AMERICAN SKANDIA TRUST
SUPPLEMENT TO THE MAY 1, 1996 PROSPECTUS and
STATEMENT OF ADDITIONAL INFORMATION
(Effective Date of Supplement: September 4, 1996)
AST PHOENIX BALANCED ASSET PORTFOLIO
SELIGMAN HENDERSON INTERNATIONAL EQUITY PORTFOLIO
SELIGMAN HENDERSON INTERNATIONAL SMALL CAP PORTFOLIO
JANCAP GROWTH PORTFOLIO
I. AST PHOENIX BALANCED ASSET PORTFOLIO
(the "Balanced Portfolio")
A. Reappointment of American Skandia Investment Services, Incorporated
(the "Manager") as Investment Manager of the Balanced Portfolio
On September 3, 1996, the Board of Trustees of American Skandia Trust
(the "Trust"), including a majority of the Trustees who are not "interested
persons" of the Trust (as defined under the Investment Company Act of 1940, as
amended) (the "Independent Trustees"), voted unanimously to ratify and approve a
New Investment Management Agreement with the Manager and authorized the
submission of the new agreement for shareholder approval. The New Investment
Management Agreement provides for compensation to the Manager payable monthly by
the Trust at the annual rate of .75% of the first $300 million of the
Portfolio's average daily net assets, plus .70% of the Portfolio's average daily
net assets over $300 million, a rate that is higher than the rate payable under
the Present Investment Management Agreement on assets over $75 million. The
Present Investment Management Agreement provides for compensation to the Manager
payable monthly at the annual rate of .75% of the first $75 million of the
Portfolio's average daily net assets, plus .65% of the Portfolio's average daily
net assets over $75 million. The New Investment Management Agreement contains
the same expense limitations set forth in the Present Investment Management
Agreement and, with the exception of the increased investment management fee
rate payable by the Trust, the effective date and termination date, and name of
the Portfolio, is identical in all other material respects.
A shareholder would pay the following expenses (rounded to the nearest
dollar) on a $1,000 investment, assuming 5% annual return at the end of each
time period. These expense examples assume that the total annual expenses for
the Portfolio throughout the period specified will be the lower of the total
annual expenses without any applicable reimbursement or expenses after any
applicable reimbursement. The examples provided below do not reflect any charges
which may be assessed by the variable insurance contracts through which shares
of the Portfolio may be purchased. Such examples are illustrative only and
should not be considered a representation of past or future expenses of the
Portfolio. Actual expenses may be greater or less than those shown below.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
1 Year 3 Years 5 Years 10 Years
Current Expense Examples: 10 30 52 116
Pro-Forma Expense Examples: 10 32 55 121
</TABLE>
The New Investment Management Agreement will become effective October
15, 1996, subject to shareholder approval of both the New Investment Management
Agreement and the New Sub-Advisory Agreement discussed below.
B. Appointment of Putnam Investment Management, Inc.
("Putnam Management") as Sub-Advisor to the Balanced Portfolio
On September 3, 1996, the Board of Trustees of the Trust, including a
majority of the Independent Trustees, voted unanimously also to ratify and
approve the Manager's selection of Putnam Management to provide sub-advisory
services to the Balanced Portfolio pursuant to a New Sub-Advisory Agreement
between the Manager and Putnam Management and authorized the submission of the
new agreement for shareholder approval. Putnam Management succeeds Phoenix
Investment Counsel, Inc., which has sub-advised the Portfolio since May 1, 1993
and will continue to sub-advise the Portfolio through the opening of business on
October 15, 1996 pursuant to the Present Sub-Advisory Agreement with the
Manager. Under the New Sub-Advisory Agreement, Putnam Management's compensation
will be payable monthly by the Manager, and not the Trust or the Portfolio, at
the annual rate of .45% of the first $150 million of the Portfolio's average
daily net assets, plus .40% of the next $150 million of the Portfolio's average
daily net assets, plus .35% of the Portfolio's average daily net assets over
$300 million, a rate that is higher than the rate payable under the Present
Sub-Advisory Agreement on assets over $25 million. The Present Sub-Advisory
Agreement provides for compensation to the Sub-advisor payable monthly at the
annual rate of .50% of the first $25 million of the Portfolio's average daily
net assets, plus .40% of the next $50 million of the Portfolio's average daily
net assets, plus .30% of the Portfolio's average daily net assets over $75
million. Except for the identity of the service provider, the effective date and
termination date, the name of the Portfolio, and the increased sub-advisory fee
rate payable by the Manager, and not the Trust or the Portfolio, the New
Sub-Advisory Agreement is identical in all material respects to the Present
Sub-Advisory Agreement. The New Sub-Advisory Agreement will become effective
October 15, 1996, subject to shareholder approval of both the New Sub-Advisory
Agreement and the New Investment Management Agreement discussed above.
