Investment Company Act No. 811-5186
As filed with the Securities and Exchange Commission on September 4, 1996
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[x] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss. 240.14a-11(c) or ss. 240.14a-12
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American Skandia Trust
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Payment of Filing Fee (Check the appropriate box):
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[x] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
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[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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<PAGE>
American Skandia Life
Assurance Corporation
1 Corporate Drive
P.O. Box 883
Shelton, CT 06484-0883
Telephone (203) 926-1888
Fax (203) 929-8071
September 23, 1996
Dear Valued Customer,
As an American Skandia Life Assurance Corporation ("ASLAC") contract owner who
beneficially owns shares of the Seligman International Small Cap Portfolio (the
"Portfolio"), you are cordially invited to a special meeting of the shareholders
of the Portfolio to be held at the offices of ASLAC, 10th Floor, One Corporate
Drive, Shelton, CT, on October 11, 1996 at 3:00 p.m.
At the special meeting, shareholders are being asked to approve or disapprove
the following four proposals:
I. A proposal to approve a new Investment Management Agreement, with
American Skandia Investment Services, Inc. ("ASISI"), an affiliate of ASLAC,
pursuant to which ASISI will continue to act as investment manager of the
Portfolio.
II. A proposal to approve a new Sub-Advisory Agreement between ASISI and
Founders Asset Management, Inc. regarding investment advice to the Portfolio.
III. A proposal to approve a change in the investment objective for the
Portfolio.
IV. A proposal to approve certain changes in the Portfolio's fundamental
investment restrictions.
Approval of Proposals I and II are made contingent upon each other. Moreover,
unless Proposals I and II are each approved, neither Proposal III nor IV will be
effected by the Portfolio. Therefore, a vote against either Proposal I or II
will have the effect of a vote against each other, as well as a vote against
both Proposals III and IV.
If Proposals I and II are approved by the Portfolio's shareholders, the name of
the Portfolio will be changed to the "Founders Passport Portfolio" effective
October 15, 1996.
Your vote is important no matter how large or small your holdings are. We urge
you to read the Proxy Statement thoroughly and to indicate your voting
instructions on the enclosed Proxy Card, date and sign it, and return it
promptly in the envelope provided to be received by American Skandia on or
before the close of business on October 9, 1996. The shares which you
beneficially own will be voted in accordance with instructions received by that
date. All shares of the Portfolio for which instructions are not received will
be voted in the same proportion as the votes cast by contract owners on the
proxy issues presented.
Any questions or concerns you may have regarding the special meeting or the
proxy should be directed to your financial representative.
Sincerely,
Gordon C. Boronow
President and Chief Operating Officer
American Skandia Life Assurance Corporation
<PAGE>
American Skandia Life
Assurance Corporation
1 Corporate Drive
P.O. Box 883
Shelton, CT 06484-0883
Telephone (203) 926-1888
Fax (203) 929-8071
September 23, 1996
Dear Registered Representative,
Please be advised that a special meeting of the shareholders of the Seligman
Henderson International Small Cap Portfolio (the "Portfolio") of the American
Skandia Trust will be held at the offices of American Skandia Life Assurance
Corporation ("ASLAC"), 10th Floor, One Corporate Drive, Shelton, CT, on October
11, 1996 at 3:00 p.m.
All ASLAC contract owners beneficially owning shares in the Portfolio as of
September 6, 1996 (the "Contractowners") have been sent the enclosed Notice of
Special Meeting, a Proxy Statement and a Proxy Card. The Contractowners have
been asked to complete the Proxy Card and return it to ASLAC by October 9, 1996.
Shares will be voted in accordance with properly completed Proxy Cards received
by that date. ASLAC will vote shares for which voting instructions are not
received by that date in the same proportion as the votes cast by the
Contractowners on the proxy issues presented.
The shareholders are being asked to approve or disapprove the following four
proposals:
I. A proposal to approve a new Investment Management Agreement, with
American Skandia Investment Services, Inc. ("ASISI"), an affiliate of ASLAC,
pursuant to which ASISI will continue to act as investment manager of the
Portfolio.
II. A proposal to approve a new Sub-Advisory Agreement between ASISI and
Founders Asset Management, Inc. regarding investment advice to the Portfolio.
III. A proposal to approve a change in the investment objective for the
Portfolio.
IV. A proposal to approve certain changes in the Portfolio's fundamental
investment restrictions.
Approval of Proposals I and II are made contingent upon each other. Moreover,
unless Proposals I and II are each approved, neither Proposal III nor IV will be
effected by the Portfolio. Therefore, a vote against either Proposal I or II
will have the effect of a vote against each other, as well as a vote against
both Proposals III and IV.
The current Sub-advisor to the Portfolio is Seligman Henderson Co. If Proposals
I and II are approved by the Portfolio's shareholders, the name of the Portfolio
will be changed to the "Founders Passport Portfolio" effective October 15, 1996.
Any questions or concerns you may have regarding the special meeting or the
proxy should be directed to ASLAC at 1-800-SKANDIA. A report of your clients
receiving proxy packets are available upon request.
Sincerely,
Gordon C. Boronow
President and Chief Operating Officer
American Skandia Life Assurance Corporation
<PAGE>
-- PRELIMINARY COPY --
AMERICAN SKANDIA TRUST
One Corporate Drive
P.O. Box 883
Shelton, Connecticut 06484
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS OF THE
SELIGMAN HENDERSON INTERNATIONAL SMALL CAP PORTFOLIO
To be held
October 11, 1996
To the Shareholders of the Seligman Henderson International Small Cap
Portfolio of American Skandia Trust:
Notice is hereby given that this Special Meeting of Shareholders of the
Seligman Henderson International Small Cap Portfolio (the "Portfolio") of
American Skandia Trust (the "Trust"), will be held at One Corporate Drive,
Shelton, Connecticut 06484 on October 11, 1996 at 3:00 p.m. Eastern Time, or at
such adjourned time as may be necessary for the holders of a majority of the
outstanding shares of the Portfolio to vote (the "Meeting"), for the following
purposes:
I. To consider the approval of a new Investment Management Agreement
between the Trust and American Skandia Investment Services, Incorporated
regarding management of the Portfolio.
II. To consider the approval of a new Sub-Advisory Agreement between
American Skandia Investment Services, Incorporated and Founders Asset
Management, Inc. regarding investment advice to the Portfolio.
III. To consider the approval of a change in the Portfolio's investment
objective.
IV. To consider the approval of changes in the Portfolio's fundamental
investment restrictions.
V. To transact such other business as may properly come before the Meeting
or any adjournment thereof.
The matters referred to above are discussed in detail in the Proxy
Statement attached to this Notice. The Board of Trustees has fixed the close of
business on September 6, 1996 as the record date for determining shareholders
entitled to notice of, and to vote at, the Meeting, and only holders of record
of shares at the close of business on that date are entitled to notice of, and
to vote at, the Meeting. Each share of the Portfolio is entitled to one vote
with respect to proposals on which the Portfolio's shareholders are entitled to
vote.
You are cordially invited to attend the Meeting. All shareholders are
requested to complete, date and sign the enclosed form of proxy and return it
promptly in the envelope provided for that purpose. The enclosed proxy is being
solicited on behalf of the Board of Trustees.
YOUR VOTE IS IMPORTANT. IN ORDER TO AVOID THE UNNECESSARY EXPENSE OF FURTHER
SOLICITATION, WE URGE YOU TO INDICATE VOTING INSTRUCTIONS ON THE ENCLOSED PROXY,
DATE AND SIGN IT, AND RETURN IT PROMPTLY IN THE ENVELOPE PROVIDED, NO MATTER HOW
LARGE OR SMALL YOUR HOLDINGS MAY BE. YOU MAY REVOKE IT AT ANY TIME PRIOR TO ITS
USE. THEREFORE, BY APPEARING AT THE MEETING, AND REQUESTING REVOCATION PRIOR TO
THE VOTING, YOU MAY REVOKE THE PROXY AND YOU CAN THEN VOTE IN PERSON.
By order of the Board of Trustees
Mary Ellen O'Leary
Corporate Secretary
American Skandia Trust
September 23, 1996
<PAGE>
PROXY STATEMENT -- PRELIMINARY COPY
AMERICAN SKANDIA TRUST
One Corporate Drive
P.O. Box 883
Shelton, Connecticut 06484
SPECIAL MEETING OF SHAREHOLDERS OF THE
SELIGMAN HENDERSON INTERNATIONAL SMALL CAP PORTFOLIO
OF
AMERICAN SKANDIA TRUST
To be held
October 11, 1996
This proxy statement and enclosed form of proxy are being furnished in
connection with the solicitation of proxies by the Board of Trustees of American
Skandia Trust (the "Trust") for use at a Special Meeting of Shareholders of the
Seligman Henderson International Small Cap Portfolio (the "Portfolio") of the
Trust to be held at One Corporate Drive, Shelton, Connecticut 06484 on October
11, 1996, at 3:00 p.m. Eastern Time (the "Meeting"), or at any adjournment
thereof, for the purposes set forth in the accompanying Notice of Meeting
("Notice"). The first mailing of proxies and proxy statements to shareholders is
anticipated to be on or about September 23, 1996.
The costs of the Meeting, including the solicitation of proxies, will
be paid by American Skandia Investment Services, Incorporated ("ASISI" or the
"Manager"), the Investment Manager to the Portfolio. Voting instructions will be
solicited principally by mailing this Proxy Statement and its enclosures, but
proxies also may be solicited by telephone, telegraph, or in person by officers
or agents of the Trust or American Skandia Life Assurance Corporation ("ASLAC").
The Trust will forward proxy materials to record owners for any beneficial
owners that such record owners may represent.
The Annual Report of the Trust (the "Report"), including audited
financial statements for 1995, has been previously sent to shareholders. Such
report, however, does not form any part of the proxy soliciting material. The
Trust will furnish an additional copy of the Report, as well as the most recent
Semi-annual Report of the Trust, to a shareholder upon request, without charge,
by writing to the Trust at the above address or by calling 1-800-752-6342.
Shareholders of record at the close of business on September 6, 1996
(the "Record Date") are entitled to notice of, and to vote at, the Meeting. Each
shareholder is entitled to one vote for each full share. As of the Record Date,
the following number of shares of beneficial interest of the Portfolio were
outstanding: ____________. As of the Record Date, there is no beneficial owner
of more than 5% of the shares of the Portfolio to the knowledge of the Trust.
Currently, the Trust serves as a funding vehicle for certain variable
annuities issued by ASLAC, a stock life insurance company. By order of the
Securities and Exchange Commission, dated August 1, 1995, the Trust was granted
exemptive relief permitting it to offer and sell shares directly to qualified
pension and retirement plans outside the separate account context. As of the
Record Date, nearly 100% of the Portfolio's shares were legally owned by ASLAC.
ASLAC holds Portfolio shares attributable to variable annuity contracts in
American Skandia Life Assurance Corporation Variable Account Class B-1, Class
B-2, and Class B-3 (collectively, for purposes of this Proxy Statement, "ASLAC
Variable Accounts"), each of which is an investment company registered as such
under the Investment Company Act of 1940, as amended (the "Investment Company
Act"). ASLAC Variable Accounts have various sub-accounts, each of which invests
exclusively in a corresponding portfolio of an underlying fund. ASLAC will
solicit voting instructions from variable annuity contract owners who
beneficially own shares of the Portfolio represented in the Seligman Henderson
International Small Cap Sub-account as of the Record Date (the
"Contractowners").
All shares of the Portfolio held by the Contractowners will be voted by
ASLAC in accordance with voting instructions received from such Contractowners
at the Meeting and any adjournments thereof. ASLAC is entitled to vote shares
for which voting instructions are not received and will vote such shares in the
same proportion as the votes cast by the Contractowners on the proxy issues
presented. ASLAC has fixed the close of business on October 9, 1996 as the last
day for which voting instructions will be accepted.
Timely, properly executed proxies will be voted as Contractowners
instruct. The Board of Trustees intends to bring before the Meeting the matters
set forth in Proposals I, II, III and IV of the foregoing Notice. Unless
instructions to the contrary are marked, proxies will be voted FOR each of the
proposals set forth in the Notice. The Trustees do not expect any other business
to be brought before the meeting. If, however, any other matters are properly
presented to the meeting for action, it is intended that the persons named in
the enclosed proxy will vote in accordance with their judgment. A Contractowner
executing and returning a proxy may revoke it at any time prior to its exercise
by written notice of such revocation to the Secretary of the Trust, by execution
of a subsequent proxy, or by voting in person at the Meeting.
The presence in person or by proxy of the holders of a majority of the
outstanding shares is required to constitute a quorum at the Meeting. Since
ASLAC is the legal owner of nearly 100% of the Portfolio's shares, ASLAC's
presence at the Meeting constitutes a quorum under the Trust's By-laws. Shares
beneficially held by Contractowners present in person or represented by proxy at
the Meeting will be counted for the purpose of calculating the votes cast on the
issues before the Meeting.
Approval of each proposal requires the vote of a "majority of the
outstanding voting securities" of the Portfolio, as defined in the Investment
Company Act, which means the vote of 67% or more of the shares of the Portfolio
present at the Meeting, if the holders of more than 50% of the outstanding
shares of the Portfolio are present or represented by proxy, or the vote of more
than 50% of the outstanding shares of the Portfolio, whichever is less. Approval
of Proposals I and II are made contingent upon each other. Moreover, unless
Proposals I and II are each approved, neither Proposal III nor IV will be
effected by the Portfolio. Therefore, a vote against either Proposal I or II
will have the effect of a vote against each other, as well as a vote against
both Proposals III and IV.
In the event that sufficient votes to approve any proposal are not
received, the persons named as proxies may propose one or more adjournments of
the Meeting to permit further solicitation of proxies. Any such adjournment will
require the affirmative vote of a majority of those shares represented at the
Meeting in person or by proxy. If a quorum is present, the persons named as
proxies will vote those proxies which they are entitled to vote FOR the proposal
in favor of such adjournment and will vote those proxies required to be voted
AGAINST the proposal against any such adjournment. Any proposals for which
sufficient favorable votes have been received by the time of the Meeting may be
acted upon and such vote shall be considered final regardless of whether the
Meeting is adjourned to permit additional solicitation with respect to any other
proposal. Proxies submitted without voting instructions will be voted FOR the
proposals.
PROPOSAL I
APPROVAL OF A NEW INVESTMENT MANAGEMENT AGREEMENT BETWEEN THE TRUST
AND AMERICAN SKANDIA INVESTMENT SERVICES, INCORPORATED
Background
Since May 1, 1995, ASISI has served as Investment Manager to the
Portfolio pursuant to an Investment Management Agreement (the "Present
Investment Management Agreement") with the Trust. The Present Investment
Management Agreement, effective May 1, 1995 and as annually renewed thereafter,
provides, among other things, that in carrying out its responsibility to
supervise and manage all aspects of the Portfolio's operations, the Manager may
engage, subject to the approval of the Board of Trustees and, where required,
the shareholders of the Portfolio, a Sub-adviser to provide advisory services in
relation to the Portfolio, and delegate to the Sub-adviser duties to, among
other things:
(1) obtain and evaluate pertinent information about significant
developments and economic, statistical and financial data, domestic,
foreign or otherwise, whether affecting the economy generally or the
Portfolio, and whether concerning the individual issuers whose
securities are included in the Portfolio or the activities in which
they engage, or with respect to securities which the Manager considers
desirable for inclusion in the Portfolio;
(2) determine what issuers and securities shall be represented in the
Portfolio's portfolio and regularly report them in writing to the Board
of Trustees;
(3) formulate and implement continuing programs for the purchases and
sales of the securities of such issuers and regularly report in writing
on them to the Board of Trustees; and
(4) take all actions on behalf of the Portfolio which appear to the
Trust necessary to carry into effect such purchase and sale programs
and supervisory functions as mentioned earlier, including the placing
of orders for the purchase and sale of portfolio securities.
In accordance with this provision for delegation of authority, the
Manager has entered into a sub-advisory agreement (the "Present Sub-Advisory
Agreement"), effective May 1, 1995, with Seligman Henderson Co. ("Seligman
Henderson"), pursuant to which the above duties have been delegated by the
Manager to Seligman Henderson. Seligman Henderson has served as Sub-adviser to
the Portfolio since May 1, 1995.
The Present Investment Management Agreement and the Present
Sub-Advisory Agreement were initially approved by the Board of Trustees,
including a majority of the Trustees who are not "interested persons" of the
Trust (as defined under the Investment Company Act) (the "Independent
Trustees"), on March 7, 1995, and last approved on April 16, 1996.
The Board of Trustees, through the Manager, has received a tendered
resignation from Seligman Henderson as Sub-adviser to the Portfolio. At a
meeting held on September 3, 1996, the Board of Trustees received a proposal
from the Manager to engage Founders Asset Management, Inc. ("Founders") to
provide sub-advisory services for the Portfolio. As hereinafter described in
greater detail, Founders has acted as an investment adviser since 1938 and
currently advises eleven no-load mutual funds. At June 30, 1996, Founders
managed assets totaling over $4 billion.
