Registration No. 811-8087
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM N-1A
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 2
(Check appropriate box or boxes)
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AMERICAN SKANDIA MASTER TRUST
(Exact Name of Registrant as Specified in Charter)
Ugland House
P.O. Box 309
South Church Street
George Town, Grand Cayman
Cayman Islands, BWI
(Address of Offshore Administrator)
Telephone Number of Offshore Administrator, including Area Code: (345) 949-6415
Eric C. Freed
1 Corporate Drive
Shelton, Connecticut 06484-0883
(Name and Address of Agent for Service)
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With copy to:
Leonard B. Mackey, Jr., Esq. Robert K. Fulton, Esq.
Rogers & Wells Werner & Kennedy
200 Park Avenue 1633 Broadway
New York, New York 10166 New York, New York 10019
(212) 878-8000 (212) 408-6900
EXPLANATORY NOTE
This Registration Statement has been filed by the Registrant
pursuant to Section 8(b) of the Investment Company Act of 1940, as amended (the
"1940 Act"). However, beneficial interests in the Registrant are not being
registered under the Securities Act of 1933, as amended (the "1933 Act"), since
such interests will be issued solely in private placement transactions which do
not involve any "public offering" within the meaning of Section 4(2) of the 1933
Act. Investments in the Registrant may only be made by investment companies or
certain other entities which are "accredited investors" within the meaning of
Regulation D under the 1933 Act. This Registration Statement does not constitute
an offer to sell, or the solicitation of an offer to buy, any beneficial
interests in the Registrant.
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AMERICAN SKANDIA MASTER TRUST
PART A
March 1, 1999
RESPONSES TO ITEMS 1 THROUGH 3 AND ITEMS 5 AND 9 HAVE BEEN OMITTED PURSUANT
TO PARAGRAPH 2(b) OF INSTRUCTION B OF THE GENERAL INSTRUCTIONS TO FORM N-1A.
American Skandia Master Trust (the "Master Trust") is part of a master-feeder
structure (as described below). Part A of this Registration Statement should be
read in conjunction with Post-Effective Amendment No. 5 of the Registration
Statement of American Skandia Advisor Funds, Inc. (the "Feeder") (1940 Act file
No. 811-8085), as filed with the Securities and Exchange Commission (the
"Commission") on February 26, 1999, and as amended from time to time, (the
"Feeder's Registration Statement"). Part A of the Feeder's Registration
Statement (the "Feeder's Part A") includes the joint prospectus of the series of
the Feeder (the "Feeder Funds") which invest in the Portfolios (as defined
below) and those series of the Feeder which do not.
ITEM 4. INVESTMENT OBJECTIVES, PRINCIPAL
INVESTMENT STRATEGIES AND RELATED RISKS.
The Master Trust is an open-end, management investment company,
organized on March 6, 1997 as a business trust under the laws of the State of
Delaware. The Master Trust is a "series fund," which is a mutual fund divided
into separate portfolios. By this offering document, the Master Trust is
offering five diversified portfolios (each a "Portfolio," and together the
"Portfolios"). From time to time, other series may be established and sold
pursuant to other offering documents.
American Skandia Investment Services, Incorporated ("ASISI") serves as
the Master Trust's investment adviser. Currently, ASISI engages a sub-advisor
("Sub-Advisor") for the investment management of each Portfolio.
Beneficial interests in the Master Trust are issued solely in private
placement transactions which do not involve any "public offering" within the
meaning of Regulation D under the Securities Act of 1933, as amended (the "1933
Act"). Investments in the Master Trust may be made only by investment companies
or certain other entities which are "accredited investors" within the meaning of
Regulation D under the 1933 Act. This registration statement does not constitute
an offer to sell, or the solicitation of an offer to buy, any "security" within
the meaning of the 1933 Act.
INVESTMENT PROGRAMS OF THE PORTFOLIOS
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. Those investment policies specifically labeled as "fundamental" may not
be changed without shareholder approval. However, the investment objective of
each Portfolio generally is not a fundamental policy and may be changed by the
Trustees of the Master Trust without shareholder approval. Similarly, most of
the Portfolios' investment policies and limitations are not fundamental
policies.
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 of the Master Trust, the Master Trust may
add more Portfolios and may cease to offer any existing Portfolio in the future.
ASMT T. Rowe Price International Equity PORTFOLIO:
Investment Objective: The investment objective of the Portfolio is to seek total
return from long-term growth of capital and income principally through
investments in common stocks of established, non-U.S. companies. Investments may
be made solely for capital appreciation or solely for income or any combination
of both for the purpose of achieving a higher overall return.
Principal Investment Policies and Risks:
The Sub-advisor expects to invest substantially all of the Portfolio's
assets (with a minimum of 65%) in established foreign companies. Geographic
diversification will be wide, including both developed and developing countries,
and there will normally be at least three different countries represented in the
Portfolio. Stocks can be purchased without regard to a company's market
capitalization, but the Sub-advisor's focus typically will be on large and, to a
lesser extent, medium-sized companies. Investment in foreign companies may be
made through American Depositary Receipts (ADRs) and the securities of foreign
investment funds or trusts (including passive foreign investment companies).
The Portfolio will invest in stocks that have the potential for growth
of capital or income or both. Stocks are selected by blending a "bottom-up"
approach (an approach based on the Sub-advisor's fundamental research on
particular companies), with an awareness of a country's economic status and
outlook. However, selecting particular stocks is the focal point of
decision-making. The Sub-advisor weighs a company's prospects for achieving and
sustaining above-average long-term earnings growth and also looks at valuation
factors, such as price/earnings and price/cash flow ratios. Valuation factors
often influence the Sub-advisor's allocations among large-, mid-, and small-cap
companies.
As with all stock funds, the Portfolio's (and Fund's) share price can
fall because of weakness in one or more securities markets, particular
industries or specific holdings. As a stock fund investing primarily in foreign
securities, the Portfolio may be subject to greater risk of loss and price
fluctuation than domestic funds. The risks of foreign investing, which are
described in more detail below under "Certain Risk Factors and Investment
Methods," include varying stages of economic and political development of
foreign countries, differing regulatory and accounting standards in non-U.S.
markets, higher transaction costs, and the risks of currency fluctuations. While
the Portfolio may engage in forward foreign currency exchange contracts and
futures and options on foreign currencies, the Portfolio does not engage in
extensive currency hedging under normal conditions. To the extent that the
Portfolio has investments in developing countries, the risks of foreign
investing will be accentuated.
Other Investments:
In addition to common stocks, the Portfolio may also purchase a variety
of other equity-related securities, such as preferred stocks, warrants and
convertible securities, as well as investment grade corporate and governmental
debt securities, when considered consistent with the Portfolio's investment
objectives and program. The Portfolio may enter into stock index or currency
futures contracts (or options thereon) for hedging purposes or to provide an
efficient means of managing the Portfolio's exposure to the foreign equity
markets. The Portfolio may write covered call options and purchase put and call
options on foreign currencies, securities, and stock indices. As part of its
investment program and to maintain greater flexibility, 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" and Part B of the Feeder Fund Registration
Statement under "Investment Programs of the Funds."
Temporary Investments. Under exceptional economic or market conditions
abroad, the Portfolio may temporarily invest all or a major portion of its
assets in U.S. government obligations or debt obligations of U.S. companies.
While the Portfolio is in a defensive position, the opportunity to achieve its
investment objective will be limited. The Portfolio's cash reserves may be
invested in high-quality domestic and foreign money market instruments. In
addition to enabling the Portfolio to take defensive positions, cash reserves
also provide flexibility in meeting redemptions and paying expenses.
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ASMT JANUS CAPITAL GROWTH PORTFOLIO:
Investment Objective: The investment objective of the Portfolio is to seek
growth of capital.
Principal Investment Policies and Risks:
The Portfolio will pursue its objective by investing primarily in
common stocks. Common stock investments will be in companies that the
Sub-advisor believes are experiencing favorable demand for their products and
services, and which operate in a favorable competitive and regulatory
environment. The Sub-advisor generally takes a "bottom up" approach to choosing
investments for the Portfolio. In other words, the Sub-advisor seeks to identify
individual companies with earnings growth potential that may not be recognized
by the market at large. Current income is not a significant factor in choosing
investments.
Because the Portfolio invests a substantial portion (or all) of its
assets in stocks, the Portfolio is subject to the risks associated with stock
investments, and the Portfolio's (and Fund's) share price therefore may
fluctuate substantially. This is true despite the Portfolio's focus on the
stocks of larger more-established companies. The Portfolio's share price will be
affected by changes in the stock markets generally, and factors specific to a
company or an industry will affect the prices of particular stocks held by the
Portfolio (for example, poor earnings, loss of major customers, major litigation
against an issuer, or changes in government regulations affecting an industry).
Because of the types of securities in which the Portfolio invests, the Portfolio
is designed for those who are investing for the long term.
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.
Special Situations. The Portfolio may invest in "special situations"
from time to time. A "special situation" arises when, in the opinion of the
Sub-advisor, the securities of a particular company will be recognized and
appreciate in value due to a specific development, such as a technological
breakthrough, management change or new product at that company. Investment in
"special situations" carries an additional risk of loss in the event that the
anticipated development does not occur or does not attract the expected
attention.
Other Investments.
Although the Sub-advisor expects to invest primarily in equity
securities, the Portfolio may also invest to a lesser degree in preferred
stocks, convertible securities, warrants, and debt securities when the Portfolio
perceives an opportunity for capital growth from such securities. The Portfolio
is subject to the following percentage limitations on investing in certain types
of debt securities:
-- 35% of its assets in lower-rated fixed income securities ("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).
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 for the Portfolio to
achieve its investment objective of capital growth will be limited.
ASAF INVESCO Equity Income Portfolio:
Investment Objective: The investment objective of the Portfolio is to seek
high current income while following sound investment practices. Capital growth
potential is an additional, but secondary, consideration.
Principal Investment Policies and Risks:
The Portfolio seeks to achieve its objective by investing in securities
that will provide a relatively high yield and stable return and that, over a
period of years, may also provide capital appreciation. The Portfolio normally
will invest at least 65% of its assets in dividend-paying common stocks of
domestic and foreign issuers. Up to 10% of the Portfolio's assets may be
invested in equity securities that do not pay regular dividends. In addition,
the Portfolio normally will have some portion of its assets invested in debt
securities, convertible bonds, or preferred stocks. The Portfolio may invest up
to 25% of its total assets in foreign securities, including securities of
issuers in countries considered to be developing. These foreign investments may
serve to increase the overall risks of the Portfolio.
