Investment Company Act No. 811-08085
As filed with the Securities and Exchange Commission on November 3, 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 Advisor Funds, Inc.
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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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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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[ ] 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.
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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
FOUNDERS CAPITAL APPRECIATION PORTFOLIO
To be held
December 30, 1998
To the Shareholders of the Founders Capital Appreciation Portfolio of
American Skandia Trust:
Notice is hereby given that a Special Meeting of Shareholders of the
Founders Capital Appreciation Portfolio (the "Portfolio") of American Skandia
Trust (the "Trust"), will be held at One Corporate Drive, Shelton, Connecticut
06484 on December 30, 1998 at 10:00 a.m. Eastern Time, or at such adjourned time
as may be necessary for the holders of a majority of the outstanding shares of
the Portfolio to vote (the "Meeting"), for the following purposes:
I. To consider the approval of a new Sub-Advisory Agreement between
American Skandia Investment Services, Incorporated and Janus Capital Corporation
regarding investment advice to the Portfolio.
II. To consider the approval of a change in the Portfolio's investment
objective.
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 November 13, 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
November 30, 1998
<PAGE>
PROXY STATEMENT
AMERICAN SKANDIA TRUST
One Corporate Drive
P.O. Box 883
Shelton, Connecticut 06484
SPECIAL MEETING OF SHAREHOLDERS
OF THE FOUNDERS CAPITAL APPRECIATION PORTFOLIO
OF
AMERICAN SKANDIA TRUST
To be held
December 30, 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
Founders Capital Appreciation Portfolio (the "Portfolio") of the Trust to be
held at One Corporate Drive, Shelton, Connecticut 06484 on December 30, 1998 at
10:00 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 December 1, 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 most recent Semi-annual Report of the
Trust, including unaudited semi-annual financial statements for the period ended
June 30, 1998, was also 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 November 13, 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: [insert]. 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
annuity contracts and variable life insurance policies issued by life insurance
companies, including ASLAC (the "Participating Insurance Companies"). 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), ASLAC Variable Account F 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
Founders Capital Appreciation 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.
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 and variable life insurance policies. 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, Founders Asset Management
LLC ("Founders"), 2930 East Third Avenue, 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. Founders is a 90%-owned subsidiary of Mellon Bank,
N.A., with the remaining 10% held by certain Founders executives and portfolio
managers. Mellon Bank is a wholly owned subsidiary of Mellon Bank Corporation, a
publicly owned multibank holding company which provides a comprehensive range of
financial products and services in domestic and selected international markets.
The Administrator of the Portfolio, 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
the Participating Insurance Companies at the Meeting and any adjournments
thereof in accordance with voting instructions received from such
Contractowners. The Participating Insurance Companies are 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 Participating Insurance
Company's Contractowners on the proxy issues presented. The Participating
Insurance Companies have fixed the close of business on December 28, 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"). 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 will constitute 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 of the Proposals is not contingent upon approval of any
other Proposal. Therefore, any Proposal that is approved will be implemented
notwithstanding the outcome of the vote on any other Proposal.
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 SUB-ADVISORY AGREEMENT BETWEEN
AMERICAN SKANDIA INVESTMENT SERVICES, INCORPORATED
AND JANUS CAPITAL CORPORATION
Background
Since the Portfolio commenced operations on January 4, 1994, ASISI has
served as Investment Manager to the Portfolio pursuant to an Investment
Management Agreement with the Trust. The Investment Management Agreement,
effective January 3, 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
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. The Manager may 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 April 1, 1998, with Founders, pursuant to which the above
duties have been delegated by the Manager to Founders. The Present Sub-Advisory
Agreement was approved by shareholders of the Portfolio on February 19, 1998.
The approval of the Present Sub-advisory Agreement was required as a result of
the transaction in which Founders was acquired by Mellon Bank. Under the Present
Sub-advisory Agreement and predecessor agreements, Founders and its predecessor
company have served as sub-advisor to the Portfolio since the Portfolio
commenced operations on January 4, 1994.
The Present Sub-advisory Agreement and predecessor agreements with
Founders and its predecessor 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
was most recently approved by the Board on April 8, 1998.
The Board of Trustees, through the Manager, has determined to submit
for the approval of the Portfolio's shareholders a proposal to replace Founders
as Sub-advisor to the Portfolio. At a telephonic meeting held on October 12,
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 II and III
below, and to engage Janus Capital Corporation ("Janus") to provide sub-advisory
services for the Portfolio. In connection with its recommendation, the Manager
proposed to enter into a new sub-advisory agreement (the "New Sub-Advisory
Agreement") with Janus, which would become effective January 4, 1999 (or, if
shareholder approval of Proposal I occurs after December 30, 1998, four business
days after such approval) (such date being hereinafter referred to as the
"Effective Date"). The terms and conditions of the New Sub-Advisory Agreement
are identical in all material respects with those of the Present Sub-Advisory
Agreement, respectively, with the exception of a decreased fee rate, the
effective date, the identity of the sub-advisor, and a change in the name of the
Portfolio to the "AST Janus Small-Cap Growth Portfolio." The Investment
Management Agreement, including the fee payable to the Manager thereunder, is
not proposed to be changed in connection with the other changes being proposed
except to reflect the change in the Portfolio's name. Therefore, shareholder
approval of a new Investment Management Agreement is not required.