In connection with its recommendation, the Manager proposed to enter into a
new investment management agreement with the Trust (the "New Investment
Management Agreement") and a new sub-advisory agreement (the "New Sub-Advisory
Agreement") with Founders, both of which would become effective October 15,
1996. The terms and conditions of the New Investment Management Agreement,
including the investment management fee rate, are identical in all material
respects with those of the Present Investment Management Agreement, with the
exception of the effective date and termination date, and a change in the name
of the Portfolio to the "Founders Passport Portfolio." The terms and conditions
of the New Sub-Advisory Agreement, including the sub-advisory fee rate, are
identical in all material respects with those of the Present Sub-Advisory
Agreement, with the exception of the identity of the service provider, the
effective date and the termination date, the name of the Portfolio, and
additional representations of the Sub-adviser concerning review of documents and
rendering of advice.
In support of its recommendation to engage Founders as Sub-adviser to
the Portfolio, the Manager informed the Board of Trustees of its belief that,
based upon its discussions with Founders, implementation of certain revised
investment strategies would be desirable and the appointment of Founders would
facilitate the implementation of the desired strategies. Such investment
strategies, reflected in proposed changes to the Portfolio's investment
objective and certain fundamental investment restrictions as described under
Proposals III and IV herein, are similar to those employed by Founders in its
management of the Founders Passport Fund (the "Founders Fund"), an open-end
management company with a current investment objective and current investment
restrictions substantially similar to those proposed herein. In the opinion of
the Manager, engagement of Founders as Sub-adviser to the Portfolio would also
assist in developing new markets for the Portfolio and efforts to increase the
Portfolio's net assets.
On September 3, 1996, the Board of Trustees, including a majority of
the Independent Trustees, voted unanimously to approve the New Investment
Management Agreement and the New Sub-Advisory Agreement, each effective October
15, 1996 (or four business days after any subsequent approval of such agreements
by the Portfolio's shareholders, whichever is later), and authorized the
submission of the new agreements for shareholder approval. The Board of Trustees
also approved a change in the name of the Portfolio to the "Founders Passport
Portfolio," subject to shareholder approval of Proposals I and II described
herein. Subject to the receipt of shareholder approval, the Present Investment
Management Agreement and the Present Sub-Advisory Agreement will be terminated
as discussed herein as of the opening of business on October 15, 1996.
The Present Investment Management Agreement
The following description of the material terms of the Present
Investment Management Agreement is qualified in its entirety by reference to the
form of such agreement attached to this Proxy Statement as Exhibit A-1.
The Present Investment Management Agreement requires the Manager to furnish
the Portfolio with, at a minimum, investment advice and investment management
and administrative services with respect to the Portfolio, subject to the
supervision of the Board of Trustees and in conformity with the stated policies
of the Portfolio. Under the terms of the Present Investment Management
Agreement, the Manager's services to the Portfolio are not to be deemed
exclusive, and the Manager is permitted to render investment advisory and
corporate administrative or other services to others (including other investment
companies) and to engage in other activities. The Manager may engage a
sub-adviser to provide advisory services in relation to the Portfolio.
The Manager is responsible for certain expenses in connection with the
trading function and investment program of the Portfolio. The Manager is
required to furnish, at its expense and without cost to the Trust, the services
of a President, Secretary, and one or more Vice Presidents of the Trust, to the
extent such additional officers may be required by the Trust for the proper
conduct of its affairs, and to provide or obtain for the Portfolio, and
thereafter supervise, such executive, administrative, clerical and shareholder
servicing services as are deemed advisable by the Board of Trustees. The Trust
pays ordinary business expenses, including, but not limited to, brokerage
commissions, legal, auditing, taxes or governmental fees, the cost of preparing
share certificates, custodian, depository, transfer and shareholder service
agent costs, expenses of issue, sale, redemption and repurchase of shares,
expenses of registering and qualifying shares for sale, insurance premiums on
property or personnel (including officers and Trustees if available) of the
Trust which inure to its benefit, expenses relating to Trustee and shareholder
meetings, the cost of preparing and distributing reports and notices to
shareholders, the fees and other expenses incurred by the Trust in connection
with membership in investment company organizations, and the cost of printing
copies of prospectuses and statements of additional information distributed to
shareholders.
The Present Investment Management Agreement also provides that in the
absence of willful misfeasance, bad faith, gross negligence or reckless
disregard of obligations or duties thereunder on the part of the Manager or any
of its officers, trustees, or employees, the Manager shall not be subject to
liability to the Trust or to any shareholder of the Portfolio for any act or
omission in the course of, or connected with, rendering services thereunder or
for any losses that may be sustained in the purchase, holding or sale of any
security.
In full compensation for the services furnished by the Manager under
the Present Investment Management Agreement, the Manager receives an annual
investment advisory fee, payable monthly, of 1.0% of the Portfolio's average
daily net assets. The Manager has agreed under the terms of the Present
Investment Management Agreement to reimburse the Trust if and to the extent that
the total of all ordinary business expenses for any fiscal year, including all
investment advisory and administration fees, but excluding taxes, interest,
brokerage commissions and fees and extraordinary expenses such as litigation,
exceeds 1.75% of the average daily net assets of the Portfolio, and if required
to do so pursuant to applicable state or regulatory authority, to pay to the
Trust such expenses no later than the last day of the first month of the next
succeeding fiscal year of the Trust. The aggregate fee paid by the Trust to the
Manager for services rendered under the Present Investment Management Agreement
for the fiscal year ended December 31, 1995 was $486,749.
The Present Investment Management Agreement provides that it will
continue in effect from year to year if specifically approved at least annually,
either by the Board of Trustees or by the vote of a majority of the Portfolio's
outstanding voting securities (as defined under the Investment Company Act) and
by the affirmative vote of a majority of the Board of Trustees who are not
parties to the agreement or interested persons of a party to the agreement
(other than as trustees of the Trust) by votes cast in person at a meeting
specifically called for such purpose. These provisions reflect the requirements
of the Investment Company Act. The Present Investment Management Agreement may
be terminated at any time, without the payment of any penalty or prejudice to
the completion of any transaction already initiated on behalf of the Portfolio,
on 60 days' written notice to the other party to the agreement by (i) the vote
of the Board of Trustees; (ii) the vote of a majority of the Portfolio's
outstanding voting securities; or (iii) the Manager. The Present Investment
Management Agreement will terminate effective May 1, 1997, if not reapproved, or
automatically in the event of its "assignment" (as defined under the Investment
Company Act).
Subject to receipt of shareholder approval of Proposals I and II
described herein, the Present Investment Management Agreement will be terminated
as of the opening of business on October 15, 1996. The decision to terminate the
Present Investment Management Agreement rather than to allow its continuance
reflects the determination of the Board of Trustees and the Manager that it
would be in the interests of the Portfolio's shareholders to enter into the New
Investment Management Agreement described below. If the Present Investment
Management Agreement is terminated, the Manager's compensation thereunder shall
be prorated to the date of termination.
The New Investment Management Agreement
The following description of the material terms of the New Investment
Management Agreement is qualified in its entirety by reference to the form of
such Agreement attached to this Proxy Statement as Exhibit A-2.
The terms and conditions of the New Investment Management Agreement are
identical in all material respects to those of the Present Investment Management
Agreement, with the exception of the effective date and termination date, and
the name of the Portfolio. As compensation for the services to be performed and
the facilities to be furnished by the Manager under the New Investment
Management Agreement, the Manager will receive a fee payable monthly at an
annual rate of 1.0% of the Portfolio's average daily net assets. This investment
management fee rate is identical to the investment management fee rate payable
by the Trust under the Present Investment Management Agreement. In addition,
like the Present Investment Management Agreement, under the terms of the New
Investment Management Agreement, the Manager will reimburse the Trust if and to
the extent that the total of all ordinary business expenses of the Portfolio for
any fiscal year of the Trust, including all management and administration fees,
but excluding taxes, interest, brokerage commissions and fees and extraordinary
expenses, such as litigation, exceeds 1.75% of the Portfolio's average daily net
assets, and if required to do so pursuant to applicable statute or regulatory
authority, to pay to the Trust such excess expenses no later than the last day
of the first month of the next succeeding fiscal year of the Trust.
If the New Investment Management Agreement is approved by the
shareholders of the Portfolio, it will become effective October 15, 1996
(subject also to shareholder approval of Proposal II), or four business days
after any subsequent approval of the agreement by the Portfolio's shareholders,
whichever is later. The New Investment Management Agreement will continue in
effect from year to year if specifically approved at least annually, either by
the Board of Trustees or by the vote of a majority of the Portfolio's
outstanding voting securities (as defined under the Investment Company Act). In
either event, such continuance shall also be approved by the vote of a majority
of the Board of Trustees who are not parties to the agreement or interested
persons of a party to the agreement (other than as trustees of the Trust) cast
in person at a meeting called for the purpose of voting on such continuance.
These provisions reflect the requirements of the Investment Company Act. Like
the Present Investment Management Agreement, the New Investment Management
Agreement may be terminated at any time, without penalty or prejudice to the
completion of any transactions already initiated on behalf of the Portfolio, on
60 days' written notice to the other party to the agreement by (i) the vote of
the Board of Trustees; (ii) the vote of a majority of the Portfolio's
outstanding voting securities; or (iii) the Manager. The New Investment
Management Agreement would terminate effective October 15, 1997, if not
reapproved, or automatically in the event of its "assignment" (as defined under
the Investment Company Act).
The Manager and Other Information
The Manager is registered as an investment adviser with the Securities
and Exchange Commission pursuant to the Investment Advisers Act of 1940, as
amended, as well as with the securities commissions of thirty-two state
jurisdictions. The Manager does not currently serve as investment adviser or
sub-adviser to any registered investment company other than the Trust. The
principal executive officer of the Manager is Jan R. Carendi, who is also a
director of the Manager and Executive Vice President and Member of Executive
Management Group, Skandia Insurance Company Ltd. ("SICL"), Sveavagen 44, S-103
50 Stockholm, Sweden. The other officers and directors of the Manager and the
officers of the Manager who are also officers or members of the Board of
Trustees of the Trust are set forth below:
<TABLE>
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<S> <C> <C> <C>
Name and Position with ASISI Principal Occupation and Address
Jan R. Carendi* Executive Vice President and
Chief Executive Officer Member of Executive Management Group
and Director Skandia Insurance Company Ltd.
Sveavagen 44, S-103 50 Stockholm, Sweden
Gordon C. Boronow* President and Chief Operating Officer
Director American Skandia Life Assurance Corporation
One Corporate Drive, Shelton, CT 06484
Thomas M. Mazzaferro* Executive Vice President and Chief Financial Officer
President, Chief Operating Officer, American Skandia Life Assurance Corporation
Chief Financial Officer and Director One Corporate Drive, Shelton, CT 06484
C. Ake Svensson Vice President and Corporate Controller
Treasurer and Director American Skandia Investment Holding Corporation
One Corporate Drive, Shelton, CT 06484
N. David Kuperstock Vice President, Product Development
Director American Skandia Life Assurance Corporation
One Corporate Drive, Shelton, CT 06484
Rodney D. Runestad Vice President and Valuation Actuary
Director American Skandia Life Assurance Corporation
One Corporate Drive, Shelton, CT 06484
Wade A. Dokken President, Chief Operating Officer
Director and Chief Marketing Officer
American Skandia Marketing, Incorporated
One Corporate Drive, Shelton, CT 06484
Richard G. Davy, Jr.* Controller
Controller American Skandia Investment Services, Incorporated
One Corporate Drive, Shelton, CT 06484
M. Priscilla Pannell* Assistant Corporate Secretary
Corporate Secretary American Skandia Life Assurance Corporation
One Corporate Drive, Shelton, CT 06484
Kristen E. Newall Administrative Coordinator
Assistant Corporate Secretary American Skandia Investment Holding Corporation
One Corporate Drive, Shelton, CT 06484
</TABLE>
*Individuals who are also Trustees or officers of the Trust.
The Manager is a wholly-owned subsidiary of American Skandia Investment
Holding Corporation ("ASIHC"), a Delaware corporation. ASIHC is also the owner
of all the issued and outstanding shares of ASLAC and American Skandia
Marketing, Incorporated ("ASM"), which is the principal underwriter of ASLAC
variable annuity contracts. ASIHC is indirectly owned by SICL, a Swedish
company. The Manager's, ASIHC's, ASLAC's, and ASM's principal offices are
located in the same building at One Corporate Drive, Shelton, Connecticut 06484.
The Administrator of the Portfolio, and every other portfolio of the
Trust, as that term is defined under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), is PFPC Inc., a Delaware corporation located at
103 Bellevue Parkway, Wilmington, Delaware 19809.
The Evaluation by the Board of Trustees
In evaluating the New Investment Management Agreement, the Board of
Trustees reviewed materials furnished by the Manager and Founders. These
materials included financial statements and information regarding the Manager
and Founders and their respective personnel and operations. Consideration was
given to comparative fee and expense information concerning other mutual funds
with similar investment objectives published by a widely recognized industry
authority and to potential indirect benefits in connection with the Portfolio
and its investment operations, including any which may arise in connection with
brokerage transactions.
In evaluating the New Investment Management Agreement, the Board of
Trustees considered that (1) the scope and quality of the services which the
Manager has provided under the Present Investment Management Agreement and
expects to provide under the New Investment Management Agreement have been and
are satisfactory; (2) the investment management fee rate payable to the Manager
under the New Investment Management Agreement is competitive and will remain
unchanged from the investment management fee rate payable under the Present
Investment Management Agreement; (3) the Manager's obligation under the Present
Investment Management Agreement to reimburse the Trust if and to the extent that
the total of all ordinary business expenses of the Portfolio for any fiscal year
of the Trust, including all management fees, exceeds 1.75% of the Portfolio's
average daily net assets would continue under the New Investment Management
Agreement (for a further discussion of this limitation on the Portfolio's
expenses under the Present Investment Management Agreement and the New
Investment Management Agreement, see the respective discussions of each
agreement under this Proposal I); and (4) the terms and conditions of the New
Investment Management Agreement will remain materially unchanged from those of
the Present Investment Management Agreement, except for the effective date and
termination date, and the name of the Portfolio. The Board also gave
consideration to the fact that the sub-advisory fee rate payable by the Manager
under the New Sub-Advisory Agreement would remain unchanged from the
sub-advisory fee rate payable under the Present Sub-Advisory Agreement, as well
as the Manager's belief that maintaining compensation at competitive levels over
the long term is necessary for the Manager to continue to provide high quality
services to the Portfolio. The Board of Trustees also considered the Manager's
present distribution strategies and willingness to devote appropriate resources
to develop new markets for the Portfolio. The Board of Trustees also received
assurances from the Manager that the scope and quality of its services would not
be diminished under the terms of the New Investment Management Agreement.
Based upon its evaluation, the Board of Trustees determined that the
continuance of the Manager's role as Investment Manager of the Portfolio likely
would offer the Portfolio continued access to effective management and advisory
services and capabilities. The Board of Trustees concluded further that the
terms of the New Investment Management Agreement, including the fees
contemplated thereby, are fair and reasonable and in the best interests of the
Portfolio and its shareholders.
In order to provide for the services described in the New Investment
Management Agreement, the shareholders are being asked to approve the New
Investment Management Agreement.
THE TRUSTEES, INCLUDING THE INDEPENDENT TRUSTEES,
RECOMMEND THAT THE SHAREHOLDERS VOTE "FOR" PROPOSAL I.
ANY UNMARKED PROXIES WILL BE SO VOTED.
PROPOSAL II
APPROVAL OF A NEW SUB-ADVISORY AGREEMENT BETWEEN
AMERICAN SKANDIA INVESTMENT SERVICES, INCORPORATED
AND FOUNDERS ASSET MANAGEMENT, INC.
The Present Sub-Advisory Agreement
The following description of the Present Sub-Advisory Agreement is
qualified in its entirety by reference to the form of such agreement attached to
this Proxy Statement as Exhibit A-3.
Seligman Henderson has advised the Portfolio since May 1, 1995. Under
the terms of the Present Sub-Advisory Agreement, Seligman Henderson has agreed
to furnish the Manager with investment advisory services in connection with a
continuous investment program for the Portfolio which is to be managed in
accordance with the investment objective, investment policies and restrictions
of the Portfolio as set forth in the Prospectus and Statement of Additional
Information of the Trust and in accordance with the Trust's Declaration of Trust
and By-laws. Subject to the supervision and control of the Manager, which is in
turn subject to the supervision and control of the Board of Trustees, Seligman
Henderson, in its discretion, determines and selects the securities to be
purchased for and sold from the Portfolio from time to time and places orders
with and gives instructions to brokers, dealers and others for all such
transactions and causes such transactions to be executed.
Additionally, pursuant to the terms of the Present Sub-Advisory
Agreement, Seligman Henderson obtains and evaluates pertinent information about
significant developments and economic, statistical and financial data, domestic,
foreign or otherwise, whether affecting the economy generally or the Portfolio,
and concerning the individual issuers whose securities are included in the
Portfolio or the activities in which they engage, or with respect to securities
which Seligman Henderson considers desirable for inclusion in the Portfolio.
In furnishing the services under the Present Sub-Advisory Agreement,
Seligman Henderson has agreed to comply with the requirements of the Investment
Company Act applicable to it, and the regulations promulgated thereunder.
