Portfolio:............................................................................120
AST American Century Income & Growth Portfolio:...............................................................................123
AST Alliance Growth and Income Portfolio:.....................................................................................128
AST DeAM Global Allocation Portfolio:.........................................................................................130
AST American Century Strategic Balanced Portfolio:............................................................................136
AST T. Rowe Price Asset Allocation Portfolio:.................................................................................149
AST T. Rowe Price Global Bond Portfolio:......................................................................................157
AST Goldman Sachs High Yield Portfolio:.......................................................................................166
AST Lord Abbett Bond-Debenture Portfolio:.....................................................................................189
AST PIMCO Total Return Bond Portfolio:........................................................................................189
AST PIMCO Limited Maturity Bond Portfolio:....................................................................................203
AST Money Market Portfolio:...................................................................................................216
INVESTMENT RESTRICTIONS:.........................................................................................................217
CERTAIN RISK FACTORS AND INVESTMENT METHODS:.....................................................................................230
PORTFOLIO TURNOVER:..............................................................................................................247
ORGANIZATION AND MANAGEMENT OF THE TRUST:........................................................................................247
INVESTMENT ADVISORY AND OTHER SERVICES:..........................................................................................258
BROKERAGE ALLOCATION:............................................................................................................273
ALLOCATION OF INVESTMENTS:.......................................................................................................281
COMPUTATION OF NET ASSET VALUES:.................................................................................................282
SALE OF SHARES:..................................................................................................................282
DESCRIPTION OF SHARES OF THE TRUST:..............................................................................................283
UNDERWRITER:.....................................................................................................................284
TAX MATTERS:.....................................................................................................................284
CUSTODIAN:.......................................................................................................................286
OTHER INFORMATION:...............................................................................................................286
FINANCIAL STATEMENTS:............................................................................................................287
APPENDIX:........................................................................................................................288

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 initial Portfolio is currently known as the AST JPMorgan International Equity Portfolio (formerly known
as the AST Strong International Equity Portfolio, the AST AIM International Equity Portfolio, the AST Putnam
International Equity Portfolio and the Seligman Henderson International Equity Portfolio). The AST Alliance Growth and
Income Portfolio (formerly known as the AST Lord Abbett Growth and Income Portfolio) was first offered as of May 1,
1992. The AST Goldman Sachs Concentrated Growth Portfolio (formerly known as 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 known as the Federated Utility Income Portfolio) and the AST DeAM Global Allocation Portfolio (formerly known
as the AIM Balanced Portfolio, the AST Putnam Balanced Portfolio and the AST Phoenix Balanced Asset Portfolio) were first
offered as of May 1, 1993. The Goldman Sachs High Yield Portfolio (formerly known as the AST Federated High Yield
Portfolio), the AST T. Rowe Price Asset Allocation Portfolio, AST State Street Research Small-Cap Growth Portfolio
(formerly known as the AST PBHG Small-Cap Growth Portfolio, the AST Janus Small-Cap Growth Portfolio and the Founders
Capital Appreciation Portfolio), the AST Hotchkis & Wiley Large-Cap Value Portfolio (formerly known as the AST INVESCO
Capital 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 known as the AST Scudder International Bond Portfolio) was first
offered as of May 1, 1994. The AST Neuberger Berman Mid-Cap Growth Portfolio (formerly known as the Berger Capital
Growth Portfolio) was first offered as of October 19, 1994. The AST DeAM International Equity Portfolio (formerly known
as AST Founders Passport Portfolio and 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 known as the AST Oppenheimer Large-Cap Growth Portfolio and the Robertson
Stephens Value + Growth Portfolio) was first offered as of May 2, 1996. The AST William Blair International Growth
Portfolio (formerly known as the AST Janus Overseas Growth Portfolio), the AST Gabelli Small-Cap Value Portfolio
(formerly known as the AST T. Rowe Price Small Company Value Portfolio), the AST American Century Strategic Balanced
Portfolio and the AST American Century Income & Growth Portfolio (formerly known as 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 known as the AST Lord Abbett Small Cap
Value Portfolio), the AST Cohen & Steers Realty Portfolio, and the AST Sanford Bernstein Managed Index 500 Portfolio
(formerly known as the AST Bankers Trust Managed Index 500 Portfolio) were first offered as of January 2, 1998. The AST
DeAM Small-Cap Growth Portfolio (formerly known as the AST Scudder Small-Cap Growth Portfolio) was first offered as of
January 4, 1999. The AST MFS Global Equity Portfolio and the AST MFS Growth 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 Goldman Sachs
Mid-Cap Growth Portfolio (formerly known as the AST Janus Mid-Cap Growth Portfolio) was first offered as of May 1, 2000.
The AST Federated Aggressive Growth Portfolio, the AST Gabelli All-Cap Value Portfolio, the AST DeAM Large-Cap Value
Portfolio (formerly known as the Janus Strategic Value Portfolio) and the AST Lord Abbett Bond-Debenture Portfolio were
first offered on October 23, 2000. The AST Alliance/Bernstein Growth + Value Portfolio and the AST Sanford Bernstein
Core Value Portfolio were first offered on May 1, 2001. The AST DeAM Small-Cap Growth Portfolio was first offered on May
1, 2002.

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 JPMorgan International Equity Portfolio:

Investment Objective: The investment objective of the Portfolio (formerly, the AST Strong International Equity
Portfolio) is to seek long-term capital growth by investing in a diversified portfolio of international equity securities.

Investment Policies:

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.

Reverse Repurchase Agreements. The Portfolio may employ reverse repurchase agreements (i) for temporary
emergency purposes, such as to meet unanticipated net redemptions so as to avoid liquidating other portfolio securities
during unfavorable market conditions; (ii) to cover short-term cash requirements resulting from the timing of trade
settlements; or (iii) to take advantage of market situations where the interest income to be earned from the from the
investment of the proceeds of the transaction is greater than the interest expense of the transaction. The Portfolio may
enter into reverse repurchase agreements in amounts not exceeding 10% of the value of its total assets. Reverse
repurchase agreements involve the risk that the market value of securities retained by the Portfolio in lieu of
liquidation may decline below the repurchase price of the securities sold by the Portfolio that it is obligated to
repurchase. This risk could cause a reduction in the net asset value of the Portfolio's shares.

Additional information about reverse repurchase agreements and their risks are included in the Trust's Prospectus
under "Certain Risk Factors and Investment Methods."

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 from banks 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 from time to time 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. Because 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 the convertible 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 the 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
are often higher than the costs of investing in the United States; this is particularly true 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 Trustee.

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 objective, regardless of the holding period of that
security. Additional information about portfolio turnover is included in this Statement under "Portfolio Transactions"
and the Trust's Prospectus under "Portfolio Turnover."

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 if, 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 Policies Which May Be Changed Without Shareholder Approval. The following limitations are applicable
to the AST JPMorgan International Equity Portfolio. These limitations are not "fundamental" restrictions, and may be
changed by the Trustees without shareholder approval. The Portfolio will not:

1. Change its policy to invest at least 80% of the value of its assets in equity securities unless it
provides 60 days prior written notice to its shareholders.

2. Make investments for the purpose of gaining control of a company's management.

AST William Blair International Growth Portfolio:

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

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 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 William Blair International Growth Portfolio. These limitations are not "fundamental" restrictions and may be
changed by the Trustees without shareholder approval:

1. The Portfolio will not change its policy to invest at least 80% of the value of its assets in securities
of issuers that are economically tied to countries other than the United States unless it provides 60 days prior written
notice to its shareholders.

2. 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.

3. 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.

4. 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.

5. The Portfolio does not currently intend to purchase securities of other investment companies, except in
compliance with the 1940 Act.

6. 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.

7. 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.

8. The Portfolio may not invest in companies for the purpose of exercising control of management.

AST DeAM International Equity Portfolio:

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

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.

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."

Securities That Are Not Readily Marketable. The Portfolio may invest up to 15% of the value of its net assets,
measured at the time of investment, in investments that are not readily marketable. As security which is not "readily
marketable" is generally considered to be a security that cannot be disposed of within seven days in the ordinary course
of business at approximately the amount at which it is valued. The Portfolio may invest in restricted securities,
subject to the foregoing 15% limitation. "Restricted" securities generally include securities that are not registered
under the Securities Act of 1933 (the "1933 Act") and are subject to legal or contractual restrictions upon resale.
Restricted securities nevertheless may be "readily marketable" and can often be sold in privately negotiated transactions
or in a registered public offering.

The Portfolio may not be able to dispose of a security that is not "readily marketable" at the time desired or at
a reasonable price. In addition, in order to resell such a security, the Portfolio might have to bear the expense and
incur the delays associated with effecting registration. In purchasing such securities, the Portfolio does not intend to
engage in underwriting activities, except to the extent the Portfolio may be deemed to be a statutory underwriter under
the 1933 Act in disposing of such securities.

Rule 144A Securities. In recent years, a large institutional market has developed for certain securities that
are not registered under the 1933 Act. Institutional investors generally will not seek to sell these instruments to the
general public, but instead will often depend on an efficient institutional market in which such unregistered securities
can readily be resold or on an issuer's ability to honor a demand for repayment. Therefore, the fact that there are
contractual or legal restrictions on resale to the general public or certain institutions is not dispositive of the
liquidity or such investments.

Rule 144A under the 1933 Act, establishes a "safe harbor" from the registration of the 1933 Act for resales of
certain securities to qualified institutional buyers. The Portfolio may invest in Rule 144A securities that may or may
not be readily marketable. Rule 144A securities are readily marketable if institutional markets for the securities
develop pursuant to Rule 144A that provide both readily ascertainable values for the securities and the ability to
liquidate the securities when liquidation is deemed necessary or advisable. However, an insufficient number of qualified
institutional buyers interested in purchasing a Rule 144A security held by the Portfolio could affect adversely the
marketability of the security. In such an instance, the Portfolio might be unable to dispose of the security promptly or
at reasonable prices.

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 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 DeAM International Equity Portfolio. These limitations are not "fundamental" restrictions, and may be changed
by the Trustees without shareholder approval. The Portfolio will not:

1. Change its policy to invest at least 80% of the value of its assets in equity securities unless it
provides 60 days prior written notice to its shareholders.

2. 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;

3. Purchase securities of other investment companies except in compliance with the 1940 Act;

4. Invest in companies for the purpose of exercising control or management.

5. 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

6. 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 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
Trustee.

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 judgment 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."

Investment Policy Which May be Changed Without Shareholder Approval. The following limitation is applicable to
the AST MFS Global Equity Portfolio. This limitation is not a "fundamental" restriction, and may be changed by the
Trustees without shareholder approval. The Portfolio will not:

1. Change its policy to invest at least 80% of the value of its assets in equity securities unless it
provides 60 days prior written notice to its shareholders.

AST State Street Research Small-Cap Growth Portfolio:

Investment Objective: The investment objective of the Portfolio (formerly, the AST PBHG Small-Cap Growth Portfolio) is
capital growth. 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:

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.

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.

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."

Convertible Securities. Convertible securities are securities such as rights, bonds, notes and preferred stocks
which are convertible into or exchangeable for common stocks. Convertible securities have characteristics similar to
both fixed income and equity securities. Because of the conversion feature, the market value of convertible securities
tends to move together with the market value of the underlying common stock. As a result, the Portfolio's selection of
convertible securities is based, to a great extent, on the potential for capital appreciation that may exist in the
underlying stock. The value of convertible securities is also affected by prevailing interest rates, the credit quality
of the issuer, and any call provisions.

Warrants. Warrants are instruments giving holders the right, but not the obligation, to buy shares of a company
at a given price during a specified period.

When-Issued and Delayed-Delivery Securities. When-issued and delayed-delivery securities are securities subject
to settlement on a future date. For fixed income securities, the interest rate realized on when-issued or
delayed-delivery securities is fixed as of the purchase date and no interest accrues to the Portfolio before
settlement. These securities are subject to market fluctuation due to changes in market interest rates and will have
the effect of leveraging the Portfolio's assets. The Portfolio is permitted to invest in forward commitments or
when-issued securities where such purchases are for investment and not for leveraging purposes. One or more segregated
accounts will be established with the Portfolio's Custodian/Custodian Bank, and the Portfolio will maintain liquid assets
in such accounts in an amount at least equal in value to the Portfolio's commitments to purchase when-issued securities.

Small and Medium Capitalization Stocks. Investments in common stocks in general are subject to market risks that
may cause their prices to fluctuate over time. Therefore, an investment in the Portfolio may be more suitable for
long-term investors who can bear the risk of these fluctuations. While the Sub-advisor intends to invest in small
capitalization companies that have strong balance sheets and favorable business prospects, any investment in small
capitalization companies involves greater risk and price volatility than that customarily associated with investments in
larger, more established companies. This increased risk may be due to the greater business risks of their small or
medium size, limited markets and financial resources, narrow product lines and frequent lack of management depth. The
securities of small capitalization companies are often traded in the over-the-counter market, and might not be traded in
volumes typical of securities traded on a national securities exchange. Thus, the securities of small capitalization
companies are likely to be less liquid, and subject to more abrupt or erratic market movements, than securities of
larger, more established companies.

Over-The-Counter Market. The Portfolio will invest in over-the-counter stocks. In contrast to the securities
exchanges, the over-the-counter market is not a centralized facility which limits trading activity to securities of
companies which initially satisfy certain defined standards. Generally, the volume of trading in an unlisted or
over-the-counter common stock is less than the volume of trading in a listed stock. This means that the depth of market
liquidity of some stocks in which the Portfolio invests may not be as great as that of other securities and, if the
Portfolio were to dispose of such a stock, they might have to offer the shares at a discount from recent prices, or sell
the shares in small lots over an extended period of time.

Investment Policies Which May Be Changed Without Shareholder Approval. The following limitations are applicable
to the AST State Street Research Small-Cap Growth Portfolio. These limitations are not "fundamental" restrictions, and
may be changed by the Trustees without shareholder approval.

1. The Portfolio will not change its policy to invest at least 80% of the value of its assets in small
capitalization companies unless it provides 60 days prior written notice to its shareholders.

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 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 DeAM 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 DeAM Small-Cap Growth Portfolio. These limitations are not "fundamental" restrictions and may be changed without
shareholder approval. The Portfolio will not:

1. Change its policy to invest at least 80% of the value of its assets in small capitalization companies
unless it provides 60 days prior written notice to its shareholders.

2. Invest for the purpose of exercising control or management of another issuer.

3. Purchase securities of other investment companies, except in compliance with the 1940 Act.

4. 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 Portfolio 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.

Warrants and Interests in Limited Liability Companies. Entities such as limited partnerships, limited
liability companies, business trusts and companies organized the United States may issue securities comparable to common
or preferred stock.

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
Portfolio 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 individual securities, indices and futures in anticipation of an increase
in the value of the underlying asset.
o The Portfolio may buy put options on individual 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."

Short Sales. The Portfolio may make short sales of securities listed on one or more national exchanges or on the
NASDAQ stock exchange. A short sale means selling a security the Portfolio does not own to take advantage of an
anticipated decline in the stock's price. Once the Portfolio sells the security short, it has an obligation to replace
the borrowed security. If it can buy the security back at a lower price, a profit results. In no event will the
Portfolio engage in short sales transactions if it would cause the market value of all of the Portfolio's securities sold
short to exceed 25% of its net assets. The value of the securities of any one issuer that may be shorted by the
Portfolio is limited to the lesser of 2% of the value of the Portfolio's net assets or 2% of the securities of any class
of the issuer. The Portfolio may also "sell short against the box," i.e., the Portfolio owns securities identical to
those sold short. Short sales against the box are not subject to the 25% limitation. A capital gain is recognized
immediately upon entering into a short sale against the box with respect to an appreciated security. Short sales are
speculative in nature, and may reduce returns or increase volatility.

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 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 Portfolios, 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. Effective July 31, 2002, change its policy to invest at least 80% of the value of its assets in small
capitalization companies unless it provides 60 days prior written notice to its shareholders.

2. Pledge its assets (other than to secure borrowings or to the extent permitted by the Portfolio's
investment policies as permitted by applicable law);

3. Make short sales of securities or maintain a short position except to the extent permitted by applicable
law;

4. 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;

5. Invest in the securities of other investment companies except as permitted by applicable law;

6. 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

7. 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 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.

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 may be treated as Section 1256 contracts and/or part of a straddle.

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. Gains or losses from
the normal closing or settlement of such contracts, as well as from the disposition of such contracts will be
characterized as 60% long-term capital gain (taxable at a maximum rate of 15%) 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 (or certain other positions) 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
one year 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., generally
dividends, interest, income derived from certain securities loans, and gains from the sale of securities or currencies.
There could be legislative, judicial or administrative developments that limit 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.

In addition, entering into certain options, futures contracts, or forward contracts may be deemed a "constructive
sale" of offsetting securities, which could result in a taxable gain to the Portfolio. 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. Change its policy to invest at least 80% of the value of its assets in small capitalization companies
unless it provides 60 days prior written notice to its shareholders (this limitation is effective on July 31, 2002).

2. Purchase additional securities when money borrowed exceeds 5% of its total assets;

3. Invest in companies for the purpose of exercising management or control;

4. 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;

5. 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;

6. 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;

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. 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;

9. Invest in puts, calls, straddles, spreads, or any combination thereof, except to the extent permitted by
the Trust's Prospectus and this Statement;

10. 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

11. 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 DeAM Small-Cap Value Portfolio:

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

Investment Policies:

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."

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. 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 also 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.

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 a contract relating to fixed income securities, 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 Portfolio will currently invest in only those collateralized obligations that are fully collateralized and
would not materially alter the risk profile of the Portfolio. 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.

Inverse Floaters. 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.

Investment Policies Which May Be Changed Without Shareholder Approval. The following limitations are applicable to the
AST DeAM Small-Cap Value Portfolio. These limitations are not "fundamental" restrictions and may be changed without
shareholder approval. The Portfolio will not:

1. Change its policy to invest at least 80% of the value of its assets in small capitalization companies
unless it provides 60 days prior written notice to its shareholders.

2. Invest for the purpose of exercising control or management of another issuer.

3. Purchase securities of other investment companies, except in compliance with the 1940 Act.

4. Invest more than 15% of its net assets in illiquid securities.

AST Goldman Sachs Mid-Cap Growth Portfolio:

Investment Objective: The investment objective of the Portfolio (formerly the AST Janus Mid-Cap Growth 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 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. Additionally, the
Portfolio may have to sell portfolio holdings so that it is able to distribute cash in order to satisfy current federal
tax law requirements to distribute income accrued, but not actually received, on zero coupon, step coupon and pay-in-kind
securities. This may cause the Portfolio to incur capital gains or losses on such sales, as well as reduce the assets to
which Portfolio expenses could be allocated and reduce the rate of return for the Portfolio. For additional discussion
of potential tax consequences of investing in zero coupon securities, see this Statement under "Tax Matters."

High-Yield/High-Risk Securities. The Portfolio may invest 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 those bonds rated below investment grade 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."

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, 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 in certain instances may be relatively more liquid than it has historically been. 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 Goldman Sachs Mid-Cap Growth Portfolio. These limitations are not "fundamental" restrictions, and may be
changed by the Trustees without shareholder approval.

1. The Portfolio will not change its policy to invest at least 80% of the value of its assets in medium
capitalization companies unless it provides 60 days prior written notice to its shareholders.

4. 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.

5. 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.

6. 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.

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 will not change its policy to invest at least 80% of the value of its assets in medium
capitalization companies unless it provides 60 days prior written notice to its shareholders.

2. The Portfolio may not purchase securities if outstanding borrowings, including any reverse repurchase
agreements, exceed 5% of its total assets.

3. Except for the purchase of debt securities and engaging in repurchase agreements, the Portfolio may not
make any loans other than securities loans.

4. 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.

5. 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.

6. 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 will not change its policy to invest at least 80% of the value of its assets in medium
capitalization companies unless it provides 60 days prior written notice to its shareholders.

2. The Portfolio may not purchase securities if outstanding borrowings, including any reverse repurchase
agreements, exceed 5% of its total assets.

3. Except for the purchase of debt securities and engaging in repurchase agreements, the Portfolio may not
make any loans other than securities loans.

7. 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.

8. 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 other
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 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, develop, refine, service or transport 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 invest primarily 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. Up to 50% of the
Portfolio's assets may be invested in foreign securities. The portion of the Portfolio's assets invested in foreign
securities will be subject to the additional risks of international investing. Please see the discussion under "Certain
Risk Factors and Investment Methods" for more information about the risk factors of foreign investing. 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 and government debt securities and preferred stocks which hold the
prospect of contributing to the achievement of the Portfolio's objective. 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 generally will write only covered call options. This means that the Portfolio will either 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. From time to time, the Portfolio will
write a call option that is not covered but where the Portfolio 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
or other suitable collateral as permitted by the SEC having a value equal to the fluctuating market value of the optioned
securities or currencies. While such an option would be "covered" with sufficient collateral to satisfy SEC prohibitions
on issuing senior securities, this type of strategy would expose the Portfolio to the risks of writing uncovered options.

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. If the Portfolio writes uncovered options as
described above it will bear the risk of having to purchase the security subject to the option at a price higher than
the exercise price of the option. As the price of a security could appreciate substantially, the Portfolio's loss could
be significant.

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 up to 50% of its total assets 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.

Federal Tax Treatment of Options, Futures Contracts and Forward Foreign Exchange Contracts. 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.

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 result in the "constructive sale" of offsetting stocks or debt securities of the Portfolio.

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. The Portfolio will not change its policy to invest at least 80% of the value of its assets in the
securities of natural resource companies unless it provides 60 days prior written notice to its shareholders.

2. Purchase additional securities when money borrowed exceeds 5% of its total assets;

3. Invest in companies for the purpose of exercising management or control;

6. Purchase securities of open-end or closed-end investment companies except in compliance with the 1940
Act.

9. Invest in puts, calls, straddles, spreads, or any combination thereof, except to the extent permitted by
the Trust's Prospectus and this Statement;

10. 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.

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 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."

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.

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.

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 (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 Goldman Sachs Concentrated 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.

Investment Policies:

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 in certain instances may be relatively liquid than it has historically been. 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."

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:

Investment Policies Which May Be Changed Without Shareholder Approval. The following limitations are applicable
to the AST Goldman Sachs Concentrated 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 DeAM Large-Cap Value Portfolio:

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

Investment Policies:

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."

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. 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 also 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.

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 a contract relating to fixed income securities, 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.

Investment Policies Which May Be Changed Without Shareholder Approval. The following limitations are applicable to the
AST DeAM Large-Cap Value Portfolio. These limitations are not "fundamental" restrictions and may be changed without
shareholder approval. The Portfolio will not:

1. Change its policy to invest at least 80% of the value of its assets in large capitalization companies
unless it provides 60 days prior written notice to its shareholders.

2. Invest for the purpose of exercising control or management of another issuer.

3. Purchase securities of other investment companies, except in compliance with the 1940 Act.

4. Invest more than 15% of its net assets in illiquid securities.

AST Hotchkis & Wiley Large-Cap Value Portfolio:

Investment Policies:

Convertible Securities. The Portfolio may invest in convertible securities of domestic or foreign issuers rated
investment grade (any of the four highest grades) by a major rating agency or, if unrated, of comparable quality in the
Advisor's opinion. A convertible security is a fixed-income security (a bond or preferred stock) which may be converted
at a stated price within a specified period of time into a certain quantity of common stock or other equity securities of
the same or a different issuer. Convertible securities rank senior to common stock in a corporation's capital structure
but are usually subordinated to similar non-convertible securities. While providing a fixed-income stream (generally
higher in yield than the income derivable from common stock but lower than that afforded by a similar non-convertible
security), a convertible security also affords an investor the opportunity, through its conversion feature, to
participate in the capital appreciation attendant upon a market price advance in the convertible security's underlying
common stock.

In general, the market value of a convertible security is at least the higher of its "investment value" (that is, its
value as a fixed-income security) or its "conversion value" (that is, its value upon conversion into its underlying
stock). As a fixed-income security, a convertible security tends to increase in market value when interest rates decline
and tends to decrease in value when interest rates rise. However, the price of a convertible security is also influenced
by the market value of the security's underlying common stock. The price of a convertible security tends to increase as
the market value of the underlying stock rises, whereas it tends to decrease as the market value of the underlying stock
declines. While no securities investment is without some risk, investments in convertible securities generally entail
less risk than investments in the common stock of the same issuer.

Foreign Securities. The Portfolio may invest in American Depositary Receipts ("ADRs"), other securities convertible
into securities of issuers based in foreign countries or other foreign securities. These securities may not necessarily
be denominated in the same currency as the securities into which they may be converted. ADRs are receipts, usually issued
by a U.S. bank or trust company, evidencing ownership of the underlying securities. Generally, ADRs are issued in
registered form, denominated in U.S. dollars, and are designed for use in the U.S. securities markets.

Foreign Investment Risks.

Foreign Market Risk. The Portfolio may invest a portion of its assets in foreign securities. Foreign security
investment involves special risks not present in U.S. investments that can increase the chances that a Fund will lose
money.

Foreign Economy Risk. The economies of certain foreign markets often do not compare favorably with that of the
United States with respect to such issues as growth of gross national product, reinvestment of capital, resources, and
balance of payments position. Certain such economies may rely heavily on particular industries or foreign capital and are
more vulnerable to diplomatic developments, the imposition of economic sanctions against a particular country or
countries, changes in international trading patterns, trade barriers, and other protectionist or retaliatory measures.
Investments in foreign markets may also be adversely affected by governmental actions such as the imposition of capital
controls, nationalization of companies or industries, expropriation of assets, or the imposition of punitive taxes. In
addition, the governments of certain countries may prohibit or impose substantial restrictions on foreign investing in
their capital markets or in certain industries. Any of these actions could severely affect security prices, impair a
Fund's ability to purchase or sell foreign securities or otherwise adversely affect a Fund's operations. Other foreign
market risks include difficulties in pricing securities, defaults on foreign government securities, difficulties in
enforcing favorable legal judgments in foreign courts, and political and social instability. Legal remedies available to
investors in certain foreign countries may be less extensive than those available to investors in the United States or
other foreign countries.

Governmental Supervision and Regulation/Accounting Standards. Many foreign governments supervise and regulate
stock exchanges, brokers and the sale of securities less than the U.S. government does. Some countries may not have laws
to protect investors the way that the United States securities laws do. Accounting standards in other countries are not
necessarily the same as in the United States. If the accounting standards in another country do not require as much
disclosure or detail as U.S. accounting standards, it may be harder for a Fund's portfolio managers to completely and
accurately determine a company's financial condition.

Dividends or interest on, or proceeds from the sale of, foreign securities may be subject to foreign withholding
taxes, and special U.S. tax considerations may apply.

Illiquid or Restricted Securities. The Portfolio may invest up to 15% of its net assets in securities that lack
an established secondary trading market or otherwise are considered illiquid. Liquidity of a security relates to the
ability to dispose easily of the security and the price to be obtained upon disposition of the security, which may be
less than would be obtained for a comparable more liquid security. Illiquid securities may trade at a discount from
comparable, more liquid investments. Investment of a Portfolio's assets in illiquid securities may restrict the ability
of the Portfolio to dispose of its investments in a timely fashion and for a fair price as well as its ability to take
advantage of market opportunities. The risks associated with illiquidity will be particularly acute where a Fund's
operations require cash, such as when the Fund redeems shares or pays dividends, and could result in the Fund borrowing
to meet short term cash requirements or incurring capital losses on the sale of illiquid investments.

The Portfolio may invest in securities that are not registered ("restricted securities") under the Securities Act of
1933, as amended (the "Securities Act"). Restricted securities may be sold in private placement transactions between
issuers and their purchasers and may be neither listed on an exchange nor traded in other established markets. In many
cases, privately placed securities may not be freely transferable under the laws of the applicable jurisdiction or due to
contractual restrictions on resale. As a result of the absence of a public trading market, privately placed securities
may be less liquid and more difficult to value than publicly traded securities. To the extent that privately placed
securities may be resold in privately negotiated transactions, the prices realized from the sales, due to illiquidity,
could be less than those originally paid by the Portfolio or less than their fair market value. In addition, issuers
whose securities are not publicly traded may not be subject to the disclosure and other investor protection requirements
that may be applicable if their securities were publicly traded. If any privately placed securities held by the Portfolio
are required to be registered under the securities laws of one or more jurisdictions before being resold, the Portfolio
may be required to bear the expenses of registration. Certain of the Portfolio's investments in private placements may
consist of direct investments and may include investments in smaller, less seasoned issuers, which may involve greater
risks. These issuers may have limited product lines, markets or financial resources, or they may be dependent on a
limited management group. In making investments in such securities, the Portfolio may obtain access to material nonpublic
information, which may restrict the Portfolio's ability to conduct portfolio transactions in such securities.

Borrowing. The Portfolio may borrow for temporary or emergency purposes in amounts not exceeding 10% of the
Portfolio's total assets. 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. Borrowing subjects
the Portfolio to interest costs which may or may not be recovered by appreciation of the securities purchased, and can
exaggerate the effect on net asset value of any increase or decrease in the market value of the Portfolio. This is the
speculative factor known as leverage.

When-Issued Securities. The Portfolio may purchase securities on a when-issued or delayed-delivery basis,
generally in connection with an underwriting or other offering. When-issued and delayed-delivery transactions occur when
securities are bought with payment for and delivery of the securities scheduled to take place at a future time, beyond
normal settlement dates, generally from 15 to 45 days after the transaction. The price that the Portfolio is obligated to
pay on the settlement date may be different from the market value on that date. While securities may be sold prior to the
settlement date, the Portfolio intends to purchase such securities with the purpose of actually acquiring them, unless a
sale would be desirable for investment reasons. At the time the Portfolio makes a commitment to purchase a security on a
when-issued basis, it will record the transaction and reflect the value of the security each day in determining the
Portfolio's net asset value. The Portfolio will also mark as segregated with its custodian cash, U.S. government
securities, equity securities or other liquid, unencumbered assets, marked-to-market daily, equal in value to its
obligations for when-issued securities.

Real Estate Investment Trusts. The Portfolio may invest in securities of real estate investment trusts or REITs.
Unlike corporations, REITs do not have to pay income taxes if they meet certain Internal Revenue Code requirements. REITs
offer investors greater liquidity and diversification than direct ownership of properties, as well as greater income
potential than an investment in common stocks. Like any investment in real estate, though, a REIT's performance depends
on several factors, such as its ability to find tenants for its properties, to renew leases and to finance property
purchases and renovations.

Shares of Other Investment Companies. The Portfolio may invest in securities of other investment companies
except to the extent prohibited by law. Like all equity investments, these investments may go up or down in value. They
also may not perform in correlation with the Portfolio's principal strategies. The Portfolio will pay additional fees
through their investments in other investment companies.

Limited Partnerships. The Portfolio may invest in limited partnership interests.

Short Sales Against-the-Box. The Portfolio may borrow and sell "short" securities when a Portfolio also owns an
equal amount of those securities (or their equivalent). No more than 25% of the Portfolio's total assets can be held as
collateral for short sales at any one time.

Temporary Defensive Position. When adverse market or economic conditions indicate to the Sub-Advisor that a
temporary defensive strategy is appropriate, The Portfolio may invest all or part of its assets in short-term investment
grade debt obligations of the U.S. government, its agencies and instrumentalities, bank certificates of deposit, bankers'
acceptances, high quality commercial paper, demand notes and repurchase agreements.

Investment Policy Which May Be Changed Without Shareholder Approval. The following limitation is applicable to
the AST Hotchkis & Wiley Large-Cap Value Portfolio. This limitation is not a "fundamental" restriction, and may be
changed by the Trustees without shareholder approval. The Portfolio will not:

1. Issue preference shares or create any funded debt;

2. Sell short;

3. 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;

4. Invest in companies for the purpose of exercising control or management.

5. Buy any securities or other property on margin (except for such short-term credits as are necessary for the
clearance of transactions).

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 applicable
to the AST Sanford Bernstein Core Value Portfolio. These 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. Change its policy to invest at least 80% of the value of its assets in securities of real estate related
issuers unless it provides 60 days prior written notice to its shareholders.

2. 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;

3. Pledge, hypothecate, mortgage or otherwise encumber its assets, except to secure permitted borrowings;

4. Participate on a joint or joint and several basis in any securities trading account;

5. Invest in companies for the purpose of exercising control;

6. Purchase securities of investment companies except in compliance with the 1940 Act; or

7. (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 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 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.

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:

1. The Portfolio will not change its policy to invest at least 80% of the value of its assets in securities
included in the S&P 500(R)unless it provides 60 days prior written notice to its shareholders.

2. 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;

3. Invest for the purpose of exercising control or management;

4. Purchase securities of other investment companies except in compliance with the 1940 Act; or

5. 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 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 stock 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."

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.

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.

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.

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.

3. 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. 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. Make short sales except short sales made "against the box" to defer recognition of taxable gains or
losses.

6. 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.

7. Invest in companies for the purpose of exercising control or management.

8. Buy any securities or other property on margin (except for such short-term credits as are necessary for
the clearance of transactions).

AST DeAM Global 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 mutual funds.

Investment Policies:

Short-Term Investments. The Portfolio may invest 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. The Portfolio may invest in debt securities issued by the U.S. government 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."

Equity Securities. The Portfolio may invest in both domestic and international 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 Portfolio also may invest in 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.

For additional information about the risks involved with equity securities, see this Statement under "Certain
Risks 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.

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.

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 25% 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 DeAM Global Allocation 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 here and in the Trust's Prospectus, the Sub-advisor has broad powers
to decide how to invest fund assets, including the power to hold them uninvested.

Investments are varied according to what is judged advantageous under changing economic conditions. It is the
Sub-advisors 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 Portfolios investment restrictions. 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 and may use other techniques, such as those
discussed below, when such a course is deemed appropriate in order to purse the Portfolio's investment objective. Senior
securities that, in the opinion of the Sub-advisor, are high-grade issues also may be purchased for defensive purposes.

So long as a sufficient number of acceptable securities are available, the Sub-advisor intends to keep the
Portfolio fully invested in stocks, 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%. The Sub-advisor may use futures contracts
as a way to expose the Portfolio's cash assets to the market, while maintaining liquidity. The Sub-advisor may not
leverage the Portfolio, so there is no greater risk to the Portfolio than if they purchase stocks.

The Sub-advisor also may purchase foreign securities, convertible debt securities, equity-equivalent securities,
non-leveraged futures and similar securities, and short-term securities and other similar securities. The Portfolio also
may invest in derivative instruments such as options, futures contracts, options on futures contracts, and swap
agreements (including, but not limited to, credit default swap agreements), or in mortgage- or asset-backed securities,
provided that such investments are in keeping with the Portfolio's investment objective.

Foreign Securities. The Portfolio may invest a portion of its total 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.

Convertible Debt Securities. A convertible debt 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 debt securities provide a stable stream
of income, with generally higher yields than common stocks. Convertible debt 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, as with all fixed-income securities, there can be no assurance
of current income because the issuers of the convertible debt 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.

Convertible debt securities generally are subordinated to other similar but non-convertible securities of the
same issuer, although convertible bonds, as corporate debt obligations, enjoy seniority in right of payment to all equity
securities, and convertible preferred stock is senior to common stock of the same issuer. Because of the subordination
feature, however, convertible debt securities typically have lower ratings from ratings organizations than similar
non-convertible securities.

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 NASDAQ. 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. Each component of a synthetic convertible security has a
separate market value and responds differently to market fluctuations. Investing in a synthetic convertible security
involves the risk normally found in holding the securities comprising the synthetic convertible security.

The Portfolio will limit its holdings of convertible debt securities to those that, at the time of purchase, are
rated at least B- by S&P or B3 by Moody's, or, if not rated by S&P or Moody's, are of equivalent investment quality as
determined by the advisor. The Portfolio's investments in convertible debt securities and other high-yield,
non-convertible debt securities rated below investment-grade will comprise less than 35% of the Portfolio's net assets.
Debt securities rated below the four highest categories are not considered "investment-grade" obligations. These
securities have speculative characteristics and present more credit risk than investment-grade obligations.

Short Sales. The Portfolio may engage in short sales for cash management purposes only 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.

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 Portfolio's custodian will segregate cash, cash equivalents or other appropriate liquid securities on its
records in an amount sufficient to meet the purchase price. 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.

Derivative Securities. To the extent permitted by its investment objectives and policies, the Portfolio may
invest in securities that are commonly referred to as derivative securities. Generally, a derivative security is a
financial arrangement the value of which is based on, or derived from, a traditional security, asset, or market index.
Certain derivative securities are described more accurately 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 derivative securities, such as mortgage-related 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.

There are many different types of derivative securities and many different ways to use them. Futures and options
are commonly used for traditional hedging purposes to attempt to protect a fund from exposure to changing interest rates,
securities prices, or currency exchange rates and for cash management purposes as a low-cost method of gaining exposure
to a particular securities market without investing directly in those securities.

The Fund may invest in swap agreements, consistent with its investment objective and strategies. The Portfolio
may enter into a swap agreement in order to, for example, attempt to obtain or preserve a particular return or spread at
a lower cost than obtaining a return or spread through purchases and/or sales of instruments in other markets; protect
against currency fluctuations; attempt to manage duration to protect against any increase in the price of securities the
Portfolio anticipates purchasing at a later date; or gain exposure to certain markets in the most economical way possible.

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, two parties agree to exchange the returns (or
differentials in rates of return) earned or realized on particular predetermined investments or instruments, which may be
adjusted for an interest factor. The gross returns to be exchanged or "swapped" between the parties are generally
calculated with respect to a "notional amount," i.e., the return on or increase in value of a particular dollar amount
invested at a particular interest rate, in a particular foreign currency, or in a "basket" of securities representing a
particular index. Forms of swap agreements include, for example, interest rate swaps, under which fixed- or
floating-rate interest payments on a specific principal amount are exchanged and total return swaps, under which one
party agrees to pay the other the total return of a defined underlying asset (usually an index, stock, bond or defined
portfolio of loans and mortgages) in exchange for fee payments, often a variable stream of cashflows based on LIBOR. The
Portfolio may enter into credit default swap agreements to hedge an existing position by purchasing or selling credit
protection. Credit default swaps enable an investor to buy/sell protection against a credit event of a specific issuer.
The seller of credit protection against a security or basket of securities receives an up-front or periodic payment to
compensate against potential default event(s). The Portfolio may enhance returns by selling protection or attempt to
mitigate credit risk by buying protection. Market supply and demand factors may cause distortions between the cash
securities market and the credit default swap market.

Whether the Portfolio's use of swap agreements will be successful depends on the advisor's ability to predict
correctly whether certain types of investments are likely to produce greater returns than other investments. Interest
rate swaps could result in losses if interest rate changes are not correctly anticipated by the Portfolio. Total return
swaps could result in losses if the reference index, security, or investments do not perform as anticipated by the
Portfolio. Credit default swaps could result in losses if the Portfolio does not correctly evaluate the creditworthiness
of the issuer on which the credit default swap is based. Because they are two-party contracts and because they may have
terms of greater 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 Portfolio will enter into swap agreements only with counterparties that meet certain
standards of creditworthiness. Certain restrictions imposed on the Portfolio by the Internal Revenue Code may limit the
Portfolios' 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 a
Portfolio's ability to terminate existing swap agreements or to realize amounts to be received under such agreements.

The return on a derivative security may increase or decrease, depending upon changes in the reference index or
instrument to which it relates.

There are risks associated with investing in derivative securities, including:

o the risk that the underlying security, interest rate, market index or other financial asset will not move in the
direction the Sub-advisor anticipates;

o the risk that adverse price movements in an instrument can result in a loss substantially greater than the
Portfolio's initial investment; and

o the risk that the counterparty will fail to perform its obligations.

Investment in Issuers with Limited Operating Histories. The Portfolio may invest a portion of its assets in the
securities of issuers with limited operating histories. 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, consolidations, and research and development in determining whether a
particular issuer has a record of three years of continuous operation.

Investments in securities of issuers with limited operating histories may involve greater risks than investments
in securities of more mature issuers. By their nature, such issuers present limited operating histories and financial
information upon which the Sub-advisor 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.

For purposes of this limitation, "issuers" refers to operating companies that issue securities for the purposes
of issuing debt or raising capital as a means of financing their ongoing operations. It does not, however, refer to
entities, corporate or otherwise, that are created for the express purpose of securitizing obligations or income streams.
For example, the Portfolio's investments in a trust created for the purpose of pooling mortgage obligations would not be
subject to the limitation.

The Portfolio will not invest more than 5% of its total assets in securities of issues with less than a
three-year operating history.

For example, the Portfolio may sell a security and at the same time make a commitment to purchase the same or a
comparable security at a future date and specified price. Conversely, the Portfolio may purchase a security and at the
same time make a commitment to sell the same or a comparable security at a future date and specified price. These types
of transactions are executed simultaneously in what are known as dollar-rolls, cash and carry, or financing
transactions. For example, a broker-dealer may seek to purchase a particular security that the Portfolio owns. The
Portfolio will sell that security to the broker-dealer and simultaneously enter into a forward commitment agreement to
buy it back at a future date. This type of transaction generates income for the Portfolio if the dealer is willing to
execute the transaction at a favorable price in order to acquire a specific security.

When purchasing securities on a when-issued or forward commitment basis, the Portfolio assumes the rights and
risks of ownership, including the risks of price and yield fluctuations. Market rates of interest on debt securities at
the time of delivery may be higher or lower than those contracted for on the when-issued security. Accordingly, the
value of that security may decline prior to delivery, which could result in a loss to the Portfolio. While the Portfolio
will make commitments to purchase or sell securities with the intention of actually receiving or delivering them, it may
sell the securities before the settlement date if doing so is deemed advisable as a matter of investment strategy.

In purchasing securities on a when-issued or forward commitment basis, the Portfolio will segregate cash, cash
equivalents or other appropriate liquid securities on its record 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). Selling securities
to meet when-issued or forward commitment obligations may generate taxable capital gains or losses.

Short-Term Securities. In order to meet anticipated redemptions, anticipated purchases of additional securities
for the Portfolio's 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 Euro Dollar Certificates of Deposit

o Bankers' Acceptances

o Short-term notes, bonds, debentures or other debt instruments

o Repurchase agreements

o Money market funds

Under the Investment Company Act, the Portfolio's investment in other investment companies (including money
market funds) 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.

Other Investment Companies. The Portfolio may invest up to 10% of its total assets in other investment
companies, such as mutual funds, provided that the investment is consistent with the Portfolio's investment policies and
restrictions. Under the Investment Company Act, The Portfolio's investment in such securities, subject to certain
exceptions, currently is limited to

o 3% of the total voting stock of any one investment company;

o 5% of the Portfolio's total assets with respect to any one investment company; and

o 10% of a 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. As a shareholder of another investment company, the
Portfolio would bear, along with other shareholders, its pro rata portion of the other investment company's expenses,
including advisory fees. These expenses would be in addition to the management fee that the Portfolio bears directly in
connection with its own operations.

Equity Equivalents, In addition to investing in common stocks, the Portfolio may invest in other equity
securities and equity equivalents, including securities that permit the Portfolio to receive an equity interest in an
issuer, the opportunity to acquire an equity interest in an issuer, or the opportunity to receive a return on its
investment that permits the Portfolio to benefit from the growth over time in the equity of an issuer. Examples of
equity securities and equity equivalents include preferred stock, convertible preferred stock and convertible debt
securities. Equity equivalents also may include securities whose value or return is derived from the value or return of
a different security.

Municipal Notes. Municipal notes are issued by state and local governments or government entities to provide
short-term capital or to meet cash flow needs.

Tax Anticipation Notes (TANs) are issued in anticipation of seasonal tax revenues, such as ad valorem property,
income, sales, use and business taxes, and are payable from these future taxes. TANs usually are general obligations of
the issuer. General obligations are backed by the issuer's full faith and credit based on its ability to levy taxes for
the timely payment of interest and repayment of principal, although such levies may be constitutionally or statutorily
limited as to rate or amount.

Revenue Anticipation Notes (RANs) are issued with the expectation that receipt of future revenues, such as
federal revenue sharing or state aid payments, will be used to repay the notes. Typically, these notes also constitute
general obligations of the issuer.

Bond Anticipation Notes (BANs) are issued to provide interim financing until long-term financing can be arranged.
In most cases, the long-term bonds provide the money for repayment of the notes.

Municipal Bonds. Municipal bonds, which generally have maturities of more than one year when issued, are
designed to meet longer-term capital needs. These securities have two principal classifications: general obligation
bonds and revenue bonds.

General Obligation (GO) bonds are issued by states, counties, cities, towns and regional districts to fund a
variety of public projects, including construction of and improvements to schools, highways, and water and sewer systems.
GO bonds are backed by the issuer's full faith and credit based on its ability to levy taxes for the timely payment of
interest and repayment of principal, although such levies may be constitutionally or statutorily limited as to rate or
amount.

Revenue Bonds are not backed by an issuer's taxing authority; rather, interest and principal are secured by the
net revenues from a project or facility.

Revenue bonds are issued to finance a variety of capital projects, including construction or refurbishment of
utility and waste disposal systems, highways, bridges, tunnels, air and sea port facilities, schools and hospitals. Many
revenue bond issuers provide additional security in the form of a debt-service reserve fund that may be used to make
payments of interest and repayments of principal on the issuer's obligations. Some revenue bond financings are further
protected by a state's assurance (without obligation) that it will make up deficiencies in the debt-service reserve fund.

Industrial Development Bonds (IDBs), a type of revenue bond, are issued by or on behalf of public authorities to
finance privately operated facilities. These bonds are used to finance business, manufacturing, housing, athletic and
pollution control projects, as well as public facilities such as mass transit systems, air and sea port facilities and
parking garages. Payment of interest and repayment of principal on an IDB depend solely on the ability of the facility's
operator to meet financial obligations, and on the pledge, if any, of the real or personal property financed. The
interest earned on IDBs may be subject to the federal alternative minimum tax.

Variable- and Floating-Rate Obligations. Variable- and floating-rate demand obligations (VRDOs and FRDOs) carry
rights that permit holders to demand payment of the unpaid principal plus accrued interest, from the issuers or from
financial intermediaries. Floating-rate securities, or floaters, have interest rates that change whenever there is a
change in a designated base rate; variable-rate instruments provide for a specified, periodic adjustment in the interest
rate, which typically is based on an index. These rate formulas are designed to result in a market value for the VRDO or
FRDO that approximates par value.

Obligations with Term Puts Attached. The Portfolio may invest in fixed-rate bonds subject to third-party puts
and participation interests in such bonds that are held by a bank in trust or otherwise, which have tender options or
demand features attached. These tender options or demand features permit the Portfolio to tender (or put) their bonds to
an institution at periodic intervals and to receive the principal amount thereof. The Sub-advisor expects that the
Portfolio will pay more for securities with puts attached than for securities without these liquidity features.

Because it is difficult to evaluate the likelihood of exercise or the potential benefit of a put, puts normally
will be determined to have a value of zero, regardless of whether any direct or indirect consideration is paid.
Accordingly, puts as separate securities are not expected to affect the Portfolios' weighted average maturities. When
the Portfolio has paid for a put, the cost will be reflected as unrealized depreciation on the underlying security for
the period the put is held. Any gain on the sale of the underlying security will be reduced by the cost of the put.

There is a risk that the seller of an obligation with a put attached will not be able to repurchase the
underlying obligation when (or if) the Portfolio attempts to exercise the put. To minimize such risks, the Portfolio
will purchase obligations with puts attached only from sellers deemed creditworthy by the Sub-advisor.

Zero-Coupon and Step-Coupon Securities. The Portfolio may purchase zero-coupon debt securities. Zero-coupon
securities do not make regular cash interest payments, and are sold at a deep discount to their face value.

The Portfolio may also purchase step-coupon or step-rate debt securities. Instead of having a fixed coupon for
the life of the security, coupon or interest payments may increase to predetermined rates at future dates. The issuer
generally retains the right to call the security. Some step-coupon securities are issued with no coupon payments at all
during an initial period, and only become interest-bearing at a future date; these securities are sold at a deep discount
to their face value.

Although zero-coupon and certain step-coupon securities may not pay current cash income, federal income tax law
requires the holder to include in income each year the portion of any original issue discount and other noncash income on
such securities accrued during that year. In order to continue to qualify for treatment as a regulated investment
company under the Internal Revenue Code and avoid certain excise tax, the Portfolio is required to make distributions of
any original issue discount and other noncash income accrued for each year. Accordingly, the Portfolio may be required
to dispose of other portfolio securities, which may occur in periods of adverse market prices, in order to generate a
case to meet these distribution requirements.

Inverse Floaters. The Portfolio may hold inverse floaters. An inverse floater is a type of derivative security
that bears an interest rate that moves inversely to market interest rates. As market interest rates rise, the interest
rate on inverse floaters goes down, and vice versa. Generally, this is accomplished by expressing the interest rate on
the inverse floater as an above-market fixed rate of interest, reduced by an amount determined by reference to a
market-based or bond-specific floating interest rate (as well as by any fees associated with administering the inverse
floater program).

Inverse floaters may be issued in conjunction with an equal amount of Dutch Auction floating-rate bonds
(floaters), or a market-based index may be used to set the interest rate on these securities. A Dutch Auction is an
auction system in which the price of the security is gradually lowered until it meets a responsive bid and is sold.
Floaters and inverse floaters may be brought to market by (1) a broker-dealer who purchases fixed-rate bonds and places
them in a trust, or (2) an issuer seeking to reduce interest expenses by using a floater/inverse floater structure in
lieu of fixed-rate bonds.

In the case of a broker-dealer structured offering (where underlying fixed-rate bonds have been placed in a
trust), distributions from the underlying bonds are allocated to floater and inverse floater holders in the following
manner:

(i) Floater holders receive interest based on rates set at a six-month interval or at a Dutch Auction, which is
typically held every 28 to 35 days. Current and prospective floater holders bid the minimum interest rate
that they are willing to accept on the floaters, and the interest rate is set just high enough to ensure
that all of the floaters are sold.

(ii) Inverse floater holders receive all of the interest that remains, if any, on the underlying bonds after floater
interest and auction fees are paid. The interest rates on inverse floaters may be significantly reduced,
even to zero, if interest rates rise.

Procedures for determining the interest payment on floaters and inverse floaters brought to market directly by
the issuer are comparable, although the interest paid on the inverse floaters is based on a presumed coupon rate that
would have been required to bring fixed-rate bonds to market at the time the floaters and inverse floaters were issued.

Where inverse floaters are issued in conjunction with floaters, inverse floater holders may be given the right to
acquire the underlying security (or to create a fixed-rate bond) by calling an equal amount of corresponding floaters.
The underlying security may then be held or sold. However, typically, there are time constraints and other limitations
associated with any right to combine interests and claim the underlying security.

Floater holders subject to a Dutch Auction procedure generally do not have the right to put back their interests
to the issuer or to a third party. If a Dutch Auction fails, the floater holder may be required to hold its position
until the underlying bond matures, during which time interest on the floater is capped at a predetermined rate.

The secondary market for floaters and inverse floaters may be limited. The market value of inverse floaters
tends to be significantly more volatile than fixed-rate bonds.

U.S. Government Securities. U.S. Treasury bills, notes, zero-coupon bonds and other bonds are direct obligations
of the U.S. Treasury, which has never failed to pay interest and repay principal when due. Treasury bills have initial
maturities of one year or less, Treasury notes from two to 10 years, and Treasury bonds more than 10 years. Although
U.S. Treasury securities carry little principal risk if held to maturity, the prices of these securities (like all debt
securities) change between issuance and maturity in response to fluctuating market interest rates.

