Investment Company Act No. 811-5186
As filed with the Securities and Exchange Commission on March 22, 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:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[X] 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):
[ ] $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 day 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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[X] 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 number, of 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
March 22, 1996
Dear Valued Customer,
As an American Skandia Life Assurance Corporation ("ASLAC") contract owner who
beneficially owns shares of the AST Scudder International Bond 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 April 12, 1996 at 10:00 a.m.
At the special meeting, shareholders are being asked to consider five proposals:
1. 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.
2. A proposal to approve a new Sub-Advisory Agreement between ASISI and
Rowe Price-Fleming International, Inc. regarding investment advice to the
Portfolio.
3. A proposal to approve a change in the investment objective for the
Portfolio.
4. A proposal to approve certain changes in the Portfolio's investment
restrictions.
5. A proposal to approve a change in the Portfolio's classification from a
"Diversified Investment Company" to a "Non-Diversified Investment Company."
Proposals 1 through 4 above are contingent upon the approval of each other. If
these proposals are approved, the name of the Portfolio will be changed to the
"T. Rowe Price International Bond Portfolio," effective May 1, 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 April 10, 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,
/s/ Gordon C. Boronow
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
March 22, 1996
Dear Registered Representative,
Please be advised that a special meeting of the shareholders of the AST Scudder
International Bond 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
April 12, 1996 at 10:00 a.m.
All ASLAC contract owners beneficially owning shares in the Portfolio as of
February 28, 1996 have been sent a Notice of Special Meeting, a Proxy Statement
and a Proxy Card. The Proxy Card is to be completed and returned to ASLAC by
April 10, 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 contract owners on the proxy issues presented.
The shareholders are being asked to approve or disapprove five proposals:
1. 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.
2. A proposal to approve a new Sub-Advisory Agreement between ASISI and
Rowe Price-Fleming International, Inc. regarding investment advice to the
Portfolio.
3. A proposal to approve a change in the investment objective for the
Portfolio.
4. A proposal to approve certain changes in the Portfolio's investment
restrictions.
5. A proposal to approve a change in the Portfolio's classification from a
"Diversified Investment Company" to a "Non-Diversified Investment Company."
Proposals 1 through 4 above are contingent upon the approval of each other.
The current sub-advisor to the Portfolio is Scudder, Stevens & Clark, Inc. If
Proposals 1 through 4 are approved by the Portfolio's shareholders, the name of
the Portfolio will be changed to the "T. Rowe Price International Bond
Portfolio" effective May 1, 1996.
Any questions or concerns you may have regarding the special meeting or the
proxy should be directed to ASLAC at (800) SKANDIA. A report of your clients
receiving proxy packets are available upon request.
Sincerely,
/s/ Gordon C. Boronow
Gordon C. Boronow
President and Chief Operating Officer
American Skandia Life Assurance Corporation
<PAGE>
AMERICAN SKANDIA TRUST
One Corporate Drive
P.O. Box 883
Shelton, Connecticut 06484
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
OF THE AST SCUDDER INTERNATIONAL BOND PORTFOLIO
To be held
April 12, 1996
To the Shareholders of the AST Scudder International Bond Portfolio of
American Skandia Trust:
Notice is hereby given that this Special Meeting of Shareholders (the
"Meeting") of the AST Scudder International Bond Portfolio (the "Portfolio") of
American Skandia Trust (the "Trust"), will be held at One Corporate Drive,
Shelton, Connecticut 06484 on April 12, 1996 at 10:00 a.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 AST Scudder International Bond Portfolio.
II. To consider the approval of a new Sub-Advisory Agreement between
American Skandia Investment Services, Incorporated and Rowe Price-Fleming
International, Inc. regarding investment advice to the AST Scudder International
Bond 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 investment
restrictions.
V. To consider the approval of a change in the Portfolio's classification
from a "diversified" investment company to a "non-diversified" investment
company.
VI. 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 February 28, 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
M. Priscilla Pannell
Assistant Corporate Secretary
American Skandia Trust
March 22, 1996
<PAGE>
PROXY STATEMENT
AMERICAN SKANDIA TRUST
One Corporate Drive
P.O. Box 883
Shelton, Connecticut 06484
SPECIAL MEETING OF SHAREHOLDERS
OF THE AST SCUDDER INTERNATIONAL BOND PORTFOLIO
OF
AMERICAN SKANDIA TRUST
To be held
April 12, 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
AST Scudder International Bond Portfolio (the "Portfolio") of the Trust to be
held at One Corporate Drive, Shelton, Connecticut 06484 on April 12, 1996 at
10:00 a.m. Eastern Time, or at any adjournment thereof (the "Meeting"), for the
purposes set forth in the accompanying Notice of Meeting ("Notice"). It is
anticipated that the first mailing of proxies and proxy statements to
shareholders will be on or about March 22, 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, including audited financial statements
for 1995 (the "Report"), 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 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 February 28, 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: 5,100,749. As of the Record Date, there is no beneficial owner of
5% or more 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, approximately 99% 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 Accounts Class B-1,
Class B-2, and Class B-3 (collectively, "ASLAC Variable Accounts"), each of
which is a separate account registered 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
AST Scudder International Bond 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 Special 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 April 10, 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 Special Meeting the
matters set forth in Proposals I, II, III, IV and V 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 Acting 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 approximately 99% 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. Unless
Proposals I, II, III and IV each are approved, none of such proposals will be
effected by the Portfolio. Therefore, a vote against any of Proposals I, II, III
or IV will have the effect of a vote against each of the others.
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. A shareholder vote may be
taken on one or more of the proposals in this Proxy Statement prior to any
adjournment if sufficient votes have been received for approval. 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, 1994, ASISI has served as Manager to the Portfolio
pursuant to an Investment Management Agreement (the "Present Investment
Management Agreement"). The Present Investment Management Agreement provides,
among other things, that in carrying out its responsibility to supervise and
manage the investment operations of the Portfolio, ASISI may engage, subject to
the approval of the Portfolio's Board of Trustees and where required the
shareholders of the Portfolio, a Sub-adviser, and delegate to the Sub-adviser
duties among others, to:
(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 ASISI considers
desirable for inclusion in the Portfolio;
(2) determine what issuers and securities shall be represented in the
Portfolio and regularly report them in writing to the Board of
Trustees;
(3) formulate and implement continuing programs for the purchase and
sales of the securities of such issuers and regularly report in writing
on them to the Board of Trustees; and
(4) take, on behalf of the Portfolio, all actions which appear to the
Trust 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 securities.
