Investment Company Act No. 811-5186
As filed with the Securities and Exchange Commission on March 16, 1998
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss. 240.14a-11(c) or ss. 240.14a-12
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American Skandia Trust
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Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
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1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
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2) Form, Schedule or Registration Statement No.:
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4) Date Filed:
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<PAGE>
AMERICAN SKANDIA TRUST
One Corporate Drive
P.O. Box 883
Shelton, Connecticut 06484
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS OF THE
BERGER CAPITAL GROWTH PORTFOLIO
To be held
April 29, 1998
To the Shareholders of the Berger Capital Growth Portfolio of American
Skandia Trust:
Notice is hereby given that this Special Meeting of Shareholders of the
Berger Capital Growth Portfolio (the "Portfolio") of American Skandia Trust (the
"Trust"), will be held at One Corporate Drive, Shelton, Connecticut 06484 on
April 29, 1998 at 10:30 p.m. Eastern Time, or at such adjourned time as may be
necessary for the holders of a majority of the outstanding shares of the
Portfolio to vote (the "Meeting"), for the following purposes:
I. To consider the approval of a new Investment Management Agreement
between the Trust and American Skandia Investment Services, Incorporated
regarding management of the Portfolio.
II. To consider the approval of a new Sub-Advisory Agreement between
American Skandia Investment Services, Incorporated and Neuberger&Berman
Management Incorporated regarding investment advice to the Portfolio.
III. To consider the approval of changes in the Portfolio's fundamental
investment restrictions.
IV. To transact such other business as may properly come before the Meeting
or any adjournment thereof.
The matters referred to above are discussed in detail in the Proxy
Statement attached to this Notice. The Board of Trustees has fixed the close of
business on March 9, 1998 as the record date for determining shareholders
entitled to notice of, and to vote at, the Meeting, and only holders of record
of shares at the close of business on that date are entitled to notice of, and
to vote at, the Meeting. Each share of the Portfolio is entitled to one vote on
each proposal.
You are cordially invited to attend the Meeting. If you do not expect
to attend, you are requested to complete, date and sign the enclosed form of
proxy and return it promptly in the envelope provided for that purpose. The
enclosed proxy is being solicited on behalf of the Board of Trustees.
YOUR VOTE IS IMPORTANT. IN ORDER TO AVOID THE UNNECESSARY EXPENSE OF FURTHER
SOLICITATION, WE URGE YOU TO INDICATE VOTING INSTRUCTIONS ON THE ENCLOSED PROXY,
DATE AND SIGN IT, AND RETURN IT PROMPTLY IN THE ENVELOPE PROVIDED, NO MATTER HOW
LARGE OR SMALL YOUR HOLDINGS MAY BE. YOU MAY REVOKE IT AT ANY TIME PRIOR TO ITS
USE. THEREFORE, BY APPEARING AT THE MEETING, AND REQUESTING REVOCATION PRIOR TO
THE VOTING, YOU MAY REVOKE THE PROXY AND YOU CAN THEN VOTE IN PERSON.
By order of the Board of Trustees
Eric C. Freed
Secretary
American Skandia Trust
March 31, 1998
<PAGE>
PROXY STATEMENT
AMERICAN SKANDIA TRUST
One Corporate Drive
P.O. Box 883
Shelton, Connecticut 06484
SPECIAL MEETING OF SHAREHOLDERS
OF THE BERGER CAPITAL GROWTH PORTFOLIO
OF
AMERICAN SKANDIA TRUST
To be held
April 29, 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 a Special Meeting of Shareholders of the
AST Berger Capital Growth Portfolio (the "Portfolio") of the Trust to be held at
One Corporate Drive, Shelton, Connecticut 06484 on April 29, 1998 at 10:30 a.m.
Eastern Time (the "Meeting"), or at any adjournment thereof, for the purposes
set forth in the accompanying Notice of Meeting ("Notice"). The first mailing of
proxies and proxy statements to shareholders is anticipated to be on or about
March 31, 1998.
The costs of the Meeting, including the solicitation of proxies, will
be paid by American Skandia Investment Services, Incorporated ("ASISI" or the
"Manager"), the Investment Manager to the Portfolio. Voting instructions will be
solicited principally by mailing this Proxy Statement and its enclosures, but
proxies also may be solicited by telephone, telegraph, or in person by officers
or agents of the Trust or American Skandia Life Assurance Corporation ("ASLAC").
The Trust will forward proxy materials to record owners for any beneficial
owners that such record owners may represent.
The Annual Report of the Trust (the "Report"), including audited
financial statements for the fiscal year ended December 31, 1997, has been
previously sent to shareholders. The Trust will furnish an additional copy of
the Report, as well as the most recent Semi-annual Report of the Trust, to a
shareholder upon request, without charge, by writing to the Trust at the above
address or by calling 1-800-752-6342.
Shareholders of record at the close of business on March 9, 1998 (the
"Record Date") are entitled to notice of, and to vote at, the Meeting. Each
shareholder is entitled to one vote for each full share. As of the Record Date,
the following number of shares of beneficial interest of the Portfolio were
outstanding: [ ]. As of the Record Date, there is no beneficial owner of more
than 5% of the shares of the Portfolio to the knowledge of the Trust.
Currently, the Trust serves as an underlying mutual fund for variable
annuities issued by life insurance companies, including ASLAC, a stock life
insurance company. As of the Record Date, nearly 100% of the Portfolio's shares
were legally owned by ASLAC. ASLAC holds Portfolio shares attributable to
variable annuity contracts in American Skandia Life Assurance Corporation
Variable Account B (Class 1 Sub-Accounts), ASLAC Variable Account B (Class 2
Sub-Accounts), ASLAC Variable Account B (Class 3 Sub-Accounts) and ASLAC
Variable Account Q (collectively, for purposes of this Proxy Statement, "ASLAC
Variable Accounts"), each of which except for ASLAC Variable Account Q is an
investment company registered as such under the Investment Company Act of 1940,
as amended (the "Investment Company Act"). ASLAC Variable Accounts have various
sub-accounts, each of which invests exclusively in a corresponding portfolio of
an underlying fund. ASLAC will solicit voting instructions from variable annuity
contract owners who beneficially own shares of the Portfolio represented in the
Berger Capital Growth Sub-account as of the Record Date (the "Contractowners").
Because Contractowners are indirectly invested in the Portfolio through their
contracts and have the right to instruct ASLAC how to vote shares of the
Portfolio on all matters requiring a shareholder vote, Contractowners should
consider themselves shareholders of the Portfolio 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
Portfolio. 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. ASIHC is
indirectly owned by Skandia Insurance Company Ltd., a Swedish company located at
Sveavagen 44, S-103, Stockholm, Sweden.
Under a Sub-advisory Agreement with ASISI, Berger Associates, Inc.
("Berger Associates"), 2l0 University Blvd., Suite 900, Denver, Colorado 80206,
serves as sub-advisor to the Portfolio 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 Portfolio. Berger Associates is a wholly owned
subsidiary of Kansas City Southern Industries, Inc. ("KCSI"). KCSI is a
publicly-traded holding company whose primary subsidiaries are engaged in
transportation and financial services.
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.
All shares of the Portfolio held by the Contractowners will be voted by
ASLAC in accordance with voting instructions received from such Contractowners
at the Meeting and any adjournments thereof. ASLAC is entitled to vote shares
for which voting instructions are not received and will vote such shares in the
same proportion as the votes cast by the Contractowners on the proxy issues
presented. ASLAC has fixed the close of business on April 27, 1998 as the last
day for which voting instructions will be accepted.
Timely, properly executed proxies will be voted as Contractowners
instruct. The Board of Trustees intends to bring before the Meeting the matters
set forth in Proposals I, II and III of the foregoing Notice (collectively, the
"Proposals"). Unless instructions to the contrary are marked, proxies will be
voted FOR each of the Proposals. The Trustees do not expect any other business
to be brought before the meeting. If, however, any other matters are properly
presented to the meeting for action, it is intended that the persons named in
the enclosed proxy will vote in accordance with their judgment. A Contractowner
executing and returning a proxy may revoke it at any time prior to its exercise
by written notice of such revocation to the Secretary of the Trust, by execution
of a subsequent proxy, or by voting in person at the Meeting.
The presence in person or by proxy of the holders of a majority of the
outstanding shares is required to constitute a quorum at the Meeting. Since
ASLAC is the legal owner of nearly 100% of the Portfolio's shares, ASLAC's
presence at the Meeting constitutes a quorum under the Trust's By-laws. Shares
beneficially held by Contractowners present in person or represented by proxy at
the Meeting will be counted for the purpose of calculating the votes cast on the
issues before the Meeting.
Approval of each of the Proposals requires the vote of a "majority of
the outstanding voting securities" of the Portfolio, as defined in the
Investment Company Act, which means the vote of 67% or more of the shares of the
Portfolio present at the Meeting, if the holders of more than 50% of the
outstanding shares of the Portfolio are present or represented by proxy, or the
vote of more than 50% of the outstanding shares of the Portfolio, whichever is
less. Approval of each Proposal is made contingent upon approval of all
Proposals. Therefore, a vote against any of Proposals I, II or III will have the
effect of a vote against each other.
In the event that sufficient votes to approve any Proposal are not
received, the persons named as proxies may propose one or more adjournments of
the Meeting to permit further solicitation of proxies. Any such adjournment will
require the affirmative vote of a majority of those shares represented at the
Meeting in person or by proxy. The persons named as proxies will vote those
proxies that they are entitled to vote FOR or AGAINST any such adjournment in
their discretion. Any Proposals for which sufficient favorable votes have been
received by the time of the Meeting may be acted upon and such vote shall be
considered final regardless of whether the Meeting is adjourned to permit
additional solicitation with respect to any other Proposal. Proxies submitted
without voting instructions will be voted FOR the Proposals.
<PAGE>
PROPOSAL I
APPROVAL OF A NEW INVESTMENT MANAGEMENT AGREEMENT BETWEEN THE TRUST
AND AMERICAN SKANDIA INVESTMENT SERVICES, INCORPORATED
Background
Since the Portfolio commenced operation on October 20, 1994, ASISI has
served as Investment Manager to the Portfolio pursuant to an Investment
Management Agreement (the "Present Investment Management Agreement") with the
Trust. The Present Investment Management Agreement, effective October 19, 1994
and as annually renewed thereafter, provides, among other things, that in
carrying out its responsibility to supervise and manage all aspects of the
Portfolio's operations, the Manager may engage, subject to the approval of the
Board of Trustees and, where required, the shareholders of the Portfolio, a
sub-advisor to provide advisory services in relation to the Portfolio, and
delegate to the sub-advisor the duty, among other things to formulate and
implement the Portfolio's investment program, including the duty to determine
what issuers and securities will be purchased for or sold from the Portfolio.
In accordance with this provision for delegation of authority, the
Manager has entered into a sub-advisory agreement (the "Present Sub-Advisory
Agreement"), effective [ ] and revised in certain immaterial respects on May 1,
1996, with Berger Associates, pursuant to which the above duties have been
delegated by the Manager to Berger Associates. Berger Associates has served as
sub-advisor to the Portfolio since the Portfolio commenced operations on October
20, 1994.
The Present Investment Management Agreement and the Present
Sub-Advisory Agreement have been approved annually 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"), since the Portfolio's inception. The Present Sub-Advisory Agreement
in its current form was most recently approved on April 11, 1997.
The Board of Trustees, through the Manager, has received a tendered
resignation from Berger Associates as Sub-advisor to the Portfolio. At a meeting
held on March 2, 1998, the Board of Trustees received a proposal from the
Manager to effect various changes to the investment objective and stated
investment policies and restrictions applicable to the Portfolio, as described
in Proposals III and IV below, and to engage Neuberger & Berman Management
Incorporated ("N&B Management") to provide sub-advisory services for the
Portfolio. In connection with its recommendation, the Manager proposed to enter
into a new investment management agreement with the Trust (the "New Investment
Management Agreement") and a new sub-advisory agreement (the "New Sub-Advisory
Agreement") with N&B Management, both of which would become effective May 1,
1998 (or four business days after the last date on which all Proposals have
received shareholder approval, whichever is later) (such date being hereinafter
referred to as the "Effective Date"). The terms and conditions of the New
Investment Management Agreement and the Sub-Advisory Agreement are identical in
all material respects with those of the Present Investment Management Agreement
and the Present Sub-Advisory Agreement, respectively, with the exception of an
increased fee rate, the elimination of a provision for reimbursement of certain
of the Portfolio's normal operating expenses by the Manager, the effective date,
the identity of the sub-advisor, and a change in the name of the Portfolio to
the "Neuberger & Berman Mid-Cap Growth Portfolio"
As described earlier in greater detail, Berger Associates is a wholly
owned subsidiary of KCSI. Berger Associates serves as investment advisers to a
number of investment companies and institutional investors. At December 31,
1997, Berger Associates and its affiliates managed assets in excess of $6.4
billion.
In support of its recommendation to engage N&B Management as
sub-advisor to the Portfolio, the Manager informed the Board of Trustees of its
belief that appointment of N&B Management as sub-advisor to the Portfolio and
implementation of a revised investment objective and of revised investment
policies and restrictions would assist in efforts to increase the Portfolio's
net assets.