A number of U.S. government agencies and instrumentalities issue debt securities. These agencies generally are
created by Congress to fulfill a specific need, such as providing credit to home buyers or farmers. Among these agencies
are the Federal Home Loan Banks, the Federal Farm Credit Banks, the Student Loan Marketing Association and the Resolution
Funding Corporation.

Some agency securities are backed by the full faith and credit pledge of the U.S. government, and some are
guaranteed only by the issuing agency. Agency securities typically offer somewhat higher yields than U.S. Treasury
securities with similar maturities. However, these securities may involve greater risk of default than securities backed
by the U.S. Treasury.

Interest rates on agency securities may be fixed for the term of the investment (fixed-rate agency securities) or
tied to prevailing interest rates (floating-rate agency securities). Interest rate resets on floating-rate agency
securities generally occur at intervals of one year or less, based on changes in a predetermined interest rate index.

Floating-rate agency securities frequently have caps limiting the extent to which coupon rates can be raised.
The price of a floating-rate agency security may decline if its capped coupon rate is lower than prevailing market
interest rates. Fixed- and floating-rate agency securities may be issued with a call date (which permits redemption
before the maturity date). The exercise of a call may reduce an obligation's yield to maturity.

Interest Rate Resets on Floating-Rate U.S. Government Agency Securities. Interest rate resets on floating-rate
U.S. government agency securities generally occur at intervals of one year or less in response to changes in a
predetermined interest rate index. There are two main categories of indices: those based on U.S. Treasury securities and
those derived from a calculated measure, such as a cost-of-funds index. Commonly used indices include the three-month,
six-month and one-year Treasury bill rates; the two-year Treasury note yield; the Eleventh District Federal Home Loan
Bank Cost of Portfolios Index (EDCOFI); and the London Interbank Offered Rate (LIBOR). Fluctuations in the prices of
floating-rate U.S. government agency securities are typically attributed to differences between the coupon rates on these
securities and prevailing market interest rates between interest rate reset dates.

Mortgage-Backed Securities. Background. A mortgage-backed security represents an ownership interest in a pool
of mortgage loans. The loans are made by financial institutions to finance home and other real estate purchases. As the
loans are repaid, investors receive payments of both interest and principal.

Like fixed-income securities such as U.S. Treasury bonds, mortgage-backed securities pay a stated rate of
interest during the life of the security. However, unlike a bond, which returns principal to the investor in one lump
sum at maturity, mortgage-backed securities return principal to the investor in increments during the life of the
security.

Because the timing and speed of principal repayments vary, the cash flow on mortgage-backed securities is
irregular. If mortgage holders sell their homes, refinance their loans, prepay their mortgages or default on their loans,
the principal is distributed pro rata to investors.

As with other fixed-income securities, the prices of mortgage-backed securities fluctuate in response to changing
interest rates; when interest rates fall, the prices of mortgage-backed securities rise, and vice versa. Changing
interest rates have additional significance for mortgage-backed securities investors, however, because they influence
prepayment rates (the rates at which mortgage holders prepay their mortgages), which in turn affect the yields on
mortgage-backed securities. When interest rates decline, prepayment rates generally increase. Mortgage holders take
advantage of the opportunity to refinance their mortgages at lower rates with lower monthly payments. When interest
rates rise, mortgage holders are less inclined to refinance their mortgages. The effect of prepayment activity on yield
depends on whether the mortgage-backed security was purchased at a premium or at a discount.

The Portfolio may receive principal sooner than it expected because of accelerated prepayments. Under these
circumstances, the Portfolio might have to reinvest returned principal at rates lower than it would have earned if
principal payments were made on schedule. Conversely, a mortgage-backed security may exceed its anticipated life if
prepayment rates decelerate unexpectedly. Under these circumstances, the Portfolio might miss an opportunity to earn
interest at higher prevailing rates.

GNMA Certificates. The Government National Mortgage Association (GNMA) is a wholly owned corporate
instrumentality of the United States within the Department of Housing and Urban Development. The National Housing Act of
1934 (Housing Act), as amended, authorizes GNMA to guarantee the timely payment of interest and repayment of principal on
certificates that are backed by a pool of mortgage loans insured by the Federal Housing Administration under the Housing
Act, or by Title V of the Housing Act of 1949 (FHA Loans), or guaranteed by the Veterans' Affairs under the Servicemen's
Readjustment Act of 1944 (VA Loans), as amended, or by pools of other eligible mortgage loans. The Housing Act provides
that the full faith and credit of the U.S. government is pledged to the payment of all amounts that may be required to be
paid under any guarantee. GNMA has unlimited authority to borrow from the U.S. Treasury in order to meet its obligations
under this guarantee.

GNMA certificates represent a pro rata interest in one or more pools of the following types of mortgage loans:
(a) fixed-rate level payment mortgage loans; (b) fixed-rate graduated payment mortgage loans (GPMs); (c) fixed-rate
growing equity mortgage loans (GEMs); (d) fixed-rate mortgage loans secured by manufactured (mobile) homes (MHs); (e)
mortgage loans on multifamily residential properties under construction (CLCs); (f) mortgage loans on completed
multifamily projects (PLCs); (g) fixed-rate mortgage loans that use escrowed funds to reduce the borrower's monthly
payments during the early years of the mortgage loans (buydown mortgage loans); and (h) mortgage loans that provide for
payment adjustments based on periodic changes in interest rates or in other payment terms of the mortgage loans.

Fannie Mae Certificates. The Federal National Mortgage Association (FNMA or Fannie Mae) is a federally chartered
and privately owned corporation established under the Federal National Mortgage Association Charter Act. Fannie Mae was
originally established in 1938 as a U.S. government agency designed to provide supplemental liquidity to the mortgage
market and was reorganized as a stockholder-owned and privately managed corporation by legislation enacted in 1968.
Fannie Mae acquires capital from investors who would not ordinarily invest in mortgage loans directly and thereby expands
the total amount of funds available for housing. This money is used to buy home mortgage loans from local lenders,
replenishing the supply of capital available for mortgage lending.

Fannie Mae certificates represent a pro rata interest in one or more pools of FHA Loans, VA Loans, or, most
commonly, conventional mortgage loans (i.e., mortgage loans that are not insured or guaranteed by a government agency) of
the following types: (a) fixed-rate level payment mortgage loans; (b) fixed-rate growing equity mortgage loans; (c)
fixed-rate graduated payment mortgage loans; (d) adjustable-rate mortgage loans; and (e) fixed-rate mortgage loans
secured by multifamily projects.

Fannie Mae certificates entitle the registered holder to receive amounts representing a pro rata interest in
scheduled principal and interest payments (at the certificate's pass-through rate, which is net of any servicing and
guarantee fees on the underlying mortgage loans), any principal prepayments, and a proportionate interest in the full
principal amount of any foreclosed or otherwise liquidated mortgage loan. The full and timely payment of interest and
repayment of principal on each Fannie Mae certificate is guaranteed by Fannie Mae; this guarantee is not backed by the
full faith and credit of the U.S. government.

Freddie Mac Certificates. The Federal Home Loan Mortgage Corporation (FHLMC or Freddie Mac) is a corporate
instrumentality of the United States created pursuant to the Emergency Home Finance Act of 1970 (FHLMC Act), as amended.
Freddie Mac was established primarily for the purpose of increasing the availability of mortgage credit. Its principal
activity consists of purchasing first-lien conventional residential mortgage loans (and participation interests in such
mortgage loans) and reselling these loans in the form of mortgage-backed securities, primarily

Freddie Mac certificates represent a pro rata interest in a group of mortgage loans (a Freddie Mac certificate
group) purchased by Freddie Mac. The mortgage loans underlying Freddie Mac certificates consist of fixed- or
adjustable-rate mortgage loans with original terms to maturity of between 10 and 30 years, substantially all of which are
secured by first-liens on one- to four-family residential properties or multifamily projects. Each mortgage loan must
meet standards set forth in the FHLMC Act. A Freddie Mac certificate group may include whole loans, participation
interests in whole loans, undivided interests in whole loans, and participations composing another Freddie Mac
certificate group.

Freddie Mac guarantees to each registered holder of a Freddie Mac certificate the timely payment of interest at
the rate provided for by the certificate. Freddie Mac also guarantees ultimate collection of all principal on the
related mortgage loans, without any offset or deduction, but generally does not guarantee the timely repayment of
principal. Freddie Mac may remit principal at any time after default on an underlying mortgage loan, but no later than 30
days following (a) foreclosure sale, (b) payment of a claim by any mortgage insurer, or (c) the expiration of any right
of redemption, whichever occurs later, and in any event no later than one year after demand has been made upon the
mortgager for accelerated payment of principal. Obligations guaranteed by Freddie Mac are not backed by the full faith
and credit pledge of the U.S. government.

Collateralized Mortgage Obligations (CMOs). A CMO is a multiclass bond backed by a pool of mortgage pass-through
certificates or mortgage loans. CMOs may be collateralized by (a) GNMA, Fannie Mae or Freddie Mac pass-through
certificates; (b) unsecured mortgage loans insured by the Federal Housing Administration or guaranteed by the Department
of Veterans' Affairs; (c) unsecuritized conventional mortgages; or (d) any combination thereof.

In structuring a CMO, an issuer distributes cash flow from the underlying collateral over a series of classes
called tranches. Each CMO is a set of two or more tranches, with average lives and cash flow patterns designed to meet
specific investment objectives. The average life expectancies of the different tranches in a four-part deal, for
example, might be two, five, seven and 20 years.

As payments on the underlying mortgage loans are collected, the CMO issuer pays the coupon rate of interest to
the bondholders in each tranche. At the outset, scheduled and unscheduled principal payments go to investors in the
first tranches. Investors in later tranches do not begin receiving principal payments until the prior tranches are paid
off. This basic type of CMO is known as a sequential pay or plain vanilla CMO.

Some CMOs are structured so that the prepayment or market risks are transferred from one tranche to another.
Prepayment stability is improved in some tranches if other tranches absorb more prepayment variability.

The final tranche of a CMO often takes the form of a Z-bond, also known as an accrual bond or accretion bond.
Holders of these securities receive no cash until the earlier tranches are paid in full. During the period that the other
tranches are outstanding periodic interest payments are added to the initial face amount of the Z-bond but are not paid
to investors. When the prior tranches are retired, the Z-bond receives coupon payments on its higher principal balance
plus any principal prepayments from the underlying mortgage loans. The existence of a Z-bond tranche helps stabilize
cash flow patterns in the other tranches. In a changing interest rate environment, however, the value of the Z-bond tends
to be more volatile.

As CMOs have evolved, some classes of CMO bonds have become more prevalent. The planned amortization class (PAC)
and targeted amortization class (TAC), for example, were designed to reduce prepayment risk by establishing a
sinking-fund structure. PAC and TAC bonds assure to varying degrees that investors will receive payments over a
predetermined period under various prepayment scenarios. Although PAC and TAC bonds are similar, PAC bonds are better
able to provide stable cash flows under various prepayment scenarios than TAC bonds because of the order in which these
tranches are paid.

The existence of a PAC or TAC tranche can create higher levels of risk for other tranches in the CMO because the
stability of the PAC or TAC tranche is achieved by creating at least one other tranche -- known as a companion bond,
support or non-PAC bond -- that absorbs the variability of principal cash flows. Because companion bonds have a high
degree of average life variability, they generally pay a higher yield. A TAC bond can have some of the prepayment
variability of a companion bond if there is also a PAC bond in the CMO issue.

Floating-rate CMO tranches (floaters) pay a variable rate of interest that is usually tied to the LIBOR.
Institutional investors with short-term liabilities, such as commercial banks, often find floating-rate CMOs attractive
investments. Super floaters (which float a certain percentage above LIBOR) and inverse floaters (which float inversely
to LIBOR) are variations on the floater structure that have highly variable cash flows.

Stripped Mortgage-Backed Securities. Stripped mortgage-backed securities are created by segregating the cash
flows from underlying mortgage loans or mortgage securities to create two or more new securities, each with a specified
percentage of the underlying security's principal or interest payments. Mortgage-backed securities may be partially
stripped so that each investor class receives some interest and some principal. When securities are completely stripped,
however, all of the interest is distributed to holders of one type of security, known as an interest-only security, or
IO, and all of the principal is distributed to holders of another type of security known as a principal-only security, or
PO. Strips can be created in a pass-through structure or as tranches of a CMO.

The market values of IOs and POs are very sensitive to interest rate and prepayment rate fluctuations. POs, for
example, increase (or decrease) in value as interest rates decline (or rise). The price behavior of these securities also
depends on whether the mortgage collateral was purchased at a premium or discount to its par value. Prepayments on
discount coupon POs generally are much lower than prepayments on premium coupon POs. IOs may be used to hedge the
Portfolio's other investments because prepayments cause the value of an IO strip to move in the opposite direction from
other mortgage-backed securities.

Commercial Mortgage-Backed Securities (CMBS). CMBS are securities created from a pool of commercial mortgage
loans, such as loans for hotels, shopping centers, office buildings, apartment buildings, and the like. Interest and
principal payments from these loans are passed on to the investor according to a particular schedule of payments. They
may be issued by U.S. government agencies or by private issuers. The credit quality of CMBS depends primarily on the
quality of the underlying loans and on the structure of the particular deal. Generally, deals are structured with
senior and subordinate classes. Multiple classes may permit the issuance of securities with payment terms, interest
rates, or other characteristics differing both from those of each other and those of the underlying assets. Examples
include classes having characteristics such as floating interest rates or scheduled amortization of principal. Rating
agencies rate the individual classes of the deal based on the degree of seniority or subordination of a particular class
and other factors. The value of these securities may change because of actual or perceived changes in the
creditworthiness of individual borrowers, their tenants, the servicing agents, or the general state of commercial real
estate and other factors.

CMBS may be partially stripped so that each investor class receives some interest and some principal. When
securities are completely stripped, however, all of the interest is distributed to holders of one type of security, known
as an interest-only security (IO), and all of the principal is distributed to holders of another type of security known
as a principal-only security (PO). The Portfolio is permitted to invest in IO classes of CMBS. As interest rates rise
and fall, the value of IOs tends to move in the same direction as interest rates. The cash flows and yields on IO
classes are extremely sensitive to the rate of principal payments (including prepayments) on the related underlying
mortgage assets. In the cases of IOs, prepayments affect the amount of cash flows provided to the investor. If the
underlying mortgage assets experience greater than anticipated prepayments of principal, an investor may fail to fully
recoup 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. However, because commercial mortgages are often locked out
from prepayment, or have high prepayment penalties or a defeasance mechanism, the prepayment risk associated with a CMBS
IO class is generally less than that of a residential IO.

Adjustable-Rate Mortgage Loans (ARMs). ARMs eligible for inclusion in a mortgage pool generally will provide for
a fixed initial mortgage interest rate for a specified period of time, generally for either the first three, six, 12, 24,
36, 60 or 84 scheduled monthly payments. Thereafter, the interest rates are subject to periodic adjustment based on
changes in an index.

ARMs have minimum and maximum rates beyond which the mortgage interest rate may not vary over the lifetime of the
loan. Certain ARMs provide for additional limitations on the maximum amount by which the mortgage interest rate may
adjust for any single adjustment period. Negatively amortizing ARMs may provide limitations on changes in the required
monthly payment. Limitations on monthly payments can result in monthly payments that are greater or less than the amount
necessary to amortize a negatively amortizing ARM by its maturity at the interest rate in effect during any particular
month.

There are two types of indices that provide the basis for ARM rate adjustments: those based on market rates and
those based on a calculated measure, such as a cost-of-funds index or a moving average of mortgage rates. Commonly
utilized indices include the one-year, three-year and five-year constant maturity U.S. Treasury rates (as reported by the
Federal Reserve Board); the three-month Treasury bill rate; the 180-day Treasury bill rate; rates on longer-term Treasury
securities; the Eleventh District Federal Home Loan Bank Cost of Funds Index (EDCOFI); the National Median Cost of Funds
Index; the one-month, three-month, six-month or one-year London Interbank Offered Rate (LIBOR); or six-month CD rates.
Some indices, such as the one-year constant maturity Treasury rate or three-month LIBOR, are highly correlated with
changes in market interest rates. Other indices, such as the EDCOFI, tend to lag behind changes in market rates and be
somewhat less volatile over short periods of time.

The EDCOFI reflects the monthly weighted average cost of funds of savings and loan associations and savings banks
whose home offices are located in Arizona, California and Nevada (the Federal Home Loan Bank Eleventh District) and who
are member institutions of the Federal Home Loan Bank of San Francisco (the FHLB of San Francisco), as computed from
statistics tabulated and published by the FHLB of San Francisco. The FHLB of San Francisco normally announces the Cost of
Funds Index on the last working day of the month following the month in which the cost of funds was incurred.

One-year and three-year Constant Maturity Treasury (CMT) rates are calculated by the Federal Reserve Bank of New
York, based on daily closing bid yields on actively traded Treasury securities submitted by five leading broker-dealers.
The median bid yields are used to construct a daily yield curve.

The National Median Cost of Funds Index, similar to the EDCOFI, is calculated monthly by the Federal Home Loan
Bank Board (FHLBB) and represents the average monthly interest expenses on liabilities of member institutions. A median,
rather than an arithmetic mean, is used to reduce the effect of extreme numbers.

LIBOR is the rate at which banks in London offer Eurodollars in trades between banks. LIBOR has become a key rate in the
U.S. domestic money market because it is perceived to reflect the true global cost of money.

The Sub-advisor may invest in ARMs whose periodic interest rate adjustments are based on new indices as these
indices become available.

Asset-Backed Securities (ABS). ABS are structured like mortgage-backed securities, but instead of mortgage loans
or interest in mortgage loans, the underlying assets may include, for example, such items as motor vehicle installment
sales or installment loan contracts, leases of various types of real and personal property, home equity loans, student
loans, small business loans, and receivables from credit card agreements. The ability of an issuer of asset-backed
securities to enforce its security interest in the underlying assets may be limited. The value of an ABS is affected by
changes in the market's perception of the assets backing the security, the creditworthiness of the servicing agent for
the loan pool, the originator of the loans, or the financial institution providing any credit enhancement.

Payments of principal and interest passed through to holders of ABS are typically supported by some form of
credit enhancement, such as a letter of credit, surety bond, limited guarantee by another entity or a priority to certain
of the borrower's other securities. The degree of credit enhancement varies, and generally applies to only a fraction of
the asset-backed security's par value until exhausted. If the credit enhancement of an ABS held by the Portfolio has been
exhausted, and if any required payments of principal and interest are not made with respect to the underlying loans, the
Portfolio may experience losses or delays in receiving payment.

Some types of ABS may be less effective than other types of securities as a means of "locking in" attractive
long-term interest rates. One reason is the need to reinvest prepayments of principal; another is the possibility of
significant unscheduled prepayments resulting from declines in interest rates. These prepayments would have to be
reinvested at lower rates. As a result, these securities may have less potential for capital appreciation during periods
of declining interest rates than other securities of comparable maturities, although they may have a similar risk of
decline in market value during periods of rising interest rates. Prepayments may also significantly shorten the
effective maturities of these securities, especially during periods of declining interest rates. Conversely, during
periods of rising interest rates, a reduction in prepayments may increase the effective maturities of these securities,
subjecting them to a greater risk of decline in market value in response to rising interest rates than traditional debt
securities, and, therefore, potentially increasing the volatility of the Portfolio.

The risks of investing in ABS are ultimately dependent upon the repayment of loans by the individual or corporate
borrowers. Although the Portfolio would generally have no recourse against the entity that originated the loans in the
event of default by a borrower, ABS typically are structured to mitigate this risk of default.

Asset-backed securities are generally issued in more than one class, each with different payment terms. Multiple
class asset-backed securities may be used as a method of providing credit support through creation of one or more classes
whose right to payments is made subordinate to the right to such payments of the remaining class or classes. Multiple
classes also 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 classes having characteristics such as floating interest rates or
scheduled amortization of principal.

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 equity and fixed-income 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.

Mortgage-Backed Securities. The Portfolio may invest a significant portion of its fixed income investments in
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."

Asset-Backed Securities. The Portfolio may invest a significant portion of its fixed income investments 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.

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.

The Portfolio generally will write only covered call options. This means that the Portfolio will either 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. From time to time, the Portfolio will
write a call option that is not covered but where the Portfolio 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. While such an option would be "covered" with sufficient collateral to
satisfy SEC prohibitions on issuing senior securities, this type of strategy would expose the Portfolio to the risks of
writing uncovered options.

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. If the Portfolio writes uncovered options as
described above, it will bear the risks of having to purchase the security subject to the option at a price higher than
the exercise price of the option. As the price of a security could appreciate substantially, the Portfolio's loss could
be significant.

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.

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."

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.

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;

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. dollar-denominated bonds.

Investment Policies: The Portfolio also seeks to moderate price fluctuation by actively managing its currency exposure.
The Portfolio's investments will include high quality 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 may also invest up to 20% of assets in the
aggregate in below investment-grade, high-risk bonds and emerging market bonds. 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.

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."

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 below.

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 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."

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, although the Portfolio may occasionally enter into forwards that extend beyond a one-year term.

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."

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.

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 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."

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.

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. The Portfolio will not change its policy to invest at least 80% of the value of its assets in fixed
income securities unless it provides 60 days prior written notice to its shareholders.

2. Pledge, mortgage or hypothecate its assets in excess, together with permitted borrowings, of 1/3 of its
total assets;

3. Purchase securities on margin, except (i) the Portfolio may make margin deposits in connection with
futures contracts or other permissible investments and (ii) the Portfolio may obtain such short-term credits as may be
necessary for the clearance of purchases and sales of securities;

4. Purchase illiquid securities if, as a result, more than 15% of its net assets would be invested in such
securities;

5. 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;

6. 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;

7. 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;

8. 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

9. Purchase or sell real estate limited partnership interests.

10. 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;

11. Invest in companies for the purpose of exercising management or control;

12. Purchase securities of open-end or closed-end investment companies except in compliance with the 1940
Act; or

13. 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 Goldman Sachs High Yield Portfolio:

Investment Objective: The Portfolio seeks a high level of current income and may also consider the potential for capital
appreciation.

Investment Policies:

The Portfolio is appropriate for investors who seek a high level of current income and who also may wish to
consider the potential for capital appreciation. A number of investment strategies are used to seek to achieve the
Portfolio's investment objective, including market sector selection, determination of yield curve exposure and issuer
selection. In addition, the Sub-Adviser will attempt to take advantage of pricing inefficiencies in the fixed-income
markets. The Sub-Adviser starts the investment process with economic analysis to determine broad growth trends,
industry-specific events and market forecasts. The market value of non-investment grade fixed-income securities tends to
reflect individual developments within a company to a greater extent than higher rated corporate debt or Treasury bonds
that react primarily to fluctuations in interest rates. Therefore, determining the creditworthiness of issuers is
critical. To that end, the Portfolio's portfolio managers have access to Goldman Sachs' highly regarded Credit Research
and Global Investment Research Departments, as well as analysis from the firm's High Yield Research Group, a dedicated
group of 15 professionals in the high yield and emerging market corporate bond research area, consisting of industry and
regional market specialists. In addition, the portfolio managers may review the opinions of the two largest independent
credit rating agencies, Standard & Poor's and Moody's. The Portfolio's portfolio managers and credit analysts also
conduct their own in-depth analysis of the issues considered for inclusion in the Fund's portfolio. The portfolio
managers and credit analysts evaluate such factors as a company's competitive position, the strength of its balance
sheet, its ability to withstand economic downturns and its potential to generate ample cash flow to service its debt. The
ability to analyze accurately a company's future cash flow by correctly anticipating the impact of economic,
industry-wide and specific events is critical to successful high yield investing. GSAM's goal is to identify companies
with the potential to strengthen their balance sheets by increasing their earnings, reducing their debt or effecting a
turnaround. GSAM analyzes trends in a company's debt picture (i.e., the level of its interest coverage) as well as new
developments in its capital structure on an ongoing basis. GSAM believes that this ongoing reassessment is more valuable
than relying on a "snapshot" view of a company's ability to service debt at one or two points in time.

The Portfolio is diversified among different sectors and industries on a global basis in an effort to reduce
overall risk. While GSAM will avoid excessive concentration in any one industry, the Fund's specific industry weightings
are the result of individual security selection. Emerging market debt considered for the Portfolio will be selected by
specialists knowledgeable about the political and economic structure of those economies.

Return on and Risks of High Yield Securities. High yield bonds can deliver higher yields and total return than
either investment grade corporate bonds or U.S. Treasury bonds. However, because these non-investment grade securities
involve higher risks in return for higher income, they are best suited to long-term investors who are financially secure
enough to withstand volatility and the risks associated with such investments.

For high yield, non-investment grade securities, as for most investments, there is a direct relationship between
risk and return. Along with their potential to deliver higher yields and greater capital appreciation than most other
types of fixed-income securities, high yield securities are subject to higher risk of loss, greater volatility and are
considered speculative by traditional investment standards. The most significant risk associated with high yield
securities is credit risk: the risk that the company issuing a high yield security may have difficulty in meeting its
principal and/or interest payments on a timely basis. As a result, extensive credit research and diversification are
essential factors in managing risk in the high yield arena. To a lesser extent, high yield bonds are also subject to
interest rate risk: when interest rates increase, the value of fixed income securities tends to decline.

Investment Policies:

U. S. Government Securities The Portfolio may invest in U.S. Government Securities. Some U.S. Government
Securities (such as Treasury bills, notes and bonds, which differ only in their interest rates, maturities and times of
issuance) are supported by the full faith and credit of the United States. Others, such as obligations issued or
guaranteed by U.S. government agencies, instrumentalities or sponsored enterprises, are supported either by (i) the right
of the issuer to borrow from the U.S. Treasury, (ii) the discretionary authority of the U.S. government to purchase
certain obligations of the issuer or (iii) only the credit of the issuer. The U.S. government is under no legal
obligation, in general, to purchase the obligations of its agencies, instrumentalities or sponsored enterprises. No
assurance can be given that the U.S. government will provide financial support to the U.S. government agencies,
instrumentalities or sponsored enterprises in the future.

U.S. Government Securities include (to the extent consistent with the Act) securities for which the payment of
principal and interest is backed by an irrevocable letter of credit issued by the U.S. government, or its agencies,
instrumentalities or sponsored enterprises. U.S. Government Securities also include (to the extent consistent with the
Act) participations in loans made to foreign governments or their agencies that are guaranteed as to principal and
interest by the U.S. government or its agencies, instrumentalities or sponsored enterprises. The secondary market for
certain of these participations is extremely limited. In the absence of a suitable secondary market, such participations
are regarded as illiquid.

The Portfolio may also purchase U.S. Government Securities in private placements and may also invest in
separately traded principal and interest components of securities guaranteed or issued by the U.S. Treasury that are
traded independently under the separate trading of registered interest and principal of securities program ("STRIPS").

Custodial Receipts and Trust Certificates. The Portfolio may invest in custodial receipts and trust
certificates, which may be underwritten by securities dealers or banks, representing interests in securities held by a
custodian or trustee. The securities so held may include U.S. Government Securities, Municipal Securities or other types
of securities in which the Portfolio may invest. The custodial receipts or trust certificates are underwritten by
securities dealers or banks and may evidence ownership of future interest payments, principal payments or both on the
underlying securities, or, in some cases, the payment obligation of a third party that has entered into an interest rate
swap or other arrangement with the custodian or trustee. For certain securities law purposes, custodial receipts and
trust certificates may not be considered obligations of the U.S. government or other issuer of the securities held by the
custodian or trustee. As a holder of custodial receipts and trust certificates, the Portfolio will bear its
proportionate share of the fees and expenses charged to the custodial account or trust. The Portfolio may also invest in
separately issued interests in custodial receipts and trust certificates.

Although under the terms of a custodial receipt or trust certificate a Fund would be typically authorized to
assert its rights directly against the issuer of the underlying obligation, the Fund could be required to assert through
the custodian bank or trustee those rights as may exist against the underlying issuers. Thus, in the event an underlying
issuer fails to pay principal and/or interest when due, a Fund may be subject to delays, expenses and risks that are
greater than those that would have been involved if the Fund had purchased a direct obligation of the issuer. In
addition, in the event that the trust or custodial account in which the underlying securities have been deposited is
determined to be an association taxable as a corporation, instead of a non-taxable entity, the yield on the underlying
securities would be reduced in recognition of any taxes paid.

Certain custodial receipts and trust certificates may be synthetic or derivative instruments that have interest
rates that reset inversely to changing short-term rates and/or have embedded interest rate floors and caps that require
the issuer to pay an adjusted interest rate if market rates fall below or rise above a specified rate. Because some of
these instruments represent relatively recent innovations, and the trading market for these instruments is less developed
than the markets for traditional types of instruments, it is uncertain how these instruments will perform under different
economic and interest-rate scenarios. Also, because these instruments may be leveraged, their market values may be more
volatile than other types of fixed income instruments and may present greater potential for capital gain or loss. The
possibility of default by an issuer or the issuer's credit provider may be greater for these derivative instruments than
for other types of instruments. In some cases, it may be difficult to determine the fair value of a derivative
instrument because of a lack of reliable objective information and an established secondary market for some instruments
may not exist. In many cases, the Internal Revenue Service has not ruled on the tax treatment of the interest received
on the derivative instruments and, accordingly, purchases of such instruments are based on the opinion of counsel to the
sponsors of the instruments.

Mortgage Loans and Mortgage-Backed Securities The Portfolio may each invest in mortgage loans and mortgage
pass-through securities and other securities representing an interest in or collateralized by adjustable and fixed-rate
mortgage loans ("Mortgage-Backed Securities").

Mortgage-Backed Securities (including collateralized mortgage obligations, REMICs and stripped mortgage-backed
securities described below) are subject to both call risk and extension risk. Because of these risks, these securities
can have significantly greater price and yield volatility than with traditional fixed-income securities.

General Characteristics. Each mortgage pool underlying Mortgage-Backed Securities consists of mortgage
loans evidenced by promissory notes secured by first mortgages or first deeds of trust or other similar security
instruments creating a first lien on owner occupied and non-owner occupied one-unit to four-unit residential properties,
multi-family (i.e., five or more) properties, agricultural properties, commercial properties and mixed use properties
(the "Mortgaged Properties"). The Mortgaged Properties may consist of detached individual dwelling units, multi-family
dwelling units, individual condominiums, townhouses, duplexes, triplexes, fourplexes, row houses, individual units in
planned unit developments and other attached dwelling units. The Mortgaged Properties may also include residential
investment properties and second homes.

The investment characteristics of adjustable and fixed rate Mortgage-Backed Securities differ from those of
traditional fixed-income securities. The major differences include the payment of interest and principal on
Mortgage-Backed Securities on a more frequent (usually monthly) schedule, and the possibility that principal may be
prepaid at any time due to prepayments on the underlying mortgage loans or other assets. These differences can result in
significantly greater price and yield volatility than is the case with traditional fixed-income securities. To the
extent that the Portfolio invests in Mortgage-Backed Securities, the Sub-Adviser may seek to manage these potential risks
by investing in a variety of Mortgage-Backed Securities and by using certain hedging techniques.

The rate of interest on mortgage-backed securities is normally lower than the interest rates paid on the
mortgages included in the underlying pool due to the annual fees paid to the servicer of the mortgage pool for passing
through monthly payments to certificate holders and to any guarantor, such as the Government National Mortgage
Association ("Ginnie Mae"), and due to any yield retained by the issuer. Actual yield to the holder may vary from the
coupon rate, even if adjustable, if the mortgage-backed securities are purchased or traded in the secondary market at a
premium or discount.

The issuers of certain mortgage-backed obligations may elect to have the pool of mortgage loans (or indirect
interests in mortgage loans) underlying the securities treated as a real estate mortgage investment conduit ("REMIC"),
which is subject to special federal income tax rules. A description of the types of mortgage-backed securities in which
the Portfolio may invest is provided below. The descriptions are general and summary in nature, and do not detail every
possible variation of the types of securities that are permissible for the Portfolio.

Adjustable Rate Mortgage Loans ("ARMs"). The Portfolio may, invest in ARMs. ARMs generally provide for
a fixed initial mortgage interest rate for a specified period of time. Thereafter, the interest rates (the "Mortgage
Interest Rates") may be subject to periodic adjustment based on changes in the applicable index rate (the "Index Rate").
The adjusted rate would be equal to the Index Rate plus a fixed percentage spread over the Index Rate established for
each ARM at the time of its origination. ARMs allow the Portfolio to participate in increases in interest rates through
periodic increases in the securities coupon rates. During periods of declining interest rates, coupon rates may readjust
downward resulting in lower yields to a Fund.

ARMs also have the risk of prepayments. The rate of principal prepayments with respect to ARMs has fluctuated in
recent years. The value of Mortgage-Backed Securities that are structured as pass through mortgage securities that are
collateralized by ARMs are less likely to rise during periods of declining interest rates to the same extent as
fixed-rate securities. Accordingly, ARMs may be subject to a greater rate of principal repayments in a declining
interest rate environment resulting in lower yields to a Fund. ARMs are also typically subject to maximum increases and
decreases in the interest rate adjustment which can be made on any one adjustment date, in any one year, or during the
life of the security. In the event of dramatic increases or decreases in prevailing market interest rates, the value of
a Fund's investment in ARMs may fluctuate more substantially since these limits may prevent the security from fully
adjusting its interest rate to the prevailing market rates. As with fixed-rate mortgages, ARM prepayment rates vary in
both stable and changing interest rate environments.

Fixed-Rate Mortgage Loans. Generally, fixed-rate mortgage loans included in a mortgage pool (the
"Fixed-Rate Mortgage Loans") will bear simple interest at fixed annual rates and have original terms to maturity ranging
from 5 to 40 years. Fixed-Rate Mortgage Loans generally provide for monthly payments of principal and interest in
substantially equal installments for the term of the mortgage note in sufficient amounts to fully amortize principal by
maturity, although certain Fixed-Rate Mortgage Loans provide for a large final "balloon" payment upon maturity.

Government Guaranteed Mortgage-Backed Securities. There are several types of government guaranteed
Mortgage-Backed Securities currently available, including guaranteed mortgage pass-through certificates and multiple
class securities, which include guaranteed Real Estate Mortgage Investment Conduit Certificates ("REMIC Certificates"),
other collateralized mortgage obligations and stripped Mortgage-Backed Securities. There is risk that the U.S.
Government will not provide financial support to its agencies, authorities, instrumentalities or sponsored enterprises. A
Fund may purchase U.S. Government securities that are not backed by the full faith and credit of the United States, such
as those issued by Fannie Mae and Freddie Mac. The maximum potential liability of the issuers of some U.S. Government
securities held by a Fund may greatly exceed their current resources, including their legal right to support from the
U.S. Treasury. It is possible that these issuers will not have the funds to meet their payment obligations in the future.

Guaranteed Mortgage Pass-Through Securities.

Ginnie Mae Certificates. Ginnie Mae is a wholly-owned corporate instrumentality of the United States.
Ginnie Mae is authorized to guarantee the timely payment of the principal of and interest on certificates that are based
on and backed by a pool of mortgage loans insured by the Federal Housing Administration ("FHA"), or guaranteed by the
Veterans Administration ("VA"), or by pools of other eligible mortgage loans. In order to meet its obligations under any
guaranty, Ginnie Mae is authorized to borrow from the U.S. Treasury in an unlimited amount. The National Housing Act
provides that the full faith and credit of the United States is pledged to the timely payment of principal and interest
by Ginnie Mae of amounts due on Ginnie Mae certificates.

Fannie Mae Certificates. Fannie Mae is a stockholder-owned corporation chartered under an act of the
U.S. Congress. Generally, Fannie Mae Certificates are issued and guaranteed by Fannie Mae and represent an undivided
interest in a pool of mortgage loans (a "Pool") formed by Fannie Mae. A Pool consists of residential mortgage loans
either previously owned by Fannie Mae or purchased by it in connection with the formation of the Pool. The mortgage
loans may be either conventional mortgage loans (i.e., not insured or guaranteed by any U.S. government agency) or
mortgage loans that are either insured by the FHA or guaranteed by the VA. However, the mortgage loans in Fannie Mae
Pools are primarily conventional mortgage loans. The lenders originating and servicing the mortgage loans are subject to
certain eligibility requirements established by Fannie Mae.

Fannie Mae has certain contractual responsibilities. With respect to each Pool, Fannie Mae is obligated to
distribute scheduled installments of principal and interest after Fannie Mae's servicing and guaranty fee, whether or not
received, to Certificate holders. Fannie Mae also is obligated to distribute to holders of Certificates an amount equal
to the full principal balance of any foreclosed mortgage loan, whether or not such principal balance is actually
recovered. The obligations of Fannie Mae under its guaranty of the Fannie Mae Certificates are obligations solely of
Fannie Mae.

Freddie Mac Certificates. Freddie Mac is a publicly held U.S. government sponsored enterprise. The
principal activity of Freddie Mac currently is the purchase of first lien, conventional, residential mortgage loans and
participation interests in such mortgage loans and their resale in the form of mortgage securities, primarily Freddie Mac
Certificates. A Freddie Mac Certificate represents a pro rata interest in a group of mortgage loans or participations in
mortgage loans (a "Freddie Mac Certificate group") purchased by Freddie Mac.

Freddie Mac guarantees to each registered holder of a Freddie Mac Certificate the timely payment of interest at
the rate provided for by such Freddie Mac Certificate (whether or not received on the underlying loans). Freddie Mac
also guarantees to each registered Certificate holder ultimate collection of all principal of the related mortgage loans,
without any offset or deduction, but does not, generally, guarantee the timely payment of scheduled principal. The
obligations of Freddie Mac under its guaranty of Freddie Mac Certificates are obligations solely of Freddie Mac.

The mortgage loans underlying the Freddie Mac and Fannie Mae Certificates consist of adjustable rate or
fixed-rate mortgage loans with original terms to maturity of up to forty years. Substantially all of these mortgage
loans are secured by first liens on one-to-four-family residential properties or multi-family projects. Each mortgage
loan must meet the applicable standards set forth in the law creating Freddie Mac or Fannie Mae. A Freddie Mac
Certificate group may include whole loans, participation interests in whole loans, undivided interests in whole loans and
participations comprising another Freddie Mac Certificate group.

Mortgage Pass-Through Securities. To the extent consistent with their investment policies, the Taxable
Funds (other than the Enhanced Income Fund and Emerging Markets Debt Fund) may invest in both government guaranteed and
privately issued mortgage pass-through securities ("Mortgage Pass-Throughs"), that are fixed or adjustable rate
Mortgage-Backed Securities which provide for monthly payments that are a "pass-through" of the monthly interest and
principal payments (including any prepayments) made by the individual borrowers on the pooled mortgage loans, net of any
fees or other amounts paid to any guarantor, administrator and/or servicer of the underlying mortgage loans.

Conventional Mortgage Loans. The conventional mortgage loans underlying the Freddie Mac and Fannie Mae
Certificates consist of adjustable rate or fixed-rate mortgage loans normally with original terms to maturity of between
five and thirty years. Substantially all of these mortgage loans are secured by first liens on one- to four-family
residential properties or multi-family projects. Each mortgage loan must meet the applicable standards set forth in the
law creating Freddie Mac or Fannie Mae. A Freddie Mac Certificate group may include whole loans, participation interests
in whole loans, undivided interests in whole loans and participations comprising another Freddie Mac Certificate group.

Multiple Class Mortgage-Backed Securities and Collateralized Mortgage Obligations. The Portfolio may
invest in multiple class securities including collateralized mortgage obligations ("CMOs") and REMIC Certificates. These
securities may be issued by U.S. government agencies, instrumentalities or sponsored enterprises such as Fannie Mae or
Freddie Mac or, to the extent consistent with the Portfolio's investment policies, by trusts formed by private
originators of, or investors in, mortgage loans, including savings and loan associations, mortgage bankers, commercial
banks, insurance companies, investment banks and special purpose subsidiaries of the foregoing. In general, CMOs are
debt obligations of a legal entity that are collateralized by, and multiple class Mortgage-Backed Securities represent
direct ownership interests in, a pool of mortgage loans or Mortgage-Backed Securities the payments on which are used to
make payments on the CMOs or multiple class Mortgage-Backed Securities.

Stripped Mortgage-Backed Securities. The Portfolio may invest in stripped mortgage-backed securities
("SMBS"), which are derivative multiclass mortgage securities, issued or guaranteed by the U.S. government, its agencies
or instrumentalities or, to the extent consistent with a Fund's investment policies, non-governmental originators.
Certain SMBS may not be readily marketable and will be considered illiquid for purposes of each Fund's limitation on
investments in illiquid securities. The Sub-Adviser may determine that SMBS which are U.S. Government Securities are
liquid for purposes of each Fund's limitation on investments in illiquid securities. The market value of the class
consisting entirely of principal payments generally is unusually volatile in response to changes in interest rates. The
yields on a class of SMBS that receives all or most of the interest from Mortgage Assets are generally higher than
prevailing market yields on other Mortgage-Backed Securities because their cash flow patterns are more volatile and there
is a greater risk that the initial investment will not be fully recouped. A Fund's investment in SMBS may require the
Fund to sell certain of its portfolio securities to generate sufficient cash to satisfy certain income distribution
requirements.

Privately Issued Mortgage-Backed Securities The Portfolio may invest in privately issued Mortgage-Backed
Securities. Privately issued Mortgage-Backed Securities are generally backed by pools of conventional (i.e.,
non-government guaranteed or insured) mortgage loans. The seller or servicer of the underlying mortgage obligations will
generally make representations and warranties to certificate-holders as to certain characteristics of the mortgage loans
and as to the accuracy of certain information furnished to the trustee in respect of each such mortgage loan. Upon a
breach of any representation or warranty that materially and adversely affects the interests of the related
certificate-holders in a mortgage loan, the seller or servicer generally will be obligated either to cure the breach in
all material respects, to repurchase the mortgage loan or, if the related agreement so provides, to substitute in its
place a mortgage loan pursuant to the conditions set forth therein. Such a repurchase or substitution obligation may
constitute the sole remedy available to the related certificate-holders or the trustee for the material breach of any
such representation or warranty by the seller or servicer.

Ratings. The ratings assigned by a rating organization to Mortgage Pass-Throughs address the likelihood
of the receipt of all distributions on the underlying mortgage loans by the related certificate-holders under the
agreements pursuant to which such certificates are issued. A rating organization's ratings normally take into
consideration the credit quality of the related mortgage pool, including any credit support providers, structural and
legal aspects associated with such certificates, and the extent to which the payment stream on such mortgage pool is
adequate to make payments required by such certificates. A rating organization's ratings on such certificates do not,
however, constitute a statement regarding frequency of prepayments on the related mortgage loans. In addition, the
rating assigned by a rating organization to a certificate may not address the remote possibility that, in the event of
the insolvency of the issuer of certificates where a subordinated interest was retained, the issuance and sale of the
senior certificates may be recharacterized as a financing and, as a result of such recharacterization, payments on such
certificates may be affected.

Credit Enhancement. Mortgage pools credited by non-governmental issuers generally offer a higher yield
than government and government-related pools because of the absence of direct or indirect government or agency payment
guarantees. To lessen the effect of failures by obligors on underlying assets to make payments. Mortgage Pass-Throughs
may contain elements of credit support. Credit support falls generally into two categories: (i) liquidity protection
and (ii) protection against losses resulting from default by an obligor on the underlying assets. Liquidity protection
refers to the provision of advances, generally by the entity administering the pools of mortgages, the provision of a
reserve fund, or a combination thereof, to ensure, subject to certain limitations, that scheduled payments on the
underlying pool are made in a timely fashion. Protection against losses resulting from default ensures ultimate payment
of the obligations on at least a portion of the assets in the pool. Such credit support can be provided by, among other
things, payment guarantees, letters of credit, pool insurance, subordination, or any combination thereof.

Subordination; Shifting of Interest; Reserve Fund. In order to achieve ratings on one or more classes
of Mortgage Pass-Throughs, one or more classes of certificates may be subordinate certificates which provide that the
rights of the subordinate certificate-holders to receive any or a specified portion of distributions with respect to the
underlying mortgage loans may be subordinated to the rights of the senior certificate-holders. If so structured, the
subordination feature may be enhanced by distributing to the senior certificate-holders on certain distribution dates, as
payment of principal, a specified percentage (which generally declines over time) of all principal payments received
during the preceding prepayment period ("shifting interest credit enhancement"). This will have the effect of
accelerating the amortization of the senior certificates while increasing the interest in the trust fund evidenced by the
subordinate certificates. Increasing the interest of the subordinate certificates relative to that of the senior
certificates is intended to preserve the availability of the subordination provided by the subordinate certificates. In
addition, because the senior certificate-holders in a shifting interest credit enhancement structure are entitled to
receive a percentage of principal prepayments which is greater than their proportionate interest in the trust fund, the
rate of principal prepayments on the mortgage loans will have an even greater effect on the rate of principal payments
and the amount of interest payments on, and the yield to maturity of, the senior certificates.

Alternative Credit Enhancement. As an alternative, or in addition to the credit enhancement afforded by
subordination, credit enhancement for Mortgage Pass-Throughs may be provided by mortgage insurance, hazard insurance, by
the deposit of cash, certificates of deposit, letters of credit, a limited guaranty or by such other methods as are
acceptable to a rating agency. In certain circumstances, such as where credit enhancement is provided by guarantees or a
letter of credit, the security is subject to credit risk because of its exposure to an external credit enhancement
provider.

Voluntary Advances. In the event of delinquencies in payments on the mortgage loans underlying the
Mortgage Pass-Throughs, the servicer may agree to make advances of cash for the benefit of certificate-holders, but
generally will do so only to the extent that it determines such voluntary advances will be recoverable from future
payments and collections on the mortgage loans or otherwise.

Optional Termination. Generally, the servicer may, at its option with respect to any certificates,
repurchase all of the underlying mortgage loans remaining outstanding at such time if the aggregate outstanding principal
balance of such mortgage loans is less than a specified percentage (generally 5-10%) of the aggregate outstanding
principal balance of the mortgage loans as of the cut-off date specified with respect to such series.

Asset-Backed Securities The Portfolio may invest in asset-backed securities. Asset-backed securities represent
participations in, or are secured by and payable from, assets such as motor vehicle installment sales, installment loan
contracts, leases of various types of real and personal property, receivables from revolving credit (credit card)
agreements and other categories of receivables. Such assets are securitized through the use of trusts and special purpose
corporations. Payments or distributions of principal and interest may be guaranteed up to certain amounts and for a
certain time period by a letter of credit or a pool insurance policy issued by a financial institution unaffiliated with
the trust or corporation, or other credit enhancements may be present. During periods of declining interest rates,
prepayment of loans underlying asset-backed securities can be expected to accelerate. Accordingly, the Portfolio's
ability to maintain positions in such securities will be affected by reductions in the principal amount of such
securities resulting from prepayments, and its ability to reinvest the returns of principal at comparable yields is
subject to generally prevailing interest rates at that time. To the extent that a Portfolio invests in asset-backed
securities, the values of the Portfolio's securities will vary with changes in market interest rates generally and the
differentials in yields among various kinds of asset-backed securities.

Asset-backed securities present certain additional risks because asset-backed securities generally do not have
the benefit of a security interest in collateral that is comparable to Mortgage Assets. Therefore, if the issuer of an
asset-backed security defaults on its payment obligations, there is the possibility that, in some cases, a Fund will be
unable to possess and sell the underlying collateral and that a Fund's recoveries on repossessed collateral may not be
available to support payments on these securities.

Loan Participations. The Portfolio may invest in loan participations. A loan participation is an interest in a
loan to a U.S. or foreign company or other borrower which is administered and sold by a financial intermediary. In a
typical corporate loan syndication, a number of lenders, usually banks (co-lenders), lend a corporate borrower a
specified sum pursuant to the terms and conditions of a loan agreement. One of the co-lenders usually agrees to act as
the agent bank with respect to the loan.

Participation interests acquired by the Portfolio may take the form of a direct or co-lending relationship with
the corporate borrower, an assignment of an interest in the loan by a co-lender or another participant, or a
participation in the seller's share of the loan. When the Portfolio acts as co-lender in connection with a participation
interest or when the Portfolio acquires certain participation interests, the Portfolio will have direct recourse against
the borrower if the borrower fails to pay scheduled principal and interest. In cases where the Portfolio lacks direct
recourse, it will look to the agent bank to enforce appropriate credit remedies against the borrower. In these cases,
the Portfolio may be subject to delays, expenses and risks that are greater than those that would have been involved if
the Portfolio had purchased a direct obligation (such as commercial paper) of such borrower. For example, in the event
of the bankruptcy or insolvency of the corporate borrower, a loan participation may be subject to certain defenses by the
borrower as a result of improper conduct by the agent bank. Moreover, under the terms of the loan participation, the
Portfolio may be regarded as a creditor of the agent bank (rather than of the underlying corporate borrower), so that the
Portfolio may also be subject to the risk that the agent bank may become insolvent. The secondary market, if any, for
these loan participations is limited and loan participations purchased by the Portfolio will normally be regarded as
illiquid.

For purposes of certain investment limitations pertaining to diversification of the Portfolio's investments, the
issuer of a loan participation will be the underlying borrower. However, in cases where the Portfolio does not have
recourse directly against the borrower, both the borrower and each agent bank and co-lender interposed between the
Portfolio and the borrower will be deemed issuers of a loan participation.

Zero Coupon, Deferred Interest, Pay-in-Kind and Capital Appreciation Bonds. The Portfolio may invest in zero
coupon, deferred interest, pay-in-kind ("PIK") and capital appreciation bonds. Zero coupon, deferred interest and
capital appreciation bonds are debt securities issued or sold at a discount from their face value and which do not
entitle the holder to any periodic payment of interest prior to maturity or a specified date. The original issue
discount varies depending on the time remaining until maturity or cash payment date, prevailing interest rates, the
liquidity of the security and the perceived credit quality of the issuer. These securities also may take the form of
debt securities that have been stripped of their unmatured interest coupons, the coupons themselves or receipts or
certificates representing interests in such stripped debt obligations or coupons. The market prices of zero coupon,
deferred interest, capital appreciation bonds and PIK securities generally are more volatile than the market prices of
interest bearing securities and are likely to respond to a greater degree to changes in interest rates than interest
bearing securities having similar maturities and credit quality.

PIK securities may be debt obligations or preferred shares that provide the issuer with the option of paying
interest or dividends on such obligations in cash or in the form of additional securities rather than cash. Similar to
zero coupon bonds and deferred interest bonds, PIK securities are designed to give an issuer flexibility in managing cash
flow. PIK securities that are debt securities can be either senior or subordinated debt and generally trade flat (i.e.,
without accrued interest). The trading price of PIK debt securities generally reflects the market value of the underlying
debt plus an amount representing accrued interest since the last interest payment.

Zero coupon, deferred interest, capital appreciation and PIK securities involve the additional risk that, unlike
securities that periodically pay interest to maturity, the Portfolio will realize no cash until a specified future
payment date unless a portion of such securities is sold and, if the issuer of such securities defaults, a Portfolio may
obtain no return at all on its investment. In addition, even though such securities do not provide for the payment of
current interest in cash, the Portfolio is nonetheless required to accrue income on such investments for each taxable
year and generally are required to distribute such accrued amounts (net of deductible expenses, if any) to avoid being
subject to tax. Because no cash is generally received at the time of the accrual, a Portfolio may be required to
liquidate other portfolio securities to obtain sufficient cash to satisfy federal tax distribution requirements
applicable to the Portfolio. A portion of the discount with respect to stripped tax-exempt securities or their coupons
may be taxable.