The Portfolio's investments in common stocks may, of course, decline in
value, which will result in declines in the Portfolio's share price. Such
declines could be substantial. To minimize the risk this presents, the
Sub-advisor only invests the Portfolio's assets in marketable common stocks and
equity securities; and will not invest more than 5% of the Portfolio's assets in
the securities of any one company or more than 25% of the Portfolio's assets in
any one industry. In light of the Portfolio's focus on income producing stocks,
its risk and share price fluctuation (and potential for gain) may be less than
many other stock funds.
Debt Securities. The Portfolio's investments in debt securities will
generally be subject to both credit risk and market risk. Credit risk relates to
the ability of the issuer to meet interest or principal payments, or both, as
they come due. Market risk relates to the fact that the market values of debt
securities in which the Portfolio invests generally will be affected by changes
in the level of interest rates. An increase in interest rates will tend to
reduce the market values of debt securities, whereas a decline in interest rates
will tend to increase their values. Although the Sub-advisor will limit the
Portfolio's debt security investments to securities it believes are not highly
speculative, both kinds of risk are increased by investing in debt securities
rated below the top four grades by Standard & Poor's Corporation or Moody's
Investors Services, Inc., or equivalent unrated debt securities ("junk bonds").
In order to minimize its risk in investing in debt securities, the
Portfolio will invest no more than 15% of its assets in junk bonds, and in no
event will the Portfolio ever invest in a debt security rated below Caa by
Moody's or CCC by Standard & Poor's. While the Sub-advisor will monitor all of
the debt securities in the Portfolio for the issuers' ability to make required
principal and interest payments and other quality factors, the Sub-advisor may
retain in the Portfolio a debt security whose rating is changed to one below the
minimum rating required for purchase of such a security. For a discussion of the
special risks involved in lower-rated bonds, see this Prospectus under "Certain
Risk Factors and Investment Methods."
Temporary Investments:
In periods of uncertain market and economic conditions, the Portfolio
may assume a defensive position with up to 100% of its assets temporarily
invested in high quality corporate bonds or notes or government securities, or
held in cash. While the Portfolio is in a defensive position, the opportunity
for the Portfolio to achieve its investment objective may be limited.
ASMT TOTAL RETURN BOND PORTFOLIO:
Investment Objective: The investment objective of the Portfolio is to seek
to maximize total return, consistent with preservation of capital and prudent
investment management.
Principal Investment Policies and Risks:
The Portfolio will invest at least 65% of the assets of which will be
invested in the following types of fixed income securities;
o securities issued or guaranteed by the U.S. Government, its agencies
or instrumentalities;
o corporate debt securities, including convertible securities and
commercial paper;
o mortgage and other asset-backed securities;
o structured notes, including hybrid or "indexed" securities, 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 obligations of foreign governments or their subdivisions, agencies and
instrumentalities; 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
portfolio 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. 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, and discussed in more detail 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.
Catastrophe Bonds. Catastrophe bonds are fixed income securities for
which the return of principal and payment of interest is contingent upon the
non-occurrence of a specific "trigger" event. The trigger event may be, for
example, a hurricane or an earthquake in a specific geographic region that
causes losses exceeding a specific amount. If the trigger event occurs, the
Portfolio may lose all or a portion of the amount it invested in the bond.
Catastrophe bonds may also expose the Portfolio to certain other risks,
including default, adverse regulatory interpretation, and adverse tax
consequences.
Mortgage-Backed 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 any 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.
Derivative Instruments. The Portfolio may purchase and write call and
put options on securities, securities indices and on foreign currencies. The
Portfolio may invest in interest rate futures contracts, stock index futures
contracts and foreign currency futures contracts and options thereon that are
traded on U.S. or foreign exchanges or boards of trade. The Portfolio may also
enter into swap agreements with respect to foreign currencies, interest rates
and securities indices. The Portfolio may use these techniques to hedge against
changes in interest rates, currency exchange rates or securities prices or as
part of its overall investment strategy.
For a discussion of futures and options and their risks, see this
Prospectus under "Certain Risk Factors and Investment Methods." The Portfolio's
investments in swap agreements are described directly below.
Swap Agreements. The Portfolio may enter into interest rate, index and
currency exchange rate swap agreements for the purposes of attempting to obtain
a desired return at a lower cost than if the Portfolio had invested directly in
an instrument that yielded the desired return. Swap agreements are two-party
contracts entered into primarily by institutional investors for periods ranging
from a few weeks to more than one year. In a standard "swap" transaction, the
two parties agree to exchange the returns (or differentials in rates of return)
earned or realized on particular investments or instruments. The returns to be
exchanged between the parties are calculated with respect to a "notional
amount," i.e., a specified dollar amount that is hypothetically invested at a
particular interest rate, in a particular foreign currency, or in a "basket" of
securities representing a particular index. Commonly used swap agreements
include interest rate caps, under which, in return for a premium, one party
agrees to make payments to the other to the extent that interest rates exceed a
specified rate or "cap"; interest floors, under which, in return for a premium,
one party agrees to make payments to the other to the extent that interest rates
fall below a specified level or "floor"; and interest rate collars, under which
a party sells a cap and purchases a floor or vice versa in an attempt to protect
itself against interest rate movements exceeding given minimum or maximum
levels.
Under most swap agreements entered into by the Portfolio, the parties'
obligations are determined on a "net basis." Consequently, the Portfolio's
obligations (or rights) under a swap agreement will generally be equal only to a
net amount based on the relative values of the positions held by each party.
Whether the Portfolio's use of swap agreements will be successful will
depend on the sub-advisor's ability to predict that certain types of investments
are likely to produce greater returns than other investments. Moreover, the
Portfolio may not receive the expected amount under a swap agreement if the
other party to the agreement defaults or becomes bankrupt. The swaps market is
relatively new and is largely unregulated.
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ASMT JPM MONEY MARKET PORTFOLIO:
Investment Objective: The investment objective of the Portfolio is to seek
high current income and maintain high levels of liquidity.
Principal Investment Policies and Risks:
As a money market fund, the Portfolio seeks to maintain a stable net
asset value of $1.00 per share. In other words, the Portfolio attempts to
operate so that shareholders do not lose any of the principal amount they invest
in the Portfolio. Of course, there can be no assurance that the Portfolio will
achieve its goal of a stable net asset value, and shares of the Portfolio are
neither insured nor guaranteed by the U.S. government or any other entity. For
instance, the issuer or guarantor of a portfolio security or the other party to
a contract could default on its obligation, and this could cause the Portfolio's
net asset value to fall below $1. In addition, the income earned by the
Portfolio will fluctuate based on market conditions and other factors.
Under the regulatory requirements applicable to money market funds, the
Portfolio must maintain a weighted average portfolio maturity of not more than
90 days and invest in high quality U.S. dollar-denominated securities that have
effective maturities of not more than 397 days. In addition, the Portfolio will
limit its investments to those securities that, in accordance with guidelines
adopted by the Trustees of the Master 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 Trustees that
disposing of the investment would not be in the Portfolio's best interest.
Subject to the above requirements, the Portfolio will invest in one or
more of the types of investments described below.
United States Government Obligations. The Portfolio may invest in
obligations of the U.S. Government and its agencies and instrumentalities either
directly or through repurchase agreements. U.S. Government obligations include:
(i) direct obligations issued by the United States Treasury such as Treasury
bills, notes and bonds; and (ii) instruments issued or guaranteed by
government-sponsored agencies acting under authority of Congress. Some U.S.
Government Obligations are supported by the full faith and credit of the U.S.
Treasury; others are supported by the right of the issuer to borrow from the
Treasury; others are supported by the discretionary authority of the U.S.
Government to purchase the agency's obligations; still others are supported only
by the credit of the agency. There is no assurance that the U.S. Government will
provide financial support to one of its agencies if it is not obligated to do so
by law.
Bank Obligations. The Portfolio may invest in high quality United
States dollar-denominated negotiable certificates of deposit, time deposits and
bankers' acceptances of U.S. and foreign banks, savings and loan associations
and savings banks meeting certain total asset minimums. The Portfolio may also
invest in obligations of international banking institutions designated or
supported by national governments to promote economic reconstruction,
development or trade between nations (e.g., the European Investment Bank, the
Inter-American Development Bank, or the World Bank). These obligations may be
supported by commitments of their member countries, and there is no assurance
these commitments will be undertaken or met.
Commercial Paper; Bonds. The Portfolio may invest in high quality
commercial paper and corporate bonds issued by United States corporations. The
Portfolio may also invest in bonds and commercial paper of foreign issuers if
the obligation is United States dollar-denominated and is not subject to foreign
withholding tax.
Asset-Backed Securities. As may be permitted by current laws and
regulations, the Portfolio may invest in asset-backed securities up to 10% of
its net assets.
Synthetic Instruments. As may be permitted by current laws and
regulations and if expressly permitted by the 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
turnover." A 100% portfolio turnover rate would occur if all of the securities
in a portfolio of investments were replaced during a given period.
Although turnover rates may vary substantially from year to
year, it is anticipated that the following Portfolios may have annual rates of
turnover exceeding 100%.
ASMT Janus Capital Growth Portfolio
ASMT PIMCO Total Return 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. High portfolio turnover rates may
also generate larger taxable income and taxable capital gains which may increase
investor tax liability.
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 Programs of the
Portfolios," 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
Part B of the Feeder Fund Registration Statement under "Investment Programs of
the Portfolios." 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. 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. Certain derivative
instruments and some of their risks are described in more detail below.
Options. Most of the Portfolios (except for the ASMT INVESCO Equity
Income Portfolio and ASMT JPM Money Market Portfolio) may engage in at least
some types of options transactions. The purchaser of an option on a security or
currency obtains the right to purchase (in the case of a call option) or sell
(in the case of a put option) the security or currency at a specified price
within a limited period of time. Upon exercise by the purchaser, the writer
(seller) of the option has the obligation to buy or sell the underlying security
at the exercise price. An option on a securities index is similar to an option
on an individual security, except that the value of the option depends on the
value of the securities comprising the index, and all settlements are made in
cash.
A Portfolio will pay a premium to the party writing the option when it
purchases an option. In order for a call option purchased by a Portfolio to be
profitable, the market price of the underlying security must rise sufficiently
above the exercise price to cover the premium and other transaction costs.
