<PAGE>
Registration No. 811-8087
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------------
FORM N-1A
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 3
(Check appropriate box or boxes)
----------------------------
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)
----------------------------
With copy to:
Robert K. Fulton, Esq.
Stradley Ronon Stevens & Young, LLP
2600 One Commerce Square
Philadelphia, PA 19103
(215) 564-2600
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.
<PAGE>
AMERICAN SKANDIA MASTER TRUST
PART A
March 1, 2000
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. 9 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 January 14, 2000, 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.
<PAGE>
ASMT T. Rowe Price International Equity PORTFOLIO:
Investment Objective: The investment objective of the Portfolio is to seek
long-term growth of capital principally through investments in common stocks of
established, non-U.S. companies.
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).
Stocks are selected by using a "bottom-up" approach (an approach based
on the Sub-advisor's fundamental research on particular companies) in an effort
to identify companies capable of achieving and sustaining above-average
long-term earnings growth. The Sub-advisor seeks to purchase stocks at
reasonable prices in relation to anticipated earnings, cash flow or book value.
Valuation factors often influence the Sub-advisor's allocations among large-,
mid-, and small-cap companies.
While bottom-up stock selection is the focus of its decision making,
the Sub-advisor also invests with an awareness of the global economic backdrop
and its outlook for individual companies. Country allocation is driven largely
by stock selection, though the Sub-advisor may limit investments in markets that
appear to have poor overall prospects.
In selecting stocks, the Sub-advisor generally favors companies with
one or more of the following characteristics:
o leading market position;
o attractive business niche;
o strong franchise or natural monopoly;
o technological leadership or proprietary advantages;
o seasoned management;
o earnings growth and cash flow sufficient to support growing dividends; and o
healthy balance sheet with relatively low debt.
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,
including money market mutual funds managed by the Sub-advisor. In addition to
enabling the Portfolio to take defensive positions, cash reserves also provide
flexibility in meeting redemptions and paying expenses.
<PAGE>
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 bonds rated below investment grade by the primary
rating agencies ("junk" bonds).
-- 25% of its assets in mortgage- and asset-backed securities.
-- 10% of its assets in zero coupon, pay-in-kind and step coupon
securities (securities that do not, or may not under certain
circumstances, make regular interest payments).
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.
ASMT INVESCO Equity Income Portfolio:
Investment Objective: The investment objective of the Portfolio is to seek high
current income and capital growth while following sound investment practices.
Principal Investment Policies and Risks:
The Portfolio seeks to achieve its objective by investing in securities
that are expected to produce relatively highs levels of income and consistent,
stable returns. The Portfolio normally will invest at least 65% of its assets in
dividend-paying common and preferred stocks of domestic and foreign issuers. Up
to 30% of the Portfolio's assets may be invested in equity securities that do
not pay regular dividends. In addition, the Portfolio normally will have some
portion of its assets invested in debt securities or convertible bonds. The
Portfolio may invest up to 25% of its total assets in foreign securities,
including securities of issuers in countries considered to be developing. These
foreign investments may serve to increase the overall risks of the Portfolio.
The Portfolio's investments in common stocks may, of course, decline in
value, which will result in declines in the Portfolio's share price. Such
declines could be substantial. To minimize the risk this presents, the
Sub-advisor will not invest 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."
<PAGE>
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 PIMCO TOTAL RETURN BOND PORTFOLIO:
Investment Objective: The investment objective of the Portfolio is to seek to
maximize total return, consistent with preservation of capital and prudent
investment management.
Principal Investment Policies and Risks:
The Portfolio will invest at least 65% of 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, is included below under "Certain Risk Factors and
Investment Methods."
U.S. Government Securities. The Portfolio may invest in various types
of U.S. Government securities, including those that are supported by the full
faith and credit of the United States; those that are supported by the right of
the issuing agency to borrow from the U.S. Treasury; those that are supported by
the discretionary authority of the U.S. Government to purchase the agency's
obligations; and still others that are supported only by the credit of the
instrumentality.
Corporate Debt Securities. Corporate debt securities include corporate
bonds, debentures, notes and other similar instruments, including convertible
securities and preferred stock. Debt securities may be acquired with warrants
attached. The rate of return or return of principal on some debt obligations may
be linked or indexed to exchange rates between the U.S. dollar and a foreign
currency or currencies.
While the Sub-advisor may regard some countries or companies as
favorable investments, pure fixed income opportunities may be unattractive or
limited due to insufficient supply or legal or technical restrictions. In such
cases, the Portfolio may consider equity securities or convertible bonds to gain
exposure to such investments.
Variable and Floating Rate Securities. Variable and floating rate
securities provide for a periodic adjustment in the interest rate paid on the
obligations. The interest rates on these securities are tied to other interest
rates, such as money-market indices or Treasury bill rates, and reset
periodically. While these securities provide the Portfolio with a certain degree
of protection against losses caused by rising interest rates, they will cause
the Portfolio's interest income to decline if market interest rates decline.
Inflation-Indexed Bonds. Inflation-indexed bonds are fixed income
securities whose principal value is periodically adjusted according to the rate
of inflation. The interest rate on these bonds is fixed at issuance, and is
generally lower than the interest rate on typical bonds. Over the life of the
bond, however, this interest will be paid based on a principal value that has
been adjusted for inflation. Repayment of the adjusted principal upon maturity
may be guaranteed, but the market value of the bonds is not guaranteed, and will
fluctuate. The Portfolio may invest in inflation-indexed bonds that do not
provide a repayment guarantee. While these securities are expected to be
protected from long-term inflationary trends, short-term increases in inflation
may lead to losses.
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.
Short Sales "Against the Box." The Portfolio may sell securities short
"against the box." For a discussion of this practice, see this Prospectus under
"Certain Risk Factors and Investment Methods."
Derivative Instruments. The Portfolio may purchase and write call and
put options on securities, securities indices and on foreign currencies. The
Portfolio may invest in interest rate futures contracts, stock index futures
contracts and foreign currency futures contracts and options thereon that are
traded on U.S. or foreign exchanges or boards of trade. The Portfolio may also
enter into swap agreements with respect to foreign currencies, interest rates
and securities indices. The Portfolio may use these techniques to hedge against
changes in interest rates, currency exchange rates or securities prices or as
part of its overall investment strategy.
For a discussion of futures and options and their risks, see this
Prospectus under "Certain Risk Factors and Investment Methods." The Portfolio's
investments in swap agreements are described directly below.
