AMERICAN SKANDIA TRUST
SUPPLEMENT TO THE PROSPECTUS, DATED MAY 1, 1995
AST Scudder International Bond Portfolio
(the "International Bond Portfolio")
REAPPOINTMENT OF AMERICAN SKANDIA INVESTMENT
SERVICES, INCORPORATED AS THE
INTERNATIONAL BOND PORTFOLIO
INVESTMENT MANAGER (Effective May 1, 1996)
Since May 1, 1994, American Skandia Investment Services, Incorporated
(the "Manager") has served as investment manager to the International Bond
Portfolio pursuant to an Investment Management Agreement (the "Prior Management
Agreement"), dated May 1, 1994, with American Skandia Trust (the "Trust"). On
April 12, 1996 shareholders of the International Bond Portfolio authorized a new
Investment Management Agreement (the "New Management Agreement") with the
Manager. The New Management Agreement, which becomes effective May 1, 1996,
provides for compensation to the Manager payable monthly at the annual rate of
.80 of 1.0% of the average daily net assets of the Portfolio, a rate that is
lower than the rate paid to the Manager pursuant to the Prior Investment
Management Agreement. The Prior Management Agreement provides for compensation
to the Manager payable monthly at the annual rate of 1% of the average daily net
assets of the Portfolio. The New Management Agreement contains the same expense
limitations set forth in the Prior Management Agreement and is identical in all
other material respects.
APPOINTMENT OF ROWE PRICE-FLEMING INTERNATIONAL, INC.
AS SUB-ADVISOR TO THE INTERNATIONAL BOND PORTFOLIO
(Effective May 1, 1996)
On April 12, 1996, the shareholders of the International Bond Portfolio
also approved the Manager's selection of Rowe Price-Fleming International, Inc.
("Rowe Price-Fleming") to provide sub-advisory services to the International
Bond Portfolio pursuant to a separate sub-advisory agreement (the "New
Sub-Advisory Agreement") between the Manager and Rowe Price-Fleming, which
becomes effective May 1, 1996. Rowe Price-Fleming succeeds Scudder, Steven &
Clark, Inc., which has managed the Portfolio since May 1, 1994 and will continue
to manage the Portfolio through April 30, 1996 pursuant to a separate
sub-advisory agreement with the Manager (the "Prior Sub-Advisory Agreement").
Rowe Price-Fleming's compensation will be paid by the Manager, rather than the
Portfolio, at a rate lower than that payable under the Prior Sub-Advisory
Agreement. Except for the lower rate of compensation, the New Sub-Advisory
Agreement is identical in all material respects to the Prior Sub-Advisory
Agreement.
Rowe Price-Fleming is located at 100 East Pratt Street, Baltimore, Maryland
21202. The firm was incorporated in Maryland in 1979 as a joint venture between
T. Rowe Price Associates, Inc. ("T. Rowe Price") and Robert Fleming Holdings
Ltd. ("Robert Fleming Holdings") and manages assets in excess of $20 billion
consisting largely of foreign securities. Rowe Price-Fleming is 50% owned by a
wholly-owned subsidiary of T. Rowe Price; 25% by a subsidiary of Robert Fleming
Holdings; and 25% by Jardine Fleming Group Ltd. ("Jardine Fleming"). Half of
Jardine Fleming is owned by Robert Fleming Holdings and half by Jardine Matheson
Holdings Ltd.
CHANGE IN NAME OF THE INTERNATIONAL
BOND PORTFOLIO (Effective May 1, 1996)
The Board of Trustees has approved the change in the name of the
International Bond Portfolio from the "AST Scudder International Bond Portfolio"
to the "T. Rowe Price International Bond Portfolio." The name change will become
effective May 1, 1996.
OTHER CHANGES TO THE INTERNATIONAL
BOND PORTFOLIO (Effective May 1, 1996)
THE PORTFOLIO MANAGERS. Beginning May 1, 1996, the Portfolio will have an
investment advisory group that has day-to-day responsibility for managing the
Portfolio and developing and executing the Portfolio's investment program. The
advisory group for the Portfolio consists of Peter Askew, Christopher Rothery
and Michael Conelius. Peter Askew joined Rowe Price-Fleming in 1988 and has 21
years of experience managing multi-currency fixed-income portfolios. Christopher
Rothery joined Rowe Price-Fleming in 1994 and has 8 years of experience managing
multi-currency fixed-income portfolios. Prior to joining Rowe Price-Fleming, Mr.
Rothery worked with Fleming International Fixed Income Management Limited.