In accordance with this provision for delegation of authority, the
Manager entered into a sub-advisory agreement (the "Present Sub-Advisory
Agreement"), effective May 1, 1994, with Scudder, Stevens & Clark, Inc.
("Scudder") pursuant to which the above duties were delegated by the Manager to
Scudder. Scudder has served as Sub-adviser to the Portfolio since the effective
date of such Agreement.
The Present Investment Management Agreement and the Present
Sub-Advisory Agreement were approved by the Board of Trustees of the Trust,
including a majority of the Trustees who are not "interested persons" of the
Trust (as defined by the Investment Company Act) (the "Independent Trustees"),
on April 5, 1994, and renewed on March 7, 1995.
At a meeting held on February 27, 1996, the Board of Trustees received
a proposal from the Manager to engage Rowe Price-Fleming International, Inc.
("Rowe Price-Fleming") to provide sub-advisory services, effective May 1, 1996.
As hereinafter described in greater detail, Rowe Price-Fleming was founded 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. In
connection with its recommendation, the Manager informed the Board of its belief
that, based upon its discussions with Rowe Price-Fleming, implementation of
certain investment strategies would be desirable and the appointment of Rowe
Price-Fleming would facilitate the implementation of the desired strategies and
at the same time would assist ASISI's efforts in developing new markets for the
Portfolio. The implementation of such investment strategies include proposed
changes in the Portfolio's investment objective and certain fundamental
investment restrictions which require shareholder approval and are described
under Proposals III and IV below.
ASISI also proposed to enter into a new investment management agreement
providing, among other things, for a reduced management fee rate and to change
the name of the Portfolio to the T. Rowe Price International Bond Portfolio,
reflecting the proposed engagement of Rowe Price-Fleming.
On February 27, 1996, a majority of the Board of Trustees, including a
majority of the Independent Trustees, voted unanimously to recommend to the
shareholders of the Portfolio that they approve a new Investment Management
Agreement with ASISI (the "New Investment Management Agreement") and a new
sub-advisory agreement with Rowe Price-Fleming (the "New Sub-Advisory
Agreement"), each effective May 1, 1996, 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 T. Rowe Price International Bond
Portfolio, subject to shareholder approval of proposals I through IV. Subject to
the receipt of shareholder approval, the Present Sub-Advisory Agreement will
expire by its terms as of the close of business on April 30, 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 ASISI to furnish
the Portfolio with 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. ASISI is responsible for certain expenses in connection with
the trading function and investment program of the Portfolio. ASISI is required
to furnish, at its expense, 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 Trust, and thereafter supervise, such executive, administrative,
clerical, and shareholder servicing services as are deemed advisable by the
Board of Trustees. The Trust pays other 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
servicing 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 ASISI or any of its
officers, trustees, or employees, ASISI 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.
As compensation for the services performed and the facilities furnished by
ASISI under the Present Investment Management Agreement, ASISI receives a fee
payable monthly at an annual rate of 1.0% of the average daily net assets of the
Portfolio. ASISI has agreed under the terms of the Present Investment Management
Agreement to reimburse the Portfolio if and to the extent that the total of all
ordinary business expenses for any fiscal year, 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 average
daily net assets of the Portfolio, and if required to do so pursuant to such
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. The aggregate fee paid by the Trust to ASISI for
services rendered under the Present Investment Management Agreement during the
1995 fiscal year of the Portfolio was $276,266. Under the terms of the Present
Investment Management Agreement, ASISI is permitted to render services to
others.
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 Trustees or by the vote of the majority of the outstanding voting
securities of the Portfolio, provided that in either event such continuance
shall also be approved by a vote of a majority of the Independent Trustees cast
in person at a meeting called for the purpose of voting on such approval. These
provisions reflect the requirements of the Investment Company Act. The Present
Investment Management Agreement may be terminated at any time without penalty on
60 days' written notice to the other party to the Present Investment Management
Agreement (i) by the vote of a majority of the Board of Trustees; (ii) by the
vote of the majority of the Portfolio's outstanding voting securities; or (iii)
by ASISI. The Present Investment Management Agreement will terminate effective
April 30, 1996, if not reapproved, or automatically in the event of its
assignment.
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, the
Portfolio name, and the rate of management fee, which is lower. If Proposals I
through IV are approved, ASISI will continue to manage the Portfolio under the
New Investment Management Agreement. The New Investment Management Agreement
provides that ASISI will receive a fee payable monthly at an annual rate of .80
of 1.0% of the average daily net assets of the Portfolio as compensation for the
services to be performed by ASISI. This is 20% less than the fee currently
received by ASISI under the Present Investment Management Agreement.
If the New Investment Management Agreement is approved by the
shareholders of the Portfolio, it will become effective May 1, 1996 (subject
also to shareholder approval of Proposals II, III and IV), and will remain in
effect, unless terminated earlier, for an initial one year term, subject to
annual review by the Board of Trustees of the Trust or by vote of the holders of
a majority of the outstanding shares of the Portfolio (as defined in the
Investment Company Act), and also, in either event, approval by a majority of
the Independent Trustees, cast in person at a meeting called for the purpose of
voting on such renewal. For this purpose, the vote of the holders of a majority
of the outstanding shares of the Portfolio means the lesser of (A) 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 Portfolio shares are present or represented
by proxy, or (B) the vote of the holders of more than 50% of the outstanding
shares of the Portfolio. The New Investment Management Agreement may be
terminated at any time without penalty on 60 days' written notice to the other
party of the New Investment Management Agreement (i) by the vote of a majority
of the Board of Trustees; (ii) by the vote of a majority of the Portfolio's
outstanding voting securities; or (iii) by ASISI. The New Investment Management
Agreement will terminate automatically in the event of its assignment.
The Manager and Other Information
ASISI is registered as an investment adviser with the Securities and
Exchange Commission pursuant to the Investment Advisers Act of 1940, as amended.
ASISI does not currently serve as investment adviser or sub-adviser to any
registered investment company other than the Trust. The principal executive
officer of ASISI is Jan R. Carendi, who is also a director of ASISI and
Executive Vice President Corporation Management Group, Skandia Insurance Company
Ltd., Sveavagen 44, S-103 50 Stockholm, Sweden. The other officers and directors
of ASISI and the officers of ASISI who are also officers or members of the Board
of Trustees of the Trust are set forth below.