In support of its recommendation to engage Janus as sub-advisor to the
Portfolio, the Manager informed the Board of Trustees of its belief that
appointment of Janus as sub-advisor to the Portfolio and implementation of
revised investment policies and restrictions would assist the Portfolio in
efforts to achieve its investment objective and increase its net assets.
At the October 12, 1998 meeting, the Board of Trustees, including a
majority of the Independent Trustees, gave preliminary approval to the New
Sub-Advisory Agreement, effective on the Effective Date (as defined earlier),
and authorized the preparation of this proxy statement and submission of the
Proposals for shareholder approval. It is anticipated that formal approval of
the New Sub-Advisory Agreement by the Board of Trustees will take place at an in
person meeting scheduled to be held on December 16, 1998. At such meeting,
Management will recommend that the Board of Trustees also approve a change in
the name of the Portfolio to the "AST Janus Small-Cap Growth Portfolio," subject
to shareholder approval of Proposal I. The Present Sub-Advisory Agreement will
be terminated as of the opening of business on the Effective Date (as defined
earlier).
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-1.
Under the terms of the Present Sub-Advisory Agreement, Founders 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, Founders,
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 Founders to use its best
efforts and good faith in the performance of its services under the Present
Sub-Advisory Agreement. However, so long as Founders 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, Founders 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 Founders' compensation under
the Present Sub-Advisory Agreement. Founders' compensation for the services
provided under the Present Sub-Advisory Agreement is computed at an annual rate
and is payable monthly in arrears, based on the average daily net assets of the
Portfolio for each month. For all services rendered, the Manager pays Founders
at the annual rate of .65 of 1% of the portion of the net assets of the
Portfolio not in excess of $75 million; .60 of 1% of the portion of the net
assets over $75 million but not in excess of $150 million; and .55 of 1% of the
portion in excess of $150 million. In computing the fee to be paid to Founders,
the net asset value of the Portfolio is determined 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 Founders has received prior written notice
thereof) upon termination of the Investment Management Agreement.
The Present Sub-Advisory Agreement will be terminated by ASISI as of
the opening of business on the Effective Date (as defined earlier). The
termination, rather than continuance, of the Present Sub-Advisory Agreement
reflects the determination of the Manager and the Board of Trustees that it
would be in the interests of the Portfolio's shareholders to enter into the New
Sub-Advisory Agreement described below. Founders' compensation under the Present
Sub-Advisory Agreement will be prorated to the date of termination.
As of June 30, 1998, Founders and its affiliates managed assets
totaling approximately $7.5 billion, including over $[insert] 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-2.
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
decreased sub-advisory fee rate payable by the Manager, the effective date and
the name of the Portfolio. In addition, certain clarifying changes that are not
believed to be material have been made to the New Sub-Advisory Agreement. 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 Janus a fee
at the annual rate of .50% of the Portfolio's average daily net assets not in
excess of $100 million, plus .45% of the Portfolio's average daily net assets
over $100 million but not in excess of $500 million; plus .40% of the portion of
the Portfolio's average daily net assets over $500 million but not in excess of
$1 billion; plus .35% of the portion of the Portfolio's average daily net assets
in excess of $1 billion. As of the current date, Janus has agreed to voluntarily
waive a portion of the above fees equal to .05% on assets over $400 million but
not in excess of $500 million and .05% on assets over $900 million but not in
excess of $1 billion. This waiver is voluntary, and may be discontinued by Janus
at any time. In computing the fee to be paid to Janus, the net asset value of
the Portfolio will be determined 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 Founders for services rendered under the
Present Sub-Advisory Agreement was $1,469,059. 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 Janus for services rendered under the
New Sub-Advisory Agreement would have been $[insert], a decrease of [insert]%
from the actual amount paid to Founders during such period.
If the New Sub-Advisory Agreement is approved by the shareholders of
the Portfolio, it will become effective at the opening of business on the
Effective Date. 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 required to 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 Janus has received prior written notice
thereof) upon termination of the Investment Management Agreement.
As discussed in more detail below, the Board of Trustees and the
Manager believe that approval of the New Sub-Advisory Agreement is in the best
interests of the Portfolio and its shareholders because of the high quality of
services expected to be provided under the New Sub-advisory Agreement. In
addition, the New Sub-Advisory Agreement could facilitate efforts to increase
the Portfolio's assets, which may have beneficial effects on Portfolio and Trust
expenses.