On March 2, 1998, the Board of Trustees, including a majority of the
Independent Trustees, gave preliminary approval to the New Investment Management
Agreement and the New Sub-Advisory Agreement, each effective on the Effective
Date (as defined earlier), and authorized the submission of the Proposals for
shareholder approval and preparation of this proxy statement. It is anticipated
that formal approval of the New Investment Management Agreement and the
Sub-Advisory Agreement by the Board of Trustees will take place at a meeting
scheduled to be held on April 8, 1998. At such meeting, Management will
recommend that the Board of Trustees also approve a change in the name of the
Portfolio to the "Neuberger & Berman Mid-Cap Growth Portfolio," subject to
shareholder approval of all of the Proposals. Subject to shareholder approval of
each of the Proposals, the Present Investment Management Agreement and the
Present Sub-Advisory Agreement will be terminated as of the opening of business
on the Effective Date (as defined earlier).
The Present Investment Management Agreement
The following description of the material terms of the Present
Investment Management Agreement is qualified in its entirety by reference to the
form of such agreement attached to this Proxy Statement as Exhibit A-1.
The Present Investment Management Agreement requires the Manager to
furnish the Portfolio, at a minimum, with investment advice and investment
management and administrative services with respect to the Portfolio, subject to
the supervision of the Board of Trustees and in conformity with the stated
policies of the Portfolio. Under the terms of the Present Investment Management
Agreement, the Manager's services to the Portfolio are not to be deemed
exclusive, and the Manager is permitted to render investment advisory and
corporate administrative or other services to others (including other investment
companies) and to engage in other activities. The Manager may engage a
sub-advisor to provide advisory services in relation to the Portfolio.
The Manager is responsible for certain expenses in connection with the
trading function and investment program of the Portfolio. The Manager is
required to furnish, at its expense and without cost to the Trust, the services
of a President, Secretary, and one or more Vice Presidents of the Trust, to the
extent such additional officers may be required by the Trust for the proper
conduct of its affairs, and to provide or obtain for the Portfolio, and
thereafter supervise, such executive, administrative, clerical and shareholder
servicing services as are deemed advisable by the Board of Trustees. The Trust
pays other expenses, including, but not limited to, brokerage commissions,
legal, auditing, taxes or governmental fees, the cost of preparing share
certificates, custodian, depository, transfer and shareholder service agent
costs, expenses of issue, sale, redemption and repurchase of shares, expenses of
registering and qualifying shares for sale, insurance premiums on property or
personnel (including officers and Trustees if available) of the Trust which
inure to its benefit, expenses relating to Trustee and shareholder meetings, the
cost of preparing and distributing reports and notices to shareholders, the fees
and other expenses incurred by the Trust in connection with membership in
investment company organizations, and the cost of printing copies of
prospectuses and statements of additional information distributed to
shareholders.
The Present Investment Management Agreement also provides that in the
absence of willful misfeasance, bad faith, gross negligence or reckless
disregard of obligations or duties thereunder on the part of the Manager or any
of its officers, trustees, or employees, the Manager shall not be subject to
liability to the Trust or to any shareholder of the Portfolio for any act or
omission in the course of, or connected with, rendering services thereunder or
for any losses that may be sustained in the purchase, holding or sale of any
security.
As compensation for the services performed and the facilities furnished
by the Manager under the Present Investment Management Agreement, the Manager
receives a fee payable monthly at an annual rate of .75% of the Portfolio's
average daily net assets. Under the terms of the Present Investment Management
Agreement, the Manager has agreed to reimburse the Portfolio for any fiscal year
in order to prevent the total of all ordinary business expenses of the
Portfolio, including all management and administration fees, but excluding
taxes, interest, brokerage commissions and fees and extraordinary expenses, such
as litigation, from exceeding 1.25% of the Portfolio's average daily net assets
(such agreement as set forth in the Present Investment Management Agreement
being hereinafter referred to as the "Contractual Expense Reimbursement
Provision"). The aggregate fee paid by the Trust to the Manager for services
rendered under the Present Investment Management Agreement for the fiscal year
ended December 31, 1997 was $1,259,790.
The Present Investment Management Agreement provides that it will
continue in effect from year to year if specifically approved at least annually,
either by the Board of Trustees or by the vote of a majority of the Portfolio's
outstanding voting securities (as defined under the Investment Company Act). In
either event, such continuance shall also be approved by the vote of a majority
of the Board of Trustees who are not parties to the agreement or interested
persons of a party to the agreement (other than as trustees of the Trust) cast
in person at a meeting called for the purpose of voting on such continuance.
These provisions reflect the requirements of the Investment Company Act. The
Present Investment Management Agreement may be terminated at any time, without
penalty or prejudice to the completion of any transaction already initiated on
behalf of the Portfolio, on 60 days' written notice to the other party to the
agreement by (i) the vote of the Board of Trustees; (ii) the vote of a majority
of the Portfolio's outstanding voting securities; or (iii) the Manager. The
Present Investment Management Agreement by its terms will terminate
automatically if not reapproved annually or in the event of its "assignment" (as
defined under the Investment Company Act).
Subject to shareholder approval of each of the Proposals, the Present
Investment Management Agreement will be terminated as of the opening of business
on the Effective Date (as defined earlier). The decision to terminate the
Present Investment Management Agreement rather than to allow its continuance
reflects the determination of the Board of Trustees and the Manager that it
would be in the interests of the Portfolio's shareholders to enter into the New
Investment Management Agreement described below. If the Present Investment
Management Agreement is terminated, the Manager's compensation thereunder will
be prorated to the date of termination.
The New Investment Management Agreement
The following description of the material terms of the New Investment
Management Agreement is qualified in its entirety by reference to the form of
such Agreement attached to this Proxy Statement as Exhibit A-2.
The terms and conditions of the New Investment Management Agreement are
identical in all material respects to those of the Present Investment Management
Agreement, with the exception of the increased investment management fee rate
payable by the Trust, the elimination of the Contractual Expense Reimbursement
Provision, the effective date and the name of the Portfolio. Although the New
Investment Management Agreement does not include the Contractual Expense
Reimbursement Provision, the Manager has voluntarily undertaken to reimburse the
Portfolio for any fiscal year in order to prevent Portfolio expenses which would
have been subject to the Contractual Expense Reimbursement Provision from
exceeding 1.25% of the average daily net assets of the Portfolio (such voluntary
undertaking being hereinafter referred to as the "Voluntary Expense
Reimbursement Agreement"). The Manager may terminate the Voluntary Expense
Reimbursement Agreement at any time. As compensation for the services to be
performed and the facilities to be furnished by the Manager under the New
Investment Management Agreement, the Manager will receive a fee payable monthly
at an annual rate of .90% of the average daily net assets of the Portfolio not
in excess of $1 billion, plus .85% of the Portfolio's average daily net assets
in excess of $1 billion.
The following table reflects the current annual fees and other expenses
incurred by the Portfolio under the Present Investment Management Agreement for
the fiscal year ending December 31, 1997, as well as the pro forma annual fees
and other expenses which would have been incurred by the Portfolio under the
proposed New Investment Management Agreement for the same time period. The
figures are stated as a percentage of average net assets of the Portfolio and do
not reflect any applicable expenses or charges, including sales loads, that may
be imposed with respect to ASLAC Variable Accounts.
<TABLE>
<CAPTION>
Current Annual Pro Forma Annual
Portfolio Operating Expenses Portfolio Operating Expenses
<S> <C> <C>
Management Fee .75% .90%
Other Expenses .24% .24%
Total Portfolio Operating Expenses .99% 1.14%
</TABLE>
Expense Examples: The examples shown below assume that the total annual expenses
for the Portfolio throughout the period specified will be the lower of the total
annual expenses without any applicable reimbursement or expenses after any
applicable reimbursement. Such examples are illustrative only and should not be
considered a representation of past or future expenses of the Portfolio. Actual
expenses may be greater or less than those shown below.
<TABLE>
<CAPTION>
A shareholder would pay the following expenses (rounded to the nearest dollar) on a $1,000 investment, assuming 5% annual
return at the end of each time period:
1 Year 3 Years 5 Years 10 Years
<S> <C> <C> <C> <C>
Current Expense Examples: 10 32 55 121
Pro-Forma Expense Examples: 12 37 64 140
</TABLE>
For the fiscal year ended December 31, 1997, the amount of the
investment management fee paid by the Trust to the Manager for services rendered
under the Present Investment Management Agreement was $1,259.790. If the New
Investment Management Agreement had been effect for the fiscal year ended
December 31, 1997, the amount of the investment management fee paid by the Trust
to the Manager for services rendered under the New Investment Management
Agreement would have been $1,511,749, an increase of 20% above the actual amount
paid.
If the New Investment Management Agreement is approved by the
shareholders of the Portfolio (and each of Proposals II, III and IV is
approved), it will become effective on the Effective Date. The New Investment
Management Agreement will continue in effect from year to year if specifically
approved at least annually, either by the Board of Trustees or by the vote of a
majority of the Portfolio's outstanding voting securities (as defined under the
Investment Company Act). In either event, such continuance shall also be
approved by the vote of a majority of the Board of Trustees who are not parties
to the agreement or interested persons of a party to the agreement (other than
as trustees of the Trust) cast in person at a meeting called for the purpose of
voting on such continuance. These provisions reflect the requirements of the
Investment Company Act. Like the Present Investment Management Agreement, the
New Investment Management Agreement may be terminated at any time, without
penalty or prejudice to the completion of any transactions already initiated on
behalf of the Portfolio, on 60 days' written notice to the other party to the
agreement by (i) the vote of the Board of Trustees; (ii) the vote of a majority
of the Portfolio's outstanding voting securities; or (iii) the Manager. The New
Investment Management Agreement would terminate if not reapproved annually or
automatically in the event of its "assignment" (as defined under the Investment
Company Act).
The Manager and Other Information
The Manager is registered as an investment advisor with the Securities
and Exchange Commission pursuant to the Investment Advisers Act of 1940, as
amended. At December 31, 1997 the Manager served as investment adviser to each
of the twenty-eight investment company portfolios of the Trust. At December 31,
1997, the Manager also served as investment advisor to five investment
portfolios of American Skandia Advisor Funds, Inc. ("ASAF") an open-end
management investment company, and to each investment portfolio of American
Skandia Master Trust ("ASMT") an open-end management investment company
comprised of five diversified investment portfolios. Five additional ASAF
portfolios invest all of their investable assets in the corresponding portfolios
of ASMT, which have identical investment objectives, policies and limitations as
these ASAF portfolios. Therefore, these ASAF portfolios do not require
investment advisors. The principal executive officer of the Manager is Jan R.
Carendi, who is also a director of the Manager, a member of the Board of
Trustees of the Trust, and Executive Vice President and Member of Executive
Management Group, Skandia Insurance Company Ltd. ("SICL"), Sveavagen 44, S-103
50 Stockholm, Sweden. The other officers and directors of the Manager and the
officers of the Manager who are also officers or members of the Board of
Trustees of the Trust are set forth below:
<TABLE>
<CAPTION>
Name and Position with ASISI Principal Occupation and Address
<S> <C>
Wade A. Dokken President and Chief Marketing Officer
Chairman, Deputy Chief Executive Officer American Skandia Marketing, Incorporated
and Director One Corporate Drive, Shelton, CT 06484
Gordon C. Boronow* President and Chief Operating Officer
Director American Skandia Life Assurance Corporation
One Corporate Drive, Shelton, CT 06484
Thomas M. Mazzaferro* Executive Vice President and Chief Financial Officer
President and American Skandia Life Assurance Corporation
Chief Financial Officer and Director One Corporate Drive, Shelton, CT 06484
John Birch Chief Operating Officer
Vice President American Skandia Investment Services, Inc.
One Corporate Drive, Shelton, CT 06848
N. David Kuperstock Vice President, Product Development
Director American Skandia Life Assurance Corporation
One Corporate Drive, Shelton, CT 06484
Rodney D. Runestad Vice President and Valuation Actuary
Director American Skandia Life Assurance Corporation
One Corporate Drive, Shelton, CT 06484
Richard G. Davy, Jr.* Vice President, Mutual Fund Operations
Vice President, Mutual Fund Operations American Skandia Investment Services, Incorporated
and Director One Corporate Drive, Shelton, CT 06484
Anders O. Soderstrom President and Chief Information Officer
Executive Vice President and Chief Information Officer American Skandia Information Services
and Technology Corporation
One Corporate Drive, Shelton, CT 06484
C. Ake Svensson Vice President, Corporate Controller & Treasurer
Treasurer American Skandia Investment Holding Corporation
One Corporate Drive, Shelton, CT 06484
</TABLE>
*Individuals who are also Trustees or officers of the Trust.
The Evaluation by the Board of Trustees
In evaluating the New Investment Management Agreement, the Board of
Trustees reviewed materials furnished by the Manager and N&B Management. These
materials included financial statements and information regarding the Manager
and N&B Management and their respective personnel and operations. Consideration
was given to the increased fee rates payable under the New Investment Management
Agreement and the New Sub-Advisory Agreement and the amount of fees and expenses
that would have been paid if such agreements had been in effect during the past
fiscal year, as well as the pro forma net increase in expenses to the Portfolio
at various asset levels under the new fee structure. Consideration also was
given to comparative fee and expense information concerning other mutual funds
with investment objectives comparable to that proposed in Proposal III published
by widely recognized industry authorities and to potential indirect benefits in
connection with the Portfolio and its investment operations, including any which
may arise in connection with brokerage transactions.