<TABLE>
<CAPTION>
<S> <C>
Name and Position with ASISI Principal Occupation and Address
Jan R. Carendi* Executive Vice President
Chief Executive Officer and Member of Corporate Management Group
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, Chief Financial Officer American Skandia Life Assurance Corporation
and Director 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
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
Richard G. Davy, Jr.* Controller
Controller American Skandia Investment Services, Incorporated
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 Skandia Insurance
Company Ltd., 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.
PROPOSAL II
APPROVAL OF A NEW SUB-ADVISORY AGREEMENT BETWEEN
AMERICAN SKANDIA INVESTMENT SERVICES, INCORPORATED
AND ROWE PRICE-FLEMING INTERNATIONAL, 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.
Scudder has advised the Portfolio since May 1, 1994. Under the terms of
the Present Sub-Advisory Agreement, Scudder 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, Scudder, 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. Scudder, at its expense, furnishes all necessary
investment facilities, including salaries of personnel required for it to
execute its duties faithfully.
Furthermore, the Present Sub-Advisory Agreement requires Scudder to use
all commercially reasonably efforts and good faith in the performance of its
services under the Present Sub-Advisory Agreement. However, so long as Scudder
has acted in good faith and has used all commercially reasonable efforts, then
in the absence of willful misfeasance, bad faith, gross negligence or reckless
disregard of its obligations under the Present Sub-Advisory Agreement, Scudder
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 Scudder's compensation under
the Present Investment Management Agreement. Scudder'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
pays Scudder at the annual rate of .60 of 1.0% of the average daily net assets
of the Portfolio. In computing the fee to be paid to Scudder, the net asset
value of the Portfolio is valued as set forth in the then current registration
statement of the Trust. The aggregate fee paid by the Manager to Scudder for
services rendered under the Present Sub-Advisory Agreement during the 1995
fiscal year of the Portfolio was $165,760.
The Present Sub-Advisory Agreement provides that it shall remain in full
force and effect for one year from the date thereof and 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 the majority of the outstanding voting
securities of the Portfolio, provided that in either event such continuance
shall also be approved by a vote of a majority of the Independent Trustees cast
in person at a meeting called for the purpose of voting on such approval. These
provisions reflect the requirements of the Investment Company Act. The Present
Sub-Advisory Agreement may be terminated at any time without penalty on 60 days'
written notice to the other party to the Present Sub-Advisory Agreement. The
Present Sub-Advisory Agreement will terminate automatically in the event of its
assignment or (provided Scudder has received prior written notice thereof) upon
termination of the Management Agreement. Unless continuance is approved, the
Present Sub-Advisory Agreement will terminate effective April 30, 1996. If the
Present Sub-Advisory Agreement is terminated, Scudder's compensation shall be
prorated to the date of termination.
The decision by the Board of Trustees and the Manager to allow the Present
Sub-Advisory Agreement to terminate by its terms rather than to consider its
continuance reflects the fact that the Board of Trustees and the Manager have
determined that it would be in the interests of the Portfolio's shareholders to
enter into the New Sub-Advisory Agreement. As hereinafter discussed, the Board
of Trustees and the Manager believe that the New Sub-Advisory Agreement will
provide the Portfolio with continued access to high quality sub-advisory
services at a lower overall fee structure for the Portfolio than is applicable
under the Present Sub-Advisory Agreement.
Scudder's offices are located at Two International Place, Boston,
Massachusetts 02110. As of December 31, 1995, Scudder managed over $100 billion
in assets, including $45,601,975 in assets of the Portfolio.
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 Portfolio name, and the advisory fee
rate payable by the Manager.
If Proposals I through IV are approved by the shareholders, Rowe
Price-Fleming will provide sub-advisory services to the Portfolio. The New
Sub-Advisory Agreement provides that the Manager, not the Trust, will pay Rowe
Price-Fleming a fee at the annual rate of .40 of 1.0% of the portion of the
average daily net assets of the Portfolio. This fee is 33 1/3% lower than the
fee currently received by Scudder under the Present Sub-Advisory Agreement.
If the New Sub-Advisory Agreement is approved by the shareholders of
the Portfolio, it will become effective May 1, 1996 (subject also to shareholder
approval of Proposals I, II and IV), and will remain in effect, unless
terminated earlier, for an initial one year term, subject thereafter to annual
review by the Board of Trustees of the Trust or by vote of the holders of a
majority of the outstanding shares of the Portfolio (as defined in the
Investment Company Act), and also, in either event, approval by a majority of
the Independent Trustees, cast in person at a meeting called for the purpose of
voting on such renewal. For this purpose, the vote of the holders of a majority
of the outstanding shares of the Portfolio means the lesser of either (A) 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 Portfolio shares are present or
represented by proxy or (B) the vote of the holders of more than 50% of the
outstanding shares of the Portfolio. The New Sub-Advisory Agreement will
terminate automatically in the event of its assignment, and may be terminated
with respect to the Portfolio at any time, without the payment of any penalty,
upon 60 days' written notice by the Manager to Rowe Price-Fleming or by Rowe
Price-Fleming to the Manager.
The Proposed Sub-Adviser
Rowe Price-Fleming was incorporated in Maryland in 1979 as a joint
venture between T. Rowe Price and Robert Fleming Holdings. Rowe Price-Fleming
provides investment advisory services to individual and institutional investors
who seek portfolio management of international securities. As of December 31,
1995, Rowe Price-Fleming managed over $20 billion, largely consisting of foreign
stocks and bonds, through its offices in Baltimore, London, Tokyo and Hong Kong.
Rowe Price-Fleming acts as an investment adviser to several mutual funds
with investment objectives similar to those of the Portfolio (collectively, the
"Comparable Price Funds"). For its services to each Comparable Price Fund, Rowe
Price-Fleming is paid a management fee ("Management Fee") consisting of two
elements: a group fee ("Group Fee") and an individual fund fee ("Fund Fee"). The
Group Fee is based on the combined net assets of all funds distributed by T.