Swap Agreements. The Portfolio may enter into interest rate, index and
currency exchange rate swap agreements for the purposes of attempting to obtain
a desired return at a lower cost than if the Portfolio had invested directly in
an instrument that yielded the desired return. Swap agreements are two-party
contracts entered into primarily by institutional investors for periods ranging
from a few weeks to more than one year. In a standard "swap" transaction, the
two parties agree to exchange the returns (or differentials in rates of return)
earned or realized on particular investments or instruments. The returns to be
exchanged between the parties are calculated with respect to a "notional
amount," i.e., a specified dollar amount that is hypothetically invested at a
particular interest rate, in a particular foreign currency, or in a "basket" of
securities representing a particular index. Commonly used swap agreements
include interest rate caps, under which, in return for a premium, one party
agrees to make payments to the other to the extent that interest rates exceed a
specified rate or "cap"; interest floors, under which, in return for a premium,
one party agrees to make payments to the other to the extent that interest rates
fall below a specified level or "floor"; and interest rate collars, under which
a party sells a cap and purchases a floor or vice versa in an attempt to protect
itself against interest rate movements exceeding given minimum or maximum
levels.
Under most swap agreements entered into by the Portfolio, the parties'
obligations are determined on a "net basis." Consequently, the Portfolio's
obligations (or rights) under a swap agreement will generally be equal only to a
net amount based on the relative values of the positions held by each party.
Whether the Portfolio's use of swap agreements will be successful will
depend on the sub-advisor's ability to predict that certain types of investments
are likely to produce greater returns than other investments. Moreover, the
Portfolio may not receive the expected amount under a swap agreement if the
other party to the agreement defaults or becomes bankrupt. The swaps market is
relatively new and is largely unregulated.
<PAGE>
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 PIMCO 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 PIMCO 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.
<PAGE>
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 PIMCO 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.
<PAGE>
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.
SHORT SALES "AGAINST THE BOX":
While none of the Portfolios will make short sales generally, the ASMT
Janus Capital Growth Portfolio and the ASMT PIMCO Total Return Bond Portfolio
may make short sales "against the box." A short sales against the box involves
selling a security that the Portfolio owns, or has the right to obtain without
additional cost, for delivery at a specified date in the future. A Portfolio may
make a short sales against the box to hedge against anticipated declines in the
market price of a particular security. If the value of the security sold short
increases instead, the Portfolio loses the opportunity to participate in the
gain.
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. While the Service Providers did not
experience any significant computer malfunctions as a result of such computer
systems failing to recognize dates in the Year 2000 (the "Year 2000 Issue"), it
is possible that such malfunctions still may occur or be discovered. In
addition, it is still possible that the Year 2000 Issue will have an adverse
affect on the Portfolios' investments or on global markets or economies
generally. The Investment Manager and the Master Trust are continuing to monitor
the Year 2000 Issue in an effort to confirm that no disruptions in the services
provided to the Master Trust take place.
<PAGE>
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 $43 billion under management
as of December 31, 1999 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, 1999, Janus
managed assets worth approximately $249 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 $357 billion of
assets as of December 31, 1999.
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, 1999, PIMCO had
approximately $186 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
$349 billion as of December 31, 1999. 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,
1999, 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. The Master Trust has adopted a Distribution Plan
under Rule 12b-1 (the "Distribution Plan"). The Distribution Plan permit the
Distributor to receive brokerage commissions in connection with purchases and
sales of securities held by the Portfolios, and to use these commissions to
promote the sale of shares of the Feeder Funds. Under the Distribution Plan,
transactions for the purchase and sale of securities for a Portfolio may be
directed to certain brokers for execution ("clearing brokers") who have agreed
to pay part of the brokerage commissions received on these transactions to the
Distributor for "introducing" transactions to the clearing broker. In turn, the
Distributor will use the brokerage commissions received as an introducing broker
to pay various distribution-related expenses, such as advertising, printing of
sales materials, and payments to selling dealers. No Portfolio will pay any new
fees or charges resulting from the Distribution Plan, nor is it expected that
the brokerage commissions paid by a Portfolio will increase as the result of
implementation of the Distribution Plan.
(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>
PART B
March 1, 2000
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, 2000, 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. 9 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 January 14, 2000 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> <C>
Jan R. Carendi (54)* Trustee Senior Executive Vice President & Member
of Corporate Management Group: Skandia
Insurance Company Ltd.
Gordon C. Boronow (46)* Vice President President & Chief Operating Officer:
American Skandia Life Assurance Corporation
John Birch (49)* 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
Julian A. Lerner (75) 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
<PAGE>
Name, Age and Address (1) Position Held with the Master Trust (2) Principal Occupation (3)
- --------------------- ----------------------------------- --------------------
F. Don Schwartz (64) Trustee Management Consultant (April 1985 to
P.O. Box 454 present)
Washington Crossing, PA 18977
David E. A. Carson (64) Trustee Director
People's Bank People's Bank (January 2000 - present)
850 Main Street
Bridgeport, CT 06604 Chairman
People's Bank (January 1999-December
1999)
Chairman & Chief Executive Officer:
People's Bank (January 1998 to December
1998)
President, Chairman & Chief Executive
Officer:
People's Bank (1983 to January 1998)
Thomas M. O'Brien (49) 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. (51) 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)
Eric C. Freed (36) 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 (38) 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 Mr. 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, Inc. ("ASI")
(formerly, American Skandia Investment Holding Corporation): Mr. Boronow also
serves as Executive Vice President, Chief Operating Officer and a Director of
ASI, and a Director of ASLAC, ASISI, ASM and ASIST; Mr. Carendi also serves as
Chairman, President, Chief Executive Officer and a Director of ASI, 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 ASI, 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 by the Master Trust to the Trustees in the fiscal
year ended October 31, 1999. 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: Master Trust and Fund Complex: (1)
---------------- ----------------------- -----------------------------
<S> <C> <C>
Jan R. Carendi $0 $0
David E.A. Carson $11,400 $78,000
Julian A. Lerner $12,500 $81,300
Thomas M. O'Brien $12,500 $81,300(2)
F. Don Schwartz $12,500 $81,300
</TABLE>
(1) 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 is the
compensation paid to the Trustees by the Fund Complex for the twelve month
period ending October 31, 1999.
(2) Mr. O'Brien deferred a portion of this compensation from the Master Trust
valued as of October 31, 1999 at $556 and from the Fund Complex valued as of
October 31, 1999 at $12,969.
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 March 1, 2000.