Putnam Management is located at One Post Office Square, Boston,
Massachusetts 02109. Putnam Management is a wholly owned subsidiary of Putnam
Investments, Inc., One Post Office Square, Boston, Massachusetts 02109, a
holding company that is in turn wholly owned by Marsh & McLennan Companies,
Inc., which has executive offices at 1166 Avenue of the Americas, New York, New
York 10036. Marsh & McLennan Companies, Inc. and its operating subsidiaries are
professional services firms with insurance and reinsurance brokering, consulting
and investment management businesses. Putnam Management is one of America's
oldest and largest money management firms, managing mutual funds since 1937. At
July 31, 1996, Putnam Management and its affiliates managed assets in excess of
$146 billion.
C. Other Changes to the Balanced Portfolio
On September 3, 1996, the Board of Trustees of the Trust, including a
majority of the Independent Trustees, voted unanimously also to ratify and
approve a recommendation to the shareholders of the Balanced Portfolio that they
approve the following changes:
1. Change in Investment Objective: The present investment objective of the
Portfolio is proposed to be changed to the following investment objective:
The Portfolio seeks to provide a balanced investment composed of a
well-diversified portfolio of stocks and bonds which will produce both
capital growth and current income.
The proposed change in the Portfolio's investment objective will become
effective October 15, 1996, subject to shareholder approval of the change, as
well as shareholder approval of the New Investment Management Agreement and the
New Sub-Advisory Agreement discussed above.
2. Changes in Certain Fundamental Investment Restrictions Applicable to the
Portfolio: The proposed changes in the Portfolio's "fundamental" investment
restrictions will become effective October 15, 1996, subject to shareholder
approval of the changes, as well as shareholder approval of the New Investment
Management Agreement and the New Sub-Advisory Agreement discussed above.
3. Change in Portfolio Name: The name of the Portfolio is proposed to be
changed from the "AST Phoenix Balanced Asset Portfolio" to the "AST Putnam
Balanced Portfolio." The change in the name of the Portfolio will become
effective October 15, 1996, subject to shareholder approval of the New
Investment Management Agreement and the New Sub-Advisory Agreement discussed
above.
II. SELIGMAN HENDERSON INTERNATIONAL EQUITY PORTFOLIO
(the "International Equity Portfolio")
A. Reappointment of American Skandia Investment Services, Incorporated
(the "Manager") as Investment Manager of the International Equity Portfolio
On September 3, 1996, the Board of Trustees of American Skandia Trust
(the "Trust"), including a majority of the Independent Trustees (as defined
above), voted unanimously to approve a New Investment Management Agreement with
the Manager and authorized the submission of the new agreement for shareholder
approval. The New Investment Management Agreement provides for compensation to
the Manager payable monthly by the Trust at the annual rate of 1.0% of the
Portfolio's average daily net assets, a rate that is identical to the rate
payable under the Present Investment Management Agreement. The New Investment
Management Agreement contains the same expense limitations set forth in the
Present Investment Management Agreement and, with the exception of the effective
date and termination date, and name of the Portfolio, is identical in all other
material respects, including any applicable voluntary fee waiver agreement made
by the Manager. The New Investment Management Agreement will become effective
October 15, 1996, subject to shareholder approval of both the New Investment
Management Agreement and the New Sub-Advisory Agreement discussed below.