Rowe Price Investment Services, Inc., other than institutional and "private
label" products (the "Price Funds"). For this purpose, the Price Funds include
all funds managed and sponsored by T. Rowe Price and Rowe Price-Fleming. The
Group Fee ranges from .48% for the first billion of assets to .31% for assets in
excess of $34 billion. Each Price Fund pays, as its portion of the Group Fee, an
amount equal to the ratio of its daily net assets to the daily net assets of all
the Price Funds. As of December 31, 1995, the Group Fee for each of the Price
Funds was .34% based on combined Price Funds' assets of approximately $48
billion. In addition, each Comparable Price Fund pays the following fixed-rate
Fund Fee based on its own net assets: Short Term Global Income -- .25%; Global
Government Bond -- .35%; International Bond -- .35%; and Emerging Markets Bond
- -- .45%. For each Comparable Price Fund, the chart below lists the total assets
and the total Management Fees (Fund Fees plus Group Fees) paid to Rowe
Price-Fleming for the year ended 1995:
<TABLE>
<CAPTION>
Total Net Assets At Management Fees Paid for
Comparable Price Fund December 31, 1995 Year Ended December 31, 1995
--------------------- ----------------- ----------------------------
<S> <C> <C>
Short Term Global Income $ 40,061,305 $ 134,000
Global Government Bond $ 28,206,773 $ 60,000
International Bond $ 1,015,666,000 $ 6,200,000
Emerging Markets Bond $ 9,988,544 $ - - - -
</TABLE>
The management agreement for each of the above-referenced funds also
provides that one or more additional expense limitation periods (of the same or
different time periods) may be implemented after the expiration of the current
limitation, and that with respect to any such additional limitation period, the
fund may reimburse Rowe Price-Fleming, provided the reimbursement does not
result in the fund's aggregate expenses exceeding the additional expense
limitation.
Under the terms of the Emerging Market Bond Fund's management
agreement, Rowe Price-Fleming is required to bear any expenses through December
31, 1996, which would cause the Fund's ratio of expenses to average net assets
to exceed 1.25%. Thereafter, through December 31, 1998, the Fund is required to
reimburse Rowe Price-Fleming for these expenses, provided the average net assets
have grown or expenses have declined sufficiently to allow reimbursement without
causing the Fund's ratio of average net assets to exceed 1.25%. Pursuant to its
management agreement, $47,000 of management fees were not accrued by the Fund
for the period ended December 31, 1995, and $135,000 of other expenses were
borne by Rowe Price-Fleming.
Under the terms of Short-Term Global Income Fund's management
agreement, Rowe Price-Fleming is required to bear any expenses through December
31, 1995, which would cause the Fund's ratio of expenses to average net assets
to exceed 1.00%. Thereafter, through December 31, 1997, the Fund is required to
reimburse Rowe Price-Fleming for these expenses, provided the average net assets
have grown or expenses have declined sufficiently to allow reimbursement without
causing the Fund's ratio of average net assets to exceed 1.00%. Pursuant to its
management agreement, $134,000 of management fees were not accrued by the Fund
for the year ended December 31, 1995, and $125,000 of unaccrued 1994 fees remain
subject to reimbursement through December 31, 1997. Additionally, $295,000 of
unaccrued 1992-1993 fees and expenses were permanently waived at December 31,
1995.
Under the terms of Global Government Bond Fund's management agreement,
Rowe Price-Fleming is required to bear any expenses through December 31, 1996,
which would cause the Fund's ratio of expenses to average net assets to exceed
1.20%. Thereafter, through December 31, 1998, the Fund is required to reimburse
Rowe Price-Fleming for these expenses, provided the average net assets have
grown or expenses have declined sufficiently to allow reimbursement without
causing the Fund's ratio of average net assets to exceed 1.20%. Pursuant to its
management agreement $153,000 of management fees were not accrued for the year
ended December 31, 1995. Pursuant to a previous agreement, $242,000 of unaccrued
1993-1994 fees remain subject to reimbursement through December 31, 1996.
The principal executive officer of Rowe Price-Fleming is M. David Testa,
who together with George J. Collins, William J. Garrett, P. John Manser, James
S. Riepe, George A. Roche, Alan H. Smith, Henry C.T. Strutt, and Martin G. Wade
constitute its Board of Directors.
The principal occupation of Mr. Testa is principal executive officer of
Rowe Price-Fleming. With the exceptions of Messrs. Garrett, Manser, Smith, and
Strutt, each of the other directors' principal occupation is director of Rowe
Price-Fleming and each of the directors is employed by T. Rowe Price. The
principal occupations of the other directors of Rowe Price-Fleming are: William
J. Garrett, Chairman of Robert Fleming Securities Limited and a Director of
Robert Fleming Holdings, Robert Fleming Investment Trust, Robert Fleming
Management Services Limited and various other affiliates of Robert Fleming
Holdings; P. John Manser, Chairman of Robert Fleming & Co. Limited, Chief
Executive Officer of Robert Fleming Holdings, Deputy Chairman of Robert Fleming
Asset Management Limited, a Director of various other affiliates of Robert
Fleming Holdings, Fleming Investment Management Limited and Jardine Fleming
Group Limited ("Jardine Fleming") and a Director of the U.K. Securities and
Investments Board; James S. Riepe; George A. Roche; Alan H. Smith, Managing
Director of Jardine Fleming Holdings Limited, Chairman of each of Jardine
Fleming Investment Management Limited, Jardine Fleming & Co. Limited and Jardine
Fleming Securities Limited and a Director of Robert Fleming Holdings, Robert
Fleming, Inc. and various other affiliates of Jardine Fleming; Henry C. Strutt,
Managing Director of Jardine Fleming Holdings Limited, Director of Robert
Fleming Holdings Limited and General Manager of Jardine Fleming Holdings
Limited.
The address of Messrs. Testa, Collins, Riepe, Roche, and Wade is 100
East Pratt Street, Baltimore, MD 21202. The address for Messrs. Garrett and
Manser is 25 Copthall Avenue, London, EC2R 7DR England. The address for Messrs.
Smith and Strutt is Jardine Fleming Holdings Ltd., 46th Floor Jardine House, GPO
Box 70, Hong Kong.
T. Rowe Price, Robert Fleming Holdings, and Jardine Fleming are owners
of Rowe Price-Fleming. The common stock of 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. (Half of Jardine Fleming is owned by Robert
Fleming Holdings and half by Jardine Matheson Holdings Limited.) T. Rowe Price
has the right to elect a majority of the board of directors of Rowe
Price-Fleming and Robert Fleming Holdings has the right to elect the remaining
directors, one of whom will be nominated by Jardine Fleming.