As of March 1, 2000, 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) THE DISTRIBUTION PLANS
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, 1999 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, 2000. 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>
AMERICAN SKANDIA MASTER TRUST
PART C. OTHER INFORMATION
<TABLE>
<CAPTION>
ITEM 23. EXHIBITS
<S> <C> <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)(4) 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
ii (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
(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
(f) Form of Deferred Compensation Plan
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
ii (g)(3) Form of Amendment to Custody Agreement between Registrant and PNC Bank
ii (g)(4) Form of Foreign Custody Manager Delegation Amendment
(g)(5) Form of Amendment to Custody Agreement between Registrant and PFPC Trust Company
i (h) Administration Services Agreement
i (l)(1) Form of Share Purchase Agreement between American Skandia Marketing, Incorporated and
American Skandia Advisor Funds, Inc.
i (l)(2) Form of Share Purchase Agreement between American Skandia Marketing, Incorporated and
Skandia Advisor Funds
(m) Form of Rule 12b-1 Plan
i Filed as an exhibit to the initial Registration Statement of the Master Trust, which was
filed on June 4, 1997.
ii Filed as an exhibit to Post-effective Amendment No. 2 of the Master Trust, which was filed
on March 1, 1999.
</TABLE>
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 AGENT WITH REGISTRANT
- ---- -------------- ---------------
<S> <C> <C>
Patricia J. Abram Senior Vice President, National None
Sales Manager, Variable Life
Gordon C. Boronow Deputy Chief Executive Officer & Vice President
Director
Kimberly Anderson 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
Wade A. Dokken President, Deputy Chief Executive None
Officer & Director
Ian Kennedy Senior Vice President, Customer None
Service
T. Richard Kennedy General Counsel None
Walter G. Kenyon Vice President & None
National Accounts Manager
N. David Kuperstock Vice President, Product None
Development & Director
Thomas M. Mazzaferro Executive Vice President, Chief None
Financial Officer & Director
Eileen S. McCann Vice President, Key None
Accounts Marketing
David R. Monroe Senior Vice President, Treasurer None
and Corporate Controller
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. 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 None
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 & Director
</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.
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 Town of Shelton and
State of Connecticut, on the 29th day of February, 2000.
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> <C>
(d)(11) Form of Sub-advisory Agreement between
American Skandia Investment Services,
Inc., and J.P. Morgan Investment
Management, Inc. for the ASMT JPM Money
Market Portfolio.
(f) Form of Deferred Compensation Plan
(g)(5) Form of Amendment to Custody Agreement
between Registrant and PNC Bank.
(m) Form of Rule 12b-1 plan.
</TABLE>
AMERICAN SKANDIA MASTER TRUST
SUB-ADVISORY AGREEMENT
THIS AGREEMENT is between American Skandia Investment Services, Incorporated
(the "Investment Manager") and J.P. Morgan Investment Management, Inc. (the
"Sub-Adviser").
W I T N E S S E T H
WHEREAS, American Skandia Master Trust (the "Trust") is a Delaware business
trust organized with one or more series of shares and is registered as an
open-end management investment company under the Investment Company Act of 1940,
as amended (the "ICA"); and
WHEREAS, the Trust will serve, at least initially, as an investment vehicle for
other parties, including other open-end investment companies (or series of such
companies) registered under the ICA; and
WHEREAS, certain series of American Skandia Advisor Funds, Inc. (the "Feeder
Fund"), an open-end management investment company established under the laws of
the state of Maryland, currently invest all of their respective investable
assets in corresponding portfolios of the Trust; and
WHEREAS, the Investment Manager and the Sub-Adviser each is an investment
adviser registered under the Investment Advisers Act of 1940, as amended (the
"Advisers Act"); and
WHEREAS, the Board of Trustees of the Trust (the "Trustees") have engaged the
Investment Manager to act as investment manager for the ASMT JPM Money Market
Portfolio (the "Portfolio"), one series of the Trust, under the terms of a
management agreement, dated June 1, 1997, with the Trust (the "Management
Agreement"); and
WHEREAS, the Investment Manager, acting pursuant to the Management Agreement,
wishes to engage the Sub-Adviser, and the Trustees have approved the engagement
of the Sub-Adviser, to provide investment advice and other investment services
set forth below.
NOW, THEREFORE, the Investment Manager and the Sub-Adviser agree as follows:
1. Investment Services. The Sub-Adviser will formulate and implement a
continuous investment program for the Portfolio conforming to the investment
objective, investment policies and restrictions of the Portfolio as set forth in
the Registration Statement of the Trust as in effect from time to time (the
"Registration Statement"), the Agreement and Declaration of Trust and By-laws of
the Trust, and any investment guidelines or other instructions received by the
Sub-Adviser in writing from the Investment Manager from time to time. Any
amendments to the foregoing documents will not be deemed effective with respect
to the Sub-Adviser until the Sub-Adviser's receipt thereof. The appropriate
officers and employees of the Sub-Adviser will be available to consult with the
Investment Manager, the Trust and Trustees at reasonable times and upon
reasonable notice concerning the business of the Trust, including valuations of
securities which are not registered for public sale, not traded on any
securities market or otherwise may be deemed illiquid for purposes of the ICA;
provided it is understood that the Sub-Adviser is not responsible for daily
pricing of the Portfolio's assets.
Subject to the supervision and control of the Investment Manager, which
in turn is subject to the supervision and control of the Trustees, the
Sub-Adviser in its discretion will determine which issuers and securities will
be purchased, held, sold or exchanged by the Portfolio or otherwise represented
in the Portfolio's investment portfolio from time to time and, subject to the
provisions of paragraph 3 of this Agreement, will place orders with and give
instructions to brokers, dealers and others for all such transactions and cause
such transactions to be executed. Custody of the Portfolio will be maintained by
a custodian bank (the "Custodian") and the Investment Manager will authorize the
Custodian to honor orders and instructions by employees of the Sub-Adviser
designated by the Sub-Adviser to settle transactions in respect of the
Portfolio. No assets may be withdrawn from the Portfolio other than for
settlement of transactions on behalf of the Portfolio except upon the written
authorization of appropriate officers of the Trust who shall have been certified
as such by proper authorities of the Trust prior to the withdrawal.
The Sub-Adviser will not be responsible for the provision of
administrative, bookkeeping or accounting services to the Portfolio except as
specifically provided herein, as required by the ICA or the Advisers Act or as
may be necessary for the Sub-Adviser to supply to the Investment Manager, the
Portfolio or the Portfolio's shareholders the information required to be
provided by the Sub-Adviser hereunder. Any records maintained hereunder shall be
the property of the Portfolio and surrendered promptly upon request.
