Investment Company Act No. 811-5186
As filed with the Securities and Exchange Commission on December 30, 1997
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by the Registrant [x] Filed by a Party other than the Registrant [ ] Check
the appropriate box: [X] Preliminary Proxy Statement [ ] Confidential, for Use
of the Commission Only (as permitted by Rule 14a-6(e)(2)) [ ] Definitive Proxy
Statement [ ] Definitive Additional Materials [ ] Soliciting Material Pursuant
to ss. 240.14a-11(c) or ss. 240.14a-12
- --------------------------------------------------------------------------------
American Skandia Trust
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] 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:
-----------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
-----------------------------------------------------------------------
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):
-----------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
-----------------------------------------------------------------------
5) Total fee paid:
-----------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
-----------------------------------------------------------------------
2) Form, Schedule or Registration Statement No.:
-----------------------------------------------------------------------
3) Filing Party:
-----------------------------------------------------------------------
4) Date Filed:
-----------------------------------------------------------------------
<PAGE>
AMERICAN SKANDIA TRUST
One Corporate Drive
P.O. Box 883
Shelton, Connecticut 06484
NOTICE OF SPECIAL MEETINGS OF SHAREHOLDERS
OF THE
FOUNDERS CAPITAL APPRECIATION PORTFOLIO
AND THE
FOUNDERS PASSPORT PORTFOLIO
To be held
February 19, 1998
To the Shareholders of the Founders Capital Appreciation Portfolio of
American Skandia Trust:
Notice is hereby given that Special Meetings of Shareholders of the
Founders Capital Appreciation Portfolio and Founders Passport Portfolio (the
"Portfolio") of American Skandia Trust (the "Trust") will be held at One
Corporate Drive, Shelton, Connecticut 06484 on February 19, 1997 at 10:00 a.m.
and 10:30 a.m. Eastern Time, respectively, or at such adjourned time as may be
necessary for the holders of a majority of the outstanding shares of each
Portfolio to vote (the "Meeting"), for the following purposes:
I. To consider the approval of a new Sub-Advisory Agreement between American
Skandia Investment Services, Incorporated and Founders Asset Management LLC
regarding investment advice to the Founders Capital Appreciation Portfolio.
II. To consider the approval of a new Sub-Advisory Agreement between American
Skandia Investment Services, Incorporated and Founders Asset Management LLC
regarding investment advice to the Founders Passport Portfolio.
III. To transact such other business as may properly come before the Meeting or
any adjournments thereof.
The shareholders of the Founders Capital Appreciation Portfolio are
entitled to vote on Proposal I. The shareholders of the Founders Passport
Portfolio are entitled to vote on Proposal II.
The matters referred to above in I and II are discussed in detail in
the Proxy Statement attached to this Notice. The Board of Trustees has fixed the
close of business on December 29, 1997 as the record date for determining
shareholders entitled to notice of, and to vote at, the Meetings, 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 Meetings. Each share of a Portfolio is
entitled to one vote with respect to a proposal on which a Portfolio's
shareholders are entitled to vote.
You are cordially invited to attend the Meetings. If you do not expect
to attend, you are requested to complete, date and sign the enclosed form (or
forms) of proxy and return it promptly in the envelope provided for that
purpose. The 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
(OR PROXIES), 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 THE PROXY 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
Eric C. Freed
Secretary
American Skandia Trust
January 19, 1998
<PAGE>
PROXY STATEMENT
AMERICAN SKANDIA TRUST
One Corporate Drive
P.O. Box 883
Shelton, Connecticut 06484
SPECIAL MEETINGS OF SHAREHOLDERS OF THE
FOUNDERS CAPITAL APPRECIATION PORTFOLIO
AND THE
FOUNDERS PASSPORT PORTFOLIO
OF
AMERICAN SKANDIA TRUST
To be held
February 19, 1998
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 Special Meetings of the Shareholders of
the Founders Capital Appreciation Portfolio (the "Capital Appreciation
Portfolio") and the Founders Passport Portfolio (the "Passport Portfolio")
(each, a "Portfolio" and collectively, the "Portfolios") of the Trust to be held
at One Corporate Drive, Shelton, Connecticut 06484 on February 19, 1998, at
10:00 a.m. and 10:30 a.m. Eastern Time, respectively (the "Meetings"), or at any
adjournments thereof, for the purposes set forth in the accompanying Notice of
Meetings (the "Notice"). The first mailing of proxies and proxy statements to
shareholders of the Portfolios is anticipated to be on or about January 21,
1998.
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.
Neither the Trust nor the Portfolios will pay any of the costs of the Meetings,
including the costs related to the solicitation of proxies.
The Annual Report of the Trust, including audited financial statements
for the fiscal year ended December 31, 1996, and the Semi-Annual Report of the
Trust (the "Reports"), have been previously sent to shareholders. The Trust will
furnish additional copies of the Reports 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 December 29, 1997 (the
"Record Date") are entitled to notice of, and to vote at, the Meetings. Each
shareholder is entitled to one vote for each full share. As of the Record Date,
shares of beneficial interest of the Capital Appreciation Portfolio were
outstanding, and shares of the Passport Portfolio were outstanding. As of the
Record Date, there is no beneficial owner of more than 5% of the shares of any
portfolio of the Trust to the knowledge of the Trust. Collectively, the Trustees
and Officers of the Trust own less than 1% of the Trust's outstanding shares.
Currently, the Trust serves as an underlying mutual fund for variable
annuities issued by life insurance companies, including ASLAC. As of the Record
Date, over 99% of each Portfolio's shares were legally owned by ASLAC. ASLAC
holds assets attributable to its variable annuity contract obligations in ASLAC
Variable Account B (Class 1 Sub-Accounts), ASLAC Variable Account B (Class 2
Sub-Accounts) and ASLAC Variable Account B (Class 3 Sub-Accounts) (collectively,
for purposes of this Proxy Statement, "ASLAC Variable Accounts"), each of which
is an investment company registered as such under the Investment Company Act of
1940, as amended (the "Investment Company Act"). ASLAC Variable Accounts are
comprised of various sub-accounts, each of which invests exclusively in a mutual
fund or in a portfolio of a mutual fund. ASLAC will solicit voting instructions
from variable annuity contract owners who beneficially own shares of the
Portfolios represented in the Founders Capital Appreciation Sub-Account and the
Founders Passport Sub-account as of the Record Date (the "Contractowners").
Because Contractowners are indirectly invested in the Portfolios through their
contracts and have the right to instruct ASLAC how to vote shares of the
Portfolios on all matters requiring a shareholder vote, Contractowners should
consider themselves shareholders of the Portfolios for purposes of this Proxy
Statement.
American Skandia Investment Services, Incorporated ("ASISI") is the
investment manager for all the Trust's investment portfolios, including the
Portfolios. ASISI is a wholly-owned subsidiary of American Skandia Investment
Holding Corporation ("ASIHC"). ASIHC is also the owner of all the outstanding
shares of ASLAC and American Skandia Marketing, Incorporated ("ASM"), which is
the principal underwriter of ASLAC variable annuity contracts. The principal
offices of ASISI, ASIHC, ASLAC and ASM are located in the same building at One
Corporate Drive, Shelton, Connecticut 06484.
Under Sub-Advisory Agreements with ASISI, Founders Asset Management, Inc.
("Founders") serves as sub-advisor to the Portfolios and, subject to the
supervision and control of ASISI and the Board of Trustees, determines the
securities to be purchased for and sold from the Portfolios. Founders, located
at 2930 East Third Avenue, Denver, Colorado 80206, was organized in 1938 and was
reincorporated in Delaware in 1970. Founders' Chairman, Chief Executive Officer,
Chief Investment Officer and sole director is Bjorn K. Borgen. Mr. Borgen's
address is 2930 East Third Avenue, Denver, Colorado 80206. Mr. Borgen currently
owns 100% of Founders' voting stock.
The Administrator of the Portfolios, and every other portfolio of the
Trust, is PFPC Inc., a Delaware corporation located at 103 Bellevue Parkway,
Wilmington, Delaware 19809.