In evaluating the New Investment Management Agreement, the Board of
Trustees considered that (1) the scope and quality of the services which the
Manager has provided under the Present Investment Management Agreement and
expects to provide under the New Investment Management Agreement have been and
are satisfactory; (2) although the investment management fee rate payable to the
Manager under the New Investment Management Agreement is higher than the
investment management fee rate payable under the Present Investment Management
Agreement, the management fee rate is competitive when compared to fee rates
applicable to mutual funds having investment objectives comparable to that
proposed in Proposal III; (3) the terms of the New Investment Management
Agreement will not change materially from those of the Present Investment
Management Agreement, except for the effective date, the name of the Portfolio,
the elimination of the Contractual Expense Reimbursement Provision and the
increased investment management fee rate; and (4) the Manager's obligations
under the Voluntary Expense Reimbursement Agreement will be the same as its
obligations under the Contractual Expense Reimbursement Provision except for the
Manager's right to terminate the Voluntary Expense Reimbursement Agreement at
any time. (For a further discussion of this limitation on the Portfolio's
expenses under the Present Investment Management Agreement and the New
Investment Management Agreement, see the respective discussions of each
agreement under this Proposal I.) The Board also gave consideration to the
Manager's belief that maintaining compensation at competitive levels over the
long term is necessary for the Manager to continue to provide high quality
services to the Portfolio. The Board of Trustees received assurances from the
Manager that the scope and quality of its services would not be diminished under
the terms of the New Investment Management Agreement. The Board of Trustees also
considered as very important the Manager's present distribution and marketing
strategies and commitment to devote appropriate resources to develop new markets
and attract additional assets for the Portfolio in an increasingly competitive
environment.
Based upon its evaluation, the Board of Trustees determined that the
continuance of the Manager's role as Investment Manager of the Portfolio likely
would offer the Portfolio continued access to effective management and advisory
services and capabilities following implementation of the changes in the
Portfolio's investment objective and stated investment policies and restrictions
contemplated by Proposals III and IV. The Board of Trustees concluded further
that the terms of the New Investment Management Agreement, including the fees
contemplated thereby, are fair and reasonable and in the best interests of the
Portfolio and its shareholders.
In order to provide for the services described in the New Investment
Management Agreement, the shareholders are being asked to approve the New
Investment Management Agreement.
This Proposal I is made contingent upon shareholder approval of
Proposals II and III. If any of the Proposals does not receive shareholder
approval, the Present Investment Management Agreement will remain in effect
subject to its terms.
THE TRUSTEES, INCLUDING THE INDEPENDENT TRUSTEES,
RECOMMEND THAT THE SHAREHOLDERS VOTE "FOR" PROPOSAL I.
ANY UNMARKED PROXIES WILL BE SO VOTED.
PROPOSAL II
APPROVAL OF A NEW SUB-ADVISORY AGREEMENT BETWEEN
AMERICAN SKANDIA INVESTMENT SERVICES, INCORPORATED
AND NEUBERGER&BERMAN MANAGEMENT INCORPORATED
The Present Sub-Advisory Agreement
The following description of the Present Sub-Advisory Agreement is
qualified in its entirety by reference to the form of such agreement attached to
this Proxy Statement as Exhibit A-3.
Berger Associates has served as sub-advisor to the Portfolio since the
Portfolio commenced operations on October 20, 1994. Under the terms of the
Present Sub-Advisory Agreement, Berger Associates has agreed to furnish the
Manager with investment advisory services in connection with a continuous
investment program for the Portfolio which is to be managed in accordance with
the investment objective, investment policies and restrictions of the Portfolio
as set forth in the Prospectus and Statement of Additional Information of the
Trust and in accordance with the Trust's Declaration of Trust and By-laws.
Subject to the supervision and control of the Manager, which is in turn subject
to the supervision and control of the Board of Trustees, Berger Associates, in
its discretion, determines and selects the securities to be purchased for and
sold from the Portfolio from time to time and places orders with and gives
instructions to brokers, dealers and others to cause such transactions to be
executed.
The Present Sub-Advisory Agreement requires Berger Associates to use
its best efforts and good faith in the performance of its services under the
Present Sub-Advisory Agreement. However, so long as Berger Associates 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 of its
obligations under the Present Sub-Advisory Agreement, Berger Associates shall
not be liable to the Trust or its shareholders or to the Manager for any act or
omission resulting in any loss suffered in any portfolio of the Trust in
connection with any service to be provided under the Present Sub-Advisory
Agreement.
The Manager is responsible for payment of Berger Associates'
compensation under the Present Sub-Advisory Agreement. Berger Associates'
compensation for the services provided under the Present Sub-Advisory Agreement
is computed at an annual rate and is payable monthly in arrears, based on the
average daily net assets of the Portfolio for each month. For all services
rendered, the Manager calculates and pays Berger Associates at the annual rate
of .55% of the portion of the Portfolio's average daily net assets not in excess
of $25 million, plus .50% of the portion of the Portfolio's average daily net
assets over $25 million but not in excess of $50 million, plus .40% of the
portion of the Portfolio's average daily net assets over $50 million. In
computing the fee to be paid to Berger Associates, the net asset value of the
Portfolio is valued as set forth in the current registration statement of the
Trust.
The Present Sub-Advisory Agreement provides that it shall remain in
effect for one year from the date of the agreement, and is renewable annually
thereafter by specific approval of the Board of Trustees or by vote of a
majority of the outstanding voting securities of the Portfolio (as defined under
the Investment Company Act). In either event, such renewal shall also be
approved by the vote of a majority of the Independent Trustees, cast in person
at a meeting called for the purpose of voting on such renewal. The Present
Sub-Advisory Agreement may be terminated at any time without penalty upon 60
days' written notice to the other party to the agreement, and will automatically
terminate in the event of its "assignment" by either party (as defined under the
Investment Company Act) or (provided Berger Associates has received prior
written notice thereof) upon termination of the Present Investment Management
Agreement.
Subject to shareholder approval of each of the Proposals, the Present
Sub-Advisory Agreement will be terminated by the resignation of Berger
Associates as sub-advisor to the Portfolio, as of the opening of business on the
Effective Date (as defined earlier). Both the Manager and Berger Associates have
mutually agreed that it would be in the interests of the Portfolio's
shareholders for the Manager to accept the resignation of Berger Associates as
sub-advisor to the Portfolio. The termination, rather than continuance, of the
Present Sub-Advisory Agreement reflects the Manager's determination that it
would be in the interests of the Portfolio's shareholders to effect the changes
to the Portfolio's investment objective and stated investment policies and
restrictions contemplated by Proposals III and IV and, if adopted, to enter into
the New Sub-Advisory Agreement described below. If the Present Sub-Advisory
Agreement is terminated, Berger Associates' compensation thereunder will be
prorated to the date of termination.
As at December 31, 1997, Berger Associates and its affiliates managed
assets totaling approximately $6.4 billion, including over $185 million in
assets of the Portfolio.
The New Sub-Advisory Agreement
The following description of the New Sub-Advisory Agreement is
qualified in its entirety by reference to the form of such agreement attached to
this Proxy Statement as Exhibit A-4.
The terms and conditions of the New Sub-Advisory Agreement are
identical in all material respects to those of the Present Sub-Advisory
Agreement, with the exception of the identity of the service provider, the
increased sub-advisory fee rate payable by the Manager, the effective date and
the name of the Portfolio. As compensation for the services to be rendered under
the New Sub-Advisory Agreement, the Manager, and not the Trust or the Portfolio,
will pay N&B Management a fee at the annual rate of .45% of the Portfolio's
average daily net assets not in excess of $100 million, plus .40% of the
Portfolio's average daily net assets over $100 million. In computing the fee to
be paid to N&B Management, the net asset value of the Portfolio shall be valued
as set forth in the then current registration statement of the Trust. If the New
Sub-Advisory Agreement is terminated, the payment will be prorated to the date
of termination.
For the fiscal year ended December 31, 1997, the amount of the
sub-advisory fee paid by the Manager to Berger Associates for services rendered
under the Present Sub-Advisory Agreement was $734,388. If the New Sub-Advisory
Agreement had been effect for the year ending December 31, 1997, the amount of
the sub-advisory fee paid by the Manager to N&B Management for services rendered
under the New Sub-Advisory Agreement would have been $721,888, a decrease of
1.7% from the actual amount paid to Berger Associates during such period.
For a description of the current annual fees and other expenses
incurred by the Portfolio under the Present Investment Management Agreement for
the fiscal year ended December 31, 1997, as well as the pro forma annual fees
and other expenses which would have been incurred by the Portfolio under the New
Investment Management Agreement for the same time period, see the discussion in
Proposal I under the heading, "The New Investment Management Agreement."
If the New Sub-Advisory Agreement is approved by the shareholders of
the Portfolio (and each of Proposals I and III is approved), it will become
effective at the opening of business on the Effective Date (as defined earlier)
The New Sub-Advisory Agreement will remain in effect for an initial one year
term and is renewable thereafter by specific approval of the Board of Trustees
or by vote of a majority of the outstanding voting securities of the Portfolio
(as defined under the Investment Company Act). In either event, such renewal
shall also be approved by the vote of a majority of the Independent Trustees,
cast in person at a meeting called for the purpose of voting on such renewal.
Like the Present Sub-Advisory Agreement, the New Sub-Advisory Agreement may be
terminated at any time without penalty upon 60 days' written notice to the other
party to the agreement, and will automatically terminate in the event of its
"assignment" by either party (as defined under the Investment Company Act) or
(provided N&B Management has received prior written notice thereof) upon
termination of the New Investment Management Agreement.
The Manager believes that implementation of the changes to the
investment objective and to the stated investment policies and restrictions
contemplated by Proposal III together with the regard for the high quality of
the investment advisory capabilities of N&B Management will facilitate efforts
to increase the Portfolio's assets with possible beneficial effects on Portfolio
and Trust expenses. As discussed herein, the Board of Trustees and the Manager
believe that the increased overall fee structure for the Portfolio under the New
Investment Management Agreement and the New Sub-Advisory Agreement accurately
reflects the high quality of services to be provided under these agreements.
The Proposed Sub-Advisor
N&B Management and its predecessor firms and affiliates have
specialized in the management of investment companies since 1950. N&B Management
has executive offices at 605 Third Avenue, New York, New York 10158-3698. All of
the voting stock of N&B Management is owned by individuals who are principals of
Neuberger&Berman, LLC ("Neuberger&Berman"). The principals having the three
largest principal interests in Neuberger & Berman are Robert Appel, Dietrich
Weisman and Marvin C. Schwartz. Neuberger&Berman, a member firm of the New York
Stock Exchange, Inc. and other principal exchanges, acts as the principal broker
in the purchase and sale of securities and the sale of covered call options for
portfolios managed by N&B Management and provides N&B Management with certain
assistance in the management of portfolios without added cost to such
portfolios. Neuberger & Berman and its affiliates, including N&B Management,
manages securities accounts, including mutual funds, that had approximately
$52.9 billion in assets as of December 31, 1997.
The principal executive officer of N&B Management is Stanley Egener and its
directors are Richard A. Cantor, Stanley Egener, Theodore P. Giuliano, Michael
M. Kassen, Irwin Lainoff and Lawrence Zicklin. The principal occupations of
Messrs. Cantor, Egener, Giuliano, Kassen, Lainoff and Zicklin are as principals
of Neuberger&Berman (in the case of Mr. Egener, also as principal executive
officer of N&B Management).
N&B Management acts as investment advisor to various publicly owned
investment companies, some of which have investment objectives comparable to
that proposed in Proposal III of this Proxy Statement (collectively, the
"Comparable N & B Funds"). Each of the Comparable N&B Funds is a "master fund"
in which one or more "feeder funds", having identical investment objectives and
policies as their corresponding "master funds", invest all their assets.
Neuberger&Berman serves as sub-advisor for all such "master funds", for which it
is compensated by N&B Management based upon direct and indirect costs. As
investment manager to the Comparable N&B Funds, N&B Management performs certain
administrative and other duties, which it will not be required to perform for
the Portfolio under the New Sub-Advisory Agreement. For each Comparable N&B
Fund, the chart below lists the total assets at December 31, 1997, as well as
the current management fee rate payable to N&B Management:
<TABLE>
<CAPTION>
Total Net Assets
Comparable N & B Fund at December 31, 1997 Management Fee Rate
<S> <C> <C> <C>
Neuberger & Berman Manhattan $626,632,234 .55% of the first $250 million of the Portfolio's average
Portfolio (a series of Equity daily net assets, .525% of the next $250 million, .50% of
Managers trust) the next $250 million, .475% of the next $250 million, .45%
of the next $500 million, and .425% of average daily
net assets in excess of $1.5 billion.
AMT Growth Investments (a series $586,426,677 .55% of the first $250 million of the Series' average daily
of Advisers Managers Trust) net assets, .525% of the next $250 million, .50% of the next
$250 million, .475% of the next $250 million, .45% of the next $500
million, and .425% of average daily net assets in excess of $1.5
billion.
AMT Mid-Cap Growth Investments $1,573,683 .55% of the first $250 million of the Series' average daily
(a series of Advisers Managers net assets, .525% of the next $250 million, .50% of the next
Trust $250 million, .475% of the next $250 million, .45% of the
next $500 million,and .425% of average daily net
assets in excess of $1.5 billion.