B. Appointment of Putnam Investment Management, Inc. ("Putnam
Management") as Sub-Advisor to the International Equity Portfolio
On September 3, 1996, the Board of Trustees of the Trust, including a
majority of the Independent Trustees, voted unanimously also to approve the
Manager's selection of Putnam Management to provide sub-advisory services to the
International Equity Portfolio pursuant to a New Sub-Advisory Agreement between
the Manager and Putnam Management and authorized the submission of the new
agreement for shareholder approval. Putnam Management succeeds Seligman
Henderson Co., which has sub-advised the Portfolio since May 1, 1992, and will
continue to sub-advise the Portfolio through the opening of business on October
15, 1996 pursuant to the Present Sub-Advisory Agreement with the Manager. Under
the New Sub-Advisory Agreement, Putnam Management's compensation will be payable
monthly by the Manager at the annual rate of .65% of the first $150 million of
the Portfolio's average daily net assets, plus .55% of the next $150 million of
the Portfolio's average daily net assets, plus .45% of the Portfolio's average
daily net assets over $300 million, a rate that is lower than the rate payable
under the Present Sub-Advisory Agreement. The Present Sub-Advisory Agreement
provides for compensation to the Sub-advisor payable monthly at the annual rate
of 1.0% of the first $100 million of the Portfolio's average daily net assets,
plus .75% of the Portfolio's average daily net assets over $100 million.
Compensation payable by the Manager under the New Sub-Advisory Agreement,
although lower than the compensation payable under the terms of the Present
Sub-Advisory Agreement, may not be lower than the compensation payable by the
Manager at various asset levels of the Portfolio taking into account the
application of the Sub-Advisor's current voluntary fee waiver agreement. Except
for the identity of the service provider, the effective date and termination
date, the name of the Portfolio, and the reduced sub-advisory fee rate payable
by the Manager, the New Sub-Advisory Agreement is identical in all material
respects to the Present Sub-Advisory Agreement. The New Sub-Advisory Agreement
will become effective October 15, 1996, subject to shareholder approval of both
the New Sub-Advisory Agreement and the New Investment Management Agreement
discussed above.
For information regarding Putnam Management, please see the above
description provided under Heading I.B of this Supplement.
C. Other Changes to the International Equity Portfolio
On September 3, 1996, the Board of Trustees of the Trust, including a
majority of the Independent Trustees, voted unanimously also to recommend to the
shareholders of the International Equity Portfolio that they approve the
following changes:
1. Change in Investment Objective: The present investment objective of the
Portfolio is proposed to be changed to the following investment objective:
The Portfolio seeks capital appreciation.
The proposed change in the Portfolio's investment objective will become
effective October 15, 1996, subject to shareholder approval of the change, as
well as shareholder approval of the New Investment Management Agreement and the
New Sub-Advisory Agreement discussed above.
2. Changes in Certain Fundamental Investment Restrictions Applicable to the
Portfolio: The proposed changes in the Portfolio's "fundamental" investment
restrictions will become effective October 15, 1996, subject to shareholder
approval of the changes, as well as shareholder approval of the New Investment
Management Agreement and the New Sub-Advisory Agreement discussed above.
3. Change in Portfolio Name: The name of the Portfolio is proposed to be
changed from the "Seligman Henderson International Equity Portfolio" to the "AST
Putnam International Equity Portfolio." The change in the name of the Portfolio
will become effective October 15, 1996, subject to shareholder approval of the
New Investment Management Agreement and the New Sub-Advisory Agreement discussed
above.
III. SELIGMAN HENDERSON INTERNATIONAL SMALL CAP PORTFOLIO
(the "International Small Cap Portfolio")
A. Reappointment of American Skandia Investment Services, Incorporated
(the "Manager") as Investment Manager of the International Small Cap Portfolio
On September 3, 1996, the Board of Trustees of American Skandia Trust
(the "Trust"), including a majority of the Independent Trustees (as defined
above), voted unanimously to approve a New Investment Management Agreement with
the Manager and authorized the submission of the new agreement for shareholder
approval. The New Investment Management Agreement provides for compensation to
the Manager payable monthly by the Trust at the annual rate of 1.0% of the
Portfolio's average daily net assets, a rate that is identical to the rate
payable under the Present Investment Management Agreement. The New Investment
Management Agreement contains the same expense limitations set forth in the
Present Investment Management Agreement and, with the exception of the effective
date and termination date, and name of the Portfolio, is identical in all other
material respects. The New Investment Management Agreement will become effective
October 15, 1996, subject to shareholder approval of both the New Investment
Management Agreement and the New Sub-Advisory Agreement discussed below.