Similarly, in order for a put option to be profitable, the market price of the
underlying security must decline sufficiently below the exercise price to cover
the premium and other transaction costs.
Generally, the Portfolios will write call options only if they are
covered (i.e., the Portfolio owns the security subject to the option or has the
right to acquire it without additional cost). By writing a call option, a
Portfolio assumes the risk that it may be required to deliver a security for a
price lower than its market value at the time the option is exercised.
Effectively, a Portfolio that writes a covered call option gives up the
opportunity for gain above the exercise price should the market price of the
underlying security increase, but retains the risk of loss should the price of
the underlying security decline. A Portfolio will write call options in order to
obtain a return from the premiums received and will retain the premiums whether
or not the options are exercised, which will help offset a decline in the market
value of the underlying securities. A Portfolio that writes a put option
likewise receives a premium, but assumes the risk that it may be required to
purchase the underlying security at a price in excess of its current market
value.
A Portfolio may sell an option that it has previously purchased prior
to the purchase or sale of the underlying security. Any such sale would result
in a gain or loss depending on whether the amount received on the sale is more
or less than the premium and other transaction costs paid on the option. A
Portfolio may terminate an option it has written by entering into a closing
purchase transaction in which it purchases an option of the same series as the
option written.
Futures Contracts and Related Options. Each Portfolio (except the ASMT
INVESCO Equity Income Portfolio and the ASMT JPM 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.
Pursuant to 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, 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 Master 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.
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 Portfolios 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.
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 and
the amounts it distributes to shareholders in dividends 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.
While the introduction of a single currency, the euro, on January 1,
1999 for participating nations in the European Economic and Monetary Union
generally occurred without significant market or operational disruption, the
euro still presents certain political and economic uncertainties. These
uncertainties may include political reaction against the euro in participating
nations and operational difficulties as the result of the fact the some
securities still pay dividends and interest in the old currencies. These
uncertainties could cause market disruptions, and could adversely affect the
value of securities held by the Portfolios.
Foreign Currency Transactions. A Portfolio that invests in securities
denominated in foreign currencies will need to engage in foreign currency
exchange transactions. Such transactions may occur on a "spot" basis at the
exchange rate prevailing at the time of the transaction. Alternatively, a
Portfolio may enter into forward foreign currency exchange contracts. A forward
contract involves an obligation to purchase or sell a specified currency at a
specified future date at a price set at the time of the contract. A Portfolio
may enter into a forward contract when it wishes to "lock in" the U.S. dollar
price of a security it expects to or is obligated to purchase or sell in the
future. This practice may be referred to as "transaction hedging." In addition,
when a Portfolio's Sub-advisor believes that the currency of a particular
country may suffer or enjoy a significant movement compared to another currency,
the Portfolio may enter into a forward contract to sell or buy the first foreign
currency (or a currency that acts as a proxy for such currency). This practice
may be referred to as "portfolio hedging." In any event, the precise matching of
the forward contract amounts and the value of the securities involved generally
will not be possible. No Portfolio will enter into a forward contract if it
would be obligated to sell an amount of foreign currency in excess of the value
of the Portfolio's securities or other assets denominated in that currency, or
will sell an amount of proxy currency in excess of the value of securities
denominated in the related currency. The effect of entering into a forward
contract on a Portfolio 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.
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 Part B of the Feeder Fund Registration Statement,
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-backed 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-backed 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-backed
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-backed 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 ASMT T. Rowe Price International Equity Portfolio, the ASMT Janus
Capital Growth Portfolio, the ASMT Total Return Bond Portfolio, and the ASMT JPM
Money Market Portfolio each 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. The
ASMT JPM 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.
The ASMT Total Return Bond Portfolio may also sell securities
on a when-issued, 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 Master Trust, each
Portfolio may invest up to 15% of its net assets in illiquid securities (except
for the ASMT JPM Money Market Portfolio, which is limited to 10% 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
Master 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. Under guidelines adopted by the Trustees of the Master
Trust, repurchase agreements must be fully collateralized and can be entered
into only with well-established banks and broker-dealers that meet the specific
requirements in the guidelines and otherwise have been deemed creditworthy by
the Sub-advisor. Repurchase transactions are intended to be short-term
transactions, usually with the seller repurchasing the securities within seven
days. Repurchase agreements that mature in more than seven days are subject to a
Portfolio's limit on illiquid securities.
A Portfolio that enters into a repurchase agreement may lose money in
the event that the other party defaults on its obligation and the Portfolio is
delayed or prevented from disposing of the collateral. A Portfolio also might
incur a loss if the value of the collateral declines, and it might incur costs
in selling the collateral or asserting its legal rights under the agreement. If
a defaulting seller filed for bankruptcy or became insolvent, disposition of
collateral might be delayed pending court action.
REVERSE REPURCHASE AGREEMENTS:
The ASMT Janus Capital Growth Portfolio, the ASMT Total Return Bond
Portfolio, and the ASMT JPM Money Market Portfolio each may enter into reverse
repurchase agreements. In a reverse repurchase agreement, a Portfolio sells a
portfolio instrument and agrees to repurchase it at an agreed upon date and
price, which reflects an effective interest rate. It may also be viewed as a
borrowing of money by the Portfolio and, like borrowing money, may increase
fluctuations in a Portfolio's share price. When entering into a reverse
repurchase agreement, a Portfolio must set aside on its books cash or other
liquid assets in an amount sufficient to meet its repurchase obligation.
BORROWING:
Each Portfolio may borrow money from banks. Each Portfolio's borrowings
are limited so that immediately after such borrowing the value of the
Portfolio's assets (including borrowings) less its liabilities (not including
borrowings) is at least three times the amount of the borrowings. Should a
Portfolio, for any reason, have borrowings that do not meet the above test, such
Portfolio must reduce such borrowings so as to meet the necessary test within
three business days. The ASMT JPM Money Market Portfolio will not purchase
securities when outstanding borrowings are greater than 5% of the Portfolio's
total assets. If a Portfolio borrows money, its share price may fluctuate more
widely until the borrowing is repaid.
LENDING PORTFOLIO SECURITIES:
Each Portfolio may lend securities with a value of up to 33 1/3% of its
total assets to broker-dealers, institutional investors, or others for the
purpose of realizing additional income. Voting rights on loaned securities
typically pass to the borrower, although a Portfolio has the right to terminate
a securities loan, usually within three business days, in order to vote on
significant matters or for other reasons. All securities loans will be
collateralized by cash or securities issued or guaranteed by the U.S. Government
or its agencies at least equal in value to the market value of the loaned
securities. Nonetheless, lending securities involves certain risks, including
the risk that the Portfolio will be delayed or prevented from recovering the
collateral if the borrower fails to return a loaned security.
OTHER INVESTMENT COMPANIES:
The Master Trust has made arrangements with certain money market mutual
funds so that the Sub-advisors for the various Funds can "sweep" excess cash
balances of the Portfolio to those funds for temporary investment purposes. In
addition, certain Sub-advisors may invest Portfolio assets in money market funds
that they advise or in other investment companies. Mutual funds pay their own
operating expenses, and the Portfolios, as shareholders in the funds, will
indirectly pay their proportionate share of such Portfolios' expenses.
YEAR 2000 RISKS:
Many services provided to the Master Trust and its Portfolios by the
Investment Manager, the Sub-advisors, and the Master Trust's other service
providers (collectively, the "Service Providers") rely on the functioning of
their respective computer systems. Many computer systems cannot distinguish the
year 2000 from the year 1900, with resulting potential difficulty in performing
various systems functions (the "Year 2000 Issue"). The Year 2000 Issue could
potentially have an adverse impact on the handling of security trades, the
payment of interest and dividends, pricing, account services and other Master
Trust operations.
The Service Providers recognize the importance of the Year 2000 Issue
and have advised the Master Trust that they are taking appropriate steps in
preparation for the year 2000. At this time, there can be no assurance that the
actions taken by the Service Providers, who are generally not affiliated with
the Investment Manager, will be sufficient to avoid any adverse impact on the
Portfolios, nor can there be any assurance that the Year 2000 Issue will not
have an adverse effect on the Portfolios' investments or on global markets or
economies generally. In addition, it has been reported that foreign institutions
have made less progress in addressing the Year 2000 Issue than major U.S.
entities, which could adversely effect the Portfolios' foreign investments.
The Investment Manager and the Master Trust are seeking further
assurances from the Service Providers that all of the systems they use in
connection with the Portfolios will be adapted in time for the year 2000. The
Investment Manager will continue to monitor the Year 2000 Issue in an effort to
confirm appropriate preparation by the Service Providers, and is attempting to
develop contingency plans in the event that the Service Providers' systems are
not adapted in time.
ITEM 6. MANAGEMENT, ORGANIZATION, CAPITAL STRUCTURE OF THE MASTER TRUST
(a) MANAGEMENT
THE INVESTMENT MANAGER:
American Skandia Investment Services, Incorporated ("ASISI," as
previously defined), One Corporate Drive, Shelton, Connecticut 06484, acts as
investment manager to each of the Portfolios pursuant to separate investment
management agreements with the Master Trust, respectively (the "Management
Agreements"). In addition to serving as investment manager to the Master Trust,
ASISI has served since 1992 as the investment manager to American Skandia Trust,
an investment company whose shares are made available to life insurance
companies writing variable annuity contracts and variable life insurance
policies, and has served since 1997 as investment manager to the Feeder.
The Management Agreements provide that ASISI will furnish each
Portfolio with investment advice and investment management and administrative
services subject to the supervision of the Trustees of the Master Trust, and in
conformity with the stated investment objectives, policies and limitations of
the applicable Portfolio. The Investment Manager is responsible for monitoring
the activities of the Sub-advisors it engages to manage the Portfolios and
reporting on such activities to the Trustees of the Master Trust. The Investment
Manager must also provide, or obtain and supervise, the executive,
administrative, accounting, custody, transfer agent and shareholder servicing
services that are deemed advisable by the Trustees of the Master Trust.
THE SUB-ADVISORS AND PORTFOLIO MANAGERS:
ASISI currently engages the following Sub-advisors to manage the
investments of each Portfolio in accordance with the Portfolio's investment
objective, policies and limitations and any investment guidelines established by
the Investment Manager. Each Sub-advisor is responsible, subject to the
supervision and control of the Investment Manager, for the purchase, retention
and sale of securities in the Portfolio's investment portfolio.