Seligman Henderson also represents and warrants that it is authorized to enter
into the Present Sub-Advisory Agreement and perform the services contemplated to
be performed thereunder. Seligman Henderson, at its expense, has agreed to
furnish all necessary investment facilities, including salaries of personnel
required for it to execute its duties faithfully.
The Present Sub-Advisory Agreement requires Seligman Henderson to use
commercially reasonable efforts and act in good faith in the performance of its
services under the Present Sub-Advisory Agreement. However, so long as Seligman
Henderson has acted in good faith and has used its commercially reasonable
efforts, then in the absence of willful misconduct, bad faith, gross negligence
or reckless disregard of its obligations under the Present Sub-Advisory
Agreement, Seligman Henderson shall not be liable to the Trust or its
shareholders or to the Manager for any act or omission resulting in any loss
suffered in any portfolio of the Trust in connection with any service to be
provided therein.
The Manager is responsible for payment of Seligman Henderson's
compensation under the Present Sub-Advisory Agreement. Seligman Henderson's
compensation for the services provided under the Present Sub-Advisory Agreement
is computed at an annual rate and is payable monthly in arrears, based on the
average daily net assets of the Portfolio for each month. For all services
rendered, the Manager calculates and pays Seligman Henderson at the annual rate
of .60% of the portion of the Portfolio's average daily net assets not in excess
of $100 million, plus .50% of the portion of the Portfolio's average daily net
assets over $100 million. In computing the fee to be paid to Seligman Henderson,
the net asset value of the Portfolio is valued as set forth in the current
registration statement of the Trust. The aggregate fee paid by the Manager to
Seligman Henderson for services rendered under the Present Sub-Advisory
Agreement for the fiscal year ended December 31, 1995 was $45,904.
The Present Sub-Advisory Agreement provides that it shall remain in
effect for two years from the date of the agreement, and is renewable annually
thereafter by specific approval of the Board of Trustees or by vote of a
majority of the outstanding voting securities of the Portfolio (as defined under
the Investment Company Act). Any such renewal shall be approved by the vote of a
majority of the Trustees who are not interested persons under the Investment
Company Act, cast in person at a meeting called for the purpose of voting on
such renewal. The Present Sub-Advisory Agreement may be terminated at any time
without penalty upon 60 days' written notice to the other party to the
agreement, and will automatically terminate in the event of its "assignment" by
either party (as defined under the Investment Company Act) or (provided Seligman
Henderson has received prior written notice thereof) upon termination of the
Present Investment Management Agreement. Unless the Present Sub-Advisory
Agreement is renewed, or otherwise terminated, the agreement will terminate
effective May 1, 1997.
Subject to the receipt of shareholder approval of Proposals I and II
described herein, the Present Sub-Advisory Agreement will be terminated by the
resignation of Seligman Henderson as Sub-adviser to the Portfolio, as of the
opening of business on October 15, 1996. Both the Manager and Seligman Henderson
have mutually agreed that it would be in the interests of the Portfolio's
shareholders for the Manager to accept the resignation of Seligman Henderson as
Sub-adviser to the Portfolio. The termination, rather than continuance, of the
Present Sub-Advisory Agreement reflects the Manager's determination that it
would be in the interests of the Portfolio's shareholders to enter into the New
Sub-Advisory Agreement described below. If the Present Sub-Advisory Agreement is
terminated, Seligman Henderson's compensation thereunder shall be prorated to
the date of termination.
Seligman Henderson's offices are located at 100 Park Avenue, New York,
New York 10017. As at December 31, 1995, Seligman Henderson managed assets
totaling approximately $24 billion, including approximately $28.5 million in
assets of the Portfolio. As at June 30, 1996, Seligman Henderson managed assets
of the Portfolio totaling approximately $81.7 million.
The New Sub-Advisory Agreement
The following description of the New Sub-Advisory Agreement is
qualified in its entirety by reference to the form of such agreement attached to
this Proxy Statement as Exhibit A-4.
The terms and conditions of the New Sub-Advisory Agreement are identical in
all material respects to those of the Present Sub-Advisory Agreement, with the
exception of the identity of the service provider, the effective date and
termination date, the name of the Portfolio, and additional representations of
the Sub-adviser concerning review of documents and rendering of advice. As
compensation for the services to be rendered under the New Sub-Advisory
Agreement, the Manager, and not the Trust or the Portfolio, will pay Founders a
fee at the annual rate of .60% of the portion of the Portfolio's average daily
net assets not in excess of $100 million, plus .50% of the portion of the
Portfolio's average daily net assets over $100 million. This sub-advisory fee
rate is identical to the sub-advisory fee rate payable by the Manager under the
Present Sub-Advisory Agreement. In computing the fee to be paid to Founders, the
net asset value of the Portfolio shall be valued as set forth in the then
current registration statement of the Trust. If the New Sub-Advisory Agreement
is terminated, the payment shall be prorated to the date of termination.
If the New Sub-Advisory Agreement is approved by the shareholders of
the Portfolio, it will become effective October 15, 1996 (subject also to
shareholder approval of Proposal I), or four business days after any subsequent
approval of the agreement by the Portfolio's shareholders, whichever is later.
The New Sub-Advisory Agreement will remain in effect for an initial one year
term, and is renewable thereafter by specific approval of the Board of Trustees
or by vote of a majority of the outstanding voting securities of the Portfolio
(as defined under the Investment Company Act). In either event, such renewal
shall also be approved by the vote of a majority of the Independent Trustees,
cast in person at a meeting called for the purpose of voting on such renewal.
Like the Present Sub-Advisory Agreement, the New Sub-Advisory Agreement may be
terminated at any time without penalty upon 60 days' written notice to the other
party to the agreement, and will automatically terminate in the event of its
"assignment" by either party (as defined under the Investment Company Act) or
(provided Founders has received prior written notice thereof) upon termination
of the New Investment Management Agreement.
The Manager believes that changes in the investment strategies
recommended by Founders, as described under Proposals III and IV herein, and the
regard for the high quality of Founders' investment advisory capabilities will
facilitate efforts to increase the Portfolio's assets with beneficial effects on
portfolio and Trust expenses. As discussed herein, the Board of Trustees and the
Manager believe that the overall fee structure for the Portfolio under the New
Investment Management Agreement and the New Sub-Advisory Agreement accurately
reflects the high quality of services to be provided under these agreements.
The Proposed Sub-Adviser
Founders is located at Founders Financial Center, 2930 East Third Avenue,
Denver, Colorado 80206. Founders has acted as an investment adviser since 1938
and currently advises eleven no-load mutual funds. At June 30, 1996, Founders
managed assets totaling over $4 billion.
Bjorn K. Borgen is the chief executive officer and sole director and
shareholder of Founders. In addition to Mr. Borgen, the other officers of
Founders are Jonathan F. Zeschin, David L. Ray, Michael K. Haines, Michael W.
Gerding, Edward F. Keely, Linda M. Ripley, Gregory P. Contillo, James P. Rankin,
Kenneth R. Christoffersen, Robert Galindo, Jr. and Thomas Mauer. The address of
each of each of the foregoing officers is 2930 East Third Avenue, Denver,
Colorado 80206.
Founders acts as investment adviser and sub-adviser to various publicly
owned investment companies, some of which have investment objectives similar to
the investment objective of the Portfolio as contemplated by Proposal III of
this Proxy Statement (collectively, the "Comparable Founders Funds"). For each
Comparable Founder Fund, the chart below lists the total assets at June 30,
1996, as well as the current management fee rate payable to Founders:
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Total Net Assets
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Comparable Founders Fund at June 30, 1996 Management Fee Rate
- ------------------------ ---------------- -------------------
Founders Passport Fund $ 163,906,201 1.00% of the first $250 million of average net
assets; plus .80% of the next $250 million; plus
.70% of any excess over $500 million.
North American Funds: $ 7,328,570 .65% of the first $50 million of average net
International Small Cap Fund assets; plus .60% of the next $150 million; plus
.50% of the next $300 million; plus .40% of any excess
over $500 million.
North American Series Trust: $ 47,088,043 Same as previous.
International Small Cap Trust
- -------------------------- -------------
All Comparable Founders Funds $ 218,322,814
The Evaluation by the Board of Trustees
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In evaluating the New Sub-Advisory Agreements, the Board of Trustees
reviewed materials furnished by the Manager and Founders. These materials
included financial statements and information regarding the Manager and Founders
and their respective personnel and operations. Consideration was given to
comparative fee and expense information concerning other mutual funds with
similar investment objectives published by a widely recognized industry
authority and to potential indirect benefits in connection with the Portfolio
and its investment operations, including any which may arise in connection with
brokerage transactions.
In evaluating the New Sub-Advisory Agreement, the Board of Trustees
considered that (1) the reputation and standing of Founders in the U.S. mutual
fund industry is generally excellent in light of, among other things, the rating
by nationally recognized fund rating services of funds managed by Founders; (2)
the services to be delivered by Founders to the Portfolio's shareholders are
expected to be of high quality; (3) the sub-advisory fee rate payable by the
Manager under the New Sub-Advisory Agreement is competitive and will remain
unchanged from the sub-advisory fee rate payable under the Present Sub-Advisory
Agreement; (4) the terms and conditions of the New Sub-Advisory Agreement will
remain materially unchanged from those of the Present Sub-Advisory Agreement,
except for the identity of the service provider, the effective date and
termination date, the name of the Portfolio, and additional representations of
the Sub-adviser concerning review of documents and rendering of advice; (5)
Founders has significant experience in managing investment portfolios with
investment objectives similar to the investment objective described in Proposal
III and, if approved, would apply to the Portfolio (the "Comparable Founders
Funds," as defined earlier); and (6) Founders managed combined assets of the
Comparable Founders Funds totaling over $218 million as at June 30, 1996. The
Board of Trustees also received assurances that Founders has considerable
staffing resources available and adequate capitalization to provide high quality
management services.
Based upon its evaluation, the Board of Trustees determined that the
Manager's engagement of Founders as Sub-adviser to the Portfolio likely would
offer the Portfolio continued access to effective management and advisory
services and capabilities. The Board of Trustees concluded further that the
terms of the New Sub-Advisory Agreement, including the fees contemplated
thereby, are fair and reasonable and in the best interests of the Portfolio and
its shareholders.
In order to provide for the services described in the New Sub-Advisory
Agreement, the shareholders are being asked to approve the New Sub-Advisory
Agreement.
Portfolio Brokerage
Subject to the supervision of the Manager and the Board of Trustees,
decisions to buy and sell securities for each portfolio of the Trust, including
the Portfolio, are made by the portfolio's respective Sub-adviser. Subject to
the direction of the Manager, each Sub-adviser is authorized to allocate the
orders placed by it on behalf of the applicable portfolio to brokers who also
may provide research or statistical material, or other services to the portfolio
or the Sub-adviser for the use of the applicable portfolio or the Sub-adviser's
other clients. Such allocation shall be in such amounts and proportions as the
Sub-adviser shall determine in accordance with the policy set forth in the
Trust's Prospectus and Statement of Additional Information or as the Board of
Trustees may determine from time to time, and the Sub-adviser will report such
allocations either to the Manager, which will report on such allocations to the
Board of Trustees, or, if requested by the Manager, directly to the Board of
Trustees. Such reports will indicate the brokers to whom such allocations have
been made and the basis therefor. The Sub-adviser may consider sale of shares of
the portfolio, as well as the recommendations of the Manager, as factors in the
selection of brokers to execute portfolio transactions for a portfolio, subject
to the requirements of best net price and most favorable execution.
Change in Portfolio Name
If Proposals I and II are approved, as of October 15, 1996, the name of
the Portfolio will be changed from the "Seligman Henderson International Small
Cap Portfolio" to the "Founders Passport Portfolio," and the New Investment
Management Agreement and the New Sub-Advisory Agreement will become effective.
As discussed earlier, the Portfolio's investment program will be based
upon the current investment program employed by Founders in connection with its
management of the Founders Passport Fund (the "Founders Fund," as defined
earlier). In the opinion of the Manager and Founders, the proposed name is
consistent with the proposed investment objective for the Portfolio, as
described more fully under Proposal III herein, and the overall investment
strategy to be employed by Founders in managing the Portfolio.
Proposals I and II are both made contingent upon shareholder approval
of each other. If either of Proposals I or II is not approved, the Present
Investment Management Agreement and the Present Sub-Advisory Agreement will
continue in effect.
THE TRUSTEES, INCLUDING THE INDEPENDENT TRUSTEES,
RECOMMEND THAT THE SHAREHOLDERS VOTE "FOR" PROPOSAL II.
ANY UNMARKED PROXIES WILL BE SO VOTED.
PROPOSAL III
APPROVAL OF A CHANGE IN THE
PORTFOLIO'S INVESTMENT OBJECTIVE
The Portfolio's current fundamental investment objective, which may not
be changed without approval of the shareholders of the Portfolio, is the
following:
The Portfolio seeks long-term capital appreciation primarily through
making international investments in companies with small to medium
market capitalizations.
The Portfolio may invest in securities of issuers domiciled in any
country. Under normal conditions, investments will be made in three principal
regions: the United Kingdom and Continental Europe, the Pacific Basin, and Latin
America. Under normal market conditions, the Portfolio's assets will be invested
in securities of issuers located in at least three different countries.
Investments will not normally be made in securities of issuers located in the
United States or Canada. Some of the countries in which the Portfolio may invest
may be considered to be developing and may involve special risks.
The Portfolio may invest in all types of securities, most of which will
be denominated in currencies other than the U.S. dollar. The Portfolio may also
invest in securities represented by European Depository Receipts or American
Depository Receipts. The Portfolio will normally invest its assets in equity
securities, including common stock, securities convertible into common stock,
depository receipts for these securities and warrants. The Portfolio may,
however, invest up to 25% of its assets in preferred stock and debt securities
if the Sub-adviser believes that the capital appreciation available from an
investment in such securities will equal or exceed the capital appreciation
available from an investment in equity securities. Dividends or interest income
are considered only when the Sub-adviser believes that such income will have a
favorable influence on the market value of a security in light of the
Portfolio's objective of capital appreciation.
Equity securities in which the Portfolio will invest may be listed on a
foreign stock exchange or traded in foreign over-the-counter markets. Under
normal market conditions, the Portfolio will invest at least 65% of its total
assets in securities of small to medium-sized companies with market
capitalizations up to $750 million, although up to 35% of its total assets may
be invested in securities of companies with market capitalizations over $750
million. The Sub-adviser will periodically review and revise the capitalization
requirements of smaller companies as circumstances may require. The Sub-adviser
anticipates that the Portfolio will continue to hold the securities of smaller
companies as those companies grow or expand so long as those investments
continue to offer prospects of long-term growth. In extraordinary circumstances,
the Portfolio may invest for temporary defensive purposes, without limit, in
large capitalization companies or increase its investments in debt securities.
There is no requirement that the debt securities in which the Portfolio
may invest be rated by a recognized rating agency. However, it is the
Portfolio's policy that investments in debt securities, whether rated or
unrated, will be made only if they are "investment grade" securities or are, in
the opinion of the Sub-adviser, of equivalent quality to "investment grade"
securities. "Investment grade" securities are those rated within the four
highest quality grades as determined by Moody's Investors Service, Inc.
("Moody's") or Standard & Poor's Corporation ("S&P's'). Securities rated with
the highest four investment grade categories (i.e., Aaa by Moody's and AAA by
S&P's) are judged to be of the best quality and carry the smallest degree of
risk. Securities rated within the lowest of the four categories (i.e., Baa by
Moody's and BBB by S&P's) lack high quality investment characteristics and, in
fact, may be speculative.
The Board of Trustees recommends that the shareholders adopt the
following fundamental investment objective for the Portfolio, which, if
approved, may not be changed without subsequent approval of the shareholders of
the Portfolio:
The Portfolio seeks capital appreciation.
As amended, the investment objective of the Portfolio would be
substantially similar to the current investment objective of the Founders
Passport Fund (the "Founders Fund," as defined earlier), an open-end management
investment company to which Founders acts as investment adviser. To achieve the
proposed objective, the Portfolio will invest primarily in securities issued by
foreign companies which have market capitalizations or annual revenues of $1
billion or less. These securities may represent companies in both established
and emerging economies throughout the world. At least 65% of the Portfolio's
total assets will normally be invested in foreign securities representing a
minimum of three countries. The Portfolio may invest in larger foreign companies
or in U.S.-based companies if, in the Sub-adviser's opinion, they represent
better prospects for capital appreciation.
The Portfolio normally will invest a significant proportion of its
assets in the securities of small and medium-size companies. As used with
respect to this Portfolio, small and medium-size companies are those which are
still in the developing stages of their life cycles and are able to achieve
rapid growth in both sales and earnings. The Portfolio tries to avoid investing
in companies where operating results may be affected adversely by excessive
competition, severe governmental regulation, or unsatisfactory productivity.
Investments in small and medium-size companies involve greater risk than is
customarily associated with more established companies. These companies often
have sales and earnings growth rates which exceed those of large companies. Such
growth rates may in turn be reflected in more rapid share price appreciation.
However, smaller companies often have limited operating histories, product
lines, markets, or financial resources, and they may be dependent upon
one-person management. These companies may be subject to intense competition
from larger entities, and the securities of such companies may have limited
marketability and may be subject to more abrupt or erratic movements in price
than securities of larger companies or the market averages in general.