All Comparable N & B Funds $1,214,632,594
</TABLE>
The Evaluation by the Board of Trustees
In evaluating the New Sub-Advisory Agreement, the Board of Trustees
reviewed materials furnished by the Manager and N&B Management. These materials
included financial statements and information regarding the Manager, N&B
Management, and their respective personnel and operations. Consideration was
given to the increased fee rates payable by the Portfolio under the New
Investment Management Agreement and the New Sub-Advisory Agreement and the
amount of fees and expenses that would have been paid if such agreements had
been in effect during the past fiscal year, as well as the pro forma net
increase in expenses to the Portfolio at various asset levels under the new fee
structure. Consideration also was given to comparative fee and expense
information concerning other mutual funds with investment objectives comparable
to that intended for the Portfolio published by widely recognized industry
authorities and to potential indirect benefits in connection with the Portfolio
and its investment operations, including any which may arise in connection with
brokerage transactions. Neuberger&Berman will act as the Portfolio's principal
broker in the purchase and sale of portfolio securities and the sale of covered
options and will receive transactional fees from the Portfolio in connection
with the transactions it effects. In order to implement the change in investment
objective and the investment program for the Portfolio formulated by N&B
Management, it is expected that the Portfolio's investment portfolio will be
substantially restructured. Neuberger&Berman will receive transactional fees in
connection with such restructuring, the aggregate amount of which is not
presently determinable but could be substantial.
Consideration was given to the Manager's report that the Portfolio's
investments during recent periods have been oriented toward stocks issued by
large capitalization companies ("large-cap company stocks") rather than stocks
issued by medium capitalization companies ("mid-cap company stocks") and that
there have been several changes in the Portfolio's individual portfolio
managers. Although the recent orientation toward large cap company stocks is
permitted by the Portfolio's investment objective, the Manager expressed the
belief that an investment program oriented toward investments in mid-cap company
stocks on a more consistent basis would be preferable to current and potential
shareholders of the Portfolio and therefore would facilitate efforts to increase
the Portfolio's assets with beneficial effects on Portfolio and Trust expenses.
The Manager expressed the view that N&B Management is capable of conducting such
an investment program.
In evaluating the New Sub-Advisory Agreement, the Board of Trustees
considered that: (1) the reputation and standing of N&B Management in the U.S.
mutual fund industry is generally excellent; (2) the services to be delivered by
N&B Management to the Portfolio's shareholders are expected to be of high
quality; (3) although the proposed sub-advisory fee rate under the New
Sub-Advisory Agreement is higher than the sub-advisory fee rate applicable under
the Present Sub-Advisory Agreement, the sub-advisory fee rate is competitive for
funds with investment objectives comparable to that described in Proposal III
and accurately reflects the high quality of services expected under the New
Sub-Advisory Agreement; (4) the terms of the New Sub-Advisory Agreement will
remain materially unchanged from those of the Present Sub-Advisory Agreement,
except for the identity of the service provider, the effective date, the name of
the Portfolio, and the increased sub-advisory fee rate; (5) N&B Management has
significant experience in managing investment portfolios with investment
objectives comparable to that proposed in Proposal III (the "Comparable N & B
Funds," as defined earlier); and (6) N&B Management managed combined assets of
the Comparable N & B Funds totaling approximately $1.2 billion as at December
31, 1997. The Board of Trustees also received assurances that N&B Management has
considerable staffing resources available and adequate capitalization to provide
high quality management services.
Based upon its evaluation, the Board of Trustees determined that the
Manager's engagement of N&B Management as sub-advisor to the Portfolio likely
would offer the Portfolio continued access to effective management and advisory
services and capabilities following implementation of the changes in the
Portfolio's investment objective and stated investment policies and restrictions
contemplated by Proposals III and IV. The Board of Trustees concluded further
that the terms of the New Sub-Advisory Agreement, including the fees
contemplated thereby, are fair and reasonable and in the best interests of the
Portfolio and its shareholders.
In order to provide for the services described in the New Sub-Advisory
Agreement, the shareholders are being asked to approve the New Sub-Advisory
Agreement.
Change in Portfolio Investment Objective
Subject to shareholder approval of the Proposals, the Portfolio's
investment objective will be changed beginning on the Effective Date (as defined
earlier). The Portfolio's current non-fundamental investment objective (the
"Present Investment Objective"), which may be changed without approval of the
shareholders of the Portfolio, is as follows:
The investment objective of the Portfolio is long-term capital
appreciation. The Portfolio seeks to achieve this objective by
investing primarily in common stocks of established companies which the
sub-advisor believes offer favorable growth prospects. Current income
is not an investment objective of the Portfolio and any income produced
will be a by-product of the effort to achieve the Portfolio's
objective.
Subject to shareholder approval of the Proposals, the Manager has
proposed that the Present Investment Objective be replaced by the following
non-fundamental investment objective for the Portfolio (the "Proposed Investment
Objective"), which also may be changed by the Board of Trustees of the Trust, if
appropriate in its judgment, without subsequent approval of the shareholders of
the Portfolio:
The investment objective of the Portfolio is to seek capital
appreciation.
The Board of Trustees has determined to adopt the Proposed Investment
Objective, subject to shareholder approval of the Proposals, in order to
facilitate the implementation and conduct of the investment program which has
been formulated for the Portfolio by N&B Management.
In general, investment decisions for the Portfolio under the Present
Investment Objective are based on an approach which seeks out successful
companies because they are believed to be more apt to become profitable
investments. To evaluate a prospective investment, the Portfolio's sub-advisor
analyzes information from various sources, including industry economic trends,
earnings expectations and fundamental securities valuation factors to identify
companies which in its opinion are more likely to have predictable, above
average earnings growth, regardless of the company's size and geographic
location. The Portfolio also takes into account a company's management and its
innovations in products and services in evaluating its prospects for continued
or future earnings growth.
In selecting its portfolio securities, the Portfolio places primary
emphasis on established companies which it believes to have favorable growth
prospects. Common stocks usually constitute all or most of the Portfolio's
investment holdings, but the Portfolio remains free to invest in securities
other than common stocks, and may do so when deemed appropriate by the
Portfolio's sub-advisor to achieve the objective of the Portfolio. The Portfolio
may, from time to time, take substantial positions in securities convertible
into common stocks, and it may also purchase government securities, preferred
stocks and other senior securities if the Portfolios' sub-advisor believes these
are likely to be the best suited at that time to achieve the Portfolio's
objective. The Portfolio's policy of investing in securities believed to have a
potential for capital growth means that a Portfolio share may be subject to
greater fluctuations in value than if the Portfolio invested in other
securities.
In seeking the Proposed Investment Objective, the Portfolio will invest
in a diversified portfolio of common stocks believed to have the maximum
potential for long-term above-average capital appreciation. Under normal
conditions, the Portfolio will primarily invest in the common stocks of medium
capitalization companies ("mid-cap companies"). Companies with market
capitalizations from $30 million to $10 billion at the time of investment will
be considered mid-cap companies. The trust may revise the definition based on
market conditions. At times, markets may favor the relative safety of stocks of
large capitalization companies ("large-cap companies") or the greater growth
potential of stocks of smaller capitalization companies ("small-cap companies")
over mid-cap company stocks. The Portfolio will not seek to invest in securities
that pay dividends or interest, and any such income is incidental.
Investments in small- and mid-cap company stocks may present greater
opportunities for capital appreciation than investments in large-cap company
stocks. However, small- and mid-cap company stocks may have higher risk and
volatility. These stocks generally are not as broadly traded as large-cap
company stocks and their prices may fluctuate more widely and abruptly. Any such
movements in stocks held by the Portfolio would be reflected in the Portfolio's
net asset value. Small- and mid-cap company stocks are also less researched than
large-cap company stocks and are often overlooked in the market.
In seeking the Proposed Investment Objective, the Portfolio normally
will be managed using a growth-oriented investment approach. A growth approach
seeks stocks of companies that the Portfolio's sub-advisor projects will grow at
above-average rates and faster than commonly expected. The Portfolio's growth
investment program under the Proposed Investment Objective will involve greater
risks and share price volatility than programs that invest in more undervalued
securities. When the Portfolio's sub-advisor believes that particular securities
have greater potential for long-term capital appreciation, the Portfolio may
purchase such securities at prices with higher multiples to measures of economic
value (such as earnings or cash flow) than an investor focusing primarily on
current fundamental value. These multiples, however, will tend to be reasonable
relative to the sub-advisor's expectation of the company's earnings growth rate.
In selecting equity securities for the Portfolio, the Portfolio's
sub-advisor will consider, among other factors, an issuer's financial strength,
competitive position, projected future earnings, management strength and
experience, reasonable valuations, and other investment criteria. The Portfolio
will diversify its investments among companies and industries.
Change in Portfolio Name
If each of the Proposals is approved, as of the Effective Date (as
defined earlier), the name of the Portfolio will be changed from the "Berger
Capital Growth Portfolio" to the "Neuberger & Berman Mid-Cap Growth Portfolio,"
and the New Investment Management Agreement and the New Sub-Advisory Agreement
will become effective.
This Proposal II is made contingent upon shareholder approval of each
of Proposals I and III. If any of the Proposals is not approved, the Present
Sub-Advisory Agreement will continue in effect subject to its terms.
THE TRUSTEES, INCLUDING THE INDEPENDENT TRUSTEES,
RECOMMEND THAT THE SHAREHOLDERS VOTE "FOR" PROPOSAL II.
ANY UNMARKED PROXIES WILL BE SO VOTED.
PROPOSAL III
APPROVAL OF CHANGES IN THE PORTFOLIO'S
FUNDAMENTAL INVESTMENT RESTRICTIONS
As described in more detail below, the Board of Trustees, including the
Independent Trustees, are recommending to the shareholders of the Portfolio that
they approve a number of changes to the Portfolio's fundamental investment
restrictions, including the elimination of certain restrictions. Generally, the
purposes behind these proposed changes are (i) to conform the fundamental
investment restrictions to the Proposed Investment Objective and to the
investment program which has been formulated by N&B Management for the
Portfolio; (ii) to increase the Portfolio's investment flexibility; and (iii) to
conform the fundamental investment restrictions applicable to the Portfolio to
those applicable to certain other portfolios of the Trust.
Reclassification of Certain Investment Restrictions from "Fundamental" to
"Non-Fundamental"
The Portfolio currently is subject to certain investment restrictions
which are "fundamental" policies and may not be changed without approval of the
shareholders of the Portfolio. The Portfolio also is subject to certain
non-fundamental investment restrictions which may be changed by the Board of
Trustees without shareholder approval.
The Manager, after discussions with N&B Management, has proposed to the
Board of Trustees that certain of the Portfolio's investment restrictions
discussed below be reclassified from "fundamental" investment restrictions to
"non-fundamental" investment restrictions to provide the Portfolio with
additional flexibility to pursue the Proposed Investment Objective consistent
with applicable laws in effect from time to time. The Investment Company Act
does not require any of these investment restrictions to be classified as
"fundamental." Moreover, certain of the prohibitions underlying these investment
restrictions reflect the requirements of the Investment Company Act and, in the
absence of such restrictions, would still be applicable to the Portfolio.
Certain of the prohibitions underlying these investment restrictions reflect the
requirements of state securities laws which no longer are applicable to the
Portfolio. If the Shareholders of the Portfolio approve this Proposal III and
the proposed changes are implemented, the Board of Trustees thereafter may
change any one or more of such "non-fundamental" investment restrictions without
the delay and expense to the Portfolio of arranging for shareholder approval to
the extent provided under applicable law.
If this Proposal III is approved by the shareholders and implemented,
the Portfolio will continue to be subject to the following fundamental
investment restrictions (collectively, the "Continuing Investment Restrictions")
which are substantially identical to those applicable to certain other
portfolios of the Trust and which will be the only fundamental investment
restrictions applicable to the Portfolio:
1. The Portfolio may not issue senior securities, except as
permitted under the Investment Company Act.
2. The Portfolio may not borrow money, except that the
Portfolio may (i) borrow money for non-leveraging, temporary or emergency
purposes, and (ii) engage in reverse repurchase agreements and make other
investments or engage in other transactions, which may involve a borrowing, in a
manner consistent with the Portfolio's investment objective and policies;
provided that the combination of (i) and (ii) shall not exceed 33 1/3% of the
value of the Portfolio's assets (including the amount borrowed) less liabilities
(other than borrowings) or such other percentage permitted by law. Any
borrowings which come to exceed this amount will be reduced in accordance with
applicable law. Subject to the above limitations, the Portfolio may borrow from
banks or other persons to the extent permitted by applicable law.
3. The Portfolio may not underwrite securities issued by other
persons, except to the extent that the Portfolio may be deemed to be an
underwriter (within the meaning of the Securities Act of 1933) in connection
with the purchase and sale of portfolio securities.
4. The Portfolio may not purchase or sell real estate unless
acquired as a result of the ownership of securities or other instruments;
provided that this restriction shall not prohibit a Portfolio from investing in
securities or other instruments backed by real estate or in securities of
companies engaged in the real estate business.
5. The Portfolio may not purchase or sell physical commodities
unless acquired as a result of the ownership of securities or instruments;
provided that this restriction shall not prohibit the Portfolio from (i)
engaging in permissible options and futures transactions and forward foreign
currency contracts in accordance with the Portfolio's investment policies, or
(ii) investing in securities of any kind.