Shareholders of each Portfolio are being asked to consider and vote on
a new sub-advisory agreement for such Portfolio. Approval of the new
sub-advisory agreement for a Portfolio is not contingent upon shareholder
approval of the new sub-advisory agreement for the other Portfolio. As explained
in more detail below, the existing sub-advisory agreements for the Portfolios
will terminate automatically, by operation of law, upon the consummation of the
merger (the "Merger") of Founders into a subsidiary of Mellon Bank, N.A.
("Mellon"). The name of this wholly owned subsidiary will be Founders Asset
Management LLC ("New Founders"). Shareholders are not being asked to approve the
Merger; rather, they are being asked to continue the existing sub-advisory
relationship for the Portfolios under new contracts (the "New Capital
Appreciation Sub-Advisory Agreement," the "New Passport Sub-Advisory Agreement",
and collectively the "New Sub-Advisory Agreements"). The Merger and the terms of
the New Sub-Advisory Agreements are discussed below. Other than the date of the
agreements and the fact that New Founders, rather than Founders, is the
sub-advisor, the proposed New Sub-Advisory Agreements are identical in form and
terms to the present agreements.
All shares of the Portfolios held by the Contractowners will be voted
by ASLAC in accordance with voting instructions received from such
Contractowners. Proxies submitted without voting instructions will be voted FOR
the proposal set forth in the Notice. ASLAC is entitled to vote shares for which
no proxy is 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 February 17, 1998 as the last day on which voting
instructions will be accepted.
As illustrated by the following table summarizing which Portfolio is
being solicited for each proposal, the shareholders of a Portfolio can vote only
on the New Sub-Advisory Agreement(s) for the Portfolio or Portfolios in which
their assets are invested. However, because the facts involved in each Proposal
do not differ materially, the Proposals are discussed together below.
<TABLE>
<CAPTION>
Proposal Portfolio
<S> <C> <C>
I. Approval of New Sub-Advisory Agreement Between Capital Appreciation Portfolio
American Skandia Investment Services,
Incorporated and Founders Asset Management LLC with
Respect to the Founders Capital Appreciation Portfolio
II. Approval of New Sub-Advisory Agreement Passport Portfolio
Between American Skandia Investment Services,
Incorporated and Founders Asset Management LLC with
Respect to the Founders Passport Portfolio
</TABLE>
<PAGE>
PROPOSAL I
APPROVAL OF A NEW SUB-ADVISORY AGREEMENT BETWEEN
AMERICAN SKANDIA INVESTMENT SERVICES, INCORPORATED
AND FOUNDERS ASSET MANAGEMENT LLC IN CONNECTION WITH ADVISORY SERVICES
PROVIDED TO THE FOUNDERS CAPITAL APPRECIATION PORTFOLIO
PROPOSAL II
APPROVAL OF A NEW SUB-ADVISORY AGREEMENT BETWEEN
AMERICAN SKANDIA INVESTMENT SERVICES, INCORPORATED
AND FOUNDERS ASSET MANAGEMENT LLC IN CONNECTION WITH ADVISORY SERVICES
PROVIDED TO THE FOUNDERS PASSPORT PORTFOLIO
Background - Capital Appreciation Portfolio
Since the Capital Appreciation Portfolio commenced operations on
January 4, 1994, ASISI has served as investment adviser to the Capital
Appreciation Portfolio pursuant to an Investment Management Agreement (the
"Capital Appreciation Investment Management Agreement") with the Trust. The
Capital Appreciation Investment Management Agreement, effective January 4, 1994
and as annually renewed thereafter, provides, among other things, that in
carrying out its responsibility to supervise and manage all aspects of the
Capital Appreciation Portfolio's operations, ASISI may engage, subject to the
approval of the Board of Trustees and, where required, the shareholders of the
Capital Appreciation Portfolio, a sub-advisor to provide advisory services in
relation to the Capital Appreciation Portfolio. Under the Capital Appreciation
Investment Management Agreement, ASISI may delegate to a sub-advisor the duty,
among other things, to formulate and implement the Capital Appreciation
Portfolio's investment program, including the duty to determine what issuers and
securities will be purchased for and sold from the Capital Appreciation
Portfolio. In accordance with this provision for delegation of authority, ASISI
entered into a sub-advisory agreement (the "Existing Capital Appreciation
Sub-Advisory Agreement"), effective January 3, 1994 and revised in non-material
respects on May 1, 1996, with Founders, pursuant to which those duties were
delegated to Founders. Founders has served as sub-advisor to the Capital
Appreciation Portfolio since it commenced operations.
The Existing Capital Appreciation Sub-Advisory Agreement was initially
approved by the Board of Trustees, including a majority of the Trustees who are
not "interested persons" of the Trust (as defined under the Investment Company
Act) (the "Independent Trustees"), on November 23, 1993, and was renewed by vote
of the Board of Trustees annually thereafter, most recently on April 11, 1997.
The Existing Capital Appreciation Sub-Advisory Agreement was not, and was not
required to be, approved by the shareholders of the Capital Appreciation
Portfolio after the Capital Appreciation Portfolio commenced operations.
Background - Passport Portfolio
Since the Passport Portfolio commenced operations on May 2 1995, ASISI
has served as investment adviser to the Passport Portfolio pursuant to an
Investment Management Agreement (the "Passport Investment Management Agreement")
with the Trust. The Passport Investment Management Agreement, effective October
15, 1996 and renewed on April 11, 1997, provides, among other things, that in
carrying out its responsibility to supervise and manage all aspects of the
Passport Portfolio's operations, ASISI may engage, subject to the approval of
the Board of Trustees and, where required, the shareholders of the Passport
Portfolio, a sub-advisor to provide advisory services in relation to the
Passport Portfolio. Under the Passport Investment Management Agreement, ASISI
may delegate to a sub-advisor the duty, among other things, to formulate and
implement the Passport Portfolio's investment program, including the duty to
determine what issuers and securities will be purchased for and sold from the
Passport Portfolio. In accordance with this provision for delegation of
authority, ASISI entered into a sub-advisory agreement dated May 1, 1995 with
Seligman Henderson Co., who served as sub-advisor until October 15, 1996. On
October 11, 1996, the shareholders of the Passport Portfolio approved a
sub-advisory agreement between ASISI and Founders for the Portfolio. Under this
Sub-Advisory Agreement (the "Existing Passport Sub-Advisory Agreement"),
Founders was delegated the duties with respect to the Passport Portfolio that
previously had been delegated to Seligman Henderson Co., and Founders has served
as sub-advisor to the Passport Portfolio since October 15, 1996. (The Existing
Capital Appreciation Sub-Advisory Agreement and the Existing Passport
Sub-Advisory Agreement are referred to collectively herein as "The Existing
Sub-Advisory Agreements").
The Existing Passport Sub-Advisory Agreement was initially approved by
the Board of Trustees, including a majority of the Trustees who are not
"interested persons" of the Trust (as defined under the Investment Company Act)
(the "Independent Trustees"), on September 3, 1996, and was renewed by vote of
the Board of Trustees on April 11, 1997.
The Merger. On December 11, 1997, Mellon entered into an Agreement and
Plan of Reorganization (the "Merger Agreement") with New Founders, Founders, and
Bjorn K. Borgen, pursuant to which Founders would be merged into New Founders, a
newly-created subsidiary of Mellon. Upon the consummation of the Merger
(expected to occur in the first quarter of this year), Founders will cease to
exist as a separate entity, and New Founders will assume all of its assets,
liabilities, business and operations. Shareholder approval of the New
Sub-Advisory Agreements is being sought because the Merger will result in an
"assignment" (as defined by the Investment Company Act) of the Existing
Sub-Advisory Agreements, resulting in the Existing Sub-Advisory Agreements'
automatic termination.
Under the Merger Agreement, the shareholders of Founders will receive a
total of $270 million from Mellon in consideration for their Founders shares.
The Trust has been advised by Founders that the Merger will not have any effect
upon the nature, quality and extent of services provided to ASISI and the
Portfolios. In addition, the portfolio manager of each of the Portfolios is not
expected to change as a result of the Merger, and each portfolio manager will
receive an employment agreement that includes various incentives to remain with
New Founders.