Therefore, the net asset values of the Portfolio's shares may fluctuate more
widely than the popular market averages.
The Portfolio may invest in convertible securities, preferred stocks,
bonds, debentures, and other corporate obligations when the Sub-adviser believes
that these investments offer opportunities for capital appreciation. Current
income will not be a substantial factor in the selection of these securities.
The Portfolio will only invest in bonds, debentures, and corporate obligations
(other than convertible securities and preferred stock) rated investment grade
(BBB or higher) at the time of purchase. Bonds in the lowest investment grade
category (BBB) have speculative characteristics, with changes in the economy or
other circumstances more likely to lead to a weakened capacity of the bonds to
make principal and interest payments than would occur with bonds rated in higher
categories. Convertible securities and preferred stocks purchased by the
Portfolio may be rated in medium and lower categories by Moody's or S&P's (Ba or
lower by Moody's and BB or lower by S&P's), but will not be rated lower than B.
The Portfolio may also invest in unrated convertible securities and preferred
stocks in instances in which the Sub-adviser believes that the financial
condition of the issuer or the protection afforded by the terms of the
securities limits risk to a level similar to that of securities eligible for
purchase by the Portfolio rated in categories no lower than B. Securities rated
B are referred to as "high-risk" securities, generally lack characteristics of a
desirable investment, and are deemed speculative with respect to the issuer's
capacity to pay interest and repay principal over a long period of time. At no
time will the Portfolio have more than 5% of its total assets invested in any
fixed-income securities which are unrated or are rated below investment grade
either at the time of purchase or as a result of a reduction in rating after
purchase.
The Manager has expressed its belief to the Board of Trustees that the
proposed change to the investment objective of the Portfolio is in the interests
of the shareholders of the Portfolio.
This Proposal III is made contingent upon shareholder approval of
Proposals I and II. If either of Proposals I or II is not approved, the current
investment objective will continue in effect and will apply to the Portfolio.
THE TRUSTEES, INCLUDING THE INDEPENDENT TRUSTEES,
RECOMMEND THAT THE SHAREHOLDERS VOTE "FOR" PROPOSAL III.
ANY UNMARKED PROXIES WILL BE SO VOTED.
PROPOSAL IV
APPROVAL OF CHANGES IN THE PORTFOLIO'S
FUNDAMENTAL INVESTMENT RESTRICTIONS
As described in more detail below, the Board of Trustees, including the
Independent Trustees, are recommending to the shareholders of the Portfolio that
they approve a number of changes to the Portfolio's fundamental investment
restrictions. Generally, the purpose behind these proposed changes is to conform
the investment program of the Portfolio with the current investment program
employed by Founders in its management of the Founders Passport Fund (the
"Founders Fund," as defined earlier). If this Proposal IV is approved, the
investment restrictions as proposed below would be substantially similar to the
current corresponding investment restrictions of the Founders Fund.
Reclassification of Certain Investment Restrictions from "Fundamental" to
"Non-Fundamental"
The Portfolio currently is subject to certain investment restrictions
which are "fundamental" policies and may not be changed without approval of the
shareholders of the Portfolio. The Portfolio also is subject to certain
non-fundamental investment restrictions which may be changed by the Board of
Trustees without shareholder approval.
The Manager, after discussions with Founders, has proposed to the Board
of Trustees that certain of the Portfolio's investment restrictions discussed
below be reclassified from "fundamental" investment restrictions to
"non-fundamental" investment restrictions to provide the Portfolio with
additional flexibility to pursue its investment objective consistent with
applicable laws in effect from time to time. The Investment Company Act does not
require any of these investment restrictions to be classified as "fundamental."
Moreover, many of the prohibitions underlying these investment restrictions
reflect the requirements of the Investment Company Act and certain state
securities laws and, in the absence of such restrictions, would still be
applicable to the Portfolio. If the Shareholders of the Portfolio approve this
Proposal IV, the Board of Trustees thereafter may change any one or more of such
"non-fundamental" investment restrictions without the delay and expense to the
Portfolio of arranging for shareholder approval to the extent provided under
applicable law.
(1) The Portfolio currently is subject to the following fundamental
investment restriction concerning the purchase of securities of other investment
companies:
The Portfolio will not purchase securities of other investment
companies, except in connection with a merger, consolidation,
acquisition or reorganization, or by purchase in the open market of
securities of closed-end investment companies where no underwriter or
dealer's commission or profit, other than a customary broker's
commission, is involved and only if immediately thereafter not more
than 10% of this Portfolio's total assets, at market value, would be
invested in such securities, or by investing no more than 5% of the
Portfolio's total assets in other open-end investment companies or by
purchasing no more than 3% of any one open-end investment company's
securities.
The Manager has proposed to the Board of Trustees that the above
fundamental investment restriction be replaced by the following proposed
non-fundamental investment restriction:
The Portfolio will not purchase securities of other investment
companies, except that the Portfolio may purchase such securities in
the open market where no commission or profit to a sponsor or dealer
other than the customary broker's commission results from such
purchase, and only if immediately thereafter (a) no more than 3% of the
voting securities of any one investment company is owned in the
aggregate by the Portfolio, (b) no more than 5% of the value of the
total assets of the Portfolio would be invested in any one investment
company, and (c) no more than 10% of the value of the total assets of
the Portfolio would be invested in the securities of all such
investment companies. The Portfolio may acquire such securities if they
are acquired in connection with a purchase or acquisition in accordance
with a plan of reorganization, merger or consolidation.
If this Proposal IV is approved, the Portfolio would continue to be
subject to a substantially similar investment restriction, since the prohibition
underlying the current fundamental investment restriction of the Portfolio
reflects the requirements of the Investment Company Act and, in the absence of
such restriction, would still apply to the Portfolio. Under the proposed
non-fundamental investment restriction, however, in the event that the
Investment Company Act or applicable state law is amended, the Portfolio would
not be required to conduct a shareholders meeting, with attendant delay and
expense, in order to respond to any provisions of the amended law of potential
benefit to the Portfolio, or if the Portfolio, on its own initiative, desires to
propose more restrictive conditions.
(2) The Portfolio currently is subject to the following fundamental
investment restriction concerning the purchase of securities on margin:
The Portfolio will not buy any securities or other property on margin
(except for such short-term credits as are necessary for the clearance
of transactions).
The Manager has proposed to the Board of Trustees that the above
fundamental investment restriction be replaced by the following proposed
non-fundamental investment restriction:
The Portfolio will not purchase any securities on margin except to
obtain such short-term credits as may be necessary for the clearance of
transactions.
If this Proposal IV is approved, the Portfolio would continue to be
subject to a substantially similar investment restriction, since the prohibition
underlying the current fundamental investment restriction of the Portfolio
reflects the requirements of the Investment Company Act and, in the absence of
such restriction, would still apply to the Portfolio. Under the proposed
non-fundamental investment restriction, however, in the event that the
Investment Company Act or applicable state law is amended, the Portfolio would
not be required to conduct a shareholders meeting, with attendant delay and
expense, in order to respond to any provisions of the amended law of potential
benefit to the Portfolio, or if the Portfolio, on its own initiative, desires to
propose more restrictive conditions.
(3) The Portfolio currently is subject to the following fundamental
investment restriction concerning the purchase of securities of issuers which
have a record of less than three years' continuous operation ("unseasoned"
issuers):
The Portfolio will not invest more than 5% of the value of its total
assets, at market value, in the securities of issuers which, with their
predecessors, have been in business less than three years; provided,
however, that securities guaranteed by a company that (including
predecessors) has been in operation at least three continuous years
shall be excluded from this limitation.
The Manager has proposed to the Board of Trustees that the above
fundamental investment restriction be replaced by the following proposed
non-fundamental investment restriction:
The Portfolio will not invest more than 5% of the market value of its
total assets in securities of companies which with their predecessors
have a continuous operating record of less than three years.
The prohibition underlying the current fundamental investment
restriction reflects the requirements of applicable state law and, in the
absence of such restriction, would still apply to the Portfolio. The proposed
non-fundamental investment restriction more closely reflects the applicable
state law requirement. Under the proposed non-fundamental restriction, the
Portfolio would continue to be permitted to invest up to 5% of its assets in
"unseasoned" issuers.
By reclassifying the investment restriction from fundamental to
non-fundamental, the Board of Trustees would also be afforded flexibility to
consider future modification or elimination of the investment restriction if
deemed appropriate.
(4) The Portfolio currently is subject to the following fundamental
investment restriction concerning investment in warrants:
The Portfolio will not invest in warrants, if, at the time of
acquisition, the investment warrants, valued at the lower of cost or
market value, would exceed 5% of the Portfolio's net assets. For
purposes of this restriction, warrants acquired by the Portfolio in
units or attached to securities may be deemed to have been purchased
without cost.
The Manager has proposed to the Board of Trustees that the above
fundamental investment restriction be replaced by the following proposed
non-fundamental investment restriction:
The Portfolio will not purchase warrants, valued at the lower of cost
or market, in excess of 5% of total assets, except that the purchase of
warrants not listed on the New York or American Stock Exchanges is
limited to 2% of total net assets. Warrants acquired by the Portfolio
in units or attached to securities shall be deemed to be without value
unless such warrants are separately transferable and current market
prices are available, or unless otherwise determined by the Board of
Trustees of the Trust.
If this Proposal IV is approved, the proposed investment restriction would
more closely reflect the current investment restriction applicable to the
Founders Fund regarding investments in warrants. Under the current investment
restriction, warrants acquired by the Portfolio in units or attached to
securities "may be deemed to be without value" with the effect that such
warrants would be excluded from the percentage limitation on warrant
investments. Under the proposed investment restriction, warrants acquired by the
Portfolio in units or attached to securities would be excluded from the
percentage limitation whether or not they have been deemed to be without value
unless the warrants are separately transferable and current market prices are
available for the warrants or the Board of Trustees determines otherwise. In
addition, although the proposed investment restriction indicates that only 2% of
the Portfolio's total net assets may be invested in warrants which are not
listed on the New York or American Stock Exchanges, such limitation is
substantially similar to a current non-fundamental restriction applicable to the
Portfolio.
By reclassifying the investment restriction from fundamental to
non-fundamental, the Board of Trustees would also be afforded flexibility to
consider future modification or elimination of the investment restriction if
deemed appropriate.
(5) The Portfolio currently is subject to the following fundamental
investment restriction concerning the making of short sales:
The Portfolio will not make short sales except short sales
against-the-box.
The Manager has proposed to the Board of Trustees that the above
fundamental investment restriction be replaced by the following proposed
non-fundamental investment restriction:
The Portfolio will not sell securities short.
If this Proposal IV is approved, the proposed investment restriction
would more closely reflect the current investment restriction applicable to the
Founders Fund regarding the making of short sales. Under the current
restriction, the Portfolio may effect short sales "against the box." These are
short sales where the Portfolio owns or has the right to obtain at no added cost
securities identical to those sold short. Such transactions may be utilized,
among other things, to defer taxable capital gains or losses. The proposed
restriction would not permit short sales under any circumstances.
By reclassifying the investment restriction from fundamental to
non-fundamental, the Board of Trustees would also be afforded flexibility to
consider future modification or elimination of the investment restriction if
deemed appropriate.
(6) The Portfolio currently is subject to the following fundamental
investment restriction concerning investment in companies for the purpose of
exercising control or management:
The Portfolio will not invest in companies for the purpose of
exercising control or management.
The Manager has proposed to the Board of Trustees that the above
fundamental investment restriction be replaced by the following proposed
non-fundamental investment restriction:
The Portfolio will not invest in companies for the purpose of
exercising control or management.
If this Proposal IV is approved, the Portfolio would continue to be
subject to the same investment restriction, since the proposed non-fundamental
investment restriction reflects the requirements of the current fundamental
investment restriction. Under the proposed investment restriction, however, the
Board of Trustees would have the future flexibility to change such
non-fundamental investment restriction, if deemed appropriate in its judgment,
without the attendant delay and expense of arranging for a shareholders meeting.
It is not the intent of the Portfolio to control or manage any company and the
Portfolio generally is precluded from doing so under various laws. Subject to
these laws, it may be in the Portfolio's interest from time to time to make
additional investments in a company to obtain the ability to influence the
management of the company. For example, the Portfolio, consistent with
applicable law, may wish to influence the management of a company in which there
is an existing investment by the Portfolio where the company is experiencing
financial difficulties.
Changes in Certain Fundamental Investment Restrictions
In addition to the proposed changes discussed above, the Manager has
proposed to the Board of Trustees that certain other of the Portfolio's
fundamental investment restrictions discussed below be changed in the following
manner:
(1) The Portfolio currently is subject to the following fundamental
investment restriction concerning investment in a single industry:
The Portfolio will not invest more than 25% of its total assets, at
market value, in the securities of issuers principally engaged in the
same industry (except securities issued or guaranteed by the U.S.
Government, its agencies or instrumentalities).
The Manager has proposed to the Board of Trustees that the above
fundamental investment restriction be replaced by the following proposed
fundamental investment restriction:
The Portfolio will not make any investment which would concentrate 25%
or more of the Portfolio's total assets in the securities of issuers
having their principal business activities in the same industry,
provided that this limitation does not apply to obligations issued or
guaranteed by the U.S. government, its agencies or instrumentalities.
The current and proposed investment restrictions are substantially
similar in effect. The proposed restriction, however, recognizes that valuations
of Portfolio securities consistent with the requirements of the Investment
Company Act in some cases may, and may be required, to be valued on a basis
other than "market value." In addition, if this Proposal IV is approved, the
proposed investment restriction would more closely reflect the current
investment restriction applicable to the Founders Fund regarding investments in
a single industry.
(2) The Portfolio currently is subject to the following fundamental
investment restriction concerning investment in real estate:
The Portfolio will not purchase or sell real estate (although it may
purchase securities secured by real estate interests on interests
therein, or issued by companies or investment trusts that invest in
real estate or interests therein).
The Manager has proposed to the Board of Trustees that the above
fundamental investment restriction be replaced by the following proposed
fundamental investment restriction:
The Portfolio will not invest directly in physical commodities (other
than foreign currencies), real estate or interests in real estate;
provided, that the Portfolio may invest in securities of issuers which
invest in physical commodities, real estate or interests in real
estate; and, provided further, that this restriction shall not prevent
the Portfolio from purchasing or selling options, futures, swaps and
forward contracts, or from investing in securities or other instruments
backed by physical commodities, real estate or interests in real
estate.
If this Proposal IV is approved, the proposed investment restriction would
more closely reflect the current investment restriction applicable to the
Founders Fund regarding investments in real estate. The proposed restriction
clarifies that certain permissible investments may involve indirect investments
in real estate and also includes commodities and commodity futures contracts
within its limitations. The proposed restriction, like the present restriction,
would permit the Portfolio to make currency investments, such as forward foreign
currency exchange contracts.
(3) The Portfolio currently is subject to the following fundamental
investment restriction concerning the ownership of a certain percentage of the
outstanding voting securities or class of securities of a single issuer:
The Portfolio will not own more than 10% of the outstanding voting
securities of any one issuer, or more than 10% of any class of
securities of one issuer.
The Manager has proposed to the Board of Trustees that the above
fundamental investment restriction be replaced by the following proposed
fundamental investment restriction:
The Portfolio will not, with respect to 75% of its total assets,
purchase more than 10% of any class of securities of any single issuer
or purchase more than 10% of the voting securities of any single
issuer.
The proposed fundamental restriction would allow the Portfolio maximum
flexibility to conduct its investment program as a "diversified" investment
company under the Investment Company Act. The Investment Company Act prohibits a
diversified fund, such as the Portfolio, from investing with respect to 75% of
its total assets in securities of an issuer if as a result the Portfolio would
own more than 10% of the outstanding voting securities of such issuer. The
proposed investment restriction reflects the more flexible limitations of the
Investment Company Act as the Portfolio will be able to purchase more than 10%
of the outstanding voting securities or class of securities of an issuer with
respect to 25% of its total assets. The current fundamental investment
restriction could impair the Portfolio's ability to pursue its investment
objective by unnecessarily preventing it from investing in desirable
opportunities.
Elimination of Certain Fundamental Investment Restrictions
As a final matter, the Manager has also proposed to the Board of
Trustees that the following fundamental investment restriction of the Portfolio
be eliminated:
The Portfolio will not purchase or retain securities of any issuer
(other than the shares of such Portfolio) if to the Trust's knowledge,
the officers and Trustees of the Trust and the officers and directors
of the Investment Manager who individually own beneficially more than
1/2 of 1% of the outstanding securities of such issuer, together own
beneficially more than 5% of such outstanding securities.
The elimination of the current investment restriction is being proposed
to conform the investment program for the Portfolio to the Founders Fund
investment program. The prohibition underlying the above investment restriction
reflects the requirements of applicable state securities law and, in the absence
of such restriction, would still be applicable to the Portfolio. Elimination of
this fundamental investment restriction would afford flexibility to the Board of
Trustees to respond to changes in the applicable state law without the attendant
expense and delay of arranging for a shareholders meeting.
This Proposal IV is made contingent upon shareholder approval of
Proposals I and II. If either of Proposals I or II is not approved, the current
fundamental investment restrictions will continue in effect and will apply to
the Portfolio.