6. The Portfolio may not make loans, except that the Portfolio
may (i) lend portfolio securities in accordance with the Portfolio's investment
policies in amounts up to 33 1/3% of the total assets of the Portfolio taken at
market value, (ii) purchase money market securities and enter into repurchase
agreements, and (iii) acquire publicly distributed or privately placed debt
securities.
7. The Portfolio may not purchase any security if, as a
result, more than 25% of the value of the Portfolio's assets would be invested
in the securities of issuers having their principal business activities in the
same industry; provided that this restriction does not apply to investments in
obligations issued or guaranteed by the U.S. Government or any of its agencies
or instrumentalities (or repurchase agreements with respect thereto).
8. The Portfolio may not, with respect to 75% of the value of
its total assets, purchase the securities of any issuer (other than securities
issued or guaranteed by the U. S. Government or any of its agencies or
instrumentalities) if, as a result, (i) more that 5% of the value of the
Portfolio's total assets would be invested in the securities of such issuer, or
(ii) more than 10% of the outstanding voting securities of such issuer would be
held by the Portfolio.
If a restriction on the Portfolio's investments is adhered to at the
time an investment is made, a subsequent change in the percentage of Portfolio
assets invested in certain securities or other instruments, or change in average
duration of the Portfolio's investment portfolio, resulting from changes in the
value of the Portfolio's total assets, will not be considered a violation of the
restriction; provided, however, that the asset coverage requirement applicable
to borrowings shall be maintained in the manner contemplated by applicable law.
With respect to Continuing Investment Restrictions (2) and (6), the
Portfolio will not borrow from or lend to any other fund unless it applies for
and receives an exemptive order from the Securities and Exchange Commission (the
"Commission"), if so required, or the Commission issues rules permitting such
transactions. There is no assurance the Commission would grant any order
requested by a Portfolio or promulgate any rules allowing such transactions.
In addition to the above Continuing Investment Restrictions, certain
fundamental investment restrictions have applied only to the Portfolio in
connection with the Present Investment Objective (the "Affected Investment
Restrictions") and certain other portfolios of the Trust. The Manager, after
consultation with N&B Management, recommends the following changes to these
Affected Investment Restrictions as they apply to the Portfolio.
(1) The Portfolio is subject to the following two overlapping Affected
Investment Restrictions concerning the purchase of securities on margin and
short sales:
The Portfolio will not buy any securities or other
property on margin (except for such short-term credits as are
necessary for the clearance of transactions.)
The Portfolio will not purchase any securities on
margin from a broker or dealer or make short sales of
securities.
The Manager has proposed to the Board of Trustees that the two Affected
Investment Restrictions set forth above be replaced by the following two
non-fundamental investment restrictions:
The Portfolio may not purchase securities on margin
from brokers, except that the Portfolio may obtain such
short-term credits as are necessary for the clearance of
securities transactions. Margin payments in connection with
transactions in futures contracts and options on futures
contracts shall not constitute the purchase of securities on
margin and shall not be deemed to violate the foregoing
limitation.
The Portfolio may not sell securities short unless it
owns or has the right to obtain securities equivalent in kind
and amount to the securities sold [without payment of
additional consideration]. Transactions in futures contracts
shall not constitute selling securities short.
The proposed non-fundamental restriction concerning the purchase of
securities on margin clarifies certain matters, including the applicability of
the restriction to futures contracts and to options on financial futures
contracts. Furthermore, the current Affected Investment Restriction prohibiting
short sales under any circumstances is unnecessarily restrictive and could
impair efforts to seek the Proposed Investment Objective. Under the proposed
non-fundamental investment restriction, the Portfolio will be permitted to enter
into short sales but only where it has the right to obtain securities equivalent
in kind and amount to the securities sold short. Short sales on any other basis
would not be permitted. The proposed non-fundamental investment restriction
concerning short sales also would clarify the treatment of futures contracts by
explicitly excluding them from the application of the restriction on short
sales.
By replacing the above Affected Investment Restriction with the two
proposed non-fundamental investment restrictions, the Board of Trustees, if
deemed appropriate in its judgment, would be able to modify or eliminate the
investment restrictions without the attendant delay and expense of arranging for
a shareholders meeting. If the non-fundamental investment objective concerning
short sales is eliminated or modified to permit short sales in cases where
securities identical to those sold short are not owned or cannot be acquired
without additional cost, the Portfolio in connection with such transactions may
be subject to risk of loss and current rules of the Commission would require the
Portfolio to hold qualifying instruments in a segregated account to cover the
amount of its exposure in connection with the transactions.
Elimination of Certain Fundamental Investment Restrictions
(1) The Portfolio also is subject to the following Affected Investment
Restriction concerning diversification of investments:
The Portfolio will not purchase the securities of any one
issuer (except government securities) if immediately after and
as a result of the purchase (a) the value of the holdings of
the securities of such issuer exceeds 5% of the value of the
Portfolios' total assets or (b) the Portfolio owns more than
10% of the voting securities or of any class of securities of
such issuer.
The Manager has proposed to the Board of Trustees that the above
Affected Investment Restriction be eliminated because it is unnecessarily
restrictive and could impair the ability of the Portfolio to seek the Proposed
Investment Objective. The Investment Company Act prohibits a diversified fund,
such as the Portfolio, from investing with respect to 75% of its total assets in
securities of an issuer if as a result more than 5% of the Portfolio's assets
would be invested in such issuer or the Portfolio would own more than 10% of the
outstanding voting securities of such issuer. If this Proposal III is adopted,
the Portfolio would continue to be subject to the Continuing Investment
Restriction 8 which reflects the more flexible limitations of the Investment
Company Act. Elimination of the above current fundamental restriction would
allow the Portfolio maximum flexibility to conduct its investment program as a
"diversified" investment company under the Investment Company Act.
If the above Affected Investment Restriction is eliminated, the
Portfolio would be able to invest up to 25% of its total assets in the
securities of a single issuer, thus enabling the Portfolio to invest more of its
assets in securities of those issuers the Portfolio's Sub-advisor believes offer
the potential for capital appreciation. Increased investments in one or more
issuers, however, may cause the value of portfolio shares to fluctuate more
widely than would otherwise occur if the Portfolio invested in a greater number
of issuers.
The proposed elimination of the above investment restriction would
enhance the Portfolio's investment flexibility by limiting the current 10%
restriction to voting securities and 75% of the Portfolio's total assets. Under
Continuing Investment Restriction 8, the Portfolio will be able to purchase more
than 10% of the outstanding voting securities of an issuer with respect to 25%
of its total assets. In addition to the potential benefits which the proposed
restriction would afford the Portfolio, the Portfolio may be subject to greater
risk of an adverse change in the financial condition or market perception of an
issuer of its portfolio securities or obligations and to greater risk of single
adverse economic or market conditions affecting an issuer of its portfolio
securities.
(3) The Portfolio also is subject to the following Affected Investment
Restriction concerning investments in issuers that have been in operation for
less than three years:
The Portfolio will not purchase securities of any company with
a record of less than three years' continuous operation
(including that of predecessors) if such purchase would cause
the Portfolio's investments in all such companies taken at
cost to exceed 5% of the value of the Portfolio's total
assets.
The Investment Manager has proposed to the Board of Trustees that the
Affected Investment Restriction set forth above be eliminated. The prohibition
underlying the current Affected Investment Restriction reflects requirements of
state securities law which are no longer applicable. Elimination of the
fundamental investment restriction set forth above would provide the Portfolio
with additional flexibility consistent with its investment objective and other
stated investment policies and restrictions to invest in companies that have
been in operation for less than three years, including start-up companies and
other companies with limited operating histories. Many of these companies would
have relatively small market capitalizations (under $1 billion). Although
investments in such companies may provide opportunities for capital growth, such
investments involve greater risk. These companies frequently have limited
product lines, markets and financial resources. Securities issued by such
companies typically trade less frequently and in limited volume and may be
traded on regional exchanges or over-the-counter. The value of such securities
may fluctuate more than those of securities issued by larger "seasoned"
companies.
(4) The Portfolio also is subject to the following Affected Investment
Restriction concerning industry concentration of investments:
The Portfolio will not invest in any one industry more than
25% of the value of its total assets at the time of such
investment.
The Investment Manager has proposed to the Board of Trustees that the
Affected Investment Restriction set forth above be eliminated. If the
fundamental investment restriction set forth above is eliminated, the Portfolio
will continue to be subject to Continuing Investment Restriction 7 which
prohibits investment of more than 25% of the Portfolio's assets in any one
industry while providing greater clarity as to the application of the percentage
limitation. Elimination of the Affected Investment Restriction set forth above
will avoid possible future ambiguity.
(5) The Portfolio also is subject to the following Affected Investment
Restriction concerning loans:
The Portfolio will not make loans, except that the Portfolio
may enter into repurchase agreements in accordance with the
Trust's investment policies. The Portfolio does not, for this
purpose, consider the purchase of all or a portion of an issue
of publicly distributed bonds, bank loan participation
agreements, bank certificates of deposit, bankers'
acceptances, debentures or other securities, whether or not
the purchase is made upon the original issuance of the
securities, to be the making of a loan.
The Manager has proposed to the Board of Trustees that the Affected
Investment Restriction set forth above be eliminated. If eliminated, the
Portfolio also would continue to be subject to Continuing Investment Restriction
6. The elimination of the above Affected Investment Restriction would clarify
that the Portfolio may enter into loans of portfolio securities in accordance
with its investment objective and other investment policies and restrictions and
permit investments in "money market securities" and "publicly or privately
placed debt securities" including, but not limited to, those enumerated in the
Affected Investment Restriction thereby affording the Portfolio additional
flexibility in seeking the Proposed Investment Objective.
The Portfolio also currently is subject to the following
non-fundamental investment restriction which is substantially the same as the
Affected Investment Restriction set forth above, except that it also explicitly
excludes securities loans from the prohibition against Portfolio loans:
Except for the purchase of debt securities and engaging in
repurchase agreements, the Portfolio will not make any loans
other than securities loans.
Securities loans must be fully collateralized but may involve some risk
to the Portfolio if the other party defaults in its obligations. If the other
party in such transactions should become involved in bankruptcy, insolvency or
similar proceedings, it is possible that the Portfolio may be treated as an
unsecured creditor and be required to return the underlying collateral to the
other party's estate. The Continuing Investment Restrictions would limit the
maximum amount of securities loans to 33 1/3% of the total assets of the
Portfolio taken at market value.
The non-fundamental investment restriction set forth above may be
modified or eliminated by the Board of Trustees, if deemed appropriate in its
judgment, without the delay and expense of arranging for a shareholders meeting.
(6) The Portfolio also is subject to the following Affected
Investment Restriction concerning borrowings: The Portfolio
will not borrow in excess of 5% of the value of its total
assets, or pledge, mortgage, or hypothecate its assets taken
at market value to an extent greater than 10% of the
Portfolio's total assets taken at cost (and no borrowing may
be undertaken except from banks as a temporary measure for
extraordinary or emergency purposes).
The Manager has proposed to the Board that the Affected Investment
Restriction set forth above be eliminated. The limitations set forth are
unnecessarily restrictive and could impair the Portfolio's ability to seek the
Proposed Investment objective. If the above fundamental investment restriction
is eliminated, the Portfolio would continue to be subject to Continuing
Restrictions 2. The elimination of the Affected Investment Restriction will
expand the circumstances under which the Portfolio may borrow to include not
only borrowings for non-leveraging, temporary or emergency purposes but
borrowings involved in other investments and transactions but only when
consistent with the Portfolio's investment objective and policies and then
subject to compliance with legal and regulatory asset coverage requirements. The
Portfolio also would be permitted to borrow from parties other than banks if
permitted to do so by law. In addition, the limitation on pledging of Portfolio
assets would be eliminated. Such limitation could conflict with the Portfolio's
ability to borrow money for proper purposes, including borrowings for temporary,
extraordinary or emergency purposes and may limit other activities, such as
pledges for certain forward commitments which could be deemed pledges.
Continuing Restriction 2 would permit more flexibility to the Portfolio to
borrow for emergency and permissible non-emergency purposes while still imposing
a limitation reflecting requirements of the Investment Company Act. Pledging
assets does entail risks. To the extent that the Portfolio pledges its assets,
the Portfolio may have less flexibility in liquidating its assets. If a large
portion of the fund's assets is involved, the Portfolio's ability to meet
redemption requests or other obligations could be delayed.
(7) The Portfolio also is subject to the following three overlapping
Affected Investment Restrictions:
The Portfolio will not act as a securities underwriter
(except to the extent the Portfolio may be deemed an
underwriter under the Securities Act of 1933 in disposing of a
security), issue senior securities (except to the extent
permitted under the 1940 Act), invest in real estate (although
it may purchase shares of a real estate investment trust), or
invest in commodities or commodity contracts.
The Portfolio will not underwrite securities issued by
others, except to the extent that the Portfolio may be deemed
an underwriter when purchasing or selling securities.
The Portfolio will not issue senior securities.
The Manager has proposed to the Board that the three Affected
Investment Restrictions set forth above be eliminated. If the above Affected
Investment Restriction are eliminated the Portfolio would continue to be subject
to substantially the same limitations under various Continuing Restrictions with
clarifications which will avoid possible future ambiguities.