Variable and Floating Rate Securities The interest rates payable on certain securities in which the Portfolio
may invest are not fixed and may fluctuate based upon changes in market rates. A variable rate obligation has an
interest rate which is adjusted at predesignated periods in response to changes in the market rate of interest on which
the interest rate is based. Variable and floating rate obligations are less effective than fixed rate instruments at
locking in a particular yield. Nevertheless, such obligations may fluctuate in value in response to interest rate changes
if there is a delay between changes in market interest rates and the interest reset date for the obligation.

The Portfolio may invest in "leveraged" inverse floating rate debt instruments ("inverse floaters"), including
"leveraged inverse floaters." The interest rate on inverse floaters resets in the opposite direction from the market rate
of interest to which the inverse floater is indexed. An inverse floater may be considered to be leveraged to the extent
that its interest rate varies by a magnitude that exceeds the magnitude of the change in the index rate of interest. The
higher the degree of leverage inherent in inverse floaters is associated with greater volatility in their market values.
Accordingly, the duration of an inverse floater may exceed its stated final maturity. Certain inverse floaters may be
deemed to be illiquid securities for purposes of each Fund's limitation on illiquid investments.

Preferred Stock, Warrants and Rights. The Portfolio may invest in preferred stock, warrants and rights.
Preferred stocks are securities that represent an ownership interest providing the holder with claims on the issuer's
earnings and assets before common stock owners but after bond owners. Unlike debt securities, the obligations of an
issuer of preferred stock, including dividend and other payment obligations, may not typically be accelerated by the
holders of such preferred stock on the occurrence of an event of default (such as a covenant default or filing of a
bankruptcy petition) or other non-compliance by the issuer with the terms of the preferred stock. Often, however, on the
occurrence of any such event of default or non-compliance by the issuer, preferred stockholders will be entitled to gain
representation on the issuer's board of directors or increase their existing board representation. In addition,
preferred stockholders may be granted voting rights with respect to certain issues on the occurrence of any event of
default.

Warrants and other rights are options to buy a stated number of shares of common stock at a specified price at
any time during the life of the warrant. The holders of warrants and rights have no voting rights, receive no dividends
and have no rights with respect to the assets of the issuer.

Corporate Debt Obligations. The Portfolio may invest in corporate debt obligations, including obligations of
industrial, utility and financial issuers. Corporate debt obligations include bonds, notes, debentures and other
obligations of corporations to pay interest and repay principal. Corporate debt obligations are subject to the risk of
an issuer's inability to meet principal and interest payments on the obligations and may also be subject to price
volatility due to such factors as market interest rates, market perception of the creditworthiness of the issuer and
general market liquidity.

Commercial Paper and Other Short-Term Corporate Obligations

The Portfolio may invest in commercial paper and other short-term obligations payable in U.S. dollars and issued
or guaranteed by U.S. corporations, non-U.S. corporations or other entities. Commercial paper represents short-term
unsecured promissory notes issued in bearer form by banks or bank holding companies, corporations and finance companies.

Trust Preferreds. The Portfolio may invest in trust preferred securities. A trust preferred or capital security
is a long dated bond (for example 30 years) with preferred features. The preferred features are that payment of interest
can be deferred for a specified period without initiating a default event. From a bondholder's viewpoint, the securities
are senior in claim to standard preferred but are junior to other bondholders. From the issuer's viewpoint, the
securities are attractive because their interest is deductible for tax purposes like other types of debt instruments.

High Yield Securities. The Portfolio may invest in bonds rated BB or below by Standard & Poor's or Ba or below
by Moody's (or comparable rated and unrated securities). These bonds are commonly referred to as "junk bonds" and are
considered speculative. The ability of their issuers to make principal and interest payments may be questionable. In
some cases, such bonds may be highly speculative, have poor prospects for reaching investment grade standing and be in
default. As a result, investment in such bonds will entail greater risks than those associated with investment grade
bonds (i.e., bonds rated AAA, AA, A or BBB by Standard and Poor's or Aaa, Aa, A or Baa by Moody's). Analysis of the
creditworthiness of issuers of high yield securities may be more complex than for issuers of higher quality debt
securities, and the ability of a Fund to achieve its investment objective may, to the extent of its investments in high
yield securities, be more dependent upon such creditworthiness analysis than would be the case if the Fund were investing
in higher quality securities.

The amount of high yield, fixed-income securities proliferated in the 1980s and early 1990s as a result of
increased merger and acquisition and leveraged buyout activity. Such securities are also issued by less-established
corporations desiring to expand. Risks associated with acquiring the securities of such issuers generally are greater
than is the case with higher rated securities because such issuers are often less creditworthy companies or are highly
leveraged and generally less able than more established or less leveraged entities to make scheduled payments of
principal and interest. High yield securities are also issued by governmental issuers that may have difficulty in making
all scheduled interest and principal payments.

The market values of high yield, fixed-income securities tends to reflect those individual corporate or municipal
developments to a greater extent than do those of higher rated securities, which react primarily to fluctuations in the
general level of interest rates. Issuers of such high yield securities are often highly leveraged, and may not be able
to make use of more traditional methods of financing. Their ability to service debt obligations may be more adversely
affected than issuers of higher rated securities by economic downturns, specific corporate or governmental developments
or the issuers' inability to meet specific projected business forecasts. These non-investment grade securities also tend
to be more sensitive to economic conditions than higher-rated securities. Negative publicity about the junk bond market
and investor perceptions regarding lower-rated securities, whether or not based on fundamental analysis, may depress the
prices for such securities.

Since investors generally perceive that there are greater risks associated with non-investment grade securities
of the type in which the Portfolio invests, the yields and prices of such securities may tend to fluctuate more than
those for higher-rated securities. In the lower quality segments of the fixed-income securities market, changes in
perceptions of issuers' creditworthiness tend to occur more frequently and in a more pronounced manner than do changes in
higher quality segments of the fixed-income securities market, resulting in greater yield and price volatility.

Another factor which causes fluctuations in the prices of high yield, fixed-income securities is the supply and
demand for similarly rated securities. In addition, the prices of fixed-income securities fluctuate in response to the
general level of interest rates. Fluctuations in the prices of portfolio securities subsequent to their acquisition will
not affect cash income from such securities but will be reflected in the Portfolio's net asset value.

The risk of loss from default for the holders of high yield, fixed-income securities is significantly greater
than is the case for holders of other debt securities because such high yield, fixed-income securities are generally
unsecured and are often subordinated to the rights of other creditors of the issuers of such securities. Investment by
the Portfolio in already defaulted securities poses an additional risk of loss should nonpayment of principal and
interest continue in respect of such securities. Even if such securities are held to maturity, recovery by the Portfolio
of their initial investment and any anticipated income or appreciation is uncertain. In addition, the Portfolio may
incur additional expenses to the extent that they are required to seek recovery relating to the default in the payment of
principal or interest on such securities or otherwise protect their interests. The Portfolio may be required to
liquidate other portfolio securities to satisfy annual distribution obligations of the Portfolio in respect of accrued
interest income on securities which are subsequently written off, even though the Portfolio has not received any cash
payments of such interest.

The secondary market for high yield, fixed-income securities is concentrated in relatively few markets and is
dominated by institutional investors, including mutual funds, insurance companies and other financial institutions.
Accordingly, the secondary market for such securities is not as liquid as and is more volatile than the secondary market
for higher-rated securities. In addition, the trading volume for high-yield, fixed-income securities is generally lower
than that of higher rated securities and the secondary market for high yield, fixed-income securities could contract
under adverse market or economic conditions independent of any specific adverse changes in the condition of a particular
issuer. These factors may have an adverse effect on the ability of the Portfolio to dispose of particular portfolio
investments. Prices realized upon the sale of such lower rated or unrated securities, under these circumstances, may be
less than the prices used in calculating the net asset value of the Portfolio. A less liquid secondary market also may
make it more difficult for the Portfolio to obtain precise valuations of the high yield securities in their portfolios.

The adoption of new legislation could adversely affect the secondary market for high yield securities and the
financial condition of issuers of these securities. The form of any future legislation, and the probability of such
legislation being enacted, is uncertain.

Non-investment grade or high-yield, fixed-income securities also present risks based on payment expectations.
High yield, fixed-income securities frequently contain "call" or buy-back features which permit the issuer to call or
repurchase the security from its holder. If an issuer exercises such a "call option" and redeems the security, the
Portfolio may have to replace such security with a lower-yielding security, resulting in a decreased return for
investors. In addition, if the Portfolio experiences net redemptions of their shares, they may be forced to sell their
higher-rated securities, resulting in a decline in the overall credit quality of the portfolios of the Portfolio and
increasing the exposure of the Portfolio to the risks of high yield securities.

Credit ratings issued by credit rating agencies are designed to evaluate the safety of principal and interest
payments of rated securities. They do not, however, evaluate the market value risk of non-investment grade 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 conditions 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 non-investment grade and comparable unrated obligations will be more dependent on the Investment
Adviser's credit analysis than would be the case with investments in investment-grade debt obligations. The Sub-Adviser
employs its own credit research and analysis, which includes a study of an issuer's existing debt, capital structure,
ability to service debt and to pay dividends, sensitivity to economic conditions, operating history and current trend of
earnings. The Investment Adviser continually monitors the investments in the Portfolio and evaluates whether to dispose
of or to retain non-investment grade and comparable unrated securities whose credit ratings or credit quality may have
changed.

Because the market for high yield securities is still relatively new and has not weathered a major economic
recession, it is unknown what effects such a recession might have on such securities. A widespread economic downturn
could result in increased defaults and losses.

Bank Obligations. The Portfolio may invest in obligations issued or guaranteed by U.S. and foreign banks. Bank
obligations, including without limitation time deposits, bankers' acceptances and certificates of deposit, may be general
obligations of the parent bank or may be obligations only of the issuing branch pursuant to the terms of the specific
obligations or government regulation.

Banks are subject to extensive but different governmental regulations which may limit both the amount and types
of loans which may be made and interest rates which may be charged. Foreign banks are subject to different regulations
and are generally permitted to engage in a wider variety of activities than U.S. banks. In addition, the profitability
of the banking industry is largely dependent upon the availability and cost of funds for the purpose of financing lending
operations under prevailing money market conditions. General economic conditions as well as exposure to credit losses
arising from possible financial difficulties of borrowers play an important part in the operations of this industry.

Municipal Securities. The Portfolio may invest in Municipal Securities, the interest on which is exempt from
regular federal income tax (i.e., excluded from gross income for federal income tax purposes but not necessarily exempt
from the federal alternative minimum tax or from the income taxes of any state or local government). In addition,
Municipal Securities include participation interests in such securities the interest on which is, in the opinion of bond
counsel or counsel selected by the Investment Adviser, excluded from gross income for federal income tax purposes. The
Portfolio may revise its definition of Municipal Securities in the future to include other types of securities that
currently exist, the interest on which is or will be, in the opinion of such counsel, excluded from gross income for
federal income tax purposes, provided that investing in such securities is consistent with each Fund's investment
objective and policies. The Portfolio may also invest in taxable Municipal Securities.

The yields and market values of municipal securities are determined primarily by the general level of interest
rates, the creditworthiness of the issuers of municipal securities and economic and political conditions affecting such
issuers. The yields and market prices of municipal securities may be adversely affected by changes in tax rates and
policies, which may have less effect on the market for taxable fixed-income securities. Moreover, certain types of
municipal securities, such as housing revenue bonds, involve prepayment risks which could affect the yield on such
securities. The credit rating assigned to municipal securities may reflect the existence of guarantees, letters of
credit or other credit enhancement features available to the issuers or holders of such municipal securities.

Dividends paid by the Funds, other than the Tax-Exempt Funds, that are derived from interest paid on both
tax-exempt and taxable Municipal Securities will be taxable to the Funds' shareholders.

Investments in municipal securities are subject to the risk that the issuer could default on its obligations.
Such a default could result from the inadequacy of the sources or revenues from which interest and principal payments are
to be made or the assets collateralizing such obligations. Revenue bonds, including private activity bonds, are backed
only by specific assets or revenue sources and not by the full faith and credit of the governmental issuer.

The two principal classifications of Municipal Securities are "general obligations" and "revenue obligations."
General obligations are secured by the issuer's pledge of its full faith and credit for the payment of principal and
interest, although the characteristics and enforcement of general obligations may vary according to the law applicable to
the particular issuer. Revenue obligations, which include, but are not limited to, private activity bonds, resource
recovery bonds, certificates of participation and certain municipal notes, are not backed by the credit and taxing
authority of the issuer, and are payable solely from the revenues derived from a particular facility or class of
facilities or, in some cases, from the proceeds of a special excise or other specific revenue source. Nevertheless, the
obligations of the issuer of a revenue obligation may be backed by a letter of credit, guarantee or insurance. General
obligations and revenue obligations may be issued in a variety of forms, including commercial paper, fixed, variable and
floating rate securities, tender option bonds, auction rate bonds, zero coupon bonds, deferred interest bonds and capital
appreciation bonds.

In addition to general obligations and revenue obligations, there is a variety of hybrid and special types of
Municipal Securities. There are also numerous differences in the security of Municipal Securities both within and
between these two principal classifications.

For the purpose of applying a Fund's investment restrictions, the identification of the issuer of a Municipal
Security which is not a general obligation is made by the Sub-Adviser based on the characteristics of the Municipal
Security, the most important of which is the source of funds for the payment of principal and interest on such securities.

An entire issue of Municipal Securities may be purchased by one or a small number of institutional investors,
including one or more Funds. Thus, the issue may not be said to be publicly offered. Unlike some securities that are
not publicly offered, a secondary market exists for many Municipal Securities that were not publicly offered initially
and such securities may be readily marketable. The credit rating assigned to Municipal Securities may reflect the
existence of guarantees, letters of credit or other credit enhancement features available to the issuers or holders of
such Municipal Securities.

The obligations of the issuer to pay the principal of and interest on a Municipal Security are subject to the
provisions of bankruptcy, insolvency and other laws affecting the rights and remedies of creditors, such as the Federal
Bankruptcy Code, and laws, if any, that may be enacted by Congress or state legislatures extending the time for payment
of principal or interest or imposing other constraints upon the enforcement of such obligations. There is also the
possibility that, as a result of litigation or other conditions, the power or ability of the issuer to pay when due
principal of or interest on a Municipal Security may be materially affected.

Municipal Leases, Certificates of Participation and Other Participation Interests. The Portfolio may
invest in municipal leases, certificates of participation and other participation interests. A municipal lease is an
obligation in the form of a lease or installment purchase which is issued by a state or local government to acquire
equipment and facilities. Income from such obligations is generally exempt from state and local taxes in the state of
issuance. Municipal leases frequently involve special risks not normally associated with general obligations or revenue
bonds. Leases and installment purchase or conditional sale contracts (which normally provide for title to the leased
asset to pass eventually to the governmental issuer) have evolved as a means for governmental issuers to acquire property
and equipment without meeting the constitutional and statutory requirements for the issuance of debt. The debt issuance
limitations are deemed to be inapplicable because of the inclusion in many leases or contracts of "non-appropriation"
clauses that relieve the governmental issuer of any obligation to make future payments under the lease or contract unless
money is appropriated for such purpose by the appropriate legislative body on a yearly or other periodic basis. In
addition, such leases or contracts may be subject to the temporary abatement of payments in the event the issuer is
prevented from maintaining occupancy of the leased premises or utilizing the leased equipment.

Although the obligations may be secured by the leased equipment or facilities, the disposition of the property in
the event of non-appropriation or foreclosure might prove difficult, time consuming and costly, and result in a delay in
recovering or the failure to fully recover a Fund's original investment. To the extent that a Fund invests in unrated
municipal leases or participates in such leases, the credit quality rating and risk of cancellation of such unrated
leases will be monitored on an ongoing basis.

Certificates of participation represent undivided interests in municipal leases, installment purchase agreements
or other instruments. The certificates are typically issued by a trust or other entity which has received an assignment
of the payments to be made by the state or political subdivision under such leases or installment purchase agreements.

Certain municipal lease obligations and certificates of participation may be deemed to be illiquid for the
purpose of the Funds' limitation on investments in illiquid securities. Other municipal lease obligations and
certificates of participation acquired by a Fund may be determined by the Sub-Adviser, pursuant to guidelines adopted by
the Trustees of the Sub-Adviser, to be liquid securities for the purpose of such limitation.

The Portfolio may purchase participations in Municipal Securities held by a commercial bank or other financial
institution. Such participations provide the Portfolio with the right to a pro rata undivided interest in the underlying
Municipal Securities. In addition, such participations generally provide the Portfolio with the right to demand payment,
on not more than seven days' notice, of all or any part of the Portfolio's participation interest in the underlying
Municipal Securities, plus accrued interest.

Municipal Notes. Municipal Securities in the form of notes generally are used to provide for short-term
capital needs, in anticipation of an issuer's receipt of other revenues or financing, and typically have maturities of up
to three years. Such instruments may include tax anticipation notes, revenue anticipation notes, bond anticipation notes,
tax and revenue anticipation notes and construction loan notes. The obligations of an issuer of municipal notes are
generally secured by the anticipated revenues from taxes, grants or bond financing. An investment in such instruments,
however, presents a risk that the anticipated revenues will not be received or that such revenues will be insufficient to
satisfy the issuer's payment obligations under the notes or that refinancing will be otherwise unavailable.

Tax-Exempt Commercial Paper. Issues of commercial paper typically represent short-term, unsecured,
negotiable promissory notes. These obligations are issued by state and local governments and their agencies to finance
working capital needs of municipalities or to provide interim construction financing and are paid from general revenues
of municipalities or are refinanced with long-term debt. In most cases, tax-exempt commercial paper is backed by letters
of credit, lending agreements, note repurchase agreements or other credit facility agreements offered by banks or other
institutions.

Pre-Refunded Municipal Securities. The principal of and interest on pre-refunded Municipal Securities
are no longer paid from the original revenue source for the securities. Instead, the source of such payments is
typically an escrow fund consisting of U.S. Government Securities. The assets in the escrow fund are derived from the
proceeds of refunding bonds issued by the same issuer as the pre-refunded Municipal Securities. Issuers of Municipal
Securities use this advance refunding technique to obtain more favorable terms with respect to securities that are not
yet subject to call or redemption by the issuer. For example, advance refunding enables an issuer to refinance debt at
lower market interest rates, restructure debt to improve cash flow or eliminate restrictive covenants in the indenture or
other governing instrument for the pre-refunded Municipal Securities. However, except for a change in the revenue source
from which principal and interest payments are made, the pre-refunded Municipal Securities remain outstanding on their
original terms until they mature or are redeemed by the issuer. Pre-refunded Municipal Securities are usually purchased
at a price which represents a premium over their face value.

Private Activity Bonds. The Portfolio may invest in certain types of Municipal Securities, generally
referred to as industrial development bonds (and referred to under current tax law as private activity bonds), which are
issued by or on behalf of public authorities to obtain funds to provide privately operated housing facilities, airport,
mass transit or port facilities, sewage disposal, solid waste disposal or hazardous waste treatment or disposal
facilities and certain local facilities for water supply, gas or electricity. The Portfolio's distributions of any
tax-exempt interest it receives from any source will be taxable for regular federal income tax purposes.

Tender Option Bonds. A tender option bond is a Municipal Security (generally held pursuant to a
custodial arrangement) having a relatively long maturity and bearing interest at a fixed rate substantially higher than
prevailing short-term, tax-exempt rates. The bond is typically issued with the agreement of a third party, such as a
bank, broker-dealer or other financial institution, which grants the security holders the option, at periodic intervals,
to tender their securities to the institution and receive the face value thereof. As consideration for providing the
option, the financial institution receives periodic fees equal to the difference between the bond's fixed coupon rate and
the rate, as determined by a remarketing or similar agent at or near the commencement of such period, that would cause
the securities, coupled with the tender option, to trade at par on the date of such determination. Thus, after payment
of this fee, the security holder effectively holds a demand obligation that bears interest at the prevailing short-term,
tax-exempt rate. However, an institution will not be obligated to accept tendered bonds in the event of certain defaults
or a significant downgrade in the credit rating assigned to the issuer of the bond. The liquidity of a tender option bond
is a function of the credit quality of both the bond issuer and the financial institution providing liquidity. Tender
option bonds are deemed to be liquid unless, in the opinion of the Investment Adviser, the credit quality of the bond
issuer and the financial institution is deemed, in light of the Fund's credit quality requirements, to be inadequate and
the bond would not otherwise be readily marketable.

Auction Rate Securities. The Portfolio may invest in auction rate securities. Auction rate securities
include auction rate Municipal Securities and auction rate preferred securities issued by closed-end investment companies
that invest primarily in Municipal Securities (collectively, "auction rate securities"). Provided that the auction
mechanism is successful, auction rate securities usually permit the holder to sell the securities in an auction at par
value at specified intervals. The dividend is reset by "Dutch" auction in which bids are made by broker-dealers and
other institutions for a certain amount of securities at a specified minimum yield. The dividend rate set by the auction
is the lowest interest or dividend rate that covers all securities offered for sale. While this process is designed to
permit auction rate securities to be traded at par value, there is some risk that an auction will fail due to
insufficient demand for the securities. A Fund will take the time remaining until the next scheduled auction date into
account for purpose of determining the securities' duration.

Dividends on auction rate preferred securities issued by a closed-end fund may be designated as exempt from
federal income tax to the extent they are attributable to exempt income earned by the fund on the securities in its
portfolio and distributed to holders of the preferred securities, provided that the preferred securities are treated as
equity securities for federal income tax purposes and the closed-end fund complies with certain tests under the Internal
Revenue Code of 1986, as amended (the "Code").

A Fund's investments in auction rate securities of closed-end funds are subject to the limitations prescribed by
the Act and certain state securities regulations. The Funds will indirectly bear their proportionate share of any
management and other fees paid by such closed-end funds in addition to the advisory fees payable directly by the Funds.

Insurance. The Portfolio may invest in "insured" tax-exempt Municipal Securities. Insured Municipal
Securities are securities for which scheduled payments of interest and principal are guaranteed by a private
(non-governmental) insurance company. The insurance only entitles a Portfolio to receive the face or par value of the
securities held by the Portfolio. The insurance does not guarantee the market value of the Municipal Securities or the
value of the shares of a Portfolio.

The Portfolio may utilize new issue or secondary market insurance. A new issue insurance policy is purchased by
a bond issuer who wishes to increase the credit rating of a security. By paying a premium and meeting the insurer's
underwriting standards, the bond issuer is able to obtain a high credit rating (usually, Aaa from Moody's or AAA from
Standard & Poor's) for the issued security. Such insurance is likely to increase the purchase price and resale value of
the security. New issue insurance policies generally are non-cancelable and continue in force as long as the bonds are
outstanding.

A secondary market insurance policy is purchased by an investor (such as a Fund) subsequent to a bond's original
issuance and generally insures a particular bond for the remainder of its term. The Funds may purchase bonds which have
already been insured under a secondary market insurance policy by a prior investor, or the Funds may directly purchase
such a policy from insurers for bonds which are currently uninsured.

An insured Municipal Security acquired by a Fund will typically be covered by only one of the above types of
policies. All of the insurance policies used by a Fund will be obtained only from insurance companies rated, at the time
of purchase, A by Moody's or Standard & Poor's, or if unrated, determined by the Investment Adviser to be of comparable
quality. The Municipal Securities invested in by the Portfolio will not be subject to this requirement.

Call Risk and Reinvestment Risk. Municipal Securities may include "call" provisions which permit the
issuers of such securities, at any time or after a specified period, to redeem the securities prior to their stated
maturity. In the event that Municipal Securities held in The Portfolio's portfolio are called prior to the maturity, the
Portfolio will be required to reinvest the proceeds on such securities at an earlier date and may be able to do so only
at lower yields, thereby reducing the Portfolio's return on its portfolio securities.

Foreign Investments. The Portfolio may invest in securities of foreign issuers and in fixed-income securities
quoted or denominated in a currency other than U.S. dollars. Investment in foreign securities may offer potential
benefits that are not available from investing exclusively in U.S. dollar-denominated domestic issues. Foreign countries
may have economic policies or business cycles different from those of the U.S. and markets for foreign fixed-income
securities do not necessarily move in a manner parallel to U.S. markets. Investing in the securities of foreign issuers
also involves, however, certain special considerations, including those set forth below, which are not typically
associated with investing in U.S. issuers. Investments in the securities of foreign issuers often involve currencies of
foreign countries and the Portfolio may be affected favorably or unfavorably by changes in currency rates and in exchange
control regulations and may incur costs in connection with conversions between various currencies. To the extent that
the Portfolio is fully invested in foreign securities while also maintaining currency positions, it may be exposed to
greater combined risk. A Portfolio also may be subject to currency exposure independent of its securities positions.

Since foreign issuers generally are not subject to uniform accounting, auditing and financial reporting
standards, practices and requirements comparable to those applicable to U.S. companies, there may be less publicly
available information about a foreign company than about a comparable U.S. company. Volume and liquidity in most foreign
bond markets are less than in the United States markets and securities of many foreign companies are less liquid and more
volatile than securities of comparable U.S. companies. Fixed commissions on foreign securities exchanges are generally
higher than negotiated commissions on U.S. exchanges, although the Portfolio endeavors to achieve the most favorable net
results on its portfolio transactions. There is generally less government supervision and regulation of securities
markets and exchanges, brokers, dealers and listed and unlisted companies than in the United States and the legal
remedies for investors may be more limited than the remedies available in the United States. For example, there may be
no comparable provisions under certain foreign laws to insider trading and similar investor protection securities laws
that apply with respect to securities transactions consummated in the United States. Mail service between the United
States and foreign countries may be slower or less reliable than within the United States, thus increasing the risk of
delayed settlement of portfolio transactions or loss of certificates for portfolio securities.

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 are uninvested and no return is earned on such assets. 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. In addition, with respect to certain foreign
countries, there is the possibility of expropriation or confiscatory taxation, limitations on the movement of funds and
other assets between different countries, political or social instability, or diplomatic developments which could
adversely affect the Portfolios' investments in those countries. Moreover, individual foreign economies may differ
favorably or unfavorably from the U.S. economy in such respects as growth of gross national product, rate of inflation,
capital reinvestment, resources self-sufficiency and balance of payments position.

Investing in Emerging Countries

Market Characteristics. For the Portfolio's investments in foreign securities, 25% of the Portfolio's
respective total assets may be invested in emerging countries. Investment in debt securities of emerging country issuers
involve special risks. The development of a market for such securities is a relatively recent phenomenon and debt
securities of most emerging country issuers are less liquid and are generally subject to greater price volatility than
securities of issuers in the United States and other developed countries. In certain countries, there may be fewer
publicly traded securities, and the market may be dominated by a few issuers or sectors. The markets for securities of
emerging countries may have substantially less volume than the market for similar securities in the United States and may
not be able to absorb, without price disruptions, a significant increase in trading volume or trade size. Additionally,
market making and arbitrage activities are generally less extensive in such markets, which may contribute to increased
volatility and reduced liquidity of such markets. The less liquid the market, the more difficult it may be for a
Portfolio to price accurately its portfolio securities or to dispose of such securities at the times determined to be
appropriate. The risks associated with reduced liquidity may be particularly acute to the extent that a Portfolio needs
cash to meet redemption requests, to pay dividends and other distributions or to pay its expenses.

Transaction costs, including brokerage commissions and dealer mark-ups, in emerging countries may be higher than
in the U.S. and other developed securities markets. As legal systems in emerging countries develop, foreign investors
may be adversely affected by new or amended laws and regulations. In circumstances where adequate laws exist, it may not
be possible to obtain swift and equitable enforcement of the law.

With respect to investments in certain emerging countries, antiquated legal systems may have an adverse impact on
the Portfolio. For example, while the potential liability of a shareholder of a U.S. corporation with respect to acts of
the corporation is generally limited to the amount of the shareholder's investment, the notion of limited liability is
less clear in certain emerging market countries. Similarly, the rights of investors in emerging market companies may be
more limited than those of investors of U.S. corporations.

Economic, Political and Social Factors. Emerging countries may be subject to a greater degree of
economic, political and social instability than the United States, Japan and most Western European countries, and
unanticipated political and social developments may affect the value of a Portfolio's investments in emerging countries
and the availability to the Portfolio of additional investments in such countries. Moreover, political and economic
structures in many emerging countries may be undergoing significant evolution and rapid development.

Many emerging countries have experienced in the past, and continue to experience, high rates of inflation. In
certain countries, inflation has at times accelerated rapidly to hyperinflationary levels, creating a negative interest
rate environment and sharply eroding the value of outstanding financial assets in those countries. The economies of many
emerging countries are heavily dependent upon international trade and are accordingly affected by protective trade
barriers and the economic conditions of their trading partners. In addition, the economies of some emerging countries
may differ unfavorably from the U.S. economy in such respects as growth of gross domestic product, rate of inflation,
capital reinvestment, resources, self-sufficiency and balance of payments position.

Restrictions on Investment and Repatriation. Certain emerging countries require governmental approval
prior to investments by foreign persons or limit investments by foreign persons to only a specified percentage of an
issuer's outstanding securities or a specific class of securities which may have less advantageous terms (including
price) than securities of the issuer available for purchase by nationals. Repatriation of investment income and capital
from certain emerging countries is subject to certain governmental consents. Even where there is no outright restriction
on repatriation of capital, the mechanics of repatriation may affect the operation of the Portfolio.

Sovereign Debt Obligations. Investment in sovereign debt can involve a high degree of risk. The
governmental entity that controls the repayment of sovereign debt may not be able or willing to repay the principal
and/or interest when due in accordance with the terms of such debt. A governmental entity's willingness or ability to
repay principal and interest due in a timely manner may be affected by, among other factors, its cash flow situation, the
extent of its foreign reserves, the availability of sufficient foreign exchange on the date a payment is due, the
relative size of the debt service burden to the economy as a whole, the governmental entity's policy towards the
International Monetary Fund and the political constraints to which a governmental entity may be subject. Governmental
entities may also be dependent on expected disbursements from foreign governments, multilateral agencies and others
abroad to reduce principal and interest on their debt. The commitment on the part of these governments, agencies and
others to make such disbursements may be conditioned on a governmental entity's implementation of economic reforms and/or
economic performance and the timely service of such debtor's obligations. Failure to implement such reforms, achieve
such levels of economic performance or repay principal or interest when due may result in the cancellation of such third
parties' commitments to lend funds to the governmental entity, which may further impair such debtor's ability or
willingness to services its debts in a timely manner. Consequently, governmental entities may default on their sovereign
debt. Holders of sovereign debt (including the Portfolio) may be requested to participate in the rescheduling of such
debt and to extend further loans to governmental agencies.

Emerging country governmental issuers are among the largest debtors to commercial banks, foreign governments,
international financial organizations and other financial institutions. Certain emerging country governmental issuers
have not been able to make payments of interest on or principal of debt obligations as those payments have come due.
Obligations arising from past restructuring agreements may affect the economic performance and political and social
stability of those issuers.

The ability of emerging country governmental issuers to make timely payments on their obligations is likely to be
influenced strongly by the issuer's balance of payments, including export performance, and its access to international
credits and investments.

As a result of the foregoing or other factors, a governmental obligor, especially in an emerging country, may
default on its obligations. If such an event occurs the Portfolio may have limited legal recourse against the issuer
and/or guarantor. Remedies must, in some cases, be pursued in the courts of the defaulting party itself, and the ability
of the holder of foreign sovereign debt securities to obtain recourse may be subject to the political climate in the
relevant country. In addition, no assurance can be given that the holders of commercial bank debt will not contest
payments to the holders of other foreign sovereign debt obligations in the event of default under the commercial bank
loan agreements.

Brady Bonds. Certain foreign debt obligations commonly referred to as "Brady Bonds" are created through
the exchange of existing commercial bank loans to foreign borrowers for new obligations in connection with debt
restructurings under a plan introduced by former U.S. Secretary of the Treasury, Nicholas F. Brady (the "Brady Plan").

Brady Bonds may be collateralized or uncollateralized and issued in various currencies (although most are
dollar-denominated) and they are actively traded in the over-the-counter secondary market. Certain Brady Bonds are
collateralized in full as to principal due at maturity by zero coupon obligations issued or guaranteed by the U.S.
government, its agencies or instrumentalities having the same maturity ("Collateralized Brady Bonds"). Brady Bonds are
not, however, considered to be U.S. Government Securities. In light of the residual risk of Brady Bonds and, among other
factors, the history of defaults with respect to commercial bank loans by public and private entities of countries
issuing Brady Bonds, investments in Brady Bonds should be viewed as speculative.

Forward Foreign Currency Exchange Contracts. The Portfolio may enter into forward foreign currency
exchange contracts for hedging purposes and to seek to increase total return. 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 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 generally charged
at any stage for trades.

The Portfolio may enter into forward foreign currency exchange contracts for hedging purposes in several
circumstances. First, when a Portfolio enters into a contract for the purchase or sale of a security quoted or
denominated in a foreign currency, or when a Portfolio anticipates the receipt in a foreign currency of a dividend or
interest payment on such a security which it holds, a Portfolio may desire to "lock in" the U.S. dollar price of the
security or the U.S. dollar equivalent of such dividend or interest payment, as the case may be. 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 transactions, a Portfolio may attempt to protect itself against an adverse change in the relationship
between the U.S. dollar and the subject foreign currency during the period between the date on which the security is
purchased or sold, or on which the dividend or interest payment is declared, and the date on which such payments are made
or received.

Additionally, when the Investment Adviser believes that the currency of a particular foreign country may suffer a
substantial decline against the U.S. dollar, it may enter into a forward contract to sell, for a fixed amount of U.S.
dollars, the amount of foreign currency approximating the value of some or all of a Portfolio's securities quoted or
denominated in such foreign currency. The precise matching of the forward contract amounts and the value of the
securities involved will not generally be possible because 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 on which the contract is
entered into and the date it matures. Using forward contracts to protect the value of a 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 a Portfolio can achieve 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 U.S. dollar
value of only a portion of a Portfolio's foreign assets.

The Portfolio may engage in cross-hedging by using forward contracts in one currency to hedge against
fluctuations in the value of securities denominated or quoted in a different currency if the Investment Adviser
determines that there is a pattern of correlation between the two currencies. In addition, the Portfolio may enter into
foreign currency transactions to seek a closer correlation between a Portfolio's overall currency exposures and the
currency exposures of the Portfolio's performance benchmark. The Portfolio will not enter into a forward contract with a
term of greater than one year.

While the Portfolio may enter into forward contracts to seek to reduce currency exchange rate risks, transactions
in such contracts involve certain other risks. Thus, while the Portfolios may benefit from such transactions,
unanticipated changes in currency prices may result in a poorer overall performance for a Portfolio than if it had not
engaged in any such transactions. Moreover, there may be imperfect correlation between a Portfolio's holdings of
securities quoted or denominated in a particular currency and forward contracts entered into by a Portfolio. Such
imperfect correlation may cause the Portfolio to sustain losses which will prevent the Portfolio from achieving a
complete hedge or expose the Portfolio to risk of foreign exchange loss.

Markets for trading forward foreign currency contracts offer less protection against defaults than is available
when trading in currency instruments on an exchange. Forward contracts are subject to the risk that the counterparty to
such contract will default on its obligations. Since a forward foreign currency exchange contract is not guaranteed by an
exchange or clearinghouse, a default on the contract would deprive a Portfolio of unrealized profits, transaction costs
or the benefits of a currency hedge or force the Portfolio to cover its purchase or sale commitments, if any, at the
current market price. In addition, the institutions that deal in forward currency contracts are not required to continue
to make markets in the currencies they trade and these markets can experience periods of illiquidity. The Portfolio will
not enter into forward foreign currency exchange contracts, unless the credit quality of the unsecured senior debt or the
claims-paying ability of the counterparty is considered to be investment grade by the Investment Adviser. To the extent
that a substantial portion of a Portfolio's total assets, adjusted to reflect the Portfolio's net position after giving
effect to currency transactions, is denominated or quoted in the currencies of foreign countries, the Portfolio will be
more susceptible to the risk of adverse economic and political developments within those countries.

Interest Rate Swaps, Mortgage Swaps, Credit Swaps, Currency Swaps, Total Return Swaps, Options on Swaps and
Interest Rate Caps, Floors and Collars. The Portfolio may enter into interest rate, credit, total return swaps, mortgage
swaps and currency swaps. The Portfolio may also enter into interest rate caps, floors and collars. The Portfolio may
also purchase and write (sell) options contracts on swaps, commonly referred to as swaptions. The Portfolio may enter
into swap transactions for hedging purposes or to seek to increase total return. Interest rate swaps involve the
exchange by a Portfolio with another party of their respective commitments to pay or receive interest, such as an
exchange of fixed-rate payments for floating rate payments. Mortgage swaps are similar to interest rate swaps in that
they represent commitments to pay and receive interest. The notional principal amount, however, is tied to a reference
pool or pools of mortgages. Credit swaps involve the receipt of floating or fixed rate payments in exchange for assuming
potential credit losses of an underlying security. Credit swaps give one party to a transaction the right to dispose of
or acquire an asset (or group of assets), or the right to receive or make a payment from the other party, upon the
occurrence of specified credit events. Currency swaps involve the exchange of the parties' respective rights to make or
receive payments in specified currencies. Total return swaps are contracts that obligate a party to pay or receive
interest in exchange for payment by the other party of the total return generated by a security, a basket of securities,
an index, or an index component. A swaption is an option to enter into a swap agreement. Like other types of options,
the buyer of a swaption pays a non-refundable premium for the option and obtains the right, but not the obligation, to
enter into an underlying swap on agreed-upon terms. The seller of a swaption, in exchange for the premium, becomes
obligated (if the option is exercised) to enter into an underlying swap on agreed-upon terms. The purchase of an
interest rate cap entitles the purchaser, to the extent that a specified index exceeds a predetermined interest rate, to
receive payment of interest on a notional principal amount from the party selling such 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 notional principal amount from the party selling the interest rate
floor. An interest rate collar is the combination of a cap and a floor that preserves a certain return within a
predetermined range of interest rates. Since interest rate, mortgage, credit and currency swaps and interest rate caps,
floors and collars are individually negotiated, each Portfolio expects to achieve an acceptable degree of correlation
between its portfolio investments and its swap, cap, floor and collar positions.

The risk of loss with respect to interest rate and mortgage swaps is normally limited to the net amount of
payments that a Portfolio is contractually obligated to make. If the other party to an interest rate swap defaults, a
Portfolio's risk of loss consists of the net amount of payments that such Portfolio is contractually entitled to receive,
if any. In contrast, currency swaps usually involve the delivery of the entire principal amount of one designated
currency in exchange for the other designated currency. Therefore, the entire principal value of a currency swap is
subject to the risk that the other party to the swap will default on its contractual delivery obligations. To the extent
that a Portfolio's potential exposure in a transaction involving a swap or an interest rate floor, cap or collar is
covered by the segregation of cash or liquid assets, the Portfolio and the Sub-Adviser believe that the transactions do
not constitute senior securities under the Act and, accordingly, will not treat them as being subject to the Portfolio's
borrowing restrictions.

The Portfolio will not enter into any interest rate, mortgage or credit swap transactions unless the unsecured
commercial paper, senior debt or claims-paying ability of the other party is rated either A or A-1 or better by Standard
& Poor's or A or P-1 or better by Moody's or their equivalent ratings. The Portfolio will also not enter into any
currency swap transactions unless the unsecured commercial paper, senior debt or claims-paying ability of the other party
thereto is rated investment grade by Standard & Poor's or Moody's, or, if unrated by such rating organization, determined
to be of comparable quality by the Sub-Adviser. 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 use of interest
rate, mortgage, credit, total return and currency swaps, as well as interest rate caps, floors and collars, is a highly
specialized activity which involves investment techniques and risks different from those associated with ordinary
portfolio securities transactions. If the Sub-Adviser is incorrect in its forecasts of market values, credit quality,
interest rates and currency exchange rates, the investment performance of the Portfolio would be less favorable than it
would have been if this investment technique were not used.

Options on Securities and Securities Indices.

Writing Covered Options. The Portfolio may write (sell) covered call and put options on any securities
in which it may invest or on any securities index consisting of securities in which it may invest. The Portfolio may
write such options on securities that are listed on national domestic securities exchanges or foreign securities
exchanges or traded in the over-the-counter market. A call option written by a Portfolio obligates such Portfolio to
sell specified securities to the holder of the option at a specified price if the option is exercised before the
expiration date. All call options written by a Portfolio are covered, which means that such Portfolio will own the
securities subject to the option so long as the option is outstanding or such Portfolio will use the other methods
described below. The Portfolio's purpose in writing covered call options is to realize greater income than would be
realized on portfolio securities transactions alone. However, a Portfolio may forego the opportunity to profit from an
increase in the market price of the underlying security.

A put option written by a Portfolio obligates the Portfolio to purchase specified securities from the option
holder at a specified price if the option is exercised before the expiration date. All put options written by a Portfolio
would be covered, which means that such Portfolio will segregate cash or liquid assets with a value at least equal to the
exercise price of the put option or will use the other methods described below. The purpose of writing such options is
to generate additional income for the Portfolio. However, in return for the option premium, each Portfolio accepts the
risk that it may be required to purchase the underlying securities at a price in excess of the securities' market value
at the time of purchase.

The Portfolio may also write (sell) covered call and put options on any securities index consisting of securities
in which it may invest. Options on securities indices are similar to options on securities, except that the exercise of
securities index options requires cash settlement payments and does not involve the actual purchase or sale of
securities. In addition, securities index options are designed to reflect price fluctuations in a group of securities or
segment of the securities market rather than price fluctuations in a single security.

The Portfolio may cover call options on a securities index by owning securities whose price changes 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 if additional cash consideration is required, liquid assets in such amount are
segregated) upon conversion or exchange of other securities held by it. The Portfolio may also cover call and put
options on a securities index by segregating cash or liquid assets, as permitted by applicable law, with a value equal to
the exercise price or by owning offsetting options as described above.

The writing of options is a highly specialized activity which involves investment techniques and risks different
from those associated with ordinary portfolio securities transactions. The use of options to seek to increase total
return involves the risk of loss if the Sub-Adviser is incorrect in its expectation of fluctuations in securities prices
or interest rates. The successful use of options for hedging purposes also depends in part on the ability of the
Sub-Adviser to predict future price fluctuations and the degree of correlation between the options and securities
markets. If the Sub-Adviser is incorrect in its expectation of changes in securities prices or determination of the
correlation between the securities indices on which options are written and purchased and the securities in the
Portfolio's investment portfolio, the investment performance of the Portfolio will be less favorable than it would have
been in the absence of such options transactions. The writing of options could increase the Portfolio's portfolio
turnover rate and, therefore, associated brokerage commissions or spreads.

Purchasing Options. The Portfolio may also purchase put and call options on any securities in which it
may invest or options on any securities index consisting of securities in which it may invest. In addition, the
Portfolio may enter into closing sale transactions in order to realize gains or minimize losses on options it had
purchased.

The Portfolio may purchase call options in anticipation of an increase, or put options in anticipation of a
decrease ("protective puts"), in the market value of securities of the type in which it may invest. The purchase of a
call option would entitle the Portfolio, in return for the premium paid, to purchase specified securities at a specified
price during the option period. The Portfolio would ordinarily realize a gain on the purchase of a call option if, during
the option period, the value of such securities exceeded the sum of the exercise price, the premium paid and transaction
costs; otherwise the Portfolio would realize either no gain or a loss on the purchase of the call option. The purchase
of a put option would entitle the Portfolio, in exchange for the premium paid, to sell specified securities at a
specified price during the option period. The purchase of protective puts is designed to offset or hedge against a
decline in the market value of a Portfolio's securities. Put options may also be purchased by a Portfolio for the purpose
of affirmatively benefiting from a decline in the price of securities which it does not own. The Portfolio would
ordinarily realize a gain if, during the option period, the value of the underlying securities decreased below the
exercise price sufficiently to cover the premium and transaction costs; otherwise the Portfolio would realize either no
gain or a loss on the purchase of the put option. Gains and losses on the purchase of put options may be offset by
countervailing changes in the value of the underlying portfolio securities.

The Portfolio may purchase put and call options on securities indices for the same purposes as it may purchase
options on securities. Options on securities indices are similar to options on securities, except that the exercise of
securities index options requires cash payments and does not involve the actual purchase or sale of securities. In
addition, securities index options are designed to reflect price fluctuations in a group of securities or segment of the
securities market rather than price fluctuations in a single security.

Writing and Purchasing Currency Call and Put Options. The Portfolio may write covered put and call
options and purchase put and call options on foreign currencies in an attempt to protect against declines in the U.S.
dollar value of foreign portfolio securities and against increases in the U.S. dollar cost of foreign securities to be
acquired. The Portfolio may also use options on currency to cross-hedge, which involves writing or purchasing options on
one currency to seek to hedge against changes in exchange rates for a different currency with a pattern of correlation.
As with other kinds of option transactions, however, the writing of an option on foreign currency will constitute only a
partial hedge, up to the amount of the premium received. If an option that the Portfolio has written is exercised, 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 exchange rate
fluctuations; however, in the event of exchange rate movements adverse to the Portfolio's position, the Portfolio may
forfeit the entire amount of the premium plus related transaction costs. The writing of currency options involves a risk
that the Portfolio will, upon exercise of the option, be required to sell currency subject to a call at a price that is
less than the currency's market value or be required to purchase currency subject to a put at a price that exceeds the
currency's market value.

The Portfolio may terminate its obligations under a written call or put option by purchasing an option identical
to the one written. Such purchases are referred to as "closing purchase transactions." The Portfolio may enter into
closing sale transactions in order to realize gains or minimize losses on purchased options.

In addition to using options for the hedging purposes described above, the Portfolio may use options on currency
to seek to increase total return. The Portfolio may write (sell) covered put and call options on any currency in an
attempt to realize greater income than would be realized on portfolio securities transactions alone. However, in
writing covered call options for additional income, the Portfolio may forego the opportunity to profit from an increase
in the market value of the underlying currency. Also, when writing put options, the Portfolio accepts, in return for the
option premium, the risk that it may be required to purchase the underlying currency at a price in excess of the
currency's market value at the time of purchase.

Yield Curve Options. The Portfolio may purchase or write options on the yield "spread" or differential
between two securities. Such transactions are referred to as "yield curve" options. In contrast to other types of
options, a yield curve option is based on the difference between the yields of designated securities, rather than the
prices of the individual securities, and is settled through cash payments. Accordingly, a yield curve option is
profitable to the holder if this differential widens (in the case of a call) or narrows (in the case of a put),
regardless of whether the yields of the underlying securities increase or decrease.

The trading of yield curve options is subject to all of the risks associated with the trading of other types of
options. In addition, however, such options present a risk of loss even if the yield of one of the underlying securities
remains constant, or if the spread moves in a direction or to an extent which was not anticipated.

Risks Associated with Options Transactions. There is no assurance that a liquid secondary market on a
domestic or foreign options exchange will exist for any particular exchange-traded option or at any particular time. If
the Portfolio is unable to effect a closing purchase transaction with respect to covered options it has written, the
Portfolio will not be able to sell the underlying securities or dispose of assets held in a segregated account until the
options expire or are exercised. Similarly, if the Portfolio is unable to effect a closing sale transaction with respect
to options it has purchased, it will have to exercise the options in order to realize any profit and will incur
transaction costs upon the purchase or sale of underlying securities.

The Portfolio may purchase and sell both options that are traded on U.S. and foreign exchanges and options traded
over-the-counter with broker-dealers and other types of institutions that make markets in these options. The ability to
terminate over-the-counter options is more limited than with exchange-traded options and may involve the risk that the
broker-dealers or financial institutions participating in such transactions will not fulfill their obligations.
Transactions by the Portfolio in options will be subject to limitations established by each of the exchanges, boards of
trade or other trading facilities on which such options are traded governing the maximum number of options in each class
which may be written or purchased by a single investor or group of investors acting in concert regardless of whether the
options are written or purchased on the same or different exchanges, boards of trade or other trading facilities or are
held in one or more accounts or through one or more brokers. Thus, the number of options which a Portfolio may write or
purchase may be affected by options written or purchased by other investment advisory clients or the Portfolios'
Investment Adviser. An exchange, board of trade or other trading facility may order the liquidation of positions found
to be in excess of these limits, and it may impose certain other sanctions.

Futures Contracts and Options on Futures Contracts

The Portfolio may purchase and sell various kinds of futures contracts, and purchase and write call and put
options on any of such futures contracts. The Portfolio may also enter into closing purchase and sale transactions with
respect to any of such contracts and options. The futures contracts may be based on various securities (such as U.S.
Government Securities), securities indices, foreign currencies and any other financial instruments and indices. The
Portfolio will engage in futures and related options transactions in order to seek to increase total return or to hedge
against changes in interest rates, securities prices or, to the extent the Portfolio invests in foreign securities,
currency exchange rates, or to otherwise manage its term structure, sector selection and duration in accordance with its
investment objective and policies. The Portfolio may also enter into closing purchase and sale transactions with
respect to such contracts and options. The Trust, on behalf of each Portfolio, has claimed an exclusion from the
definition of the term "commodity pool operator" under the Commodity Exchange Act and, therefore, is not subject to
registration or regulation as a pool operator under that Act with respect to the Portfolios.

Neither the CFTC, National Futures Association, SEC nor any domestic exchange regulates activities of any foreign
exchange or boards of trade, including the execution, delivery and clearing of transactions, or has the power to compel
enforcement of the rules of a foreign exchange or 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, a Portfolio's investments in foreign
futures or foreign options transactions may not be provided the same protections in respect of transactions on United
States exchanges. In particular persons 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
CFTC and arbitration proceedings provided by the National Futures Association or any domestic futures exchange.
Similarly, these persons may not have the protection of the U.S. securities laws.

Futures Contracts. A futures contract may generally be described as an agreement between two parties to
buy and sell particular financial instruments or currencies for an agreed price during a designated month (or to deliver
the final cash settlement price, in the case of a contract relating to an index or otherwise not calling for physical
delivery at the end of trading in the contract).

When interest rates are rising or securities prices are falling, a Portfolio can seek to offset a decline in the
value of its current portfolio securities through the sale of futures contracts. When interest rates are falling or
securities prices are rising, a Portfolio, through the purchase of futures contracts, can attempt to secure better rates
or prices than might later be available in the market when it effects anticipated purchases. The Portfolio may purchase
and sell futures contracts on a specified currency in order to seek to increase total return or to protect against
changes in currency exchange rates. For example, the Portfolio may seek to offset anticipated changes in the value of a
currency in which its portfolio securities, or securities that it intends to purchase, are quoted or denominated by
purchasing and selling futures contracts on such currencies. As another example, the Portfolio may enter into futures
transactions to seek a closer correlation between the Portfolio's overall currency exposures and the currency exposures
of a Fund's performance benchmark.

Positions taken in the futures markets are not normally held to maturity but are instead liquidated through
offsetting transactions which may result in a profit or a loss. While futures contracts on securities or currency will
usually be liquidated in this manner, the Portfolio may instead make, or take, delivery of the underlying securities or
currency whenever it appears economically advantageous to do so. A clearing corporation associated with the exchange on
which futures on securities or currency are traded guarantees that, if still open, the sale or purchase will be performed
on the settlement date.