THE TRUSTEES, INCLUDING THE INDEPENDENT TRUSTEES,
RECOMMEND THAT THE SHAREHOLDERS VOTE "FOR" PROPOSAL IV.
ANY UNMARKED PROXIES WILL BE SO VOTED.
Shareholder Proposals
The Trust is not required to hold and will not ordinarily hold annual
shareholders' meetings. The Board of Trustees may call special meetings of the
shareholders for action by shareholder vote as required by the Investment
Company Act or the Trust's Declaration of Trust.
Pursuant to rules adopted by the SEC under the Exchange Act, a
shareholder may include in proxy statements relating to annual and other
meetings of the shareholders of the Trust certain proposals for shareholder
action which he or she intends to introduce at such special meetings; provided,
among other things, that such proposal must be received by the Trust a
reasonable time before a solicitation of proxies is made for such meeting.
Timely submission of a proposal does not necessarily mean that the proposal will
be included.
By order of the Board of Trustees
Mary Ellen O'Leary
Corporate Secretary
American Skandia Trust
12915-1
<PAGE>
LIST OF EXHIBITS
EXHIBIT A-1 Form of Present Investment Management Agreement
EXHIBIT A-2 Form of New Investment Management Agreement
EXHIBIT A-3 Form of Present Sub-Advisory Agreement
EXHIBIT A-4 Form of New Sub-Advisory Agreement
<PAGE>
EXHIBIT A-1
INVESTMENT MANAGEMENT AGREEMENT
THIS AGREEMENT is made this 1st day of May, 1995, by and between
American Skandia Trust, a Massachusetts business trust (the "Fund"), and
American Skandia Life Investment Management, Inc., a Connecticut corporation
(the "Investment Manager");
W I T N E S E T H
WHEREAS, the Fund is registered as an open-end, diversified management
investment company under the Investment Company Act of 1940, as amended (the
"Investment Company Act"), and the rules and regulations promulgated thereunder;
and
WHEREAS, the Investment Manager is registered as an investment adviser
under the Investment Advisers Act of 1940, as amended (the "Investment Advisers
Act"); and
WHEREAS, the Fund and the Investment Manager desire to enter into an
agreement to provide for the management of the assets of the Seligman Henderson
International Small Cap Portfolio of the Fund (the "Portfolio") on the terms and
conditions hereinafter set forth.
NOW THEREFORE, in consideration of the mutual covenants herein
contained and other good and valuable consideration, the receipt whereof is
hereby acknowledged, the parties hereto agree as follows:
1. Management. The Investment Manager shall act as investment manager for
the Portfolio and shall, in such capacity, manage the investment operations of
the Portfolio, including the purchase, retention, disposition and lending of
securities, subject at all times to the policies and control of the Fund's Board
of Trustees. The Investment Manager shall give the Portfolio the benefit of its
best judgments, efforts and facilities in rendering its services as investment
manager.
2. Duties of Investment Manager. In carrying out its obligation under
paragraph 1 hereof, the Investment Manager shall:
(a) supervise and manage all aspects of the Portfolio's operations:
(b) provide the Portfolio or obtain for it, and thereafter supervise, such
executive, administrative, clerical and shareholder servicing services as are
deemed advisable by the Fund's Board of Trustees;
(c) arrange, but not pay for, the periodic updating of prospectuses and
supplements thereto, proxy material, tax returns, reports to the Portfolio's
shareholders, reports to and filings with the Securities and Exchange
Commission, state Blue Sky authorities and other applicable regulatory
authorities;
(d) provide to the Board of Trustees of the Fund on a regular basis,
written financial reports and analyses on the Portfolio's securities
transactions and the operations of comparable investment companies;
(e) obtain and evaluate pertinent information about significant
developments and economic, statistical and financial data, domestic, foreign or
otherwise, whether affecting the economy generally or the Portfolio, and whether
concerning the individual issuers whose securities are included in the Portfolio
or the activities in which they engage, or with respect to securities which the
Investment Manager considers desirable for inclusion in the Portfolio;
(f) determine what issuers and securities shall be represented in the
Portfolio's portfolio and regularly report them in writing to the Board of
Trustees;
(g) formulate and implement continuing programs for the purchases and sales
of the securities of such issuers and regularly report in writing thereon to the
Board of Trustees; and
(h) take, on behalf of the Portfolio, all actions which appear to the Fund
necessary to carry into effect such purchase and sale programs and supervisory
functions as aforesaid, including the placing of orders for the purchase and
sale of portfolio securities.
3. Broker-Dealer Relationships. The Investment Manager is responsible
for decisions to buy and sell securities for the Portfolio, broker-dealer
selection, and negotiation of its brokerage commission rates. The Investment
Manager shall determine the securities to be purchased or sold by the Portfolio
pursuant to its determinations with or through such persons, brokers or dealers,
in conformity with the policy with respect to brokerage as set forth in the
Fund's Prospectus and Statement of Additional Information, or as the Board of
Trustees may determine from time to time. Generally, the Investment Manager's
primary consideration in placing Portfolio securities transactions with
broker-dealers for execution is to obtain and maintain the availability of,
execution at the best net price and in the most effective manner possible. The
Investment Manager may consider sale of the shares of the Portfolio, subject to
the requirements of best net price and most favorable execution.
Consistent with this policy, the Investment Manager will take the
following into consideration: the best net 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. Accordingly, the cost of the brokerage commissions to the Portfolio may
be greater than that available from other brokers if the difference is
reasonably justified by other aspects of the portfolio execution services
offered. Subject to such policies and procedures as the Board of Trustees of the
Fund may determine, the Investment Manager shall not be deemed to have acted
unlawfully or to have breached any duty solely by reason of its having caused
the Portfolio to pay a broker or dealer that provides research services to the
Investment Manager for the Portfolio's use an amount of commission for effecting
a portfolio investment transaction in excess of the amount of commission another
broker or dealer would have charged for effecting that transaction, if the
Investment Manager, determines in good faith that such amount of commission was
reasonable in relation to the value of the research services provided by such
broker, viewed in terms of either that particular transaction or the Investment
Manager's ongoing responsibilities with respect to the Portfolio. The Investment
Manager is further authorized to allocate the orders placed by it on behalf of
the Portfolio to such brokers and dealers who also provide research or
statistical material, or other services to the Fund or the Investment Manager.
Such allocation shall be in such amounts and proportions as the Investment
Manager shall determine and the Investment Manager will report on said
allocations to the Board of Trustees of the Fund regularly as requested by the
Board and, in any event, at least once each calendar year if no specific request
is made, indicating the brokers to whom such allocations have been made and the
basis therefor.
4. Control by Board of Trustees. Any investment program undertaken by
the Investment Manager pursuant to this Agreement, as well as any other
activities undertaken by the Investment Manager on behalf of the Fund pursuant
thereto, shall at all times be subject to any directives of the Board of
Trustees of the Fund.
5. Compliance with Applicable Requirements. In carrying out its obligations
under this Agreement, the Investment Manager shall at all times conform to:
(a) all applicable provisions of the Investment Company Act and Investment
Advisers Act and any rules and regulations adopted thereunder, as amended; and
(b) the provisions of the Registration Statements of the Fund under the
Securities Act of 1933 and the Investment Company Act, including the investment
objectives, policies and restrictions, and permissible investments specified
therein; and
(c) the provisions of the Declaration of Trust of the Fund, as amended; and
(d) the provisions of the By-laws of the Fund, as amended; and
(e) any other applicable provisions of state and federal law.
6. Expenses. The expenses connected with the Fund shall be allocable
between the Fund and the Investment Manager as follows:
(a) The Investment Manager shall furnish, at its expense and without cost
to the Fund, the services of a President, Secretary, and one or more Vice
Presidents of the Fund, to the extent at such additional officers may be
required by the Fund for the proper conduct of its affairs.
(b) The Investment Manager shall further maintain, at its expense and
without cost to the Fund, a trading function in order to carry out its
obligations under subparagraphs (f), (g) and (h) of paragraph 2 hereof to place
orders for the purchase and sale of portfolio securities for the Portfolio.
(c) Nothing in subparagraph (a) hereof shall be construed to require the
Investment Manager to bear:
(i) any of the costs (including applicable office space, facilities and
equipment) of the services of a principal financial officer of the Fund whose
normal duties consist of maintaining the financial accounts and books and
records of the Fund; including the reviewing of calculations of net asset value
and preparing tax returns; or
(ii) any of the costs (including applicable office space, facilities and
equipment) of the services of any of the personnel operating under the direction
of such principal financial officer. Notwithstanding the obligation of the Fund
to bear the expense of the functions referred to in clauses (i) and (ii) of this
subparagraph (c), the Investment Manager may pay the salaries, including any
applicable employment or payroll taxes and other salary costs, of the principal
financial officer and other personnel carrying out such functions and the Fund
shall reimburse the Investment Manager therefor upon proper accounting.
(d) All of the ordinary business expenses incurred in the operations of the
Fund and the offering of its shares shall be borne by the Fund unless
specifically provided otherwise in this paragraph 6. These expenses include but
are not limited to brokerage commissions, legal, auditing, taxes or governmental
fees, the cost of preparing share certificates, custodian, depository, transfer
and shareholder service agent costs, expenses of issue, sale, redemption and
repurchase of shares, expenses of registering and qualifying shares for sale,
insurance premiums on property or personnel (including officers and trustees if
available) of the Fund which inure to its benefit, expenses relating to trustee
and shareholder meetings, the cost of preparing and distributing reports and
notices to shareholders, the fees and other expenses incurred by the Fund in
connection with membership in investment company organizations and the cost of
printing copies of prospectuses and statements of additional information
distributed to shareholders.
7. Delegation of Responsibilities. Upon the request of the Fund's Board of
Trustees, the Investment Manager may perform services on behalf of the Fund
which are not required by this Agreement. Such services will be performed on
behalf of the Fund and the Investment Manager's cost in rendering such services
may be billed monthly to the Fund, subject to examination by the Fund's
independent accountants. Payment or assumption by the Investment Manager of any
Fund expense that the Investment Manager is not required to pay or assume under
this Agreement shall not relieve the Investment Manager of any of its
obligations to the Fund nor obligate the Investment Manager to pay or assume any
similar Fund expense on any subsequent occasion.
8. Engagement of Sub-advisors and Broker-Dealers. The Investment Manager
may engage, subject to approval of the Fund's Board of Trustees, and where
required, the shareholders of the Portfolio, a sub-advisor to provide advisory
services in relation to the Portfolio. Under such sub-advisory agreement, the
Investment Manager may delegate to the sub-advisor the duties outlined in
subparagraphs (e), (f), (g) and (h) of paragraph 2 hereof.
9. Compensation. The Fund shall pay the Investment Manager in full
compensation for services rendered hereunder an annual investment advisory fee,
payable monthly, of 1.0% of the Portfolio's average daily net assets.
10. Expense Limitation. If, for any fiscal year of the Fund, the total of
all ordinary business expenses of the Portfolio, including all investment
advisory and administration fees but excluding brokerage commissions and fees,
taxes, interest and extraordinary expenses such as litigation, would exceed
1.75% of the average daily net assets of the Portfolio, the Investment Manager
agrees to pay the Fund such excess expenses, and if required to do so pursuant
to such applicable statute or regulatory authority, to pay to the Fund such
excess expenses no later than the last day of the first month of the next
succeeding fiscal year of the Fund. For the purposes of this paragraph, the term
"fiscal year" shall exclude the portion of the Fund's current fiscal year which
shall have elapsed prior to the date hereof and shall include the portion of the
then current fiscal year which shall have elapsed at the date of termination of
this Agreement.
11. Non-Exclusivity. The services of the Investment Manager to the
Portfolio are not to be deemed to be exclusive, and the Investment Manager shall
be free to render investment advisory and corporate administrative or other
services to others (including other investment companies) and to engage in other
activities. It is understood and agreed that officers or directors of the
Investment Manager may serve as officers or trustees of the Fund, and that
officers or trustees of the Fund may serve as officers or directors of the
Investment Manager to the extent permitted by law; and that the officers and
directors of the Investment Manager are not prohibited from engaging in any
other business activity or from rendering services to any other person, or from
serving as partners, officers or directors of any other firm or corporation,
including other investment companies.
12. Term and Approval. This Agreement shall become effective on May 1, 1995
and shall continue in force and effect from year to year, provided that such
continuance is specifically approved at least annually:
(a) (i) by the Fund's Board of Trustees or (ii) by the vote of a majority
of the Portfolio's outstanding voting securities (as defined in Section 2(a)(42)
of the Investment Company Act); and
(b) by the affirmative vote of a majority of the trustees who are not
parties to this Agreement or interested persons of a party to this Agreement
(other than as Fund trustees), by votes cast in person at a meeting specifically
called for such purpose.
13. Termination. This Agreement may be terminated at any time without the
payment of any penalty or prejudice to the completion of any transactions
already initiated on behalf of the Portfolio, by vote of the Fund's Board of
Trustees or by vote of a majority of the Portfolio's outstanding voting
securities, or by the Investment Manager, on sixty (60) days' written notice to
the other party. The notice provided for herein may be waived by either party.
This Agreement automatically terminates in the event of its assignment, the term
"assignment" for the purpose having the meaning defined in Section 2(a)(4) of
the Investment Company Act.
14. Liability of Investment Manager and Indemnification. In the absence of
willful misfeasance, bad faith, gross negligence or reckless disregard of
obligations or duties hereunder on the part of the Investment Manager or any of
its officers, trustees or employees, it shall not be subject to liability to the
Fund or to any shareholder of the Portfolio for any act or omission in the
course of, or connected with, rendering services hereunder or for any losses
that may be sustained in the purchase, holding or sale of any security.
15. Liability of Trustees and Shareholders. A copy of the Agreement and
Declaration of Trust of the Fund is on file with the Secretary of The
Commonwealth of Massachusetts, and notice is hereby given that this instrument
is executed on behalf of the trustees of the Fund as trustees and not
individually and that the obligations of this instrument are not binding upon
any of the trustees or shareholders individually but are binding only upon the
assets and property of the Fund. Federal and state laws impose responsibilities
under certain circumstances on persons who act in good faith, and therefore,
nothing herein shall in any way constitute a waiver of limitation of any rights
which the Fund or Investment Manager may have under applicable law.
16. Notices. Any notices under this Agreement shall be in writing,
addressed and delivered or mailed postage paid to the other party at such
address as such other party may designate for the receipt of such notice. Until
further notice, it is agreed that the address of the Fund shall be 126 High
Street, Boston, Massachusetts, 02110, and the address of the Investment Manager
shall be One Corporate Drive, Shelton, Connecticut 06484.
17. Questions of Interpretation. Any question of interpretation of any term
or provision of this Agreement having a counterpart in or otherwise derived from
a term or provision of the Investment Company Act, shall be resolved by
reference to such term or provision of the Act and to interpretations thereof,
if any, by the United States Courts or in the absence of any controlling
decision of any such court, by rules, regulations or orders of the Securities
and Exchange Commission issued pursuant to said Act. In addition, where the
effect of a requirement of the Investment Company Act, reflected in any
provision of this Agreement is released by rules, regulation or order of the
Securities and Exchange Commission, such provision shall be deemed to
incorporate the effect of such rule, regulation or order.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in duplicate by their respective officers on the day and year first
above written.
AMERICAN SKANDIA TRUST
By _________________________________
Gordon C. Boronow
Vice President
Attest:
- -----------------------------
AMERICAN SKANDIA LIFE
INVESTMENT MANAGEMENT, INC.
By _________________________________
Thomas M. Mazzaferro
President & Chief Operating Officer
Attest:
- ------------------------------
<PAGE>
EXHIBIT A-2
INVESTMENT MANAGEMENT AGREEMENT
THIS AGREEMENT is made this 15th day of October, 1996 by and
between American Skandia Trust, a Massachusetts business trust (the "Fund"), and
American Skandia Investment Services, Incorporated, a Connecticut corporation
(the "Investment Manager");
W I T N E S E T H
WHEREAS, the Fund is registered as an open-end, diversified
management investment company under the Investment Company Act of 1940, as
amended (the "Investment Company Act"), and the rules and regulations
promulgated thereunder; and
WHEREAS, the Investment Manager is registered as an investment
adviser under the Investment Advisers Act of 1940, as amended (the "Investment
Advisers Act"); and
WHEREAS, the Fund and the Investment Manager desire to enter into
an agreement to provide for the management of the assets of the Founders
Passport Portfolio (the "Portfolio") on the terms and conditions hereinafter set
forth.
NOW THEREFORE, in consideration of the mutual covenants herein
contained and other good and valuable consideration, the receipt whereof is
hereby acknowledged, the parties hereto agree as follows:
1. Management. The Investment Manager shall act as investment manager for
the Portfolio and shall, in such capacity, manage the investment operations of
the Portfolio, including the purchase, retention, disposition and lending of
securities, subject at all times to the policies and control of the Fund's Board
of Trustees. The Investment Manager shall give the Portfolio the benefit of its
best judgments, efforts and facilities in rendering its services as investment
manager.