With respect to underwriting activities, Continuing Restriction 3 would
continue to prohibit the Portfolio from acting as an underwriter except to the
extent that it may be deemed to be an underwriter (within the meaning of the
Securities Act of 1933). The Continuing Restriction makes clear that its
provisions apply both to sales and purchases of portfolio securities and does
not apply to securities which the Portfolio issues itself, as contemplated by
the Investment Company Act.
The issuance of senior securities by an investment company is governed
by and generally prohibited under the requirements of the Investment Company
Act, subject to certain exceptions for borrowing arrangements. With respect to
issuance of senior securities, Continuing Restriction 1 prohibits the Portfolio
from issuing senior securities except as permitted by the Investment Company
Act.
With respect to investments by the Portfolio in real estate, Continuing
Restriction 4 prohibits direct investments in real estate but makes clear that
indirect ownership of real estate through securities or other instruments backed
by real estate or in securities engaged in the real estate business will be
permitted. Elimination of the Affected Investment Restriction would therefore
expand the range of real estate investments available to the Portfolio.
Continuing Restriction 4 also clarifies that acquisition of real estate as a
result of ownership of securities or other instruments will not violate its
restrictions. Like investments in real estate investment trusts, such additional
investments will be subject to risks associated with the real estate market,
including, among others, declines in real estate values, changes in general or
local economic conditions, overbuilding, and changes in zoning or tax laws.
With respect to investments by the Portfolio in commodities or
commodity contracts, Continuing Restriction 5 prohibits the Portfolio from
buying or selling physical commodities, but not commodities contracts, and makes
clear that the prohibition does not apply to options, futures transactions and
forward currency contracts otherwise permitted by the Portfolio's investment
policies and that indirect investments in commodities through securities
investments will not be subject to its limitations. Continuing Restriction 5
also clarifies that physical commodities obtained as a result of owning
securities or debt instruments will not constitute a violation of its
restrictions.
(8) The Portfolio also is subject to the following Affected Investment
Restriction concerning investments in other investment companies:
A Portfolio will not purchase securities of other investment
companies, except in connection with a merger, consolidation,
acquisition or reorganization, or by purchase in the open
market of securities of closed-end investment companies where
no underwriter or dealer's commission or profit, other than a
customary broker's commission, is involved and only if
immediately thereafter not more than 10% of this Portfolio's
total assets, at market value, would be invested in such
securities, or by investing no more than 5% of the Portfolio's
total assets in other open-end investment companies or by
purchasing no more than 3% of any one open-end investment
company's securities.
The Manager has proposed to the Board of Trustees that the above
Affected Investment Restriction be eliminated. The prohibition underlying the
current Affected Investment Restriction reflects the requirements of the
Investment Company Act which will continue to apply to the Portfolio if the
Affected Investment Restriction set forth above is eliminated. In the event that
the Investment Company Act is amended, the Portfolio would not be required to
conduct a shareholders meeting with attendant delay and expense in order to
respond to any changes in the law of potential benefit to the Portfolio.
(9) The Portfolio also is subject to the following Affected Investment
Restriction:
The Portfolio will not invest in companies for the purpose of
exercising control or management.
The Manager has proposed to the Board of Trustees that the above
Affected Investment Restriction be eliminated. The Portfolio has no present
intention of purchasing securities for the purpose of exercising control or
management and, as a practical matter, the ability of the Portfolio to exercise
control or management of an issuer is subject to various state and federal laws
which will continue to apply to the Portfolio if the above Affected Investment
Restriction is eliminated. Moreover, elimination of the Affected Investment
Restriction would clarify the Portfolio's ability to influence management of
issuers when it is permissible and appropriate to do so, including instances
where issuers of portfolio securities or instruments may be in default of their
obligations.
(10) The Portfolio also is subject to the following Affected Investment
Restriction concerning investment in securities of issuers in which management
of the Trust or the Manager owns securities:
The Portfolio will not purchase or retain securities of any
issuer (other than the shares of such Portfolio) if to the
Trust's knowledge, the officers and Trustees of the Trust and
the officers and directors of the Investment Manager who
individually own beneficially more than of .5 of 1% of the
outstanding securities of such issuer, together own
beneficially more than 5% of such outstanding securities.
The Manager has proposed to the Board of Trustees that the above
Affected Investment Restriction be eliminated because the prohibitions
underlying the restriction reflect the requirements of state securities laws
which are no longer applicable. Elimination of the Affected Investment
Restriction would permit the Portfolio to invest in securities of any issuer
without regard to ownership in such issuer by management of the Trust or the
Manager, except to the extent prohibited by the Portfolio's investment objective
and other stated investment policies and restrictions and the Investment Company
Act.
(11) Finally, the Portfolio also is subject to the following Affected
Investment Restriction:
The Portfolio will not participate in a joint or joint and
several trading account in securities.
Under the Investment Company Act, the Portfolio generally is prohibited
from participating in a joint or joint and several trading account in
securities, subject to an exception for certain underwriting arrangements and
subject further to the receipt of exemptive relief. Notwithstanding the
elimination of the above Affected Investment Restriction, the Portfolio would
continue to be subject to the provisions of the Investment Company Act.
Elimination of the above Affected Investment Restriction would afford
flexibility to the Board of Trustees to respond to changes in the Investment
Company Act that may potentially be advantageous to the Portfolio without the
attendant delay and expense of arranging for a shareholders meeting and to
consider appropriate proposals involving accounts which have received necessary
regulatory clearance.
This Proposal III is made contingent upon shareholder approval of
Proposals I and II. If any of the Proposals is not approved, the current
fundamental investment restrictions will continue in effect and will apply to
the Portfolio.
THE TRUSTEES, INCLUDING THE INDEPENDENT TRUSTEES, RECOMMEND THAT THE
SHAREHOLDERS VOTE "FOR" PROPOSAL III. ANY UNMARKED PROXIES WILL BE SO VOTED.
Shareholder Proposals
The Trust is not required to hold and will not ordinarily hold annual
shareholders' meetings. The Board of Trustees may call special meetings of the
shareholders for action by shareholder vote as required by the Investment
Company Act or the Trust's Declaration of Trust.
Pursuant to rules adopted by the 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 special meetings; provided, among other things, that such
proposal must be received by the Trust a reasonable time before a solicitation
of proxies is made for such meeting. Timely submission of a proposal does not
necessarily mean that the proposal will be included.
By order of the Board of Trustees
Eric C. Freed
Secretary
American Skandia Trust
<PAGE>
EXHIBIT A-1
INVESTMENT MANAGEMENT AGREEMENT
THIS AGREEMENT is made this 19th day of October, 1994 by and between American
Skandia Trust, a Massachusetts business trust (the "Fund"), and American Skandia
Life Investment Management, Incorporated, a Connecticut corporation (the
"Investment Manager").
W I T N E S S E T H
WHEREAS, the Fund is registered as an open-end management investment company
under the Investment Company Act of 1940, as amended (the "Investment Company
Act"), and the rules and regulations promulgated thereunder; and
WHEREAS, the Investment Manager is registered as an investment adviser under the
Investment Advisers Act of 1940, as amended (the "Investment Advisers Act"); and
WHEREAS, the Fund and the Investment Manager desire to enter into an agreement
to provide for the management of the assets of the Berger Capital Growth
Portfolio of the Fund (the "Portfolio") on the terms and conditions hereinafter
set forth.
NOW THEREFORE, in consideration of the mutual covenants herein contained and
other good and valuable consideration, the receipt whereof is hereby
acknowledged, the parties hereto agree as follows:
1. Management. The Investment Manager shall act as investment manager for the
Portfolio and shall, in such capacity, manage the investment operations of the
Portfolio, including the purchase, retention, disposition and lending of
securities, subject at all times to the policies and control of the Fund's Board
of Trustees. The Investment Manager shall give the Portfolio the benefit of its
best judgments, efforts and facilities in rendering its services as investment
manager.
2. Duties of Investment Manager. In carrying out its obligation under
paragraph 1 hereof, the Investment Manager shall:
(a) supervise and manage all aspects of the Portfolio's operations:
(b) provide the Portfolio or obtain for it, and thereafter supervise,
such executive, administrative, clerical and shareholder servicing services as
are deemed advisable by the Fund's Board of Trustees;
(c) arrange, but not pay for, the periodic updating of prospectuses and
supplements thereto, proxy material, tax returns, reports to the Portfolio's
shareholders, reports to and filings with the Securities and Exchange
Commission, state Blue Sky authorities and other applicable regulatory
authorities;
(d) provide to the Board of Trustees of the Fund on a regular basis,
written financial reports and analyses on the Portfolio's securities
transactions and the operations of comparable investment companies;
(e) obtain and evaluate pertinent information about significant
developments and economic, statistical and financial data, domestic, foreign or
otherwise, whether affecting the economy generally or the Portfolio, and whether
concerning the individual issuers whose securities are included in the Portfolio
or the activities in which they engage, or with respect to securities which the
Investment Manager considers desirable for inclusion in the Portfolio;
(f) determine what issuers and securities shall be represented in the
Portfolio's portfolio and regularly report them in writing to the Board of
Trustees;
(g) formulate and implement continuing programs for the purchases and
sales of the securities of such issuers and regularly report in writing thereon
to the Board of Trustees; and
(h) take, on behalf of the Portfolio, all actions which appear to the
Fund necessary to carry into effect such purchase and sale programs and
supervisory functions as aforesaid, including the placing of orders for the
purchase and sale of portfolio securities.
3. Broker-Dealer Relationships. The Investment Manager is responsible for
decisions to buy and sell securities for the Portfolio, broker-dealer selection,
and negotiation of the Portfolio's brokerage commission rates. The Investment
Manager shall determine the securities to be purchased or sold by the Portfolio
pursuant to its determinations with or through such persons, brokers or dealers,
in conformity with the policy with respect to brokerage as set forth in the
Fund's Prospectus and Statement of Additional Information, or as the Board of
Trustees may determine from time to time. Generally, the Investment Manager's
primary consideration in placing Portfolio securities transactions with
broker-dealers for execution is to obtain and maintain the availability of,
execution at the best net price and in the most effective manner possible. The
Investment Manager may consider the sale of shares of the Portfolio, subject to
the requirements of best net price and most favorable execution.
Consistent with this policy, the Investment Manager will take the
following into consideration: the best net price available; the reliability,
integrity and financial condition of the broker-dealer; the size of and
difficulty in executing the order; and the value of the expected contribution of
the broker-dealer to the investment performance of the Portfolio on a continuing
basis. Accordingly, the cost of the brokerage commissions to the Portfolio may
be greater than that available from other brokers if the difference is
reasonably justified by other aspects of the portfolio execution services
offered. Subject to such policies and procedures as the Board of Trustees of the
Fund may determine, the Investment Manager shall not be deemed to have acted
unlawfully or to have breached any duty solely by reason of its having caused
the Portfolio to pay a broker or dealer that provides research services to the
Investment Manager for the Portfolio's use an amount of commission for effecting
a portfolio investment transaction in excess of the amount of commission another
broker or dealer would have charged for effecting that transaction, if the
Investment Manager, determines in good faith that such amount of commission was
reasonable in relation to the value of the research services provided by such
broker, viewed in terms of either that particular transaction or the Investment
Manager's ongoing responsibilities with respect to the Portfolio. The Investment
Manager is further authorized to allocate the orders placed by it on behalf of
the Portfolio to such brokers and dealers who also provide research and
statistical material, or other services to the Fund or the Investment Manager.
Such allocation shall be in such amounts and proportions as the Investment
Manager shall determine and the Investment Manager will report on said
allocations to the Board of Trustees of the Fund regularly as requested by the
Board and, in any event, at least once each calendar year if no specific request
is made, indicating the brokers to whom such allocations have been made and the
basis therefor.
4. Control by the Board of Trustees. Any investment program undertaken by the
Investment Manager pursuant to this Agreement, as well as any other activities
undertaken by the Investment Manager on behalf of the Fund pursuant thereto,
shall at all times be subject to any directives of the Board of Trustees of the
Fund.
5. Compliance with Applicable Requirements. In carrying out its obligations
under this Agreement, the Investment Manager shall at all times conform to:
(a) all applicable provisions of the Investment Company Act and the
Investment Advisers Act and any rules and regulations adopted thereunder, as
amended; and
(b) the provisions of the Registration Statement of the fund under the
Securities Act of 1933 and the Investment Company Act, including the investment
objectives, policies and restrictions, and permissible investments specified
therein; and
(c) the provisions of the Agreement and Declaration of Trust of the
Fund, as amended; and
(d) the provisions of the By-laws of the Fund, as amended; and
(e) any other applicable provisions of state and federal law.
6. Expenses. The expenses connected with the Fund shall be allocable between the
Fund and the Investment Manager as follows:
(a) The Investment Manager shall furnish, at its expense and without
cost to the Fund, the services of a President, Secretary, and one or more Vice
Presidents of the Fund, to the extent that such additional officers may be
required by the Fund for the proper conduct of its affairs.
(b) The Investment Manager shall further maintain, at its expense and
without cost to the Fund, a trading function in order to carry out its
obligations under subparagraphs (f), (g) and (h) of paragraph 2 hereof to place
orders for the purchase and sale of portfolio securities for the Portfolio.