Hedging Strategies. Hedging, by use of futures contracts, seeks to establish with more certainty than
would otherwise be possible the effective price or rate of return on portfolio securities or securities that the
Portfolio proposes to acquire or the exchange rate of currencies in which portfolio securities are quoted or
denominated. The Portfolio may, for example, take a "short" position in the futures market by selling futures contracts
to seek to hedge against an anticipated rise in interest rates or a decline in market prices or foreign currency rates
that would adversely affect the U.S. dollar value of the Portfolio's portfolio securities. Such futures contracts may
include contracts for the future delivery of securities held by the Portfolio or securities with characteristics similar
to those of the Portfolio's securities. Similarly, the Portfolio may sell futures contracts on any currencies in which
its portfolio securities are quoted or denominated or sell futures contracts on one currency to seek to hedge against
fluctuations in the value of securities quoted or denominated in a different currency if there is an established
historical pattern of correlation between the two currencies. If, in the opinion of the Sub-advisor, there is a
sufficient degree of correlation between price trends for the Portfolio's securities and futures contracts based on other
financial instruments, securities indices or other indices, the Portfolios may also enter into such futures contracts as
part of its hedging strategy. Although under some circumstances prices of securities in the Portfolio may be more or
less volatile than prices of such futures contracts, the Sub-Advisor will attempt to estimate the extent of this
volatility difference based on historical patterns and compensate for any such differential by having the Portfolio enter
into a greater or lesser number of futures contracts or by attempting to achieve only a partial hedge against price
changes affecting the Portfolio's securities. When hedging of this character is successful, any depreciation in the
value of portfolio securities will be substantially offset by appreciation in the value of the futures position. On the
other hand, any unanticipated appreciation in the value of the Portfolio would be substantially offset by a decline in
the value of the futures position.

On other occasions, a Fund may take a "long" position by purchasing futures contracts. This may be done, for
example, when a Fund anticipates the subsequent purchase of particular securities when it has the necessary cash, but
expects the prices or currency exchange rates then available in the applicable market to be less favorable than prices
that are currently available.

Options on Futures Contracts. The acquisition of put and call options on futures contracts will give
the Portfolio right (but not the obligation) for a specified price to sell or to purchase, respectively, the underlying
futures contract at any time during the option period. As the purchaser of an option on a futures contract, a Fund
obtains the benefit of the futures position if prices move in a favorable direction but limits its risk of loss in the
event of an unfavorable price movement to the loss of the premium and transaction costs. The Portfolio's loss incurred
by writing options on futures is potentially unlimited and may exceed the amount of the premium received. The Portfolio
will incur transaction costs in connection with the writing of options on futures.

Other Considerations. The Portfolio will engage in transactions in futures contracts and related
options transactions only to the extent such transactions are consistent with the requirements of the Code for
maintaining their qualifications as regulated investment companies for federal income tax purposes.

Transactions in futures contracts and options on futures involve brokerage costs, require margin deposits and may
require the Funds to segregate cash or liquid assets, as permitted by applicable law, in an amount equal to the
underlying value of such contracts and options.

While transactions in futures contracts and options on futures may reduce certain risks, such transactions
themselves entail certain other risks. Thus, while the Portfolio may benefit from the use of futures and options on
futures, unanticipated changes in interest rates or securities prices or currency exchange rates may result in a poorer
overall performance for the Portfolio than if it had not entered into any futures contracts or options transactions.
When futures contracts and options are used for hedging purposes, perfect correlation between the Portfolio's futures
positions and portfolio positions will be impossible to achieve. In the event of an imperfect correlation between a
futures position and the Portfolio's position which is intended to be protected, the desired protection may not be
obtained and a Portfolio may be exposed to risk of loss.

Perfect correlation between the Portfolio's futures positions and portfolio positions will be difficult to
achieve, particularly where futures contracts based on specific fixed-income securities or specific currencies are not
available. In addition, it is not possible to hedge fully or protect against currency fluctuations affecting the value
of securities quoted or denominated in foreign currencies because the value of such securities is likely to fluctuate as
a result of independent factors unrelated to currency fluctuations. The profitability of the Portfolio's trading in
futures depends upon the ability of the Sub-advisor to analyze correctly the futures markets

Convertible Securities. The Portfolio may invest in convertible securities. Convertible securities are bonds,
debentures, notes, preferred stocks or other securities that may be converted into or exchanged for a specified amount of
common stock (or other securities) of the same or different issuer within a particular period of time at a specified
price or formula. A convertible security entitles the holder to receive interest that is generally paid or accrued on
debt or a dividend that is paid or accrued on preferred stock until the convertible security matures or is redeemed,
converted or exchanged. Convertible securities have unique investment characteristics, in that they generally (i) have
higher yields than common stocks, but lower yields than comparable non-convertible securities, (ii) are less subject to
fluctuation in value than the underlying common stock due to their fixed-income characteristics and (iii) provide the
potential for capital appreciation if the market price of the underlying common stock increases.

A convertible security may be subject to redemption at the option of the issuer at a price established in the
convertible security's governing instrument. 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, convert it into the underlying common stock
or sell it to a third party. Any of these actions could have an adverse effect on the Portfolio's ability to achieve its
investment objective, which, in turn, could result in losses to the Portfolio.

Restricted and Illiquid Securities. The Portfolio may purchase securities that are not registered or that are
offered in an exempt non-public offering ("Restricted Securities") under the Securities Act of 1933, as amended ("1933
Act"), including securities eligible for resale to "qualified institutional buyers" pursuant to Rule 144A under the 1933
Act. However, the Portfolio will not invest more than 15% of its net assets in illiquid investments, which include
repurchase agreements with a notice or demand period of more than seven days, certain SMBS, certain municipal leases,
certain over-the-counter options, securities that are not readily marketable and Restricted Securities, unless the
Sub-Adviser determines, based upon a continuing review of the trading markets for the specific Restricted Securities and
the adopted Portfolio guidelines, that such Restricted Securities are liquid.

When-Issued and Forward Commitment Securities. The Portfolio may purchase securities on a when-issued basis or
purchase or sell securities on a forward commitment basis beyond the customary settlement time. These transactions
involve a commitment by the Portfolio to purchase or sell securities at a future date beyond the customary settlement
time. The price of the underlying securities (usually expressed in terms of yield) and the date when the securities will
be delivered and paid for (the settlement date) are fixed at the time the transaction is negotiated. When-issued
purchases and forward commitment transactions are negotiated directly with the other party, and such commitments are not
traded on exchanges. The Portfolio will generally purchase securities on a when-issued basis or purchase or sell
securities on a forward commitment basis only with the intention of completing the transaction and actually purchasing or
selling the securities. If deemed advisable as a matter of investment strategy, however, the Portfolio may dispose of or
negotiate a commitment after entering into it. A Portfolio may also sell securities it has committed to purchase before
those securities are delivered to the Portfolio on the settlement date. The Funds may realize capital gains or losses in
connection with these transactions. Securities purchased or sold on a when-issued or forward commitment basis involve a
risk of loss if the value of the security to be purchased declines prior to the settlement date or if the value of the
security to be sold increases prior to the settlement date.

Other Investment Companies. The reserves the right to invest up to 10% of its total assets, calculated at the
time of purchase, in the securities of other investment companies, but may neither invest more than 5% of its total
assets in the securities of any one investment company nor acquire more than 3% of the voting securities of any other
investment company. The Portfolio will indirectly bear its proportionate share of any management fees and other expenses
paid by investment companies in which it invests in addition to the management fees and other expenses paid by the Fund.
Although the Portfolio does not expect to do so in the foreseeable future, it is authorized to invest substantially all
of its assets in a single open-end investment company or series thereof that has substantially the same investment
objective, policies and fundamental restrictions as the Fund.

The Portfolio may also purchase shares of investment companies investing primarily in foreign securities, including
"country funds." Country funds have portfolios consisting primarily of securities of issuers located in specified foreign
countries or regions. The Portfolio may also invest in iSharessm and similar securities. iSharessm are shares of an
investment company that invests substantially all of its assets in securities included in various securities indices
including foreign securities indices. iSharessm are listed on the AMEX and were initially offered to the public in
1996. The market prices of iSharessm are expected to fluctuate in accordance with both changes in the NAVs of their
underlying indices and supply and demand of iSharessm on the AMEX. To date, iSharessm have traded at relatively modest
discounts and premiums to the NAVs. However, iSharessm have a limited operating history and information is lacking
regarding the actual performance and trading liquidity of iSharessm for extended periods or over complete market cycles.
In addition, there is no assurance that the requirements of the AMEX necessary to maintain the listing of iSharessm will
continue to be met or will remain unchanged. In the event substantial market or other disruptions affecting iSharessm
should occur in the future, the liquidity and value of a Fund's shares could also be substantially and adversely
affected. If such disruptions were to occur, a Fund could be required to reconsider the use of iSharessm as part of its
investment strategy.

Repurchase Agreements. The Portfolio may enter into repurchase agreements with banks, brokers, and dealers which
furnish collateral at least equal in value or market price to the amount of their repurchase obligation. These
repurchase agreements may involve foreign government securities. A repurchase agreement is an arrangement under which
the Portfolio purchases securities and the seller agrees to repurchase the securities within a particular time and at a
specified price. Custody of the securities is maintained by the Portfolio's custodian (or sub-custodian). 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 a stated rate due to the Portfolio together with the repurchase price on
repurchase. In either case, the income to the Portfolio is unrelated to the interest rate on the security subject to the
repurchase agreement.

For purposes of the Act, and generally for tax purposes, a repurchase agreement is deemed to be a loan from a
Fund to the seller of the security. For other purposes, it is not always clear whether a court would consider the
security purchased by a Fund subject to a repurchase agreement as being owned by a Fund or as being collateral for a loan
by a Fund to the seller. In the event of commencement of bankruptcy or insolvency proceedings with respect to the seller
of the security before repurchase of the security under a repurchase agreement, a Fund may encounter delay and incur
costs before being able to sell the security. Such a delay may involve loss of interest or a decline in value of the
security. If the court characterizes the transaction as a loan and a Fund has not perfected a security interest in the
security, the Fund may be required to return the security to the seller's estate and be treated as an unsecured creditor
of the seller. As an unsecured creditor, a Fund would be at risk of losing some or all of the principal and interest
involved in the transaction. Apart from the risk of bankruptcy or insolvency proceedings, there is also the risk that
the seller may fail to repurchase the security.

Reverse Repurchase Agreements. The Portfolio may borrow money by entering into transactions called reverse
repurchase agreements. Under these arrangements, the Portfolio will sell portfolio securities to dealers in U.S.
Government Securities or members of the Federal Reserve System, with an agreement to repurchase the security on an agreed
date, price and interest payment. These reverse repurchase agreements may involve foreign government securities.
Reverse repurchase agreements involve the possible risk that the value of portfolio securities the Portfolio relinquishes
may decline below the price the Portfolio must pay when the transaction closes. Borrowings may magnify the potential for
gain or loss on amounts invested resulting in an increase in the speculative character of the Portfolio's outstanding
shares.

When the Portfolio enters into a reverse repurchase agreement, it places in a separate custodial account either
liquid assets or other high grade debt securities that have a value equal to or greater than the repurchase price. The
account is then continuously monitored by the Investment Adviser to make sure that an appropriate value is maintained.
Reverse repurchase agreements are considered to be borrowings under the Act.

Investment Policies Which May Be Changed Without Shareholder Approval. The following limitations are applicable
to the AST Goldman Sachs High Yield Portfolio. The limitations are not "fundamental" restrictions and may be changed by
the Trustees without shareholder approval.

The Portfolio may not:

(1) Invest in companies for the purpose of exercising control or management;

(2) Invest more than 15% of the Fund's net assets in illiquid investments, including illiquid repurchase
agreements with a notice or demand period of more than seven days, securities which are not readily marketable
and restricted securities not eligible for resale pursuant to Rule 144A under the 1933 Act;

(3) Purchase additional securities if the Fund's borrowings (excluding covered mortgage dollar rolls) exceed
5% of its net assets; or

(4) Make short sales of securities, except short sales against-the-box.

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. Change its policy to invest at least 80% of the value of its assets in fixed income securities unless it
provides 60 days prior written notice to its shareholders.

2. Pledge its assets (other than to secure borrowings, or to the extent permitted by the Portfolio's
investment policies);

3. Make short sales of securities;

4. Invest knowingly more than 15% of its net assets (at the time of investment) in illiquid securities;

5. Invest in the securities of other investment companies except in compliance with the 1940 Act;

8. 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:

Unless otherwise indicated, all limitations applicable to the Portfolio apply only at the time a transaction is
entered into. Unless otherwise noted, the Portfolio may invest up to 5% of its net assets in any type of security or
investment not specifically noted in this Statement or the Trust's Prospectus that the investment adviser reasonably
believes is compatible with the investment objectives and policies of that Portfolio.

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 sellers/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 originators/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. The Portfolio takes the position that such securities
do not represent interests in any particular "industry" or group of industries. 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 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. Brady bonds are not considered to be U.S. Government securities. 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 or as part of their overall investment strategy. 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 primarily 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 or other liquid assets 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. For purposes of applying the Portfolio's investment policies and restrictions (as stated in the
prospectuses and this SAI) swap agreements are generally valued by the Portfolio at market value. In the case of a
credit default swap sold by the Portfolio (i.e., where the Portfolio is selling credit default protection), however, the
Portfolio will generally value the swap at its notional amount. The manner in which certain securities or other
instruments are valued by the Portfolio for purposes of applying investment policies and restrictions may differ from the
manner in which those investments are valued by other types of investors. The Portfolio may also enter into interest
rate, index, credit 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. The Portfolio may also enter into options on swap agreements. 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 Trust's
investment restriction relating to the lending of funds or assets by the Portfolio.

Investment Company Securities. 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 company's total assets.

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 change its policy to invest at least 80% of the value of its assets in fixed
income securities unless it provides 60 days prior written notice to its shareholders.

2. 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.

3. 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.

4. 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.

5. 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.

6. Invest in companies for the purpose of exercising control or management.

7. Buy any securities or other property on margin (except for such short-term credits as are necessary for
the clearance of transactions).

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.

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.

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").

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 or other liquid assets 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, credit 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. The Portfolio may also enter into
options on swap agreements. 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."

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
Trust's investment restriction relating to the lending of funds or assets by 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 Trustee, 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 Trust'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. The Portfolio will not change its policy to invest at least 80% of the value of its assets in fixed
income securities unless it provides 60 days prior written notice to its shareholders.

2. 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.

3. 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.

4. 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 SAI.

5. Invest in companies for the purpose of exercising control or management.

6. Buy any securities or other property on margin (except for such short-term credits as are necessary for
the clearance of transactions).

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 Portfolio may invest in asset-backed securities backed by credit card receivables,
automobile loans, manufactured housing loans and home equity loans in an aggregate amount of up to 10% of the Portfolio's
net assets, subject to the limitations of rule 2a-7 under in Investment Company Act of 1940. These 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 Policies Which May Be Changed Without Shareholder Approval. The following limitations are applicable
to the AST Money Market Portfolio. These limitations are not "fundamental" restrictions and may be changed by the
Trustees without shareholder approval.

1. The 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. 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 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.

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 Goldman Sachs Concentrated Growth Portfolio, the AST Hotchkis & Wiley
Large-Cap Value Portfolio, the AST Alliance Growth and Income Portfolio the AST Goldman Sachs 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 underwrite securities issued by others except to the extent that the Portfolio may be deemed
an underwriter when purchasing or selling securities.

2. A Portfolio will not issue senior securities.

Investment Restrictions Applicable Only to the AST DeAM International Equity 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, (c) by lending portfolio securities in an amount not
to exceed 33 1/3% of the Portfolio's total assets and (d) loans of money to other investment companies to the extent
permitted by the Investment Company Act of 1940 or any exemptions therefrom that may be granted by the SEC or any SEC
releases, no-action letters or similar relief or interpretive guidance;

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 persons to the extent permitted by applicable law, including the Investment Company Act
of 1940, or to the extent permitted by any exemption from the Investment Company Act of 1940 that may be granted by the
SEC, or any SEC releases, no-action letters or similar relief or interpretive guidance, and then 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 William Blair International 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. Subject to the above limitations, the Portfolio may borrow from persons to the extent permitted by applicable
law, including the Investment Company Act of 1940, or to the extent permitted by any exemption from the Investment
Company Act of 1940 that may be granted by the SEC, or any SEC releases, no-action letters or similar relief or
interpretive guidance.

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; (iii) acquire publicly distributed or
privately placed debt securities; and (iv) make loans of money to other investment companies to the extent permitted by
the Investment Company Act of 1940 or any exemption therefrom that may be granted by the SEC or any SEC releases,
no-action letters or similar relief or interpretive guidance.

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 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 persons to the
extent permitted by applicable law including the Investment Company Act of 1940, or to the extent permitted by any
exemption from the Investment Company Act of 1940 that may be granted by the SEC, or any SEC releases, no-action letters
or similar relief or interpretive guidance;

2. Purchase or sell physical commodities; except that it 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) 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; (iii) acquire publicly-distributed or privately-placed debt securities and purchase
debt; and (iv) make loans of money to other investment companies to the extent permitted by the Investment Company Act of
1940 or any exemption therefrom that may be granted by the SEC or any SEC releases, no-action letters or similar relief
or interpretive guidance;

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;

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 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

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 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.

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 persons to the
extent permitted by applicable law, including the Investment Company Act of 1940, or to the extent permitted by any
exemption from the Investment Company Act of 1940 that may be granted by the SEC, or any SEC releases, no-action letters
or similar relief or interpretive guidance;

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 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) make
loans of money to other investment companies to the extent permitted by the Investment Company Act of 1940 or any
exemption therefrom that may be granted by the SEC, or any SEC releases, no-action letters or similar relief or
interpretive guidance; (iii) purchase money market securities and enter into repurchase agreements; and (iv) acquire
publicly-distributed or privately-placed debt securities and purchase debt;

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 Goldman Sachs Concentrated Growth Portfolio:

1. As to 50% of the value of its total assets, the Portfolio will not purchase a security of any issuer (other than
securities issued or guaranteed by the U.S. Government or any of its agencies or instrumentalities, or securities of
other investment companies) if as a result, (a) more than 5% of its total assets, at market value, would be invested in
the securities of any one issuer or (b) the Portfolio would hold more than 10% of the outstanding voting securities of
that issuer.

2. 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).

3. 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).

4. 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).

5. 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; (iii) acquire publicly distributed or
privately placed debt securities; and (iv) make loans of money to other investment companies to the extent permitted by
the Investment Company Act of 1940 or any exemption therefrom that may be granted by the SEC or any SEC releases,
no-action letters or similar relief or interpretive guidance;

6. The Portfolio may not 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 persons to the extent permitted by applicable law including the Investment Company Act of 1940, or to the
extent permitted by any exemption from the Investment Company Act of 1940 that may be granted by the SEC, or any SEC
releases, no-action letters or similar relief or interpretive guidance.

Investment Restrictions Applicable Only to the AST Alliance Growth and Income Portfolio:

1. As to 75% of the value of its total assets, the Portfolio will not purchase a security of any issuer (other than
securities issued or guaranteed by the U.S. Government or any of its agencies or instrumentalities, or securities of
other investment companies) if as a result, (a) more than 5% of the Portfolio's total assets would be invested in the
securities of that issuer, or (b) the Portfolio would hold more than 10% of the outstanding voting securities of that
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; (iii) acquire publicly distributed or
privately placed debt securities; and (iv) make loans of money to other investment companies to the extent permitted by
the Investment Company Act of 1940 or any exemption therefrom that may be granted by the SEC or any SEC releases,
no-action letters or similar relief or interpretive guidance.

3. 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).

4. The Portfolio will not borrow money except from persons to the extent permitted by applicable law including the
Investment Company Act of 1940, or to the extent permitted by any exemption from the Investment Company Act of 1940 that
may be granted by the SEC, or any SEC releases, no-action letters or similar relief or interpretive guidance, 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.

5. 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).

6. 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.

Investment Restrictions Applicable Only to the AST Hotchkis & Wiley Large-Cap Value Portfolio:

As a matter of fundamental policy, the Portfolio may not:

1. Borrow money except from persons to the extent permitted by applicable law including the Investment Company Act
of 1940, or to the extent permitted by any exemption from the Investment Company Act of 1940 that may be granted by the
SEC, or any SEC releases, no-action letters or similar relief or interpretive guidance, in excess of 33 1/3% of the value
of its total net assets, and when borrowing, it is for temporary or emergency purposes;

2. Buy or sell real estate, commodities, commodity contracts (however, the Portfolio may purchase securities of
companies investing in real estate);

3. Purchase securities if the purchase would cause the Portfolio, at the time, with respect to 75% of its total
assets, 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 or any of its
agencies or instrumentalities, or securities of other investment companies);

4. 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; (iii) acquire publicly distributed or privately placed debt
securities; and (iv) make loans of money to other investment companies to the extent permitted by the Investment Company
Act of 1940 or any exemption therefrom that may be granted by the SEC or any SEC releases, no-action letters or similar
relief or interpretive guidance; or

5. 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:

1. 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; (iii) acquire publicly distributed or privately placed debt
securities; and (iv) make loans of money to other investment companies to the extent permitted by the Investment Company
Act of 1940 or any exemption therefrom that may be granted by the SEC or any SEC releases, no-action letters or similar
relief or interpretive guidance;

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.);

7. 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; 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 temporary, 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. Subject to the
above limitations, the Portfolio may borrow from persons to the extent permitted by applicable law including the
Investment Company Act of 1940, or to the extent permitted by any exemption from the Investment Company Act of 1940 that
may be granted by the SEC, or any SEC releases, no-action letters or similar relief or interpretive guidance.

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
persons to the extent permitted by applicable law, including the Investment Company Act of 1940, or to the extent
permitted by any exemption from the Investment Company Act of 1940 that may be granted by the SEC, or any SEC releases,
no-action letters or similar relief or interpretive guidance;

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
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; and (iv) make loans of money to other investment companies to the extent permitted by the
Investment Company Act of 1940 or any exemption therefrom that may be granted by the SEC or any SEC releases, no-action
letters or similar relief or interpretive guidance;

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 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.

With respect to investment restriction (2), the Portfolio does not consider currency contracts on 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.

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 for temporary, extraordinary or emergency purposes or except in connection with reverse
repurchase agreements provided that the Portfolio maintains asset coverage of 300% for all borrowings. Subject to the
above limitations, the Portfolio may borrow from persons to the extent permitted by applicable law including the
Investment Company Act of 1940, or to the extent permitted by any exemption from the Investment Company Act of 1940 that
may be granted by the SEC, or any SEC releases, no-action letters or similar relief or interpretive guidance;

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, (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, and (c) loans of money to other investment companies to the extent permitted by the
Investment Company Act of 1940 or any exemption therefrom that may be granted by the SEC or any SEC releases, no-action
letters or similar relief or interpretive guidance;

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).

Notes: The following notes should be read in connection with the above described fundamental policies. The notes are not
---
fundamental policies.

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.

For purposes of investment restriction (6), U.S., state or local governments, or related agencies or instrumentalities,
are not considered an industry. It is the position of the Staff of the SEC that foreign governments are industries for
purposes of this restriction. For as long as this staff position is in effect, the Portfolio will not invest more than
25% of its total assets in the securities of any single governmental issuer. For purposes of this restriction,
governmental entities are considered separate issuers.

Investment Restrictions Applicable Only to the AST Goldman Sachs High Yield Portfolio:

1. The Portfolio will not borrow money except for temporary, extraordinary or emergency purposes and then only from
persons to the extent permitted by applicable law including the Investment Company Act of 1940, or to the extent
permitted by any exemption from the Investment Company Act of 1940 that may be granted by the SEC, or any SEC releases,
no-action letters or similar relief or interpretive guidance, and only in amounts not in excess of 33 1/3% 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.

2. 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).

3. 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.

4. 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.

6. 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 persons to the extent permitted by applicable law including the Investment Company
Act of 1940, or to the extent permitted by any exemption from the Investment Company Act of 1940 that may be granted by
the SEC, or any SEC releases, no-action letters or similar relief or interpretive guidance, 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, (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 (d)
make loans of money to other investment companies to the extent permitted by the Investment Company Act of 1940 or any
exemption therefrom that may be granted by the SEC or any SEC releases, no-action letters or similar relief or
interpretive guidance.

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 persons to the extent permitted by applicable law including the Investment Company Act of 1940, or
to the extent permitted by any exemption from the Investment Company Act of 1940 that may be granted by the SEC, or any
SEC releases, no-action letters or similar relief or interpretive guidance, 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, (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 (d) make loans
of money to other investment companies to the extent permitted by the Investment Company Act of 1940 or any exemption
therefrom that may be granted by the SEC or any SEC releases, no-action letters or similar relief or interpretive
guidance.

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 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).

4. 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.

5. The Portfolio will not borrow money, except from persons to the extent permitted by applicable law including the
Investment Company Act of 1940, or to the extent permitted by any exemption from the Investment Company Act of 1940 that
may be granted by the SEC, or any SEC releases, no-action letters or similar relief or interpretive guidance, for
temporary, extraordinary or emergency purposes and then only in amounts not to exceed 33 1/3% 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. 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.

6. 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, or making loans of money to other investment companies to the extent permitted by the Investment Company Act of
1940 or any exemption therefrom that may be granted by the SEC or any SEC releases, no-action letters or similar relief
or interpretive guidance.

7. 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 JP Morgan International Equity Portfolio, the AST MFS Global Equity
Portfolio, the AST State Street Research Small-Cap Growth Portfolio, the AST DeAM Small-Cap Growth Portfolio, the AST
Federated Aggressive Growth Portfolio, the AST Goldman Sachs Small-Cap Value Portfolio, the AST DeAM Small-Cap Value
Portfolio, the AST Goldman Sachs 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 Alliance Growth Portfolio, the AST MFS Growth Portfolio, the AST Marsico Capital Growth Portfolio, the
AST DeAM Large-Cap 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 DeAM Global Allocation 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 persons to the extent permitted by applicable law, including the Investment
Company Act of 1940, or to the extent permitted by any exemption from the Investment Company Act of 1940 that may be
granted by the SEC, or any SEC releases, no-action letters or similar relief or interpretive guidance.

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, (iii) acquire publicly distributed or
privately placed debt securities, and (iv) make loans of money to other investment companies to the extent permitted by
the Investment Company Act of 1940 or any exemption therefrom that may be granted by the SEC or any SEC releases,
no-action letters or similar relief or interpretive guidance.

7. No Portfolio other than 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 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 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 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.

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 JPMorgan International Equity Portfolio and the AST DeAM
Global Allocation 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. A prolonged economic downturn could severely disrupt the market
for and adversely affect the value of low-rated and comparable unrated 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 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 generally 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.

Investment Company Securities:

Each 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. A Portfolio will indirectly bear its
proportionate share of any management fees and other expenses paid by such other investment companies.

For example, a 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.

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."

The turnover rates for the AST DeAM International Equity Portfolio for the year ended December 31, 2002 and the
year ended December 31, 2003 were 354% and 138% respectively. Deutsche Asset Management, Inc. became the Portfolio's
Sub-advisor on May 1, 2002 and trading precipitated by this change resulted in the unusually high portfolio turnover for
the year ended December 31, 2002.

The turnover rates for the AST DeAM Global Allocation Portfolio for the year ended December 31, 2002 and the year
ended December 31, 2003 were 160% and 18% respectively. Deutsche Asset Management, Inc. became the Portfolio's
Sub-advisor on May 1, 2002 and trading precipitated by this change resulted in the unusually high portfolio turnover for
the year ended December 31, 2002.

The turnover rates for the AST Federated Aggressive Growth Portfolio for the year ended December 31, 2002 and the
year ended December 31, 2003 were 250% and 96% respectively. In 2002 when Hans Utsch and Lawrence Auriana of Federated's
Kaufmann unit were added as portfolio managers, the Portfolio was repositioned, resulting in higher portfolio turnover
rates for that year.

The turnover rates for the AST Goldman Sachs Mid-Cap Growth Portfolio for the year ended December 31, 2002 and
the year ended December 31, 2003 were 162% and 59% respectively. The turnover rates for the AST Goldman Sachs
Concentrated Growth Portfolio for the year ended December 31, 2002 and the year ended December 31, 2003 were 109% and 21%
respectively. The higher turnover rates in 2002 were from the previous Sub-advisor. The rates for 2003 are more in line
with the current Sub-advisor's practice.

The turnover rates for the AST Sanford Bernstein Core Value Portfolio for the year ended December 31, 2002 and
the year ended December 31, 2003 were 28% and 90% respectively. The higher turnover in 2003 was the result of in
increase in cash flow activity in the Portfolio during the year.

The turnover rates for the AST Hotchkis & Wiley Large-Cap Value Portfolio for the year ended December 31, 2002
and the year ended December 31, 2003 were 32% and 100% respectively. INVESCO Funds Group, Inc, the Portfolio's previous
Sub-advisor did not manage the Portfolio to any target portfolio turnover rates.

The turnover rates for the AST T. Rowe Price Global Bond Portfolio for the year ended December 31, 2002 and the
year ended December 31, 2003 were 323% and 196% respectively. The reason for the high turnover in 2002 was the result of
the rapid growth in the size of the Portfolio.

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 Statement, thirty-seven 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 ASI and an indirect subsidiary of Prudential Financial ("Prudential"). 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 ASI. Founded in 1875, Prudential is a publicly held financial services company
primarily engaged in providing life insurance, property and casualty insurance, mutual funds, annuities, pension and
retirement related services and administration, asset management, securities brokerage, banking and trust services, real
estate brokerage franchises and relocation services through its wholly-owned subsidiaries.

ASISI serves as co-manager of the Trust along with Prudential Investments LLC ("PI") (each an "Investment
Manager" and together the "Investment Managers").

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. PI is also registered as an
investment adviser with the SEC. PI is a wholly-owned subsidiary of PIFM HoldCo, Inc., which is wholly-owned subsidiary
of Prudential Asset Management Holding Company, which is a wholly-owned subsidiary of Prudential.

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:

Independent Trustees

-----------------------------------------------------------------------------------------------------------------------------------------
Term of Number of
Position ffice*** Portfolios in
With Trust Ond Fund
--------------------------- aength of Complex Other Directorships
Name, Address** Lime Principal Occupations Overseen Held by the
and Age T Served During Past 5 Years By Trustee Trustee****
-----------------------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------------------
Saul K. Fenster, Ph.D. (71) Trustee Since 2003 President Emeritus of New Jersey 81 Member (since 2000), Board
of Directors of IDT
Corporation.
Institute of Technology (since
2002); formerly President
(1978-2002) of New Jersey
Institute of Technology;
Commissioner (1998-2002) of the
Middle States Association
Commission on Higher Education;
Commissioner (1985-2002) of the
New Jersey Commission on Science
and Technology; Director (since
1998) Society of Manufacturing
Engineering Education Foundation,
Director (since 1995) of
Prosperity New Jersey; formerly a
director or trustee of Liberty
Science Center, Research and
Development Council of New Jersey,
New Jersey State Chamber of
Commerce, and National Action
Council for Minorities in
Engineering.
Delayne Dedrick Gold (64) Trustee Since 2003 89 __
Marketing Consultant
(1982-present); formerly Senior
Vice President and Member of the
Board of Directors, Prudential
Bache Securities, Inc.
Julian A. Lerner (79) Trustee Since 2003 Senior Vice President and 41 --
Emeritus Portfolio Manager (1986-1995);
AIM Charter Fund and AIM Summit
Fund.
W. Scott McDonald, Jr. (67) Vice Since 2003 Management Consultant (since 78 --
Chairman 1997) at Kaludis Consulting
and Trustee Group, Inc. (company serving
higher education); Formerly,
principal (1995-1997), Scott
McDonald & Associates, Chief
Operating Officer (1991-1995),
Fairleigh Dickinson University,
Executive Vice President and Chief
Operating Officer (1975-1991),
Drew University, interim President
(1988-1990), Drew University and
former Director of School, College
and University Underwriters Ltd.

Thomas T. Mooney (62) Chairman Since 2003 Chief Executive Officer, the 81 Director (since 1988) of The
and Trustee Rochester Business Alliance, High Yield Plus Fund, Inc.
formerly President of the
Greater Rochester Metro Chamber
of Commerce, Rochester City
Manager; formerly Deputy Monroe
County Executive; Director of
Blue Cross of Rochester and
Executive Service Corps of
Rochester; Director of the
Rochester Individual Practice
Association; Director of Rural
Metro Ambulance Rochester (since
2003).
Thomas M. O'Brien (53) Trustee Since 1992 President and Chief Executive 77 Director (December 1996-May
Officer (since May 2000) of 2000) of North Fork Bank;
Atlantic Bank of New York; Vice Director (since May 2000) of
Chairman (January 1997-April Atlantic Bank of New York.
2000) of North Fork Bank;
President and Chief Executive
Officer (December 1984-December
1996) of North Side Savings Bank.
John A. Pileski (64) Trustee Since 2001 Retired since June 2000; Tax 77 Director (since April 2001) of
Partner (July 1974-June 2000) of New York Community Bank;
KPMG LLP. Director (since January 1997)
of Director of Queens Museum of
Art; Director (since May 1980)
of Surf Club of Quogue, Inc.

F. Don Schwartz (68) Trustee Since 1992 Management Consultant (since April 77 --
1985).

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

Interested Trustees

-----------------------------------------------------------------------------------------------------------------------------
Name, Address** and Position With Term of Principal Occupations Number of Other
Office*** Portfolios in
Trust and Fund
Length of Complex Directorships
ime Served Overseen by Held by the
Age T During Past 5 Years Trustee Trustee****
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
*David R. Odenath, Trustee Since President of Prudential 79 --
Jr. (47) 2003 Annuities (since August 2002);
Executive Vice President (since
May 2003) of American Skandia
Investment Services, Inc; Chief
Executive Officer and Director
(since May 2003) of American
Skandia Life Assurance
Corporation, American Skandia
Information Services and
Technology Corporation and
Skandia U.S. Inc.; President,
Chief Executive Officer and
Director (since May 2003) of
American Skandia Marketing,
Inc.; Formerly President, Chief
Executive Officer, Chief
Operating Officer and
Officer-In-Charge (1999-2003)
of PI; Senior Vice President
(since June 1999) of
Prudential; formerly Senior
Vice President (August 1993-May
1999) of PaineWebber Group, Inc.
*Robert F. Gunia (57)Vice President Since Chief Administrative Officer 112 Vice President and
and Trustee 2003 (since June 1999) of Prudential Director (since May
Investments LLC (PI); Executive 1989) and Treasurer
Vice President and Treasurer (since 1999) of The
(since January 1996) of PI; Asia Pacific Fund, Inc.
President (since April 1999) of
Prudential Investment
Management Services LLC (PIMS);
Corporate Vice President (since
September 1997) of The
Prudential Insurance Company of
America (Prudential); Director,
Executive Vice President and
Chief Administrative Officer
(since May 2003) of American
Skandia Investment Services,
Inc, American Skandia Advisory
Services, Inc., and American
Skandia Fund Services, Inc.;
President (since April 1999) of
Prudential Investment
Management Services LLC;
Executive Vice President (since
March 1999) and Treasurer
(since May 2000) of Prudential
Mutual Fund Services LLC;
formerly Senior Vice President
(March 1987-May 1999) of
Prudential Securities
Incorporated (Prudential
Securities).
-----------------------------------------------------------------------------------------------------------------------------

Information pertaining to the Officers of the Trust who are not also Trustees is set forth below.

Officers

------------------------------------------------------------------------------------------------------------------------------------
Name, Address** and Age Position With Trust Term of Principal Occupations
Office*** and
Length of
Time Served During Past 5 Years
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
Grace C. Torres (44) Treasurer and Principal Financial Since Senior Vice President (since January 2000)
and Accounting Officer 2003 of PI; Senior Vice President and Assistant
Treasurer (since May 2003) of American
Skandia Investment Services, Inc. and
American Skandia Advisory Services, Inc.;
formerly First Vice President (December
1996-January 2000) of PI and First Vice
President (March 1993-1999) of Prudential
Securities.

Jeffrey M. Scarbel (40) Assistant Treasurer Since 2003 Vice President (since November 2000) of PI;
formerly Director (October 1996-November
2000) of PI.
Jonathan D. Shain (45) Assistant Secretary Since 2003 Vice President and Corporate Counsel (since
August 1998) of Prudential; Vice President
and Assistant Secretary (since May 2003) of
American Skandia Investment Services, Inc.
and American Skandia Fund Services, Inc.;
formerly Attorney with Fleet Bank, N.A.
(January 1997-July 1998).

Edward P. Macdonald (36) Assistant Secretary Since 2003 Vice President and Assistant Secretary
(since May 2003) of American Skandia
Investment Services, Inc. and Prudential
Series Fund; Chief Counsel, Investment
Management of American Skandia, Inc. (ASI),
ASISI and ASASI (since July 2002);
Secretary of the Trust, ASAF and ASMT
(December 2000 until May 2003); Anti-Money
Laundering Officer (September 2002 until
May 2003) Senior Counsel, Securities of
ASI (September 2000-June 2002); Counsel of
ASI (December 1999-August 2000); Senior
Associate of Counsel of ASI (April
1999-December 1999); Branch Chief, Senior
Counsel and Attorney at the U.S. Securities
and Exchange Commission (October 1994-April
1999).

Marguerite E. H. Morrison (48) Chief Legal Officer and Secretary Since 2003 Vice President and Chief Legal
Officer-Mutual Funds and Unit Investment
Trusts (since August 2000) of Prudential;
Senior Vice President and Secretary (since
April 2003) of PI; Senior Vice President
and Secretary (since May 2003) of American
Skandia Investment Services, Inc., American
Skandia Advisory Services, Inc., and
American Skandia Fund Services, Inc.; Vice
President and Assistant Secretary of PIMS
(since October 2001), previously Senior
Vice President and Assistant Secretary
(February 2001-April 2003) of PI, Vice
President and Associate General Counsel
(December 1996-February 2001) of PI.

Lee D. Augsburger (44) Chief Compliance Officer Since 2004 Vice President and Chief Compliance Officer
(since May 2003) of PI; Vice President and
Chief Compliance Officer (since October
2000) of Prudential Investment Management,
Inc.; formerly Vice President and Chief
Legal Officer-Annuities (August
1999-October 2000) of Prudential Insurance
Company of America; Vice President and
Corporate Counsel (November 1997-August
1999) of Prudential Insurance Company of
America.

Anti-Money Laundering Compliance Since 2003 Vice President, Prudential (since
Maryanne Ryan (40) Officer November 1998), First Vice President
Prudential Securities (March 1997-May
1998); Anti-Money Laundering Compliance
Officer (since 2003) of American Skandia
Investment Services, Inc., American
Skandia Advisory Services, Inc. and
American Skandia Marketing, Inc.
------------------------------------------------------------------------------------------------------------------------------------

---------

* "Interested" Trustee, as defined in the Investment Company Act, by reason of employment with the Manager (as defined
below), and/or the Distributor (as defined below).
** Unless otherwise noted, the address of the Trustees and Officers is c/o: Prudential Investments LLC, Gateway Center
Three, 100 Mulberry Street, Newark, New Jersey 07102.
*** There is no set term of office for Trustees and Officers. The Independent Trustees have adopted a retirement policy,
which calls for the retirement of Trustees on December 31 of the year in which they reach the age of 75. The table
shows how long they have served as Trustee and/or Officer.
**** This column includes only directorships of companies required to register, or file reports with the SEC under the
Securities Exchange Act of 1934 (i.e., "public companies") or other investment companies registered under the
Investment Company Act.

The Trust has Trustees who oversee the actions of the Portfolio's Manager, each Sub-advisor and Distributor, and
decide upon matters of general policy. The Trustees also review the actions of the Trust's Officers, who conduct and
supervise the daily business operations of the Trust.

Trustees and Officers of the Trust are also trustees, directors and officers of some or all of the other investment
companies advised by the Trust's Manager and distributed by PIMS.

The Independent Trustees have adopted a retirement policy, which calls for the retirement of Trustees on December
31 of the year in which they reach the age of 75.

Pursuant to the Management Agreement with the Trust, the Manager pays all compensation of officers and employees of
the Trust as well as the fees and expenses of all Interested Trustees of the Trust.

Standing Board Committees

The Board has established three standing committees in connection with governance of the Trust--Audit, Nominating
and Valuation, as described below:

The Audit Committee consists of Mr. Pileski, Mr. O'Brien and Ms. Gold. The responsibilities of the Audit Committee
are to assist the Board in overseeing the Trust's independent auditors, accounting policies and procedures, and other
areas relating to each Trust's auditing processes. The Audit Committee is responsible for pre-approving all audit
services and any permitted non-audit services to be provided by the auditors directly to the Trust. The Audit Committee
is also responsible for pre-approving permitted non-audit services to be provided by the auditors to (1) the Manager and
(2) any entity in a control relationship with the Manager that provides ongoing services to the Trust, provided that the
engagement of auditors relates directly to the operation and financial reporting of the Trust. The scope of the Audit
Committee's responsibility is oversight. It is management's responsibility to maintain appropriate systems for accounting
and internal control and the independent auditors' responsibility to plan and carry out a proper audit. The independent
accountants are responsible to the Board and the Audit Committee. The Audit Committee met four times during the fiscal
year ended December 31, 2003.

The Nominating Committee consists of Mr. Fenster and Mr. Schwartz. This Committee interviews and recommends to the
Board persons to be nominated for election as Trustees by the Trust's shareholders and selects and proposes nominees for
election by the Board between annual meetings. This Committee does not normally consider candidates proposed by
shareholders for election as Trustees. The Nominating Committee reviews each Trustee's investment in the Trust, matters
relating to Trustee compensation and expenses and compliance with the Trust's retirement policy. The Nominating Committee
also reviews the independence of Trustees serving on the Board and recommends to the Board Independent Trustees to be
selected for membership on Board Committees. The Nominating Committee met once during the fiscal year ended December 31,
2003.

The Valuation Committee consists of at least two Board members or an officer of the Trust and one Board member
(in both instances the Valuation Committee may include employees of the Manager who may constitute a majority of the
Valuation Committee). The Valuation Committee supervises the valuation of the Trust's portfolio securities and other
assets and meets on an as-needed basis. The Valuation Committee met 17 times during the fiscal year ended December 31,
2003.

In addition to the three standing committees of the Board, the Board of Trustees has also approved participation in
an Executive Committee designed to coordinate the governance of all of the mutual funds in the Prudential mutual fund
complex. The role of the Executive Committee is solely advisory and consultative, without derogation of any of the duties
or responsibilities of the Board. The following Independent Trustees serve on the Executive Committee: W. Scott McDonald,
Jr. and Thomas T. Mooney, The responsibilities of the Executive Committee include: facilitating communication and
coordination between the Independent Trustees and fund management on issues that affect more than one fund; serving as a
liaison between the Boards of Trustees/Trustees of funds and fund management; developing, in consultation with outside
counsel and management, draft agendas for board meetings; reviewing and recommending changes to Board practices generally
and monitoring and supervising the performance of legal counsel to the funds generally and the Independent Trustees.

The Trust pays each of its Trustees who is not an affiliated person of the Manager or the Sub-advisors annual
compensation in addition to certain out-of-pocket expenses. Trustees who serve on the committees may receive additional
compensation. The amount of compensation paid to each Independent Trustee may change as result of the creation of
additional funds upon whose Boards the Trustees may be asked to serve.

Independent Trustees may defer receipt of their Trustees' fees pursuant to a deferred fee agreement with the Trust.
Under the terms of such agreement, the Trust accrues daily the amount of Trustee's fees which, in turn, accrues interest
at a rate equivalent to the prevailing rate of 90-day U.S. Treasury bills at the beginning of each calendar quarter or,
at the daily rate of return of any Prudential mutual fund chosen by the Trustee. The Trust's obligation to make payments
of deferred Trustees' fees, together with interest thereon, is a general obligation of the Trust.

The Trust has no retirement or pension plan for its Trustees.

The following tables sets forth the aggregate compensation paid by the Trust for the fiscal year ended December 31,
2003 to the Independent Trustees. The table also shows aggregate compensation paid to those Trustees for service on the
Trust's Board and the Board of any other investment companies managed by PI (the Trust Complex), for the calendar year
ended December 31, 2003.

Compensation Table

----------------------------------------------------------------------------------------------------------------------------------
Name and Position Aggregate Compensation Aggregate Compensation from Trust and
---------------------------
From Trust Fund Complex
----------------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------------
$75,575 $89,500 (37/90)*
David E.A. Carson(1)
----------------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------------
$50,922 $174,300 (5/81)*
Saul K. Fenster, Ph.D.--Trustee(2)
216,300 (8/85)*
Delayne Dedrick Gold--Trustee(2) $53,886 $
80,000 (4/78)*
Julian A. Lerner--Trustee Emeritus $156,375 $
187,800 (5/81)*
W. Scott McDonald, Jr.--Trustee (2)** $55,430 $
224,300 (6/81)*
Thomas T. Mooney--Trustee(2)** $54,386 $
89,000 (4/78)*
Thomas M. O'Brien--Trustee $104,520 $
93,000 (4/78)*
John A. Pileski--Trustee $120,527 $
86,500 (4/78)*
F. Don Schwartz--Trustee $117,629 $
158,800 (5/80)*
Louis A. Weil, III--Trustee(3) $49,862 $
----------------------------------------------------------------------------------------------------------------------------------

---------

(1) Resigned from the Board of Trustees of the Trust during the calendar year ended December 31, 2003.
(2) Joined the Board of Trustees of the Trust during the calendar year ended December 31, 2003.
(3) Mr. Weil resigned from the Board of Trustees effective February 27, 2004.
* Indicates number of funds/portfolios in Fund Complex (including the Trust) to which aggregate compensation relates.
The Trust became part of the PI fund complex effective May 1, 2003. Accordingly, payments to existing Trustees, from
the Trust, for the year exceed amounts paid from the Complex.
** Although the last column shows the total amount paid to Trustees from the Fund Complex during the calendar year ended
December 31, 2003, such compensation was deferred at the election of the Trustees, in total or in part, under the
Trust's deferred fee agreement. Including accrued interest and the selected Prudential Fund's rate of return on
amounts deferred through December 31, 2003, the total amount of compensation for the year amounted to $104,520,
$32,725, $206,230 and $291,363 for Messrs. O'Brien, Schwartz, McDonald and Mooney, respectively.

The following tables set forth the dollar range of equity securities in the Trust beneficially owned by a Trustee,
and, on aggregate basis, in all registered investment companies overseen by a Trustee in the Fund Complex as of December
31, 2003.

Trustee Share Ownership Table

Independent Trustees

-----------------------------------------------------------------------------------------------------------
Name of Trustee Dollar Range Aggregate Dollar Range of Securities in
All Registered Investment Companies
of Securities Overseen By Trustee
in the Trust* in Fund Complex
-----------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------
-- $50,001-
Saul K. Fenster, Ph.D. 100,000
over
Delayne Dedrick Gold -- $100,000
--
Julian A. Lerner None
over
W. Scott McDonald, Jr. -- $100,000
over
Thomas T. Mooney -- $100,000
__ over
Thomas M. O'Brien $100,000

John A. Pileski -- None
$50,001-
F. Don Schwartz -- ---------------------------------------

- 100,000
-----------------------------------------------------------------------------------------------------------

Interested Trustees

--------------------------------------------------------------------------------------------------------------
Name of Trustee Dollar Range Aggregate Dollar Range of Securities in
All Registered Investment Companies
of Securities Overseen By Trustee in
in the Trust* Fund Complex
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
-- over $100,000
Robert F. Gunia

David R. Odenath, Jr. -- over $100,000
--------------------------------------------------------------------------------------------------------------
* Trust securities may only be sold to Participating Insurance Companies as a result of certain IRA rules and
regulations. Consequently, the Trustees currently may not own Trust securities.

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, 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's Investment Management Agreements, on behalf of each Portfolio, with
ASISI and PI as co-managers provide that ASISI 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. ASISI and PI jointly has engaged Sub-advisors to conduct the investment programs of each
Portfolio, including the purchase, retention and sale of portfolio securities. ASISI and PI are responsible for
monitoring the activities of the Sub-advisors and reporting on such activities to the Trustees. ASISI and PI 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. Subject to approval by the Board of Trustees, ASISI and PI
select and employ one or more sub-advisors for a Portfolio, who have primary responsibility for determining what
investments the Portfolio will purchase, retain and sell.

ASISI and PI have engaged the Sub-advisors noted on the cover of this SAI to conduct the various investment
programs of each Portfolio pursuant to separate sub-advisory agreements with ASISI.

Under the terms of the Management Agreements, an Investment Manager provides, 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. An 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 an 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, an Investment Manager is permitted to render services to others.
The Management Agreements provide that neither an 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 an 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 JPMorgan 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 William Blair International Growth Portfolio: An annual rate of 1.0% of the average daily net assets of the
Portfolio.

AST DeAM International Equity Portfolio: An annual rate of 1.00% of the average daily net assets of the
Portfolio. Prior to May 1, 2002, the Investment Manager had engaged Founders Asset Management LLC as Sub-advisor for the
Portfolio, for a total Investment Management fee of 1.00% of the average daily net assets of the Portfolio.

AST MFS Global Equity Portfolio: An annual rate of 1.00% of the average daily net assets of the Portfolio.

AST State Street Research Small-Cap Growth Portfolio: An annual rate of .90% of the average daily net assets of
the Portfolio.

AST DeAM Small-Cap Growth Portfolio: An annual rate of .95% of the average daily net assets of the Portfolio.

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 DeAM Small-Cap Value Portfolio: An annual rate of .95% of the average daily net assets of the Portfolio.

AST Goldman Sachs Mid-Cap Growth Portfolio: An annual rate of 1.00% 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.

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.

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 Portfolio: An annual rate of .95% 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.

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 Goldman Sachs Concentrated Growth Portfolio: An annual rate of .90% of the average daily net assets of the
Portfolio.

AST DeAM Large-Cap Value Portfolio: An annual rate of .85% of the average daily net assets of the Portfolio.
Prior to May 1, 2002, the Investment Manager had engaged Janus Capital Management LLC 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 Hotchkis & Wiley Large-Cap Value Portfolio: An annual rate of .75% 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 1.00% 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 DeAM Global Allocation Portfolio: An annual rate of .10% of the average daily net assets of the Portfolio.
Prior to May 1, 2002, the Investment Manager had engaged A I M Capital Management, Inc. as Sub-advisor for the Portfolio
for a total Investment Management fee equal to 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 Goldman Sachs 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, 2004.

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 each of the Portfolios other than the AST DeAM Large-Cap Value Portfolio and the
AST DeAM Small-Cap Value Portfolio. The Investment Manager has voluntarily agreed to waive a portion of its fee equal to
.10% of the average daily net assets for the AST DeAM Large-Cap Value Portfolio. The Investment Manager has voluntarily
agreed to waive a portion of its fee equal to .15% of the average daily net assets for the AST DeAM Small-Cap Value
Portfolio. The Investment Manager may terminate these voluntary agreements at any time.