2. Duties of Investment Manager. In carrying out its obligation under
paragraph 1 hereof, the Investment Manager shall:
(a) supervise and manage all aspects of the Portfolio's operations:
(b) provide the Portfolio or obtain for it, and thereafter supervise, such
executive, administrative, clerical and shareholder servicing services as are
deemed advisable by the Fund's Board of Trustees;
(c) arrange, but not pay for, the periodic updating of prospectuses and
supplements thereto, proxy material, tax returns, reports to the Portfolio's
shareholders, reports to and filings with the Securities and Exchange
Commission, state Blue Sky authorities and other applicable regulatory
authorities;
(d) provide to the Board of Trustees of the Fund on a regular basis,
written financial reports and analyses on the Portfolio's securities
transactions and the operations of comparable investment companies;
(e) obtain and evaluate pertinent information about significant
developments and economic, statistical and financial data, domestic, foreign or
otherwise, whether affecting the economy generally or the Portfolio, and whether
concerning the individual issuers whose securities are included in the Portfolio
or the activities in which they engage, or with respect to securities which the
Investment Manager considers desirable for inclusion in the Portfolio;
(f) determine what issuers and securities shall be represented in the
Portfolio's portfolio and regularly report them in writing to the Board of
Trustees;
(g) formulate and implement continuing programs for the purchases and sales
of the securities of such issuers and regularly report in writing thereon to the
Board of Trustees; and
(h) take, on behalf of the Portfolio, all actions which appear to the Fund
necessary to carry into effect such purchase and sale programs and supervisory
functions as aforesaid, including the placing of orders for the purchase and
sale of portfolio securities.
3. Broker-Dealer Relationships. The Investment Manager is responsible for
decisions to buy and sell securities for the Portfolio, broker-dealer selection,
and negotiation of its brokerage commission rates. The Investment Manager shall
determine the securities to be purchased or sold by the Portfolio pursuant to
its determinations with or through such persons, brokers or dealers, in
conformity with the policy with respect to brokerage as set forth in the Fund's
Prospectus and Statement of Additional Information, or as the Board of Trustees
may determine from time to time. Generally, the Investment Manager's primary
consideration in placing Portfolio securities transactions with broker-dealers
for execution is to obtain and maintain the availability of, execution at the
best net price and in the most effective manner possible. The Investment Manager
may consider sale of the shares of the Portfolio, subject to the requirements of
best net price and most favorable execution.
Consistent with this policy, the Investment Manager will take the
following into consideration: the best net 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. Accordingly, the cost of the brokerage commissions to the Portfolio may
be greater than that available from other brokers if the difference is
reasonably justified by other aspects of the portfolio execution services
offered. Subject to such policies and procedures as the Board of Trustees of the
Fund may determine, the Investment Manager shall not be deemed to have acted
unlawfully or to have breached any duty solely by reason of its having caused
the Portfolio to pay a broker or dealer that provides research services to the
Investment Manager for the Portfolio's use an amount of commission for effecting
a portfolio investment transaction in excess of the amount of commission another
broker or dealer would have charged for effecting that transaction, if the
Investment Manager, determines in good faith that such amount of commission was
reasonable in relation to the value of the research services provided by such
broker, viewed in terms of either that particular transaction or the Investment
Manager's ongoing responsibilities with respect to the Portfolio. The Investment
Manager is further authorized to allocate the orders placed by it on behalf of
the Portfolio to such brokers and dealers who also provide research or
statistical material, or other services to the Fund or the Investment Manager.
Such allocation shall be in such amounts and proportions as the Investment
Manager shall determine and the Investment Manager will report on said
allocations to the Board of Trustees of the Fund regularly as requested by the
Board and, in any event, at least once each calendar year if no specific request
is made, indicating the brokers to whom such allocations have been made and the
basis therefor.
4. Control by Board of Trustees. Any investment program undertaken by the
Investment Manager pursuant to this Agreement, as well as any other activities
undertaken by the Investment Manager on behalf of the Fund pursuant thereto,
shall at all times be subject to any directives of the Board of Trustees of the
Fund.
5. Compliance with Applicable Requirements. In carrying out its obligations
under this Agreement, the Investment Manager shall at all times conform to:
(a) all applicable provisions of the Investment Company Act and Investment
Advisers Act and any rules and regulations adopted thereunder, as amended; and
(b) the provisions of the Registration Statements of the Fund under the
Securities Act of 1933 and the Investment Company Act, including the investment
objectives, policies and restrictions, and permissible investments specified
therein; and
(c) the provisions of the Declaration of Trust of the Fund, as amended; and
(d) the provisions of the By-laws of the Fund, as amended; and
(e) any other applicable provisions of state and federal law.
6. Expenses. The expenses connected with the Fund shall be allocable
between the Fund and the Investment Manager as follows:
(a) The Investment Manager shall furnish, at its expense and without cost
to the Fund, the services of a President, Secretary, and one or more Vice
Presidents of the Fund, to the extent that such additional officers may be
required by the Fund for the proper conduct of its affairs.
(b) The Investment Manager shall further maintain, at its expense and
without cost to the Fund, a trading function in order to carry out its
obligations under subparagraphs (f), (g) and (h) of paragraph 2 hereof to place
orders for the purchase and sale of portfolio securities for the Portfolio.
(c) Nothing in subparagraph (a) hereof shall be construed to require the
Investment Manager to bear:
(i) any of the costs (including applicable office space, facilities and
equipment) of the services of a principal financial officer of the Fund whose
normal duties consist of maintaining the financial accounts and books and
records of the Fund; including the reviewing of calculations of net asset value
and preparing tax returns; or
(ii) any of the costs (including applicable office space, facilities and
equipment) of the services of any of the personnel operating under the direction
of such principal financial officer. Notwithstanding the obligation of the Fund
to bear the expense of the functions referred to in clauses (i) and (ii) of this
subparagraph (c), the Investment Manager may pay the salaries, including any
applicable employment or payroll taxes and other salary costs, of the principal
financial officer and other personnel carrying out such functions and the Fund
shall reimburse the Investment Manager therefor upon proper accounting.
(d) All of the ordinary business expenses incurred in the operations of the
Fund and the offering of its shares shall be borne by the Fund unless
specifically provided otherwise in this paragraph 6. These expenses include but
are not limited to brokerage commissions, legal, auditing, taxes or governmental
fees, the cost of preparing share certificates, custodian, depository, transfer
and shareholder service agent costs, expenses of issue, sale, redemption and
repurchase of shares, expenses of registering and qualifying shares for sale,
insurance premiums on property or personnel (including officers and trustees if
available) of the Fund which inure to its benefit, expenses relating to trustee
and shareholder meetings, the cost of preparing and distributing reports and
notices to shareholders, the fees and other expenses incurred by the Fund in
connection with membership in investment company organizations and the cost of
printing copies of prospectuses and statements of additional information
distributed to shareholders.
7. Delegation of Responsibilities. Upon the request of the Fund's Board of
Trustees, the Investment Manager may perform services on behalf of the Fund
which are not required by this Agreement. Such services will be performed on
behalf of the Fund and the Investment Manager's cost in rendering such services
may be billed monthly to the Fund, subject to examination by the Fund's
independent accountants. Payment or assumption by the Investment Manager of any
Fund expense that the Investment Manager is not required to pay or assume under
this Agreement shall not relieve the Investment Manager of any of its
obligations to the Fund nor obligate the Investment Manager to pay or assume any
similar Fund expense on any subsequent occasion.
8. Engagement of Sub-advisors and Broker-Dealers. The Investment Manager
may engage, subject to approval of the Fund's Board of Trustees, and where
required, the shareholders of the Portfolio, a sub-advisor to provide advisory
services in relation to the Portfolio. Under such sub-advisory agreement, the
Investment Manager may delegate to the sub-advisor the duties outlined in
subparagraphs (e), (f), (g) and (h) of paragraph 2 hereof.
9. Compensation. The Fund shall pay the Investment Manager in full
compensation for services rendered hereunder an annual investment advisory fee,
payable monthly, of 1.00% of the average daily net assets of the Portfolio.
10. Expense Limitation. If, for any fiscal year of the Fund, the total of
all ordinary business expenses of the Portfolio, including all investment
advisory and administration fees but excluding brokerage commissions and fees,
taxes, interest and extraordinary expenses such as litigation, would exceed
1.75% of the average daily net assets of the Portfolio, the Investment Manager
agrees to pay the Fund such excess expenses, and if required to do so pursuant
to such applicable statute or regulatory authority, to pay to the Fund such
excess expenses no later than the last day of the first month of the next
succeeding fiscal year of the Fund. For the purposes of this paragraph, the term
"fiscal year" shall exclude the portion of the Fund's current fiscal year which
shall have elapsed prior to the date hereof and shall include the portion of the
then current fiscal year which shall have elapsed at the date of termination of
this Agreement.
11. Non-Exclusivity. The services of the Investment Manager to the
Portfolio are not to be deemed to be exclusive, and the Investment Manager shall
be free to render investment advisory and corporate administrative or other
services to others (including other investment companies) and to engage in other
activities. It is understood and agreed that officers or directors of the
Investment Manager may serve as officers or trustees of the Fund, and that
officers or trustees of the Fund may serve as officers or directors of the
Investment Manager to the extent permitted by law; and that the officers and
directors of the Investment Manager are not prohibited from engaging in any
other business activity or from rendering services to any other person, or from
serving as partners, officers or directors of any other firm or corporation,
including other investment companies.
12. Term and Approval. This Agreement shall become effective on October 15,
1996 and shall continue in force and effect from year to year, provided that
such continuance is specifically approved at least annually:
(a) (i) by the Fund's Board of Trustees or (ii) by the vote of a majority
of the Portfolio's outstanding voting securities (as defined in Section 2(a)(42)
of the Investment Company Act); and
(b) by the affirmative vote of a majority of the trustees who are not
parties to this Agreement or interested persons of a party to this Agreement
(other than as Fund trustees), by votes cast in person at a meeting specifically
called for such purpose.
13. Termination. This Agreement may be terminated at any time without the
payment of any penalty or prejudice to the completion of any transactions
already initiated on behalf of the Portfolio, by vote of the Fund's Board of
Trustees or by vote of a majority of the Portfolio's outstanding voting
securities, or by the Investment Manager, on sixty (60) days' written notice to
the other party. The notice provided for herein may be waived by either party.
This Agreement automatically terminates in the event of its assignment, the term
"assignment" for the purpose having the meaning defined in Section 2(a)(4) of
the Investment Company Act.
14. Liability of Investment Manager and Indemnification. In the absence of
willful misfeasance, bad faith, gross negligence or reckless disregard of
obligations or duties hereunder on the part of the Investment Manager or any of
its officers, trustees or employees, it shall not be subject to liability to the
Fund or to any shareholder of the Portfolio for any act or omission in the
course of, or connected with, rendering services hereunder or for any losses
that may be sustained in the purchase, holding or sale of any security.
15. Liability of Trustees and Shareholders. A copy of the Agreement and
Declaration of Trust of the Fund is on file with the Secretary of The
Commonwealth of Massachusetts, and notice is hereby given that this instrument
is executed on behalf of the trustees of the Fund as trustees and not
individually and that the obligations of this instrument are not binding upon
any of the trustees or shareholders individually but are binding only upon the
assets and property of the Fund. Federal and state laws impose responsibilities
under certain circumstances on persons who act in good faith, and therefore,
nothing herein shall in any way constitute a waiver of limitation of any rights
which the Fund or Investment Manager may have under applicable law.
16. Notices. Any notices under this Agreement shall be in writing,
addressed and delivered or mailed postage paid to the other party at such
address as such other party may designate for the receipt of such notice. Until
further notice, it is agreed that the address of the Fund shall be 126 High
Street, Boston, Massachusetts, 02110, and the address of the Investment Manager
shall be One Corporate Drive, Shelton, Connecticut 06484.
17. Questions of Interpretation. Any question of interpretation of any term
or provision of this Agreement having a counterpart in or otherwise derived from
a term or provision of the Investment Company Act, shall be resolved by
reference to such term or provision of the Act and to interpretations thereof,
if any, by the United States Courts or in the absence of any controlling
decision of any such court, by rules, regulations or orders of the Securities
and Exchange Commission issued pursuant to said Act. In addition, where the
effect of a requirement of the Investment Company Act, reflected in any
provision of this Agreement is released by rules, regulation or order of the
Securities and Exchange Commission, such provision shall be deemed to
incorporate the effect of such rule, regulation or order.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed in duplicate by their respective officers on the day and year
first above written.
AMERICAN SKANDIA TRUST
Attest: By___________________________________
Gordon C. Boronow
___________________________________ Vice President
AMERICAN SKANDIA INVESTMENT
SERVICES, INCORPORATED
Attest: By___________________________________
Thomas M. Mazzaferro
___________________________________ President & Chief Operating Officer
<PAGE>
EXHIBIT A-3
SUB-ADVISORY AGREEMENT
THIS AGREEMENT is between American Skandia Investment Services,
Incorporated (the "Advisor") and Seligman Henderson Co. (the "Sub-Advisor").
WHEREAS American Skandia Trust (the "Trust") is a Massachusetts business trust
organized with one or more series of shares, and is registered as an investment
company under the Investment Company Act of 1940 (the "ICA"); and
WHEREAS the trustees of the Trust (the "Trustees") have engaged the Advisor to
act as investment manager for the Seligman Henderson International Small Cap
Portfolio, (the "Portfolio") under the terms of a management agreement, dated
May 1, 1995, with the Trust (the "Management Agreement"); and
WHEREAS the Advisor has engaged the Sub-Advisor and the Trustees have approved
the engagement of the Sub-Advisor to provide investment advice and other
investment services set forth below;
NOW, THEREFORE the Advisor and the Sub-Advisor agree as follows:
1. Investment Services. The Sub-Advisor will furnish the Advisor with
investment advisory services in connection with a continuous investment program
for the Portfolio which is to be managed in accordance with the investment
objective, investment policies and restrictions of the Portfolio as set forth in
the Prospectus and Statement of Additional Information of the Trust and in
accordance with the Trust's Declaration of Trust and By-Laws. Advisor will
promptly furnish Sub-Advisor with any amendments to such documents. Such
documents will not be effective with respect to the Sub-Advisor until receipt
thereof.
Subject to the supervision and control of the Advisor, which is in turn
subject to the supervision and control of the Trust's Board of Trustees, the
Sub-Advisor will in its discretion determine and select the securities to be
purchased for and sold from the Portfolio from time to time and will place
orders with and give instructions to brokers, dealers and others for all such
transactions and cause such transactions to be executed. The Portfolio will be
maintained by a custodian bank (the "Custodian") and the Advisor will authorize
the Custodian to honor orders and instructions by employees of the Sub-Advisor
authorized by the Advisor to settle transactions in respect of the Portfolio. No
assets may be withdrawn from the Portfolio other than for settlement of
transactions on behalf of the Portfolio except upon the written authorization of
appropriate officers of the Trust who shall have been certified as such by
proper authorities of the Trust prior to the withdrawal.
The Sub-Advisor will obtain and evaluate pertinent information about
significant developments and economic, statistical and financial data, domestic,
foreign or otherwise, whether affecting the economy generally or the Portfolio,
and concerning the individual issuers whose securities are included in the
Portfolio or the activities in which they engage, or with respect to securities
which the Sub-Advisor considers desirable for inclusion in the Portfolio.
In furnishing the services under this Agreement, the Sub-Advisor will
comply with the requirements of the ICA applicable to it, and the regulations
promulgated thereunder.
Nothing in this Agreement shall be implied to prevent the Advisor from
engaging other sub-advisors to provide investment advice and other services in
relation to portfolios of the Trust for which Sub-Advisor does not provide such
services, or to prevent Advisor from providing such services itself in relation
to such portfolios.
2. Delivery of Documents to Sub-Advisor. The Advisor has furnished the
Sub-Advisor with copies of each of the following documents:
(a) The Declaration of Trust of the Trust as in effect on the date hereof;
(b) The By-Laws of the Trust in effect on the date hereof;
(c) The resolutions of the Trustees approving the engagement of the
Sub-Advisor as Sub-Advisor to the Advisor and approving the form of this
Agreement;
(d) The resolutions of the Trustees selecting the Advisor as investment
manager to the Trust and approving the form of the Advisor's Management
Agreement with the Trust;
(e) The Advisor's Management Agreement with the Trust;
(f) The Code of Ethics of the Trust and of the Advisor as currently in
effect; and
(g) A list of companies the securities of which are not to be brought or
sold for the Portfolio.
The Advisor will furnish the Sub-Advisor from time to time with copies, properly
certified or otherwise authenticated, of all amendments of or supplements to the
foregoing, if any. Such amendments or supplements as to items (a) through (f)
above will be provided within 30 days of the time such materials became
available to the Advisor. 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 Advisor.
3. Delivery of Documents to the Advisor. The Sub-Advisor has furnished the
Advisor with copies of each of the following documents:
(a) The Sub-Advisor's Form ADV as filed with the Securities and Exchange
Commission;
(b) The Sub-Advisor's most recent balance sheet;
(c) Separate lists of persons who the Sub-Advisor wishes to have authorized
to give written and/or oral instructions to Custodians of Trust assets for the
Portfolio;
(d) The Code of Ethics of the Sub-Advisor as currently in effect.
The Sub-Advisor will furnish the Advisor from time to time with copies, properly
certified or otherwise authenticated, of all material amendments of or
supplements to the foregoing, if any. Such amendments or supplements as to items
(a) through (d) above will be provided within 30 days of the time such materials
became available to the Sub-Advisor.