Unless otherwise noted, each portfolio manager listed below has managed
his or her respective Portfolio since its inception.
Rowe Price-Fleming International, Inc. ("Price-Fleming") serves as
Sub-advisor for the ASMT T. Rowe Price International Equity Portfolio.
Price-Fleming, located at 100 East Pratt Street, Baltimore, Maryland 21202, was
founded in 1979 as a joint venture between T. Rowe Price Associates, Inc. and
Robert Fleming Holdings Limited. Price-Fleming is one of the world's largest
international mutual fund asset managers with over $32 billion under management
as of December 31, 1998 in its offices in Baltimore, London, Tokyo, Hong Kong,
Singapore, and Buenos Aires.
An investment advisory group has responsibility for the day-to-day
management of the ASMT T. Rowe Price International Equity Portfolio. The
advisory group for the Portfolio consists of Martin G. Wade, Mark C.J.
Bickford-Smith, Robert W. Smith, John R. Ford, James B.M. Seddon, and David J.L.
Warren. Martin Wade joined Price-Fleming in 1979 and has 27 years of experience
with Fleming Group (Fleming Group includes Robert Fleming Holdings Ltd. and/or
Jardine Fleming International Holdings Ltd.) in research, client service and
investment management. Mark C.J. Bickford-Smith joined Price-Fleming in 1995 and
has 14 years experience with the Fleming Group in research and financial
analysis. Robert W. Smith joined Price-Fleming in 1996, and has been with T.
Rowe Price since 1992. He has 12 years experience in financial analysis. John R.
Ford joined Price-Fleming in 1982 and has 17 years of experience with Fleming
Group in research and portfolio management. James B.M. Seddon joined
Price-Fleming in 1987 and has 12 years of experience in investment management.
David J.L. Warren joined Price-Fleming in 1984 and has 17 years experience in
equity research, fixed income research and portfolio management.
Janus Capital Corporation ("Janus") serves as Sub-advisor for the ASMT
Janus Capital Growth Portfolio. Janus, located at 100 Fillmore Street, Denver,
Colorado 80206-4923, serves as the investment advisor to the Janus Funds, as
well as advisor or sub-advisor to several other mutual funds and individual,
corporate, charitable and retirement accounts. As of December 31, 1998, Janus
managed assets worth approximately $108 billion.
The portfolio manager responsible for management of the ASMT Janus Capital
Growth Portfolio is Scott W. Schoelzel. Mr. Schoelzel, a Senior Portfolio
Manager at Janus who has managed the Portfolio since August, 1997, joined Janus
in January, 1994 as Vice President of Investments.
INVESCO Funds Group, Inc. ("INVESCO") serves as Sub-advisor for the
ASMT INVESCO Equity Income Portfolio. INVESCO, located at 7800 East Union
Avenue, P.O. Box 173706, Denver, Colorado 80217-3706, was established in 1932.
AMVESCAP PLC, the parent of INVESCO, is one of the largest independent
investment management businesses in the world and managed over $275 billion of
assets as of December 31, 1998.
The portfolio managers responsible for the day-to-day management of the
ASMT INVESCO Equity Income Portfolio are Charles P. Mayer, Portfolio Co-Manager,
and Donovan J. (Jerry) Paul, Portfolio Co-Manager. Mr. Mayer began his
investment career in 1969 and is now a senior vice president of INVESCO. From
1993 to 1994, he was vice president of INVESCO. Mr. Paul entered the investment
management industry in 1976 and has been a senior vice president of INVESCO
since 1994. From 1993 to 1994, he was president of Quixote Investment
Management, Inc.
Pacific Investment Management Company ("PIMCO") serves as Sub-advisor
for the ASMT PIMCO Total Return Bond Portfolio. PIMCO, located at 840 Newport
Center Drive, Suite 360, Newport Beach, California 92660, is an investment
counseling firm founded in 1971. As of December 31, 1998, PIMCO had
approximately $158 billion of assets under management.
The portfolio manager responsible for the day-to-day management of the ASMT
PIMCO Total Return Bond Portfolio is William H. Gross. Mr. Gross is Managing
Director of PIMCO and has been associated with the firm since 1971.
J.P. Morgan Investment Management Inc. ("J.P. Morgan") serves as
Sub-advisor for the ASMT JPM Money Market Portfolio. J.P. Morgan has principal
offices at 522 Fifth Avenue, New York, New York 10036. 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
$290 billion as of December 31, 1998. J.P. Morgan has managed investments for
clients since 1913, and has managed short-term fixed income assets for clients
since 1969.
INVESTMENT MANAGEMENT FEES:
Investment Management Fees. ASISI receives a monthly fee from each
Portfolio 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, among other things, the investment objective,
policies and limitations of each Portfolio. Each investment management fee is
accrued daily for the purposes of determining the sale and redemption price of
the Fund's shares. The fees paid to ASISI for the fiscal year ended October 31,
1998, stated as a percentage of the Portfolio's average daily net assets, are as
follows:
<TABLE>
<CAPTION>
Fund/Portfolio: Annual Rate:
<S> <C>
ASMT T. Rowe Price International Equity Portfolio: 1.00%
ASMT Janus Capital Growth Portfolio: 1.00%
ASMT INVESCO Equity Income Portfolio: 0.75%
ASMT PIMCO Total Return Bond Portfolio: 0.65%
ASMT JPM Money Market Portfolio: 0.50%
</TABLE>
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 Part B of the
Feeders Registration Statement under "Investment Advisory & Administration
Services" and "Fund Expenses".
LEGAL PROCEEDINGS. Not applicable.
(b) Capital Stock.
The Master Trust is organized as a trust under the laws of the State of
Delaware. Investors in a series of the Master Trust will each be liable for all
obligations of such series. However, the risk of an investor incurring financial
loss on account of such liability is limited to circumstances in which both
inadequate insurance existed and the Master Trust itself was unable to meet its
obligations.
All consideration received by the Master Trust for interests of
one of the series and all assets in which such consideration is invested will
belong to that series (subject only to the rights of creditors of the Master
Trust) and will be subject to the liabilities related thereto. The income
attributable to, and the expenses of, one series are treated separately from
those of any other series. The Master Trust has the ability to create, from time
to time, new series without interestholder approval.
Mutual fund shares are not deposits or obligations of, or
guaranteed or endorsed by, any bank, and are not federally insured by the
Federal Deposit Insurance Corporation, the Federal Reserve Board, or any other
agency. The net asset value of funds of this type will fluctuate.
Investments in the Master Trust may not be transferred, but an
investor may withdraw all or any portion of its investment at any time at net
asset value.
Under the Master Trust's anticipated method of operation as a
partnership for federal income tax purposes, the Master Trust will not be
subject to any income tax. However, each investor in the Master Trust will be
taxable on its share (as determined in accordance with the governing instruments
of the Master Trust) of the Master Trust's ordinary income and capital gain in
determining its income tax liability. The determination of such share will be
made in accordance with the Code and regulations promulgated thereunder.
ITEM 7. SHAREHOLDER INFORMATION.
(a) Pricing of Portfolio Interests. Interests in each Portfolio
of the Master Trust are sold on a continuous basis at the net asset value per
interest ("NAV") of that Portfolio next determined after an order in proper form
is received by the PFPC International (Cayman) Ltd. Net asset value per interest
is determined as of the close of the New York Stock Exchange (currently 4:00
p.m., New York time), on each day on which the NYSE is open for business. Net
asset value per interest of a Portfolio is computed by dividing the value of the
Portfolio's net assets (i.e., the value of its assets less liabilities) by the
total number of its interests outstanding. In general, the assets of each
Portfolio (except the ASMT JPM Money Market Portfolio) are valued on the basis
of market quotations. However, in certain circumstances, where market quotations
are not readily available or where market quotations for a particular security
or asset are believed to be incorrect, securities and other assets are valued by
methods that are believed to accurately reflect their fair value. The assets of
the ASMT JPM 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 may change
on days when an investor will not be able to purchase or redeem interests.
(b) Purchase. Beneficial interests in the Master Trust are issued
solely in private placement transactions which do not involve any "public
offering" within the meaning of Section 4(2) of the 1933 Act. Investments in the
Master Trust may be made only by investment companies or certain other entities
which are "accredited investors" within the meaning of Regulation D under the
1933 Act. This registration statement does not constitute an offer to sell, or
the solicitation of an offer to buy, any "security" within the meaning of the
1933 Act.
(c) Redemption of Master Trust Interests. An investor in the
Master Trust may withdraw all or any portion of its investment on any business
day at the net asset value next determined after a withdrawal request in proper
form is furnished by the investor to the Transfer Agent. When a request is
received in proper form, the Master Trust will redeem the interests at the next
determined net asset value.
The Master Trust will make payment for all interests redeemed
within five days after receipt by the Transfer Agent of a redemption request in
proper form, except as provided by the rules of the Commission. Investments in
the Master Trust may not be transferred.
The right of any investor to receive payment with respect to any
withdrawal may be suspended or the payment of the withdrawal proceeds postponed
during any period in which the New York Stock Exchange is closed (other than
weekends or holidays) or trading on such Exchange is restricted, or, to the
extent otherwise permitted by the 1940 Act, if an emergency exists.
(d) Dividends and Distributions. The Master Trust anticipates
that it will operate as a partnership for federal income tax purposes. Each
investor in the Master Trust will receive its share (as determined in accordance
with the governing instruments of the Master Trust) of the Master Trust's
ordinary income and capital gains. The determination of each share will be made
in accordance with the Internal Revenue Code of 1986 and regulations promulgated
thereunder.
(e) Tax Consequences. The Master Trust anticipates that it will
operate as a partnership for federal income tax purposes and that the Master
Trust will not be subject to any income tax. However, each investor in the
Master Trust will be taxable on its share (as determined in accordance with the
governing instruments of the Master Trust) of the Master Trust's ordinary income
and capital gain (which may be taxable at different rates depending upon the
length of time the Master Trust holds its assets) in determining its income tax
liability. The determination of each share will be made in accordance with the
Internal Revenue Code of 1986 and regulations promulgated thereunder.
ITEM 8. DISTRIBUTION ARRANGEMENTS.
(a) Sales Loads. Not Applicable.
(b) 12b-1 Fees. Not Applicable.