In furnishing the services under this Agreement, the Sub-Adviser will
comply with and use its best efforts to enable the Portfolio to conform to the
requirements of: (i) the ICA and the regulations promulgated thereunder; (ii)
Subchapter M of the Internal Revenue Code and the regulations promulgated
thereunder; (iii) other applicable provisions of state or federal law; (iv) the
Agreement and Declaration of Trust and By-laws of the Trust; (v) policies and
determinations of the Trust and the Investment Manager provided to the
Sub-Adviser in writing; (vi) the fundamental and non-fundamental investment
policies and restrictions applicable to the Portfolio, as set out in the
Registration Statement in effect, or as such investment policies and
restrictions from time to time may be amended by the Portfolio's shareholders or
the Trustees and communicated to the Sub-Adviser in writing; (vii) the
Registration Statement; and (viii) investment guidelines or other instructions
received in writing from the Investment Manager. Notwithstanding the foregoing,
the Sub-Adviser shall have no responsibility to monitor compliance with
limitations or restrictions for which information from the Investment Manager or
its authorized agents is required to enable the Sub-Adviser to monitor
compliance with such limitations or restrictions unless such information is
provided to the Sub-adviser in writing. The Sub-Adviser shall supervise and
monitor the activities of its representatives, personnel and agents in
connection with the investment program of the Portfolio.
Nothing in this Agreement shall be implied to prevent the Investment
Manager from engaging other sub-advisers to provide investment advice and other
services to the Portfolio or to series or portfolios of the Trust for which the
Sub-Adviser does not provide such services, or to prevent the Investment Manager
from providing such services itself in relation to the Portfolio or such other
series or portfolios.
The Sub-Adviser shall not be responsible for the preparation or filing
of any reports required of the Portfolio by any governmental or regulatory
agency, except as expressly agreed to in writing.
2. Investment Advisory Facilities. The Sub-Adviser, at its expense, will furnish
all necessary investment facilities, including salaries of personnel, required
for it to execute its duties hereunder.
3. Execution of Portfolio Transactions. In connection with the investment and
reinvestment of the assets of the Portfolio, the Sub-Adviser is responsible for
the selection of broker-dealers to execute purchase and sale transactions for
the Portfolio in conformity with the policy regarding brokerage as set forth in
the Registration Statement or as the Trustees may determine from time to time,
as well as the negotiation of brokerage commission rates with such executing
broker-dealers. Generally, the Sub-Adviser's primary consideration in placing
Portfolio investment transactions with broker-dealers for execution will be to
obtain, and maintain the availability of, best execution at the best available
price.
Consistent with this policy, the Sub-Adviser, in selecting
broker-dealers and negotiating brokerage commission rates, will take all
relevant factors into consideration, including, but not limited to: the best
price available; the reliability, integrity and financial condition of the
broker-dealer; the size of and difficulty in executing the order; and the value
of the expected contribution of the broker-dealer to the investment performance
of the Portfolio on a continuing basis. Subject to such policies and procedures
as the Trustees may determine, the Sub-Adviser shall have discretion to effect
investment transactions for the Portfolio through broker-dealers (including, to
the extent permissible under applicable law, broker-dealers affiliated with the
Sub-Adviser) qualified to obtain best execution of such transactions who provide
brokerage and/or research services, as such services are defined in section
28(e) of the Securities Exchange Act of 1934, as amended (the "1934 Act"), and
to cause the Portfolio to pay any such broker-dealers an amount of commission
for effecting a portfolio investment transaction in excess of the amount of
commission another broker-dealer would have charged for effecting that
transaction, if the Sub-Adviser determines in good faith that such amount of
commission is reasonable in relation to the value of the brokerage or research
services provided by such broker-dealer, viewed in terms of either that
particular investment transaction or the Sub-Adviser's overall responsibilities
with respect to the Portfolio and other accounts as to which the Sub-Adviser
exercises investment discretion (as such term is defined in section 3(a)(35) of
the 1934 Act). Allocation of orders placed by the Sub-Adviser on behalf of the
Portfolio to such broker-dealers shall be in such amounts and proportions as the
Sub-Adviser shall determine in good faith in conformity with its
responsibilities under applicable laws, rules and regulations. The Sub-Adviser
will submit reports on such allocations to the Investment Manager regularly as
requested by the Investment Manager, in such form as may be mutually agreed to
by the parties hereto, indicating the broker-dealers to whom such allocations
have been made and the basis therefor.
Subject to the foregoing provisions of this paragraph 3, the
Sub-Adviser may also consider the sale of interests in the Portfolio, or may
consider or follow recommendations of the Investment Manager that take such
sales into account, as factors in the selection of broker-dealers to effect the
Portfolio's investment transactions. Notwithstanding the above, nothing shall
require the Sub-Adviser to use a broker-dealer which provides research services
or to use a particular broker-dealer which the Investment Manager has
recommended
4. Reports by the Sub-Adviser. The Sub-Adviser shall furnish the Investment
Manager monthly, quarterly and annual reports, in such form as may be mutually
agreed to by the parties hereto, concerning transactions and performance of the
Portfolio, including information required in the Registration Statement or
information necessary for the Investment Manager to review the Portfolio or
discuss the management of it. The Sub-Adviser shall permit the books and records
maintained with respect to the Portfolio to be inspected and audited by the
Trust, the Investment Manager or their respective agents at all reasonable times
during normal business hours upon reasonable notice. The Sub-Adviser shall
immediately notify both the Investment Manager and the Trust of any legal
process served upon it in connection with its activities hereunder, including
any legal process served upon it on behalf of the Investment Manager, the
Portfolio or the Trust. The Sub-Adviser shall promptly notify the Investment
Manager of any changes in any information regarding the Sub-Adviser or the
investment program for the Portfolio as described in Section 9 of this
Agreement.
5. Compensation of the Sub-Adviser. The amount of the compensation to the
Sub-Adviser is computed at an annual rate. The fee shall be payable monthly in
arrears, based on the average daily net assets of the Portfolio for each month,
at the annual rate set forth in Exhibit A to this Agreement.
In computing the fee to be paid to the Sub-Adviser, the net asset value
of the Portfolio shall be valued as set forth in the Registration Statement. If
this Agreement is terminated, the payment described herein shall be prorated to
the date of termination.
The Investment Manager and the Sub-Adviser shall not be considered as
partners or participants in a joint venture. The Sub-Adviser will pay its own
expenses for the services to be provided pursuant to this Agreement and will not
be obligated to pay any expenses of the Investment Manager, the Portfolio or the
Trust. Except as otherwise specifically provided herein, the Investment Manager,
the Portfolio and the Trust will not be obligated to pay any expenses of the
Sub-Adviser.