Mellon. Mellon is a subsidiary of Mellon Bank Corporation ("MBC"), a
publicly owned multibank holding company incorporated under Pennsylvania law in
1971 and registered under the Federal Bank Holding Company Act of 1956, as
amended. Mellon and MBC are located at One Mellon Bank Center, Pittsburgh,
Pennsylvania 15258. MBC provides a comprehensive range of financial products and
services in domestic and selected international markets. MBC's banking
subsidiaries are located in Pennsylvania, Massachusetts, Delaware, Maryland, and
New Jersey, while other subsidiaries are located in key business centers
throughout the United States and abroad. MBC currently ranks among the nation's
largest bank holding companies based on market capitalization.
MBC's principal wholly-owned subsidiaries are Mellon, The Boston
Company, Inc., Mellon Bank (DE) National Association, Mellon Bank (MD) National
Association, and a number of companies known as Mellon Financial Services
Corporation. MBC also owns a federal savings bank headquartered in Pennsylvania,
Mellon Bank, F.S.B. The Dreyfus Corporation ("Dreyfus"), one of the nation's
largest mutual fund companies, is a wholly-owned subsidiary of Mellon. MBC's
banking subsidiaries engage in retail financial services, commercial banking,
trust and investment management services, residential real estate loan
financing, mortgage servicing, equipment leasing, mutual fund activities and
various securities-related activities. Through its subsidiaries, MBC managed
more than $299 billion in assets as of September 30, 1997, including
approximately $102 billion in proprietary mutual fund assets. As of September
30, 1997, various subsidiaries of MBC provided non-investment services, such as
custodial or administration services, for approximately $1.488 trillion in
assets, including $60 billion in mutual fund assets.
Based on Securities and Exchange Commission ("SEC") filings, MBC has
informed the Trust that it is not aware of any persons who, as of September 30,
1997, either individually or as a group, beneficially owned more than 10% of
MBC's outstanding voting securities.
Evaluation of the Board of Trustees
At a meeting of the Board of Trustees of American Skandia Trust held on
December 2, 1997, the Board of Trustees gave approval to the New Sub-Advisory
Agreements, and authorized the officers of the Trust to prepare this proxy
statement. In evaluating the New Sub-Advisory Agreements, the Trustees
considered the fact that the Existing Sub-Advisory Agreements are identical to
the New Sub-Advisory Agreements (except for their effective dates and that New
Founders, rather than Founders, is the sub-advisor), including the terms
relating to the services to be provided and the fees to be paid to New Founders
thereunder. The Trustees considered the performance of Founders to date in
providing services to the Portfolios, and the skills and capabilities of the
personnel of Founders.
The Trustees considered to be particularly important assurances from
both Founders and Mellon that the Merger would not affect the nature, quality or
extent of the services that Founders provides to the Portfolios. The Trustees
also considered assurances from Founders that New Founders would operate as a
separate subsidiary of Mellon, and that it was not Mellon's intention to attempt
to influence New Founders' investment decisions. In addition, the Trustees
considered the fact that the senior management of Founders, including Michael K.
Haines, the portfolio manager of the Capital Appreciation Portfolio, and Michael
W. Gerding, the portfolio manager of the Passport Portfolio, have entered into
employment agreements that include various incentives to remain with New
Founders. The Trustees also considered Mellon's reputation and its substantial
resources.
Based on the Trustees' review and their evaluation of the materials
they received, and in consideration of all factors deemed relevant to them, the
Trustees determined that the New Sub-Advisory Agreements are in the best
interests of the Portfolios and their respective shareholders. Accordingly, the
Board, including all of the Independent Trustees, voted to recommend that the
Portfolios' shareholders vote to approve the New Sub-Advisory Agreements.
The New and Existing Sub-Advisory Agreements
The New Capital Appreciation Sub-Advisory Agreement, which is attached
to this Proxy Statement as Exhibit A, and the New Passport Sub-Advisory
Agreement, which is attached to this Proxy Statement as Exhibit B, will become
effective as of the consummation of the Merger, contingent upon approval by the
shareholders of the relevant Portfolio. If the shareholders approve the New
Sub-Advisory Agreements, they will remain in effect for an initial term of one
year from their effective dates, and may be renewed annually thereafter by
specific approval of the Board of Trustees or the shareholders of the
Portfolios. As discussed above, all of the terms and provisions of the New
Sub-Advisory Agreements, other than their effective dates and the sub-advisor to
the Portfolios, are the same as those of the Existing Sub-Advisory Agreements.
Those terms and provisions are summarized below.
Under the terms of the New Sub-Advisory Agreements, as under the
Existing Sub-Advisory Agreements, New Founders will agree to furnish the
Investment Manager with investment advisory services in connection with
continuous investment programs for the Portfolios, which are to be managed in
accordance with their respective investment objectives, investment policies and
restrictions as set forth in the Prospectus and Statement of Additional
Information of the Trust and in accordance with the Trust's Agreement and
Declaration of Trust and By-laws. Subject to the supervision and control of the
Investment Manager, which in turn will be subject to the supervision and control
of the Board of Trustees, New Founders, in its discretion, will determine and
select the securities to be purchased for and sold from each of the Portfolios
and place orders with and give instructions to brokers, dealers and others to
cause such transactions to be executed. Under the New Sub-Advisory Agreements,
as under the Existing Sub-Advisory Agreements, New Founders will obtain and
evaluate pertinent information about significant developments and economic,
statistical and financial data, whether affecting the economy generally or the
Portfolios, information concerning the individual issuers whose securities are
included in the Portfolios or the activities in which they engage, or
information with respect to securities that New Founders considers desirable for
inclusion in the Portfolios.
Under the terms of the New Sub-Advisory Agreements, as under the
Existing Sub-Advisory Agreements, sub-advisory fees are payable by ASISI, not by
the Portfolios or their shareholders. For its fee, New Founders will agree to
furnish at its expense all necessary investment facilities, including salaries
of personnel, required for it to execute its duties under the New Sub-Advisory
Agreements faithfully. New Founder's compensation for the services provided
under the New Sub-Advisory Agreements will be computed at an annual rate and
will be payable monthly in arrears, based on the average daily net assets of the
respective Portfolio for each month. For all services rendered to the Capital
Appreciation Portfolio, ASISI will calculate and pay New Founders at the annual
rate of .65% of the portion of the Capital Appreciation Portfolio's average
daily net assets not in excess of $75 million; .60% of the portion of the
Capital Appreciation Portfolio's average daily net assets over $75 but not in
excess of $150 million; and .55% of the portion of the Capital Appreciation
Portfolio's average daily net assets in excess of $150 million. The aggregate
fee paid by ASISI to New Founders for services rendered under the Existing
Capital Appreciation Sub-Advisory Agreement for the fiscal year ending December
31, 1997 was $ . For all services rendered to the Passport Portfolio, ASISI will
calculate and pay New Founders at the annual rate of .60% of the portion of the
Passport Portfolio's average daily net assets not in excess of $100 million;
plus .50% of the portion of the Passport Portfolio's average daily net assets in
excess of $100 million. The aggregate fee paid by ASISI to New Founders for
services rendered under the Existing Passport Sub-Advisory Agreement for the
fiscal year ending December 31, 1997 was $ .
The New Sub-Advisory Agreements are renewable annually by specific
approval of the Board of Trustees or by vote of a majority of the outstanding
voting securities of the respective Portfolio (as defined under the Investment
Company Act). Any renewal by the Board requires the approval by the vote of a
majority of the Trustees who are not interested persons under the Investment
Company Act, cast in person at a meeting called for the purpose of voting on
such renewal. The New Sub-Advisory Agreements may be terminated at any time
without penalty upon 60 days' written notice to the other party to the
agreement, and will automatically terminate in the event of its "assignment" by
either party (as defined under the Investment Company Act) or (provided New
Founders has received prior written notice thereof) upon termination of the
Investment Management Agreement.