(c) Master Feeder Funds. The Master Trust is part of a
master/feeder structure. Members of the general public may not purchase a direct
interest in a Portfolio. However, each Portfolio may sell interests to other
affiliated and non-affiliated investment companies and/or institutional
investors. Each of the mutual funds investing in the Master Trust acquires an
indirect interest in the securities owned by its corresponding Portfolio.
Such investors will invest in a Portfolio on the same terms and
conditions as the corresponding Feeder Fund and will pay a proportionate share
of the Portfolio's expenses. Other investors in a Portfolio, however, are not
required to sell their shares to the public at the same price as the
corresponding Feeder Fund, and may have different sales commissions and
operating expenses. These differences may result indifferences in returns among
the investment companies that invest exclusively in the Portfolios.
The Trustees of the Master Trust believe that the "master/feeder"
fund structure offers opportunities for substantial growth in the assets of the
Portfolios that may enable the Portfolios to reduce their operating expenses,
thereby producing higher returns and benefiting the shareholders of the Feeder
Funds. A Feeder Fund's investment in its corresponding Portfolio may, however,
be adversely affected by the actions of other investors in the Portfolio. For
example, if a large investor withdraws from a Portfolio, the remaining investors
may bear higher pro rata operating expenses. However, this possibility also
exists for traditionally structured funds with large investors.
Each of the Feeder Funds currently investing in the Master Trust
may withdraw (completely redeem) all of its assets from its corresponding
Portfolio at any time if their Directors determine that it is in the best
interest of the Fund to do so. A Feeder Fund might withdraw, for example, if
other investors in the Fund's corresponding Portfolio voted to, by a vote of all
investors in the Portfolio (including the Fund), change the investment
objective, policies or limitations of the Portfolio in a manner not acceptable
to the Directors of the Feeder Fund. The withdrawal of all a Feeder Fund's
assets from a corresponding Portfolio may affect the investment performance of
the Feeder Fund and of the corresponding Portfolio.
Each Portfolio normally will not hold meetings of investors
except as required by the 1940 Act. Each investor in a Portfolio (including a
Feeder Fund) will be entitled to vote in proportion to its interest in the
Portfolio. When a Feeder Fund is requested to vote on matters pertaining to a
Portfolio, the Fund will hold a meeting of its shareholders and will vote its
interest in the Portfolio for or against such matters proportionately to the
instructions to vote for or against such matters received from Fund
shareholders.
For more information about the "master/feeder" fund structure,
please see Part B of the Feeder Fund Registration Statement under "Additional
Information on the `Master Feeder' Fund Structure".
<PAGE>
B-10
PART B
March 1, 1999
AMERICAN SKANDIA MASTER TRUST
ITEM 10. COVER PAGE AND TABLE OF CONTENTS.
This Part B, which is not a prospectus, supplements and should be
read in conjunction with the current Part A of American Skandia Master Trust
(the "Master Trust"), dated March 1, 1999, as it may be revised from time to
time. To obtain a copy of Part A of the Master Trust, please write to the Master
Trust at Ugland House, P.O. Box 309, South Church Street, George Town, Grand
Cayman, Cayman Islands, BWI, or call (345) 949-6415.
As permitted by General Instruction D to Form N-1A, responses to
certain Items required to be included in Part B of this Registration Statement
are incorporated herein by reference from Post-Effective Amendment No. 6 of the
Registration Statement of American Skandia Advisor Funds, Inc. (the "Feeder")
(1940 Act File No. 811-8085) as filed with the Securities and Exchange
Commission (the "Commission") on February 26, 1999 and as amended from time to
time (the "Feeder's Registrations Statement"). Part A of the Feeder's
Registration Statement (the "Feeder's Part A") includes the joint prospectus of
the series of the Feeder (the "Feeder Funds") which invests in the Portfolios
(as defined below) and those series of the Feeder which do not. Part B of the
Feeder's Registration Statement (the "Feeder's Part B") includes the joint
statement of additional information of the Feeder Funds which invest in the
Portfolios and those series of the Feeder which do not invest in the Master
Trust.
<TABLE>
<CAPTION>
Page
<S> <C>
History...............................................................................................................B-1
Description of the Master Trust and its Investments and Risks.........................................................B-1
Management of the Master Trust........................................................................................B-2
Control Persons and Principal Holders of Securities...................................................................B-5
Investment Advisory and Other Services................................................................................B-5
Brokerage Allocation and Other Practices..............................................................................B-6
Capital Stock and Other Securities....................................................................................B-6
Purchase, Redemption and Pricing of Securities........................................................................B-7
Taxation of the Master Trust..........................................................................................B-8
Underwriters..........................................................................................................B-8
Calculations of Performance Data......................................................................................B-8
Financial Statements..................................................................................................B-8
</TABLE>
ITEM 11. HISTORY OF THE MASTER TRUST.
Information on the history of the Master Trust is incorporated
herein by reference from Item 4 in Part A.
ITEM 12. DESCRIPTION OF THE MASTER TRUST AND ITS INVESTMENTS AND RISKS.
THE FOLLOWING INFORMATION SUPPLEMENTS AND SHOULD BE READ IN
CONJUNCTION WITH ITEM 4 IN PART A.
Information on the fundamental investment limitations and the
non-fundamental investment policies and limitations of the Portfolios, the types
of securities bought and investment techniques used by the Portfolios, and
certain risks attendant thereto, as well as other information on the Portfolios'
investment programs, is incorporated herein by reference from the sections
entitled "Investment Programs of the Funds," "Fundamental Investment
Restrictions," "Certain Risk Factors and Investment Methods" and "Portfolio
Turnover" in the Feeder's Part B.
ITEM 13. MANAGEMENT OF THE MASTER TRUST.
The Trustees of the Master Trust have oversight responsibilities
for the operations of each Portfolio. Currently, each of the Trustees of the
Master Trust also serves as a Director of Feeder. The Trustees of the Master
Trust, including a majority of the Trustees who are not "interested persons" (as
defined in the 1940 Act) have adopted written procedures to identify and
reasonably address any potential conflicts of interest which might arise as a
result of an "overlap" of Trustees and Directors, including, if necessary, the
creation of a separate board of trustees of the Master Trust.
Trustees and officers of the Master Trust, together with
information as to their principal business occupations during at least the last
five years, are shown below. Each Trustee who is an "interested person" of the
Master Trust, as defined in the 1940 Act, is indicated by an asterisk.
<TABLE>
<CAPTION>
Name, Age and Address (1) Position Held with the Master Trust (2) Principal Occupation (3)
- --------------------- ----------------------------------- --------------------
<S> <C> <C>
Jan R. Carendi (53)* Trustee Senior Executive Vice President & Member
of Corporate Management Group: Skandia
Insurance Company Ltd.
Gordon C. Boronow (45)* Vice President & Trustee President & Chief Operating Officer:
American Skandia Life Assurance Corporation
Thomas M. Mazzaferro (45)* President, Principal Executive Officer & Executive Vice President & Chief Financial
Trustee Officer: American Skandia Life Assurance
Corporation
John Birch (48)* Vice President Senior Vice President and Chief Operating
Officer:
American Skandia Investment Services,
Incorporated
December 1997 to present
Executive Vice President and
Chief Operating Officer:
International Fund Administration
Bermuda
August 1996 to October 1997
Senior Vice President and
Chief Administrative Officer:
Gabelli Funds, Inc.
Rye, New York
March 1995 to August 1996
Executive Vice President:
Kansallis Osake Pankki
New York, New York
May 1985 to March 1995
Name, Age and Address (1) Position Held with the Master Trust (2) Principal Occupation (3)
- --------------------- ----------------------------------- --------------------
Julian A. Lerner (74) Trustee Semi-retired since 1995; Senior Vice
12850 Spurling Road President & Portfolio Manager of AIM
Suite 308 Charter Fund and AIM Summit Fund from 1986
Dallas, TX 75230 to 1995
F. Don Schwartz (63) Trustee Management Consultant (April 1985 to
1101 Penn Grant Road present)
Lancaster, PA 17602
David E.A. Carson (64) Trustee Chairman
People's Bank People's Bank (January 1999 to present)
850 Main Street Chairman & Chief Executive Officer:
Bridgeport, CT 06604 People's Bank (January 1998 to January
1999)
President, Chairman & Chief Executive
Officer: People's Bank from 1983 to 1997
Thomas M. O'Brien (48) Trustee Vice Chairman: North Fork Bank (January
North Fork Bank 1997 to present)
275 Broad Hollow Road
Melville, N.Y. 11747 President & Chief Executive Officer:
North Side Savings Bank (December 1984 to
December 1996)
Richard G. Davy, Jr. (50) Controller Vice President, Operations: American
Skandia Investment Services, Incorporated
(January 1997 to present)
Controller: American Skandia Investment
Services, Incorporated (September 1994 to
January 1997)
Self-employed Consultant (December 1991 to
September 1994)
Gunnar Moberg (44) Vice President Director of Marketing: Skandia Assurance
and Financial Services
Jaime Francisco Paredes (43) Vice President President: Skandia Holding de Colombia S.A.
C. Ake Svensson (48) Treasurer Treasurer: American Skandia Investment
Holding Corporation
Eric C. Freed (35) Secretary Senior Counsel, Securities: American
Skandia Investment Holding Corporation,
since January 1998
Securities Counsel: American Skandia
Investment Holding Corporation, December
1996 to December 1997
Attorney, Senior Attorney and Special
Counsel: U.S. Securities and Exchange
Commission from March 1991 to November 1996
J. Fergus McKeon (37) Assistant Corporate Secretary General Manager: PFPC International
PFPC International (Dublin) Ltd. (Dublin) Ltd. since August 1993
80 Harcourt Street
Dublin 2, Ireland Financial Consultant (1992 to 1993)
</TABLE>
* Indicates a Trustee who is an "interested person" within the meaning set forth
in the 1940 Act.
(1) Unless otherwise indicated, the address of each officer and Trustee listed
above is One Corporate Drive, Shelton, Connecticut 06484.
(2) All of the officers and Trustees of the Master Trust listed above (except
for Messrs. Moberg, Paredes, Svensson and McKeon) serve in similar capacities
for the American Skandia Advisor Funds, Inc. and/or American Skandia Trust, both
of which are other investment companies managed by the Investment Manager.