The investment management fee paid for each of the past three fiscal years by each Portfolio was as follows:

Investment Management Fees
2001 2002 2003
---- ---- ----
AST JP Morgan International Equity $4,531,109 $3,326,254 $3,097,437
AST William Blair International Growth 7,637,333 4,293,095 3,710,146
AST DeAM International Equity 1,957,352 1,329,260 1,413,369
AST MFS Global Equity 424,195 628,384 740,929
AST State Street Research Small-Cap Growth 4,078,228 3,139,282 2,544,813
AST DeAM Small-Cap Growth 5,992,043 3,307,221 3,215,381
AST Federated Aggressive Growth 76,948 255,483 949,935
AST Goldman Sachs Small-Cap Value 2,980,201 4,488,013 2,869,368
AST Gabelli Small-Cap Value 3,984,951 4,711,797 5,023,713
AST DeAM Small-Cap Value 39,575 232,608
AST Goldman Sachs Mid-Cap Growth 700,821 591,558 933,348
AST Neuberger Berman Mid-Cap Growth 4,955,480 3,457,835 2,809,373
AST Neuberger Berman Mid-Cap Value 8,529,633 8,428,515 7,270,459
AST Alger All-Cap Growth 7,225,980 4,831,748 3,483,357
AST Gabelli All-Cap Value 1,039,744 1,317,381 1,204,506
AST T. Rowe Price Natural Resources 1,322,239 1,334,498 1,013,732
AST Alliance Growth 3,684,731 3,051,290 2,095,031
AST MFS Growth 8,711,349 6,513,842 4,943,984
AST Marsico Capital Growth 12,258,722 10,727,760 11,625,980
AST Goldman Sachs Concentrated Growth 26,556,021 14,657,442 10,103,147
AST DeAM Large-Cap Value 338,284 766,469 948,754
AST Hotchkis & Wiley Large-Cap Value 8,305,048 6,322,699 4,630,668
AST Alliance/Bernstein Growth + Value 75,451 312,093 410,660
AST Sanford Bernstein Core Value 85,387 617,387 1,449,666
AST Cohen & Steers Realty 1,306,673 1,871,717 2,135,036
AST Sanford Bernstein Managed Index 500 3,774,212 3,161,195 2,735,972
AST American Century Income & Growth 3,131,080 2,344,395 1,916,346
AST Alliance Growth and Income 12,891,016 11,270,924 10,173,073
AST DeAM Global Allocation 3,942,792 1,329,910 265,583
AST American Century Strategic Balanced 1,751,146 1,649,127 1,695,443
AST T. Rowe Price Asset Allocation 3,081,375 2,533,863 2,500,094
AST T. Rowe Price Global Bond 916,292 1,179,262 1,747,680
AST Goldman Sachs High Yield 4,055,451 4,012,796 5,756,882
AST Lord Abbett Bond-Debenture 267,351 760,144 1,595,766
AST PIMCO Total Return Bond 9,324,202 12,286,583 14,633,211
AST PIMCO Limited Maturity Bond 3,436,658 5,426,765 7,266,844
AST Money Market 11,758,628 12,719,198 12,456,575

The sub-advisory fee paid by the Investment Manager to the Sub-advisors for each Portfolio for each of the past
three fiscal years was as follows:

Sub-advisory Fees
2001 2002 2003
---- ---- ----
AST JPMorgan International Equity(1) $2,409,743 $1,701,399 $1,580,261
AST William Blair International Growth(2) 4,091,406 2,081,813 1,112,696
AST DeAM International Equity(3) 1,078,676 576,549 424,011
AST MFS Global Equity 180,283 267,063 314,895
AST State Street Research Small-Cap Growth(4) 2,059,707 1,612,792 1,322,406
AST DeAM Small-Cap Growth(5) 2,718,864 1,228,218 1,042,429
AST Federated Aggressive Growth 73,889 138,429 487,934
AST Goldman Sachs Small-Cap Value(6) 1,568,527 2,362,112 1,510,194
AST Gabelli Small-Cap Value 1,836,514 2,094,132 2,232,761
AST DeAM Small-Cap Value 0 22,327 85,698
AST Goldman Sachs Mid-Cap Growth(7) $385,050 $288,778 $256,115
AST Neuberger Berman Mid-Cap Growth 2,210,682 1,489,011 1,230,538
AST Neuberger Berman Mid-Cap Value 3,999,070 3,640,460 3,183,634
AST Alger All-Cap Growth 2,865,877 1,999,653 1,466,677
AST Gabelli All-Cap Value 437,787 554,687 507,160
AST T. Rowe Price Natural Resources 734,577 741,388 563,184
AST Alliance Growth 1,637,658 1,356,129 931,125
AST MFS Growth 3,518,459 2,721,362 2,115,049
AST Marsico Capital Growth 5,670,785 4,813,167 5,155,049
AST Goldman Sachs Concentrated Growth(8) 13,011,657 6,884,621 3,083,652
AST DeAM Large-Cap Value(9) 186,056 255,360 223,236
AST Hotchkis & Wiley Large-Cap Value(10) 3,843,384 2,948,983 2,160,978
AST Alliance/Bernstein Growth + Value 33,534 135,153 182,516
AST Sanford Bernstein Core Value 28,462 205,796 483,222
AST Cohen & Steers Realty 722,669 561,515 640,511
AST Sanford Bernstein Managed Index 500 789,035 686,866 615,995
AST American Century Income & Growth 1,511,050 1,144,051 944,295
AST Alliance Growth and Income 4,790,227 4,269,875 3,869,287
AST DeAM Global Allocation(11) 1,998,816 677,284 132,792
AST American Century Strategic Balanced 796,060 754,052 773,123
AST T. Rowe Price Asset Allocation 993,787 832,754 822,822
AST T. Rowe Price Global Bond 458,146 589,631 873,840
AST Goldman Sachs High Yield(12) 1,161,672 1,147,339 1,501,377
AST Lord Abbett Bond-Debenture 83,547 237,545 493,625
AST PIMCO Total Return Bond 3,676,751 4,911,076 5,628,158
AST PIMCO Limited Maturity Bond 1,321,791 2,087,217 2,794,940
AST Money Market(13) 1,440,997 1,380,531 1,246,526

(1) For the fiscal year 2001, $2,360,387 was paid to AIM and $49,356 was paid to Strong Capital Management, Inc.
("Strong"). For fiscal years 2002 and 2003, the entire fee noted above was paid to Strong, the prior Sub-advisor for the
Portfolio.
(2) For the fiscal year 2002, $1,952,344 was paid to Janus Capital Management LLC and $129,469 was paid to William Blair
& Company, LLC ("William Blair"). For the fiscal year 2003, the entire fee noted above was paid to William Blair.
(3) For the fiscal year 2001, the entire fee noted above was paid to Founders Asset Management LLC ("Founders"). For
the fiscal year 2002, $286,250 was paid to Founders and $290, 299 was paid to Deutsche Asset Management, Inc.
("Deutsche"). For the fiscal year 2003, the entire fee noted above was paid to Deutsche.
(4) For the fiscal year 2001, $1,513,376 was paid to Janus Capital Management LLC and $546,331 was paid to Pilgrim
Baxter & Associates, Ltd. ("Pilgrim Baxter"). For fiscal years 2002 and 2003, the entire fee noted was paid to Pilgrim
Baxter, the prior Sub-advisor for the Portfolio.
(5) For the fiscal year 2001, $2,619,058 was paid to Zurich Scudder Investments, Inc. and $99,806 was paid to Deutsche
Asset Management, Inc. ("Deutsche"). For fiscal years 2002 and 2003, the entire fee noted above was paid to Deutsche.
(6) For the fiscal year 2001, $433,623 was paid to Lord Abbett and $1,134,904 was paid to Goldman Sachs Asset
Management, L.P. ("Goldman Sachs"), For fiscal years 2002 and 2003, the entire fee noted above was paid to Goldman Sachs.
(7) For the fiscal year 2002, $269,282 was paid to Janus Capital Management LLC and $19,496 was paid to Goldman Sachs
Asset Management, L.P. ("Goldman Sachs"). For the fiscal year 2003, the entire fee noted above was paid to Goldman Sachs.
(8) For the fiscal year 2002, $6,411,347 was paid to Janus Capital Management LLC and $473,274 was paid to Goldman Sachs
Asset Management, L.P.
(9) For the fiscal year 2001, the entire fee noted above was paid to Janus Capital Management LLC ("Janus"). For the
fiscal year 2002, $98,938 was paid to Janus and $156,422 was paid to Deutsche Asset Management, Inc.
(10) For fiscal years 2001, 2002 and 2003, the entire fee noted above was paid to INVESCO Funds Group, Inc., the prior
Sub-advisor for the Portfolio.
(11) For the fiscal year 2001, the entire fee noted was paid to AIM Capital Management, Inc. ("AIM"). For the fiscal
year 2002, $564,530 was paid to AIM and $112,754 was paid to Deutsche Asset Management, Inc. ("Deutsche"). For the
fiscal year 2003, the entire fee noted above was paid to Deutsche.
(12) For fiscal years 2001, 2002 and 2003, the entire fee noted was paid to Federated Investment Counseling, the prior
Sub-advisor for the Portfolio.
(13) For the fiscal year 2001, $1,068,339 was paid to J.P. Morgan Investment Management Inc. and $372,658 was paid to
Wells Capital Management, Incorporated ("Wells"). For fiscal years 2002 and 2003, the entire fee noted was paid to Wells.

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 JPMorgan International Equity Portfolio: 1.75%

AST State Street Research Small-Cap Growth Portfolio: 1.30%

AST T. Rowe Price Natural Resources Portfolio: 1.35%

AST Alliance Growth Portfolio: 1.45%

AST Goldman Sachs Concentrated Growth Portfolio: 1.35%.

AST Hotchkis & Wiley Large-Cap Value Portfolio: 1.20%

AST Alliance Growth and Income Portfolio: 1.25%

AST T. Rowe Price Asset Allocation Portfolio: 1.25%

AST T. Rowe Price Global Bond Portfolio: 1.75%

AST Goldman Sachs 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: 0.65%.

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 William Blair International Growth Portfolio: 1.75%

AST DeAM International Equity Portfolio: 1.50%

AST MFS Global Equity Portfolio: 1.75%

AST DeAM Small-Cap Growth Portfolio: 1.35%

AST DeAM Small-Cap Value Portfolio: 1.15%

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 Goldman Sachs 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 Marsico Capital Growth Portfolio: 1.35%

AST MFS Growth Portfolio: 1.35%

AST American Century Income & Growth Portfolio: 1.25%

AST DeAM Large-Cap Value Portfolio: 0.99%

AST Alliance/Bernstein Growth + Value Portfolio: 1.35%

AST Sanford Bernstein Core Value Portfolio: 1.25%

AST Sanford Bernstein Managed Index 500 Portfolio: 0.80%

AST Cohen & Steers Realty Portfolio: 1.45%

AST DeAM Global Allocation Portfolio: 0.35%

AST American Century Strategic Balanced Portfolio: 1.25%

AST Lord Abbett Bond-Debenture Portfolio: 1.20%

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 an 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: An 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:

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 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.

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.

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 Portfolio).

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.

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.

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. Commencing January 1,2002, Cohen & Steers Capital Management, Inc. has voluntarily agreed to waive a portion of
its fee: .30% of the portion not in excess of $350 million, .25% of the assets over $350 million. The Sub-advisor may
terminate this voluntary agreement at any time.

Deutsche Asset Management, Inc. for the AST DeAM 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: .30% of the portion of the combined average daily net assets not in excess of $500
million; plus .25% of the portion over $500 million but not in excess of $1 billion; plus .20% of the portion over $1
billion. Prior to May 1, 2002, the Investment Manager had engaged Founders Asset Management LLC as Sub-advisor for the
Portfolio (formerly the AST Founders Passport Portfolio) for an annual rate of .60% of the average daily net assets of
the Portfolio not in excess of $100 million; plus .50% of the portion of the average net assets in excess of $100 million.

Deutsche Asset Management, Inc. for the AST DeAM Large-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 : .20% of the portion of the combined average daily net assets not in excess of $500
million; plus .15% of the portion over $500 million but not in excess of $1 billion; plus .10% of the portion in excess
of $1 billion. Prior to May 1, 2002, the Investment Manager had engaged Janus Capital Management LLC as Sub-advisor for
the Portfolio (formerly the AST Janus Strategic Value Portfolio) for 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.

Deutsche Asset Management, Inc. for the AST DeAM Small-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: .35% of the portion of the combined average daily net assets not in excess of $100
million; plus .30% of the portion over $100 million but not in excess of $300 million; plus .25% of the portion over $300
million but not in excess of $500 million; plus .20% of the portion in excess of $500 million. Prior to December 10,
2001, the Investment Manager had engaged Zurich Scudder Investments, Inc. as Sub-advisor for the Portfolio (formerly the
AST Scudder Small-Cap Growth Portfolio) for 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.

Deutsche Asset Management, Inc. for the AST DeAM Small-Cap Value Portfolio: An annual rate equal to the
following percentages of the average daily net assets of the Portfolio: .35% of the portion of the combined average daily
net assets not in excess of $100 million; plus .30% of the portion over $100 million but not in excess of $300 million;
plus .25% of the portion over $300 million but not in excess of $500 million; plus .20% of the portion in excess of $500
million.

Deutsche Asset Management, Inc. for the AST DeAM Global Allocation Portfolio: An annual rate equal to .05% of
the average daily net assets of the Portfolio and any future 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. Prior to May 1, 2002, the Investment Manager had engaged A I M Capital Management, Inc. as Sub-advisor for
the Portfolio (formerly the AST AIM Balanced Portfolio) for 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.

Federated Equity Management Company of Pennsylvania 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.

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 the Portfolio and the series of American Skandia Advisor Funds,
Inc. that is managed by the Sub-advisor and identified by the Sub-advisor as being similar to the Portfolio: .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.

Goldman Sachs Asset Management, L.P. for the AST Goldman Sachs Small-Cap Value Portfolio: An annual rate of .50%
of the average daily net assets of the Portfolio.

Goldman Sachs Asset Management, L.P. for the AST Goldman Sachs Mid-Cap Growth Portfolio: An annual rate equal to
the following percentages of the combined average daily net assets of the Portfolio and AST Goldman Sachs Concentrated
Growth Portfolio and the following series of American Skandia Advisor Funds, ASAF Goldman Sachs Mid-Cap Growth Fund and
ASAF Goldman Sachs Concentrated Growth Fund, that are managed by the Sub-advisor and identified by the Sub-advisor and
the Investment Manager as being similar to the Portfolios .28% of the portion of the average daily net assets of the
Portfolios not in excess of $1 billion plus .25% of the portion of the net assets over $1 billion. Prior to November 11,
2002, the Investment Manager had engaged Janus Capital Management LLC as Sub-advisor for the Fund (formerly the AST Janus
Mid-Cap Growth Portfolio) for an annual rate of .50% of the portion of the combined average daily net assets not in
excess of $250 million; plus .45% of the portion over $250 million but not in excess of $750 million; plus .40% of the
portion over $750 million but not in excess of $1.5 billion; plus .35% of the portion in excess of $1.5 billion.

Goldman Sachs Asset Management, L.P. for the AST Goldman Sachs Concentrated Growth Portfolio: An annual rate
equal to the following percentages of the combined average daily net assets of the Portfolio and AST Goldman Sachs
Mid-Cap Growth Fund and the following series of American Skandia Advisor Funds, ASAF Goldman Sachs Mid-Cap Growth
Portfolio and ASAF Goldman Sachs Concentrated Growth Portfolio, that are managed by the Sub-advisor and identified by the
Sub-advisor and the Investment Manager as being similar to the Portfolios .28% of the portion of the average daily net
assets of the Portfolios not in excess of $1 billion plus .25% of the portion of the net assets over $1 billion. Prior
to November 11, 2002, the Investment Manager had engaged Janus Capital Management LLC as Sub-advisor for the Portfolio
(formerly the AST JanCap Growth Portfolio) for an annual rate of .45% of the average daily net assets of the Portfolio.

Goldman Sachs Asset Management, L.P. for the AST Goldman Sachs High Yield Portfolio: An annual rate of .30% of
the average daily net assets of the Portfolio. Prior to May 1, 2004, the Investment Manager had engaged Federated
Investment Counseling as Sub-advisor for the Portfolio (formerly the AST Federated High Yield Portfolio) at 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.

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.

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.

Hotchkis and Wiley Capital Management, LLC for the AST Hotchkis & Wiley Large-Cap Value Portfolio: An annual
rate of .30% of the average daily net assets of the Portfolio. Prior to May 2, 2004, the Investment Manager had engaged
INVESCO Funds Group, Inc. for the Portfolio (formerly the AST INVESCO Capital Income Portfolio) at a Sub-advisory fee of
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.

J.P. Morgan Investment Management Inc. for the AST JPMorgan International Equity Portfolio: An annual rate equal
to the following percentages: .35% of the portion of the combined average daily net assets not in excess of $250 million;
plus .33% of the portion over $250 million but not in excess of $500 million; plus .30% of the portion over $500
million. Prior to January 20, 2004, the Investment Manager had engaged Strong Capital Management, Inc. as Sub-advisor
for the Portfolio (formerly the AST Strong International Equity Portfolio) for 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 was 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 not in excess of $500 million; plus .40% of
the portion over $500 million but not in excess of $1 billion; plus .35% of the portion in excess of $1 billion. Prior
to December 10, 2001, the Investment Manager had engaged A I M Capital Management, Inc. as Sub-advisor for the Portfolio
(formerly the AST AIM International Equity Portfolio) for 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 was
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.

Massachusetts Financial Services for the AST MFS Global Equity Portfolio: An annual rate of .425% of average
daily net assets of the Portfolio.

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. Commencing March 1, 2001, Marsico Capital Management, LLC has voluntarily
agreed to waive the portion of its fee that exceeds the following percentage 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 Investment Manager and Sub-advisor as being similar to the Portfolio: .40% of the combined average daily net assets
of the Portfolio. The Sub-advisor may terminate this voluntary agreement at any time.

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 January 1, 2002, 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 has been 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.

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.

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.

State Street Research and Management Company for the AST State Street Research Small-Cap Growth Portfolio: An
annual rate of 0.50% for first $350 million of the average daily net assets; plus 0.45% over $350 million of assets.
(The assets of the AST State Street Research Small Cap Growth Portfolio will be aggregated with the assets of all other
portfolios managed or co-managed by Prudential Investments LLC for which State Street serves as Sub-adviser, for purposes
of the fee calculation). Prior to May 1, 2004, the Investment Advisor had engaged Pilgrim Baxter & Associates, Ltd. as
Sub-advisor for the Portfolio (formerly the AST PBHG Small-Cap Growth Portfolio) at 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 was 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 $100 million; plus .45% of
the portion over $100 million but not in excess of $400 million; plus .40% of the portion over $400 million but not in
excess of $900 million; plus .35% of the portion in excess of $900 million. Between January 1, 1999 and September 17,
2001, the Investment Manager had engaged Janus Capital Management LLC as Sub-advisor for the Portfolio (formerly the AST
Janus Small-Cap Growth Portfolio), for a total Sub-advisory fee 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. 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.

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 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.

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.

Lord, Abbett & Co. LLC 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.

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.

Wells Capital Management, Incorporated 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 the Sub-Advisor and is similar to the Portfolio: .07% of the portion of the combined average daily net
assets not in excess of $500 million; plus .05% of the portion over $500 million but not in excess of $1.5 billion; plus
.04% of the portion in excess of $1.5 billion. Prior to September 17, 2001, the Investment Manager had engaged J.P.
Morgan Investment Management Inc. as Sub-advisor for the Portfolio at a total Sub-advisory fee of 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.

William Blair & Company L.L.C. for the AST William Blair International 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 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 $500 million;
plus .25% of the portion over $500 million but not in excess of $1 billion; plus .20% of the portion in excess of $1
billion. Prior to November 11, 2002, the Investment Manager had engaged Janus Capital Management LLC as Sub-advisor for
the Portfolio (formerly, the AST Janus Overseas Growth Portfolio) for an annual rate of .60% of the portion of the
average daily net assets of the Portfolio not in excess of $100 million; when the average daily net assets of the
Portfolio equal or exceed $100 million, the annual rate will be .50% of the entire average daily net assets of the
Portfolio.

From time to time, the Sub-advisor may reimburse the Investment Manager or the Portfolio, as the case may be, for
expenses related but not limited to the printing and mailing of prospectus supplements and marketing materials that
became inaccurate due to an event caused by the Sub-advisor such as a portfolio manager replacement or the replacement of
a sub-advisor.

Corporate Structure. Several of the Sub-advisors are controlled by other parties as noted below:

Deutsche Asset Management, Inc. ("DAMI") is a wholly owned indirect subsidiary of Deutsche Bank A.G.

American Century Companies, Inc. 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 investment management business.

Alliance Capital Management Corporation ("ACMC"), is an indirect wholly-owned subsidiary of AXA Financial, Inc.
("AXA Financial"), is the general partner of Alliance Capital Management, L.P. ("Alliance Capital"). As of December 31,
2001, Alliance Capital Management Holding L.P. ("Alliance Holding") owned approximately 30.1% of the outstanding units of
limited partnership interest in Alliance Capital ("Alliance Units"). ACMC is the general partner of Alliance Holding,
whose equity interests are traded on the New York Stock Exchange, Inc. ("NYSE") in the form of units ("Alliance Holding
Units"). As of December 31, 2001, AXA Financial, together with certain of its wholly-owned subsidiaries, including ACMC,
beneficially owned approximately 2.1% of the outstanding Alliance Holding Units and 51.7% of the outstanding Alliance
Units. AXA Financial, a Delaware corporation, is a wholly-owned subsidiary of AXA, a French company.

Massachusetts Financial Services Company is a subsidiary of Sun Life of Canada (US) Financial Services Holdings,
Inc. which in turn is an indirect wholly owned subsidiary of Sun Life Services of Canada, Inc. ( a diversified services
organization).

Lord, Abbett & Co. LLC ("Lord Abbett") is a Delaware limited liability company with the following Partners, all
of whom are actively involved in the management of Lord Abbett: Tracie E. Ahern, Joan A. Binstock, Michael Brooks, Zane
E. Brown, Patrick Browne, Daniel E. Carper, John J. DiChiaro, Sholom Dinsky, Lesley-Jane Dixon, Robert S. Dow, Kevin P.
Ferguson, Robert P. Fetch, Daria L. Foster, Daniel H. Frascarelli, Robert I. Gerber, Michael S. Goldstein, Michael A.
Grant, Howard E. Hansen, Paul A. Hilstad, W. Charles Hofer, W. Thomas Hudson, Jr., Cinda Hughes, Ellen G. Itskovitz,
Lawrence H. Kaplan, Robert A. Lee, Maren Lindstrom, Gregory M. Macosko, Thomas Malone, Charles Massare, Jr., Stephen J.
McGruder, Paul McNamara, Robert G. Morris, Robert J. Noelke, A. Edward Oberhaus, III, R. Mark Pennington, Walter Prahl,
Michael Rose, Eli M. Salzmann, Douglas B. Sieg, Richard Sieling, Michael T. Smith, Richard Smola, Diane Tornejal,
Christopher J. Towle, Edward K. von der Linde and Marion Zapolin.

Neuberger Berman Management Inc. is an indirect wholly owned subsidiary of Lehman Brothers Holding Inc., a
publicly traded holding company.

Marsico Capital Management LLC is a wholly-owned indirect subsidiary of Bank of America Corporation.

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.

T. Rowe Price International, Inc. an indirect wholly owned subsidiary of T. Rowe Price Group, Inc.

Federated Equity Management Company of Pennsylvania, organized as a Delaware statutory trust in 2003, and
Federated Global Investment Management Corp., organized as a Delaware corporation in 1995.

Pacific Investment Management Company LLC ("PIMCO"), a Delaware limited liability company, is a majority-owned
subsidiary of Allianz Dresdner Asset Management of America L.P., ("ADAM LP"). Allianz Aktiengesellschaft ("Allianz AG")
is the indirect majority owner of ADAM LP. Allianz AG is a European-based, multinational insurance and financial
services holding company. Pacific Life Insurance Company holds an indirect minority interest in ADAM LP.

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 PBHG Small-Cap Growth Portfolio, the AST DeAM 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 Alliance Growth Portfolio, the AST Marsico Capital Growth Portfolio, the AST Hotchkis &
Wiley Large-Cap 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 Lord Abbett Growth and Income Portfolio, the AST
DeAM Global Allocation Portfolio, the AST American Century Strategic Balanced Portfolio, the AST T. Rowe Price Asset
Allocation Portfolio, the AST Goldman Sachs 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 DeAM
International Equity Portfolio, the AST JPMorgan International Equity Portfolio, the AST William Blair International
Growth Portfolio 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 and 2001( the AST Federated
Aggressive Growth Portfolio, the AST Goldman Sachs Mid-Cap Growth Portfolio, the AST Alger All-Cap Growth Portfolio, the
AST Gabelli All-Cap Value Portfolio, the AST DeAM Large-Cap Value Portfolio, and the AST Lord Abbett Bond-Debenture
Portfolio, 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. The fees payable to
the Administrator for any Portfolio that has not commenced operations prior to the date of this Statement would not be
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. 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, 2001, 2002 and 2003, the Trust paid the
Administrator $10,876,193, $10,173,593 and $10,034,859 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. 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, including ASM, 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.

As noted above, a Sub-advisor may purchase new securities on behalf of the applicable Portfolio in an
underwritten fixed price offering. In these situations, the underwriter or selling group member may provide the
Sub-advisor with research in addition to selling the securities (at the fixed public offering price). Because the
offerings are conducted at a fixed price, the ability to obtain research from a broker/dealer in this situation provides
knowledge that may benefit the Portfolio without incurring additional costs. These arrangements may not fall within the
safe harbor of Section 28(e) of the Securities Exchange Act of 1934 because the broker/dealer is considered to be acting
in a principal capacity in underwritten transactions. However, the NASD has adopted rules expressly permitting
broker/dealers to provide bona fide research to advisors in connection with fixed price offerings under certain
circumstances. As a general matter, in these situations, the underwriter or selling group member will provide research
credits at a rate that is higher than that which is available for secondary market transactions.

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 as ASM. 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 factors
among other factors 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, 2001, 2002 and 2003, aggregate brokerage commissions of $48,618,098, $43,685,969 and
$28,515,246 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.

The table below sets forth certain information concerning payment of commissions by the Trust, including the commissions
paid to an affiliated broker for the fiscal years ended December 31, 2003, 2002 and 2001.

AST Alger All-Cap Growth Portfolio
---------------------- ---------------------- ----------------------
December 31, 2003 December 31, 2002 December 31, 2001
---------------------- ---------------------- ----------------------
---------------------- ---------------------- ----------------------
Total Brokerage Commission............................. $2,062,078 N/A N/A
Total Brokerage Commission paid to affiliated brokers
(Fred Alger & Co.)..................................... 238,035 $1,121,083 $969,295
Percentage of total brokerage commissions paid to
affiliated brokers..................................... 11.54% 38.87% 49.33%
Percentage of the aggregate dollar amount of portfolio
transactions involving the payment of commissions to
affiliated brokers..................................... 15.09% 42.46% 49.36%
Total Brokerage Commission paid to affiliated brokers
(American Skandia Marketing)........................... $1,036,098 N/A N/A
Percentage of total brokerage commissions paid to American
Skandia Marketing...................................... 50.24% N/A N/A
Percentage of the aggregate dollar amount of portfolio
transactions involving the payment of commissions to
American Skandia Marketing............................. 53.23% N/A N/A

......... AST Alliance /Bernstein Growth and Value Portfolio
---------------------- ---------------------- ----------------------
December 31, 2003 December 31, 2002 December 31, 2001
---------------------- ---------------------- ----------------------
---------------------- ---------------------- ----------------------
Total Brokerage Commission............................. $59,230 N/A N/A
Total Brokerage Commission paid to affiliated brokers
(Sanford C. Bernstein & Co., LLC)...................... $45,970 $60,043 $76,664
Percentage of total brokerage commissions paid to
affiliated brokers..................................... 77.61% 98.33% 100%
Percentage of the aggregate dollar amount of portfolio
transactions involving the payment of commissions to
affiliated brokers..................................... 77.77% 97.82% 100%

AST Alliance Growth Portfolio
---------------------- ---------------------- ----------------------
December 31, 2003 December 31, 2002 December 31, 2001
---------------------- ---------------------- ----------------------
---------------------- ---------------------- ----------------------
Total Brokerage Commission............................. $487,792 N/A N/A
Total Brokerage Commission paid to affiliated brokers
(Sanford C. Bernstein & Co., LLC)...................... 7,920 $2,880 N/A
Percentage of total brokerage commissions paid to
affiliated brokers..................................... 1.62% 0.35% N/A
Percentage of the aggregate dollar amount of portfolio
transactions involving the payment of commissions to
affiliated brokers..................................... 1.59% 0.44% N/A
Total Brokerage Commission paid to affiliated brokers
(American Skandia Marketing)........................... $114,064 N/A N/A
Percentage of total brokerage commissions paid to American
Skandia Marketing...................................... 23.38% N/A N/A
Percentage of the aggregate dollar amount of portfolio
transactions involving the payment of commissions to
American Skandia Marketing............................. 27.83% N/A N/A

AST Alliance Growth + Income Portfolio
---------------------- ---------------------- ----------------------
December 31, 2003 December 31, 2002 December 31, 2001
---------------------- ---------------------- ----------------------
---------------------- ---------------------- ----------------------
Total Brokerage Commission............................. $3,199,791 N/A N/A
Total Brokerage Commission paid to affiliated brokers
(Sanford C. Bernstein & Co., LLC)...................... 175,250 $114,309 N/A
Percentage of total brokerage commissions paid to
affiliated brokers..................................... 5.47% 2.33% N/A
Percentage of the aggregate dollar amount of portfolio
transactions involving the payment of commissions to
affiliated brokers..................................... 4.69% 2.75% N/A
Total Brokerage Commission paid to affiliated brokers
(American Skandia Marketing)........................... $1,178,779 N/A N/A
Percentage of total brokerage commissions paid to American
Skandia Marketing...................................... 36.83% N/A N/A
Percentage of the aggregate dollar amount of portfolio
transactions involving the payment of commissions to
American Skandia Marketing............................. 38.87% N/A N/A

......... AST American Century Income & Growth Portfolio
---------------------- ---------------------- ----------------------
December 31, 2003 December 31, 2002 December 31, 2001
---------------------- ---------------------- ----------------------
---------------------- ---------------------- ----------------------
Total Brokerage Commission............................. $775,699 N/A N/A
Total Brokerage Commission paid to affiliated brokers
(J.P. Morgan Securities, Prudential Securities, First
Union Capital Markets and Wachovia Securities, LLC).... $744 $1,008 $3,440
Percentage of total brokerage commissions paid to
affiliated brokers..................................... 0.09% 0.13% 0.89%
Percentage of the aggregate dollar amount of portfolio
transactions involving the payment of commissions to
affiliated brokers..................................... 0.11% 0.12% 0.50%

......... AST American Century Strategic Balanced Portfolio
---------------------- ---------------------- ----------------------
December 31, 2003 December 31, 2002 December 31, 2001
---------------------- ---------------------- ----------------------
---------------------- ---------------------- ----------------------
Total Brokerage Commission............................. $389,523 N/A N/A
Total Brokerage Commission paid to affiliated brokers
(J.P. Morgan Securities, Inc., Prudential Securities, and
First Union Capital Markets)........................... $2,288 $1,069 $1,480
Percentage of total brokerage commissions paid to
affiliated brokers..................................... 0.58% 0.23% 0.89%
Percentage of the aggregate dollar amount of portfolio
transactions involving the payment of commissions to
affiliated brokers..................................... 0.66% 0.30% 0.50%

AST Cohen & Steers Realty Portfolio
---------------------- ---------------------- ----------------------
December 31, 2003 December 31, 2002 December 31, 2001
---------------------- ---------------------- ----------------------
---------------------- ---------------------- ----------------------
Total Brokerage Commission............................. $338,839 N/A N/A
Total Brokerage Commission paid to affiliated brokers
(Wachovia Capital Markets)............................. $846 N/A N/A
Percentage of total brokerage commissions paid to
affiliated brokers..................................... .25% N/A N/A
Percentage of the aggregate dollar amount of portfolio
transactions involving the payment of commissions to
affiliated brokers..................................... .17% N/A N/A
Total Brokerage Commission paid to affiliated brokers
(American Skandia Marketing)........................... $31,892 N/A N/A
Percentage of total brokerage commissions paid to American
Skandia Marketing...................................... 9.41% N/A N/A
Percentage of the aggregate dollar amount of portfolio
transactions involving the payment of commissions to
American Skandia Marketing............................. 8.38% N/A N/A

......... AST DeAM Global Allocation Portfolio
---------------------- ---------------------- ----------------------
December 31, 2003 December 31, 2002 December 31, 2001
---------------------- ---------------------- ----------------------
---------------------- ---------------------- ----------------------
Total Brokerage Commission N/A N/A N/A
Total Brokerage Commission paid to affiliated brokers (DB
Alex Brown) N/A $32,104 N/A
Percentage of total brokerage commissions paid to
affiliated brokers N/A 61.36% N/A
Percentage of the aggregate dollar amount of portfolio
transactions involving the payment of commissions to
affiliated brokers N/A 99.21% N/A

......... AST Gabelli All-Cap Value Portfolio
---------------------- ---------------------- ----------------------
December 31, 2003 December 31, 2002 December 31, 2001
---------------------- ---------------------- ----------------------
---------------------- ---------------------- ----------------------
Total Brokerage Commission............................. $178,271 N/A N/A
Total Brokerage Commission paid to affiliated brokers
(Gabelli Securities and Wexford)....................... $139,174 $173,437 $324,864
Percentage of total brokerage commissions paid to
affiliated brokers..................................... 78.06% 77.59% 84.58%
Percentage of the aggregate dollar amount of portfolio
transactions involving the payment of commissions to
affiliated brokers..................................... 80.18% 86.16% 86.49%
Total Brokerage Commission paid to affiliated brokers
(American Skandia Marketing)........................... $6,665 N/A N/A
Percentage of total brokerage commissions paid to American
Skandia Marketing...................................... 3.73% N/A N/A
Percentage of the aggregate dollar amount of portfolio
transactions involving the payment of commissions to
American Skandia Marketing............................. 3.49% N/A N/A

......... AST Gabelli Small-Cap Value Portfolio
---------------------- ---------------------- ----------------------
December 31, 2003 December 31, 2002 December 31, 2001
---------------------- ---------------------- ----------------------
---------------------- ---------------------- ----------------------
Total Brokerage Commission............................. $775,755 N/A N/A
Total Brokerage Commission paid to affiliated brokers
(Gabelli Securities, Wachovia Securities, LLC, and
Prudential Securities, Inc.)........................... $389,581 $451,360 $833,002
Percentage of total brokerage commissions paid to
affiliated brokers..................................... 50.22% 61.69% 84.93%
Percentage of the aggregate dollar amount of portfolio
transactions involving the payment of commissions to
affiliated brokers..................................... 46.18% 63.79% 88.61%
Total Brokerage Commission paid to affiliated brokers
(American Skandia Marketing)........................... $34,673 N/A N/A
Percentage of total brokerage commissions paid to American
Skandia Marketing...................................... 4.47% N/A N/A
Percentage of the aggregate dollar amount of portfolio
transactions involving the payment of commissions to
American Skandia Marketing............................. 4.48% N/A N/A

......... AST Goldman Sachs Concentrated Growth Portfolio
---------------------- ---------------------- ----------------------
December 31, 2003 December 31, 2002 December 31, 2001
---------------------- ---------------------- ----------------------
---------------------- ---------------------- ----------------------
Total Brokerage Commission............................. $1,961,277 N/A N/A
Total Brokerage Commission paid to affiliated brokers
(American Skandia Marketing)........................... $695,993 N/A N/A
Percentage of total brokerage commissions paid to
affiliated brokers..................................... 35.49% N/A N/A
Percentage of the aggregate dollar amount of portfolio
transactions involving the payment of commissions to
affiliated brokers..................................... 37.08% N/A N/A

......... AST Goldman Sachs Mid-Cap Growth Portfolio
---------------------- ---------------------- ----------------------
December 31, 2003 December 31, 2002 December 31, 2001
---------------------- ---------------------- ----------------------
---------------------- ---------------------- ----------------------
Total Brokerage Commission............................. $389,050 N/A N/A
Total Brokerage Commission paid to affiliated brokers
(Goldman Sachs & Co. and Prudential Securities, Inc.).. $346 N/A N/A
Percentage of total brokerage commissions paid to
affiliated brokers..................................... .08% N/A N/A
Percentage of the aggregate dollar amount of portfolio
transactions involving the payment of commissions to
affiliated brokers..................................... .12% N/A N/A
Total Brokerage Commission paid to affiliated brokers
(American Skandia Marketing)........................... $151,029 N/A N/A
Percentage of total brokerage commissions paid to American
Skandia Marketing...................................... 38.82% N/A N/A
Percentage of the aggregate dollar amount of portfolio
transactions involving the payment of commissions to
American Skandia Marketing............................. 38.74% N/A N/A

......... AST Goldman Sachs Small-Cap Value Portfolio
---------------------- ---------------------- ----------------------
December 31, 2003 December 31, 2002 December 31, 2001
---------------------- ---------------------- ----------------------
---------------------- ---------------------- ----------------------
Total Brokerage Commission............................. $1,110,391 N/A N/A
Total Brokerage Commission paid to affiliated brokers
(Goldman Sachs & Co., Prudential Securities, Inc., and
Wachovia Securities LLC)............................... $24,416 $34,527 $62,286
Percentage of total brokerage commissions paid to
affiliated brokers..................................... 2.19% 1.37% 2.92%
Percentage of the aggregate dollar amount of portfolio
transactions involving the payment of commissions to
affiliated brokers..................................... 1.97% 1.74% 8.00%
Total Brokerage Commission paid to affiliated brokers
(American Skandia Marketing)........................... $222,846 N/A N/A
Percentage of total brokerage commissions paid to American
Skandia Marketing...................................... 20.06% N/A N/A
Percentage of the aggregate dollar amount of portfolio
transactions involving the payment of commissions to
American Skandia Marketing............................. 18.56% N/A N/A

......... AST Hotchkis & Wiley Large-Cap Value Portfolio
---------------------- ---------------------- ----------------------
December 31, 2003 December 31, 2002 December 31, 2001
---------------------- ---------------------- ----------------------
---------------------- ---------------------- ----------------------
Total Brokerage Commission............................. $803,548 N/A N/A
Total Brokerage Commission paid to affiliated brokers
(American Skandia Marketing)........................... $295,812 N/A N/A
Percentage of total brokerage commissions paid to
affiliated brokers..................................... 36.81% N/A N/A
Percentage of the aggregate dollar amount of portfolio
transactions involving the payment of commissions to
affiliated brokers..................................... 24.45% N/A N/A

......... AST Marsico Capital Growth Portfolio
---------------------- ---------------------- ----------------------
December 31, 2003 December 31, 2002 December 31, 2001
---------------------- ---------------------- ----------------------
---------------------- ---------------------- ----------------------
Total Brokerage Commission............................. $3,041,073 N/A N/A
Total Brokerage Commission paid to affiliated brokers
(American Skandia Marketing) .......................... $646,342 $31,960 $168,782
Percentage of total brokerage commissions paid to
affiliated brokers..................................... 21.25% 1.12% 6.73%
Percentage of the aggregate dollar amount of portfolio
transactions involving the payment of commissions to
affiliated brokers..................................... 24.96% 1.80% 6.21%

......... AST MFS Growth Portfolio
---------------------- ---------------------- ----------------------
December 31, 2003 December 31, 2002 December 31, 2001
---------------------- ---------------------- ----------------------
---------------------- ---------------------- ----------------------
Total Brokerage Commission............................. $4,155,736 N/A N/A
Total Brokerage Commission paid to affiliated brokers
(American Skandia Marketing)........................... $889,853 N/A $334,259
Percentage of total brokerage commissions paid to
affiliated brokers..................................... 21.41% N/A 100%
Percentage of the aggregate dollar amount of portfolio
transactions involving the payment of commissions to
affiliated brokers..................................... 16.27% N/A 100%

......... AST Neuberger Berman Mid-Cap Growth Portfolio
---------------------- ---------------------- ----------------------
December 31, 2003 December 31, 2002 December 31, 2001
---------------------- ---------------------- ----------------------
---------------------- ---------------------- ----------------------
Total Brokerage Commission............................. $1,164,980 N/A N/A
Total Brokerage Commission paid to affiliated brokers
(Neuberger Berman LLC)................................. $191,778 $203,926 $265,587
Percentage of total brokerage commissions paid to
affiliated brokers..................................... 16.46% 21.37% 31.57%
Percentage of the aggregate dollar amount of portfolio
transactions involving the payment of commissions to
affiliated brokers..................................... 16.18% 21.05% 29.79%
Total Brokerage Commission paid to affiliated brokers
(American Skandia Marketing)........................... $222,760 N/A N/A
Percentage of total brokerage commissions paid to American
Skandia Marketing...................................... 19.12% N/A N/A
Percentage of the aggregate dollar amount of portfolio
transactions involving the payment of commissions to
American Skandia Marketing............................. 19.39% N/A N/A

......... AST Neuberger Berman Mid-Cap Value Portfolio
---------------------- ---------------------- ----------------------
December 31, 2003 December 31, 2002 December 31, 2001
---------------------- ---------------------- ----------------------
---------------------- ---------------------- ----------------------
Total Brokerage Commission............................. $1,834,515 N/A N/A
Total Brokerage Commission paid to affiliated brokers
(Neuberger Berman LLC)................................. $651,777 $1,002,560 $1,984,021
Percentage of total brokerage commissions paid to
affiliated brokers..................................... 35.52% 37.23% 37.98%
Percentage of the aggregate dollar amount of portfolio
transactions involving the payment of commissions to
affiliated brokers..................................... 33.75% 37.61% 37.25%
Total Brokerage Commission paid to affiliated brokers
(American Skandia Marketing)........................... $730,876 N/A N/A
Percentage of total brokerage commissions paid to American
Skandia Marketing...................................... 39.84% N/A N/A
Percentage of the aggregate dollar amount of portfolio
transactions involving the payment of commissions to
American Skandia Marketing............................. 38.79% N/A N/A

......... AST State Street Research Small-Cap Growth Portfolio
---------------------- ---------------------- ----------------------
December 31, 2003 December 31, 2002 December 31, 2001
---------------------- ---------------------- ----------------------
---------------------- ---------------------- ----------------------
Total Brokerage Commission............................. $1,549,522 N/A N/A
Total Brokerage Commission paid to affiliated brokers
(American Skandia Marketing)........................... $235,797 N/A N/A
Percentage of total brokerage commissions paid to
affiliated brokers..................................... 15.22% N/A N/A
Percentage of the aggregate dollar amount of portfolio
transactions involving the payment of commissions to
affiliated brokers..................................... 16.67% N/A N/A

......... AST Sanford Bernstein Core Value Portfolio
---------------------- ---------------------- ----------------------
December 31, 2003 December 31, 2002 December 31, 2001
---------------------- ---------------------- ----------------------
---------------------- ---------------------- ----------------------
Total Brokerage Commission............................. $939,295 N/A N/A
Total Brokerage Commission paid to affiliated brokers
(Sanford C. Bernstein & Co., LLC) $346,164 $373,954 $73,730
Percentage of total brokerage commissions paid to
affiliated brokers..................................... 36.85% 95.22% 100%
Percentage of the aggregate dollar amount of portfolio
transactions involving the payment of commissions to
affiliated brokers..................................... 36.31% 98.45% 100%
Total Brokerage Commission paid to affiliated brokers
(American Skandia Marketing)........................... $306,092 N/A N/A
Percentage of total brokerage commissions paid to American
Skandia Marketing...................................... 32.58 N/A N/A
Percentage of the aggregate dollar amount of portfolio
transactions involving the payment of commissions to
American Skandia Marketing............................. 33.41% N/A N/A

......... AST Sanford Bernstein Managed Index 500 Portfolio
---------------------- ---------------------- ----------------------
December 31, 2003 December 31, 2002 December 31, 2001
---------------------- ---------------------- ----------------------
---------------------- ---------------------- ----------------------
Total Brokerage Commission............................. $870,921 N/A N/A
Total Brokerage Commission paid to affiliated brokers
(Sanford C. Bernstein & Co., LLC) $346,136 $324,048 $446,700
Percentage of total brokerage commissions paid to
affiliated brokers..................................... 39.74% 28.09% 41.07%
Percentage of the aggregate dollar amount of portfolio
transactions involving the payment of commissions to
affiliated brokers..................................... 42.40% 25.54% 40.57%
Total Brokerage Commission paid to affiliated brokers
(American Skandia Marketing)........................... $284,861 N/A N/A
Percentage of total brokerage commissions paid to American
Skandia Marketing...................................... 32.70% N/A N/A
Percentage of the aggregate dollar amount of portfolio
transactions involving the payment of commissions to
American Skandia Marketing............................. 31.48% N/A N/A

......... AST JPMorgan International Equity Portfolio
---------------------- ---------------------- ----------------------
December 31, 2003 December 31, 2002 December 31, 2001
---------------------- ---------------------- ----------------------
---------------------- ---------------------- ----------------------
Total Brokerage Commission............................. $843,780 N/A N/A
Total Brokerage Commission paid to affiliated brokers
(American Skandia Marketing)........................... $91,992 N/A N/A
Percentage of total brokerage commissions paid to
affiliated brokers..................................... 10.90% N/A N/A
Percentage of the aggregate dollar amount of portfolio
transactions involving the payment of commissions to
affiliated brokers..................................... 11.43% N/A N/A

AST T. Rowe Price Asset Allocation Portfolio
---------------------- ---------------------- ----------------------
December 31, 2003 December 31, 2002 December 31, 2001
---------------------- ---------------------- ----------------------
---------------------- ---------------------- ----------------------
Total Brokerage Commission............................. $159,024 N/A N/A
Total Brokerage Commission paid to affiliated brokers
(Prudential Securities, Inc. and Wachovia Securities LLC) $675 N/A N/A
Percentage of total brokerage commissions paid to
affiliated brokers..................................... 0.42% N/A N/A
Percentage of the aggregate dollar amount of portfolio
transactions involving the payment of commissions to
affiliated brokers..................................... 0.44% N/A N/A

......... AST T. Rowe Natural Resources Portfolio
---------------------- ---------------------- ----------------------
December 31, 2003 December 31, 2002 December 31, 2001
---------------------- ---------------------- ----------------------
---------------------- ---------------------- ----------------------
Total Brokerage Commission............................. $154,699 N/A N/A
Total Brokerage Commission paid to affiliated brokers
(Wachovia Securities LLC) $5,710 N/A N/A
Percentage of total brokerage commissions paid to
affiliated brokers..................................... 3.69% N/A N/A
Percentage of the aggregate dollar amount of portfolio
transactions involving the payment of commissions to
affiliated brokers..................................... 1.88% N/A N/A
Total Brokerage Commission paid to affiliated brokers
(American Skandia Marketing)........................... $26,587 N/A N/A
Percentage of total brokerage commissions paid to American
Skandia Marketing...................................... 17.18% N/A N/A
Percentage of the aggregate dollar amount of portfolio
transactions involving the payment of commissions to
American Skandia Marketing............................. 19.88% N/A N/A

......... AST William Blair International Growth Portfolio
---------------------- ---------------------- ----------------------
December 31, 2003 December 31, 2002 December 31, 2001
---------------------- ---------------------- ----------------------
---------------------- ---------------------- ----------------------
Total Brokerage Commission............................. $1,270,459 N/A N/A
Total Brokerage Commission paid to affiliated brokers
(American Skandia Marketing)........................... $555,036 N/A N/A
Percentage of total brokerage commissions paid to
affiliated brokers..................................... 43.69% N/A N/A
Percentage of the aggregate dollar amount of portfolio
transactions involving the payment of commissions to
affiliated brokers..................................... 51.93% N/A N/A

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 net asset value per share ("NAV") of each Portfolio is determined as of the time of the close of regular
trading on the New York Stock Exchange (the "NYSE") (which is normally 4:00 p.m. Eastern Time) on each day that the NYSE
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 for which the primary market is the National
Association of Securities Dealer's Automatic Quotation System ("NASDAQ") are valued at the NASDAQ Official Closing Price
(as defined by NASDAQ). 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 may include but are not limited to prospectuses, information statements, semi-annual and annual reports
and any proxy materials. The Trust pays ASLAC 0.10%, on an annualized basis, of the net asset value of the shares
legally owned by any separate account of ASLAC, and pays Kemper 0.10%, 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, Incorporated ("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. Prudential Investment Management Services LLC ("PIMS") is co-distributor
along with ASM (each a "Distributor" and together the "Distributors"). 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, 2003, ASM received $8,091,627 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 a Distributor'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 ASM, PIMS or another affiliated broker-dealer as underwriter, if so required by
applicable law. ASM and PIMS are registered as broker-dealers with the SEC and the National Association of Securities
Dealers. Each is an affiliate of American Skandia Life Assurance Corporation and the Investment Managers.

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.

.........December 31, 2003, the following Portfolios had, for federal income tax purposes, capital loss carryforwards
available to offset future net realized gains:

......... Expiration December 31,
----------------- --------------- ---------------- ---------------- ---------------
Portfolio Total 2008 2009 2010 2011
----------------- --------------- ---------------- ---------------- ---------------

AST JPMorgan International Equity Portfolio $187,634,414 -- $100,807,480 $76,213,067 $10,613,867
AST William Blair International Growth Portfolio 262,834,328 -- 93,897,621 123,994,607 44,942,100
AST DeAM International Equity Portfolio 165,358,319 $43,648,402 107,473,503 14,236,414 --
AST MFS Global Equity Portfolio 11,078,864 102,871 2,025,569 6,125,096 2,825,328
AST State Street Research Small-Cap Growth 223,311,073 -- 157,029,918 66,281,155 --
Portfolio
AST DeAM Small-Cap Growth Portfolio 300,230,534 -- 216,945,355 83,285,179 --
AST Federated Aggressive Growth Portfolio -- -- -- -- --
AST Goldman Sachs Small-Cap Value Portfolio -- -- -- -- --
AST Gabelli Small-Cap Value Portfolio 3,742,822 -- -- 3,742,822 --
AST DeAM Small-Cap Value Portfolio -- -- -- -- --
AST Goldman Sachs Mid-Cap Growth Portfolio 84,438,560 -- 58,496,027 25,942,533 --
AST Neuberger Berman Mid-Cap Growth Portfolio 393,730,075 -- 270,207,817 122,095,636 1,426,622
AST Neuberger Berman Mid-Cap Value Portfolio -- -- -- -- --
AST Alger All-Cap Growth Portfolio 436,369,084 56,105,001 208,714,661 171,549,422 --
AST Gabelli All-Cap Value Portfolio 28,106,272 -- 1,815,571 21,341,849 4,948,852
AST T. Rowe Price Natural Resources Portfolio 2,789,355 -- -- -- 2,789,355
AST Alliance Growth Portfolio 262,150,877 -- 134,760,953 95,931,726 31,458,198
AST MFS Growth Portfolio 458,347,610 -- 259,923,499 198,424,111 --
AST Marsico Capital Growth Portfolio 344,302,754 -- 209,783,108 134,519,646 --
AST Goldman Sachs Concentrated Growth Portfolio 954,099,195 115,116,090 465,068,305 179,588,458 153,326,342
AST DeAM Large-Cap Value Portfolio 21,532,998 -- 3,927,079 15,949,510 1,656,409
AST Hotchkis & Wiley Large-Cap Value Portfolio 102,862,892 -- 16,409,726 86,453,166 --
AST Alliance/Bernstein Growth + Value Portfolio 5,284,212 -- -- 4,092,914 1,191,298
AST Sanford Bernstein Core Value Portfolio -- -- -- -- --
AST Cohen & Steers Realty Portfolio -- -- -- -- --
AST Sanford Bernstein Managed Index 500 Portfolio 159,385,659 -- 59,806,425 69,268,601 30,310,633
AST American Century Income & Growth Portfolio 88,982,431 9,602,532 33,041,332 29,933,758 16,404,809
AST Alliance Growth and Income Portfolio 316,348,367 -- -- 254,824,843 61,523,524
AST DeAM Global Allocation Portfolio 102,070,572 13,319,609 35,338,513 48,177,607 5,234,843
AST American Century Strategic Balanced Portfolio 23,087,262 -- 6,031,874 14,469,531 2,585,857
AST T. Rowe Price Asset Allocation Portfolio 16,301,159 -- -- 11,926,235 4,374,924
AST Goldman Sachs High Yield Portfolio(1) 208,313,692 17,797,821 61,793,618 87,452,429 37,484,899

(1) The Portfolio had additional capital loss carryforwards of $3,784,925 expiring in 2007.