Under the terms of the New Sub-Advisory Agreements, as under the
Existing Sub-Advisory Agreements, New Founders will use its best efforts and
good faith in the performance of its services. However, so long as New Founders
has acted in good faith and used its best efforts, then in the absence of
willful misconduct, bad faith, gross negligence or reckless disregard by New
Founders of its obligations under the New Sub-Advisory Agreements, New Founders
shall not be liable to the Trust, its shareholders or ASISI for any loss
suffered by the Portfolios in connection with the services provided under the
New Sub-Advisory Agreement.
Information Concerning Founders
Founders served as advisor or sub-advisor to investment company
portfolios as of , 1997, including the Capital Appreciation Portfolio and the
Passport Portfolio. These portfolios had aggregate assets of approximately $
billion as of , 1997. In addition, Founders provides investment management
services to private institutional clients.
The following table lists other investment companies or investment
company portfolios for which Founders acts as investment advisor or sub-advisor
that have similar investment objectives as the Capital Appreciation Portfolio,
as well as the rate of advisory and sub-advisory compensation payable to
Founders and the net assets of the fund or portfolio.
<TABLE>
<CAPTION>
- --------------------------------- ------------------ ----------------------- ------------------------ ------------------------
FUND OBJECTIVE INVESTMENT ADVISER FEE RATE NET ASSETS AS OF
OR [INSERT]
SUB-ADVISER
<S> <C> <C> <C> <C>
- --------------------------------- ------------------ ----------------------- ------------------------ ------------------------
- --------------------------------- ------------------ ----------------------- ------------------------ ------------------------
Founders Discovery Fund Capital Investment Adviser 1.00% to $250 million [INSERT]
Appreciation 0.80% next $250 million
0.70% thereafter
- --------------------------------- ------------------ ----------------------- ------------------------ ------------------------
- --------------------------------- ------------------ ----------------------- ------------------------ ------------------------
Founders Frontier Fund Capital Investment Adviser 1.00% to $250 million [INSERT]
Appreciation 0.80% next $250 million
0.70% thereafter
- --------------------------------- ------------------ ----------------------- ------------------------ ------------------------
- --------------------------------- ------------------ ----------------------- ------------------------ ------------------------
American Skandia Advisors Capital Sub-adviser 0.50% to $250 million [INSERT]
Funds, Inc. - ASAF Founders Growth 0.45% thereafter
Small Capitalization Fund
- --------------------------------- ------------------ ----------------------- ------------------------ ------------------------
- --------------------------------- ------------------ ----------------------- ------------------------ ------------------------
Ohio National Fund, Inc.- Small Maximum Investment Adviser 0.65% to $75 million [INSERT]
Cap Portfolio Capital 0.60% next $75 million
Growth 0.55% thereafter
- --------------------------------- ------------------ ----------------------- ------------------------ ------------------------
</TABLE>
The following table lists other investment companies or investment
company portfolios for which Founders acts as investment advisor or sub-advisor
that have similar investment objectives as the Passport Portfolio, as well as
the rate of sub-advisory compensation payable to Founders and the net assets of
the fund or portfolio.
<TABLE>
<CAPTION>
- --------------------------------- ------------------ ----------------------- ------------------------ ------------------------
FUND OBJECTIVE INVESTMENT ADVISER FEE RATE NET ASSETS AS OF
OR [INSERT]
SUB-ADVISER
<S> <C> <C> <C> <C>
- --------------------------------- ------------------ ----------------------- ------------------------ ------------------------
- --------------------------------- ------------------ ----------------------- ------------------------ ------------------------
Founders Passport Fund Capital Investment Adviser 1.00% to $250 million [INSERT]
appreciation 0.80% next $250 million
0.70% thereafter
- --------------------------------- ------------------ ----------------------- ------------------------ ------------------------
- --------------------------------- ------------------ ----------------------- ------------------------ ------------------------
Manufacturers Investment Trust- Long-term Investment Adviser 0.65% to $50 million [INSERT]
International Small Cap Trust capital 0.60% next $150 million
appreciation 0.50% next $300 million
0.40% thereafter
- --------------------------------- ------------------ ----------------------- ------------------------ ------------------------
- --------------------------------- ------------------ ----------------------- ------------------------ ------------------------
American Skandia Advisor Funds, Capital growth Sub-adviser 0.60% to $100 million [INSERT]
Inc. - ASAF Founders 0.50% thereafter
International Small
Capitalization Fund
- --------------------------------- ------------------ ----------------------- ------------------------ ------------------------
- --------------------------------- ------------------ ----------------------- ------------------------ ------------------------
North American Funds - Long-term Investment Adviser 0.65% to $50 million [INSERT]
International Small Cap Fund capital 0.60% next $150 million
appreciation 0.50% next $300 million
0.40% thereafter
- --------------------------------- ------------------ ----------------------- ------------------------ ------------------------
</TABLE>
Mr. Bjorn K. Borgen is the Chairman, Chief Executive Officer, Chief
Investment Officer and sole director of Founders. Mr. Borgen is also the
President and a director of Founders Funds, Inc. New Founders was organized as a
Delaware limited liability company on November 26, 1997. The management board of
New Founders currently consists of: Christopher M. Condron, Chairman, who is
also Vice Chairman of MBC and President, Chief Executive Officer and Chief
Operating Officer of Dreyfus, 200 Park Avenue, New York, New York 10166;
Jonathan F. Zeschin, currently President and Chief Operating Officer of
Founders, 2930 East Third Avenue, Denver, Colorado 80206; Gregory P. Contillo,
currently Senior Vice President - Institutional Marketing of Founders; Stephen
E. Canter, Vice Chairman and Chief Investment Officer of Dreyfus; and Lawrence
S. Kash, Vice Chairman - Distribution of Dreyfus. Mr. Zeschin also is the Chief
Executive Officer of New Founders, and Mr. Contillo also is the Senior Vice
President - Institutional Marketing of New Founders. Two additional members will
be added to the management board of New Founders, one qualified person from each
of New Founders and another Mellon affiliate.
Founders has advised the Trust and ASISI that the staff of the
Securities and Exchange Commission has been conducting an investigation
concerning possible violations of the federal securities laws in connection with
brokerage transactions Founders effected for certain of its private account
clients during the period 1992 through mid-1995. The Commission has not yet made
any determination as to whether any violations have occurred and, if so, whether
any action is appropriate. Founders currently is engaged in discussions with the
staff concerning the staff's possible recommendations to the Commission. The
investigation does not involve brokerage transactions of either of the
Portfolios.
Section 15(f). The Trust has been informed by Founders and Mellon that
they intend to comply with Section 15(f) of the Investment Company Act. Section
15(f) provides a non-exclusive "safe harbor" for an investment adviser or any of
its affiliated persons to receive any amount or benefit in connection with a
change in control of the investment advisor as long as two conditions are met.
First, for a period of three years after the change of control, at least 75% of
the board members of the investment company must not be "interested persons" of
the adviser or the predecessor advisor. Second, an "unfair burden" must not be
imposed on the investment company as a result of the transaction or any express
or implied terms, conditions, or understandings applicable thereto. The term
"unfair burden" is defined in Section 15(f) to include any arrangement during
the two-year period after the transaction whereby the investment advisor, or any
interested person of any such advisor, receives or is entitled to receive any
compensation, directly or indirectly, from the investment company or its
security holders (other than fees for bona fide investment advisory or other
services) or from any person in connection with the purchase or sale of
securities or other property to, from, or on behalf of the investment company
(other than bona fide ordinary compensation as principal underwriter for such
investment company). None of the Trust's Board of Trustees are interested
persons of Founders or Mellon. In addition, the Trust has been advised that
neither Mellon, Founders, or Mr. Borgen, will take any action, either before or
for a period of three years after the Merger, that would have the effect of
imposing an "unfair burden" on the Trust as a result of the Merger.
Founders has undertaken to pay all costs and expenses of the Meeting.