(c) Nothing in subparagraph (a) hereof shall be construed to require
the Investment Manager to bear:
(i) any of the costs (including applicable office space,
facilities and equipment) of the services of a principal
financial officer of the Fund whose normal duties consist of
maintaining the financial accounts and books and records of
the Fund; including the reviewing of calculations of net asset
value and preparing tax returns; or
(ii) any of the costs (including applicable office space,
facilities and equipment) of the services of any of the
personnel operating under the direction of such principal
financial officer. Notwithstanding the obligation of the Fund
to bear the expense of the functions referred to in clauses
(i) and (ii) of this subparagraph (c), the Investment Manager
may pay the salaries, including any applicable employment or
payroll taxes and other salary costs, of the principal
financial officer and other personnel carrying out such
functions, and the Fund shall reimburse the Investment Manager
therefor upon proper accounting.
(d) All of the ordinary business expenses incurred in the operations of
the Fund and the offering of its shares shall be borne by the Fund unless
specifically provided otherwise in this paragraph 6. These expenses include but
are not limited to brokerage commissions, legal, auditing, taxes or governmental
fees, the cost of preparing share certificates, custodian, depository, transfer
and shareholder service agent costs, expenses of issue, sale, redemption and
repurchase of shares, expenses of registering and qualifying shares for sale,
insurance premiums on property or personnel (including officers and trustees if
available) of the Fund which inure to its benefit, expenses relating to trustee
and shareholder meetings, the cost of preparing and distributing reports and
notices to shareholders, the fees and other expenses incurred by the Fund in
connection with membership in investment company organizations, and the cost of
printing copies of prospectuses and statements of additional information
distributed to shareholders.
7. Delegation of Responsibilities. Upon the request of the Fund's Board of
Trustees, the Investment Manager may perform services on behalf of the Fund
which are not required by this Agreement. Such services will be performed on
behalf of the Fund and the Investment Manager's cost in rendering such services
may be billed monthly to the Fund, subject to examination by the Fund's
independent accountants. Payment or assumption by the Investment Manager of any
Fund expense that the Investment Manager is not required to pay or assume under
this Agreement shall not relieve the Investment Manager of any of its
obligations to the Fund nor obligate the Investment Manager to pay or assume any
similar Fund expense on any subsequent occasion.
8. Engagement of Sub-Advisers and Broker-Dealers. The Investment Manager may
engage, subject to approval of the Fund's Board of Trustees, and where required,
the shareholders of the Portfolio, a sub-advisor to provide advisory services in
relation to the Portfolio. Under such sub-advisory agreement, the Investment
Manager may delegate to the sub-advisor the duties outlined in subparagraphs
(e), (f), (g) and (h) of paragraph 2 hereof.
9. Compensation. The Fund shall pay the Investment Manager in full compensation
for services rendered hereunder an annual investment advisory fee, payable
monthly, of .75% of the Portfolio's average daily net assets.
10. Expense Limitation. If, for any fiscal year of the Fund, the total of all
ordinary business expenses of the Portfolio, including all investment advisory
and administration fees by excluding brokerage commissions and fees, taxes,
interest and extraordinary expenses such as litigation, would exceed 1.25% of
the average daily net assets of the Portfolio, the Investment Manager agrees to
pay the Fund such excess expenses, and if required to do so pursuant to such
applicable statute or regulatory authority, to pay to the Fund such excess
expenses no later than the last day of the first month of the next succeeding
fiscal year of the Fund. For the purposes of this paragraph, the term "fiscal
year" shall exclude the portion of the Fund's current fiscal year which shall
have elapsed prior to the date hereof and shall include the portion of the then
current fiscal year which shall have elapsed at the date of termination of this
Agreement.
11. Non-Exclusivity. The services of the Investment Manager to the Portfolio are
not to be deemed to be exclusive, and the Investment Manager shall be free to
render investment advisory and corporate administrative or other services to
others (including other investment companies) and to engage in other activities.
It is understood and agreed that officers or directors of the Investment Manager
may serve as officers or trustees of the Fund, and that officers or trustees of
the Fund may serve as officers or directors of the Investment Manager to the
extent permitted by law; and that the officers and directors of the Investment
Manager are not prohibited from engaging in any other business activity or from
rendering services to any other person, or from serving as partners, officers or
directors of any other firm or corporation, including other investment
companies.
12. Term and Approval. This Agreement shall become effective on October 19, 1994
and shall continue in force and effect from year to year, provided that such
continuance is specifically approved at least annually:
(a) (i) by the Fund's Board of Trustees or (ii) by the vote of a
majority of the Portfolio's outstanding voting securities (as defined in Section
2(a)(42) of the Investment Company Act); and
(b) by the affirmative vote of a majority of the trustees who are not
parties to this Agreement or interested persons of a party to this Agreement
(other than as Fund trustees), by votes cast in person at a meeting specifically
called for such purpose.
13. Termination. This Agreement may be terminated at any time without the
payment of any penalty or prejudice to the completion of any transactions
already initiated on behalf of the Portfolio, by vote of the Fund's Board of
Trustees or by vote of a majority of the Portfolio's outstanding voting
securities, or by the Investment Manager, on sixty (60) days' written notice to
the other party. The notice provided for herein may be waived by either party.
This Agreement automatically terminates in the event of its assignment, the term
"assignment" for the purpose having the meaning defined in Section 2(a)(4) of
the Investment Company Act.
14. Liability of Investment Manager and Indemnification. In the absence of
willful misfeasance, bad faith, gross negligence or reckless disregard of
obligations or duties hereunder on the part of the Investment Manager or any of
its officers, trustees or employees, it shall not be subject to liability to the
Fund or to any shareholder of the Portfolio for any act or omission in the
course of, or connected with, rendering services hereunder or for any losses
that may be sustained in the purchase, holding or sale of any security.
15. Liability of the Trustees and Shareholders. A copy of the Agreement and
Declaration of Trust of the Fund is on file with the Secretary of The
Commonwealth of Massachusetts, and notice is hereby given that this instrument
is executed on behalf of the trustees of the Fund as trustees and not
individually and that the obligations of this instrument are not binding upon
any of the trustees or shareholders individually but are binding only upon the
assets and property of the Fund. Federal and state laws impose responsibilities
under certain circumstances on persons who act in good faith, and therefore,
nothing herein shall in any way constitute a waiver of limitation of any rights
which the Fund or the Investment Manager may have under applicable law.
16. Notices. Any notices under this Agreement shall be in writing, addressed and
delivered or mailed postage paid to the other party at such address as such
other party may designate for the receipt of such notice. Until further notice,
it is agreed that the address of the Fund shall be 126 High Street, Boston,
Massachusetts, 02110, and the address of the Investment Manager shall be One
Corporate Drive, Shelton, Connecticut 06484.
17. Questions of Interpretation. Any question of interpretation of any term or
provision of this Agreement having a counterpart in or otherwise derived from a
term or provision of the Investment Company Act, shall be resolved by reference
to such term or provision of the Act and to interpretations thereof, if any, by
the United States Courts or in the absence of any controlling decision of any
such court, by rules, regulations or orders of the Securities and Exchange
Commission issued pursuant to the said Act. In addition, where the effect of a
requirement of the Investment Company Act, reflected in any provision of this
Agreement is released by rules, regulation or order of the Securities and
Exchange Commission, such provision shall be deemed to incorporate the effect of
such rule, regulation or order.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in duplicate by their respective officers on the day and year first
above written.
AMERICAN SKANDIA TRUST
Attest: By: /s/ Gordon C. Boronow
/s/Joan M. Chanda
AMERICAN SKANDIA LIFE INVESTMENT
MANAGEMENT, INCORPORATED
Attest: By: /s/Thomas M. Mazzaferro
/s/Patricia E. Randol
<PAGE>
EXHIBIT A-2
INVESTMENT MANAGEMENT AGREEMENT
THIS AGREEMENT is made this 1st day of May, 1998 by and between American Skandia
Trust, a Massachusetts business trust (the "Fund"), and American Skandia Life
Investment Management, Incorporated, a Connecticut corporation (the "Investment
Manager").
W I T N E S S E T H
WHEREAS, the Fund is registered as an open-end management investment company
under the Investment Company Act of 1940, as amended (the "Investment Company
Act"), and the rules and regulations promulgated thereunder; and
WHEREAS, the Investment Manager is registered as an investment adviser under the
Investment Advisers Act of 1940, as amended (the "Investment Advisers Act"); and
WHEREAS, the Fund and the Investment Manager desire to enter into an agreement
to provide for the management of the assets of the Neuberger&Berman Mid-Cap
Growth Portfolio of the Fund (the "Portfolio") on the terms and conditions
hereinafter set forth.
NOW THEREFORE, in consideration of the mutual covenants herein contained and
other good and valuable consideration, the receipt whereof is hereby
acknowledged, the parties hereto agree as follows:
1. Management. The Investment Manager shall act as investment manager for the
Portfolio and shall, in such capacity, manage the investment operations of the
Portfolio, including the purchase, retention, disposition and lending of
securities, subject at all times to the policies and control of the Fund's Board
of Trustees. The Investment Manager shall give the Portfolio the benefit of its
best judgments, efforts and facilities in rendering its services as investment
manager.
2. Duties of Investment Manager. In carrying out its obligation under
paragraph 1 hereof, the Investment Manager shall:
(a) supervise and manage all aspects of the Portfolio's operations:
(b) provide the Portfolio or obtain for it, and thereafter supervise,
such executive, administrative, clerical and shareholder servicing services as
are deemed advisable by the Fund's Board of Trustees;
(c) arrange, but not pay for, the periodic updating of prospectuses and
supplements thereto, proxy material, tax returns, reports to the Portfolio's
shareholders, reports to and filings with the Securities and Exchange
Commission, state Blue Sky authorities and other applicable regulatory
authorities;
(d) provide to the Board of Trustees of the Fund on a regular basis,
written financial reports and analyses on the Portfolio's securities
transactions and the operations of comparable investment companies;
(e) obtain and evaluate pertinent information about significant
developments and economic, statistical and financial data, domestic, foreign or
otherwise, whether affecting the economy generally or the Portfolio, and whether
concerning the individual issuers whose securities are included in the Portfolio
or the activities in which they engage, or with respect to securities which the
Investment Manager considers desirable for inclusion in the Portfolio;
(f) determine what issuers and securities shall be represented in the
Portfolio's portfolio and regularly report them in writing to the Board of
Trustees;
(g) formulate and implement continuing programs for the purchases and
sales of the securities of such issuers and regularly report in writing thereon
to the Board of Trustees; and
(h) take, on behalf of the Portfolio, all actions which appear to the
Fund necessary to carry into effect such purchase and sale programs and
supervisory functions as aforesaid, including the placing of orders for the
purchase and sale of portfolio securities.
3. Broker-Dealer Relationships. The Investment Manager is responsible for
decisions to buy and sell securities for the Portfolio, broker-dealer selection,
and negotiation of the Portfolio's brokerage commission rates. The Investment
Manager shall determine the securities to be purchased or sold by the Portfolio
pursuant to its determinations with or through such persons, brokers or dealers,
in conformity with the policy with respect to brokerage as set forth in the
Fund's Prospectus and Statement of Additional Information, or as the Board of
Trustees may determine from time to time. Generally, the Investment Manager's
primary consideration in placing Portfolio securities transactions with
broker-dealers for execution is to obtain and maintain the availability of,
execution at the best net price and in the most effective manner possible. The
Investment Manager may consider the sale of shares of the Portfolio, subject to
the requirements of best net price and most favorable execution.
Consistent with this policy, the Investment Manager will take the
following into consideration: the best net price available; the reliability,
integrity and financial condition of the broker-dealer; the size of and
difficulty in executing the order; and the value of the expected contribution of
the broker-dealer to the investment performance of the Portfolio on a continuing
basis. Accordingly, the cost of the brokerage commissions to the Portfolio may
be greater than that available from other brokers if the difference is
reasonably justified by other aspects of the portfolio execution services
offered. Subject to such policies and procedures as the Board of Trustees of the
Fund may determine, the Investment Manager shall not be deemed to have acted
unlawfully or to have breached any duty solely by reason of its having caused
the Portfolio to pay a broker or dealer that provides research services to the
Investment Manager for the Portfolio's use an amount of commission for effecting
a portfolio investment transaction in excess of the amount of commission another
broker or dealer would have charged for effecting that transaction, if the
Investment Manager determines in good faith that such amount of commission was
reasonable in relation to the value of the research services provided by such
broker, viewed in terms of either that particular transaction or the Investment
Manager's ongoing responsibilities with respect to the Portfolio. The Investment
Manager is further authorized to allocate the orders placed by it on behalf of
the Portfolio to such brokers and dealers who also provide research and
statistical material, or other services to the Fund or the Investment Manager.
Such allocation shall be in such amounts and proportions as the Investment
Manager shall determine and the Investment Manager will report on said
allocations to the Board of Trustees of the Fund regularly as requested by the
Board and, in any event, at least once each calendar year if no specific request
is made, indicating the brokers to whom such allocations have been made and the
basis therefor.
4. Control by the Board of Trustees. Any investment program undertaken by the
Investment Manager pursuant to this Agreement, as well as any other activities
undertaken by the Investment Manager on behalf of the Fund pursuant thereto,
shall at all times be subject to any directives of the Board of Trustees of the
Fund.