6. Delivery of Documents to the Sub-Adviser. The Investment Manager has
furnished the Sub-Adviser with true, correct and complete copies of each of the
following documents:
(a) The Agreement and Declaration of Trust of the Trust, as in effect on the
date hereof;
(b) The By-laws of the Trust, as in effect on the date hereof;
(c) The resolutions of the Trustees approving the engagement of the Sub-Adviser
as portfolio manager of the Portfolio and approving the form of this
Agreement;
(d) The resolutions of the Trustees selecting the Investment Manager as
investment manager to the Portfolio and approving the form of the
Management Agreement;
(e) The Management Agreement;
(f) The Code of Ethics of the Trust and of the Investment Manager, as in effect
on the date hereof; and
(g) A list of companies the securities of which are not to be bought or sold
for the Portfolio.
The Investment Manager will furnish the Sub-Adviser from time to time
with copies, properly certified or otherwise authenticated, of all amendments of
or supplements to the foregoing, if any. Such amendments or supplements as to
items (a) through (f) above will be provided within 30 days of the time such
materials become available to the Investment Manager. Such amendments or
supplements as to item (g) above will be provided not later than the end of the
business day next following the date such amendments or supplements become known
to the Investment Manager. Any amendments or supplements to the foregoing will
not be deemed effective with respect to the Sub-Adviser until the Sub-Adviser's
receipt thereof. The Investment Manager will provide such additional information
as the Sub-Adviser may reasonably request in connection with the performance of
its duties hereunder.
7. Delivery of Documents to the Investment Manager. The Sub-Adviser has
furnished the Investment Manager with true, correct and complete copies of each
of the following documents:
(a) The Sub-Adviser's Form ADV as filed with the Securities and Exchange
Commission as of the date hereof;
(b) The Sub-Adviser's most recent balance sheet;
(c) Separate lists of persons who the Sub-Adviser wishes to have authorized to
give written and/or oral instructions to Custodians of Trust assets for the
Portfolio; and
(d) The Code of Ethics of the Sub-Adviser, as in effect on the date hereof.
The Sub-Adviser will furnish the Investment Manager from time to time
with copies, properly certified or otherwise authenticated, of all amendments of
or supplements to the foregoing, if any. Such amendments or supplements will be
provided within 30 days of the time such materials become available to the
Sub-Adviser. Any amendments or supplements to the foregoing will not be deemed
effective with respect to the Investment Manager until the Investment Manager's
receipt thereof. The Sub-Adviser will provide additional information as the
Investment Manager may reasonably request in connection with the Sub-Adviser's
performance of its duties under this Agreement.
8. Confidential Treatment. The parties hereto understand that any information or
recommendation supplied by the Sub-Adviser in connection with the performance of
its obligations hereunder is to be regarded as confidential and for use only by
the Investment Manager, the Trust or such persons the Investment Manager may
designate in connection with the Portfolio. The parties also understand that any
information supplied to the Sub-Adviser in connection with the performance of
its obligations hereunder, particularly, but not limited to, any list of
securities which may not be bought or sold for the Portfolio, is to be regarded
as confidential and for use only by the Sub-Adviser in connection with its
obligation to provide investment advice and other services to the Portfolio.
9. Representations of the Parties. Each party hereto hereby further represents
and warrants to the other that: (i) it is registered as an investment adviser
under the Advisers Act and is registered or licensed as an investment adviser
under the laws of all jurisdictions in which its activities require it to be so
registered or licensed; and (ii) it will use its reasonable best efforts to
maintain each such registration or license in effect at all times during the
term of this Agreement; and (iii) it will promptly notify the other if it ceases
to be so registered, if its registration is suspended for any reason, or if it
is notified by any regulatory organization or court of competent jurisdiction
that it should show cause why its registration should not be suspended or
terminated; and (iv) it is duly authorized to enter into this Agreement and to
perform its obligations hereunder.
The Sub-Adviser further represents that it has adopted a written Code
of Ethics in compliance with Rule 17j-1(b) of the ICA. The Sub-Adviser shall be
subject to such Code of Ethics and shall not be subject to any other Code of
Ethics, including the Investment Manager's Code of Ethics, unless specifically
adopted by the Sub-Adviser. The Investment Manager further represents and
warrants to the Sub-Adviser that (i) the appointment of the Sub-Adviser by the
Investment Manager has been duly authorized and (ii) it has acted and will
continue to act in connection with the transactions contemplated hereby, and the
transactions contemplated hereby are, in conformity with the ICA, the Trust's
governing documents and other applicable laws.
10. Liability. In the absence of willful misfeasance, bad faith, gross
negligence or reckless disregard for its obligations hereunder, the Sub-Adviser
shall not be liable to the Trust, the Portfolio, the Portfolio's shareholders or
the Investment Manager for any act or omission resulting in any loss suffered by
the Trust, the Portfolio, the Portfolio's shareholders or the Investment Manager
in connection with any service to be provided herein. The Federal laws impose
responsibilities under certain circumstances on persons who act in good faith,
and therefore, nothing herein shall in any way constitute a waiver or limitation
of any rights which the Trust, the Portfolio or the Investment Manager may have
under applicable law.
11. Other Activities of the Sub-Adviser. The Investment Manager agrees that the
Sub-Adviser and any of its partners or employees, and persons affiliated with
the Sub-Adviser or with any such partner or employee, may render investment
management or advisory services to other investors and institutions, and that
such investors and institutions may own, purchase or sell, securities or other
interests in property that are the same as, similar to, or different from those
which are selected for purchase, holding or sale for the Portfolio. The
Investment Manager further acknowledges that the Sub-Adviser shall be in all
respects free to take action with respect to investments in securities or other
interests in property that are the same as, similar to, or different from those
selected for purchase, holding or sale for the Portfolio. The Investment Manager
understands that the Sub-Adviser shall not favor or disfavor any of the
Sub-Adviser's clients or class of clients in the allocation of investment
opportunities, so that to the extent practical, such opportunities will be
allocated among the Sub-Adviser's clients over a period of time on a fair and
equitable basis. Nothing in this Agreement shall impose upon the Sub-Adviser any
obligation (i) to purchase or sell, or recommend for purchase or sale, for the
Portfolio any security which the Sub-Adviser, its partners, affiliates or
employees may purchase or sell for the Sub-Adviser or such partner's,
affiliate's or employee's own accounts or for the account of any other client of
the Sub-Adviser, advisory or otherwise, or (ii) to abstain from the purchase or
sale of any security for the Sub-Adviser's other clients, advisory or otherwise,
which the Investment Manager has placed on the list provided pursuant to
paragraph 6(g) of this Agreement.
12. Continuance and Termination. This Agreement shall remain in full force and
effect for one year from the date hereof, and is renewable annually thereafter
by specific approval of the Trustees or by vote of a majority of the outstanding
voting securities of the Portfolio. Any such renewal shall be approved by the
vote of a majority of the Trustees who are not interested persons under the ICA,
cast in person at a meeting called for the purpose of voting on such renewal.