Other Matters and Shareholder Proposals
The Board of Trustees intends to bring before the Meetings the two
Proposals set forth herein and in the foregoing Notice. The Trustees do not
expect any other business to be brought before the Meetings. If, however, any
other matters are properly presented to the Meetings for action, it is intended
that the persons named in the enclosed proxy will vote in accordance with their
judgment. A Contractowner executing and returning a proxy may revoke it at any
time prior to its exercise by written notice of such revocation to the Secretary
of the Trust, by execution of a subsequent proxy, or by voting in person at the
Meetings.
The presence in person or by proxy of the holders of a majority of the
outstanding shares of the Portfolio is required to constitute a quorum at the
Meeting of the Portfolio. Since ASLAC is the legal owner of over 99% of each
Portfolio's shares, ASLAC's presence at a Meeting constitutes a quorum under the
Trust's By-laws. Shares beneficially held by Contractowners present in person or
represented by proxy at the Meetings will be counted for the purpose of
calculating the votes cast on the issues before the Meetings. Approval of each
of the proposals requires the vote of a "majority of the outstanding voting
securities," as defined in the Investment Company Act, of the relevant
Portfolio, 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.
In the event that sufficient votes to approve either of the proposals
are not received, the persons named as proxies may propose one or more
adjournments of the Meeting to permit further solicitation of proxies with
respect to such proposal. Any such adjournment will require the affirmative vote
of a majority of those shares represented at the Meetings in person or by proxy.
The persons named as proxies will vote those proxies that they are entitled to
vote FOR or AGAINST any such adjournment proposal in their discretion.
The Trust is not required to hold and will not ordinarily hold annual
shareholders' meetings. The Board of Trustees may call special meetings of the
shareholders for action by shareholder vote as required by the Investment
Company Act or the Trust's Declaration of Trust.
Pursuant to rules adopted by the Commission, 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 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
Eric C. Freed
Secretary
American Skandia Trust
<PAGE>
<TABLE>
<CAPTION>
LIST OF EXHIBITS
<S> <C>
EXHIBIT A Form of New Sub-Advisory Agreement for the Capital Appreciation Portfolio
EXHIBIT B Form of New Sub-Advisory Agreement for the Passport Portfolio
</TABLE>
<PAGE>
EXHIBIT A
SUB-ADVISORY AGREEMENT
THIS AGREEMENT is between American Skandia Investment Services, Incorporated
(the "Investment Manager") and Founders Asset Management LLC (the
"Sub-Advisor").
WHEREAS American Skandia Trust (the "Trust") is a Massachusetts business trust
organized with one or more series of shares, and is registered as an investment
company under the Investment Company Act of 1940 (the "ICA"); and
WHEREAS the trustees of the Trust (the "Trustees") have engaged the Investment
Manager to act as investment manager for the Founders Capital Appreciation
Portfolio (the "Portfolio") under the terms of a management agreement, dated
January 3, 1994, with the Trust (the "Management Agreement"); and
WHEREAS the Investment Manager has engaged the Sub-Advisor and the Trustees have
approved the engagement of the Sub-Advisor to provide investment advice and
other investment services set forth below;
NOW, THEREFORE the Investment Manager and the Sub-Advisor agree as follows:
1. Investment Services. The Sub-Advisor will furnish the Investment Manager with
investment advisory services in connection with a continuous investment program
for the Portfolio which is to be managed in accordance with the investment
objective, investment policies and restrictions of the Portfolio as set forth in
the Prospectus and Statement of Additional Information of the Trust and in
accordance with the Trust's Declaration of Trust and By-Laws. Officers,
directors, and employees of Sub-Advisor will be available 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 with respect
to disclosure about the Sub-Advisor or information relating directly or
indirectly to the Sub-Advisor, 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 Sub-Advisor further represents and warrants that it is an investment advisor
registered under the Investment Advisers Act of 1940, as amended, 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 subchapters L and M (including,
respectively, Section 817(h) and Section 851(b)(1), (2), (3) and (4)) of the
Internal Revenue Code, applicable to the Portfolio, and the regulations
promulgated thereunder. Sub-Advisor shall comply with (i) other applicable
provisions of state or federal law; (ii) the 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: .65 of 1% of the portion of the net
assets of the Portfolio not in excess of $75 million; .60 of 1% of the portion
of the net assets over $75 million but not in excess of $150 million; and .55 of
1% of the portion in excess of $150 million.
In computing the fee to be paid to the Sub-Advisor, the net asset value
of the Portfolio shall be valued as set forth in the then current registration
statement of the Trust. If this agreement is terminated, the payment shall be
prorated to the date of termination.
Investment Manager and Sub-Advisor shall not be considered as partners
or participants in a joint venture. Sub-Advisor will pay its own expenses for
the services to be provided pursuant to this Agreement and will not be obligated
to pay any expenses of Investment Manager or the Trust. Except as otherwise
provided herein, Investment Manager and the Trust will not be obligated to pay
any expenses of Sub-Advisor.
8. Confidential Treatment. It is understood that any information or
recommendation supplied by the Sub-Advisor in connection with the performance of
its obligations hereunder is to be regarded as confidential and for use only by
the Investment Manager, the Trust or such persons the Investment Manager may
designate in connection with the Portfolio. It is also understood that any
information supplied to Sub-Advisor in connection with the performance of its
obligations hereunder, particularly, but not limited to, any list of securities
which, on a temporary basis, may not be bought or sold for the Portfolio, is to
be regarded as confidential and for use only by the Sub-Advisor in connection
with its obligation to provide investment advice and other services to the
Portfolio.
9. Representations of the Parties. Each party to this Agreement hereby
acknowledges that it is registered as an investment advisor under the 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.
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: Founders Investments LLC
Founders Financial Center
2930 East Third Avenue
Denver, Colorado 80206
Attention: David Ray
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 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 Investment Manager, the
Trust or any affiliated person of the Investment Manager or the Trust or upon
verbal information confirmed by the Sub-Advisor in writing or (3) to the extent
of, and as a result of, the failure of the Sub-Advisor to execute, or cause to
be executed, Portfolio transactions according to the standards and requirements
of the 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 written
information furnished by Sub-Advisor, or any affiliated person of the
Sub-Advisor or other than upon verbal information confirmed by the Sub-Advisor
in writing; provided, however, that in no case is Investment Manager's indemnity
in favor of Sub-Advisor or any affiliated person or controlling person of
Sub-Advisor deemed to protect such person against any liability to which any
such person would otherwise be subject by reason of willful misconduct, bad
faith or gross negligence in the performance of its duties or by reason of its
reckless disregard of its obligations and duties under this Agreement.
15. Warranty. The Investment Manager represents and warrants that (i) the
appointment of the Sub-Advisor by the Investment Manager has been duly
authorized and (ii) it has acted and will continue to act in connection with the
transactions contemplated hereby, and the transactions contemplated hereby are,
in conformity with the 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. 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 February ____, 1998.
FOR THE INVESTMENT MANAGER: FOR THE SUB-ADVISOR:
_________________________________ _________________________________
Thomas Mazzaferro
President & Chief Operating Officer
Date:__________ Date:__________
Attest:____________________________ Attest:_________________________
<PAGE>
EXHIBIT B
SUB-ADVISORY AGREEMENT
THIS AGREEMENT is between American Skandia Investment Services, Incorporated
(the "Investment Manager") and Founders Asset Management LLC (the
"Sub-Advisor").
WHEREAS American Skandia Trust (the "Trust") is a Massachusetts business trust
organized with one or more series of shares, and is registered as an investment
company under the Investment Company Act of 1940 (the "ICA"); and
WHEREAS the trustees of the Trust (the "Trustees") have engaged the Investment
Manager to act as investment manager for the Founders Passport Portfolio (the
"Portfolio") under the terms of a management agreement, dated October 15, 1996,
with the Trust (the "Management Agreement"); and
WHEREAS the Investment Manager has engaged the Sub-Advisor and the Trustees have
approved the engagement of the Sub-Advisor to provide investment advice and
other investment services set forth below;
NOW, THEREFORE the Investment Manager and the Sub-Advisor agree as follows:
1. Investment Services. The Sub-Advisor will furnish the Investment Manager with
investment advisory services in connection with a continuous investment program
for the Portfolio which is to be managed in accordance with the investment
objective, investment policies and restrictions of the Portfolio as set forth in
the Prospectus and Statement of Additional Information of the Trust and in
accordance with the Trust's Declaration of Trust and By-laws. Officers,
directors, and employees of Sub-Advisor will be available upon reasonable
request to consult with Investment Manager and the Trust, their officers,
employees and Trustees concerning the business of the Trust. Investment Manager
will promptly furnish Sub-Advisor with any amendments to any of the foregoing
documents (the "Documents"). Any amendments to the Documents will not be deemed
effective with respect to the Sub-Advisor until the Sub-Advisor's receipt
thereof.