B. Appointment of Founders Asset Management, Inc. ("Founders")
as Sub-Advisor to the International Small Cap Portfolio
On September 3, 1996, the Board of Trustees of the Trust, including a
majority of the Independent Trustees, voted unanimously also to approve the
Manager's selection of Founders to provide sub-advisory services to the
International Small Cap Portfolio pursuant to a New Sub-Advisory Agreement
between the Manager and Founders and authorized the submission of the new
agreement for shareholder approval. Founders succeeds Seligman Henderson Co.,
which has sub-advised the Portfolio since May 1, 1995 and will continue to
sub-advise the Portfolio through the opening of business on October 15, 1996
pursuant to the Present Sub-Advisory Agreement with the Manager. Under the New
Sub-Advisory Agreement, Founders' compensation will be payable monthly by the
Manager at the annual rate of .60% of the first $100 million of the Portfolio's
average daily net assets, plus .50% of the Portfolio's average daily net assets
over $100 million, a rate that is identical to the rate payable under the
Present Sub-Advisory Agreement. Except for the identity of the service provider,
the effective date and termination date, and the name of the Portfolio, the New
Sub-Advisory Agreement is identical in all material respects to the Present
Sub-Advisory Agreement. The New Sub-Advisory Agreement will become effective
October 15, 1996, subject to shareholder approval of both the New Sub-Advisory
Agreement and the New Investment Management Agreement discussed above.
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.
C. Other Changes to the International Small Cap Portfolio
On September 3, 1996, the Board of Trustees of the Trust, including a
majority of the Independent Trustees, voted unanimously also to recommend to the
shareholders of the International Small Cap Portfolio that they approve the
following changes:
1. Change in Investment Objective: The present investment objective of the
Portfolio is proposed to be changed to the following investment objective:
The Portfolio seeks capital appreciation.
The proposed change in the Portfolio's investment objective will become
effective October 15, 1996, subject to shareholder approval of the change, as
well as shareholder approval of the New Investment Management Agreement and the
New Sub-Advisory Agreement discussed above.
2. Changes in Fundamental Investment Restrictions Applicable to the
Portfolio: The proposed changes in the Portfolio's "fundamental" investment
restrictions will become effective October 15, 1996, subject to shareholder
approval of the changes, as well as shareholder approval of the New Investment
Management Agreement and the New Sub-Advisory Agreement discussed above.
3. Change in Portfolio Name: The name of the Portfolio is proposed to be
changed from the "Seligman Henderson International Small Cap Portfolio" to the
"Founders Passport Portfolio." The change in the name of the Portfolio will
become effective October 15, 1996, subject to shareholder approval of the New
Investment Management Agreement and the New Sub-Advisory Agreement discussed
above.
IV. JANCAP GROWTH PORTFOLIO
The following is inserted in the current disclosure of the Prospectus
under the caption, "Investment Management Agreements" for the "JanCap Growth
Portfolio:"
Commencing September 4, 1996, the Sub-advisor has voluntarily agreed to
waive a portion of its fee equal to .10% of the Portfolio's average
daily net assets over $500 million but not in excess of $1 billion; and
.05% of the portion of the Portfolio's average daily net assets over $1
billion.
The following is inserted in the current disclosure of the Statement of
Additional Information under the caption, "MANAGEMENT OF THE TRUST: Investment
Management Agreements" for the "JanCap Growth Portfolio:"
Commencing September 4, 1996, the Investment Manager has voluntarily
agreed to reimburse certain operating expenses in excess of 1.33% for
the JanCap Growth Portfolio. This voluntary agreement may be terminated
by the Investment Manager at any time.
ASTSUPP: 12802-1 (9/96)