Rowe Price-Fleming and T. Rowe Price maintain offices at 100 East Pratt
Street, Baltimore, Maryland 21202. Robert Fleming Holdings' offices are located
at 25 Copthall Avenue, London, EC2R 7DR England. Jardine Fleming's offices are
located at 46th Floor, Jardine House, GPO Box 70, Hong Kong.
The Evaluation by the Board of Trustees
In evaluating the New Investment Management and New Sub-Advisory
Agreements, the Board of Trustees requested and reviewed materials furnished by
the Manager and Rowe Price-Fleming. These materials included financial
statements and information regarding ASISI and Rowe Price-Fleming and their
respective personnel and operations. Consideration was given to the reduced fee
rates payable under the New Investment Management and New Sub-Advisory
Agreements and the amount of fees and expenses that would have been paid if the
New Investment Management and New Sub-Advisory Agreements had been in effect
during the past fiscal year and the fiscal year to date. Consideration also 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 investment
operations of the Portfolio, including any which may arise in connection with
brokerage transactions.
In evaluating the New Investment Management Agreement, the Board considered
that (1) the scope and quality of the services which ASISI 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 be lower than the investment
management fee rate payable under the Present Investment Management Agreement;
and (3) the terms of the New Investment Management Agreement will be unchanged,
except for the lower investment management fee rate, the termination date and
certain non-material changes. The Board also considered ASISI's present
distribution strategies and willingness to devote appropriate resources to
develop new markets for the Portfolio. The Board received assurances from ASISI
that the scope and quality of its services will not be diminished regardless of
the reduction in the investment management fee rate under the New Investment
Management Agreement.
In evaluating the New Sub-Advisory Agreement, the Board of Trustees
considered that (1) the reputation and standing of Rowe Price-Fleming and its
affiliate, T. Rowe Price, in the U.S. mutual fund industry is generally
excellent; (2) the services to be delivered by Rowe Price-Fleming to the
Portfolio's shareholders are expected to be of high quality; (3) the proposed
sub-advisory fee rate under the New Sub-Advisory Agreement is competitive and
lower than the sub-advisory fee rate applicable under the Present Sub-Advisory
Agreement; (4) the terms of the New Sub-Advisory Agreement will be unchanged
from those of the Present Sub-Advisory Agreement, except for the lower
sub-advisory fee rate, the termination date and certain non-material changes;
and (5) Rowe Price-Fleming has significant experience in managing international
investment portfolios and the historical performance over various time periods
of open-end investment companies managed by that firm having investment
objectives, investment policies and investment restrictions comparable to those
of the Portfolio (measured by investment returns and expense ratios and
recognizing that such past performance is no guarantee of future results for the
Portfolio) has been competitive. The Board also received assurances that Rowe
Price-Fleming has considerable staffing resources available and adequate
capitalization to provide high quality management services.
Based upon its evaluation, the Board determined that the continuance of the
Manager's role as Investment Manager and Rowe Price-Fleming's assumption of the
sub-advisory function for the Portfolio likely would offer the Portfolio
continued access to effective management and advisory services and capabilities.
The Board concluded further that the terms of the New Investment Management and
Sub-Advisory Agreements, 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 and New Sub-Advisory Agreements, the shareholders are being asked to
approve the New Investment Management Agreement and 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 the Trust are made for each portfolio,
including the Portfolio, by its 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. 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 through IV are approved, the name of the Portfolio will be
changed from the "AST Scudder International Bond Portfolio" to the "T. Rowe
Price International Bond Portfolio," and the New Investment Management Agreement
and the New Sub-Advisory Agreement will be executed, all such actions to be
effective May 1, 1996.
Proposals I and II both are made contingent upon shareholder approval
of Proposals III and IV.
THE TRUSTEES, INCLUDING THE INDEPENDENT TRUSTEES, RECOMMEND THAT THE
SHAREHOLDERS VOTE "FOR" PROPOSAL I AND "FOR" PROPOSAL II.
ANY UNMARKED PROXIES WILL BE SO VOTED.
PROPOSAL III
APPROVAL OF A CHANGE IN PORTFOLIO'S
INVESTMENT OBJECTIVE
The Portfolio's current investment objective is stated as follows: The
Portfolio seeks to provide income primarily by investing in a managed portfolio
of high grade debt securities denominated in foreign currencies ("international
bonds"). As a secondary objective, the Portfolio seeks protection and possible
enhancement of principal value by actively managing currency, bond market and
maturity exposure and by security selection. To achieve its objectives, the
Portfolio will primarily invest in international bonds that are denominated in
foreign currencies, including bonds denominated in the European Currency Unit.
The Portfolio's investments may include debt securities issued or guaranteed by
a foreign national government, its agencies, instrumentalities or political
subdivisions, debt securities issued or guaranteed by supranatural
organizations, corporate debt securities, bank or bank holding company debt
securities and other debt securities including those convertible into common
stock. The Portfolio will invest no more than 15% of its total assets in debt
securities that are rated below BBB or Baa but rated no lower than B by Standard
and Poor's Corporation ("S&P") or Moody's Investors Services, Inc. ("Moody's"),
respectively.
The Board recommends that the shareholders adopt the following
investment objective for the Portfolio:
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.
If approved by the shareholders, the proposed investment objective would
afford a greater degree of flexibility in the management of the Portfolio than
is available under the current investment objective. In this regard, the
proposed investment objective would permit the Portfolio to employ strategies
which seek capital appreciation in addition to high current income, as market
conditions warrant. The proposed investment objective also would clarify that
Rowe Price-Fleming may select Portfolio investments on the basis of its own
quality assessments, taking into account various factors including, but not
limited to, applicable ratings by rating agencies such as S&P and Moody's. If
the proposed investment objective is approved it is expected that Rowe
Price-Fleming will continue to use active management of the Portfolio's maturity
structure and currency exposure to moderate price fluctuation.