(3) Unless otherwise indicated, each officer and Trustee listed above has held
his/her principal occupation for at least the last five years. In addition to
the principal occupations noted above, the following officers and Trustees of
the Master Trust hold various positions with American Skandia Investment
Services, Incorporated ("ASISI"), the Master Trust's Investment Manager, and its
affiliates, including American Skandia Life Assurance Corporation ("ASLAC"),
American Skandia Marketing, Incorporated ("ASM"), American Skandia Information
Services and Technology Corporation ("ASIST") or American Skandia Investment
Holding Corporation ("ASIHC"): Mr. Boronow also serves as Executive Vice
President, Chief Operating Officer and a Director of ASIHC, and a Director of
ASLAC, ASISI, ASM and ASIST; Mr. Carendi also serves as Chairman, President,
Chief Executive Officer and a Director of ASIHC, and Chief Executive Officer and
a Director of ASLAC, ASISI, ASM and ASIST; Mr. Davy also serves as a Director of
ASISI; Mr. Mazzaferro also serves as Executive Vice President, Chief Financial
Officer and a Director of ASIHC, a Director of ASLAC, President, Chief Financial
Officer and a Director of ASISI, and Executive Vice President and Chief
Financial Officer of ASM and ASIST; Mr. Svensson also serves as Treasurer of
ASLAC, ASISI, ASM and ASIST and Director of ASLAC and ASISI; Mr. Moberg also
serves as Vice President of Skandia Insurance Company Ltd., Director of ASLAC,
Skandia Life Assurance Company Ltd., Royal Skandia Life Assurance Limited,
International Skandia SICAV, Skandia Leben AG, Skandia Lebensversicherung,
Intercaser S.A. de Seguros, Skandia Vita SpA, Skandia Leben Holding, Skandia AFS
Bahamas Ltd and Skandia AFS South East Asia (L) Ltd., and a Deputy member of the
following Boards: Skandia Holding de Colombia, Skandia Seguros Generales S.A.,
Skandia Seguros de Vida S.A. and Fiduciara Skandia S.A.
The Declaration of Trust provides that the Trustees, officers and
employees of the Master Trust may be indemnified by the Master Trust to the
fullest extent permitted by Delaware law and the federal securities laws. The
Master Trust's By-laws provide that the Master Trust shall indemnify each of its
Trustees, officers and employees against liabilities and expenses reasonably
incurred by them, in connection with, or resulting from, any claim, action, suit
or proceeding, threatened against or otherwise involving such Trustee, officer
or employee, directly or indirectly, by reason of being or having been a
Trustee, officer or employee of the Master Trust. Neither the Declaration of
Trust nor the By-laws of the Master Trust authorize the Master Trust to
indemnify any Trustee or officer against any liability to which he or she would
otherwise be subject by reason of or for willful misfeasance, bad faith, gross
negligence or reckless disregard of such person's duties.
The officers and Trustees of the Master Trust who are "interested
persons" within the meaning of the 1940 Act do not receive compensation directly
from the Master Trust for serving in the capacities described above. Those
officers and Trustees of the Master Trust, however, who are affiliated with the
Investment Manager may receive remuneration indirectly from the Master Trust for
services provided in their respective capacities with the Investment Manager.
Each of the non-interested Trustees is expected to receive for
his service on the Board of Trustees an annual and "per-meeting" fee, plus
reimbursement for reasonable out-of-pocket expenses incurred in connection with
attendance at Board meetings. The following table sets forth information
concerning the compensation anticipated to be paid by the Master Trust to the
Trustees in the current fiscal year. Neither the Master Trust nor any investment
company in the Fund Complex (as defined below) offers any pension or retirement
benefits to its trustees.
<TABLE>
<CAPTION>
Aggregate Compensation Total Compensation from the
Name of Trustee: from the Master Trust: (1) Master Trust and Fund Complex: (2)
---------------- -------------------------- -----------------------------
<S> <C> <C>
Gordon C. Boronow $0 $0
Jan R. Carendi $0 $0
David E.A. Carson $5,100 $75,625
Julian A. Lerner $5,100 $74,125
Thomas M. Mazzaferro $0 $0
Thomas M. O'Brien $5,100 $75,625
F. Don Schwartz $5,100 $75,625
</TABLE>
(1) The amount indicated estimates the compensation anticipated to be paid to
the Trustees of the Master Trust for the Master Trust's fiscal year ending
October 31, 1999.
(2) As of the date of this Part B, the "Fund Complex" consisted of the Master
Trust, the Feeder and American Skandia Trust. The amount indicated estimates the
compensation anticipated to be paid to the Trustees by the Fund Complex for the
twelve month period ending October 31, 1999.
ITEM 14. CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES.
No Trustee or officer of the Master Trust owned any of the Master
Trust's interests outstanding on February 26, 1999.
As of February 26, 1999, the following interestholders
beneficially owned, directly or indirectly, 5% or more of the Master Trust's
outstanding interests:
<TABLE>
<CAPTION>
Name and Address Percent of Master Trust Interests Outstanding
<S> <C>
American Skandia Advisor Funds, Inc. 91.7%
Skandia Advisor Funds 8.3%
</TABLE>
At the present time, the Master Trust anticipates that its
interests will be held only by the American Skandia Advisor Funds, Inc., a
Maryland corporation, and Skandia Advisor Funds, a mutual fund company
incorporated under the law of Cayman Islands.
ITEM 15. INVESTMENT ADVISORY AND OTHER SERVICES.
THE FOLLOWING INFORMATION SUPPLEMENTS AND SHOULD BE READ IN
CONJUNCTION WITH ITEM 4 IN PART A.
Information on the investment management and other services
provided for or on behalf of the Portfolios is incorporated herein by reference
from the sections entitled "Investment Advisory & Administration Services,"
"Fund Expenses," "Distribution Arrangements" and "Other Information" in the
Feeder's Part B. The following list identifies the specific sections and
subsections in the Feeder's Part B under which the information required by Item
15 of Form N-1A may be found. Each listed section is incorporated herein by
reference.
<TABLE>
<CAPTION>
Incorporated by Reference from the
Form N-1A Item No. following Section of Feeder's Part B
- ------------------ ------------------------------------
<S> <C> <C>
Item 15(a) INVESTMENT ADVISORY & ADMINISTRATION SERVICES - THE
INVESTMENT MANAGER; THE SUB-ADVISORS; and FUND EXPENSES
Item 15(c) Not applicable
Item 15(d) INVESTMENT ADVISORY & ADMINISTRATION SERVICES - THE
ADMINISTRATOR
Item 15(e) Not applicable
Item 15(f) Not applicable
Item 15(g) Not applicable
Item 15(h) OTHER INFORMATION - DOMESTIC AND FOREIGN CUSTODIANS;
INDEPENDENT ACCOUNTANTS
</TABLE>
The exclusive placement agent for the Master Trust is American
Skandia Marketing Incorporated ("ASM") which receives no compensation for acting
in this capacity. ASM is an affiliate of the investment manager of each
Portfolio of the Master Trust.
Coopers & Lybrand, located at George Quay, P.O. Box 1283, Dublin
2, Ireland, has been selected as the independent certified public accounts of
the Master Trust, providing audit services and assistance and consultation with
respect to the preparation of filings with the Commission.
ITEM 16. BROKERAGE ALLOCATION AND OTHER PRACTICES.
Information on portfolio turnover and brokerage allocation for or
on behalf of the Master Trust is incorporated herein by reference from the
sections under PORTFOLIO TRANSACTIONS entitled "Brokerage Allocation" and
"Portfolio Turnover" in the Feeder's Part B.
ITEM 17. CAPITAL STOCK AND OTHER SECURITIES.
THE FOLLOWING INFORMATION SUPPLEMENTS AND SHOULD BE READ IN
CONJUNCTION WITH ITEM 6(b) and 7 IN PART A.
Under the Declaration of Trust, the Trustees are authorized to
issue shares of beneficial interests in the Master Trust. Investors in each
Portfolio of the Master Trust are entitled to participate pro rata in
distributions of income, loss, gain and credit of that Portfolio. Upon
liquidation or dissolution of the Master Trust, investors in a Portfolio are
entitled to share pro rata in that Portfolio's net assets available for
distribution to its investors. Investments in the Master Trust have no
preference, pre-exemptive, conversion or similar rights and are fully paid and
non-assessable, except as set forth below. Investments in the Master Trust may
not be transferred. No certificates are issued.
Each investor is entitled to a vote, with respect to matters
effecting each of the Master Trust's series, in proportion to the amount of its
investment in the Master Trust. Investors in the Master Trust do not have
cumulative voting rights, and investors holding more than 50% of the aggregate
beneficial interest in the Master Trust may elect all of the Trustees of the
Master Trust if they choose to do so and in such event the other investors in
the Master Trust would not be able to elect any Trustee. The Master Trust is not
required to hold annual meetings of investors but the Master Trust will hold
special meetings of investors when in the judgment of the Master Trust's
Trustees it is necessary or desirable to submit matters for an investor vote.
The Trustees may elect to terminate the Trust or any Portfolio without a vote of
the interestholders.
Rule 18f-2 under the 1940 Act provides that any matter required
to be submitted under the provisions of the 1940 Act or applicable state law or
otherwise to the holders of the outstanding voting securities of an investment
company, such as the Master Trust, with more than one Portfolio will not be
deemed to have been effectively acted upon unless approved by the holders of a
majority of the outstanding interests of each Portfolio of the Master Trust
affected by such matter. Rule 18f-2 further provides that a Portfolio of the
Master Trust shall be deemed to be affected by a matter unless it is clear that
the interests of the Portfolio in the matter are identical or that the matter
does not affect any interest of the Portfolio. However, the Rule exempts the
selection of independent accountants and the election of Trustees from the
separate voting requirements of the Rule.
ITEM 18. PURCHASE, REDEMPTION AND PRICING OF SECURITIES.
THE FOLLOWING INFORMATION SUPPLEMENTS AND SHOULD BE READ IN
CONJUNCTION WITH ITEMS 7 AND 8 IN PART A.
(a) PURCHASE OF SECURITIES. Beneficial interests in the Master
Trust are issued solely in private placement transactions which do not involve
any "public offering" within the meaning of Section 4(2) of the 1933 Act.
Investments in the Master Trust may only be made by investment companies or
certain other entities which are "accredited investors" within the meaning of
Regulation D under the 1933 Act. This registration statement does not constitute
an offer to sell, or the solicitation of an offer to buy, any "security" within
the meaning of the 1933 Act.