4. Investment Advisory Facilities. The Sub-Advisor, at its expense, will
furnish all necessary investment facilities, including salaries of personnel
required for it to execute its duties faithfully.
5. Execution of Portfolio Transactions. Sub-Advisor is responsible for
decisions to buy and sell securities for the Portfolio, broker-dealer,
selection, and negotiation of its brokerage commission rates. Sub-advisor shall
determine the securities to be purchased or sold by the Portfolio pursuant to
its determinations with or through such persons, brokers or dealers, in
conformity with the policy with respect to brokerage as set forth in the Trust's
Prospectus and Statement of Additional Information, or as the Board of Trustees
may determine from time to time as communicated to the Sub-Advisor. Generally,
Sub-Advisor's primary consideration in placing Portfolio securities transactions
with broker-dealers for execution is to obtain and maintain the availability of
best execution in the most effective manner possible. The Sub-Advisor may
consider sale of shares issued by the Portfolio, as communicated by Advisor to
Sub-Advisor, as well as recommendations of the Advisor, subject in every case to
the requirement of best execution.
Consistent with this policy, the Sub-Advisor will take the following into
consideration: the best net price available; the reliability, integrity and
financial condition of the broker-dealer; the size of and difficulty in
executing the order; the general execution and operational capabilities of the
broker-dealer to effect the proposed transactions and the value of the expected
contribution of the broker-dealer to the investment performance of the Portfolio
on a continuing basis. Accordingly, the cost of the brokerage commissions to the
Portfolio may be greater than that available from other brokers if the
difference is reasonably justified by other aspects of the portfolio execution
services offered. Subject to such policies and procedures as the Board of
Trustees of the Trust may determine, as are communicated to the Sub-Advisor, the
Sub-Advisor shall not be deemed to have acted unlawfully or to have breached any
duty solely by reason of its having caused the Portfolio to pay a broker-dealer
that provides research services to the Sub-Advisor an amount of commission for
effecting a portfolio investment transaction in excess of the amount of
commission another broker-dealer would have charged for effecting that
transaction, if the Sub-Advisor determines in good faith that such amount of
commission was reasonable in relation to the value of the research services
provided by such broker, viewed in terms of either that particular transaction
or the Sub-Advisor's ongoing responsibilities with respect to the Portfolio or
its other clients. The Sub-Advisor is further authorized to allocate the orders
placed by it on behalf of the Portfolio to such broker-dealers who also provide
research related services to the Sub-Advisor, or other services to the Portfolio
or the Sub-Advisor. Such allocation shall be in such amounts and proportions as
the Sub-Advisor shall determine in good faith to be reasonable in relation to
the value of the services provided by such broker, viewed in terms of either
that particular transaction or the Sub-Advisor's ongoing responsibilities with
respect to the Portfolio or its other clients. The Sub-Advisor will report on
said allocations to the Advisor regularly as requested by the Advisor and, in
any event, at least once each calendar year if no specific request is made,
indicating the brokers to whom such allocations have been made and the basis
therefor. It is understood the services provided by such broker may be used by
the Sub-Advisor in connection with its services to other clients and are of the
type that qualify for the safe harbor in Section 28(e) of the Securities
Exchange Act of 1934.
6. Reports by Sub-Advisor. The Sub-Advisor shall furnish the Advisor
monthly, quarterly and annual reports concerning transactions and performance of
the Portfolio, including information required to be disclosed in the Trust's
registration statement, in such form as may be mutually agreed, to review the
Portfolio and discuss the management of it. The Sub-Advisor shall permit the
financial statements, books and records with respect to the Portfolio to be
inspected and audited by the Trust, the Advisor or their agents at all
reasonable times during normal business hours. The Sub-Advisor shall immediately
notify and forward to both Advisor and legal counsel for the Trust any legal
process served upon it on behalf of the Advisor or the Trust. The Sub-Advisor
shall promptly notify the Advisor of any changes in any information required to
be disclosed in the Trust's registration statement.
7. Compensation of Sub-Advisor. The amount of the compensation to the
Sub-Advisor is computed at an annual rate. The fee is payable monthly in
arrears, based on the average daily net assets of the Portfolio for each month,
at the annual rates shown below.
For the services rendered, the Advisor will calculate and pay the
Sub-Advisor at the annual rate of .60 of 1% of the portion of the average daily
net assets of the Portfolio not in excess of $100 million; plus .50 of 1% of the
portion of the net assets over $100 million.
In computing the fee to be paid to the Sub-Advisor, the net asset value
of the Portfolio shall be valued as set forth in the then current registration
statement of the Trust. If this Agreement is terminated, the payment shall be
prorated to the date of termination.
Advisor and Sub-Advisor shall not be considered as partners or
participants in a joint venture. Sub-Advisor will pay its own expenses for the
services to be provided pursuant to this Agreement and will not be obligated to
pay any expenses of Trust Advisor or the Trust. Except as otherwise provided
herein, Advisor and the Trust will not be obligated to pay any expenses of
Sub-Advisor.
8. Confidential Treatment. Subject to Section 11 of this Agreement, it is
understood that any information or recommendation supplied by the Sub-Advisor in
connection with the performance of its obligations hereunder is to be regarded
as confidential and for use only by the Advisor, the Trust or such persons the
Advisor may designate in connection with the Portfolio.
9. Representations of the Parties. The Advisor and Sub-Advisor each hereby
acknowledges that it is registered as an investment advisor under the Investment
Advisers Act of 1940 ("Advisers Act"), it will use commercially reasonable
efforts to maintain such registration, and 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.
10. Liability. The Sub-Advisor shall use commercially reasonable efforts
and act in good faith in the performance of its services hereunder. However, so
long as the Sub-Advisor has acted in good faith and has used commercially
reasonable efforts, then in the absence of willful misconduct, bad faith, gross
negligence or reckless disregard for its obligations hereunder, it shall not be
liable to the Trust or its shareholders or to the Advisor for any act or
omission resulting in any loss suffered in any portfolio of the Trust 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 of limitation
of any rights which the Trust or Advisor or Sub-Advisor may have under
applicable law.
The Advisor agrees that the Sub-Advisor shall not be liable for any
failure to recommend the purchase or sale of any security on behalf of the
Portfolio on the basis of any information which might, in Sub-Advisor's
reasonable opinion, constitute a violation of any federal or state laws, rules
or regulations.
11. Other Activities of Sub-Advisor. Advisor agrees that the Sub-Advisor
and any of its partners or employees, and persons affiliated with it or with any
such partner or employee may render investment management or advisory services
to other investors and institutions, and such investors and institutions may
own, purchase or sell, securities or other interests in property the same as or
similar to those which are selected for purchase, holding or sale for the
Portfolio, and the Sub-Advisor shall be in all respects free to take action with
respect to investments in securities or other interests in property the same as
or similar to those selected for purchase, holding or sale for the Portfolio.
Purchases and sales of individual securities on behalf of the Portfolio and
other portfolios of the Trust or accounts for other investors or institutions
will be made on a basis that is equitable to all portfolios of the Trust and
other accounts. Nothing in this Agreement shall impose upon the Sub-Advisor any
obligation to purchase or sell or recommend for purchase or sale, for the
Portfolio any security which it, its partners, affiliates or employees may
purchase or sell for the Sub-Advisor or such own accounts or for the account of
any other client, advisory or otherwise.
12. Continuance and Termination. This Agreement shall remain in full force
and effect for two years from the date hereof, and is renewable thereafter by
specific approval of the Board of Trustees of the Trust 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 Advisor or Sub-Advisor upon 60 days written notice, and will
automatically terminate in the event of its assignment by either party to this
Agreement, as defined in the ICA, or (provided Sub-Advisor has received prior
written notice thereof) upon termination of the Advisor's Management Agreement
with the Trust.
13. Notification. Sub-Advisor will notify the Advisor within a reasonable
time of (i) any change in the personnel of the Sub-Advisor with responsibility
for making investment decisions in relation to the Portfolio or who have been
authorized to give instructions to a Custodian of the Trust, or (ii) any change
of a partner of the Sub-Advisor.
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 address for such party.
Advisor: American Skandia Investment Services, Incorporated
Attention: Thomas Mazzaferro
President & Chief Operating Officer
One Corporate Drive
Shelton, Connecticut 06484
Sub-Advisor: Seligman Henderson Co.
Attention: Richard Garland
100 Park Avenue
New York, New York 10017
14. Indemnification. The Sub-Advisor agrees to indemnify and hold-harmless
Advisor, any affiliated person within the meaning of Section 2(a)(3) of the 1940
("affiliated person") of Advisor and each person, if any who, within the meaning
of Section 15 of the Securities Act of 1933 (the "1933 Act"), controls
("controlling person") Advisor, against any and all losses, claims, damages,
liabilities (including reasonable legal and other expenses), to which Advisor or
such affiliated person or controlling person may become subject under the 1933
Act, the 1940 Act, the Investment Adviser's Act of 1940 ("Advisers Act"), under
any other statute, at common law or otherwise, arising out of Sub-Advisor's
responsibilities as portfolio manager of the Portfolio (1) to the extent of and
as a result of the willful misconduct, bad faith, or gross negligence by
Sub-Advisor, any of Sub-Advisor's employees or representatives or any affiliate
of or any person acting on behalf of Sub-Advisor, or (2) as a result of any
untrue statement or alleged untrue statement of a material fact contained in a
prospectus or statement of additional information covering the Portfolio or the
Trust or 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 written information furnished to Advisor,
the Trust or any affiliated person of the Advisor or the Trust or upon verbal
information confirmed by the Sub-Advisor in writing or (3) to the extent of, and
as a result of, the failure of the Sub-Advisor to execute, or cause to be
executed, Portfolio transactions according to the standards and requirements of
the 1940 Act; provided, however, that in no case is Sub-Advisor's indemnity in
favor of Advisor or any affiliated person or controlling person of Advisor
deemed to protect such person against any liability to which any such person
would otherwise be subject by reason of willful misconduct, bad faith or gross
negligence in the performance of its duties or by reason of its reckless
disregard of its obligations and duties under this Agreement.
The Advisor agrees to indemnify and hold harmless Sub-Advisor, any
affiliated person within the meaning of Section 2(a)(3) of the 1940 Act
("affiliated person") of Sub-Advisor and each person, if any who, within the
meaning of Section 15 of the Securities Act of 1933 (the "1933 Act"), controls
("controlling person") Sub-Advisor, against any and all losses, claims, damages,
liabilities or litigation (including reasonable legal and other expenses), to
which Sub-Advisor or such affiliated person or controlling person may become
subject under the 1933 Act, the 1940 Act, the Investment Adviser's Act of 1940
("Advisers Act"), under any other statute, at common law or otherwise, arising
out of Advisor'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 Advisor, any of Advisor's employees or representatives or any
affiliate of or any person acting on behalf of Advisor, or (2) as a result of
any untrue statement or alleged untrue statement of a material fact contained in
a prospectus or statement of additional information covering the Portfolio or
the Trust or 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 written information furnished to
Sub-Advisor, or any affiliated person of the Sub-Advisor or other than upon
verbal information confirmed by the Sub-Advisor in writing; provided, however,
that in no case is Advisor's indemnity in favor of Sub-Advisor or any affiliated
person or controlling person of Sub-Advisor deemed to protect such person
against any liability to which any such person would otherwise be subject by
reason of willful misconduct, bad faith or gross negligence in the performance
of its duties or by reason of its reckless disregard of its obligations and
duties under this Agreement.
15. Warranty. The Advisor represents and warrants that (i) the appointment of
the Sub-Advisor by the Advisor 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.
The Sub-Advisor represents and warrants that it is authorized to enter
into this Agreement and perform the services contemplated to be performed
hereunder. The Sub-Advisor also represents and warrants that it intends to
retain the services of all the personnel of the Prior Sub-Advisor with
responsibility for making investment decisions in relation to the Portfolio.
16. Governing Law. This Agreement is made under, and shall be governed by
and construed in accordance with, the laws of the State of Connecticut.
The effective date of this Agreement is May 1, 1995.
FOR THE ADVISOR: FOR THE SUB-ADVISOR
- ------------------------------- --------------------------------
Thomas Mazzaferro
President and Chief Operating Officer
Date: ________________________ Date: _________________________
Attest: ________________________ Attest: __________________________
<PAGE>
EXHIBIT A-4
SUB-ADVISORY AGREEMENT
THIS AGREEMENT is between American Skandia Investment Services,
Incorporated (the "Investment Manager") and Founders Asset Management, Inc. (the
"Sub-Advisor").
WHEREAS American Skandia Trust (the "Trust") is a Massachusetts business trust
organized with one or more series of shares, and is registered as an investment
company under the Investment Company Act of 1940 (the "ICA"); and
WHEREAS the trustees of the Trust (the "Trustees") have engaged the Investment
Manager to act as investment manager for the Founders Passport Portfolio (the
"Portfolio") under the terms of a management agreement, dated October 15, 1996,
with the Trust (the "Management Agreement"); and
WHEREAS the Investment Manager has engaged the Sub-Advisor and the Trustees have
approved the engagement of the Sub-Advisor to provide investment advice and
other investment services set forth below;
NOW, THEREFORE the Investment Manager and the Sub-Advisor agree as follows:
1. Investment Services. The Sub-Advisor will furnish the Investment Manager with
investment advisory services in connection with a continuous investment program
for the Portfolio which is to be managed in accordance with the investment
objective, investment policies and restrictions of the Portfolio as set forth in
the Prospectus and Statement of Additional Information of the Trust and in
accordance with the Trust's Declaration of Trust and By-laws. Officers,
directors, and employees of Sub-Advisor will be available upon reasonable
request to consult with Investment Manager and the Trust, their officers,
employees and Trustees concerning the business of the Trust. Investment Manager
will promptly furnish Sub-Advisor with any amendments to any of the foregoing
documents (the "Documents"). Any amendments to the Documents will not be deemed
effective with respect to the Sub-Advisor until the Sub-Advisor's receipt
thereof.
Subject to the supervision and control of the Investment Manager, which
is in turn subject to the supervision and control of the Trust's Board of
Trustees, the Sub-Advisor will in its discretion determine and select the
securities to be purchased for and sold from the Portfolio from time to time and
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-Advisor designated by the Investment Manager to settle
transactions in respect of the Portfolio. No assets may be withdrawn from the
Portfolio other than for settlement of transactions on behalf of the Portfolio
except upon the written authorization of appropriate officers of the Trust who
shall have been certified as such by proper authorities of the Trust prior to
the withdrawal.
The Sub-Advisor will obtain and evaluate pertinent information about
significant developments and economic, statistical and financial data, domestic,
foreign or otherwise, whether affecting the economy generally or the Portfolio,
and concerning the individual issuers whose securities are included in the
Portfolio or the activities in which they engage, or with respect to securities
which the Sub-Advisor considers desirable for inclusion in the Portfolio.
The Sub-Advisor represents that it reviewed the Registration Statement
of the Trust, including any amendments or supplements thereto, and any Proxy
Statement relating to the approval of this Agreement, as filed with the
Securities and Exchange Commission and provided to the Sub-Advisor by the
Investment Manager, and represents and warrants that with respect to disclosure
about the Sub-Advisor or information relating directly to the Sub-Advisor, such
Registration Statement or Proxy Statement contains, as of the date thereof, no
untrue statement of any material fact and does not omit any statement of
material fact which was required to be stated therein or necessary to make the
statements contained therein not misleading. The Sub-Advisor further represents
and warrants that it is an investment advisor registered under the Investment
Advisers Act of 1940, as amended (the "Advisers Act"), and under the laws of all
jurisdictions in which the conduct of its business hereunder requires such
registration.
In furnishing the services under this Agreement, the Sub-Advisor will
comply with the requirements of the ICA and subchapters L and M (including,
respectively, Section 817(h) and Section 851(b)(1), (2), (3) and (4)) of the
Internal Revenue Code, applicable to the Portfolio, and the regulations
promulgated thereunder. Sub-Advisor shall comply with (i) other applicable
provisions of state or federal law; (ii) the provisions of the Declaration of
Trust and By-laws of the Trust; (iii) policies and determinations of the Trust
and Investment Manager communicated to the Sub-Advisor in writing; (iv) the
fundamental policies and investment restrictions of the Trust, as set out in the
Trust's registration statement under the ICA, or as amended by the Trust's
shareholders and communicated to the Sub-Advisor in writing; (v) the Prospectus
and Statement of Additional Information of the Trust; and (vi) investment
guidelines or other instructions received in writing from Investment Manager.
Sub-Advisor shall supervise and monitor the activities of its representatives,
personnel and agents in connection with the investment program of the Portfolio.
Nothing in this Agreement shall be implied to prevent the Investment
Manager from engaging other sub-advisors to provide investment advice and other
services in relation to portfolios of the Trust for which Sub-Advisor does not
provide such services, or to prevent Investment Manager from providing such
services itself in relation to such portfolios.