Subject to the supervision and control of the Investment Manager, which
is in turn subject to the supervision and control of the Trust's Board of
Trustees, the Sub-Advisor will in its discretion determine and select the
securities to be purchased for and sold from the Portfolio from time to time and
will place orders with and give instructions to brokers, dealers and others for
all such transactions and cause such transactions to be executed. Custody of the
Portfolio will be maintained by a custodian bank (the "Custodian") and the
Investment Manager will authorize the Custodian to honor orders and instructions
by employees of the Sub-Advisor designated by the Investment Manager to settle
transactions in respect of the Portfolio. No assets may be withdrawn from the
Portfolio other than for settlement of transactions on behalf of the Portfolio
except upon the written authorization of appropriate officers of the Trust who
shall have been certified as such by proper authorities of the Trust prior to
the withdrawal.
The Sub-Advisor will obtain and evaluate pertinent information about
significant developments and economic, statistical and financial data, domestic,
foreign or otherwise, whether affecting the economy generally or the Portfolio,
and concerning the individual issuers whose securities are included in the
Portfolio or the activities in which they engage, or with respect to securities
which the Sub-Advisor considers desirable for inclusion in the Portfolio.
The Sub-Advisor represents that it reviewed the Registration Statement
of the Trust, including any amendments or supplements thereto, and any Proxy
Statement relating to the approval of this Agreement, as filed with the
Securities and Exchange Commission and provided to the Sub-Advisor by the
Investment Manager, and represents and warrants that with respect to disclosure
about the Sub-Advisor or information relating directly to the Sub-Advisor, such
Registration Statement or Proxy Statement contains, as of the date thereof, no
untrue statement of any material fact and does not omit any statement of
material fact which was required to be stated therein or necessary to make the
statements contained therein not misleading. The Sub-Advisor further represents
and warrants that it is an investment advisor registered under the Investment
Advisers Act of 1940, as amended (the "Advisers Act"), and under the laws of all
jurisdictions in which the conduct of its business hereunder requires such
registration.
In furnishing the services under this Agreement, the Sub-Advisor will
comply with the requirements of the ICA and subchapters L and M (including,
respectively, Section 817(h) and Section 851(b)(1), (2), (3) and (4)) of the
Internal Revenue Code, applicable to the Portfolio, and the regulations
promulgated thereunder. Sub-Advisor shall comply with (i) other applicable
provisions of state or federal law; (ii) the provisions of the Declaration of
Trust and By-laws of the Trust; (iii) policies and determinations of the Trust
and Investment Manager communicated to the Sub-Advisor in writing; (iv) the
fundamental policies and investment restrictions of the Trust, as set out in the
Trust's registration statement under the ICA, or as amended by the Trust's
shareholders and communicated to the Sub-Advisor in writing; (v) the Prospectus
and Statement of Additional Information of the Trust; and (vi) investment
guidelines or other instructions received in writing from Investment Manager.
Sub-Advisor shall supervise and monitor the activities of its representatives,
personnel and agents in connection with the investment program of the Portfolio.
Nothing in this Agreement shall be implied to prevent the Investment
Manager from engaging other sub-advisors to provide investment advice and other
services in relation to portfolios of the Trust for which Sub-Advisor does not
provide such services, or to prevent Investment Manager from providing such
services itself in relation to such portfolios.
2. Delivery of Documents to Sub-Advisor. The Investment Manager has furnished
the Sub-Advisor with copies of each of the following documents:
(a) The Declaration of Trust of the Trust as in effect on the date hereof;
(b) The By-laws of the Trust in effect on the date hereof;
(c) The resolutions of the Trustees approving the engagement of
the Sub-Advisor as Sub-Advisor to the Investment Manager and
approving the form of this agreement;
(d) The resolutions of the Trustees selecting the Investment
Manager as investment manager to the Trust and approving the
form of the Investment Manager's Management Agreement with the
Trust;
(e) The Investment Manager's Management Agreement with the Trust;
(f) The Code of Ethics of the Trust and of the Investment Manager as
currently in effect; and
(g) A list of companies the securities of which are not to be
bought or sold for the Portfolio because of non-public
information regarding such companies that is available to
Investment Manager or the Trust, or which, in the sole opinion
of the Investment Manager, it believes such non-public
information would be deemed to be available to Investment
Manager and/or the Trust.
The Investment Manager will furnish the Sub-Advisor from time to time
with copies, properly certified or otherwise authenticated, of all amendments of
or supplements to the foregoing, if any. Such amendments or supplements as to
items (a) through (f) above will be provided within 30 days of the time such
materials became available to the Investment Manager. Such amendments or
supplements as to item (g) above will be provided not later than the end of the
business day next following the date such amendments or supplements become known
to the Investment Manager.
3. Delivery of Documents to the Investment Manager. The Sub-Advisor has
furnished the Investment Manager with copies of each of the following documents:
(a) The Sub-Advisor's Form ADV as filed with the Securities and Exchange
Commission;
(b) The Sub-Advisor's most recent audited balance sheet;
(c) Separate lists of persons who the Sub-Advisor wishes to have
authorized to give written and/or oral instructions to
Custodians of Trust assets for the Portfolio;
(d) The Code of Ethics of the Sub-Advisor as currently in effect.
The Sub-Advisor will furnish the Investment Manager from time to time
with copies, properly certified or otherwise authenticated, of all material
amendments of or supplements to the foregoing, if any. Such amendments or
supplements as to items (a) through (d) above will be provided within 30 days of
the time such materials became available to the Sub-Advisor.
4. Investment Advisory Facilities. The Sub-Advisor, at its expense, will furnish
all necessary investment facilities, including salaries of personnel required
for it to execute its duties faithfully.
5. Execution of Portfolio Transactions. Sub-Advisor is responsible for decisions
to buy and sell securities for the Portfolio, broker-dealer selection, and
negotiation of its brokerage commission rates. Sub-Advisor shall determine the
securities to be purchased or sold by the Portfolio pursuant to its
determinations with or through such persons, brokers or dealers, in conformity
with the policy with respect to brokerage as set forth in the Trust's Prospectus
and Statement of Additional Information, or as the Board of Trustees may
determine from time to time and communicate to the Sub-Advisor in writing.
Generally, Sub-Advisor's primary consideration in placing Portfolio securities
transactions with broker-dealers for execution is to obtain and maintain the
availability of best execution at the best net price and in the most effective
manner possible. The Sub-Advisor may consider sale of the shares of the
Portfolio, as well as recommendations of the Investment Manager, subject to the
requirements of best net price and most favorable execution.
Consistent with this policy, the Sub-Advisor will take the following
into consideration: the best net price available; the reliability, integrity and
financial condition of the broker-dealer; the size of and difficulty in
executing the order; and the value of the expected contribution of the
broker-dealer to the investment performance of the Portfolio on a continuing
basis. Accordingly, the cost of the brokerage commissions to the Portfolio may
be greater than that available from other brokers if the difference is
reasonably justified by other aspects of the portfolio execution services
offered. Subject to such policies and procedures as the Board of Trustees of the
Trust may determine, the Sub-Advisor shall not be deemed to have acted
unlawfully or to have breached any duty solely by reason of its having caused
the Portfolio to pay a broker-dealer that provides research services to the
Sub-Advisor an amount of commission for effecting a portfolio investment
transaction in excess of the amount of commission another broker-dealer would
have charged for effecting that transaction, if the Sub-Advisor determines in
good faith that such amount of commission was reasonable in relation to the
value of the research services provided by such broker, viewed in terms of
either that particular transaction or the Sub-Advisor's ongoing responsibilities
with respect to the Portfolio and its other clients. The Sub-Advisor is further
authorized to allocate the orders placed by it on behalf of the Portfolio to
such broker-dealers who also provide research or statistical material, or other
services to the Portfolio or the Sub-Advisor. Such allocation shall be in such
amounts and proportions as the Sub-Advisor shall determine in good faith in
conformity with its responsibilities under applicable laws, rules and
regulations and the Sub-Advisor will report on said allocations to the
Investment Manager regularly as requested by the Investment Manager and, in any
event, at least once each calendar year if no specific request is made,
indicating the brokers to whom such allocations have been made and the basis
therefor.