SUSPENSION OF REDEMPTIONS. The right of redemption of interests
of a Portfolio of the Master Trust may be suspended or the date of payment
postponed (a) during any period when the New York Stock Exchange is closed
(other than customary weekend and holiday closings), (b) when trading in the
markets the Portfolio ordinarily utilizes is restricted, or when an emergency
exists as determined by the Securities and Exchange Commission so that disposal
of the Portfolio's investments or determination of its net asset value is not
reasonably practicable, or (c) for such other periods as the Commission by order
may permit to protect the Master Trust's interestholders.
PRICING OF SECURITIES. Portfolio securities, including open short
positions and options written by the Master Trust, are valued at the last sale
price on the securities exchange or national securities market on which such
securities primarily are traded. Securities not listed on an exchange or
national securities market, or securities in which there were no transactions,
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. Short-term
investments are carried at amortized cost, which approximates value. Any
securities or other assets for which recent market quotations are not readily
available are valued at fair value as determined in good faith by or under
procedures established by the Trustees. Expenses and fees, including the
management fee, are accrued daily and taken into account for the purpose of
determining the net asset value of interests in each Portfolio of the Master
Trust.
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.
ASMT JPM Money Market Portfolio: For the ASMT JPM 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.
NEW YORK STOCK EXCHANGE CLOSINGS. The holidays (as observed) on which the
New York Stock Exchange is closed currently are: New Year's Day, Martin Luther
King, Jr. Day, Presidents' Day, Good Friday, Memorial Day, Independence Day,
Labor Day, Thanksgiving and Christmas.
(b) FUND REORGANIZATIONS. Not Applicable.
(c) OFFERING PRICE. Not Applicable.
ITEM 19. TAXATION OF THE MASTER TRUST.
The Master Trust is organized as a trust under Delaware law.
Management of the Master Trust believes that the Master Trust qualified through
the fiscal year ended October 31, 1998 and for future fiscal years will continue
qualify as a partnership for Federal income tax purposes. As such, the Master
Trust will not be subject to any income tax. However, each investor in the
Master Trust will be taxable on its share (as determined in accordance with the
governing instruments of the Master Trust) of the Master Trust's ordinary income
and capital gain in determining its income tax liability. The determination of
such share will be made in accordance with the Internal Revenue Code of 1986, as
amended (the "Code"), and regulations promulgated thereunder.
The Master Trust's taxable year-end is October 31, 1999. Although
the Master Trust will not be subject to Federal income tax, it will file
appropriate Federal income tax returns.
It is intended that the Master Trust's assets, income and
distributions will be managed in such a way that an investor in the Master Trust
will be able to satisfy the requirements of Subchapter M of the Code for
qualification as a regulated investment company, assuming that the investor
invested all of its investable assets in the Master Trust.
Investors are advised to consult their own tax advisers as to the
tax consequences of an investment in the Master Trust.
ITEM 20. UNDERWRITERS.
The exclusive placement agent for the Master Trust is American
Skandia Marketing, Incorporated, which receives no compensation for serving in
this capacity.
ITEM 21. CALCULATIONS OF PERFORMANCE DATA.
Not applicable.
ITEM 22. FINANCIAL STATEMENTS.
The financial statements of the Master Trust are incorporated
herein by reference from the section entitled "Financial Statements" in the
Feeder's Part B.
<PAGE>
C-9
AMERICAN SKANDIA MASTER TRUST
PART C. OTHER INFORMATION
<TABLE>
<CAPTION>
ITEM 23. EXHIBITS
<S> <S> <C>
i (a)(1) Certificate of Trust
i (a)(2) Agreement and Declaration of Trust
i (b) By-Laws
i (d)(1) Form of Investment Management Agreement between Registrant and American Skandia Investment Services,
Incorporated for ASMT T. Rowe Price International Equity Portfolio
i (d)(2) Form of Investment Management Agreement between Registrant and American Skandia Investment Services,
Incorporated for ASMT Janus Capital Growth Portfolio
i (d)(3) Form of Investment Management Agreement between Registrant and American Skandia Investment Services,
Incorporated for ASMT INVESCO Equity Income Portfolio
i (d)(3) Form of Investment Management Agreement between Registrant and American Skandia Investment Services,
Incorporated for ASMT PIMCO Total Return Bond Portfolio
i (d)(5) Form of Investment Management Agreement between Registrant and American Skandia Investment Services,
Incorporated for ASMT JPM Money Market Portfolio
i (d)(6) Form of Sub-advisory Agreement between American Skandia Investment Services, Incorporated and Rowe
Price-Fleming International, Inc. for ASMT T. Rowe Price International Equity Portfolio
i (d)(7) Form of Sub-advisory Agreement between American Skandia Investment Services, Incorporated and Janus Capital
Corporation for ASMT Janus Capital Growth Portfolio
i (d)(8) Form of Sub-advisory Agreement between American Skandia Investment Services, Incorporated and INVESCO Trust
Company for ASMT INVESCO Equity Income Portfolio
(d)(9) Amendment to Sub-advisory Agreement between American Skandia Investment Services, Incorporated, INVESCO Trust
Company and INVESCO Funds Group, Inc. for the ASMT INVESCO Equity Income Portfolio
i (d)(10)Form of Sub-advisory Agreement between American Skandia Investment Services, Incorporated and Pacific
Investment Management Company for ASMT PIMCO Total Return Bond Portfolio
i (d)(11)Form of Sub-advisory Agreement between American Skandia Investment Services, Incorporated and J.P. Morgan
Investment Management, Inc. for ASMT JPM Money Market Portfolio
i (e) Placement Agency Agreement
i (g)(1) Form of Custody Agreement between Registrant and PNC Bank
i (g)(2) Form of Custody Agreement between Registrant and Morgan Stanley Trust Company
(g)(3) Form of Amendment to Custody Agreement between Registrant and PNC Bank
(g)(4) Form of Foreign Custody Manager Delegation Amendment
i (h) Administration Services Agreement
i (i)(1) Form of Share Purchase Agreement between American Skandia Marketing, Incorporated and American Skandia Advisor
Funds, Inc.
i (i)(2) Form of Share Purchase Agreement between American Skandia Marketing, Incorporated and Skandia Advisor Funds
</TABLE>
i Filed as an exhibit to the initial Registration Statement of the Master
Trust, which was filed on June 4, 1997.
ii Filed as part of Post-effective Amendment No. 6 to Registration
Statement of American Skandia Advisor Funds, Inc., which was filed on February
26, 1999 and is incorporated herein by reference.
ITEM 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE MASTER TRUST.
Not applicable.
ITEM 25. INDEMNIFICATION.
Reference is made to Article IX of the Master Trust's Declaration
of Trust filed as Exhibit 1(b) to the Master Trust's registration statement
filed on June 4, 1997. The application of these provisions is limited by Article
10 of the Registrant's By-Laws filed as Exhibit 2 to the Master Trust's
registration statement filed on June 4, 1997 and by the following undertaking
set forth in the rules promulgated by the Securities and Exchange Commission:
Insofar as indemnification for liabilities 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 such indemnification is against
public policy as expressed in such Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities
(other than the payment by the registrant of expenses incurred or paid
by a trustee, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by
such trustee, 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 such Act
and will be governed by the final adjudication of such issue.
Reference also is made to the Placement Agency Agreement filed as Exhibit 6
to the Registrant's registration statement filed on June 4, 1997.
ITEM 26. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER.
See Item 6, "Management, Organization and Capital Structure of
the Master Trust" in Part A and Item 15, "Investment Advisory and Other
Services" in Part B regarding the business of the Investment Manager. For
information as to the business, profession, vocation or employment of a
substantial nature engaged in by ASISI or any of its respective officers and
directors during the past two years, reference is made to Form ADV, filed with
the Securities and Exchange Commission under the Investment Advisers Act of 1940
by ASISI, incorporated by reference herein (SEC File No. 801-40532).
ITEM 27. PRINCIPAL UNDERWRITERS.
(a) Not applicable.
(b) Set forth below is a list of each executive officer and
director of the Placement Agent. The principal business address of each such
person is One Corporate Drive, Shelton, Connecticut 06484.
<TABLE>
<CAPTION>
POSITIONS AND OFFICES
WITH THE PLACEMENT POSITIONS AND OFFICES
NAME WITH REGISTRANT
AGENT
<S> <C> <C> <C>
Patricia J. Abram Senior Vice President, National None
Sales Manager, Variable Life
Gordon C. Boronow Deputy Chief Executive Officer & Vice President & Trustee
Director
Kimberly A. Bradshaw Vice President & National Sales None
Manager/Qualified Plans
Robert Brinkman Senior Vice President, National None
Sales Manager
Jan R. Carendi Chairman, Chief Executive Officer Trustee
& Director
Kathleen A. Chapman Assistant Corporate Secretary None
Lucinda C. Ciccarello Vice President, Mutual Funds None
William F. Cordner Vice President, Customer Focus None
Teams
Wade A. Dokken President, Deputy Chief Executive None
Officer & Director
Ian Kennedy Senior Vice President, Customer None
Service
Lawrence Kudlow Senior Vice President & Chief None
Economist
N. David Kuperstock Vice President, Product None
Development & Director
Thomas M. Mazzaferro Executive Vice President, Chief Trustee
Financial Officer & Director
David R. Monroe Treasurer None
Michael A. Murray Vice President, National Sales None
Manager/American Skandia Advisor
Funds, Inc.
Brian O'Connor Vice President & National Sales None
Manager, Internal Wholesaling
M. Patricia Paez Director None
M. Priscilla Pannell Corporate Secretary None
Kathleen A. Pritchard Vice President & National Key None
Accounts/Financial Institutions
Hayward L. Sawyer Senior Vice President, National None
Sales Manager & Director
Anders O. Soderstrom Executive Vice President & Chief None
Information Officer
Leslie S. Sutherland Vice President & National Accounts None
Manager
Amanda C. Sutyak Vice President None
Christian A. Thwaites Senior Vice President & National None
Marketing Director
Mary Toumpas Vice President and Compliance None
Director
Bayard F. Tracy Senior Vice President, National None
Sales Manager & Director
Deborah G. Ullman Senior Vice President and Chief None
Operating Officer, Finance and
Business Operations
</TABLE>
ITEM 28. LOCATION OF ACCOUNTS AND RECORDS.