5. Compliance with Applicable Requirements. In carrying out its obligations
under this Agreement, the Investment Manager shall at all times conform to:
(a) all applicable provisions of the Investment Company Act and the
Investment Advisers Act and any rules and regulations adopted thereunder, as
amended; and
(b) the provisions of the Registration Statement of the fund under the
Securities Act of 1933 and the Investment Company Act, including the investment
objectives, policies and restrictions, and permissible investments specified
therein; and
(c) the provisions of the Agreement and Declaration of Trust of the
Fund, as amended; and
(d) the provisions of the By-laws of the Fund, as amended; and
(e) any other applicable provisions of state and federal law.
6. Expenses. The expenses connected with the Fund shall be allocable between the
Fund and the Investment Manager as follows:
(a) The Investment Manager shall furnish, at its expense and without
cost to the Fund, the services of a President, Secretary, and one or more Vice
Presidents of the Fund, to the extent that such additional officers may be
required by the Fund for the proper conduct of its affairs.
(b) The Investment Manager shall further maintain, at its expense and
without cost to the Fund, a trading function in order to carry out its
obligations under subparagraphs (f), (g) and (h) of paragraph 2 hereof to place
orders for the purchase and sale of portfolio securities for the Portfolio.
(c) Nothing in subparagraph (a) hereof shall be construed to require
the Investment Manager to bear:
(i) any of the costs (including applicable office space,
facilities and equipment) of the services of a principal
financial officer of the Fund whose normal duties consist of
maintaining the financial accounts and books and records of
the Fund; including the reviewing of calculations of net asset
value and preparing tax returns; or
(ii) any of the costs (including applicable office space,
facilities and equipment) of the services of any of the
personnel operating under the direction of such principal
financial officer. Notwithstanding the obligation of the Fund
to bear the expense of the functions referred to in clauses
(i) and (ii) of this subparagraph (c), the Investment Manager
may pay the salaries, including any applicable employment or
payroll taxes and other salary costs, of the principal
financial officer and other personnel carrying out such
functions, and the Fund shall reimburse the Investment Manager
therefor upon proper accounting.
(d) All of the ordinary business expenses incurred in the operations of
the Fund and the offering of its shares shall be borne by the Fund unless
specifically provided otherwise in this paragraph 6. These expenses include but
are not limited to brokerage commissions, legal, auditing, taxes or governmental
fees, the cost of preparing share certificates, custodian, depository, transfer
and shareholder service agent costs, expenses of issue, sale, redemption and
repurchase of shares, expenses of registering and qualifying shares for sale,
insurance premiums on property or personnel (including officers and trustees if
available) of the Fund which inure to its benefit, expenses relating to trustee
and shareholder meetings, the cost of preparing and distributing reports and
notices to shareholders, the fees and other expenses incurred by the Fund in
connection with membership in investment company organizations, and the cost of
printing copies of prospectuses and statements of additional information
distributed to shareholders.
7. Delegation of Responsibilities. Upon the request of the Fund's Board of
Trustees, the Investment Manager may perform services on behalf of the Fund
which are not required by this Agreement. Such services will be performed on
behalf of the Fund and the Investment Manager's cost in rendering such services
may be billed monthly to the Fund, subject to examination by the Fund's
independent accountants. Payment or assumption by the Investment Manager of any
Fund expense that the Investment Manager is not required to pay or assume under
this Agreement shall not relieve the Investment Manager of any of its
obligations to the Fund nor obligate the Investment Manager to pay or assume any
similar Fund expense on any subsequent occasion.
8. Engagement of Sub-Advisers and Broker-Dealers. The Investment Manager may
engage, subject to approval of the Fund's Board of Trustees, and where required,
the shareholders of the Portfolio, a sub-advisor to provide advisory services in
relation to the Portfolio. Under such sub-advisory agreement, the Investment
Manager may delegate to the sub-advisor the duties outlined in subparagraphs
(e), (f), (g) and (h) of paragraph 2 hereof.
9. Compensation. The Fund shall pay the Investment Manager in full compensation
for services rendered hereunder an annual investment advisory fee, payable
monthly, of .90% of the portion of the average daily net assets of the Portfolio
not in excess of $1 billion; plus .85% of the portion of the net assets in
excess of $1 billion.
10. Non-Exclusivity. The services of the Investment Manager to the Portfolio are
not to be deemed to be exclusive, and the Investment Manager shall be free to
render investment advisory and corporate administrative or other services to
others (including other investment companies) and to engage in other activities.
It is understood and agreed that officers or directors of the Investment Manager
may serve as officers or trustees of the Fund, and that officers or trustees of
the Fund may serve as officers or directors of the Investment Manager to the
extent permitted by law; and that the officers and directors of the Investment
Manager are not prohibited from engaging in any other business activity or from
rendering services to any other person, or from serving as partners, officers or
directors of any other firm or corporation, including other investment
companies.
11. Term and Approval. This Agreement shall become effective on May 1, 1998 and
shall continue in force and effect from year to year, provided that such
continuance is specifically approved at least annually:
(a) (i) by the Fund's Board of Trustees or (ii) by the vote of a
majority of the Portfolio's outstanding voting securities (as defined in Section
2(a)(42) of the Investment Company Act); and
(b) by the affirmative vote of a majority of the trustees who are not
parties to this Agreement or interested persons of a party to this Agreement
(other than as Fund trustees), by votes cast in person at a meeting specifically
called for such purpose.
12. Termination. This Agreement may be terminated at any time without the
payment of any penalty or prejudice to the completion of any transactions
already initiated on behalf of the Portfolio, by vote of the Fund's Board of
Trustees or by vote of a majority of the Portfolio's outstanding voting
securities, or by the Investment Manager, on sixty (60) days' written notice to
the other party. The notice provided for herein may be waived by either party.
This Agreement automatically terminates in the event of its assignment, the term
"assignment" having the meaning defined in Section 2(a)(4) of the Investment
Company Act.
13. Liability of Investment Manager and Indemnification. In the absence of
willful misfeasance, bad faith, gross negligence or reckless disregard of
obligations or duties hereunder on the part of the Investment Manager or any of
its officers, trustees or employees, it shall not be subject to liability to the
Fund or to any shareholder of the Portfolio for any act or omission in the
course of, or connected with, rendering services hereunder or for any losses
that may be sustained in the purchase, holding or sale of any security.
14. Liability of the Trustees and Shareholders. A copy of the Agreement and
Declaration of Trust of the Fund is on file with the Secretary of The
Commonwealth of Massachusetts, and notice is hereby given that this instrument
is executed on behalf of the trustees of the Fund as trustees and not
individually and that the obligations of this instrument are not binding upon
any of the trustees or shareholders individually but are binding only upon the
assets and property of the Fund. Federal and state laws impose responsibilities
under certain circumstances on persons who act in good faith, and therefore,
nothing herein shall in any way constitute a waiver of limitation of any rights
which the Fund or the Investment Manager may have under applicable law.
15. Notices. Any notices under this Agreement shall be in writing, addressed and
delivered or mailed postage paid to the other party at such address as such
other party may designate for the receipt of such notice. Until further notice,
it is agreed that the address of the Fund and the Investment Manager shall be
One Corporate Drive, Shelton, Connecticut 06484.
16. Questions of Interpretation. Any question of interpretation of any term or
provision of this Agreement having a counterpart in or otherwise derived from a
term or provision of the Investment Company Act, shall be resolved by reference
to such term or provision of the Act and to interpretations thereof, if any, by
the United States Courts or in the absence of any controlling decision of any
such court, by rules, regulations or orders of the Securities and Exchange
Commission issued pursuant to the said Act. In addition, where the effect of a
requirement of the Investment Company Act, reflected in any provision of this
Agreement is released by rules, regulation or order of the Securities and
Exchange Commission, such provision shall be deemed to incorporate the effect of
such rule, regulation or order.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in duplicate by their respective officers on the day and year first
above written.
AMERICAN SKANDIA TRUST
Attest: By:
AMERICAN SKANDIA INVESTMENT
SERVICES, INCORPORATED
Attest: By:
<PAGE>
EXHIBIT A-3
SUB-ADVISORY AGREEMENT
THIS AGREEMENT is between American Skandia Investment Services,
Incorporated (the "Investment Manager") and Berger Associates Inc. (the
"Sub-Advisor").
WHEREAS American Skandia Trust (the "Trust") is a Massachusetts business trust
organized with one or more series of shares, and is registered as an investment
company under the Investment Company Act of 1940 (the "ICA"); and
WHEREAS the trustees of the Trust (the "Trustees") have engaged the Investment
Manager to act as investment manager for the Berger Capital Growth Portfolio
(the "Portfolio") under the terms of a management agreement, dated October 19,
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 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.
Notwithstanding the above, the Sub-Advisor shall have no responsibility to
monitor compliance with limitations or restrictions for which it has not
received sufficient information from the Investment Manager or its authorized
agents to enable the Sub-Advisor to monitor compliance with such limitations or
restrictions. 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: .55 of 1% of the portion of the net
assets of the Portfolio not in excess of $25 million; .50 of 1% of the portion
of the net assets in excess of $25 million but not in excess of $50 million; and
.40 of 1% of the portion in excess of $50 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: Berger Associates, Inc.
210 University Boulevard
Suite 900
Denver, Colorado 80206
Attention: Kevin R. Fay
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 May 1, 1996.
FOR THE INVESTMENT MANAGER: FOR THE SUB-ADVISOR:
/s/Thomas Mazzaferro /s/Kevin R. Fay
Thomas Mazzaferro Kevin R. Fay
President & Chief Operating Officer Vice President
Date: 5/1/96 Date: 5/1/96
Attest: /s/Ivette Aquilino Attest: /s/Janice A. Teague
<PAGE>
EXHIBIT A-4
SUB-ADVISORY AGREEMENT
THIS AGREEMENT is between American Skandia Investment Services, Incorporated
(the "Investment Manager") and Neuberger&Berman Management Incorporated (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 Neuberger&Berman Mid-Cap Growth
Portfolio (the "Portfolio") under the terms of a management agreement, dated May
1, 1998, 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 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), and (3)) of the
Internal Revenue Code, applicable to the Portfolio, and the regulations
promulgated thereunder. Sub-Advisor shall comply with (i) other applicable
provisions of state or federal law; (ii) the provision of the Declaration of
Trust and By-Laws of the Trust; (iii) policies and determinations of the Trust
and Investment Manager; (iv) the fundamental policies and investment
restrictions of the Trust, as set out in the Trust's registration statement
under the ICA, or as amended by the Trust's shareholders; (v) the Prospectus and
Statement of Additional Information of the Trust; and (vi) investment guidelines
or other instructions received in writing from Investment Manager.
Notwithstanding the above, the Sub-Advisor shall have no responsibility to
monitor compliance with limitations or restrictions for which it has not
received sufficient information from the Investment Manager or its authorized
agents to enable the Sub-Advisor to monitor compliance with such limitations or
restrictions. 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: .45 of 1% of the portion of the net
assets of the Portfolio not in excess of $100 million; and .40 of 1% of the
portion 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 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: John Birch
Vice President & Chief Operating Officer
Sub-Advisor: Neuberger&Berman Management Incorporated
605 Third Avenue
2nd Floor
New York, NY 10158-0180
Attention:
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 May 1, 1998.
FOR THE INVESTMENT MANAGER: FOR THE SUB-ADVISOR:
John Birch
Vice President & Chief Operating Officer
Date: Date:
Attest: Attest:
<PAGE>
AMERICAN SKANDIA TRUST
PROXY FOR SPECIAL MEETING OF SHAREHOLDERS OF THE
BERGER CAPITAL GROWTH PORTFOLIO
TO BE HELD ON APRIL 29, 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")
which 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 April
29, 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.
PLEASE SIGN BELOW 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 Berger Capital Growth 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."
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ACCOUNT NUMBER:
UNITS:
CONTROL NO:
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TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: KEEP THIS PORTION FOR YOUR RECORDS
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THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED DETACH AND RETURN THIS PORTION ONLY
AMERICAN SKANDIA TRUST -- BERGER CAPITAL GROWTH PORTFOLIO
THIS PROXY IS BEING SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES OF THE TRUST.
For Against Abstain
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THE BOARD OF TRUSTEES OF THE TRUST I. PROPOSAL TO APPROVE A NEW INVESTMENT MANAGEMENT [] [] []
RECOMMENDS VOTING FOR THE FOLLOWING AGREEMENT BETWEEN THE TRUST AND AMERICAN
PROPOSALS: SKANDIA INVESTMENT SERVICES, INCORPORATED
REGARDING MANAGEMENT OF THE BERGER CAPITAL
THE SHARES REPRESENTED HEREBY WILL BE GROWTH PORTFOLIO.
VOTED AS INDICATED OR FOR THE PROPOSALS IF
NO CHOICE IS INDICATED. II. PROPOSAL TO APPROVE A NEW SUB-ADVISORY [] [] []
AGREEMENT BETWEEN AMERICAN SKANDIA INVESTMENT
SERVICES, INCORPORATED AND NEUBERGER&BERMAN
MANAGEMENT INCORPORATED REGARDING INVESTMENT
ADVICE TO THE BERGER CAPITAL GROWTH PORTFOLIO.
III. PROPOSAL TO APPROVE CHANGES IN THE PORTFOLIO'S [] [] []
FUNDAMENTAL INVESTMENT RESTRICTIONS.
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Please be sure to sign and date this Proxy Approval of Proposals I, II and III are made contingent
upon approval of all Proposals
__________________________________ Date: _________ ___________________________ Date: ________
Signature [PLEASE SIGN WITHIN BOX] Signature (Joint Owners)
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DETACH CARD
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