This Agreement may be terminated without penalty at any time by the Investment
Manager or the Sub-Adviser upon 60 days written notice, and will automatically
terminate in the event of (i) its "assignment" by either party to this
Agreement, as such term is defined in the ICA, subject to such exemptions as may
be granted by the Securities and Exchange Commission by rule, regulation or
order, or (ii) upon termination of the Management Agreement, provided the
Sub-Adviser has received prior written notice thereof.
13. Notification. The Sub-Adviser will notify the Investment Manager within a
reasonable time of any change in the personnel of the Sub-Adviser with
responsibility for making investment decisions in relation to the Portfolio (the
"Portfolio Manager(s)") or who have been authorized to give instructions to the
Custodian. The Sub-adviser shall be responsible for reasonable out-of-pocket
costs and expenses incurred by the Investment Manager, the Portfolio or the
Trust to amend or supplement the Trust's or the Feeder Fund's prospectus to
reflect a change in Portfolio Manager(s) or otherwise to comply with the ICA,
the Securities Act of 1933, as amended (the "1933 Act") or any other applicable
statute, law, rule or regulation, as a result of such change; provided, however,
that the Sub-Adviser shall not be responsible for such costs and expenses where
the change in Portfolio Manager(s) reflects the termination of employment of the
Portfolio Manager(s) with the Sub-Adviser and its affiliates or is a result of a
request by the Investment Manager or is due to other circumstances beyond the
Sub-Adviser's control.
Any notice, instruction or other communication required or contemplated
by this Agreement shall be in writing. All such communications shall be
addressed to the recipient at the address set forth below, provided that either
party may, by notice, designate a different recipient and/or address for such
party.
Investment Manager: American Skandia Investment Services, Incorporated
One Corporate Drive
Shelton, Connecticut 06484
Attention: John Birch
Senior Vice President & Chief Operating Officer
Sub-Adviser: J.P. Morgan Investment Management, Inc.
522 Fifth Avenue
New York, New York 10036
Attention: Paul Brignola
Trust: American Skandia Master Trust
One Corporate Drive
Shelton, Connecticut 06484
Attention: Eric C. Freed, Esq.
14. Indemnification. The Sub-Adviser agrees to indemnify and hold harmless the
Investment Manager, any affiliated person within the meaning of Section 2(a)(3)
of the ICA ("affiliated person") of the Investment Manager and each person, if
any who, within the meaning of Section 15 of the 1933 Act, controls
("controlling person") the Investment Manager, against any and all losses,
claims, damages, liabilities or litigation (including reasonable legal and other
expenses), to which the Investment Manager or such affiliated person or
controlling person of the Investment Manager may become subject under the 1933
Act, the ICA, the Advisers Act, under any other statute, law, rule or
regulation, at common law or otherwise, arising out of the Sub-Adviser's
responsibilities hereunder (1) to the extent of and as a result of the willful
misconduct, bad faith, or gross negligence by the Sub-Adviser, any of the
Sub-Adviser's employees or representatives or any affiliate of or any person
acting on behalf of the Sub-Adviser, or (2) as a result of any untrue statement
or alleged untrue statement of a material fact contained in the Registration
Statement, including any amendment thereof or any supplement thereto, or the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statement therein not misleading, if
such a statement or omission was made in reliance upon and in conformity with
written information furnished by the Sub-Adviser to the Investment Manager, the
Portfolio, the Trust or any affiliated person of the Investment Manager, the
Portfolio or the Trust or upon verbal information confirmed by the Sub-Adviser
in writing, or (3) to the extent of, and as a result of, the failure of the
Sub-Adviser to execute, or cause to be executed, portfolio investment
transactions according to the requirements of the ICA; provided, however, that
in no case is the Sub-Adviser's indemnity in favor of the Investment Manager or
any affiliated person or controlling person of the Investment Manager deemed to
protect such person against any liability to which any such person would
otherwise be subject by reason of willful misconduct, bad faith or gross
negligence in the performance of its duties or by reason of its reckless
disregard of its obligations and duties under this Agreement.
The Investment Manager agrees to indemnify and hold harmless the
Sub-Adviser, any affiliated person of the Sub-Adviser and each controlling
person of the Sub-Adviser, if any, against any and all losses, claims, damages,
liabilities or litigation (including reasonable legal and other expenses), to
which the Sub-Adviser or such affiliated person or controlling person of the
Sub-Adviser may become subject under the 1933 Act, the ICA, the Advisers Act,
under any other statute, law, rule or regulation, at common law or otherwise,
arising out of the Investment Manager's responsibilities as investment manager
of the Portfolio (1) to the extent of and as a result of the willful misconduct,
bad faith, or gross negligence by the Investment Manager, any of the Investment
Manager's employees or representatives or any affiliate of or any person acting
on behalf of the Investment Manager, or (2) as a result of any untrue statement
or alleged untrue statement of a material fact contained in the Registration
Statement, including any amendment thereof or any supplement thereto, or the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statement therein not misleading, if
such a statement or omission was made other than in reliance upon and in
conformity with written information furnished by the Sub-Adviser, or any
affiliated person of the Sub-Adviser or other than upon verbal information
confirmed by the Sub-Adviser in writing; provided, however, that in no case is
the Investment Manager's indemnity in favor of the Sub-Adviser or any affiliated
person or controlling person of the Sub-Adviser deemed to protect such person
against any liability to which any such person would otherwise be subject by
reason of willful misconduct, bad faith or gross negligence in the performance
of its duties or by reason of its reckless disregard of its obligations and
duties under this Agreement. It is agreed that the Investment Manager's
indemnification obligations under this Section 14 will extend to expenses and
costs (including reasonable attorneys fees) incurred by the Sub-Adviser as a
result of any litigation brought by the Investment Manager alleging the
Sub-Adviser's failure to perform its obligations and duties in the manner
required under this Agreement unless judgment is rendered for the Investment
Manager.
15. Conflict of Laws. The provisions of this Agreement shall be subject to all
applicable statutes, laws, rules and regulations, including, without limitation,
the applicable provisions of the ICA and rules and regulations promulgated
thereunder. To the extent that any provision contained herein conflicts with any
such applicable provision of law or regulation, the latter shall control. The
terms and provisions of this Agreement shall be interpreted and defined in a
manner consistent with the provisions and definitions of the ICA. If any
provision of this Agreement shall be held or made invalid by a court decision,
statute, rule or otherwise, the remainder of this Agreement shall continue in
full force and effect and shall not be affected by such invalidity.