The investment policy of the Portfolio is to invest in debt securities
issued or guaranteed by a foreign national government, its agencies,
instrumentalities or political subdivisions; debt securities issued or
guaranteed by supranational organizations; corporate debt securities; bank or
bank holding company debt securities; and other debt securities, including those
convertible into common stock. The Portfolio will also invest up to 65% of its
assets in high quality, non-dollar denominated government and corporate bonds
outside the U.S. However, the Portfolio will invest up to 20% of its assets in
below investment-grade, high-risk bonds, including bonds in default where there
is a potential for significant capital appreciation. Under the current
investment objective, the Portfolio may invest up to 15% of its total assets in
debt securities that are noted below BBB or Baa, but rated no lower than B, by
S&P or Moody's. There will be no minimum required S&P or Moody's rating if the
proposed investment objective is approved by the Portfolio's shareholders.
Securities rated below investment grade could involve greater price volatility
and higher degress of risk with respect to payment of principal and interest
than higher quality fixed-income securities. The market prices of such lower
rated debt securities may decline significantly in periods of general economic
difficulty. In addition, the trading market for these securities is generally
less liquid than for higher rated securities. Therefore, the Portfolio may have
difficulty disposing of these securities at the desired time or obtaining market
quotations for purposes of valuing its portfolio and calculating its net asset
value. Because of the increase in the limitation on investments in lower-quality
securities from 15% to 20% and the absence of specific rating criteria, the new
investment objective and investment policy may entail a greater degree of risk
than the present investment objective. The Board of Trustees believes that the
potential benefits to the Portfolio from the additional flexibility afforded by
the proposed new investment objective will outweigh any possible increased risk
to the Portfolio.
This Proposal III is made contingent upon the receipt of shareholder
approval for Proposals I, II and IV. If any one or more of Proposals I, II and
IV are not approved, the current investment objective will continue in effect.
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 INVESTMENT RESTRICTIONS
Reclassification of Certain Investment Restrictions from "Fundamental" to
"Non-Fundamental"
The Portfolio currently is subject to certain investment restrictions
set forth below which are "fundamental" policies, and may not be changed without
approval of the shareholders of the affected portfolios of the Trust.
i. A 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.
ii. A 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).
iii. A Portfolio will not invest in companies for the purpose of exercising
control or management.
iv. A 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 Portfolio also is subject to certain non-fundamental investment
restrictions which may be changed by the Board of Trustees without shareholder
approval. The Investment Company Act does not require any of the above
restrictions to be classified as "fundamental." The Manager and Rowe
Price-Fleming have proposed to the Board that the above four investment
restrictions be reclassified from "fundamental" investment restrictions
(applicable to this and other Portfolios of the Trust) to "non-fundamental"
investment restrictions (applicable only to this Portfolio) to provide the
Portfolio with additional flexibility to pursue its investment objective
consistent with applicable laws in effect from time to time, as discussed below.
If the Shareholders of the Portfolio approve 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.
It is not expected that approval of the changes described in Proposal IV
will affect materially the manner in which the Portfolio is managed.
(1) The first fundamental investment restriction concerning the purchase of
securities of other investment companies reflects requirements under Investment
Company Act. Under the Manager and Rowe Price-Fleming's proposal, such
fundamental investment restriction would be reclassified as the following
non-fundamental investment restriction:
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.
If Proposal IV is approved, the Manager and Rowe Price-Fleming still would
be subject to a substantially similar investment restriction, since the current
fundamental investment restriction reflects the requirements of the Investment
Company Act. However, if 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 to respond to any provisions of the amended law
of potential benefit to the Portfolio.
(2) The second fundamental investment restriction concerning purchases
of securities or other property on margin reflects the requirements under the
following current non-fundamental investment restriction:
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.
If Proposal IV is approved, the Manager and Rowe Price-Fleming would
continue to be subject to the same investment restriction, as stated above,
since the current non-fundamental investment restriction reflects the
requirements of the current fundamental investment restriction. However, the
Board of Trustees would have the future flexibility to change such
non-fundamental investment restriction if appropriate in the judgment of the
Board of Trustees, without the attendant delay and expense of arranging for a
shareholders meeting.
(3) The third fundamental investment restriction concerning investment
in companies for the purpose of exercising control or management reflects the
requirements under the following proposed non-fundamental investment
restriction:
The Portfolio may not invest in companies for purpose of exercising
management or control.
If Proposal IV is approved, the Manager and Rowe Price-Fleming still would
be subject to the same investment restriction, since the proposed
non-fundamental investment restriction reflects the requirements of the current
fundamental investment restriction. However, the Board of Trustees would have
the future flexibility to change such non-fundamental investment restriction, if
appropriate in the judgment of the Board of Trustees, 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 an additional investment in a
company to obtain the ability to influence the management of a 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.
(4) The fourth fundamental investment restriction concerning purchases
of securities beneficially held by the officers or Trustees of the Trust or
officers or directors of the Manager reflects the requirements of the following
proposed non-fundamental investment restriction:
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.
This prohibition reflects the requirements of applicable state "Blue Sky"
law and, in the absence of the investment restriction, would still be applicable
to the Portfolio. By reclassifying the restriction from fundamental to
non-fundamental, the Board of Trustees, if appropriate in its judgment, will be
able to respond to any future changes in applicable law and make changes to the
investment restriction without the attendant delay and expense of arranging for
a shareholders meeting.
Changes in Fundamental Investment Restrictions
The Portfolio currently is subject to the following fundamental investment
restriction (applicable only to this Portfolio):
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.
The Manager and Rowe Price-Fleming have proposed to eliminate this
fundamental investment restriction and replace it with the following fundamental
investment restriction:
The Portfolio may not issue senior securities except in compliance with
the Investment Company Act of 1940.
For purposes of the Portfolio, "senior securities" include, with certain
exceptions, any bond, debenture, note, or similar obligation or instrument
constituting a security and evidencing indebtedness, and any stock of a class
having priority over any other class as to distribution of assets or payment of
dividends. Under the Investment Company Act, the Portfolio generally is
prohibited from issuing senior securities. However, under the Investment Company
Act, the Portfolio may borrow directly from any bank, provided the Portfolio
maintains a 300% asset coverage for the loan. If Proposal IV is approved, the
Portfolio will be able to take advantage of this current exception under the
Investment Company Act if, in the judgment of the Board of Trustees, it is
appropriate to do so. Moreover, the Board of Trustees, if appropriate in its
judgement, thereafter will be able to respond to any future changes in the
applicable provisions of the Investment Company Act of potential benefit to the
Portfolio and to make changes to the investment restriction without the
attendant delay and expense of arranging for a shareholders meeting.