6. Reports by Sub-Advisor. The Sub-Advisor shall furnish the Investment Manager
monthly, quarterly and annual reports concerning transactions and performance of
the Portfolio, including information required in the Trust's Registration
Statement, in such form as may be mutually agreed, to review the Portfolio and
discuss the management of it. The Sub-Advisor shall permit the financial
statements, books and records with respect to the Portfolio to be inspected and
audited by the Trust, the Investment Manager or their agents at all reasonable
times during normal business hours. The Sub-Advisor shall immediately notify and
forward to both Investment Manager and legal counsel for the Trust any legal
process served upon it on behalf of the Investment Manager or the Trust. The
Sub-Advisor shall promptly notify the Investment Manager of any changes in any
information required to be disclosed in the Trust's Registration Statement.
7. Compensation of Sub-Advisor. The amount of the compensation to the
Sub-Advisor is computed at an annual rate. The fee is payable monthly in
arrears, based on the average daily net assets of the Portfolio for each month,
at the annual rates shown below.
For all services rendered, the Investment Manager will calculate and
pay the Sub-Advisor at the annual rate of: .60 of 1% of the portion of the net
assets of the Portfolio not in excess of $100 million; plus .50 of 1% of the
portion of the net assets of the Portfolio in excess of $100 million.
In computing the fee to be paid to the Sub-Advisor, the net asset value
of the Portfolio shall be valued as set forth in the then current registration
statement of the Trust. If this agreement is terminated, the payment shall be
prorated to the date of termination.
Investment Manager and Sub-Advisor shall not be considered as partners
or participants in a joint venture. Sub-Advisor will pay its own expenses for
the services to be provided pursuant to this Agreement and will not be obligated
to pay any expenses of Investment Manager or the Trust. Except as otherwise
provided herein, Investment Manager and the Trust will not be obligated to pay
any expenses of Sub-Advisor.
8. Confidential Treatment. It is understood that any information or
recommendation supplied by the Sub-Advisor in connection with the performance of
its obligations hereunder is to be regarded as confidential and for use only by
the Investment Manager, the Trust or such persons the Investment Manager may
designate in connection with the Portfolio. It is also understood that any
information supplied to Sub-Advisor in connection with the performance of its
obligations hereunder, particularly, but not limited to, any list of securities
which, on a temporary basis, may not be bought or sold for the Portfolio, is to
be regarded as confidential and for use only by the Sub-Advisor in connection
with its obligation to provide investment advice and other services to the
Portfolio.
9. Representations of the Parties. Each party to this Agreement hereby
acknowledges that it is registered as an investment advisor under the Advisers
Act, that it will use its reasonable best efforts to maintain such registration,
and that it will promptly notify the other if it ceases to be so registered, if
its registration is suspended for any reason, or if it is notified by any
regulatory organization or court of competent jurisdiction that it should show
cause why its registration should not be suspended or terminated.
10. Liability. The Sub-Advisor shall use its best efforts and good faith in the
performance of its services hereunder. However, so long as the Sub-Advisor has
acted in good faith and has used its best efforts, then in the absence of
willful misfeasance, bad faith, gross negligence or reckless disregard for its
obligations hereunder, it shall not be liable to the Trust or its shareholders
or to the Investment Manager for any act or omission resulting in any loss
suffered in any portfolio of the Trust in connection with any service to be
provided herein. The Federal laws impose responsibilities under certain
circumstances on persons who act in good faith, and therefore, nothing herein
shall in any way constitute a waiver of limitation of any rights which the Trust
or Investment Manager may have under applicable law.
The Investment Manager agrees that the Sub-Advisor shall not be liable
for any failure to recommend the purchase or sale of any security on behalf of
the Portfolio on the basis of any information which might, in Sub-Advisor's
opinion, constitute a violation of any federal or state laws, rules or
regulations.
11. Other Activities of Sub-Advisor. Notwithstanding the first sentence of
Section 8 of this Agreement, the Investment Manager agrees that the Sub-Advisor
and any of its partners or employees, and persons affiliated with it or with any
such partner or employee may render investment management or advisory services
to other investors and institutions, and such investors and institutions may
own, purchase or sell, securities or other interests in property the same as or
similar to those which are selected for purchase, holding or sale for the
Portfolio, and the Sub-Advisor shall be in all respects free to take action with
respect to investments in securities or other interests in property the same as
or similar to those selected for purchase, holding or sale for the Portfolio.
Purchases and sales of individual securities on behalf of the Portfolio and
other portfolios of the Trust or accounts for other investors or institutions
will be made on a basis that is equitable to all portfolios of the Trust and
other accounts. Nothing in this agreement shall impose upon the Sub-Advisor any
obligation to purchase or sell or recommend for purchase or sale, for the
Portfolio any security which it, its partners, affiliates or employees may
purchase or sell for the Sub-Advisor or such partner's, affiliate's or
employee's own accounts or for the account of any other client, advisory or
otherwise.
12. Continuance and Termination. This Agreement shall remain in full force and
effect for one year from the date hereof, and is renewable annually thereafter
by specific approval of the Board of Trustees of the Trust or by vote of a
majority of the outstanding voting securities of the Portfolio. Any such renewal
shall be approved by the vote of a majority of the Trustees who are not
interested persons under the ICA, cast in person at a meeting called for the
purpose of voting on such renewal. This agreement may be terminated without
penalty at any time by the Investment Manager or Sub-Advisor upon 60 days
written notice, and will automatically terminate in the event of its assignment
by either party to this Agreement, as defined in the ICA, or (provided
Sub-Advisor has received prior written notice thereof) upon termination of the
Investment Manager's Management Agreement with the Trust.
13. Notification. Sub-Advisor will notify the Investment Manager within a
reasonable time of any change in the personnel of the Sub-Advisor with
responsibility for making investment decisions in relation to the Portfolio or
who have been authorized to give instructions to a Custodian of the Trust.
Any notice, instruction or other communication required or contemplated
by this Agreement shall be in writing. All such communications shall be
addressed to the recipient at the address set forth below, provided that either
party may, by notice, designate a different address for such party.
Investment Manager: American Skandia Investment Services, Incorporated
One Corporate Drive
Shelton, Connecticut 06484
Attention: Thomas M. Mazzaferro
President & Chief Operating Officer
Sub-Advisor: Founders Investments LLC
Founders Financial Center
2930 East Third Avenue
Denver, CO 80206
Attention: General Counsel
14. Indemnification. The Sub-Advisor agrees to indemnify and hold harmless
Investment Manager, any affiliated person within the meaning of Section 2(a)(3)
of the ICA ("affiliated person") of Investment Manager and each person, if any
who, within the meaning of Section 15 of the Securities Act of 1933 (the "1933
Act"), controls ("controlling person") Investment Manager, against any and all
losses, claims, damages, liabilities or litigation (including reasonable legal
and other expenses), to which Investment Manager or such affiliated person or
controlling person may become subject under the 1933 Act, the ICA, the Advisers
Act, under any other statute, at common law or otherwise, arising out of
Sub-Advisor's responsibilities as portfolio manager of the Portfolio (1) to the
extent of and as a result of the willful misconduct, bad faith, or gross
negligence by Sub-Advisor, any of Sub-Advisor's employees or representatives or
any affiliate of or any person acting on behalf of Sub-Advisor, or (2) as a
result of any untrue statement or alleged untrue statement of a material fact
contained in a prospectus or statement of additional information covering the
Portfolio or the Trust or any amendment thereof or any supplement thereto or the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statement therein not misleading, if
such a statement or omission was made in reliance upon written information
furnished by the Sub-Advisor, or any affiliated person of the Sub-Advisor, to
the Investment Manager, the Trust or any affiliated person of the Investment
Manager or the Trust or upon verbal information confirmed by the Sub-Advisor in
writing or (3) to the extent of, and as a result of, the failure of the
Sub-Advisor to execute, or cause to be executed, Portfolio transactions
according to the standards and requirements of the ICA; provided, however, that
in no case is Sub-Advisor's indemnity in favor of Investment Manager or any
affiliated person or controlling person of Investment Manager deemed to protect
such person against any liability to which any such person would otherwise be
subject by reason of willful misconduct, bad faith or gross negligence in the
performance of its duties or by reason of its reckless disregard of its
obligations and duties under this Agreement.