16. Amendments, Waivers, etc. Provisions of this Agreement may be changed,
waived, discharged or terminated only by an instrument in writing signed by the
party against which enforcement of the change, waiver, discharge or termination
is sought. This Agreement (including Exhibit A hereto) may be amended at any
time by written mutual consent of the parties, subject to the requirements of
the ICA and rules and regulations promulgated and orders granted thereunder.
17. Governing State Law. This Agreement is made under, and shall be governed by
and construed in accordance with, the laws of the State of Connecticut.
18. Severability. Each provision of this Agreement is intended to be severable.
If any provision of this Agreement is held to be illegal or made invalid by
court decision, statute, rule or otherwise, such illegality or invalidity will
not affect the validity or enforceability of the remainder of this Agreement.
The effective date of this agreement is October 1, 1999.
FOR THE INVESTMENT MANAGER: FOR THE SUB-ADVISER:
- ----------------------------------- -----------------------------------
Date: ____________________________ Date: ____________________________
Attest: ____________________________ Attest: ____________________________
<PAGE>
American Skandia Master Trust
ASMT JPM Money Market Portfolio
Sub-Advisory Agreement
EXHIBIT A
An annual rate equal to the following percentages of the combined
assets of the Portfolio and the series of American Skandia Trust that is managed
by the Sub-Adviser and identified by the Sub-Adviser and the Investment Manager
as being similar to the Portfolio: .09% of the portion of the combined average
daily net assets not in excess of $500 million; plus .06% of the portion over
$500 million but not in excess of $1.5 billion; plus .04% of the portion in
excess of $1.5 billion.
Deferred Compensation Plan for Directors
of each of:
American Skandia Advisor Funds, Inc.
American Skandia Master Trust
American Skandia Trust
The purpose of this Plan is to defer the receipt of the fees that the Directors
or Trustees of the Trusts and the Fund receive in that capacity. Under the Plan,
deferred amounts are invested directly in the Fund and the Trusts. Fees deferred
by Directors of the Fund are only invested in the Fund and fees deferred by
Trustees of each Trust are invested in their respective Trust. Deferred amounts
during the deferral period are credited with income, gains, and losses based on
the performance of investments of the Fund and the Trusts. This Plan describes
the operation of three distinct Plans.
1.0 Election to Defer Payments. Any member of the Board of Directors of the Fund
and the Board of the Trusts may elect to receive their fees for Board services
on a deferred basis as provided for in this Plan. To defer compensation any
Director or Trustee shall elect in writing prior to, and to take effect from,
the beginning of the calendar year, or for persons elected to the Board in any
month other than December or in the year in which this Plan is adopted, within
thirty days after such event, to take effect with thirty days of such election.
A Directors election to defer compensation shall remain in effect until
terminated in writing to the President of ASISI, and any such termination shall
take effect thirty days following receipt by the President of such termination.
Once compensation is deferred such deferred compensation may not distributed
unless pursuant to Section xx.
2.0 Deferred Payment Account. Each deferred payment shall be credited at the
time when such payment would otherwise have been paid to a Director to an
account established n the name of that Director on the books of the American
Skandia Trust ("Deferred Payment Account"), adjusted for notional investment
experience, as defined in Section 3.0.
3.0 Return on Deferred Payment Account Balance.
3.1 For purposes of measuring the investment return on a Director's Deferred
Payment Account, the Director may elect to have the aggregate amount of his
deferred compensation (or a specified portion thereof) receive a return (i) at a
rate equal to the return earned on three-month U.S. Treasury Bills at the
beginning of each calendar quarter (the "Treasury Bill Rate") and such interest
shall be credited to the account quarterly at the end of each calendar quarter,
or (ii) at a rate of return (positive or negative) equal to the rate of return
on the shares of any of the Funds of the Trust (each a "Notional Fund"),
assuming reinvestment of dividends and distributions of the Notional Funds.
3.2 A Director may amend his designation of investment return as of the end of
each calendar quarter by giving written notice to the President of ASISI at
least thirty days prior to the end of such calendar quarter. A timely change to
a Director's designation of investment return shall become effective on the
first day of the calendar quarter following receipt by the President of the Fund
("President").
4.0 Notional Investment Experience. Amount credited to a Deferred Payment
Account shall be periodically adjusted for notional investment experience. In
each case such notional investment experience shall be determined by treating
the Deferred Payment Amount as though an equivalent dollar amount had been
invested and reinvested in one or more of the Notional Funds. The Notional Funds
used as a basis for determining notional investment experience with respect to
any Director's Deferred Payment Account shall be designated by the Director in
writing by instrument of election substantially in the form attached hereto as
Exhibit C and may be changed prospectively by similar written election effective
as of the first day of any calendar quarter.
The President may from time to time limit the Notional Funds available for
purposes of such election. If at any time any Notional Fund that has previously
been designated by a Director as a notional investment shall cease to exist or
shall be unavailable for any reason, or if the Director fails to designate one
or more Notional Funds pursuant to this Section 4, the President may, at his
discretion, and upon notice to the Director, treat any amounts notionally
invested in such Notional Fund (whether representing past amounts credited to a
Director's Deferred Payment Account or subsequent fee deferrals or both) as
having been invested at the Treasury Bill Rate, only until such time as the
Director shall have made another investment election in accordance with the
foregoing procedures. Deferred Payment Accounts shall continue to be adjusted
for notional investment experience until distributed in full in accordance with
the distribution method elected by the Director pursuant to Section 5.
5.0 Payment of Deferred Amounts. All amounts credited to an account pursuant to
any election by the Director made as provided in Section 1 shall be paid to the
Director:
in, or beginning in, the calendar year following the calendar year in which the
Director ceases to be a Director of the Trust or a Fund, or
in, or beginning in, the calendar year following the earlier of the calendar
year in which the Director ceases to be a Director of the Trust or a Fund or
attains age 70,
and shall be paid
in a lump sum payable on the first day of the calendar year in which payment is
to be made, or
in 10 or fewer installments, payable on the first day of each year commencing
with the calendar year in which payment is to begin, all as the Director shall
specify in making the election.
AMENDMENT TO CUSTODIAN SERVICES AGREEMENT
This Amendment, dated the 12th day of May, 1999, is entered into
between AMERICAN SKANDIA MASTER TRUST, a Delaware business trust (the "Fund")
and PFPC TRUST COMPANY, (successor to PNC Bank, N.A.) ("PFPC Trust").