Michael Conelius joined Rowe Price-Fleming in 1995.
Prior to that, Mr. Conelius had worked with T. Rowe Price since 1988.
CHANGE IN INVESTMENT OBJECTIVE. On April 12, 1996, the shareholders adopted the
following investment objective for the Portfolio, which becomes effective May 1,
1996 and replaces the investment objective stated in the Prospectus in its
entirety:
The Portfolio seeks to provide high current income and capital
appreciation by investing in high-quality, non-dollar denominated
government and corporate bonds outside the United States.
CHANGES IN INVESTMENT POLICIES. On April 12, 1996 the shareholders approved
certain changes in the "fundamental" investment restrictions applicable to the
International Bond Portfolio which may not be changed without approval of the
Shareholders of the Portfolio. As a result of these changes, the Portfolio,
effective May 1, 1996, no longer will be subject to "fundamental" investment
restrictions which provide that:
(1) 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 the 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;
(2) 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);
(3) The Portfolio will not invest in companies for the purpose of
exercising control or management;
(4) 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; and
(5) The Portfolio may not issue senior securities, except as
appropriate to evidence indebtedness which it is permitted to incur,
provided that collateral arrangements with respect to currency-related
contracts, futures contracts, options or other permitted investments,
including deposits of initial and variation margin, are not considered
to be the issuance of senior securities for purposes of this
restriction.
As a result of the changes approved by the Shareholders, the following
additional fundamental investment restriction will become applicable to the
Portfolio on May 1, 1996:
The Portfolio may not issue senior securities except in compliance with
the Investment Company Act of 1940.
As a result of the changes approved by the Shareholders, the Portfolio,
effective May 1, 1996, also will be subject to the following additional
"non-fundamental" investment restrictions, which may be changed by action of the
Board of Trustees without further shareholder approval:
(1) The Portfolio may not purchase securities of open-end or closed-end
investment companies, except in compliance with the Investment Company
Act of 1940 and applicable state law;
(2) The Portfolio may not purchase securities on margin, unless, by
virtue of its ownership of other securities, it has the right to obtain
securities equivalent in kind and amount to the securities sold and, if
the right is conditional, the sale is made upon the same conditions,
except in connection with arbitrage transactions and except that the
Portfolio may obtain such short-term credits as may be necessary for
the clearance of purchases and sales of securities;
(3) The Portfolio may not invest in companies for the purpose of exercising
management or control; and
(4) The Portfolio may not purchase or retain the securities of any
issuer if those officers and directors of the Portfolio, and of the
Sub-advisor, who each own beneficially more than .5% of the outstanding
securities of such issuer, together own beneficially more than 5% of
such securities.
CHANGE IN CLASSIFICATION OF INTERNATIONAL BOND PORTFOLIO. On April 12, 1996, the
shareholders of the Portfolio approved a change in classification of the
Portfolio from a "diversified" investment company to a "non-diversified"
investment company under the Investment Company Act of 1940 (the "1940 Act").
Prior to this change of classification, the 1940 Act required 75% of the value
of the Portfolio's total assets to be represented by cash and non-cash items
(including receivables), government securities, securities of other investment
companies and other securities to be limited in respect of any new issues to an
amount not greater than 5% of the value of the total assets of such company and
not more than 10% of the outstanding securities of such issues. As a
"non-diversified" investment company the Portfolio no longer is subject to such
diversification requirements and may invest a greater portion of its assets in
qualifying securities or obligations of a smaller number of issuers. The
Portfolio may be subject to greater risk of adverse change in the financial
condition or market perception of an issuer of its portfolio securities or
obligations and to greater risk of single economic, political or regulatory
occurrences or events than an investment company that is more broadly
diversified. The Portfolio intends to continue to satisfy diversification
requirements established under federal tax law which apply to regulated
investment companies and to segregated asset accounts upon which variable
annuity contracts or variable life insurance policies are based, as set forth in
the prospectus.
ANNUAL PORTFOLIO OPERATING EXPENSES
(As a Percentage of Average Net Assets)
Please see the current Prospectus, dated May 1, 1995, for a description
of the annual operating expenses of the International Bond Portfolio for the
fiscal year ending December 31, 1994. As of May 1, 1996, the description of the
annual operating expenses of the Portfolio will be based upon the expenses
incurred by the Portfolio for the fiscal year ending December 31, 1995 and will
be restated to reflect the reduction in the fee payable to the Manager from
1.00% under the Prior Management Agreement to .80% under the New Management
Agreement.
The effective date of this supplement is April 16, 1996.