This Proposal IV is contingent upon shareholder approval of Proposals I
through III. If any one or more of Proposals I through III are not approved, the
current 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.
PROPOSAL V
APPROVAL OF A CHANGE IN PORTFOLIO'S
CLASSIFICATION FROM A "DIVERSIFIED INVESTMENT COMPANY"
TO A "NON-DIVERSIFIED INVESTMENT COMPANY"
The Portfolio currently is classified as a "diversified company" under the
Investment Company Act. As a diversified company, 75% of the value of the
Portfolio's total assets must be represented by cash and non-cash items
(including receivables), government securities, securities of other investment
companies, and other securities limited in respect of any new issuer to an
amount not greater in value than 5% of the value of the total assets of such
management company and to not more than 10% of the outstanding voting securities
of such issuer.
It is proposed that the Portfolio's shareholders approve a change in
the classification of the Portfolio from a diversified to a non-diversified
company. If approved, the Portfolio would be able to invest in securities and
obligations without regard to the limitations described above, although it still
would intend 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. The proposed change in classification is being requested in
recognition of the limited supply of eligible fixed income investment
opportunities in foreign markets and would afford a greater degree of
flexibility, consistent with other international bond funds, than currently is
available to pursue investment opportunities in furtherance of the Portfolio's
investment objectives and policies. As a "non-diversified investment company,"
as defined for purposes of the Investment Company Act, the Portfolio would be
permitted to invest a greater portion of its assets in qualifying securities or
obligations of a smaller number of issuers. In addition to the potential
benefits which the proposed change in class would afford to the Portfolio, the
Portfolio may be subject to greater risk of an 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 TRUSTEES, INCLUDING THE INDEPENDENT TRUSTEES,
RECOMMEND THAT THE SHAREHOLDERS VOTE "FOR" PROPOSAL V.
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 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 the Trust.
Pursuant to rules adopted by the Commission 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
M. Priscilla Pannell
Assistant Corporate Secretary
American Skandia Trust
<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
Form of Present Investment Management Agreement
<PAGE>
INVESTMENT MANAGEMENT AGREEMENT
THIS AGREEMENT is made this 1st day of May, 1994, 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 AST Scudder
International Bond 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 1.00% 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
January 3, 1994 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: s/Gordon C. Boronow
s/Joan Chanda
AMERICAN SKANDIA LIFE
INVESTMENT MANAGEMENT, INC.
Attest: By: s/Thomas M. Mazzaferro
s/Patricia Randol
<PAGE>
EXHIBIT A-2
Form of New Management Agreement
<PAGE>
INVESTMENT MANAGEMENT AGREEMENT
THIS AGREEMENT is made this 1st day of May, 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 T. Rowe Price
International Bond 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 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 .80 of 1.0% 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
May 1, 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
_____________________________ Executive Vice President
AMERICAN SKANDIA INVESTMENT
SERVICES, INCORPORATED
Attest: By _________________________________
Thomas M. Mazzaferro
_____________________________ President & Chief Operating Officer
<PAGE>
EXHIBIT A-3
Form of Present Sub-Advisory Agreement
<PAGE>
SUB-ADVISORY AGREEMENT
THIS AGREEMENT is between American Skandia Life Investment Management, Inc.
(the "Advisor") and Scudder, Stevens & Clark, 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 "1940 Act"); and
WHEREAS the trustees of the Trust (the "Trustees") have engaged the Advisor to
act an investment manager for the AST Scudder International Bond Portfolio (the
"Portfolio") under the terms of a management agreement, dated May 1, 1994, 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, incorporating research performed by the Sub-Advisor, 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 amendments 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.
Sub-Advisor shall cooperate with the Custodian and the Advisor (as acceptable
to the Custodian, Advisor and Sub-Advisor) with respect to effecting and
settling transactions.
In furnishing the services under this Agreement, the Sub-Advisor will
comply with the requirements of the 1940 Act 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 fixed-income 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 Advisor or the Trust, or which, in the sole
opinion of the Advisor, it believes such non-public
information would be deemed to be available to Advisor and/or
the Trust.
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) though (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 investment
determinations and shall place orders for the execution of purchase and sale
transactions for the Portfolio with or through brokers or dealers selected by
the Sub-Advisor (including the Sub-Advisor's affiliate, Scudder Investor
Services, Inc.) 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. 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 Advisor, 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 for the Portfolio's use 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. 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 and
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.
6. Reports by Sub-Advisor and Records of the Portfolio. 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 of which the Sub-Advisor becomes aware that would be required
to be disclosed in the Trust's registration statement.
In compliance with the requirements of Rule 3la-3 under the 1940 Act,
the Sub-Advisor agrees that all records it maintains for the Trust are the
property of the Trust and further agrees to surrender promptly to the Trust or
Advisor any such records upon the Trust's or the Advisor's request. The
Sub-Advisor further agrees to maintain for the Trust the records the Trust is
required to maintain under Rule 31a-1(b) insofar as such records relate to the
investment affairs of the Trust. The Sub-Advisor further agrees to preserve for
the periods prescribed by Rule 3la-2 under the 1940 Act the records it maintains
for the Trust.
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 Advisor will calculate and pay the
Sub-Advisor at the annual rate of .60 of 1% of the net assets of the Portfolio.
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 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. 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. 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 and Covenants of the Parties. Each party to this Agreement
hereby acknowledges that it is registered as an investment advisor under the
Investment Advisers Act of 1940, it will use all commercially reasonably 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. Sub-Advisor covenants that it will carry out
appropriate compliance procedures necessary to the operation of the Portfolio as
Sub-Advisor and Advisor may agree.
10. Liability. The Sub-Advisor shall use all commercially reasonable 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 all commercially reasonable
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 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, including without limitation any loss
suffered as a result of the Sub-Advisor's reasonable reliance on information
provided by the Trust's custodian and fund accountant. The Federal laws impose
responsibilities under certain circumstances on persons who act in good faith,
and therefore, nothing therein shall in any way constitute a waiver of
limitation of any rights which the Trust or 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 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 officers, directors or employees, and persons affiliated with it or with
any such officer, director 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 interest 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 officers, directors,
affiliates or employees may purchase or sell for the Sub-Advisor or such
officer's, director'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 1940 Act, 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 1940 Act, 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 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.