WHEREAS, the Fund and PFPC Trust have entered into a Custodian Services
Agreement dated as of June 1, 1997 as the same may be amended from time to time
(the "Agreement"), pursuant to which the Fund appointed PFPC Trust to act as
custodian for its investment portfolios; and
WHEREAS, the Fund and PFPC Trust now wish to amend the Agreement as it
relates to Written Instructions; and
WHEREAS, the Fund's Board of Trustees has approved or will ratify 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:
"Written Instructions". The term "Written Instructions" shall
mean (i) written instructions signed by two Authorized Persons
and received by PFPC Trust or (ii) trade instructions
transmitted by means of an electronic transaction reporting
system access to which requires the use of a password or other
authorized identifier. The instructions may be delivered
electronically or by hand, mail, tested telegram, cable, telex
or facsimile sending device.
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:
PFPC TRUST COMPANY
By:
Title:
AMERICAN SKANDIA MASTER TRUST
DISTRIBUTION PLAN
This Distribution Plan (the "Plan") constitutes the written
Supplemental Distribution Plan for the various series of American Skandia Master
Trust, a Delaware business trust (the "Trust"), adopted pursuant to the
provisions of Rule 12b-1 under the Investment Company Act of 1940, as amended
(the "Investment Company Act"). During the effective term of this Plan, the
Company may incur expenses primarily intended to result in the sale of shares of
investment companies that have series that invest all of their investable assets
in the Trust (the "Funds") or to maintain or improve account services provided
to holders of Fund shares upon the terms and conditions hereinafter set forth:
Section 1. The Trust is an open-end management investment company formed under
the laws of the State of Delaware. Beneficial interests in the Trust may be
issued in one or more series (each, a "Portfolio"), and may be issued only to
other investment companies and certain other entities that are "accredited
investors" within the meaning of Regulation D under the Securities Act of 1933.
Section 2. The Company currently offers interests in five series, the ASMT T.
Rowe Price International Equity Portfolio, the ASMT Janus Capital Growth
Portfolio, the ASMT INVESCO Equity Income Portfolio, the ASMT PIMCO Total Return
Bond Portfolio, and the ASMT JPM Money Market Portfolio (each, a "Participating
Portfolio"). This Plan shall also apply to any other series of the Trust
designated from time to time by the Board of Trustees of the Trust. Where used
in this Plan, the term "interests" shall pertain only to beneficial interests in
a Participating Portfolio.
Section 3. In order to provide for the implementation of this Plan, the Trust
may, to the extent necessary, enter into an amended Placement Agency Agreement
(the "Agreement") with American Skandia Marketing, Incorporated ("ASMI")
pursuant to which ASMI serves as the placement agent for the Trust's interests.
Any modification to such Agreement shall become effective with respect to any
Participating Portfolio only upon compliance with Section 12(b) of the
Investment Company Act and Rule 12b-1 thereunder as the same may be amended from
time to time.
Section 4. The Trust may expend amounts consisting solely of that portion of
brokerage commissions paid by the Portfolios in connection with their portfolio
transactions that are made available to ASMI or other introducing brokers by
broker-dealers executing such portfolio transactions for the benefit of the
Participating Portfolios to finance activities principally intended to result in
the sale of shares of the Funds. Expenses permitted to be paid pursuant to this
Plan shall include, but not necessarily be limited to, the following costs: a.
printing and mailing of Fund prospectuses, statements of additional information,
any supplements thereto and shareholder reports for existing and prospective
shareholders; b. development, preparation, printing and mailing of
advertisements, sale literature and other promotional materials describing
and/or relating to the Portfolios or Funds and including materials intended
either for broker-dealer only use or for retail use; c. holding or participating
in seminars and sales meetings designed to promote the distribution of Fund
shares; d. marketing fees requested by broker-dealers who sell Fund shares; e.
obtaining information and providing explanations to Fund shareholders regarding
Portfolio and Fund investment objectives and policies and other information
about the Trust and its Portfolios and the Funds and their series, including the
performance of the Fund series; f. training sales personnel regarding sales of
shares of the Funds; g. personal service and/or maintenance of shareholder
accounts with respect to Fund shares attributable to such accounts; and h.
financing any other activity that the Trust's Board of Trustees determines is
primarily intended to result in the sale of shares of the Funds.
Section 5. This Plan shall become effective only upon compliance with Section
12(b) of the Investment Company Act and Rule 12b-1 thereunder and shall continue
in effect for a period of more than one year after it takes effect only so long
as such continuance is specifically approved at least annually by a majority of
the Board of Trustees and a majority of the Qualified Trustees by votes cast in
person at a meeting called for the purpose of voting on continuation of the
Plan.
Section 6. ASMI and any other person authorized to direct the disposition of
monies paid or payable by the Trust pursuant to this Plan or any related
Agreement shall provide to the Board of Trustees, and the Board of Trustees
shall review, at least quarterly, a written report of the amounts so expended
and the purposes for which such expenditures were made.
Section 7. This Plan may be terminated as to interests in a Participating
Portfolio at any time by vote of a majority of the Qualified Trustees or by an
interest holder vote in accordance with the Investment Company Act. In the event
of such termination, the subject Portfolio shall cease to be a Participating
Portfolio upon satisfaction of its outstanding obligations hereunder.
Section 8. All agreements with any person relating to implementation of this
Plan shall be in writing, and any agreement related to this Plan shall provide:
a. that such agreement may be terminated with respect to a Participating
Portfolio at any time, without payment of any penalty, by vote of a majority of
the Qualified Trustees or by interest holder vote in accordance with the
Investment Company Act on not more than 60 days' written notice to any other
party to the agreement; and
b. that such agreement shall terminate automatically in the event of
its assignment.
Section 9. This Plan may not be amended to materially change the source of
monies from which distribution expenses are paid by the Trust pursuant to
Section 4 hereof, without interest holder approval in accordance with the
Investment Company Act and any material amendment to this Plan shall be approved
by a majority of the Board of Trustees and a majority of the Qualified Trustees
by votes cast in person at a meeting called for the purpose of voting on the
amendment. Amendments to this Plan other than material amendments of the kind
referred to above may be adopted by a vote of the Board of Trustees, including a
majority of Qualified Trustees. The Board of Trustees, by such vote, also may
interpret this Plan and make all determinations necessary or advisable for its
administration.
Section 10. As used in this Plan, (a) the term "Qualified Trustees" shall mean
those Trustees of the Trust who are not interested persons of the Trust, and
have no direct or indirect financial interest in the operation of this Plan or
any agreements related to it, and (b) the terms "assignment" and "interested
person" shall have the respective meanings specified in the Investment Company
Act and the rules and regulations thereunder, subject to such exemptions as may
be granted by the Securities and Exchange Commission.
Section 11. While this Plan is in effect, the selection and nomination of the
Qualified Trustees shall be committed to the discretion of the Qualified
Trustees then in office.
Executed as of ___________________, 1999.
AMERICAN SKANDIA MASTER TRUST
By: ________________________________