The following Portfolios elected to treat post-October losses incurred in the period November 1, 2003 through December
31, 2003 as having occurred in the following fiscal year:

Post October Losses
-------------------
Portfolio Currency Capital
--------- -------- -------
William Blair International....................................................... $88,218 $ --
MFS Global Equity................................................................. 9,817 --
Federated Aggressive Growth....................................................... 126 --
Alger All-Cap Growth.............................................................. -- 1,294,094
Alliance Growth................................................................... -- 1,178,467
MFS Growth........................................................................ 11,725 --
Marsico Capital Growth............................................................ -- 389,872
Alliance/Bernstein Growth + Value................................................. -- 152,682
Sanford Bernstein Core Value...................................................... -- 16,153
Sanford Bernstein Managed Index 500............................................... -- 514,201
American Century Income & Growth.................................................. -- 883,892
T. Rowe Price Global Bond......................................................... 97,518 --

.........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.

CUSTODIAN:

The custodian for all cash and securities holdings of the AST DeAM International Equity Portfolio, the AST
JPMorgan International Equity Portfolio, AST William Blair International Growth Portfolio, AST MFS Global Equity
Portfolio and AST T. Rowe Price Global Bond Portfolio is JP Morgan Chase Bank, 4 MetroTech Center, Brooklyn, New York
11245. 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, 2004, 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 April
15, 2004, the amount of shares of the Trust owned by 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, 2004.

.........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 for the fiscal year ended December 31, 2003 are incorporated in this
Statement of Additional Information by reference to the Annual Report to Shareholders for each Portfolio. The audited
financial statements contained in the Annual Report to Shareholders have been audited by KPMG LLP, independent
accountants as stated in their reports, which also are incorporated by reference in this Statement of Additional
Information. 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.

APPENDIX B

ALLIANCE CAPITAL MANAGEMENT L.P.

Statement of Policies and Procedures for
Voting Proxies on Behalf of Discretionary Client Accounts
---------------------------------------------------------

INTRODUCTION

As a registered investment adviser, Alliance Capital Management L.P. ("Alliance Capital", "we" or "us") has a fiduciary
duty to act solely in the best interests of our clients. As part of this duty, we recognize that we must vote client
securities in a timely manner and make voting decisions that are in the best interests of our clients.

This statement is intended to comply with Rule 206(4)-6 of the Investment Advisers Act of 1940. It sets forth our
policies and procedures for voting proxies for our discretionary investment advisory clients, including investment
companies registered under the Investment Company Act of 1940. This statement is applicable to Alliance Capital's growth
and value investment groups investing on behalf of clients in both US and global securities.

PROXY POLICIES
--------------

This statement is designed to be responsive to the wide range of subjects that can have a significant effect on the
investment value of the securities held in our clients' accounts. These policies are not exhaustive due to the variety
of proxy voting issues that we may be required to consider. Alliance Capital reserves the right to depart from these
guidelines in order to avoid voting decisions that we believe may be contrary to our clients' best interests. In
reviewing proxy issues, we will apply the following general policies:

Elections of Directors: Unless there is a proxy fight for seats on the Board or we determine that there are other
compelling reasons for withholding votes for directors, we will vote in favor of the management proposed slate of
directors. That said, we believe that directors have a duty to respond to shareholder actions that have received
significant shareholder support. We may withhold votes for directors that fail to act on key issues such as failure to
implement proposals to declassify boards, failure to implement a majority vote requirement, failure to submit a rights
plan to a shareholder vote and failure to act on tender offers where a majority of shareholders have tendered their
shares. In addition, we will withhold votes for directors who fail to attend at least seventy-five percent of board
meetings within a given year without a reasonable excuse. Finally, we may withhold votes for directors of non-U.S.
issuers where there is insufficient information about the nominees disclosed in the proxy statement.

Appointment of Auditors: Alliance Capital believes that the company remains in the best position to choose the auditors
and will generally support management's recommendation. However, we recognize that there may be inherent conflicts when
a company's independent auditor performs substantial non-audit related services for the company. Therefore, we may vote
against the appointment of auditors if the fees for non-audit related services are disproportionate to the total audit
fees paid by the company or there are other reasons to question the independence of the company's auditors.

Changes in Capital Structure: Changes in a company's charter, articles of incorporation or by-laws are often technical
and administrative in nature. Absent a compelling reason to the contrary, Alliance Capital will cast its votes in
accordance with the company's management on such proposals. However, we will review and analyze on a case-by-case basis
any non-routine proposals that are likely to affect the structure and operation of the company or have a material
economic effect on the company. For example, we will generally support proposals to increase authorized common stock
when it is necessary to implement a stock split, aid in a restructuring or acquisition or provide a sufficient number of
shares for an employee savings plan, stock option or executive compensation plan. However, a satisfactory explanation of
a company's intentions must be disclosed in the proxy statement for proposals requesting an increase of greater than one
hundred percent of the shares outstanding. We will oppose increases in authorized common stock where there is evidence
that the shares will be used to implement a poison pill or another form of anti-takeover device, or if the issuance of
new shares could excessively dilute the value of the outstanding shares upon issuance.

Corporate Restructurings, Mergers and Acquisitions: Alliance Capital believes proxy votes dealing with corporate
reorganizations are an extension of the investment decision. Accordingly, we will analyze such proposals on a
case-by-case basis, weighing heavily the views of the research analysts that cover the company and the investment
professionals managing the portfolios in which the stock is held.

Proposals Affecting Shareholder Rights: Alliance Capital believes that certain fundamental rights of shareholders must
be protected. We will generally vote in favor of proposals that give shareholders a greater voice in the affairs of the
company and oppose any measure that seeks to limit those rights. However, when analyzing such proposals we will weigh
the financial impact of the proposal against the impairment of shareholder rights.

Corporate Governance: Alliance Capital recognizes the importance of good corporate governance in ensuring that
management and the board of directors fulfill their obligations to the shareholders. We favor proposals promoting
transparency and accountability within a company. For example, we will vote for proposals providing for equal access to
proxies, a majority of independent directors on key committees, and separating the positions of chairman and chief
executive officer.

Anti-Takeover Measures: Alliance Capital believes that measures that impede takeovers or entrench management not only
infringe on the rights of shareholders but may also have a detrimental effect on the value of the company. We will
generally oppose proposals, regardless of whether they are advanced by management or shareholders, the purpose or effect
of which is to entrench management or dilute shareholder ownership. Conversely, we support proposals that would restrict
or otherwise eliminate anti-takeover measures that have already been adopted by corporate issuers. For example, we will
support shareholder proposals that seek to require the company to submit a shareholder rights plan to a shareholder
vote. We will evaluate, on a case-by-case basis, proposals to completely redeem or eliminate such plans. Furthermore,
we will generally oppose proposals put forward by management (including blank check preferred stock, classified boards
and supermajority vote requirements) that appear to be intended as management entrenchment mechanisms.

Executive Compensation: Alliance Capital believes that company management and the compensation committee of the board of
directors should, within reason, be given latitude to determine the types and mix of compensation and benefit awards
offered. Whether proposed by a shareholder or management, we will review proposals relating to executive compensation
plans on a case-by-case basis to ensure that the long-term interests of management and shareholders are properly
aligned. We will analyze the proposed plans to ensure that shareholder equity will not be excessively diluted, the
option exercise price is not below market price on the date of grant and an acceptable number of employees are eligible
to participate in such programs. We will generally oppose plans that permit repricing of underwater stock options without
shareholder approval. Other factors such as the company's performance and industry practice will generally be factored
into our analysis. We will support proposals to submit severance packages triggered by a change in control to a
shareholder vote and proposals that seek additional disclosure of executive compensation. Finally, we will support
shareholder proposals requiring companies to expense stock options because we view them as a large corporate expense.

Social and Corporate Responsibility: Alliance Capital will review and analyze on a case-by-case basis proposals relating
to social, political and environmental issues to determine whether they will have a financial impact on shareholder
value. We will vote against proposals that are unduly burdensome or result in unnecessary and excessive costs to the
company. We may abstain from voting on social proposals that do not have a readily determinable financial impact on
shareholder value.

Proxy Voting Procedures

Proxy Voting Committees
-----------------------

Our growth and value investment groups have formed separate proxy voting committees to establish general proxy policies
for Alliance Capital and consider specific proxy voting matters as necessary. These committees periodically review new
types of corporate governance issues, evaluate proposals not covered by these policies and recommend how we should
generally vote on such issues. In addition, the committees, in conjunction with the analyst that covers the company,
contact management and interested shareholder groups as necessary to discuss proxy issues. Members of the committees
include senior investment personnel and representatives of the Corporate Legal Department. The committees may also
evaluate proxies where we face a potential conflict of interest (as discussed below). Finally, the committees monitor
adherence to guidelines, industry trends and review the policies contained in this statement from time to time.

Conflicts of Interest
---------------------

Alliance Capital recognizes that there may be a potential conflict of interest when we vote a proxy solicited by an
issuer whose retirement plan we manage, whose retirement plan we administer, or with whom we have another business or
personal relationship that may affect how we vote on the issuer's proxy. We believe that centralized management of proxy
voting, oversight by the proxy voting committees and adherence to these policies ensures that proxies are voted with only
our clients' best interests in mind. That said, we have implemented additional procedures to ensure that our votes are
not the product of a conflict of interests, including: (i) requiring anyone involved in the decision making process to
disclose to the chairman of the appropriate proxy committee any potential conflict that they are aware of and any contact
that they have had with any interested party regarding a proxy vote; (ii) prohibiting employees involved in the decision
making process or vote administration from revealing how we intend to vote on a proposal in order to reduce any attempted
influence from interested parties; and (iii) where a material conflict of interests exists, reviewing our proposed vote
by applying a series of objective tests and, where necessary, considering the views of a third party research service to
ensure that our voting decision is consistent with our clients' best interests. For example, if our proposed vote is
consistent with our stated proxy voting policy, no further review is necessary. If our proposed vote is contrary to our
stated proxy voting policy but is also contrary to management's recommendation, no further review is necessary. If our
proposed vote is contrary to our stated proxy voting policy or is not covered by our policy, is consistent with
management's recommendation, and is also consistent with the views of an independent source, no further review is
necessary. If our proposed vote is contrary to our stated proxy voting policy or is not covered by our policy, is
consistent with management's recommendation and is contrary to the views of an independent source, the proposal is
reviewed by the appropriate proxy committee for final determination.

Proxies of Certain Non-US Issuers
---------------------------------

Proxy voting in certain countries requires "share blocking." Shareholders wishing to vote their proxies must deposit
their shares shortly before the date of the meeting (usually one-week) with a designated depositary. During this
blocking period, shares that will be voted at the meeting cannot be sold until the meeting has taken place and the shares
are returned to the clients' custodian banks. Alliance Capital may determine that the value of exercising the vote does
not outweigh the detriment of not being able to transact in the shares during this period. Accordingly, if share
blocking is required we may abstain from voting those shares. In such a situation we would have determined that the cost
of voting exceeds the expected benefit to the client.

Proxy Voting Records

Clients may obtain information about how we voted proxies on their behalf by contacting their Alliance Capital
administrative representative. Alternatively, clients may make a written request for proxy voting information to: Mark
R. Manley, Senior Vice President & Acting General Counsel, Alliance Capital Management L.P., 1345 Avenue of the Americas,
New York, NY 10105.

American Century Proxy Voting Guidelines

The Manager is responsible for exercising the voting rights associated with the securities purchased and/or held by the
funds. In exercising its voting obligations, the Manager is guided by general fiduciary principles. It must act
prudently, solely in the interest of the funds, and for the exclusive purpose of providing benefits to them. The Manager
attempts to consider all factors of its vote that could affect the value of the investment. The funds' board of
[directors/trustees] has approved the Manager's Proxy Voting Guidelines to govern the Manager's proxy voting activities.
The Manager and the board have agreed on certain significant contributors to shareholder value with respect to a number
of matters that are often the subject of proxy solicitations for shareholder meetings. The Proxy Voting Guidelines
specifically address these considerations and establish a framework for the Manager's consideration of the vote that
would be appropriate for the funds. In particular, the Proxy Voting Guidelines outline principles and factors to be
considered in the exercise of voting authority for proposals addressing:
o Election of Directors
o Ratification of Selection of Auditors
o Equity-Based Compensation Plans
o Anti-Takeover Proposals
>> Cumulative Voting
>> Staggered Boards
>> "Blank Check" Preferred Stock
>> Elimination of Preemptive Rights
>> Non-targeted Share Repurchase
>> Increase in Authorized Common Stock
>> "Supermajority" Voting Provisions or Super Voting Share Classes
>> "Fair Price" Amendments
>> Limiting the Right to Call Special Shareholder Meetings
>> Poison Pills or Shareholder Rights Plans
>> Golden Parachutes
>> Reincorporation
>> Confidential Voting
>> Opting In or Out of State Takeover Laws
o Shareholder Proposals Involving Social, Moral or Ethical Matters
o Anti-Greenmail Proposals
o Changes to Indemnification Provisions
o Non-Stock Incentive Plans
o Director Tenure
o Directors' Stock Options Plans
o Director Share Ownership
Finally, the Proxy Voting Guidelines establish procedures for voting of proxies in cases in which the Manager may have a
potential conflict of interest. Companies with which the Manager has direct business relationships could theoretically
use these relationships to attempt to unduly influence the manner in which American Century votes on matters for the
funds. To ensure that such a conflict of interest does not affect proxy votes cast for the funds, all discretionary
(including case-by-case) voting for these companies will be voted in direct consultation with a committee of the
independent directors of the funds.
A copy of the Manager's current Proxy Voting Guidelines are available on the funds' website at www.americancentury.com.

Cohen & Steers Proxy Voting Policies
July 2003
---------

At Cohen & Steers, we view voting rights as a critical component of corporate governance. As you probably are aware,
Cohen & Steers Capital Management, Inc. has been a leading firm in the effort to promote strong corporate governance in
the REIT industry.

Overview
We would like to take this opportunity to summarize for you our proxy voting policies and procedures. Our three overall
objectives in exercising voting rights are:
o Holding companies accountable for their actions
o Rationalizing management and shareholder concerns
o Seeking to ensure that management effectively communicates with its owners about the company's business
operations and financial performance.

In exercising voting rights, we engage in a careful evaluation of issues that may materially affect the rights of
shareholders and the value of the security. We always act with reasonable care, prudence and diligence. While we may
consider the views of third parties such as ISS or other proxy voting services, we never base a proxy voting decision
solely on the opinion of a third party, except in the unlikely scenario that a conflict of interest requires us to rely
on a third party as a means to resolve our conflict. Rather, decisions are based on our reasonable and good faith
determination as to how best to maximize shareholder value.

Stock-Based Compensation
Our goal in the area of stock-based compensation is to ensure that compensation plans align the interests of management
and shareholders. Thus, we generally oppose proposals to authorize the issuance of new shares if the issuance, plus the
shares reserved for issuance in connection with all other stock related plans, exceeds 10% of the outstanding shares.

In addition, we believe that stock options generally should not be re-priced, and never should be re-priced particularly
without shareholder approval. Moreover, we believe that companies should not issue new options, with a lower strike
price, to make up for previously issued options that are substantially underwater. We vote against the election of any
slate of directors that to our knowledge has authorized a company to re-price or replace underwater options during the
most recent year without shareholder approval.

We also support measures to increase the long-term stock ownership by a company's executives. These include requiring
senior executives to hold a minimum amount of stock in a company (often expressed as a percentage of annual
compensation), requiring stock acquired through option exercise to be held for a certain minimum amount of time, and
issuing restricted stock awards instead of options. In this respect, we support the expensing of option grants because it
removes the incentive of a company to issue options in lieu of restricted stock. We also support employee stock purchase
plans, although we generally believe the discounted purchase price should be not less than 85% of the current market
price.

Control Issues
Our policies naturally address a number of important change of control issues. We believe that, although a takeover
attempt can be a significant distraction for a board and management, the simple fact is that the possibility of a
corporate takeover keeps management focused on maximizing shareholder value. As a result, we generally oppose measures
that are designed to prevent or obstruct corporate takeovers because they can entrench current management. Thus, we
generally vote against shareholder rights plans (a misnomer in our opinion) or "poison pills." We also generally vote
against any directors who, without shareholder approval, have to our knowledge instituted a new poison pill plan,
extended an existing plan, or adopted a new plan upon the expiration of an existing plan during the past year. In the
same vein, we also generally vote against "golden parachute" plans because they impede potential takeovers that
shareholders should be free to consider. In addition, we will withhold our votes at the next shareholder meeting for
directors who to our knowledge have approved golden parachutes. We vote against proposals that require a super-majority
of shareholders to approve a merger or other significant business combination, and support proposals that seek to lower
existing super-majority voting requirements.

In the area of board composition, we support the election of a board that consists of at least a simple majority of
independent directors. We also generally withhold our support for non-independent directors who serve on a company's
audit, compensation and/or nominating committees. In addition, we generally vote against classified boards.

With respect to stock-related items, we will vote in favor of an increase in a company's authorized shares, provided that
the increase is not greater than three times the number of shares outstanding and reserved for issuance, including shares
reserved for stock-related plans and securities convertible into common stock, but not shares reserved for any poison
pill plan. Importantly, we vote against blank check preferred share authorizations and other proposals to establish
classes of stock with superior voting rights, unless we are comfortable that (1) a company's board authorized the use of
preferred stock only for legitimate capital formation purposes and not for anti-takeover purposes, and (2) no preferred
stock will be issued with voting power that is disproportionate to the economic interests of the preferred stock.

Social Issues
With respect to social issues, we believe that it is the responsibility of the board and management to run a company on a
daily basis. With this in mind, in the absence of unusual circumstances, we do not believe that shareholders should be
involved in determining how a company should address broad social and policy issues. As a result, we generally vote
against these types of proposals, which are generally initiated by shareholders, unless we believe the proposal has
significant economic implications.

Voting Process
Of course, no set of guidelines can anticipate all situations that may arise. Our portfolio managers and analysts analyze
proxy proposals in an effort to gauge the impact of a proposal on the financial prospects of a company, and vote
accordingly. These policies are intended to provide guidelines for voting. They are not, however, hard and fast rules
because corporate governance issues are so varied.

We maintain procedural mechanisms to ensure that our voting records are kept in a manner that is fully consistent with
SEC requirements. In addition, we have a detailed administrative structure that is designed to ensure that Cohen & Steers
does not face a material conflict of interest in voting a proxy. While a conflict has never surfaced since our founding
in 1986, our policy will be to vote in accordance with the advice of a proxy voting service, such as ISS, in the unlikely
event that such a conflict should arise.

We hope this provides you with a reasonable overview of our policy and procedures. If you have any specific questions,
would like to receive a copy of our complete policy or would like information as to how we voted on a particular issue,
please contact our general counsel, Larry Stoller, at (212) 446-9112. We appreciate the trust you have placed in us and
we look forward to continuing to work with you for many years to come.

Deutsche Asset Management Proxy Voting Guidelines

The Fund has delegated proxy voting responsibilities to its investment advisor, subject to the Board's general
oversight. The Fund has delegated proxy voting to the advisor with the direction that proxies should be voted consistent
with the Fund's best economic interests. The advisor has adopted its own Proxy Voting Policies and Procedures
("Policies"), and Proxy Voting Guidelines ("Guidelines") for this purpose. The Policies address, among other things,
conflicts of interest that may arise between the interests of the Fund, and the interests of the advisor and its
affiliates, including the Fund's principal underwriter. The Guidelines set forth the advisor's general position on
various proposals, such as:
o Shareholder Rights-- The advisor generally votes against proposals that restrict shareholder rights.
------------------
o Corporate Governance -- The advisor generally votes for confidential and cumulative voting and against
---------------------
supermajority voting requirements for charter and bylaw amendments.
o Anti-Takeover Matters-- The advisor generally votes for proposals that require shareholder ratification of
----------------------
poison pills or that request boards to redeem poison pills, and votes "against" the adoption of poison pills if
they are submitted for shareholder ratification. The advisor generally votes for fair price proposals.
o Routine Matters-- The advisor generally votes for the ratification of auditors, procedural matters related to the
---------------
annual meeting, and changes in company name, and against bundled proposals and adjournment.

The general provisions described above do not apply to investment companies. The advisor generally votes proxies
solicited by investment companies in accordance with the recommendations of an independent third-party, except for
proxies solicited by or with respect to investment companies for which the advisor or an affiliate serves as investment
advisor or principal underwriter ("affiliated investment companies"). The advisor votes affiliated investment company
proxies in the same proportion as the vote of the investment company's other shareholders (sometimes called "mirror" or
"echo" voting). Master fund proxies solicited from feeder funds are voted in accordance with applicable requirements of
the Investment Company Act of 1940.

Although the Guidelines set forth the advisor's general voting positions on various proposals, the advisor may,
consistent with the Fund's best interests, determine under some circumstances to vote contrary to those positions.

The Guidelines on a particular issue may or may not reflect the view of individual members of the board, or of a majority
of the board. In addition, the Guidelines may reflect a voting position that differs from the actual practices of the
public companies within the Deutsche Bank organization or of the investment companies for which the advisor or an
affiliate serves as investment advisor or sponsor.

The advisor may consider the views of a portfolio company's management in deciding how to vote a proxy or in establishing
general voting positions for the Guidelines, but management's views are not determinative.

As mentioned above, the Policies describe the way in which the advisor resolves conflicts of interest. To resolve
conflicts, the advisor, under normal circumstances, votes proxies in accordance with its Guidelines. If the advisor
departs from the Guidelines with respect to a particular proxy or if the Guidelines do not specifically address a certain
proxy proposal, a proxy voting committee established by the advisor will vote the proxy. Before voting any such proxy,
however, the advisor's conflicts review committee will conduct an investigation to determine whether any potential
conflicts of interest exist in connection with the particular proxy proposal. If the conflicts review committee
determines that the advisor has a material conflict of interest, or certain individuals on the proxy voting committee
should be recused from participating in a particular proxy vote, it will inform the proxy voting committee. If notified
that the advisor has a material conflict, or fewer than three voting members are eligible to participate in the proxy
vote, typically the advisor will engage an independent third party to vote the proxy or follow the proxy voting
recommendations of an independent third party. Under certain circumstances, the advisor may not be able to vote proxies
or the advisor may find that the expected economic costs from voting outweigh the benefits associated with voting. For
example, the advisor may not vote proxies on certain foreign securities due to local restrictions or customs. The
advisor generally does not vote proxies on securities subject to share blocking restrictions.

Federated Investment Management Company Voting Proxies on Fund Portfolio Securities

The Board has delegated to the Adviser authority to vote proxies on the securities held in the Fund's portfolio. The
Board has also approved the Adviser's policies and procedures for voting the proxies, which are described below.

Proxy Voting Policies
The Adviser's general policy is to cast proxy votes in favor of proposals that the Adviser anticipates will enhance the
long-term value of the securities being voted. Generally, this will mean voting for proposals that the Adviser believes
will: improve the management of a company; increase the rights or preferences of the voted securities; and/or increase
the chance that a premium offer would be made for the company or for the voted securities.

The following examples illustrate how these general policies may apply to proposals submitted by a company's board of
directors. However, whether the Adviser supports or opposes a proposal will always depend on the specific circumstances
described in the proxy statement and other available information.

On matters of corporate governance, generally the Adviser will vote for proposals to: require independent tabulation of
proxies and/or confidential voting by shareholders; reorganize in another jurisdiction (unless it would reduce the rights
or preferences of the securities being voted); and repeal a shareholder rights plan (also known as a "poison pill"). The
Adviser will generally vote against the adoption of such a plan (unless the plan is designed to facilitate, rather than
prevent, unsolicited offers for the company).

On matters of capital structure, generally the Adviser will vote: against proposals to authorize or issue shares that are
senior in priority or voting rights to the securities being voted; for proposals to grant preemptive rights to the
securities being voted; and against proposals to eliminate such preemptive rights.

On matters relating to management compensation, generally the Adviser will vote: for stock incentive plans that align the
recipients' interests with the interests of shareholders without creating undue dilution; and against proposals that
would permit the amendment or replacement of outstanding stock incentives with new stock incentives having more favorable
terms.

On matters relating to corporate transactions, the Adviser will vote proxies relating to proposed mergers, capital
reorganizations, and similar transactions in accordance with the general policy, based upon its analysis of the proposed
transaction. The Adviser will vote proxies in contested elections of directors in accordance with the general policy,
based upon its analysis of the opposing slates and their respective proposed business strategies. Some transactions may
also involve proposed changes to the company's corporate governance, capital structure or management compensation. The
Adviser will vote on such changes based on its evaluation of the proposed transaction or contested election. In these
circumstances, the Adviser may vote in a manner contrary to the general practice for similar proposals made outside the
context of such a proposed transaction or change in the board. For example, if the Adviser decides to vote against a
proposed transaction, it may vote for anti-takeover measures reasonably designed to prevent the transaction, even though
the Adviser typically votes against such measures in other contexts.

The Adviser generally votes against proposals submitted by shareholders without the favorable recommendation of a
company's board. The Adviser believes that a company's board should manage its business and policies, and that
shareholders who seek specific changes should strive to convince the board of their merits or seek direct representation
on the board.

In addition, the Adviser will not vote if it determines that the consequences or costs outweigh the potential benefit of
voting. For example, if a foreign market requires shareholders casting proxies to retain the voted shares until the
meeting date (thereby rendering the shares "illiquid" for some period of time), the Adviser will not vote proxies for
such shares. [For "index funds" only, add the following: Finally, because the Fund is an "Index Fund," and therefore
invests in large numbers of securities without independent evaluation by the Adviser, the Adviser will not independently
analyze the Fund's interest in the proxy. The Adviser will vote its proxies in accordance with its applicable general
guidelines and in the same manner as a non-Index Fund managed by the Adviser that is voting on the same proxy matter. If
neither of these two conditions apply, the Adviser will vote as recommended by a Sub-advisor to the Index Fund; and, in
absence of such recommendation, as recommended by the subject company's board of directors.]

Proxy Voting Procedures
The Adviser has established a Proxy Voting Committee (Proxy Committee), to exercise all voting discretion granted to the
Adviser by the Board in accordance with the proxy voting policies. The Adviser has hired Investor Responsibility
Research Center (IRRC) to obtain, vote, and record proxies in accordance with the Proxy Committee's directions. The
Proxy Committee directs IRRC by means of Proxy Voting Guidelines, and IRRC may vote any proxy as directed in the Proxy
Voting Guidelines without further direction from the Proxy Committee (and may make any determinations required to
implement the Proxy Voting Guidelines). However, if the Proxy Voting Guidelines require case-by-case direction for a
proposal, IRRC will provide the Proxy Committee with all information that it has obtained regarding the proposal and the
Proxy Committee will provide specific direction to IRRC. The Adviser's proxy voting procedures generally permit the
Proxy Committee to amend the Proxy Voting Guidelines, or override the directions provided in such Guidelines, whenever
necessary to comply with the proxy voting policies.

Conflicts of Interest
The Adviser has adopted procedures to address situations where a matter on which a proxy is sought may present a
potential conflict between the interests of the Fund (and its shareholders) and those of the Adviser or Distributor.
This may occur where a significant business relationship exists between the Adviser (or its affiliates) and a company
involved with a proxy vote. A company that is a proponent, opponent, or the subject of a proxy vote, and which to the
knowledge of the Proxy Committee has this type of significant business relationship, is referred to as an "Interested
Company."

The Adviser has implemented the following procedures in order to avoid concerns that the conflicting interests of the
Adviser have influenced proxy votes. Any employee of the Adviser who is contacted by an Interested Company regarding
proxies to be voted by the Adviser must refer the Interested Company to a member of the Proxy Committee, and must inform
the Interested Company that the Proxy Committee has exclusive authority to determine how the Adviser will vote. Any
Proxy Committee member contacted by an Interested Company must report it to the full Proxy Committee and provide a
written summary of the communication. Under no circumstances will the Proxy Committee or any member of the Proxy
Committee make a commitment to an Interested Company regarding the voting of proxies or disclose to an Interested Company
how the Proxy Committee has directed such proxies to be voted. If the Proxy Voting Guidelines already provide specific
direction on the proposal in question, the Proxy Committee shall not alter or amend such directions. If the Proxy Voting
Guidelines require the Proxy Committee to provide further direction, the Proxy Committee shall do so in accordance with
the proxy voting policies, without regard for the interests of the Adviser with respect to the Interested Company. If
the Proxy Committee provides any direction as to the voting of proxies relating to a proposal affecting an Interested
Company, it must disclose to the Fund's Board information regarding: the significant business relationship; any material
communication with the Interested Company; the matter(s) voted on; and how, and why, the Adviser voted as it did.

If the Fund holds shares of another investment company for which the Adviser (or an affiliate) acts as an investment
adviser, the Proxy Committee will vote the Fund's proxies in the same proportion as the votes cast by shareholders who
are not clients of the Adviser at any shareholders' meeting called by such investment company, unless otherwise directed
by the Board.

Fred Alger Management, Inc.
Proxy Voting Policy

1. Operational Items
Adjourn Meeting
Generally vote AGAINST proposals to provide management with the authority to adjourn an annual or special meeting absent
compelling reasons to support the proposal.
Amend Quorum Requirements
Vote AGAINST proposals to reduce quorum requirements for shareholder meetings below a majority of the shares outstanding
unless there are compelling reasons to support the proposal.
Amend Minor Bylaws
Vote FOR bylaw or charter changes that are of a housekeeping nature (updates or corrections).
Change Company Name
Vote FOR proposals to change the corporate name.
Change Date, Time, or Location of Annual Meeting
Vote FOR management proposals to change the date/time/location of the annual meeting unless the proposed change is
unreasonable. Vote AGAINST shareholder proposals to change the date/time/location of the annual meeting unless the
current scheduling or location is unreasonable.
Ratifying Auditors
Vote FOR proposals to ratify auditors, unless any of the following apply:
o An auditor has a financial interest in or association with the company, and is therefore not independent
o Fees for non-audit services are excessive, or There is reason to believe that the independent auditor has
rendered an opinion which is neither accurate nor indicative of the company's financial position.

Vote CASE-BY-CASE on shareholder proposals asking companies to prohibit or limit their auditors from engaging in
non-audit services. Vote FOR shareholder proposals asking for audit firm rotation, unless the rotation period is so
short (less than five years) that it would be unduly burdensome to the company.

Transact Other Business
Vote AGAINST proposals to approve other business when it appears as voting item.

2. Board of Directors
Voting on Director Nominees in Uncontested Elections
Votes on director nominees should be made on a CASE-BY-CASE basis, examining the following factors: composition of the
board and key board committees, attendance at board meetings, corporate governance provisions and takeover activity,
long-term company performance relative to a market index, directors' investment in the company, whether the chairman is
also serving as CEO, and whether a retired CEO sits on the board. However, there are some actions by directors that
should result in votes being withheld. These instances include directors who:
o Attend less than 75 percent of the board and committee meetings without a valid
excuse
o Implement or renew a dead-hand or modified dead-hand poison pill
o Ignore a shareholder proposal that is approved by a majority of the shares outstanding
o Ignore a shareholder proposal that is approved by a majority of the votes cast for two consecutive years
o Failed to act on takeover offers where the majority of the shareholders tendered their shares
o Are inside directors or affiliated outsiders and sit on the audit, compensation, or nominating committees
o Are inside directors or affiliated outsiders and the full board serves as the audit, compensation, or nominating
committee or the company does not have one of these committees
o Are audit committee members and the non-audit fees paid to the auditor are excessive.

In addition, directors who enacted egregious corporate governance policies or failed to replace management as appropriate
would be subject to recommendations to withhold votes.
Age Limits
Vote AGAINST shareholder proposals to impose a mandatory retirement age for outside directors.
Board Size
Vote FOR proposals seeking to fix the board size or designate a range for the board size. Vote AGAINST proposals that
give management the ability to alter the size of the board outside of a specified range without shareholder approval.
Classification/Declassification of the Board
Vote FOR proposals to repeal classified boards and to elect all directors annually.
Cumulative Voting
Vote AGAINST proposals to eliminate cumulative voting. Vote proposals to restore or permit cumulative voting on a
CASE-BY-CASE basis relative to the company's other governance provisions.
Director and Officer Indemnification and Liability Protection
Proposals on director and officer indemnification and liability protection should be evaluated on a CASE-BY-CASE basis,
using Delaware law as the standard. Vote AGAINST proposals to eliminate entirely directors' and officers' liability for
monetary damages for violating the duty of care. Vote AGAINST indemnification proposals that would expand coverage
beyond just legal expenses to acts, such as negligence, that are more serious violations of fiduciary obligation than
mere carelessness. Vote FOR only those proposals providing such expanded coverage in cases when a director's or
officer's legal defense was unsuccessful if both of the following apply: The director was found to have acted in good
faith and in a manner that he reasonably believed was in the best interests of the company, and
o Only if the director's legal expenses would be covered.
Establish/Amend Nominee Qualifications
Vote CASE-BY-CASE on proposals that establish or amend director qualifications. Votes should be based on how reasonable
the criteria are and to what degree they may preclude dissident nominees from joining the board. Vote AGAINST shareholder
proposals requiring two candidates per board seat.
Filling Vacancies/Removal of Directors
Vote AGAINST proposals that provide that directors may be removed only for cause. Vote FOR proposals to restore
shareholder ability to remove directors with or without cause. Vote AGAINST proposals that provide that only continuing
directors may elect replacements to fill board vacancies. Vote FOR proposals that permit shareholders to elect directors
to fill board vacancies.
Independent Chairman (Separate Chairman/CEO)
Vote on a CASE-BY-CASE basis shareholder proposals requiring that the positions of chairman and CEO be held separately.
Because some companies have governance structures in place that counterbalance a combined position, the following factors
should be taken into account in determining whether the proposal warrants support:
o Designated lead director appointed from the ranks of the independent board members with clearly delineated duties
o Majority of independent directors on board
o All-independent key committees
o Committee chairpersons nominated by the independent directors
o CEO performance reviewed annually by a committee of outside directors
o Established governance guidelines
o Company performance.
Majority of Independent Directors/Establishment of Committees
Vote FOR shareholder proposals asking that a majority or more of directors be independent unless the board composition
already meets the proposed threshold by ISS's definition of independence. Vote FOR shareholder proposals asking that
board audit, compensation, and/or nominating committees be composed exclusively of independent directors if they
currently do not meet that standard.
Stock Ownership Requirements
Generally vote AGAINST shareholder proposals that mandate a minimum amount of stock that directors must own in order to
qualify as a director or to remain on the board. While ISS favors stock ownership on the part of directors, the company
should determine the appropriate ownership requirement.
Term Limits
Vote AGAINST shareholder proposals to limit the tenure of outside directors.

3. Proxy Contests
Voting for Director Nominees in Contested Elections
Votes in a contested election of directors must be evaluated on a CASE-BY-CASE basis, considering the following factors:
o Long-term financial performance of the target company relative to its industry; management's track record
o Background to the proxy contest
o Qualifications of director nominees (both slates)
o Evaluation of what each side is offering shareholders as well as the likelihood that the proposed objectives and
goals can be met; and stock ownership positions.
Reimbursing Proxy Solicitation Expenses
Voting to reimburse proxy solicitation expenses should be analyzed on a CASE-BY-CASE basis. In cases where ISS recommends
in favor of the dissidents, we also recommend voting for reimbursing proxy solicitation expenses.
Confidential Voting
Vote FOR shareholder proposals requesting that corporations adopt confidential voting, use independent vote tabulators
and use independent inspectors of election, as long as the proposal includes a provision for proxy contests as follows:
In the case of a contested election, management should be permitted to request that the dissident group honor its
confidential voting policy. If the dissidents agree, the policy remains in place. If the dissidents will not agree, the
confidential voting policy is waived. Vote FOR management proposals to adopt confidential voting.

4. Antitakeover Defenses and Voting Related Issues
Advance Notice Requirements for Shareholder Proposals/Nominations
Votes on advance notice proposals are determined on a CASE-BY-CASE basis, giving support to those proposals which allow
shareholders to submit proposals as close to the meeting date as reasonably possible and within the broadest window
possible.
Amend Bylaws without Shareholder Consent
Vote AGAINST proposals giving the board exclusive authority to amend the bylaws. Vote FOR proposals giving the board the
ability to amend the bylaws in addition to shareholders.
Poison Pills
Vote FOR shareholder proposals that ask a company to submit its poison pill for shareholder ratification. Review on a
CASE-BY-CASE basis shareholder proposals to redeem a company's poison pill. Review on a CASE-BY-CASE basis management
proposals to ratify a poison pill.
Shareholder Ability to Act by Written Consent
Vote AGAINST proposals to restrict or prohibit shareholder ability to take action by written consent. Vote FOR proposals
to allow or make easier shareholder action by written consent.
Shareholder Ability to Call Special Meetings
Vote AGAINST proposals to restrict or prohibit shareholder ability to call special meetings. Vote FOR proposals that
remove restrictions on the right of shareholders to act independently of management.
Supermajority Vote Requirements
Vote AGAINST proposals to require a supermajority shareholder vote. Vote FOR proposals to lower supermajority vote
requirements.
5. Mergers and Corporate Restructurings
Appraisal Rights
Vote FOR proposals to restore, or provide shareholders with, rights of appraisal.
Asset Purchases
Vote CASE-BY-CASE on asset purchase proposals, considering the following factors:
o Purchase price
o Fairness opinion
o Financial and strategic benefits
o How the deal was negotiated
o Conflicts of interest
o Other alternatives for the business
o Noncompletion risk.
Asset Sales
Votes on asset sales should be determined on a CASE-BY-CASE basis, considering the following factors:
o Impact on the balance sheet/working capital
o Potential elimination of diseconomies
o Anticipated financial and operating benefits
o Anticipated use of funds
o Value received for the asset
o Fairness opinion
o How the deal was negotiated
o Conflicts of interest.
Bundled Proposals
Review on a CASE-BY-CASE basis bundled or "conditioned" proxy proposals. In the case of items that are conditioned upon
each other, examine the benefits and costs of the packaged items. In instances when the joint effect of the conditioned
items is not in shareholders' best interests, vote against the proposals. If the combined effect is positive, support
such proposals.
Conversion of Securities
Votes on proposals regarding conversion of securities are determined on a CASE-BYCASE basis. When evaluating these
proposals the investor should review the dilution to existing shareholders, the conversion price relative to market
value, financial issues, control issues, termination penalties, and conflicts of interest.

Vote FOR the conversion if it is expected that the company will be subject to onerous penalties or will be forced to file
for bankruptcy if the transaction is not approved.

Corporate Reorganization/Debt Restructuring/Prepackaged
Bankruptcy Plans/Reverse Leveraged Buyouts/Wrap Plans
Votes on proposals to increase common and/or preferred shares and to issue shares as part of a debt restructuring plan
are determined on a CASE-BY-CASE basis, taking into consideration the following:
o Dilution to existing shareholders' position
o Terms of the offer
o Financial issues
o Management's efforts to pursue other alternatives
o Control issues
o Conflicts of interest.

Vote FOR the debt restructuring if it is expected that the company will file for bankruptcy if the transaction is not
approved.

Formation of Holding Company
Votes on proposals regarding the formation of a holding company should be determined on a CASE-BY-CASE basis, taking into
consideration the following:

o The reasons for the change
o Any financial or tax benefits
o Regulatory benefits
o Increases in capital structure
o Changes to the articles of incorporation or bylaws of the company.

Absent compelling financial reasons to recommend the transaction, vote AGAINST the formation of a holding company if the
transaction would include either of the following:
o Increases in common or preferred stock in excess of the allowable maximum as calculated by the ISS Capital
Structure model
o Adverse changes in shareholder rights

Going Private Transactions (LBOs and Minority Squeezeouts)
Vote going private transactions on a CASE-BY-CASE basis, taking into account the following: offer price/premium, fairness
opinion, how the deal was negotiated, conflicts of interest, other alternatives/offers considered, and noncompletion risk.

Joint Ventures
Votes CASE-BY-CASE on proposals to form joint ventures, taking into account the following: percentage of assets/business
contributed, percentage ownership, financial and strategic benefits, governance structure, conflicts of interest, other
alternatives, and noncompletion risk.

Liquidations
Votes on liquidations should be made on a CASE-BY-CASE basis after reviewing management's efforts to pursue other
alternatives, appraisal value of assets, and the compensation plan for executives managing the liquidation. Vote FOR the
liquidation if the company will file for bankruptcy if the proposal is not approved.

Mergers and Acquisitions/ Issuance of Shares to Facilitate Merger or Acquisition
Votes on mergers and acquisitions should be considered on a CASE-BY-CASE basis, determining whether the transaction
enhances shareholder value by giving consideration to the following:
o Prospects of the combined company, anticipated financial and operating benefits
o Offer price
o Fairness opinion
o How the deal was negotiated
o Changes in corporate governance
o Change in the capital structure
o Conflicts of interest.

Private Placements/Warrants/Convertible Debentures
Votes on proposals regarding private placements should be determined on a CASE-BYCASE basis. When evaluating these
proposals the investor should review: dilution to existing shareholders' position, terms of the offer, financial issues,
management's efforts to pursue other alternatives, control issues, and conflicts of interest. Vote FOR the private
placement if it is expected that the company will file for bankruptcy if the transaction is not approved.

Spinoffs
Votes on spinoffs should be considered on a CASE-BY-CASE basis depending on:
o Tax and regulatory advantages
o Planned use of the sale proceeds
o Valuation of spinoff
o Fairness opinion
o Benefits to the parent company
o Conflicts of interest
o Managerial incentives
o Corporate governance changes
o Changes in the capital structure.

Value Maximization Proposals
Vote CASE-BY-CASE on shareholder proposals seeking to maximize shareholder value by hiring a financial advisor to explore
strategic alternatives, selling the company or liquidating the company and distributing the proceeds to shareholders.
These proposals should be evaluated based on the following factors: prolonged poor performance with no turnaround in
sight, signs of entrenched board and management, strategic plan in place for improving value, likelihood of receiving
reasonable value in a sale or dissolution, and whether company is actively exploring its strategic options, including
retaining a financial advisor.

6. State of Incorporation
Control Share Acquisition Provisions
Vote FOR proposals to opt out of control share acquisition statutes unless doing so would enable the completion of a
takeover that would be detrimental to shareholders. Vote AGAINST proposals to amend the charter to include control share
acquisition provisions. Vote FOR proposals to restore voting rights to the control shares.

Control Share Cashout Provisions
Vote FOR proposals to opt out of control share cashout statutes.
Disgorgement Provisions
Vote FOR proposals to opt out of state disgorgement provisions.
Fair Price Provisions
Vote proposals to adopt fair price provisions on a CASE-BY-CASE basis, evaluating factors such as the vote required to
approve the proposed acquisition, the vote required to repeal the fair price provision, and the mechanism for determining
the fair price. Generally, vote AGAINST fair price provisions with shareholder vote requirements greater than a majority
of disinterested shares.
Freezeout Provisions
Vote FOR proposals to opt out of state freezeout provisions.
Greenmail
Vote FOR proposals to adopt antigreenmail charter of bylaw amendments or otherwise restrict a company's ability to make
greenmail payments. Review on a CASE-BY-CASE basis antigreenmail proposals when they are bundled with other charter or
bylaw amendments.
Reincorporation Proposals
Proposals to change a company's state of incorporation should be evaluated on a CASE-BY-CASE basis, giving consideration
to both financial and corporate governance concerns, including the reasons for reincorporating, a comparison of the
governance provisions, and a comparison of the jurisdictional laws. Vote FOR reincorporation when the economic factors
outweigh any neutral or negative governance changes.
Stakeholder Provisions
Vote AGAINST proposals that ask the board to consider nonshareholder constituencies or other nonfinancial effects when
evaluating a merger or business combination.
State Antitakeover Statutes
Review on a CASE-BY-CASE basis proposals to opt in or out of state takeover statutes (including control share acquisition
statutes, control share cash-out statutes, freezeout provisions, fair price provisions, stakeholder laws, poison pill
endorsements, severance pay and labor contract provisions, antigreenmail provisions, and disgorgement provisions).

7. Capital Structure
Adjustments to Par Value of Common Stock
Vote FOR management proposals to reduce the par value of common stock.
Common Stock Authorization
Votes on proposals to increase the number of shares of common stock authorized for issuance are determined on a
CASE-BY-CASE basis using a model developed by ISS. Vote AGAINST proposals at companies with dual-class capital structures
to increase the number of authorized shares of the class of stock that has superior voting rights. Vote FOR proposals to
approve increases beyond the allowable increase when a company's shares are in danger of being delisted or if a company's
ability to continue to operate as a going concern is uncertain.
Dual-class Stock
Vote AGAINST proposals to create a new class of common stock with superior voting rights.

Vote FOR proposals to create a new class of nonvoting or subvoting common stock if:
o It is intended for financing purposes with minimal or no dilution to current shareholders
o It is not designed to preserve the voting power of an insider or significant shareholder
Issue Stock for Use with Rights Plan
Vote AGAINST proposals that increase authorized common stock for the explicit purpose of implementing a shareholder
rights plan (poison pill).
Preemptive Rights
Review on a CASE-BY-CASE basis shareholder proposals that seek preemptive rights. In evaluating proposals on preemptive
rights, consider the size of a company, the characteristics of its shareholder base, and the liquidity of the stock.
Preferred Stock
Vote AGAINST proposals authorizing the creation of new classes of preferred stock with unspecified voting, conversion,
dividend distribution, and other rights ("blank check" preferred stock).
Vote FOR proposals to create "declawed" blank check preferred stock (stock that cannot be used as a takeover defense).
Vote FOR proposals to authorize preferred stock in cases where the company specifies the voting, dividend, conversion,
and other rights of such stock and the terms of the preferred stock appear reasonable. Vote AGAINST proposals to increase
the number of blank check preferred stock authorized for issuance when no shares have been issued or reserved for a
specific
purpose. Vote CASE-BY-CASE on proposals to increase the number of blank check preferred shares after analyzing the number
of preferred shares available for issue given a company's industry and performance in terms of shareholder returns.
Recapitalization
Votes CASE-BY-CASE on recapitalizations (reclassifications of securities), taking into account the following: more
simplified capital structure, enhanced liquidity, fairness of conversion terms, impact on voting power and dividends,
reasons for the reclassification, conflicts of interest, and other alternatives considered.
Reverse Stock Splits
Vote FOR management proposals to implement a reverse stock split when the number of authorized shares will be
proportionately reduced. Vote FOR management proposals to implement a reverse stock split to avoid delisting. Votes on
proposals to implement a reverse stock split that do not proportionately reduce the number of shares authorized for issue
should be determined on a CASE-BY-CASE basis using a model developed by ISS.
Share Repurchase Programs
Vote FOR management proposals to institute open-market share repurchase plans in which all shareholders may participate
on equal terms.
Stock Distributions: Splits and Dividends
Vote FOR management proposals to increase the common share authorization for a stock
split or share dividend, provided that the increase in authorized shares would not result in
an excessive number of shares available for issuance as determined using a model
developed by ISS.
Tracking Stock
Votes on the creation of tracking stock are determined on a CASE-BY-CASE basis, weighing the strategic value of the
transaction against such factors as: adverse governance changes, excessive increases in authorized capital stock, unfair
method of distribution, diminution of voting rights, adverse conversion features, negative impact on stock option plans,
and other alternatives such as spinoff.

8. Executive and Director Compensation
Votes with respect to compensation plans should be determined on a CASE-BY-CASE basis. Our methodology for reviewing
compensation plans primarily focuses on the transfer of shareholder wealth (the dollar cost of pay plans to shareholders
instead of simply focusing on voting power dilution). Using the expanded compensation data disclosed under the SEC's
rules, ISS will value every award type. ISS will include in its analyses an estimated dollar cost for the proposed plan
and all continuing plans. This cost, dilution to shareholders' equity, will also be expressed as a percentage figure for
the
transfer of shareholder wealth, and will be considered long with dilution to voting power. Once ISS determines the
estimated cost of the plan, we compare it to a company-specific dilution cap.
Our model determines a company-specific allowable pool of shareholder wealth that may be transferred from the company to
executives, adjusted for:
o Long-term corporate performance (on an absolute basis and relative to a standard industry peer group and an
appropriate market index),
o Cash compensation, and
o Categorization of the company as emerging, growth, or mature.

These adjustments are pegged to market capitalization. ISS will continue to examine other features of proposed pay plans
such as administration, payment terms, plan duration, and whether the administering committee is permitted to reprice
underwater stock options without shareholder approval.

Director Compensation
Votes on compensation plans for directors are determined on a CASE-BY-CASE basis, using a proprietary, quantitative model
developed by ISS.
Stock Plans in Lieu of Cash
Votes for plans which provide participants with the option of taking all or a portion of their cash compensation in the
form of stock are determined on a CASE-BY-CASE basis. Vote FOR plans which provide a dollar-for-dollar cash for stock
exchange. Votes for plans which do not provide a dollar-for-dollar cash for stock exchange should be determined on a
CASE-BY-CASE basis using a proprietary, quantitative model developed by ISS.
Director Retirement Plans
Vote AGAINST retirement plans for nonemployee directors. Vote FOR shareholder proposals to eliminate retirement plans for
nonemployee directors.
Management Proposals Seeking Approval to Reprice Options
Votes on management proposals seeking approval to reprice options are evaluated on a CASE-BY-CASE basis giving
consideration to the following:
o Historic trading patterns
o Rationale for the repricing
o Value-for-value exchange
o Option vesting
o Term of the option
o Exercise price
o Participation.

Employee Stock Purchase Plans
Votes on employee stock purchase plans should be determined on a CASE-BY-CASE basis.
Vote FOR employee stock purchase plans where all of the following apply:
o Purchase price is at least 85 percent of fair market value
o Offering period is 27 months or less, and
o Potential voting power dilution (VPD) is ten percent or less.