Advisor: American Skandia Life Investment Management, Inc.
Attention: Thomas Mazzaferro
Chief Operating Officer
One Corporate Drive
Shelton, Connecticut 06484
Sub-Advisor: Scudder, Stevens & Clark, Inc.
Two International Place
Boston, Massachusetts 02110
Attention: David B. Watts
14. Indemnification. The Sub-Advisor agrees to indemnify and hold harmless
Advisor, any affiliated person with the meaning of Section 2(a)(3) of the 1940
Act ("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 or litigation (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
("Adviser's 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 expressly for use in the Trust's registration statement, or upon verbal
information confirmed by the Sub-Advisor in writing expressly for use in the
Trust's registration statement 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 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 Adviser's 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 by
the Trust other than in reliance upon written information furnished by
Sub-Advisor, or any affiliated person of the Sub-Advisor expressly for use in
the Trust's registration statement or other than upon verbal information
confirmed by the Sub-Advisor in writing expressly for use in the Trust's
registration statement; 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
1940 Act, 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 May 1, 1994.
FOR THE ADVISOR: FOR THE SUB-ADVISOR:
s/Thomas Mazzaferro s/David B. Watts
Thomas Mazzaferro David B. Watts
Chief Operating Officer Managing Director
and President
Date: May 12, 1994 Date: May 6, 1994
Attest: s/Patricia E. Randol Attest: s/Ann M. McCreary
<PAGE>
EXHIBIT A-4
Form of New Sub-Advisory Agreement
<PAGE>
SUB-ADVISORY AGREEMENT
THIS AGREEMENT is between American Skandia Investment Services,
Incorporated (the "Investment Manager") and Rowe Price-Fleming International,
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 T. Rowe Price International Bond
Portfolio (the "Portfolio") under the terms of a management agreement, dated May
1, 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. Representatives of
Sub-Advisor will be available as reasonably requested 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 such documents. Such amendments will not be effective with
respect to the Sub-Advisor until 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. 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 authorized 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 represents and warrants that information
relating directly or indirectly to the Sub-Advisor, supplied or to be supplied
by Sub-Advisor for inclusion or incorporation by reference in such Registration
Statement or Proxy Statement, contained or contains no untrue statement of any
material fact and did not or 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 ICA, and under the laws of all
jurisdictions in which the conduct of its business hereunder requires such
registration.
The Investment Manager 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 represents and warrants that with respect
to disclosure about the manager or information relating directly or indirectly
to the Investment Manager, such Registration Statement or Proxy Statement
contains, as of the date hereof, 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 Investment Manager further represents and warrants that it is an investment
adviser registered under the ICA and under the laws of all jurisdictions in
which the conduct of its business hereunder requires such registration.
Sub-Advisor shall use its best judgment, effort, and advice in
rendering services under this Agreement.
In furnishing the services under this Agreement, the Sub-Advisor will
comply with the requirements of the ICA and subchapter M (including Section
851(b)(1), (2) and (3)) 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 provision
of the Declaration of Trust and By-Laws of the Trust; (iii) policies and
determinations of the Trust and Investment Manager; (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;
(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 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 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. 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 for the Portfolio's use 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. 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 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, 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 .40 of 1% of the average daily net assets
of the Portfolio.
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 Investment
Advisers Act of 1940, it will use its reasonable best 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.
The Investment Manager hereby represents that it has provided to the
Sub-Advisor a true, correct and complete copy of the Registration Statement of
the Trust as in effect on the date of this Agreement, including any amendments
and supplements thereto, and agrees to provide to Sub-Advisor true, correct and
complete copies of any amendments and supplements thereto subsequent to the date
of this Agreement.
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. 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: Rowe Price-Fleming International, Inc.
100 East Pratt Street
Baltimore, Maryland 21202
Attention: Mr. Henry H. Hopkins
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 1940 Act ("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 1940 Act, the
Investment Adviser's Act of 1940 ("Adviser's 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 information relating
directly or indirectly to the Sub-Advisor supplied or to be supplied by
Sub-Advisor for inclusion or incorporation by reference 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, 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
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 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
("Adviser's 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 information relating directly or
indirectly to the Sub-Advisor supplied or to be supplied by Sub-Advisor for
inclusion or incorporation by reference in such prospectus or statement of
additional information; 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 Investment Company Act of 1940, 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. Amendment. This Agreement may be amended by mutual written consent of
the parties, subject to the provisions of the ICA.
17. 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, 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>
AMERICAN SKANDIA TRUST
PROXY FOR SPECIAL MEETING OF SHAREHOLDERS OF
THE AST SCUDDER INTERNATIONAL BOND PORTFOLIO
TO BE HELD ON APRIL 12, 1996
The undersigned hereby appoints Cynthia Gorgoretti, Maureen Gulick and
Deirdre Burke and each of them as 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 AST Scudder International Bond Portfolio of the Trust to be
held at 10:00 a.m., Eastern Time, on April 12, 1996 at the offices of the Trust
at One Corporate Drive, 10th Floor, Shelton, Connecticut and at any adjournment
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 below 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 AST Scudder International Bond 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>
PLEASE MARK CHOICE
AS IN THIS EXAMPLE
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C> <C> <C> <C>
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 AST SCUDDER
THE SHARES REPRESENTED HEREBY WILL BE INTERNATIONAL BOND 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 ROWE PRICE-FLEMING
THE BOARD OF TRUSTEES OF THE TRUST. INTERNATIONAL, INC. REGARDING INVESTMENT ADVICE
TO THE AST SCUDDER INTERNATIONAL BOND PORTFOLIO.
CONTRACT NUMBER:
III. PROPOSAL TO APPROVE A CHANGE IN THE PORTFOLIO'S
INVESTMENT OBJECTIVE.
IV. PROPOSAL TO APPROVE CHANGES IN THE PORTFOLIO'S
INVESTMENT RESTRICTIONS.
V. PROPOSAL TO APPROVE A CHANGE IN THE PORTFOLIO'S
CLASSIFICATION FROM A "DIVERSIFIED" INVESTMENT
COMPANY TO A "NON-DIVERSIFIED" INVESTMENT
COMPANY.
- ------------------------ -----------
Signature of Shareholder Date RECORD DATE UNITS:
- -----------------------------------------------------------------------------------------------------------------------------------
DETACH CARD
</TABLE>