Records regarding the Registrant's securities holdings are
maintained at Registrant's custodians, PNC Bank, 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 Ugland House,
P.O. Box 309, South Church Street, George Town, Grand Cayman, Cayman Islands,
BWI. The Registrant's financial ledgers, similar financial records and records
regarding the Registrant's shareholders are maintained at the offices of its
Administrator, PFPC, Inc. Ugland House, P.O. Box 309, South Church Street,
George Town, Grand Cayman, Cayman Islands, BWI and 103 Bellevue Parkway,
Wilmington, Delaware 19809.
ITEM 29. MANAGEMENT SERVICES.
Not Applicable.
ITEM 30. UNDERTAKINGS.
Master Trust hereby undertakes to call a meeting of
interestholders for the purpose of voting upon the question of removal of a
trustee or trustees when requested in writing to do so by the holders of at
least 10% of the Master Trust's outstanding shares of beneficial interest and in
connection with such meeting to comply with the provisions of Section 16(c) of
the Investment Company Act of 1940 relating to shareholder communications.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Investment Company Act of
1940, the Registrant has duly caused this Registration Statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of Dublin
and Country of Ireland, on the 27th day of February, 1998.
AMERICAN SKANDIA MASTER TRUST
(Registrant)
By: /s/ Eric C. Freed
Eric C. Freed
Corporate Secretary
<PAGE>
<TABLE>
<CAPTION>
Exhibits
Table of Contents
Exhibit Number Description
<S> <C>
(d)(9) Amendment to Sub-advisory Agreement between American Skandia
Investment Services, Inc., INVESCO Trust Company and INVESCO
Funds Group, Inc. for the ASMT INVESCO Equity Income Portfolio.
(g)(3) Form of Amendment to Custody Agreement between Registrant and
PNC Bank.
(g)(4) Form of Foreign Custody Manager Delegation Amendment.
</TABLE>
AMENDMENT TO SUB-ADVISORY AGREEMENT
THIS AMENDMENT TO THE SUB-ADVISORY AGREEMENT dated June 1, 1997 (the
"Sub-Advisory Agreement") is between American Skandia Investment Services,
Incorporated (the "Investment Manager"). INVESCO Trust Company ("INVESCO
Trust"), and INVESCO Funds Group, Inc. ("IFG").
WHEREAS, the Investment Manager and INVESCO Trust entered into the Sub-Advisory
Agreement, wherein the Investment Manager engaged INVESCO Trust to provide
investment advice and other investment services with respect to the INVESCO
Equity Income Portfolio (the "Portfolio") of the American Skandia Master Trust;
and
WHEREAS, all of the former employees of INVESCO Trust that provide services to
the Portfolio have become employees of IFG and henceforth IFG, rather than
INVESCO Trust, will be providing sub-advisory services to the Portfolio; and
WHEREAS, INVESCO Trust is a wholly owned subsidiary of IFG. NOW, THEREFORE the
Investment Manager, INVESCO Trust, and IFG agree as follows:
1. Name Change. The parties hereby agree that all references to the name
"INVESCO Trust Company" contained in the Sub-Advisory Agreement are hereby
changed to refer to "INVESCO Funds Group, Inc."
2. Other Terms. Other than noted above, all terms and conditions of the
Sub-Advisory Agreement are unchanged, and remain in full force and effect.
The effective date of this amendment is May 1, 1998.
FOR THE INVESTMENT MANAGER FOR INVESCO TRUST COMPANY
/s/John Birch /s/Ronald L. Grooms
Date: July 2, 1998 Date: June 11, 1998
Attest: /s/Eric C. Freed Attest: /s/Kimberly A. Anselmo
FOR INVESCO FUNDS GROUP, INC.
/s/Glen A. Payne
Date: June 11, 1998
Attest: Kimberly K. Anselmo
AMENDMENT TO CUSTODIAN SERVICES AGREEMENT
This Amendment, dated the 27th day of April, 1998, is entered into
between AMERICAN SKANDIA MASTER TRUST, a Delaware business trust (the "Fund")
and PNC BANK, N.A., a national banking association ("PNC Bank").
WHEREAS, the Fund and PNC Bank have entered into a Custodian Services
Agreement dated as of June 1, 1997 (the "Agreement"), pursuant to which the Fund
appointed PNC Bank to act as custodian for its investment portfolios; and
WHEREAS, the Fund and PNC Bank now wish to amend the Agreement as it
relates to Authorized Persons; and
WHEREAS, the Fund's Board of Trustees has approved this Amendment;
NOW THEREFORE, the parties hereto, intending to be legally bound, hereby
agree as follows:
1. Defined Terms. From and after the date hereof, the following term as
used in the Agreement shall be amended and restated in its entirety as follows:
"Authorized Person" means any officer of the Fund and any other
person authorized by an officer of the Fund to give Oral
Instructions and Written Instructions on behalf of the Fund and
listed on the Authorized Persons Appendix attached hereto and
made a part hereof or any amendment thereto as may be received by
PNC Bank. An Authorized Person's scope of authority may be
limited by the Fund by setting forth such limitation in the
Authorized Persons Appendix.
2. Miscellaneous. Except to the extent amended and supplemented hereby,
the Agreement shall remain unchanged and in full force and effect and is hereby
ratified, confirmed and approved in all respects as amended and supplemented
hereby.
IN WITNESS WHEREOF, the undersigned have executed this Amendment as of
the date and year first above written.
AMERICAN SKANDIA MASTER TRUST
By:
Title:
PNC BANK, N.A.
.
By:
Title:
American Skandia Master Trust
One Corporate Drive
Shelton, Connecticut 06484-0083
Re: Foreign Custody Manager Delegation Amendment
Dear Sirs:
Reference is made to a Custody Agreement dated as of April 10, 1998,
(the "Agreement") by and between the Custodian and the Client for the
safekeeping of securities and cash received by the Custodian for the account of
the Client. Unless otherwise defined herein, terms defined in the Agreement are
used herein with their defined meanings.
1. In addition to the duties of the Custodian under the Agreement, with
respect to the Property in such jurisdictions as the Client and the Custodian
shall agree from time to time, the Client hereby delegates to the Custodian, and
the Custodian hereby accepts and assumes, the following duties of a "Foreign
Custody Manager" as permitted by Rule 17f-5 of the Investment Company of 1940
Act, as amended ("Rule 17f-5"):
a. selecting Eligible Foreign Custodians (as defined in Rule
17f-5) and placing and maintaining Property with such
Eligible Foreign Custodians;
b. entering into written contracts with such Eligible Foreign
Custodians or, in the case of a Securities Depository (as
defined in Rule 17f-5), entering into a contract or agreeing
to be bound by the rules or established procedures of such
depository, or some combination of the foregoing; and
c. establishing a system for and monitoring the appropriateness
of maintaining the Property with each Eligible Foreign
Custodian and the custody contracts or arrangements with
such Eligible Foreign Custodian.
The procedures the Custodian and the Client will use in performing the
activities under this Amendment are set forth in the Agreement and the Client
Services Guide. Notwithstanding anything to the contrary in this Amendment or
the Agreement, the Custodian shall not be responsible for the duties described
in a., b. and c. with respect to any Compulsory Securities Depository. A
"Compulsory Securities Depository" shall mean a securities depository or
clearing agency listed on Exhibit B to the Agreement, as such Exhibit may be
amended from time to time by the Custodian by written notice to the Client, or
upon Authorized Instructions.
2. Section 2 of the Agreement shall be removed and replaced with the
following:
"The Property may be held (i) in custody and deposit
accounts that have been established by the Custodian
with one or more domestic or foreign banks,
depositories, clearing agencies, or other
institutions as listed on Exhibit A, as such Exhibit
may be amended from time to time by the Custodian by
written notice to the Client (the "Subcustodians"),
(ii) through the facilities of one or more Compulsory
Securities Depositories, or (iii) upon Authorized
Instructions, through the facilities of any other
securities depository or clearing agency. Each of the
Subcustodians listed on Exhibit A and each of the
Compulsory Securities Depositories listed on Exhibit
B is an Eligible Foreign Custodian. The Custodian
shall hold Property through a Subcustodian only if
(a) neither such Subcustodian nor any of its
creditors may assert any right, charge, security
interest, lien, encumbrance or other claim of any
kind to the Property except a claim of payment for
their safe custody or administration or, in the case
of cash deposits, liens or rights in favor of
creditors of the Subcustodian arising under
bankruptcy, insolvency, or similar laws, and (b)
beneficial ownership of such Property may be freely
transferred without the payment of money or value
other than for safe custody or administration. Any
Subcustodian may hold Property in a securities
depository and may utilize a clearing agency."
3. In acting as a Foreign Custody Manager, the Custodian shall exercise
reasonable care, prudence and diligence such as a person having responsibility
for the safekeeping of fund assets would exercise.
4. The Custodian shall provide the Board of Directors of the Client
with written quarterly reports for use at the Client's quarterly Board of
Directors meetings regarding the placement of the Property with a particular
Eligible Foreign Custodian and any material changes to the arrangements with any
Eligible Foreign Custodian holding any Property.
5. In acting as a Foreign Custody Manager, the Custodian shall not
supervise, recommend or advise the Client relative to the investment, purchase,
sale, retention or disposition of any Property in any particular country,
including with respect to prevailing country risks.
6. (a) The Client represents that it (i) has the authority and power to
delegate to the Custodian the duties set forth herein and (ii) has taken all
requisite action (corporate or otherwise) to authorize the execution and
delivery of this Amendment.
(b) The Custodian represents that it (i) is a U.S. Bank (as
defined in Rule 17f-5) and (ii) has taken all requisite action (corporate or
otherwise) to authorize the execution and delivery of this Amendment.
7. Except as expressly amended hereby, all terms and provisions of the
Agreement are and shall continue to be in full force and effect. This Amendment
shall be construed in accordance with the applicable laws of the State of New
York. This Amendment may be executed by one or both of the parties hereto on any
number of separate counterparts, and all of said counterparts taken together
shall be deemed to constitute one and the same instrument.
If the foregoing corresponds to your understanding of our agreement,
please indicate your acceptance by the signature of your authorized
representative below.
Yours truly,
MORGAN STANLEY TRUST COMPANY
By:/s/G. Federico
Name:
Title:
Agreed and accepted:
AMERICAN SKANDIA MASTER TRUST
By: /s/ C. Ake Svensson
Name: C. Ake Svensson
Title: Treasurer
Date: April 10, 1998