Vote AGAINST employee stock purchase plans where any of the following apply:
o Purchase price is less than 85 percent of fair market value, or
o Offering period is greater than 27 months, or
o VPD is greater than ten percent

Incentive Bonus Plans and Tax Deductibility Proposals (OBRA-Related Compensation Proposals)
Vote FOR proposals that simply amend shareholder-approved compensation plans to include administrative features or place
a cap on the annual grants any one participant may receive to comply with the provisions of Section 162(m). Vote FOR
proposals to add performance goals to existing compensation plans to comply with the provisions of Section 162(m) unless
they are clearly inappropriate. Votes to amend existing plans to increase shares reserved and to qualify for favorable
tax treatment under the provisions of Section 162(m) should be considered on a CASE-BY-CASE basis using a proprietary,
quantitative model developed by ISS. Generally vote FOR cash or cash and stock bonus plans that are submitted to
shareholders for the purpose of exempting compensation from taxes under the provisions of Section 162(m) if no increase
in shares is requested.

Employee Stock Ownership Plans (ESOPs)
Vote FOR proposals to implement an ESOP or increase authorized shares for existing ESOPs, unless the number of shares
allocated to the ESOP is excessive (more than five percent of outstanding shares.)

401(k) Employee Benefit Plans
Vote FOR proposals to implement a 401(k) savings plan for employees.

Shareholder Proposals Regarding Executive and Director Pay
Generally, vote FOR shareholder proposals seeking additional disclosure of executive and director pay information,
provided the information requested is relevant to shareholders' needs, would not put the company at a competitive
disadvantage relative to its industry, and is not unduly burdensome to the company. Vote AGAINST shareholder proposals
seeking to set absolute levels on compensation or otherwise dictate the amount or form of compensation. Vote AGAINST
shareholder proposals requiring director fees be paid in stock only. Vote FOR shareholder proposals to put option
repricings to a shareholder vote. Vote on a CASE-BY-CASE basis for all other shareholder proposals regarding executive
and director pay, taking into account company performance, pay level versus peers, pay level versus industry, and long
term corporate outlook.

Option Expensing
Generally vote FOR shareholder proposals asking the company to expense stock options, unless the company has already
publicly committed to expensing options by a specific date.

Performance-Based Stock Options
Vote CASE-BY-CASE on shareholder proposals advocating the use of performance based stock options (indexed,
premium-priced, and performance-vested options), taking into account:
o Whether the proposal mandates that all awards be performance-based
o Whether the proposal extends beyond executive awards to those of lower-ranking employees
o Whether the company's stock-based compensation plans meet ISS's SVT criteria and do not violate our repricing
guidelines

Golden and Tin Parachutes
Vote FOR shareholder proposals to require golden and tin parachutes (executive severance agreements) to be submitted for
shareholder ratification, unless the proposal requires shareholder approval prior to entering into employment contracts.
Vote on a CASE-BY-CASE basis on proposals to ratify or cancel golden or tin parachutes. An acceptable parachute should
include the following: The parachute should be less attractive than an ongoing employment opportunity with the firm
o The triggering mechanism should be beyond the control of management
o The amount should not exceed three times base salary plus guaranteed benefits

9. Social and Environmental Issues

CONSUMER ISSUES AND PUBLIC SAFETY
Animal Rights
Vote CASE-BY-CASE on proposals to phase out the use of animals in product testing,
taking into account:
o The nature of the product and the degree that animal testing is necessary or federally mandated (such as medical
products),
o The availability and feasibility of alternatives to animal testing to ensure product safety, and
o The degree that competitors are using animal-free testing. Generally vote FOR proposals seeking a report on the
company's animal welfare standards unless:
o The company has already published a set of animal welfare standards and monitors compliance
o The company's standards are comparable to or better than those of peer firms, and
o There are no serious controversies surrounding the company's treatment of animals

Drug Pricing
Vote CASE-BY-CASE on proposals asking the company to implement price restraints on pharmaceutical products, taking into
account:
o Whether the proposal focuses on a specific drug and region
o Whether the economic benefits of providing subsidized drugs (e.g., public goodwill) outweigh the costs in terms
of reduced profits, lower R&D spending, and harm to competitiveness
o The extent that reduced prices can be offset through the company's marketing budget without affecting R&D spending
o Whether the company already limits price increases of its products
o Whether the company already contributes life-saving pharmaceuticals to the needy and Third World countries
o The extent that peer companies implement price restraints

Genetically Modified Foods
Vote CASE-BY-CASE on proposals to label genetically modified (GMO) ingredients voluntarily in the company's products, or
alternatively to provide interim labeling and eventually eliminate GMOs, taking into account: The costs and feasibility
of labeling and/or phasing out The nature of the company's business and the proportion of it affected by the proposal
o The proportion of company sales in markets requiring labeling or GMO-free products
o The extent that peer companies label or have eliminated GMOs
o Competitive benefits, such as expected increases in consumer demand for the company's products
o The risks of misleading consumers without federally mandated, standardized labeling
o Alternatives to labeling employed by the company.

Vote FOR proposals asking for a report on the feasibility of labeling products containing GMOs. Vote AGAINST proposals to
completely phase out GMOs from the company's products. Such resolutions presuppose that there are proven health risks to
GMOs--an issue better left to federal regulators--which outweigh the economic benefits derived from biotechnology. Vote
CASE-BY-CASE on reports outlining the steps necessary to eliminate GMOs from the company's products, taking into account:
o The relevance of the proposal in terms of the company's business and the proportion of it affected by the
resolution
o The extent that peer companies have eliminated GMOs
o The extent that the report would clarify whether it is viable for the company to eliminate GMOs from its products
o Whether the proposal is limited to a feasibility study or additionally seeks an action plan and timeframe
actually to phase out GMOs
o The percentage of revenue derived from international operations, particularly in Europe, where GMOs are more
regulated.

Vote AGAINST proposals seeking a report on the health and environmental effects of GMOs and the company's strategy for
phasing out GMOs in the event they become illegal in the United States. Studies of this sort are better undertaken by
regulators and the scientific community. If made illegal in the United States, genetically modified crops would
automatically be recalled and phased out.

Handguns
Generally vote AGAINST requests for reports on a company's policies aimed at curtailing gun violence in the United States
unless the report is confined to product safety information. Criminal misuse of firearms is beyond company control and
instead falls within the purview of law enforcement agencies.

Predatory Lending
Vote CASE-BY CASE on requests for reports on the company's procedures for preventing predatory lending, including the
establishment of a board committee for oversight, taking into account:
o Whether the company has adequately disclosed mechanisms in place to prevent abusive lending practices
o Whether the company has adequately disclosed the financial risks of its subprime business
o Whether the company has been subject to violations of lending laws or serious lending controversies
o Peer companies' policies to prevent abusive lending practices.

Tobacco
Most tobacco-related proposals should be evaluated on a CASE-BY-CASE basis, taking into account the following factors:
Second-hand smoke:
o Whether the company complies with all local ordinances and regulations
o The degree that voluntary restrictions beyond those mandated by law might hurt the company's competitiveness
o The risk of any health-related liabilities.
Advertising to youth:
o Whether the company complies with federal, state, and local laws on the marketing of tobacco or if it has been
fined for violations
o Whether the company has gone as far as peers in restricting advertising
o Whether the company entered into the Master Settlement Agreement, which restricts marketing of tobacco to youth
o Whether restrictions on marketing to youth extend to foreign countries

Cease production of tobacco-related products or avoid selling products to tobacco companies:
o The percentage of the company's business affected
o The economic loss of eliminating the business versus any potential tobacco-related liabilities. Spinoff
tobacco-related businesses:
o The percentage of the company's business affected
o The feasibility of a spinoff
o Potential future liabilities related to the company's tobacco business.

Stronger product warnings:
Vote AGAINST proposals seeking stronger product warnings. Such decisions are better left to public health authorities.

Investment in tobacco stocks: Vote AGAINST proposals prohibiting investment in tobacco equities. Such decisions are
better left to portfolio managers.

ENVIRONMENT AND ENERGY
Arctic National Wildlife Refuge
Vote CASE-BY-CASE on reports outlining potential environmental damage from drilling in the Arctic National Wildlife
Refuge (ANWR), taking into account:
o Whether there are publicly available environmental impact reports;
o Whether the company has a poor environmental track record, such as violations of federal and state regulations or
accidental spills; and
o The current status of legislation regarding drilling in ANWR.

CERES Principles
Vote CASE-BY-CASE on proposals to adopt the CERES Principles, taking into account:
o The company's current environmental disclosure beyond legal requirements, including environmental health and
safety (EHS) audits and reports that may duplicate CERES
o The company's environmental performance record, including violations of federal and state regulations, level of
toxic emissions, and accidental spills
o Environmentally conscious practices of peer companies, including endorsement of CERES
o Costs of membership and implementation.

Environmental Reports
Generally vote FOR requests for reports disclosing the company's environmental policies unless it already has
well-documented environmental management systems that are available to the public.
Global Warming
Generally vote FOR reports on the level of greenhouse gas emissions from the company's operations and products, unless
the report is duplicative of the company's current environmental disclosure and reporting or is not integral to the
company's line of business. However, additional reporting may be warranted if:
o The company's level of disclosure lags that of its competitors, or
o The company has a poor environmental track record, such as violations of federal and state regulations.

Recycling
Vote CASE-BY-CASE on proposals to adopt a comprehensive recycling strategy, taking into account:
o The nature of the company's business and the percentage affected
o The extent that peer companies are recycling
o The timetable prescribed by the proposal
o The costs and methods of implementation
o Whether the company has a poor environmental track record, such as violations of federal and state regulations.

Renewable Energy
Vote CASE-BY-CASE on proposals to invest in renewable energy sources, taking into account:
o The nature of the company's business and the percentage affected
o The extent that peer companies are switching from fossil fuels to cleaner sources
o The timetable and specific action prescribed by the proposal
o The costs of implementation
o The company's initiatives to address climate change

Generally vote FOR requests for reports on the feasibility of developing renewable energy sources, unless the report is
duplicative of the company's current environmental disclosure and reporting or is not integral to the company's line of
business.

GENERAL CORPORATE ISSUES

Link Executive Compensation to Social Performance
Vote CASE-BY-CASE on proposals to review ways of linking executive compensation to social factors, such as corporate
downsizings, customer or employee satisfaction, community involvement, human rights, environmental performance, predatory
lending, and executive/employee pay disparities. Such resolutions should be evaluated in the context of:
o The relevance of the issue to be linked to pay
o The degree that social performance is already included in the company's pay structure and disclosed
o The degree that social performance is used by peer companies in setting pay
o Violations or complaints filed against the company relating to the particular social performance measure
o Artificial limits sought by the proposal, such as freezing or capping executive pay Independence of the
compensation committee
o Current company pay levels.

Charitable/Political Contributions
Generally vote AGAINST proposals asking the company to affirm political nonpartisanship in the workplace so long as:
o The company is in compliance with laws governing corporate political activities, and
o The company has procedures in place to ensure that employee contributions to company-sponsored political action
committees (PACs) are strictly voluntary and not coercive.

Vote AGAINST proposals to report or publish in newspapers the company's political contributions. Federal and state laws
restrict the amount of corporate contributions and include reporting requirements. Vote AGAINST proposals disallowing the
company from making political contributions. Businesses are affected by legislation at the federal, state, and local
level and barring contributions can put the company at a competitive disadvantage. Vote AGAINST proposals restricting the
company from making charitable contributions. Charitable contributions are generally useful for assisting worthwhile
causes and for creating goodwill in the community. In the absence of bad faith, self-dealing, or gross negligence,
management should determine which contributions are in the best interests of the company. Vote AGAINST proposals asking
for a list of company executives, directors, consultants, legal counsels, lobbyists, or investment bankers that have
prior government service and whether such service had a bearing on the business of the company. Such a list would be
burdensome to prepare without providing any meaningful information to shareholders.

LABOR STANDARDS AND HUMAN RIGHTS
China Principles
Vote AGAINST proposals to implement the China Principles unless:
o There are serious controversies surrounding the company's China operations, and
o The company does not have a code of conduct with standards similar to those promulgated by the International
Labor Organization (ILO).

Country-specific human rights reports
Vote CASE-BY-CASE on requests for reports detailing the company's operations in a particular country and steps to protect
human rights, based on:
o The nature and amount of company business in that country
o The company's workplace code of conduct
o Proprietary and confidential information involved
o Company compliance with U.S. regulations on investing in the country
o Level of peer company involvement in the country.

International Codes of Conduct/Vendor Standards
Vote CASE-BY-CASE on proposals to implement certain human rights standards at company facilities or those of its
suppliers and to commit to outside, independent monitoring. In evaluating these proposals, the following should be
considered:
o The company's current workplace code of conduct or adherence to other global standards and the degree they meet
the standards promulgated by the proponent
o Agreements with foreign suppliers to meet certain workplace standards
o Whether company and vendor facilities are monitored and how
o Company participation in fair labor organizations
o Type of business
o Proportion of business conducted overseas
o Countries of operation with known human rights abuses
o Whether the company has been recently involved in significant labor and human rights controversies or violations
o Peer company standards and practices
o Union presence in company's international factories

Generally vote FOR reports outlining vendor standards compliance unless any of the following apply:
o The company does not operate in countries with significant human rights violations
o The company has no recent human rights controversies or violations, or
o The company already publicly discloses information on its vendor standards compliance.

MacBride Principles
Vote CASE-BY-CASE on proposals to endorse or increase activity on the MacBride Principles, taking into account:
o Company compliance with or violations of the Fair Employment Act of 1989
o Company antidiscrimination policies that already exceed the legal requirements
o The cost and feasibility of adopting all nine principles
o The cost of duplicating efforts to follow two sets of standards (Fair Employment and the MacBride Principles)
o The potential for charges of reverse discrimination
o The potential that any company sales or contracts in the rest of the United Kingdom could be negatively impacted
o The level of the company's investment in Northern Ireland
o The number of company employees in Northern Ireland
o The degree that industry peers have adopted the MacBride Principles
o Applicable state and municipal laws that limit contracts with companies that have not adopted the MacBride
Principles.

MILITARY BUSINESS
Foreign Military Sales/Offsets
Vote AGAINST reports on foreign military sales or offsets. Such disclosures may involve sensitive and confidential
information. Moreover, companies must comply with government controls and reporting on foreign military sales.

Landmines and Cluster Bombs
Vote CASE-BY-CASE on proposals asking a company to renounce future involvement in antipersonnel landmine production,
taking into account:
o Whether the company has in the past manufactured landmine components
o Whether the company's peers have renounced future production
Vote CASE-BY-CASE on proposals asking a company to renounce future involvement in cluster bomb production, taking into
account:
o What weapons classifications the proponent views as cluster bombs
o Whether the company currently or in the past has manufactured cluster bombs or their components
o The percentage of revenue derived from cluster bomb manufacture
o Whether the company's peers have renounced future production

Nuclear Weapons
Vote AGAINST proposals asking a company to cease production of nuclear weapons components and delivery systems, including
disengaging from current and proposed contracts. Components and delivery systems serve multiple military and non-military
uses, and withdrawal from these contracts could have a negative impact on the company's business.

Spaced-Based Weaponization
Generally vote FOR reports on a company's involvement in spaced-based weaponization unless:
o The information is already publicly available or
o The disclosures sought could compromise proprietary information.

WORKPLACE DIVERSITY
Board Diversity
Generally vote FOR reports on the company's efforts to diversify the board, unless:
o The board composition is reasonably inclusive in relation to companies of similar size and business or
o The board already reports on its nominating procedures and diversity initiatives.

Vote CASE-BY-CASE on proposals asking the company to increase the representation of women and minorities on the board,
taking into account:
o The degree of board diversity
o Comparison with peer companies
o Established process for improving board diversity
o Existence of independent nominating committee
o Use of outside search firm
o History of EEO violations.

Equal Employment Opportunity (EEO)
Generally vote FOR reports outlining the company's affirmative action initiatives unless all of the following apply:
o The company has well-documented equal opportunity programs
o The company already publicly reports on its company-wide affirmative initiatives and provides data on its
workforce diversity, and
o The company has no recent EEO-related violations or litigation.

Vote AGAINST proposals seeking information on the diversity efforts of suppliers and service providers, which can pose a
significant cost and administration burden on the company.

Glass Ceiling
Generally vote FOR reports outlining the company's progress towards the Glass Ceiling Commission's business
recommendations, unless:
o The composition of senior management and the board is fairly inclusive
o The company has well-documented programs addressing diversity initiatives and leadership development
o The company already issues public reports on its company-wide affirmative initiatives and provides data on its
workforce diversity, and
o The company has had no recent, significant EEO-related violations or litigation

Sexual Orientation
Vote CASE-BY-CASE on proposals to amend the company's EEO policy to include sexual orientation, taking into account:
o Whether the company's EEO policy is already in compliance with federal, state and local laws
o Whether the company has faced significant controversies or litigation regarding
unfair treatment of gay and lesbian employees
o The industry norm for including sexual orientation in EEO statements
o Existing policies in place to prevent workplace discrimination based on sexual
orientation

Vote AGAINST proposals to extend company benefits to or eliminate benefits from domestic partners. Benefit decisions
should be left to the discretion of the company.

10. Mutual Fund Proxies

Election of Directors
Vote to elect directors on a CASE-BY-CASE basis, considering the following factors:
o Board structure
o Director independence and qualifications
o Attendance at board and committee meetings.

Votes should be withheld from directors who:
o Attend less than 75 percent of the board and committee meetings without a valid excuse for the absences. Valid
reasons include illness or absence due to company business. Participation via telephone is acceptable. In
addition, if the director missed only one meeting or one day's meetings, votes should not be withheld even if
such absence dropped the director's attendance below 75 percent.
o Ignore a shareholder proposal that is approved by a majority of shares outstanding
o Ignore a shareholder proposal that is approved by a majority of the votes cast for two consecutive years
o Are interested directors and sit on the audit or nominating committee, or
o Are interested directors and the full board serves as the audit or nominating committee or the company does not
have one of these committees.

Convert Closed-end Fund to Open-end Fund
Vote conversion proposals on a CASE-BY-CASE basis, considering the following factors:
o Past performance as a closed-end fund
o Market in which the fund invests
o Masures taken by the board to address the discount
o Past shareholder activism, board activity
o Votes on related proposals.

Proxy Contests
Votes on proxy contests should be determined on a CASE-BY-CASE basis, considering the following factors:
o Past performance relative to its peers
o Market in which fund invests
o Measures taken by the board to address the issues
o Past shareholder activism, board activity, and votes on related proposals
o Strategy of the incumbents versus the dissidents
o Independence of directors
o Experience and skills of director candidates
o Governance profile of the company
o Evidence of management entrenchment

Investment Advisory Agreements
Votes on investment advisory agreements should be determined on a CASE-BY-CASE basis, considering the following factors:
o Proposed and current fee schedules
o Fund category/investment objective
o Performance benchmarks
o Share price performance compared to peers
o Resulting fees relative to peers
o Assignments (where the advisor undergoes a change of control).

Approve New Classes or Series of Shares
Vote FOR the establishment of new classes or series of shares.

Preferred Stock Proposals
Votes on the authorization for or increase in preferred shares should be determined on a CASE-BY-CASE basis, considering
the following factors:
o Stated specific financing purpose
o Possible dilution for common shares
o Whether the shares can be used for antitakeover purposes.

1940 Act Policies
Votes on 1940 Act policies should be determined on a CASE-BY-CASE basis, considering the following factors:
o Potential competitiveness
o Regulatory developments
o Current and potential returns
o Current and potential risk.

Generally vote FOR these amendments as long as the proposed changes do not fundamentally alter the investment focus of
the fund and do comply with the current SEC interpretation.

Change Fundamental Restriction to Nonfundamental
Restriction
Proposals to change a fundamental restriction to a nonfundamental restriction should be evaluated on a CASE-BY-CASE
basis, considering the following factors:
o The fund's target investments
o The reasons given by the fund for the change
o The projected impact of the change on the portfolio.

Change Fundamental Investment Objective to Nonfundamental
Vote AGAINST proposals to change a fund's fundamental investment objective to nonfundamental.

Name Change Proposals
Votes on name change proposals should be determined on a CASE-BY-CASE basis, considering the following factors:
o Political/economic changes in the target market
o Consolidation in the target market
o Current asset composition

Change in Fund's Subclassification
Votes on changes in a fund's subclassification should be determined on a CASE-BY-CASE basis, considering the following
factors:
o Potential competitiveness
o Current and potential returns
o Risk of concentration
o Consolidation in target industry

Disposition of Assets/Termination/Liquidation
Vote these proposals on a CASE-BY-CASE basis, considering the following factors:
o Strategies employed to salvage the company
o The fund's past performance
o Terms of the liquidation.

Changes to the Charter Document
Votes on changes to the charter document should be determined on a CASE-BY-CASE basis, considering the following factors:
o The degree of change implied by the proposal
o The efficiencies that could result
o The state of incorporation
o Regulatory standards and implications.

Vote AGAINST any of the following changes:
o Removal of shareholder approval requirement to reorganize or terminate the trust or any of its series
o Removal of shareholder approval requirement for amendments to the new declaration of trust
o Removal of shareholder approval requirement to amend the fund's management contract, allowing the contract to be
modified by the investment manager and the trust management, as permitted by the 1940 Act
o Allow the trustees to impose other fees in addition to sales charges on investment in a fund, such as deferred
sales charges and redemption fees that may be imposed upon redemption of a fund's shares
o Removal of shareholder approval requirement to engage in and terminate subadvisory arrangements
o Removal of shareholder approval requirement to change the domicile of the fund

Change the Fund's Domicile
Vote reincorporations on a CASE-BY-CASE basis, considering the following factors:
o Regulations of both states
o Required fundamental policies of both states
o Increased flexibility available.

Authorize the Board to Hire and Terminate Subadvisors Without Shareholder Approval
Vote AGAINST proposals authorizing the board to hire/terminate subadvisors without shareholder approval.

Distribution Agreements
Vote these proposals on a CASE-BY-CASE basis, considering the following factors:
o Fees charged to comparably sized funds with similar objectives
o The proposed distributor's reputation and past performance
o The competitiveness of the fund in the industry
o Terms of the agreement.

Master-Feeder Structure
Vote FOR the establishment of a master-feeder structure.

Mergers
Vote merger proposals on a CASE-BY-CASE basis, considering the following factors:
o Resulting fee structure
o Performance of both funds
o Continuity of management personnel
o Changes in corporate governance and their impact on shareholder rights.

Shareholder Proposals to Establish Director Ownership Requirement
Generally vote AGAINST shareholder proposals that mandate a specific minimum amount of stock that directors must own in
order to qualify as a director or to remain on the board. While ISS favors stock ownership on the part of directors, the
company should determine the appropriate ownership requirement.

Shareholder Proposals to Reimburse Proxy Solicitation Expenses
Voting to reimburse proxy solicitation expenses should be analyzed on a CASE-BY-CASE basis. In cases where ISS recommends
in favor of the dissidents, we also recommend voting for reimbursing proxy solicitation expenses.

Shareholder Proposals to Terminate Investment Advisor
Vote to terminate the investment advisor on a CASE-BY-CASE basis, considering the following factors:

o Performance of the fund's NAV
o The fund's history of shareholder relations
o The performance of other funds under the advisor's management.

GAMCO Investors, Inc. - The Voting of Proxies on Behalf of Clients

These procedures are adopted pursuant to the proxy rules promulgated by 17 C.F.R.ss.ss.274.204(4)-2, 275.204-2 and
270.30b1-4. These procedures will be used by the advisers having to determine how to vote proxies relating to portfolio
securities, including the procedures that the Fund uses when a vote presents a conflict between the interests of Fund
shareholders, on the one hand, and those of the Fund's investment adviser; principal underwriter; or any affiliated
person of the Fund, its investment adviser, or its principal underwriter.

I. Proxy Voting Committee

The proxy committee was originally formed in April 1989 for the purpose of formulating guidelines and reviewing proxy
statements within the parameters set by the substantive proxy voting guidelines published by GAMCO in 1988, a copy of
which are appended as Exhibit A. The committee will include representatives of Research, Administration, legal, and the
adviser. Where a member of the Committee ceases to serve, a replacement will be nominated by the Chairman and voted upon
by the entire Committee. As of June 30, 2003. The members are:

Research

Ivan Arteaga, Research Analyst
Joshua Fenton, Director of Research
James Foung, Research Analyst
Douglas R. Jamieson, Chief Operating Officer
William S. Selby, Managing Director
Peter D. Zaglio, Chairman, Proxy Committee

Administration

Karyn M. Nappi, Compliance Manager

Legal

Stephen DeTore, Deputy General Counsel
James E. McKee, General Counsel

Gabelli Funds, LLC.

Bruce N. Alpert, Chief Operating Officer
Caesar M. P. Bryan, Portfolio Manager
Howard F. Ward, Portfolio Manager

Peter D. Zaglio currently chairs the committee. In his absence, the Director of Research will chair the
committee. Meetings are held as needed basis to form views on the manner in which the advisers should vote proxies on
behalf of the shareholders. In general, the research analyst who follows the issuer, using the Proxy Guidelines, will
recommend how to vote on each issue. All matters identified by the Legal and Compliance Department as controversial,
taking into account matters such as the recommendation of third party services such as ISS, that matter is presented to
the Proxy voting committee. If the Legal and Compliance Department or the analyst has identified the matter as (1) one
that is controversial, (2) one that would benefit from deliberation by the Proxy Voting Committee or (3) may give rise to
a conflict of interest between the adviser and the advisory clients of the firm, the analyst will initially determine
what vote to recommend that the adviser should cast.

For non-controversial matters, the analyst may vote the proxy if (1) the vote is consistent with the
recommendations of the issuer's Board of Directors, and not contrary to the Proxy Guidelines; or (2) the vote is contrary
to the recommendations of the Board of Directors but is consistent with the Proxy Guidelines. In those instances, the
analyst may sign and date the proxy and return them to the Compliance Manager. If the vote is not covered by the Proxy
Guidelines and the analyst recommends voting against the issuer's Board of Directors' recommendations, the vote goes
before the committee.

For matters submitted to the Committee, each member of the Committee will receive, prior to the meeting, a copy
of the proxy statement, any third party research, a summary of any views provided by the Chief Investment Officer and any
recommendation by the analyst. At the meeting, the analyst presents his/her viewpoint, and a vote of the committee is
taken. If counsel believes that the matter before the committee is one with respect to which a conflict of interest may
exist between the adviser and the clients of the adviser, counsel will provide an opinion to committee concerning the
conflict. If the matter is one in which the interests of the clients of one or more of advisers may diverge, counsel
will so advise and the Committee may make a different recommendation as to each adviser. For any matters that might
trigger appraisal rights, counsel will provide an opinion concerning the likely risks and merits of such an appraisal
action. Should the vote concerning one or more recommendations be tied in a vote of the committee, the views of the
analyst will be followed. The committee notifies the proxy department of the result of the vote and the proxy is voted
accordingly.

Although the Proxy Guidelines express the normal preferences of the voting of any shares not covered by a
contrary investment guideline provided by the client, the Committee is not bound by the preference set forth in the Proxy
Guidelines and will reviewed each matter on its own merits. Written minutes of all proxy meetings are kept on file. The
adviser subscribes to the Institutional Shareholder Corporate Governance Service. ISS supplies current information on
regulations, trends in proxy voting and information on corporate governance issues. ISS also sponsors seminars and
conferences on corporate governance matters.

If the vote cast either by the analyst or as a result of the deliberations of the Proxy Voting Committee runs
contrary to the recommendation of the Board of Directors of the issuer, the matter will be referred to legal counsel to
determine whether an amendment to the last-filed Schedule 13D is appropriate.

II. Social Issues and other Client Guidelines

If the client has provided special instructions relating to the adviser by voting the proxy on behalf of the
client, any special client considerations should be noted on the client profile and disseminated to the proxy
department. This is the responsibility of the portfolio manager or sales assistant. In accordance with Department of
Labor guidelines, the adviser's policy is to vote on behalf of ERISA accounts in the best interest of the plan
participants with regard to social issues that carry an economic impact. Where an account is not governed by ERISA, the
adviser will vote shares held on behalf of the client in a manner consistent with any individual investment/voting
guidelines provided by the client. Otherwise the adviser will abstain with respect to those shares.

III. Client retention of Voting Rights

If a client chooses to retain the right to vote proxies or if there is any change in voting authority, the
following should be notified by the portfolio manager/sales assistant:

- Client profile
- Legal: James McKee and Stephen DeTore
- Proxy department: Karyn Nappi
- Portfolio Manager assigned to the account.

In the event that the Board of Directors of one or more of the investment companies managed by one of the
advisers has retained direct voting control over any security, the Compliance Department will provide each Board Member
(Or in the event that the voting has been delegated to a committee of the Board, to the Committee members) with a copy of
the proxy statement together with any recommendation by the adviser.

IV. Voting Records

The Compliance Department will retain a record of matters voted upon. It will provide to the advisers such
voting records as are necessary to fulfill. The adviser's staff may request proxy-voting records for use in presentations
to current or prospective clients. Requests for proxy voting records should be made at least ten days prior to client
meetings.

If a client wishes to receive a proxy voting record on a quarterly, semi-annual or annual basis, please notify
the proxy department. The reports will be available for mailing approximately ten days after the quarter end of the
period. First quarter reports may be delayed since the end of the quarter falls during the height of the proxy season.

A letter is sent to the custodian of all separate account clients for which the adviser has voting responsibility
instructing them to forward all proxy materials to:

[Adviser name]
Attn: Proxy Department
One Corporate Center
Rye, New York 10580-1433

The sales assistant sends the letter to the custodian of all new accounts, along with the trading/DTC instructions.
Proxy voting records will be retained in compliance with 17 C.F.R.ss.275.204-2.

V. Voting Procedures

1. Custodian banks, outside brokerage firms and Wexford Clearing Services Corporation are responsible for forwarding
proxies directly to GAMCO.

Proxies are received in one of three forms:

o Shareholder Vote Authorization Forms (VAF's) - Issued by ADP. VAF's must be voted through the issuing
institution causing a time lag. ADP is an outside service contracted by the various institutions to issue proxy
materials.
o Proxy cards which may be voted directly.
o Proxy cards which are returned to the custodian (usually an outside broker).
This is the least efficient method. It is difficult to determine whether our votes are
being cast in the manner we directed. There is also a considerable time lag.

2. On the record date, a run is made of all holders of the security for comparison with proxies when they are received.
To facilitate the reconciliation process, a copy of any trade corrections occurring between record date minus five and
the meeting date should be given to the proxy department by the person making the correction. Any trade that changes the
voting status of shares (i.e. from "A" shares to "B" shares) should also be given to the proxy department.

3. Upon receipt of the proxy, the number of shares each form represents is logged into the proxy system according to
security.

4. In the case of a discrepancy such as an incorrect number of shares, an improperly signed or dated card, wrong class
of security, etc., the issuing custodian is notified by phone. A corrected proxy is requested. Any arrangements are
made to insure that a proper proxy is received in time to be voted (overnight delivery, fax, etc.). When securities are
out on loan on record date, the custodian is requested to supply written verification.

5. Upon receipt of instructions from the proxy committee (see Administrative), the votes are cast and recorded for each
account on an individual basis.

Since January 1, 1992, records have been maintained on the Proxy Edge system. The system is backed up regularly. From
1990 through 1991, records were maintained on the PROXY VOTER system and in hardcopy format. Prior to 1990, records were
maintained on diskette and in hardcopy format.

PROXY EDGE records include:
Security Name and Cusip Number
Date and Type of Meeting (Annual, Special, Contest)
Client Name
Adviser or Fund Account Number
Directors' Recommendation
How GAMCO voted for the client on each issue
The rationale for the vote when it appropriate

Records prior to the institution of the PROXY EDGE system include:
Security name
Type of Meeting (Annual, Special, Contest)
Date of Meeting
Name of Custodian
Name of Client
Custodian Account Number
Adviser or Fund Account Number
Directors' recommendation
How the Adviser voted for the client on each issue
Date the proxy statement was received and by whom
Name of person posting the vote
Date and method by which the vote was cast

o From these records individual client proxy voting records are compiled. It is our policy to provide
institutional clients with a proxy voting record during client reviews. In addition, we will supply a proxy voting
record at the request of the client on a quarterly, semi-annual or annual basis.

6. Proxy cards/VAF's are marked and copied. Copies are kept alphabetically by security. Records for the current proxy
season are located in the Proxy Department office. In preparation for the upcoming season, files are transferred to the
La Vigna storage facility during January/February.

7. Shareholder Vote Authorization Forms issued by ADP are always sent directly to a specific individual at ADP. The
Advisers's ADP representative is Andre Carvajal. Her back-up is Gina Bitros. Their supervisor is Debbie Sciallo. A
follow-up call is made to verify receipt.

8. If a proxy card or VAF is received too late to be voted in the conventional matter, every attempt is made to vote on
one of the following manners:

o VAF's can be faxed to ADP up until the time of the meeting. This is followed up by mailing the original form.
-or-
A call is placed to the custodian bank and a verbal vote is given to the bank and the bank then calls ADP and gives
a verbal vote. Because of the increased possibility for errors, this method is only used as a last resort. ADP may not
take a verbal vote from the Adviser directly. Written verification of the vote is requested from the custodian.

o When a solicitor has been retained, the solicitor is called. At the solicitor's direction, the proxy is faxed or
sent by messenger.

10. Two weeks prior to the meeting all custodians who have not yet forward proxy materials are contacted.

11. In the case of a proxy contest, records are maintained for each opposing entity.

12. Voting in Person

a) At times it may be necessary to vote the shares in person. In this case, a "legal proxy" is obtained in the following
manner:

o Banks and brokerage firms using the services at ADP:

The back of the VAF is stamped indicating that we wish to vote in person. The forms are then sent overnight to
ADP. ADP issues individual legal proxies and sends them back via overnight (or the Adviser can pay messenger charges).
A lead-time of at least two weeks prior to the meeting is needed to do this. Alternatively, the procedures detailed
below for banks not using ADP may be implemented.

o Banks and brokerage firms issuing proxies directly:

The bank is called and/or faxed and a legal proxy is requested.

All legal proxies should appoint:

"Representative of [Adviser name] with full power of substitution."

b) The legal proxies are given to the person attending the meeting along with the following supplemental material:

o A limited Power of Attorney appointing the attendee an Adviser representative.
o A list of all shares being voted by custodian only. Client names and account numbers are not included. This
list must be presented, along with the proxies, to the Inspectors of Elections and/or tabulator at least one-half
hour prior to the scheduled start of the meeting. The tabulator must "qualify" the votes (i.e. determine if the vote
have previously been cast, if the votes have been rescinded, etc. vote have previously been cast, etc.).
o A sample ERISA and Individual contract.
o A sample of the annual authorization to vote proxies form.
o A copy of our most recent Schedule 13D filing (if applicable).

Proxy Voting Guidelines - GABELLI ASSET MANAGEMENT, INC.

1. General Policy Statement
------------------------

It is the policy of Gabelli Asset Management Inc. to vote in the best economic interests of our clients. As we
state in our Magna Carta of Shareholders Rights, established in May 1988, we are neither for nor against management. We
are for shareholders.

At our first proxy committee meeting in 1989, it was decided that each proxy statement should be evaluated on its
own merits within the framework first established by our Magna Carta of Shareholders Rights. The attached guidelines
serve to enhance that broad framework.

We do not consider any issue routine. We take into consideration all of our research on the company, its
directors, and their short and long-term goals for the company. In cases where issues that we generally do not approve
of are combined with other issues, the negative aspects of the issues will be factored into the evaluation of the overall
proposals but will not necessitate a vote in opposition to the overall proposals.

2. Board of Directors
------------------

The advisers do not consider the election of the Board of Directors a routine issue. Each slate of directors is
evaluated on a case-by-case basis.

Factors taken into consideration include:

o Historical responsiveness to shareholders
This may include such areas as:
- Paying greenmail
- Failure to adopt shareholder resolutions receiving a majority of shareholder votes
o Qualifications
o Nominating committee in place
o Number of outside directors on the board
o Attendance at meetings
o Overall performance

3. Selection of Auditors
---------------------

In general, we support the Board of Directors' recommendation for auditors.

4. Blank Check Preferred Stock
---------------------------

We oppose the issuance of blank check preferred stock.

Blank check preferred stock allows the company to issue stock and establish dividends, voting rights, etc.
without further shareholder approval.

5. Classified Board
----------------

A classified board is one where the directors are divided into classes with overlapping terms. A different class
is elected at each annual meeting.

While a classified board promotes continuity of directors facilitating long range planning, we feel directors
should be accountable to shareholders on an annual basis. We will look at this proposal on a case-by-case basis taking
into consideration the board's historical responsiveness to the rights of shareholders.

Where a classified board is in place we will generally not support attempts to change to an annually elected
board.

When an annually elected board is in place, we generally will not support attempts to classify the board.

6. Increase Authorized Common Stock
--------------------------------

The request to increase the amount of outstanding shares is considered on a case-by-case basis.

Factors taken into consideration include:

o Future use of additional shares
- Stock split
- Stock option or other executive compensation plan
- Finance growth of company/strengthen balance sheet
- Aid in restructuring
- Improve credit rating
- Implement a poison pill or other takeover defense
o Amount of stock currently authorized but not yet issued or reserved for stock option plans
o Amount of additional stock to be authorized and its dilutive effect

We will support this proposal if a detailed and verifiable plan for the use of the additional shares is contained
in the proxy statement.

7. Confidential Ballot
-------------------

We support the idea that a shareholder's identity and vote should be treated with confidentiality.

However, we look at this issue on a case-by-case basis.

In order to promote confidentiality in the voting process, we endorse the use of independent Inspectors of
Election.

8. Cumulative Voting
-----------------

In general, we support cumulative voting.

Cumulative voting is a process by which a shareholder may multiply the number of directors being elected by the
number of shares held on record date and cast the total number for one candidate or allocate the voting among two or more
candidates.

Where cumulative voting is in place, we will vote against any proposal to rescind this shareholder right.

Cumulative voting may result in a minority block of stock gaining representation on the board. When a proposal
is made to institute cumulative voting, the proposal will be reviewed on a case-by-case basis. While we feel that each
board member should represent all shareholders, cumulative voting provides minority shareholders an opportunity to have
their views represented.

9. Director Liability and Indemnification
--------------------------------------

We support efforts to attract the best possible directors by limiting the liability and increasing the
indemnification of directors, except in the case of insider dealing.

10. Equal Access to the Proxy
-------------------------

The SEC's rules provide for shareholder resolutions. However, the resolutions are limited in scope and there is
a 500 word limit on proponents' written arguments. Management has no such limitations. While we support equal access to
the proxy, we would look at such variables as length of time required to respond, percentage of ownership, etc.

11. Fair Price Provisions
---------------------

Charter provisions requiring a bidder to pay all shareholders a fair price are intended to prevent two-tier
tender offers that may be abusive. Typically, these provisions do not apply to a board-approved transactions.

We support fair price provisions because we feel all shareholders should be entitled to receive the same benefits.

Reviewed on a case-by-case basis.

12. Golden Parachutes
-----------------

Golden parachutes are severance payments to top executives who are terminated or demoted after a takeover.

We support any proposal that would assure management of its own welfare so that they may continue to make
decisions in the best interest of the company and shareholders even if the decision results in them losing their job. We
do not, however, support excessive golden parachutes. Therefore, each proposal will be decided on a case-by- case basis.

Note: Congress has imposed a tax on any parachute that is more than three times the executive's average annual
compensation.

13. Anti-greenmail Proposals
------------------------

We do not support greenmail. An offer extended to one shareholder should be extended to all shareholders equally
across the board.

14. Limit Shareholders' Rights to call Special Meetings
---------------------------------------------------

We support the right of shareholders to call a special meeting.

15. Consideration of Non-financial Effects of a Merger
--------------------------------------------------

This proposal releases the directors from only looking at the financial effects of a merger and allows them the
opportunity to consider the merger's effects on employees, the community, and consumers.

As a fiduciary, we are obligated to vote in the best economic interests of our clients. In general, this
proposal does not allow us to do that. Therefore, we generally cannot support this proposal.

Reviewed on a case-by-case basis.

16. Mergers, Buyouts, Spin-offs, Restructurings
-------------------------------------------

Each of the above are considered on a case-by-case basis. According to the Department of Labor, we are not
required to vote for a proposal simply because the offering price is at a premium to the current market price. We may
take into consideration the long term interests of the shareholders.
17. Military Issues
---------------

Shareholder proposals regarding military production must be evaluated on a purely economic set of criteria for
our ERISA clients. As such, decisions will be made on a case-by-case basis.

In voting on this proposal for our non-ERISA clients, we will vote according to the client's direction when
applicable. Where no direction has been given, we will vote in the best economic interests of our clients. It is not
our duty to impose our social judgment on others.

18. Northern Ireland
----------------

Shareholder proposals requesting the signing of the MacBride principles for the purpose of countering the
discrimination of Catholics in hiring practices must be evaluated on a purely economic set of criteria for our ERISA
clients. As such, decisions will be made on a case-by-case basis.

In voting on this proposal for our non-ERISA clients, we will vote according to client direction when
applicable. Where no direction has been given, we will vote in the best economic interests of our clients. It is not
our duty to impose our social judgment on others.

19. Opt Out of State Anti-takeover Law
----------------------------------

This shareholder proposal requests that a company opt out of the coverage of the state's takeover statutes.
Example: Delaware law requires that a buyer must acquire at least 85% of the company's stock before the buyer can
exercise control unless the board approves.

We consider this on a case-by-case basis. Our decision will be based on the following:

o State of Incorporation
o Management history of responsiveness to shareholders
o Other mitigating factors

20. Poison Pill
-----------

In general, we do not endorse poison pills.

In certain cases where management has a history of being responsive to the needs of shareholders and the stock is
very liquid, we will reconsider this position.

21. Reincorporation
---------------

Generally, we support reincorporation for well-defined business reasons. We oppose reincorporation if proposed
solely for the purpose of reincorporating in a state with more stringent anti-takeover statutes that may negatively
impact the value of the stock.

22. Stock Option Plans
------------------

Stock option plans are an excellent way to attract, hold and motivate directors and employees. However, each
stock option plan must be evaluated on its own merits, taking into consideration the following:

o Dilution of voting power or earnings per share by more than 10%
o Kind of stock to be awarded, to whom, when and how much
o Method of payment
o Amount of stock already authorized but not yet issued under existing stock option plans

23. Supermajority Vote Requirements
-------------------------------

Supermajority vote requirements in a company's charter or bylaws require a level of voting approval in excess of
a simple majority of the outstanding shares. In general, we oppose supermajority-voting requirements. Supermajority
requirements often exceed the average level of shareholder participation. We support proposals' approvals by a simple
majority of the shares voting.

24. Limit Shareholders' Right to Act by Written Consent
---------------------------------------------------

Written consent allows shareholders to initiate and carry on a shareholder action without having to wait until
the next annual meeting or to call a special meeting. It permits action to be taken by the written consent of the same
percentage of the shares that would be required to effect proposed action at a shareholder meeting.

Reviewed on a case-by-case basis.

Goldman, Sachs & Co.

Goldman Sachs Asset Management, L.P.

Goldman Sachs Asset Management International
Goldman Sachs Princeton LLC
(collectively, "GSAM")

SUMMARY OF POLICY ON PROXY VOTING
FOR INVESTMENT ADVISORY CLIENTS

Proxy voting and our understanding of corporate governance issues are important elements of the portfolio management
services we perform for our advisory clients who have authorized us to address these matters on their behalf. Our
guiding principles in performing this service are to make proxy voting decisions that (i) favor proposals that tend to
maximize a company's shareholder value and (ii) are free from the influence of conflicts of interest.

Public Equity Investments

Overview of GSAM Proxy Voting Policy

To implement these general principles for investments in publicly-traded equities, we have adopted the GSAM Proxy Voting
Policy to assist us in making proxy voting decisions and developing procedures for effecting those decisions. The GSAM
Proxy Voting Policy and associated procedures are designed to ensure that where GSAM has the authority to vote proxies,
GSAM complies with its legal, fiduciary, and contractual obligations.

The GSAM Proxy Voting Policy addresses a wide variety of individual topics, including, among other matters, shareholder
voting rights, anti-takeover defenses, board structures and the election of directors, executive and director
compensation, reorganizations, mergers and various shareholder proposals. It reflects GSAM's fundamental belief that
sound corporate governance will create a framework within which a company can be directed and managed in the interests of
its shareholders. Senior management of GSAM periodically reviews the GSAM Proxy Voting Policy to ensure it continues to
be consistent with our guiding principles. Clients may request a copy of the GSAM Proxy Voting Policy for their review
by contacting their financial advisor.

Implementation by Portfolio Management Teams

Each GSAM equity portfolio management team ("Portfolio Management Team") has developed an approach for how best to
evaluate proxy votes on an individualized basis in relation to the GSAM Proxy Voting Policy and each Portfolio Management
Team's investment philosophy and process. For example, our active-equity Portfolio Management Teams view the analysis of
corporate governance practices as an integral part of the investment research and stock valuation process. Therefore, on
a case-by-case basis, each active-equity Portfolio Management Team may vote differently from the pre-determined
application of the GSAM Proxy Voting Policy. Our quantitative-equity Portfolio Management Teams, by contrast,
exclusively follow such pre-determined application.

In addition, the GSAM Proxy Voting Policy is designed generally to permit Portfolio Management Teams to consider
applicable regional rules and practices regarding proxy voting when forming their views on a particular matter.

Use of Third-Party Service Providers

We utilize independent service providers to assist us in determining the GSAM Proxy Voting Policy and in implementing our
proxy voting decisions. The primary provider we currently use is Institutional Shareholder Services ("ISS"), which
provides proxy voting services to many asset managers on a global basis. Senior GSAM management is responsible for
reviewing our relationship with ISS and for evaluating the quality and effectiveness of the various services provided by
ISS to assist us in satisfying our proxy voting responsibilities.

Specifically, ISS assists GSAM in the proxy voting and corporate governance oversight process by developing and updating
the ISS Proxy Voting Guidelines, which are incorporated into the GSAM Proxy Voting Policy, and by providing research and
analysis, recommendations regarding votes, operational implementation, and recordkeeping and reporting services. GSAM's
decision to retain ISS is based principally on the view the services ISS provides, subject to GSAM's oversight, will
generally result in proxy voting decisions which are favorable to shareholders' interests. GSAM may, however, hire other
service providers to supplement or replace the services GSAM receives from ISS. In addition, active-equity Portfolio
Management Teams are able to cast votes that differ from recommendations made by ISS, as detailed in the GSAM Proxy
Voting Policy.

Conflicts of Interest

The GSAM Proxy Voting Policy also contains procedures to address potential conflicts of interest. These procedures
include our adoption of and reliance on the GSAM Proxy Voting Policy, including the ISS Proxy Voting Guidelines, and the
day-to-day implementation of those Guidelines by ISS. The procedures also establish a process under which an
active-equity Portfolio Management Team's decision to vote against an ISS recommendation is approved by the local Chief
Investment Officer for the requesting Portfolio Management Team and notification of the vote is provided to the Global
Chief Investment Officer for active-equity investment strategies and other appropriate GSAM personnel.

Fixed Income and Private Investments

Voting decisions with respect to client investments in fixed income securities and the securities of privately-held
issuers generally will be acted upon by the relevant portfolio managers based on their assessment of the particular
transactions or other matters at issue.

External Managers

Where GSAM places client assets with managers outside of GSAM, whether through separate accounts, funds-of-funds or other
structures, such external managers generally will be responsible for proxy voting. GSAM may, however, retain such
responsibilities where it deems appropriate.

Client Direction

Clients may choose to vote proxies themselves, in which case they must arrange for their custodian to send proxy
materials directly to them. GSAM can also accommodate situations where individual clients have developed their own
guidelines with ISS or another proxy service. Clients may also discuss with GSAM the possibility of receiving
individualized reports or other individualized services regarding proxy voting conducted on their behalf.

HOTCHKIS AND WILEY CAPITAL MANAGEMENT
-------------------------------------

PROXY VOTING POLICIES AND PROCEDURES

PURPOSE
-------

The purpose of these Proxy Voting Policies and Procedures is to memorialize the procedures and policies adopted by
Hotchkis and Wiley Capital Management ("HWCM") to enable it to comply with its accepted responsibilities and the
requirements of Rule 206(4)-6 under the Investment Advisers Act of 1940, as amended ("Advisers Act").

POLICY
------

HWCM acts as discretionary investment adviser for various clients, including clients governed by the Employee Retirement
Income Security Act of 1974 ("ERISA"). Unless a client (including a "named fiduciary" under ERISA) specifically reserves
the right to vote its own proxies, HWCM will vote all proxies in sufficient time prior to their deadlines as part of its
full discretionary authority over the assets.

When voting proxies for clients, HWCM's primary concern is that all decisions be made solely in the best interest of the
shareholder (for ERISA accounts, plan beneficiaries and participants, in accordance with the letter and spirit of
ERISA). HWCM will act in a manner it deems prudent and diligent and which is intended to enhance the economic value of
the assets of the account.

GUIDELINES
----------

Each proxy issue will be considered individually. The following guidelines are a partial list to be used in voting on
proposals often contained in proxy statements, but will not be used as rigid rules. The voting policies below are
subject to modification in certain circumstances and will be reexamined from time to time. With respect to matters that
do not fit in the categories stated below, HWCM will exercise its best judgement as a fiduciary to vote in the manner
which will most enhance shareholder value.

Management Proposals

The majority of votes presented to shareholders are proposals made by management, which have been approved and
recommended by its board of directors. Generally, in the absence of any unusual or non-routine information, the
following items are likely to be supported:

o Ratification of appointment of independent auditors
o General updating/corrective amendments to charter
o Increase in common share authorization for a stock split or share dividend
o Stock option plans that are incentive based and not excessive
o Election of directors

The following items will always require company specific and case-by-case review and analysis when submitted by
management to a shareholder vote:

o Directors' liability and indemnity proposals
o Executive compensation plans
o Mergers, acquisitions, and other restructurings submitted to a shareholder vote
o Anti-takeover and related provisions

Shareholder Proposals

Under ERISA standards, it is inappropriate to use (vote) plan assets to carry out social agendas or purposes. Thus,
shareholder proposals are examined closely for their relationship to the best interest of beneficiaries, and economic
impact. In general, HWCM will vote in accordance with the recommendation of the company's board of directors on all
shareholder proposals. However, HWCM will support shareholder proposals that are consistent with HWCM's proxy voting
guidelines for board-approved proposals

Generally, shareholder proposals related to the following items are supported:

o Confidential voting
o Bylaw and charter amendments only with shareholder approval
o Majority of independent directors in a board

Generally, shareholder proposals related to the following items are not supported:

o Limitations on the tenure of directors
o Declassification of the board
o Cumulative voting
o Restrictions related to social, political, or special interest issues that impact the ability of the company to
do business or be competitive and that have a significant financial or vested interest impact.
o Reports which are costly to provide or expenditures which are of a non-business nature or would provide no
pertinent information from the perspective of shareholders.

Conflict of Interest

Due to the nature of HWCM's business and its small size, it is unlikely that conflicts of interest will arise in voting
proxies of public companies,. However, if a potential conflict of interest did arise it would typically be a proxy for
a company that is also HWCM's client. In this event, the Compliance Department will review these votes to make sure that
HWCM's proposed votes are consistent with the established guidelines and not prompted by any conflict of interest.

HWCM may receive proxies for companies which are clients of Stephens Inc. ("Stephens"), a full service broker-dealer and
investment bank who's parent company, Stephens Group Inc., owns a non-controlling minority interest in HWCM. Stephens
does not directly or indirectly participate in HWCM's policies or decisions with respect to proxy voting.