The Investment Manager agrees to indemnify and hold harmless
Sub-Advisor, any affiliated person of Sub-Advisor and each controlling person of
Sub-Advisor, if any, against any and all losses, claims, damages, liabilities or
litigation (including reasonable legal and other expenses), to which Sub-Advisor
or such affiliated person or controlling person may become subject under the
1933 Act, the ICA, the Advisers Act, under any other statute, at common law or
otherwise, arising out of Investment Manager's responsibilities as investment
manager of the Portfolio (1) to the extent of and as a result of the willful
misconduct, bad faith, or gross negligence by Investment Manager, any of
Investment Manager's employees or representatives or any affiliate of or any
person acting on behalf of Investment Manager, or (2) as a result of any untrue
statement or alleged untrue statement of a material fact contained in a
prospectus or statement of additional information covering the Portfolio or the
Trust or any amendment thereof or any supplement thereto or the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statement therein not misleading, if such a statement
or omission was made by the Trust other than in reliance upon written
information furnished by Sub-Advisor, or any affiliated person of the
Sub-Advisor or other than upon verbal information confirmed by the Sub-Advisor
in writing; provided, however, that in no case is Investment Manager's indemnity
in favor of Sub-Advisor or any affiliated person or controlling person of
Sub-Advisor deemed to protect such person against any liability to which any
such person would otherwise be subject by reason of willful misconduct, bad
faith or gross negligence in the performance of its duties or by reason of its
reckless disregard of its obligations and duties under this Agreement.
15. Warranty. The Investment Manager represents and warrants that (i) the
appointment of the Sub-Advisor by the Investment Manager has been duly
authorized and (ii) it has acted and will continue to act in connection with the
transactions contemplated hereby, and the transactions contemplated hereby are,
in conformity with the ICA, the Trust's governing documents and other applicable
laws.
The Sub-Advisor represents and warrants that it is authorized to
perform the services contemplated to be performed hereunder.
16. Governing Law. This agreement is made under, and shall be governed by and
construed in accordance with, the laws of the State of Connecticut.
The effective date of this agreement is February ___, 1998.
FOR THE INVESTMENT MANAGER: FOR THE SUB-ADVISOR:
______________________________ ________________________________
Thomas Mazzaferro
President & Chief Operating Officer
Date:_____________ Date:____________
Attest:________________________ Attest:_________________________
12847-1
<PAGE>
AMERICAN SKANDIA TRUST
PROXY FOR SPECIAL MEETING OF SHAREHOLDERS OF THE
FOUNDERS CAPITAL APPRECIATION PORTFOLIO
TO BE HELD ON FEBRUARY 19, 1998
The undersigned hereby appoints Maureen Gulick and Deirdre Burke and
each of them as the proxy or proxies of the undersigned, with full power of
substitution, to vote on behalf of the undersigned all shares of beneficial
interest of the above stated Portfolio of American Skandia Trust (or "Trust")
that the undersigned is entitled to vote at a Special Meeting of the
Shareholders of the Portfolio to be held at 10:00 a.m., Eastern Time, on
February 19, 1998, at the offices of the Trust at One Corporate Drive, 10th
Floor, Shelton, Connecticut and at any adjournments thereof, upon the matters
described in the accompanying Proxy Statement and upon any other business that
may properly come before the meeting or any adjournment thereof. Said proxies
are directed to vote or to refrain from voting as checked below. If any other
matters are properly presented to the meeting for action, it is intended that
the proxies will vote in accordance with their judgment.
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 Founders Capital Appreciation 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."
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
- -------------------------------------------------------------------------------
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
<TABLE>
<CAPTION>
AMERICAN SKANDIA TRUST
THIS PROXY IS BEING SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES OF THE TRUST.
For Against Abstain
<S> <C> <C> <C>
THE BOARD OF TRUSTEES OF THE TRUST PROPOSAL TO APPROVE A NEW SUB-ADVISORY [] [] []
RECOMMENDS VOTING FOR THE FOLLOWING AGREEMENT BETWEEN AMERICAN SKANDIA INVESTMENT
PROPOSAL: SERVICES, INCORPORATED AND FOUNDERS ASSET
MANAGEMENT LLC REGARDING INVESTMENT ADVICE TO
THE SHARES REPRESENTED HEREBY WILL BE THE FOUNDERS CAPITAL APPRECIATION PORTFOLIO.
VOTED AS INDICATED OR FOR THE PROPOSAL IF
NO CHOICE IS INDICATED.
</TABLE>
<TABLE>
<CAPTION>
Please be sure to sign and date this Proxy
<S> <C> <C> <C>
_________________________________ Date:___________ _________________________ Date: ____________
Signature [PLEASE SIGN WITHIN BOX] Signature (Joint Owners)
</TABLE>
- --------------------------------------------------------------------------------
DETACH CARD
<PAGE>
AMERICAN SKANDIA TRUST
PROXY FOR SPECIAL MEETING OF SHAREHOLDERS OF THE
FOUNDERS PASSPORT PORTFOLIO
TO BE HELD ON FEBRUARY 19, 1998
The undersigned hereby appoints Maureen Gulick and Deirdre Burke and
each of them as the proxy or proxies of the undersigned, with full power of
substitution, to vote on behalf of the undersigned all shares of beneficial
interest of the above stated Portfolio of American Skandia Trust (or "Trust")
that the undersigned is entitled to vote at a Special Meeting of the
Shareholders of the Portfolio to be held at 10:30 a.m., Eastern Time, on
February 19, 1998, at the offices of the Trust at One Corporate Drive, 10th
Floor, Shelton, Connecticut and at any adjournments thereof, upon the matters
described in the accompanying Proxy Statement and upon any other business that
may properly come before the meeting or any adjournment thereof. Said proxies
are directed to vote or to refrain from voting as checked below. If any other
matters are properly presented to the meeting for action, it is intended that
the proxies will vote in accordance with their judgment.
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 Founders Passport 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."
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
- -------------------------------------------------------------------------------
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
AMERICAN SKANDIA TRUST
THIS PROXY IS BEING SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES OF THE TRUST.
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C> <C> <C>
THE BOARD OF TRUSTEES OF THE TRUST PROPOSAL TO APPROVE A NEW SUB-ADVISORY [] [] []
RECOMMENDS VOTING FOR THE FOLLOWING AGREEMENT BETWEEN AMERICAN SKANDIA INVESTMENT
PROPOSAL: SERVICES, INCORPORATED AND FOUNDERS ASSET
MANAGEMENT LLC REGARDING INVESTMENT ADVICE TO
THE SHARES REPRESENTED HEREBY WILL BE THE FOUNDERS PASSPORT PORTFOLIO.
VOTED AS INDICATED OR FOR THE PROPOSAL IF
NO CHOICE IS INDICATED.
</TABLE>
<TABLE>
<CAPTION>
Please be sure to sign and date this Proxy
<S> <C> <C> <C>
_________________________________ Date:___________ _________________________ Date: ____________
Signature [PLEASE SIGN WITHIN BOX] Signature (Joint Owners)
</TABLE>
- --------------------------------------------------------------------------------
DETACH CARD