2. Delivery of Documents to Sub-Advisor. The Investment Manager has
furnished the Sub-Advisor with copies of each of the following documents:
(a) The Declaration of Trust of the Trust as in effect on the date hereof;
(b) The By-laws of the Trust in effect on the date hereof;
(c) The resolutions of the Trustees approving the engagement of the
Sub-Advisor as Sub-Advisor to the Investment Manager and approving the form of
this agreement;
(d) The resolutions of the Trustees selecting the Investment Manager as
investment manager to the Trust and approving the form of the Investment
Manager's Management Agreement with the Trust;
(e) The Investment Manager's Management Agreement with the Trust;
(f) The Code of Ethics of the Trust and of the Investment Manager as
currently in effect; and
(g) A list of companies the securities of which are not to be bought or
sold for the Portfolio because of non-public information regarding such
companies that is available to Investment Manager or the Trust, or which, in the
sole opinion of the Investment Manager, it believes such non-public information
would be deemed to be available to Investment Manager and/or the Trust.
The Investment Manager will furnish the Sub-Advisor from time to time
with copies, properly certified or otherwise authenticated, of all amendments of
or supplements to the foregoing, if any. Such amendments or supplements as to
items (a) through (f) above will be provided within 30 days of the time such
materials became 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.
3. Delivery of Documents to the Investment Manager. The Sub-Advisor has
furnished the Investment Manager with copies of each of the following documents:
(a) The Sub-Advisor's Form ADV as filed with the Securities and Exchange
Commission;
(b) The Sub-Advisor's most recent audited balance sheet;
(c) Separate lists of persons who the Sub-Advisor wishes to have authorized
to give written and/or oral instructions to Custodians of Trust assets for the
Portfolio;
(d) The Code of Ethics of the Sub-Advisor as currently in effect.
The Sub-Advisor will furnish the Investment Manager from time to time
with copies, properly certified or otherwise authenticated, of all material
amendments of or supplements to the foregoing, if any. Such amendments or
supplements as to items (a) through (d) above will be provided within 30 days of
the time such materials became available to the Sub-Advisor.
4. Investment Advisory Facilities. The Sub-Advisor, at its expense, will
furnish all necessary investment facilities, including salaries of personnel
required for it to execute its duties faithfully.
5. Execution of Portfolio Transactions. Sub-Advisor is responsible for
decisions to buy and sell securities for the Portfolio, broker-dealer selection,
and negotiation of its brokerage commission rates. Sub-Advisor shall determine
the securities to be purchased or sold by the Portfolio pursuant to its
determinations with or through such persons, brokers or dealers, in conformity
with the policy with respect to brokerage as set forth in the Trust's Prospectus
and Statement of Additional Information, or as the Board of Trustees may
determine from time to time and communicate to the Sub-Advisor in writing.
Generally, Sub-Advisor's primary consideration in placing Portfolio securities
transactions with broker-dealers for execution is to obtain and maintain the
availability of best execution at the best net price and in the most effective
manner possible. The Sub-Advisor may consider sale of the shares of the
Portfolio, as well as recommendations of the Investment Manager, subject to the
requirements of best net price and most favorable execution.
Consistent with this policy, the Sub-Advisor will take the following into
consideration: the best net 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. Accordingly, the cost of the brokerage commissions to the Portfolio may
be greater than that available from other brokers if the difference is
reasonably justified by other aspects of the portfolio execution services
offered. Subject to such policies and procedures as the Board of Trustees of the
Trust may determine, the Sub-Advisor shall not be deemed to have acted
unlawfully or to have breached any duty solely by reason of its having caused
the Portfolio to pay a broker-dealer that provides research services to the
Sub-Advisor an amount of commission for effecting a portfolio investment
transaction in excess of the amount of commission another broker-dealer would
have charged for effecting that transaction, if the Sub-Advisor determines in
good faith that such amount of commission was reasonable in relation to the
value of the research services provided by such broker, viewed in terms of
either that particular transaction or the Sub-Advisor's ongoing responsibilities
with respect to the Portfolio and its other clients. The Sub-Advisor is further
authorized to allocate the orders placed by it on behalf of the Portfolio to
such broker-dealers who also provide research or statistical material, or other
services to the Portfolio or the Sub-Advisor. Such allocation shall be in such
amounts and proportions as the Sub-Advisor shall determine in good faith in
conformity with its responsibilities under applicable laws, rules and
regulations and the Sub-Advisor will report on said allocations to the
Investment Manager regularly as requested by the Investment Manager and, in any
event, at least once each calendar year if no specific request is made,
indicating the brokers to whom such allocations have been made and the basis
therefor.
6. Reports by Sub-Advisor. The Sub-Advisor shall furnish the Investment Manager
monthly, quarterly and annual reports concerning transactions and performance of
the Portfolio, including information required in the Trust's Registration
Statement, in such form as may be mutually agreed, to review the Portfolio and
discuss the management of it. The Sub-Advisor shall permit the financial
statements, books and records with respect to the Portfolio to be inspected and
audited by the Trust, the Investment Manager or their agents at all reasonable
times during normal business hours. The Sub-Advisor shall immediately notify and
forward to both Investment Manager and legal counsel for the Trust any legal
process served upon it on behalf of the Investment Manager or the Trust. The
Sub-Advisor shall promptly notify the Investment Manager of any changes in any
information required to be disclosed in the Trust's Registration Statement.
7. Compensation of Sub-Advisor. The amount of the compensation to the
Sub-Advisor is computed at an annual rate. The fee is payable monthly in
arrears, based on the average daily net assets of the Portfolio for each month,
at the annual rates shown below.
For all services rendered, the Investment Manager will calculate and
pay the Sub-Advisor at the annual rate of: .60 of 1% of the portion of the net
assets of the Portfolio not in excess of $100 million; plus .50 of 1% of the
portion of the net assets of the Portfolio in excess of $100 million.
In computing the fee to be paid to the Sub-Advisor, the net asset value
of the Portfolio shall be valued as set forth in the then current registration
statement of the Trust. If this agreement is terminated, the payment shall be
prorated to the date of termination.
Investment Manager and Sub-Advisor shall not be considered as partners
or participants in a joint venture. Sub-Advisor will pay its own expenses for
the services to be provided pursuant to this Agreement and will not be obligated
to pay any expenses of Investment Manager or the Trust. Except as otherwise
provided herein, Investment Manager and the Trust will not be obligated to pay
any expenses of Sub-Advisor.
8. Confidential Treatment. It is understood that any information or
recommendation supplied by the Sub-Advisor in connection with the performance of
its obligations hereunder is to be regarded as confidential and for use only by
the Investment Manager, the Trust or such persons the Investment Manager may
designate in connection with the Portfolio. It is also understood that any
information supplied to Sub-Advisor in connection with the performance of its
obligations hereunder, particularly, but not limited to, any list of securities
which, on a temporary basis, may not be bought or sold for the Portfolio, is to
be regarded as confidential and for use only by the Sub-Advisor in connection
with its obligation to provide investment advice and other services to the
Portfolio.
9. Representations of the Parties. Each party to this Agreement hereby
acknowledges that it is registered as an investment advisor under the Advisers
Act, that it will use its reasonable best efforts to maintain such registration,
and that 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.
10. Liability. The Sub-Advisor shall use its best efforts and good faith in
the performance of its services hereunder. However, so long as the Sub-Advisor
has acted in good faith and has used its best efforts, then in the absence of
willful misfeasance, bad faith, gross negligence or reckless disregard for its
obligations hereunder, it shall not be liable to the Trust or its shareholders
or to the Investment Manager for any act or omission resulting in any loss
suffered in any portfolio of the Trust 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 of limitation of any rights which the Trust
or Investment Manager may have under applicable law.
The Investment Manager agrees that the Sub-Advisor shall not be liable
for any failure to recommend the purchase or sale of any security on behalf of
the Portfolio on the basis of any information which might, in Sub-Advisor's
opinion, constitute a violation of any federal or state laws, rules or
regulations.
11. Other Activities of Sub-Advisor. Notwithstanding the first sentence of
Section 8 of this Agreement, the Investment Manager agrees that the Sub-Advisor
and any of its partners or employees, and persons affiliated with it or with any
such partner or employee may render investment management or advisory services
to other investors and institutions, and such investors and institutions may
own, purchase or sell, securities or other interests in property the same as or
similar to those which are selected for purchase, holding or sale for the
Portfolio, and the Sub-Advisor shall be in all respects free to take action with
respect to investments in securities or other interests in property the same as
or similar to those selected for purchase, holding or sale for the Portfolio.
Purchases and sales of individual securities on behalf of the Portfolio and
other portfolios of the Trust or accounts for other investors or institutions
will be made on a basis that is equitable to all portfolios of the Trust and
other accounts. Nothing in this agreement shall impose upon the Sub-Advisor any
obligation to purchase or sell or recommend for purchase or sale, for the
Portfolio any security which it, its partners, affiliates or employees may
purchase or sell for the Sub-Advisor or such partner's, affiliate's or
employee's own accounts or for the account of any other client, advisory or
otherwise.
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 Board of Trustees of the Trust 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 Sub-Advisor upon 60 days
written notice, and will automatically terminate in the event of its assignment
by either party to this Agreement, as defined in the ICA, or (provided
Sub-Advisor has received prior written notice thereof) upon termination of the
Investment Manager's Management Agreement with the Trust.
13. Notification. Sub-Advisor will notify the Investment Manager within a
reasonable time of any change in the personnel of the Sub-Advisor with
responsibility for making investment decisions in relation to the Portfolio or
who have been authorized to give instructions to a Custodian of the Trust.
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 address for such party.
Investment Manager: American Skandia Investment Services, Incorporated
One Corporate Drive
Shelton, Connecticut 06484
Attention: Thomas M. Mazzaferro
President & Chief Operating Officer
Sub-Advisor: Founders Asset Management, Inc.
Founders Financial Center
2930 East Third Avenue
Denver, CO 80206
Attention: General Counsel
14. Indemnification. The Sub-Advisor agrees to indemnify and hold harmless
Investment Manager, any affiliated person within the meaning of Section 2(a)(3)
of the ICA ("affiliated person") of Investment Manager and each person, if any
who, within the meaning of Section 15 of the Securities Act of 1933 (the "1933
Act"), controls ("controlling person") Investment Manager, against any and all
losses, claims, damages, liabilities or litigation (including reasonable legal
and other expenses), to which Investment Manager or such affiliated person or
controlling person may become subject under the 1933 Act, the ICA, the Advisers
Act, under any other statute, at common law or otherwise, arising out of
Sub-Advisor's responsibilities as portfolio manager of the Portfolio (1) to the
extent of and as a result of the willful misconduct, bad faith, or gross
negligence by Sub-Advisor, any of Sub-Advisor's employees or representatives or
any affiliate of or any person acting on behalf of Sub-Advisor, or (2) as a
result of any untrue statement or alleged untrue statement of a material fact
contained in a prospectus or statement of additional information covering the
Portfolio or the Trust or 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 written information
furnished by the Sub-Advisor, or any affiliated person of the Sub-Advisor, to
the Investment Manager, the Trust or any affiliated person of the Investment
Manager or the Trust or upon verbal information confirmed by the Sub-Advisor in
writing or (3) to the extent of, and as a result of, the failure of the
Sub-Advisor to execute, or cause to be executed, Portfolio transactions
according to the standards and requirements of the ICA; provided, however, that
in no case is Sub-Advisor's indemnity in favor of Investment Manager or any
affiliated person or controlling person of 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
Sub-Advisor, any affiliated person of Sub-Advisor and each controlling person of
Sub-Advisor, if any, against any and all losses, claims, damages, liabilities or
litigation (including reasonable legal and other expenses), to which Sub-Advisor
or such affiliated person or controlling person may become subject under the
1933 Act, the ICA, the Advisers Act, under any other statute, at common law or
otherwise, arising out of 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 Investment Manager, any of
Investment Manager's employees or representatives or any affiliate of or any
person acting on behalf of Investment Manager, or (2) as a result of any untrue
statement or alleged untrue statement of a material fact contained in a
prospectus or statement of additional information covering the Portfolio or the
Trust or 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 by the Trust other than in reliance upon written
information furnished by Sub-Advisor, or any affiliated person of the
Sub-Advisor or other than upon verbal information confirmed by the Sub-Advisor
in writing; provided, however, that in no case is Investment Manager's indemnity
in favor of Sub-Advisor or any affiliated person or controlling person of
Sub-Advisor deemed to protect such person against any liability to which any
such person would otherwise be subject by reason of willful misconduct, bad
faith or gross negligence in the performance of its duties or by reason of its
reckless disregard of its obligations and duties under this Agreement.
15. Warranty. The Investment Manager represents and warrants that (i) the
appointment of the Sub-Advisor by the Investment Manager has been duly
authorized and (ii) it has acted and will continue to act in connection with the
transactions contemplated hereby, and the transactions contemplated hereby are,
in conformity with the ICA, the Trust's governing documents and other applicable
laws.
The Sub-Advisor represents and warrants that it is authorized to
perform the services contemplated to be performed hereunder.
16. Governing Law. This agreement is made under, and shall be governed by
and construed in accordance with, the laws of the State of Connecticut.
The effective date of this agreement is October 15, 1996.
FOR THE INVESTMENT MANAGER: FOR THE SUB-ADVISOR:
- ------------------------------ -------------------------------
Thomas Mazzaferro
President & Chief Operating Officer
Date: _______________________ Date: _______________________
Attest: _______________________ Attest: _______________________
<PAGE>
APPENDIX
(FORM OF PROXY)
<PAGE>
-- PRELIMINARY COPY --
AMERICAN SKANDIA TRUST
PROXY FOR SPECIAL MEETING OF SHAREHOLDERS OF THE
SELIGMAN HENDERSON INTERNATIONAL SMALL CAP PORTFOLIO
TO BE HELD ON OCTOBER 11, 1996
The undersigned hereby appoints Cynthia Gorgoretti, Maureen Gulick and
Deirdre Burke and each of them as the proxy or proxies of the undersigned, with
full power of substitution, to vote on behalf of the undersigned all shares of
beneficial interest of the above stated Portfolio of American Skandia Trust (or
"Trust") which the undersigned is entitled to vote at a Special Meeting of the
Shareholders of the Seligman Henderson International Small Cap Portfolio of the
Trust to be held at 3:00 p.m., Eastern Time, on October 11, 1996 at the offices
of the Trust at One Corporate Drive, 10th Floor, Shelton, Connecticut and at any
adjournments thereof, upon the matters described in the accompanying Proxy
Statement and upon any other business that may properly come before the meeting
or any adjournment thereof. Said proxies are directed to vote or to refrain from
voting pursuant to the Proxy Statement as checked on the reverse side upon the
following matters.
PLEASE SIGN ON THE OTHER SIDE AND RETURN PROMPTLY IN THE ENCLOSED
POSTAGE PAID ENVELOPE.
The undersigned acknowledges receipt with this proxy of a copy of the
Combined Notice of Special Meeting of Shareholders and the Proxy Statement of
the Seligman Henderson International Small Cap Portfolio of the Trust. If a
contract is jointly held, each contract owner named should sign. If only one
signs, his or her signature will be binding. If the contract owner is a trust,
custodial account or other entity, the name of the trust or the custodial
account should be entered and the trustee, custodian, etc. should sign in his or
her own name, indicating that he or she is "Trustee," "Custodian," or other
applicable designation. If the contract owner is a partnership, the partnership
should be entered and the partner should sign in his or her own name, indicating
that he or she is a "Partner."
<PAGE>
<TABLE>
<CAPTION>
PLEASE MARK VOTES
AS IN THIS EXAMPLE
<S> <C> <C> <C> <C> <C>
For Against Abstain
THE BOARD OF TRUSTEES OF THE TRUST I. PROPOSAL TO APPROVE A NEW INVESTMENT MANAGEMENT
RECOMMENDS VOTING FOR THE FOLLOWING AGREEMENT BETWEEN THE TRUST AND AMERICAN
PROPOSALS: SKANDIA INVESTMENT SERVICES, INCORPORATED
REGARDING MANAGEMENT OF THE SELIGMAN HENDERSON
THE SHARES REPRESENTED HEREBY WILL BE INTERNATIONAL SMALL CAP PORTFOLIO.
VOTED AS INDICATED OR FOR THE PROPOSALS IF
NO CHOICE IS INDICATED. II. PROPOSAL TO APPROVE A NEW SUB-ADVISORY
AGREEMENT BETWEEN AMERICAN SKANDIA INVESTMENT
THIS PROXY IS BEING SOLICITED ON BEHALF OF SERVICES, INCORPORATED AND FOUNDERS ASSET
THE BOARD OF TRUSTEES OF THE TRUST. MANAGEMENT, INC. REGARDING INVESTMENT ADVICE TO
THE SELIGMAN HENDERSON INTERNATIONAL SMALL CAP
CONTRACT NUMBER: PORTFOLIO.
III. PROPOSAL TO APPROVE A CHANGE IN THE PORTFOLIO'S
INVESTMENT OBJECTIVE.
IV. PROPOSAL TO APPROVE CHANGES IN THE PORTFOLIO'S
FUNDAMENTAL INVESTMENT RESTRICTIONS.
Please be sure to sign and date this Proxy Approval of Proposals I and II are made contingent upon each other.
Each of Proposals III and IV are made contingent upon approval of
Proposals I and II.
</TABLE>
- ------------------------- -------------------------
Shareholder sign here Co-owner sign here RECORD DATE UNITS:
- --------------------------------------------------------------------------------
DETACH CARD