PROCEDURES
----------

HWCM's Portfolio Services Department is responsible for ensuring that all proxies received by HWCM are voted in a timely
manner and voted consistently across all portfolios. Although many proxy proposals can be voted in accordance with our
established guidelines, we recognize that some proposals require special consideration, which may dictate that we make an
exception to our broad guidelines.

HWCM subscribes to an independent third party proxy research firm which provides analysis and recommendation for company
proxies. On specific items where the board-approved recommendation and the research firm's recommendation do not agree,
HWCM will generally approve the board-approved recommendation if it is consistent with our established guidelines. The
HWCM analyst responsible for research for the company makes a determination on how to vote the proxies using our
established guidelines.

Whenever HWCM is proposing to vote against the board-approved recommendations or against its established guidelines, the
Compliance Department will review these votes to make sure that HWCM's proposed vote is not prompted by any conflict of
interest.

RECORD KEEPING
--------------

In accordance with Rule 204-2 under the Advisers Act, HWCM will maintain for the time periods set forth in the Rule (i)
these proxy voting procedures and policies, and all amendments thereto; (ii) all proxy statements received regarding
client securities (provided however, that HWCM may rely on the proxy statement filed on EDGAR as its records); (iii) a
record of all votes cast on behalf of clients; (iv) records of all client requests for proxy voting information; (v) any
documents prepared by the HWCM that were material to making a decision how to vote or that memorialized the basis for the
decision; and (vi) all records relating to requests made by clients regarding conflicts of interest in voting the proxy.

HWCM will describe in its Part II of Form ADV (or other brochure fulfilling the requirement of Rule 204-3) its proxy
voting policies and procedures and advise clients how they may obtain information about how HWCM voted their securities.
Clients may obtain information about how their securities were voted or a copy of our Proxy Voting Policies and
Procedures free of charge by written request addressed to HWCM.

JPMorgan Fleming Asset Management

The investment adviser entities that comprise JPMorgan Fleming Asset Management ("JPMFAM") may be granted by their
clients the authority to vote the proxies of the securities held in client portfolios. To ensure that the proxies are
voted in the best interests of its clients, JPMFAM has adopted detailed proxy voting procedures ("Procedures") that
incorporate detailed proxy guidelines ("Guidelines") for voting proxies on specific types of issues.

Pursuant to the Procedures, most routine proxy matters will be voted in accordance with the Guidelines, which have been
developed with the objective of encouraging corporate action that enhances shareholder value. For proxy matters that are
not covered by the Guidelines (including matters that require a case-by-case determination) or where a vote contrary to
the Guidelines is considered appropriate, the Procedures require a certification and review process to be completed
before the vote is cast. That process is designed to identify actual or potential material conflicts of interest and
ensure that the proxy vote is cast in the best interests of clients.

To oversee and monitor the proxy-voting process, each JPMFAM advisory entity will establish a proxy committee and appoint
a proxy administrator in each global location where proxies are voted. Each proxy committee will meet periodically to
review general proxy-voting matters, review and approve the Guidelines annually, and provide advice and recommendations
on general proxy-voting matters as well as on specific voting issues implemented by the relevant JPMFAM entity.

A copy of the JPMFAM proxy voting procedures and guidelines are available upon request by contacting your client service
representative.

Marsico Proxy Summary

MCM votes client proxies in the best economic interest of clients. Because MCM generally believes in the managements of
companies we invest in, we think that voting in clients' best economic interest generally means voting with management.

Although MCM will routinely vote with management, our analysts will review proxy proposals as part of our normal
monitoring of portfolio companies and their managements. In rare cases, we might decide to vote a proxy against a
management recommendation. This would require notice to every affected MCM client.

MCM will routinely abstain from voting proxies issued by companies we have decided to sell, or proxies issued by foreign
companies that impose burdensome voting requirements. MCM will not notify clients of these routine abstentions.

In unusual circumstances when there may be an apparent material conflict of interest between MCM's interests and clients'
interests in how proxies are voted (such as when MCM knows that a proxy issuer is also an MCM client), MCM generally will
resolve any appearance concerns by causing those proxies to be "echo voted" or "mirror voted" in the same proportion as
other votes, or by voting the proxies as recommended by an independent service provider. MCM will not notify clients if
it uses these routine procedures to resolve an apparent conflict. In rare cases, MCM might use other procedures to
resolve an apparent conflict and give notice to clients.

MCM generally uses an independent service provider to help vote proxies, keep voting records, and disclose voting
information to clients. MCM's full proxy voting policy and information about the voting of a particular client's proxies
are available to the client on request.

MASSACHUSETTS FINANCIAL SERVICES COMPANY

PROXY VOTING POLICIES AND PROCEDURES
------------------------------------

Massachusetts Financial Services Company, MFS Institutional Advisors, Inc., and MFS' other investment adviser
subsidiaries (collectively, "MFS") have adopted proxy voting policies and procedures with respect to securities owned by
the investment companies and separate accounts for which MFS serves as investment adviser and has the power to vote
proxies.

A. VOTING GUIDELINES

General Policy; Potential Conflicts of Interest

MFS' policy is that proxy voting decisions are made in light of all relevant factors affecting the anticipated
impact of the vote on the long-term economic value of the relevant clients' investments in the subject company, without
regard to any of MFS' corporate interests, such as distribution, 401(k) administration or institutional relationships, or
the interests of any party other than the client.

As a general matter, MFS maintains a consistent voting position with respect to similar proxy proposals made by
various issuers. However, MFS recognizes that there are gradations in certain types of proposals (e.g., "poison pill"
proposals or the potential dilution caused by the issuance of new stock) that may result in different voting positions
being taken with respect to the different proxy statements. Some items that otherwise would be acceptable will be voted
against the proponent when it is seeking extremely broad flexibility without offering a valid explanation. In addition,
MFS generally votes consistently on the same matter when securities of an issuer are held by multiple client accounts.

MFS reviews proxy issues on a case-by-case basis, and there are instances when our judgment of the anticipated
effect on the best long-term interests of our clients may warrant exceptions to the guidelines. The guidelines provide a
framework within which the proxies are voted and have proven to be very workable in practice. These guidelines are
reviewed internally and revised as appropriate.

Any potential conflicts of interest with respect to proxy votes are decided in favor of our clients' long-term
economic interests. As a matter of policy, MFS will not be influenced in executing these voting rights by outside
sources whose interests conflict with or are different from the interests of our clients who own these securities. The
MFS Proxy Review Group is responsible for monitoring and reporting on all potential conflicts of interest.

B. REVIEW, RECOMMENDATION AND VOTING PROCEDURES
--------------------------------------------

1. Gathering Proxies
-----------------

Nearly all proxies received by MFS originate at Automatic Data Processing Corp. ("ADP"). ADP and issuers send
proxies and related material directly to the record holders of the shares beneficially owned by MFS' clients, usually to
the client's custodian or, less commonly, to the client itself. Each client's custodian is responsible for forwarding
all proxy solicitation materials to MFS. This material will include proxy cards, reflecting the proper shareholdings of
Funds and of clients on the record dates for such shareholder meetings, and proxy statements, the issuer's explanation of
the items to be voted upon.

MFS, on behalf of itself and the Funds, has entered into an agreement with an independent proxy administration
firm (the "Proxy Administrator") pursuant to which the Proxy Administrator performs various proxy vote processing and
recordkeeping functions for MFS' Fund and institutional client accounts. The Proxy Administrator does not make
recommendations to MFS as to how to vote any particular item. The Proxy Administrator receives proxy statements and
proxy cards directly from various custodians, logs these materials into its database and matches upcoming meetings with
MFS Fund and client portfolio holdings, which are input into the Proxy Administrator's system by an MFS holdings
datafeed. Through the use of the Proxy Administrator system, ballots and proxy material summaries for the upcoming
shareholders' meetings of over 10,000 corporations are available on-line to certain MFS employees, the MFS Proxy
Consultant and the MFS Proxy Review Group and most proxies can be voted electronically. In addition to receiving the
hard copies of materials relating to meetings of shareholders of issuers whose securities are held by the Funds and/or
clients, the ballots and proxy statements can be printed from the Proxy Administrator's system and forwarded for review.

2. Analyzing Proxies
-----------------

After input into the Proxy Administrator system, proxies which are deemed to be completely routine (e.g., those
involving only uncontested elections of directors, appointments of auditors, and/or employee stock purchase plans)1 are
automatically voted in favor by the Proxy Administrator without being sent to either the MFS Proxy Consultant or the MFS
Proxy Review Group for further review. Proxies that pertain only to merger and acquisition proposals are forwarded
initially to an appropriate MFS portfolio manager or research analyst for his or her recommendation. All proxies that
are reviewed by either the MFS Proxy Consultant or a portfolio manager or analyst are then forwarded with recommendation
to the MFS Proxy Review Group.

Recommendations with respect to voting on non-routine issues are generally made by the MFS Proxy Consultant in
light of the policies referred to above and all other relevant materials. His or her recommendation as to how each proxy
proposal should be voted is indicated on copies of proxy cards, including his or her rationale on significant items.
These cards are then forwarded to the MFS Proxy Review Group.

As a general matter, portfolio managers and investment analysts are consulted and involved in developing MFS'
substantive proxy voting guidelines, but have little or no involvement in or knowledge of proxy proposals or voting
positions taken by MFS. This is designed to promote consistency in the application of MFS' voting guidelines, to promote
consistency in voting on the same or similar issues (for the same or for multiple issuers) across all client accounts,
and to minimize or remove the potential that proxy solicitors, issuers, and third parties might attempt to exert
influence on the vote or might create a conflict of interest that is not in the best long-term economic interests of our
client. In limited, specific instances (e.g., mergers), the MFS Proxy Consultant or the MFS Proxy Review Group may
consult with or seek recommendations from portfolio managers or analysts. The MFS Proxy Review Group would ultimately
determine the manner in which all proxies are voted.

3. Voting Proxies
--------------

After the proxy card copies are reviewed, they are voted electronically through the Proxy Administrator's
system. In accordance with its contract with MFS, the Proxy Administrator also generates a variety of reports for the
MFS Proxy Consultant and the MFS Proxy Review Group, and makes available on-line various other types of information so
that the MFS Proxy Review Group and the MFS Proxy Consultant may monitor the votes cast by the Proxy Administrator on
behalf of MFS' clients.

C. MONITORING SYSTEM

It is the responsibility of the Proxy Administrator and MFS' Proxy Consultant to monitor the proxy voting
process. As noted above, when proxy materials for clients are received, they are forwarded to the Proxy Administrator
and are input into the Proxy Administrator's system. Additionally, through an interface with the portfolio holdings
database of MFS, the Proxy Administrator matches a list of all MFS Funds and clients who hold shares of a company's stock
and the number of shares held on the record date with the Proxy Administrator's listing of any upcoming shareholder's
meeting of that company.

When the Proxy Administrator's system "tickler" shows that the date of a shareholders' meeting is approaching, a
Proxy Administrator representative checks that the vote for MFS Funds and clients holding that security has been recorded
in the computer system. If a proxy card has not been received from the client's custodian, the Proxy Administrator calls
the custodian requesting that the materials be forward immediately. If it is not possible to receive the proxy card from
the custodian in time to be voted at the meeting, MFS may instruct the custodian to cast the vote in the manner specified
and to mail the proxy directly to the issuer.

D. RECORDS RETENTION AND REPORTS

Proxy solicitation materials, including electronic versions of the proxy cards completed by the MFS Proxy
Consultant and the MFS Proxy Review Group, together with their respective notes and comments, are maintained in an
electronic format by the Proxy Administrator and are accessible on-line by the MFS Proxy Consultant and the MFS Proxy
Review Group. All proxy voting materials and supporting documentation, including records generated by the Proxy
Administrator's system as to proxies processed, the dates when proxies were received and returned, and the votes on each
company's proxy issues, are retained for six years.

At any time, a report can be printed by MFS for each client who has requested that MFS furnish a record of votes
cast. The report specifies the proxy issues which have been voted for the client during the year and the position taken
with respect to each issue.

Generally, MFS will not divulge actual voting practices to any party other than the client or its representatives
(or an appropriate governmental agency) because we consider that information to be confidential and proprietary to the
client.

On an annual basis, the MFS Proxy Consultant and the MFS Proxy Review Group report at an MFS equity management meeting
on votes cast during the past year against management on the proxy statements of companies whose shares
were held by the Funds and other clients.

Marsico Capital Management, LLC Proxy Summary

Neuberger Berman Management, Inc.

Proxy summary

The Board has delegated to Neuberger Berman the responsibility to vote proxies related to the securities held in the
Fund's portfolios. Under this authority, Neuberger Berman is required by the Board to vote proxies related to portfolio
securities in the best interests of the Fund and its stockholders. The Board permits Neuberger Berman to contract with a
third party to obtain proxy voting and related services, including research of current issues.

Neuberger Berman has implemented written Proxy Voting Policies and Procedures ("Proxy Voting Policy") that are designed
to reasonably ensure that Neuberger Berman votes proxies prudently and in the best interest of its advisory clients for
whom Neuberger Berman has voting authority, including the Fund. The Proxy Voting Policy also describes how Neuberger
Berman addresses any conflicts that may arise between its interests and those of its clients with respect to proxy voting.

Neuberger Berman's Proxy Committee is responsible for developing, authorizing, implementing and updating the Proxy Voting
Policy, overseeing the proxy voting process and engaging and overseeing any independent third-party vendors as voting
delegate to review, monitor and/or vote proxies. In order to apply the Proxy Voting Policy noted above in a timely and
consistent manner, Neuberger Berman utilizes Institutional Shareholder Services Inc. ("ISS") to vote proxies in
accordance with Neuberger Berman's voting guidelines.

Neuberger Berman's guidelines adopt the voting recommendations of ISS. Neuberger Berman retains final authority and
fiduciary responsibility for proxy voting. Neuberger Berman believes that this process is reasonably designed to address
material conflicts of interest that may arise between Neuberger Berman and a client as to how proxies are voted.

In the event that an investment professional at Neuberger Berman believes that it is in the best interests of a client or
clients to vote proxies in a manner inconsistent with Neuberger Berman's proxy voting guidelines or in a manner
inconsistent with ISS recommendations, the Proxy Committee will review information submitted by the investment
professional to determine that there is no material conflict of interest between Neuberger Berman and the client with
respect to the voting of the proxy in that manner.

If the Proxy Committee determines that the voting of a proxy as recommended by the investment professional presents a
material conflict of interest between Neuberger Berman and the client or clients with respect to the voting of the proxy,
the Proxy Committee shall: (i) take no further action, in which case ISS shall vote such proxy in accordance with the
proxy voting guidelines or as ISS recommends; (ii) disclose such conflict to the client or clients and obtain written
direction from the client as to how to vote the proxy; (iii) suggest that the client or clients engage another party to
determine how to vote the proxy; or (iv) engage another independent third party to determine how to vote the proxy.

PACIFIC INVESTMENT MANAGEMENT COMPANY LLC

DESCRIPTION OF PROXY VOTING POLICIES AND PROCEDURES
---------------------------------------------------

Pacific Investment Management Company LLC ("PIMCO") has adopted written proxy voting policies and procedures ("Proxy
Policy") as required by Rule 206(4)-6 under the Investment Advisers Act of 1940, as amended. PIMCO has implemented the
Proxy Policy for each of its clients as required under applicable law, unless expressly directed by a client in writing
to refrain from voting that client's proxies. Recognizing that proxy voting is a rare event in the realm of fixed income
investing and is typically limited to solicitation of consent to changes in features of debt securities, the Proxy Policy
also applies to any voting rights and/or consent rights of PIMCO, on behalf of its clients, with respect to debt
securities, including but not limited to, plans of reorganization, and waivers and consents under applicable indentures.

The Proxy Policy is designed and implemented in a manner reasonably expected to ensure that voting and consent rights are
exercised in the best interests of PIMCO's clients. Each proxy is voted on a case-by-case basis taking into
consideration any relevant contractual obligations as well as other relevant facts and circumstances at the time of the
vote. In general, PIMCO reviews and considers corporate governance issues related to proxy matters and generally
supports proposals that foster good corporate governance practices. PIMCO may vote proxies as recommended by management
on routine matters related to the operation of the issuer and on matters not expected to have a significant economic
impact on the issuer and/or its shareholders.

PIMCO will supervise and periodically review its proxy voting activities and implementation of the Proxy Policy. PIMCO
will review each proxy to determine whether there may be a material conflict between PIMCO and its client. If no
conflict exists, the proxy will be forwarded to the appropriate portfolio manager for consideration. If a conflict does
exist, PIMCO will seek to resolve any such conflict in accordance with the Proxy Policy. PIMCO seeks to resolve any
material conflicts of interest by voting in good faith in the best interest of its clients. If a material conflict of
interest should arise, PIMCO will seek to resolve such conflict in the client's best interest by pursuing any one of the
following courses of action: (i) convening a committee to assess and resolve the conflict; (ii) voting in accordance with
the instructions of the client; (iii) voting in accordance with the recommendation of an independent third-party service
provider; (iv) suggesting that the client engage another party to determine how the proxy should be voted; (v) delegating
the vote to a third-party service provider; or (vi) voting in accordance with the factors discussed in the Proxy Policy.

Clients may obtain a copy of PIMCO's written Proxy Policy and the factors that PIMCO may consider in determining how to
vote a client's proxy. Except as required by law, PIMCO will not disclose to third parties how it voted on behalf of a
client. However, upon request from an appropriately authorized individual, PIMCO will disclose to its clients or the
entity delegating the voting authority to PIMCO for such clients, how PIMCO voted such client's proxy. In addition, a
client may obtain copies of PIMCO's Proxy Policy and information as to how its proxies have been voted by contacting
PIMCO.

T. ROWE PRICE PROXY VOTING - PROCESS AND POLICIES

T. Rowe Price Associates, Inc. and T. Rowe Price International, Inc. recognize and adhere to the principle that one of
the privileges of owning stock in a company is the right to vote on issues submitted to shareholder vote--such as election
of directors and important matters affecting a company's structure and operations. As an investment adviser with a
fiduciary responsibility to its clients, T. Rowe Price analyzes the proxy statements of issuers whose stock is owned by
the investment companies that it sponsors and serves as investment adviser. T. Rowe Price also is involved in the proxy
process on behalf of its institutional and private counsel clients who have requested such service. For those private
counsel clients who have not delegated their voting responsibility but who request advice, T. Rowe Price makes
recommendations regarding proxy voting.

Proxy Administration
The T. Rowe Price Proxy Committee develops our firm's positions on all major corporate issues, creates guidelines, and
oversees the voting process. The Proxy Committee, composed of portfolio managers, investment operations managers, and
internal legal counsel, analyzes proxy policies based on whether they would adversely affect shareholders' interests and
make a company less attractive to own. In evaluating proxy policies each year, the Proxy Committee relies upon our own
fundamental research, independent research provided by third parties, and information presented by company managements
and shareholder groups.

Once the Proxy Committee establishes its recommendations, they are distributed to the firm's portfolio managers as voting
guidelines. Ultimately, the portfolio manager votes on the proxy proposals of companies in his or her portfolio. When
portfolio managers cast votes that are counter to the Proxy Committee's guidelines, they are required to document their
reasons in writing to the Proxy Committee. Annually, the Proxy Committee reviews T. Rowe Price's proxy voting process,
policies, and voting records.

T. Rowe Price has retained Institutional Shareholder Services, an expert in the proxy voting and corporate governance
area, to provide proxy advisory and voting services. These services include in-depth research, analysis, and voting
recommendations as well as vote execution, reporting, auditing and consulting assistance for the handling of proxy voting
responsibility and corporate governance-related efforts. While the Proxy Committee relies upon ISS research in
establishing T. Rowe Price's voting guidelines--many of which are consistent with ISS positions--T. Rowe Price may deviate
from ISS recommendations on general policy issues or specific proxy proposals.

Fiduciary Considerations
T. Rowe Price's decisions with respect to proxy issues are made in light of the anticipated impact of the issue on the
desirability of investing in the portfolio company. Proxies are voted solely in the interests of the client, Price Fund
shareholders or, where employee benefit plan assets are involved, in the interests of plan participants and
beneficiaries. Practicalities involved with international investing may make it impossible at times, and at other times
disadvantageous, to vote proxies in every instance.

Consideration Given Management Recommendations
When determining whether to invest in a particular company, one of the key factors T. Rowe Price considers is the quality
and depth of its management. As a result, T. Rowe Price believes that recommendations of management on most issues
should be given weight in determining how proxy issues should be voted.

T. Rowe Price Voting Policies

Specific voting guidelines have been established by the Proxy Committee for recurring issues that appear on proxies,
which are available to clients upon request. The following is a summary of the more significant T. Rowe Price policies:

Election of Directors
T. Rowe Price generally supports slates with a majority of independent directors and nominating committees chaired by an
independent board member. We withhold votes for inside directors serving on compensation and audit committees and for
directors who miss more than one-fourth of the scheduled board meetings.

Executive Compensation
Our goal is to assure that a company's equity-based compensation plan is aligned with shareholders' long-term interests.
While we evaluate most plans on a case-by-case basis, T. Rowe Price generally opposes compensation packages that provide
what we view as excessive awards to a few senior executives or that contain excessively dilutive stock option plans. We
base our review on criteria such as the costs associated with the plan, plan features, dilution to shareholders and
comparability to plans in the company's peer group. We generally oppose plans that give a company the ability to reprice
options.

Anti-takeover and Corporate Governance Issues
T. Rowe Price generally opposes anti-takeover measures and other proposals designed to limit the ability of shareholders
to act on possible transactions. When voting on corporate governance proposals, we will consider the dilutive impact to
shareholders and the effect on shareholder rights.

Social and Corporate Responsibility Issues
T. Rowe Price generally votes with a company's management on social issues unless they have substantial economic
implications for the company's business and operations that have not been adequately addressed by management.

Monitoring and Resolving Conflicts of Interest
The Proxy Committee is also responsible for monitoring and resolving possible material conflicts between the interests of
T. Rowe Price and those of its clients with respect to proxy voting. Since our voting guidelines are pre-determined by
the Proxy Committee using recommendations from ISS, an independent third party, application of the T. Rowe Price
guidelines to vote clients' proxies should in most instances adequately address any possible conflicts of interest.
However, for proxy votes inconsistent with T. Rowe Price guidelines, the Proxy Committee reviews all such proxy votes in
order to determine whether the portfolio manager's voting rationale appears reasonable. The Proxy Committee also
assesses whether any business or other relationships between T. Rowe Price and a portfolio company could have influenced
an inconsistent vote on that company's proxy. Issues raising possible conflicts of interest are referred to designated
members of the Proxy Committee for immediate resolution.

Reporting
Vote Summary Reports are generated for each client that requests T. Rowe Price to furnish proxy voting records. The
report specifies the portfolio companies, meeting dates, proxy proposals, votes cast for the client during the period,
and the position taken with respect to each issue. Reports normally cover quarterly or annual periods. If you wish to
receive a copy of your account's voting record, please contact your T. Rowe Price Client Relationship Manager.

WELLS CAPITAL MANAGEMENT

PROXY VOTING POLICIES AND PROCEDURES

1. Scope of Policies and Procedures. These Proxy Voting Policies and Procedures ("Procedures") are used to
-----------------------------------
determine how to vote proxies relating to portfolio securities held in accounts managed by Wells Capital Management and
whose voting authority has been delegated to Wells Capital Management. Wells Capital Management believes that the
Procedures are reasonably designed to ensure that proxy matters are conducted in the best interest of clients, in
accordance with its fiduciary duties.

2. Voting Philosophy. Wells Capital Management exercises its voting responsibility, as a fiduciary, with the goal
------------------
of maximizing value to shareholders consistent with the governing laws and investment policies of each portfolio. While
securities are not purchased to exercise control or to seek to effect corporate change through share ownership, Wells
Capital Management supports sound corporate governance practices within companies in which they invest.

Wells Capital Management utilizes Institutional Shareholders Services (ISS), a proxy-voting agent, for voting proxies and
proxy voting analysis and research. ISS votes proxies in accordance with the Wells Fargo Proxy Guidelines established by
Wells Fargo Proxy Committee and attached hereto as Appendix A.

3. Responsibilities
----------------

(A) Proxy Administrator
----------------------

Wells Capital Management has designated a Proxy Administrator who is responsible for administering and overseeing
the proxy voting process to ensure the implementation of the Procedures. The Proxy Administrator monitors ISS to
determine that ISS is accurately applying the Procedures as set forth herein and that proxies are voted in a
timely and responsible manner. The Proxy Administrator reviews the continuing appropriateness of the Procedures
set forth herein, recommends revisions as necessary and provides an annual update on the proxy voting process.

(i) Voting Guidelines. Wells Fargo Proxy Guidelines set forth Wells Fargo's proxy policy statement and guidelines
------------------
regarding how proxies will be voted on the issues specified. ISS will vote proxies for or against as
directed by the guidelines. Where the guidelines specify a "case by case" determination for a
particular issue, ISS will evaluate the proxies based on thresholds established in the proxy
guidelines. In addition, proxies relating to issues not addressed in the guidelines, especially
foreign securities, Wells Capital Management will defer to ISS Proxy Guidelines. Finally, with
respect to issues for which a vote for or against is specified by the Procedures, the Proxy
Administrator shall have the authority to direct ISS to forward the proxy to him or her for a
discretionary vote, in consultation with the Proxy Committee or the portfolio manager covering the
subject security if the Proxy Committee or the portfolio manager determines that a case-by-case review
of such matter is warranted, provided however, that such authority to deviate from the Procedures shall
not be exercised if the Proxy Administrator is aware of any conflict of interest as described further
below with respect to such matter.

(ii) Voting Discretion. In all cases, the Proxy Administrator will exercise its voting discretion in accordance with
-------------------
the voting philosophy of the Wells Fargo Proxy Guidelines. In cases where a proxy is forwarded by ISS
to the Proxy Administrator, the Proxy Administrator may be assisted in its voting decision through
receipt of: (i) independent research and voting recommendations provided by ISS or other independent
sources; or (ii) information provided by company managements and shareholder groups. In the event that
the Proxy Administrator is aware of a material conflict of interest involving Wells Fargo/Wells Capital
Management or any of its affiliates regarding a proxy that has been forwarded to him or her, the Proxy
Administrator will return the proxy to ISS to be voted in conformance with the voting guidelines of
ISS.

Voting decisions made by the Proxy Administrator will be reported to ISS to ensure that the vote is
registered in a timely manner.

(iii) Securities on Loan. As a general matter, securities on loan will not be recalled to facilitate proxy
-------------------
voting (in which case the borrower of the security shall be entitled to vote the proxy).

(iv) Conflicts of Interest. Wells Capital Management has obtained a copy of ISS policies, procedures and
----------------------
practices regarding potential conflicts of interest that could arise in ISS proxy voting services to
Wells Capital Management as a result of business conducted by ISS. Wells Capital Management believes
that potential conflicts of interest by ISS are minimized by these policies, procedures and practices,
a copy of which is attached hereto as Appendix B. In addition, Wells Fargo and/or Wells Capital
-----------
Management may have a conflict of interest regarding a proxy to be voted upon if, for example, Wells
Fargo and/or Wells Capital Management or its affiliates have other relationships with the issuer of the
proxy. Wells Capital Management believes that, in most instances, any material conflicts of interest
will be minimized through a strict and objective application by ISS of the voting guidelines attached
hereto. However, when the Proxy Administrator is aware of a material conflict of interest regarding a
matter that would otherwise require a vote by Wells Capital Management, the Proxy Administrator shall
defer to ISS to vote in conformance with the voting guidelines of ISS In addition, the Proxy
Administrator will seek to avoid any undue influence as a result of any material conflict of interest
that exists between the interest of a client and Wells Capital Management or any of its affiliates. To
this end, an independent fiduciary engaged by Wells Fargo will direct the Proxy Administrator on voting
instructions for the Wells Fargo proxy.

(B) ISS
---

ISS has been delegated with the following responsibilities:

(i) Research and make voting determinations in accordance with the Wells Fargo Proxy Guidelines described
in Appendix A;

(ii) Vote and submit proxies in a timely manner;

(iii) Handle other administrative functions of proxy voting;

(iv) Maintain records of proxy statements received in connection with proxy votes and provide copies of such proxy
statements promptly upon request;

(v) Maintain records of votes cast; and

(vi) Provide recommendations with respect to proxy voting matters in general.

(C) Except in instances where clients have retained voting authority, Wells Capital Management will instruct
custodians of client accounts to forward all proxy statements and materials received in respect of client
accounts to ISS.

(D) Notwithstanding the foregoing, Wells Capital Management retains final authority and fiduciary responsibility for
proxy voting.

4. Record Retention. Wells Capital Management will maintain the following records relating to the implementation
-----------------
of the Procedures:
(i) A copy of these proxy voting polices and procedures;
(ii) Proxy statements received for client securities (which will be satisfied by relying on EDGAR or ISS);
(iii) Records of votes cast on behalf of clients (which ISS maintains on behalf of Wells Capital Management);
(iv) Records of each written client request for proxy voting records and Wells Capital Management's written
response to any client request (written or oral) for such records; and
(v) Any documents prepared by Wells Capital Management or ISS that were material to making a proxy voting
decision.
Such proxy voting books and records shall be maintained at an office of Wells Capital Management in an easily
accessible place for a period of five years.

5. Disclosure of Policies and Procedures. Wells Capital Management will disclose to its clients a summary
------------------------------------------
description of its proxy voting policy and procedures via mail. A detail copy of the policy and procedures will be
provided to clients upon request by calling 1-800-736-2316. It is also posted on Wells Capital Management website at
www.wellscap.com.

Wells Capital Management will also provide proxy statements and any records as to how we voted proxies on behalf
of client upon request. Clients may contact us at 1-800-736-2316 or by e-mail at
http://www.wellscap.com/contactus/index.html to request a record of proxies voted on their behalf.

Except as otherwise required by law, Wells Capital Management has a general policy of not disclosing to any
issuer or third party how its client proxies are voted.

Wells Fargo Bank Proxy Guidelines and Philosophy

INTRODUCTION
------------

Wells Fargo Trust has adopted a system-wide philosophy statement and guidelines for voting of proxies for fiduciary and
agency accounts where we have sole voting authority or joint voting authority (with other fiduciaries or co-actors).

The voting of proxies is the responsibility of the Wells Fargo Proxy Committee, which is appointed each year by the Trust
Operating Committee (TOC). A monthly review and approval of voting activity is the responsibility of the Trust
Investment Committee (TIC).

Most Wells Fargo fiduciary entities have appointed Institutional Shareholder Services (ISS) as their agent to vote
proxies, following Wells Fargo guidelines to assure consistent application of the philosophy and voting guidelines and
for efficiency of operations and processing since we share a single system and processing capability. Wells Fargo Bank
administers the proxy voting process, including development and maintenance of proxy voting guidelines.

PROXY POLICY STATEMENT

A. Proxies relating to fiduciary accounts must be voted for the exclusive benefit of the trust beneficiary. Proxy
votes should be cast based upon an analysis of the impact of any proposal on the economic value of the stock during the
time the stock is intended to be held by a fiduciary account.

B. Because the acquisition and retention of a security reflects confidence in management's ability to generate
acceptable returns for the shareholder, certain proxy issues involving corporate governance should be voted as
recommended by management. These issues are listed in the proxy guidelines incorporated in this document.

C. We encourage the Board of Directors to request powers which can be used to enhance the economic value of the
stock by encouraging negotiation with a potential acquirer or by discouraging coercive and undervalued offers:

1. The decision as to whether or not a Board of Directors should be granted these powers will be based upon:
an evaluation of the independence of the Board in its attempt to maximize shareholder value and, upon an evaluation that
the specific power being requested is reasonable in light of our objective to maximize the economic value of the stock
and is not, in itself, abusive. Proxy issues that will be evaluated and voted in accordance with this standard are
listed in the guidelines.

2. We will evaluate proposals where a Board of Directors has requested a change in their powers of
corporate governance that increase the powers of the Board with respect to potential acquisition transactions as follows:

a. An evaluation will be made of the Board's independence and performance as determined by a review of
relevant factors including:

1) Length of service of senior management

2) Number/percentage of outside directors

3) Consistency of performance (EPS) over the last five years

4) Value/growth of shares relative to industry/market averages

5) Clear evidence of management and/or strategy changes implemented by the Board which are designed to
improve company performance and shareholder value

b. If the Board is viewed to be independent and the financial performance of the Company has been good:

1) An evaluation will be made as to the appropriateness of the power or change being requested, if properly
exercised, to enhance the economic value of the stock.

2) If the provision itself is not viewed to be unnecessary or abusive (irrespective of the manner
in which it may be exercised), then the proxy will be voted in favor of such proposal.

c. If the Board is not viewed as independent, or the performance of the Company has not been good, or if
the proposal is determined to be inappropriate, unnecessary, unusual, or abusive, the proxy will be voted against such
proposal.

If the Proxy Committee deems it appropriate, the Company may be offered the opportunity to present the Board's
and management's position to the Committee.

D. Our process for evaluating shareholder proposals will be as follows:

If the proposal relates to issues that do not have a material economic impact on the value of the stock, the proxy will
be voted as recommended by management.

If the proposal has a potential economic impact on the value of the stock, the analysis outlined in paragraph C.2 above
will be made. If the Board is viewed as independent and the financial performance of the Company has been good, then the
proxy will be voted as recommended by management.

3. Standard shareholder proposals will be voted as indicated on Exhibit C.

E. The Proxy Committee will ensure that adequate records are maintained which reflect (i) how and pursuant to which
guidelines proxies are voted, (ii) that proxies and holdings are being reconciled, and (iii) whether reasonable efforts
are being made to obtain any missing proxies.

This Proxy Policy Statement may be disclosed to any current or prospective trust customer or beneficiary. Disclosure of
proxy voting in specific accounts shall be made when requested by the plan sponsor, beneficiary, grantor, owner, or any
other person with a beneficial interest in the account.

Wells Fargo Bank employs Institutional Shareholder Services (ISS) as its proxy voting agent, responsible for analyzing
proxies and recommending a voting position consistent with the Wells Fargo Proxy Guidelines. On issues where the Wells
Fargo Proxy Guidelines are silent, Wells Fargo Bank will defer to the ISS Proxy Guidelines, particularly in the case of
global proxy issues. The Wells Fargo Proxy Committee is responsible for the final decision on the voting of all proxies
for Wells Fargo Bank.

The Wells Fargo Proxy Committee has taken the following steps to ensure that material conflicts of interest are avoided
between the interests of the client (fund shareholders and trust beneficiaries), on the one hand, and the investment
adviser, corporation, principal underwriter, or an affiliated person of the trust account, fund, its investment adviser
or principal underwriter, on the other hand.

The Wells Fargo Proxy Committee requires that all proxies relating to fiduciary accounts must be voted for the exclusive
benefit of the fund shareholder and trust beneficiary.

The Wells Fargo Proxy Committee has adopted system-wide, written proxy guidelines and procedures for voting proxies to
ensure consistency in voting proxies across all accounts.

Wells Fargo has hired ISS as our proxy-voting agent in analyzing and recommending a voting position on all proxies (based
on the Wells Fargo Proxy Guidelines) to ensure independence and consistency in analysis, interpretation and
implementation of the proxy voting process.

Wells Fargo hires an independent fiduciary to direct the Wells Fargo Proxy Committee on voting instructions for the Wells
Fargo proxy.

Proxy guidelines, which are implemented on a case-by-case basis, are evaluated consistently across proxies on the basis
of rigid, quantifiable thresholds.

The Wells Fargo organization has a wall of confidentiality between the commercial bank and its lending activities and the
fiduciary responsibilities within the trust world.

--------
1 Proxies for foreign companies often contain significantly more voting items than those of U.S. companies. Many of
these items on foreign proxies involve repetitive, non-controversial matters that are mandated by local law.
Accordingly, there is an expanded list of items that are deemed routine (and therefore automatically voted in favor for
foreign issuers, including the following: (i) receiving financial statements or other reports from the board; (ii)
approval of declarations of dividends; (iii) appointment of shareholders to sign board meeting minutes; (iv) the
discharge of management and supervisory boards; and (v) approval of share repurchase programs.

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.

(d). (1) Form of Investment Management Agreement among the Registrant, American Skandia
Investment Services, Incorporated and Prudential Investments LLC for the
various portfolios of the Registrant.

(2) Sub-advisory Agreement among American Skandia Investment Services,
Incorporated, Prudential Investments LLC and Goldman Sachs Asset Management
for the AST Goldman Sachs Concentrated Growth Portfolio.

(3) Sub-advisory Agreement among American Skandia Investment Services,
Incorporated, Prudential Investments LLC and Wells Fargo Investment
Management, Incorporated for the AST Money Market Portfolio.

(4) Sub-advisory Agreement among American Skandia Investment Services,
Incorporated, Prudential Investments LLC and Goldman Sachs Asset Management
for the AST Goldman Sachs High Yield Portfolio.

(5) Sub-advisory Agreement among American Skandia Investment Services,
Incorporated, Prudential Investments LLC and T. Rowe Price Associates, Inc.
for the AST T. Rowe Price Asset Allocation Portfolio.

(6) Sub-advisory Agreement among American Skandia Investment Services
Incorporated, Prudential Investments LLC and Pacific Investment Management
Company for the AST PIMCO Total Return Bond Portfolio.

(7) Sub-advisory Agreement among American Skandia Investment Services,
Incorporated, Prudential Investments LLC and T. Rowe Price Associates, Inc.
for the AST T. Rowe Price Natural Resources Portfolio.

(8) Sub-advisory Agreement among American Skandia Investment Services,
Incorporated, Prudential Investments LLC and Pacific Investment Management
Company for the AST PIMCO Limited Maturity Bond Portfolio.

(9) Sub-advisory Agreement among American Skandia Investment Services,
Incorporated, Prudential Investments LLC and T. Rowe Price International, Inc.
for the AST T. Rowe Price Global Bond Portfolio.

(10) Sub-advisory Agreement among American Skandia Investment Services,
Incorporated, Prudential Investments LLC and William Blair & Company LLC for
the AST William Blair International Growth Portfolio.

(11) Sub-advisory Agreement among American Skandia Investment Services,
Incorporated, Prudential Investments LLC and Deutsche Asset Management, Inc.
for the AST DeAM International Equity Portfolio.

(12) Sub-advisory Agreement among American Skandia Investment Services,
Incorporated, Prudential Investments LLC and American Century Investment
Management, Inc. for the AST American Century Strategic Balanced Portfolio.

(13) Sub-advisory Agreement among American Skandia Investment Services,
Incorporated, Prudential Investments LLC and American Century Investment
Management, Inc. for the AST American Century Income & Growth Portfolio.

(14) Sub-advisory Agreement among American Skandia Investment Services,
Incorporated and J. P. Morgan Investment Management, Inc. for the AST JPMorgan
International Equity Portfolio.

(15) Sub-advisory Agreement among American Skandia Investment Services,
Incorporated, Prudential Investments LLC and Deutsche Asset Management, Inc.
for the AST DeAM Global Allocation Portfolio.

(16) Sub-advisory Agreement among American Skandia Investment Services,
Incorporated and Hotchkis and Wiley Capital Management LLC for the AST
Hotchkis & Wiley Large-Cap Value Portfolio.

(17) Sub-advisory Agreement among American Skandia Investment Services,
Incorporated, Prudential Investments LLC and Goldman Sachs Asset Management
for the AST Goldman Sachs Small-Cap Value Portfolio.

(18) Sub-advisory Agreement among American Skandia Investment Services,
Incorporated, Prudential Investments LLC and Cohen & Steers Capital
Management, Inc. for the AST Cohen & Steers Realty Portfolio.

(19) Sub-advisory Agreement among American Skandia Investment Services,
Incorporated, Prudential Investments LLC and Marsico Capital Management, LLC
for the AST Marsico Capital Growth Portfolio.

(20) Sub-advisory Agreement among American Skandia Investment Services,
Incorporated, Prudential Investments LLC and Neuberger&Berman Management,
Incorporated for the AST Neuberger Berman Mid-Cap Value Portfolio.

(21) Sub-advisory Agreement among American Skandia Investment Services,
Incorporated, Prudential Investments LLC and Neuberger&Berman Management,
Incorporated for the AST Neuberger Berman Mid-Cap Growth Portfolio.

(22) Sub-advisory Agreement among American Skandia Investment Services,
Incorporated, Prudential Investments LLC and State Street Research and
Management Company for the AST State Street Research Small-Cap Growth
Portfolio.

(23) Sub-advisory Agreement among American Skandia Investment Services,
Incorporated, Prudential Investments LLC and Deutsche Asset Management, Inc.
for the AST DeAM Small-Cap Growth Portfolio.

(24) Sub-advisory Agreement among American Skandia Investment Services,
Incorporated, Prudential Investments LLC and Massachusetts Financial Services
Company for the AST MFS Global Equity Portfolio.

(25) Sub-advisory Agreement among American Skandia Investment Services,
Incorporated, Prudential Investments LLC and Massachusetts Financial Services
Company for the AST MFS Growth Portfolio.

(26) Sub-advisory Agreement among American Skandia Investment Services,
Incorporated, Prudential Investments LLC and Fred Alger Management, Inc. for
the AST Alger All-Cap Growth Portfolio.

(27) Sub-advisory Agreement among American Skandia Investment Services,
Incorporated, Prudential Investments LLC and Goldman Sachs Asset Management.
for the AST Goldman Sachs Mid-Cap Growth Portfolio.

(28) Sub-advisory Agreement among American Skandia Investment Services,
Incorporated, Prudential Investments LLC and Alliance Capital Management L.P.
for the AST Alliance Growth Portfolio.

(29) Sub-advisory Agreement among American Skandia Investment Services,
Incorporated, Prudential Investments LLC and Sanford C. Bernstein & Co., LLC
for the AST Sanford Bernstein Managed Index 500 Portfolio.

(30) Sub-advisory Agreement among American Skandia Investment Services,
Incorporated, Prudential Investments LLC and Alliance Capital Management L.P.
for the AST Alliance Growth and Income Portfolio.

(31) Sub-advisory Agreement among American Skandia Investment Services,
Incorporated, Prudential Investments LLC and Federated Investment Counseling
for the AST Federated Aggressive Growth Portfolio.

(32) Amendment to Sub-advisory Agreement among American Skandia Investment
Services, Incorporated, Prudential Investments LLC for the AST Federated
Aggressive Growth Portfolio.

(33) Sub-advisory Agreement among American Skandia Investment Services,
Incorporated, Prudential Investments LLC and GAMCO Investors, Inc. for the AST
Gabelli Small-Cap Value Portfolio.

(34) Sub-advisory Agreement among American Skandia Investment Services,
Incorporated, Prudential Investments LLC and GAMCO Investors, Inc. for the AST
Gabelli All-Cap Value Portfolio.

(35) Sub-advisory Agreement among American Skandia Investment Services,
Incorporated, Prudential Investments LLC and Deutsche Asset Management, Inc.
for the AST DeAM Large-Cap Value Portfolio.

(36) Sub-advisory Agreement among American Skandia Investment Services,
Incorporated, Prudential Investments LLC and Lord Abbett & Co. for the AST
Lord Abbett Bond-Debenture Portfolio.

(37) Sub-advisory Agreement among American Skandia Investment Services,
Incorporated, Prudential Investments LLC, Alliance Capital Management L.P. and
Sanford C. Bernstein & Co., LLC for the AST Alliance/Bernstein Growth + Value
Portfolio.

(38) Sub-advisory Agreement among American Skandia Investment Services,
Incorporated and Sanford C. Bernstein & Co., LLC for the AST Sanford Bernstein
Core Value Portfolio.

(39) Sub-advisory Agreement among American Skandia Investment Services,
Incorporated, Prudential Investments LLC and Deutsche Asset Management, Inc.
for the AST DeAM Small-Cap 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.

xx (2) Foreign Custody Manager Delegation Amendment between Registrant and The Chase
Manhattan Bank.

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.

(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.

(p) (1) Form of Code of Ethics of Registrant pursuant to Rule 17j-1.

(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 Alliance Capital Management L.P.

xviii (5) Form of Code of Ethics of American Century Investment Management, Inc.

xviii (6) Form of Code of Ethics of Cohen & Steers Capital Management, Inc.

xxiii (7) Form of Code of Ethics of Deutsche Asset Management, Inc.

xviii (8) Form of Code of Ethics of Federated Investment Counseling

xxvi (9) Form of Code of Ethics of Federated Global Investment Management Corp.

xviii (10) Form of Code of Ethics of Fred Alger Management, Inc.

xviii (11) Form of Code of Ethics of GAMCO Investors, Inc.

xix (12) Form of Code of Ethics of Goldman Sachs Asset Management

(13) Form of Code of Ethics of Hotchkis and Wiley Capital Management LLC

(14) Form of Code of Ethics of J. P. Morgan Investment Management, Inc.

xviii (15) Form of Code of Ethics of Lord, Abbett & Co.

xxv (16) Form of Code of Ethics of Marsico Capital Management, LLC

xviii (17) Form of Code of Ethics of Massachusetts Financial Services Company

xviii (18) Form of Code of Ethics of Neuberger Berman Management, Inc.

xix (19) Form of Code of Ethics of Pacific Investment Management Company LLC

xviii (20) Form of Code of Ethics of Sanford C. Bernstein & Co., LLC

(21) Form of Code of Ethics of State Street Research and Management Company

xviii (22) Form of Code of Ethics of T. Rowe Price Associates, Inc.

xviii (23) Form of Code of Ethics of T. Rowe Price International, Inc.

xx (24) Form of Code of Ethics of Wells Capital Management, Incorporated
-------------------
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.

xix Filed as an Exhibit to Post-Effective Amendment No. 39 to Registration Statement, which Amendment was
filed via EDGAR on April 30, 2001, and is incorporated herein by reference.

xx Filed as an Exhibit to Post-Effective Amendment No. 40 to Registration Statement, which Amendment was
filed via EDGAR on July 16, 2001, and is incorporated herein by reference.

xxi Filed as an Exhibit to Post-Effective Amendment No. 41 to Registration Statement, which Amendment was
filed via EDGAR on September 14, 2001, and is incorporated herein by reference.

xxii Filed as an Exhibit to Post-Effective Amendment No. 42 to Registration Statement, which Amendment was
filed via EDGAR on October 11, 2001, and is incorporated herein by reference.

xxiii Filed as an Exhibit to Post-Effective Amendment No. 43 to Registration Statement, which Amendment was
filed via EDGAR on December 10, 2001, and is incorporated herein by reference.

xxiv Filed as an Exhibit to Post-Effective Amendment No. 44 to Registration Statement, which Amendment was
filed via EDGAR on February 15, 2002, and is incorporated herein by reference.

xxv Filed as an Exhibit to Post-Effective Amendment No. 45 to Registration Statement, which Amendment was
filed via EDGAR on May 1, 2002, and is incorporated herein by reference.

xxvi Filed as an Exhibit to Post-Effective Amendment No. 46 to Registration Statement, which Amendment was
filed via EDGAR on February 28, 2003, 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 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, June 29, 2001, March 28, 2002 and March 26, 2003 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, Incorporated.

The following table sets forth information on the current officers and directors of the Distributor:

David R. Odenath, Jr. President, Chief Executive Officer & Director
Eugene Stark Chief Financial Officer
Lesley Mann Chief Operations Officer
Edward C. Chaplin Treasurer
Anthony Piszel Controller
Timothy Harris Chief Legal Officer & Corporate Secretary
David A. Pugliese Chief Compliance Officer
Maryanne Ryan Chief Anti-Money Laundering Officer
Christopher Allegro Vice President
Timothy S. Cronin Vice President
Jacob Herschler Vice President
Marc Levine Vice President
Steve Long Vice President
William Marsh Vice President
Nicholas Campanella Vice President
Polly Rae Vice President
Yvonne Rocco Vice President
Richard Singmaster Vice President
Hayward L. Sawyer Vice President
Paul Blinn Assistant Controller
Anne Bloss Assistant Controller
Linda Gann Assistant Controller
Janice Pavlou Assistant Controller
Robert Szuhany Assistant Controller
Kathleen A. Chapman Asst. Corporate Secretary
Maureen W. Meade Asst. Corporate Secretary
Laura Delaney Asst. Treasurer
Kathleen C. Hoffman Asst. Treasurer
Georgia T. Garnecki Asst. Secretary
Kathleen M. Gibson Asst. Secretary
James Avery Director
Vivian Banta Director
Richard Carbone Director
Helen Galt Director
Ronald Joelson Director

Of the above, the following individual is an officer and trustee of Registrant: David R. Odenath, Jr.
(Chief Executive Officer and Trustee).

Prudential Investment Management Services LLC ("PIMS") serves as co-underwriter of the Trust's shares,
along with ASM. The Directors and Officers of PIMS are as follows:

James J. Avery Executive Vice President
Edward P. Baird Executive Vice President
Kelly D. Barrett Vice President
Peter J. Boland Vice President & Deputy Chief Operating Officer
Cedward Chaplin Executive Vice President & Treasurer
Dan M. Degood Vice President
John T. Doscher Senior Vice President & Chief Compliance Officer
Robert M. Falzon Vice President
Rosemary Flannery Vice President
Andrew R. French Asst. Secretary
Robert F. Gunia President
William V. Healey Senior Vice President, Secretary and Chief Legal Officer
Richard R. Hoffman Vice President
Carl L. McGuire Vice President
Christine M. McHugh Vice President
Michael J. Mcquade Asst. Treasurer, Senior Vice President, Chief Financial Officer and Comptroller
Charles C. Morgan Vice President
Marguerite Morrison Vice President & Asst. Secretary
Kevin B. Osborn Vice President
Janice F. Pavlou Vice President
Stephen Pelletier Executive Vice President
Judy A. Rice Vice President
Maryanne Ryan Vice President
Ajay Sawhney Vice President
Scott G. Sfeyster Executive Vice President
Robert A. Szuhany Vice President
James J. Tronolone Vice President
Scott S. Wallner Vice President, Asst. Secretary and Deputy Chief Legal Officer
Deborah L. Weidenhammer Vice President
Michael G. Williamson Vice President
Bernard B. Winograd Executive Vice President

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 Gateway Center 3, 100
Mulberry Street, Newark NJ 07102. 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, 2004. 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
--------- ----- ----

David R. Odenath* Trustee and President (Principal 4/30/04
---------------- -------
David R. Odenath Executive Officer)

Grace Torres* Treasurer (Principal 4/30/04
------------ -------
Grace Torres Financial and Accounting
Officer)

Delayne Dedrick Gold* Trustee 4/30/04
-------------------- -------
Delayne Dedrick Gold

Saul K. Fenster* Trustee 4/30/04
---------------- -------
Sauk K. Fenster, Ph.D.

Robert F. Gunia* Trustee 4/30/04
--------------- -------
Robert F. Gunia

W. Scott McDonald, Jr.* Trustee 4/30/04
---------------------- -------
W. Scott McDonald, Jr.

Thomas T. Mooney* Trustee 4/30/04
---------------- -------
Thomas T. Mooney

Thomas M. O'Brien* Trustee 4/30/04
----------------- -------
Thomas M. O'Brien

John A. Pileski* Trustee 4/30/04
--------------- -------
John A. Pileski

F. Don Schwartz* Trustee 4/30/04
--------------- -------
F. Don Schwartz

*By: /s/Edward P. Macdonald
------------------------
Edward P. Macdonald

*Pursuant to Powers of Attorney previously filed

Registration No. 33-24962

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

EXHIBITS
FILED WITH POST-EFFECTIVE AMENDMENT NO. 49
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
-------------- -----------