The Proposed Sub-Advisor
Janus serves as investment advisor to the Janus Funds, as well as
advisor or sub-advisor to several other mutual funds and individual, corporate,
charitable and retirement accounts. Janus has its principal offices at 100
Fillmore Street, Denver, Colorado 80206-4923. Kansas City Southern Industries,
Inc. ("KCSI"), 114 West 11th Street, Kansas City, Missouri 64105, owns
approximately 83% of the outstanding voting stock of Janus. KCSI is a publicly
traded holding company whose primary subsidiaries are engaged in transportation,
information processing and financial services. Thomas H. Bailey, President,
Chief Executive Officer and Chairman of the Board of Janus, owns approximately
12% of its voting stock and, by agreement with KCSI, selects a majority of
Janus' board.
In addition to Mr. Bailey, the other directors of Janus are: James P.
Craig, Vice Chairman and Chief Investment Officer of Janus; Michael E. Herman,
President, Kansas City Royals Baseball Team and Finance Committee Chairman,
Ewing Marion Kauffman Foundation; Thomas A. McDonnell, President, DST
Technologies, Inc. and President, Chief Executive Officer and Director, DST
Systems, Inc.; Landon H. Rowland, President and Chief Executive Officer of KCSI;
and Michael Stolper, President, Stolper & Co., Inc. Each of the directors may be
reached through Janus at the above address.
Janus acts as investment adviser to various publicly owned investment
companies, one series of which has an investment objective and program similar
to the investment objective and proposed investment program for the Portfolio as
described in more detail below (the "Comparable Janus Fund"). As investment
adviser to the Comparable Janus Fund, Janus performs certain administrative and
other duties, which it will not be required to perform for the Portfolio under
the New Sub-Advisory Agreement. The following chart lists the net assets of the
Comparable Janus Fund at October 30, 1998, as well as the current advisory fee
rate payable to Janus.
<TABLE>
<CAPTION>
Total Net Assets
Comparable Janus Fund at October 30, 1998 Fee Rate
<S> <C> <C> <C>
Janus Investment Fund -- Janus $1,036,400,000 .75% of the first $300 million of the fund's average
Venture Fund daily net assets, .70% of the next $200 million, and
.65% of the average daily net assets in excess of
$500 million.
</TABLE>
The Evaluation by the Board of Trustees
In evaluating the New Sub-Advisory Agreement, the Board of Trustees
received information and reviewed materials furnished by the Manager, including
information about Founders' operations and management of the Portfolio and
Janus' personnel, operations and anticipated management of the Portfolio.
Consideration was given to the decreased fee rate payable by the Manager under
the New Sub-Advisory Agreement, and the fact that the Investment Management fees
payable by the Portfolio will remain the same. Therefore, although the Manager's
net compensation will increase, the Portfolio's shareholders will not pay any
additional fees as a result of the change in sub-advisors.
Consideration was given to the Manager's report of the Portfolio's
under-performance over the past three years relative to the Russell 2000 Growth
Index and other mutual funds with similar investment objectives, and to the
Manager's belief that such under-performance was not accompanied by any
reduction in risk relative to such index and the other mutual funds.
Consideration was also given to recent organizational and management changes at
Founders. The Manager provided its assessment that replacement of the
Sub-advisor for the Portfolio and approval of the New Sub-advisory Agreement
with Janus could improve the Portfolio's performance. The Manager's
recommendation of Janus was based, among other factors, on (1) the performance
of other funds with similar investment objectives and investment styles that are
managed by Janus, (2) the Janus personnel who will be involved in the management
of the Portfolio, including the fact that the head of the team responsible for
managing the Portfolio will be the Chief Investment Officer of Janus, and (3)
the experience of the Trust and the Manager with the sub-advisory services
provided by Janus, including the high-quality services provided by Janus for two
other portfolios of the Trust and for other investment company portfolios for
which the Manager serves as Investment Manager.
The Board of Trustees also considered that (1) the overall reputation
and standing of Janus in the U.S. mutual fund industry is excellent, (2) 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
sub-advisor, the effective date, the name of the Portfolio, and the sub-advisory
fee rate. In addition to considering the investment advisory capabilities of
Janus in terms of potential benefits in the investment performance of the
Portfolio, the Board of Trustees also considered that the capabilities and
reputation of Janus will facilitate efforts to increase the Portfolio's assets,
with possible beneficial effects on Portfolio and Trust expenses.
Based upon its evaluation, the Board of Trustees concluded that the
Manager's engagement of Janus as Sub-advisor to the Portfolio likely would offer
the Portfolio access to highly effective management and advisory services and
capabilities. 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 Name
If Proposal I is approved, as of the Effective Date, the name of the
Portfolio will be changed from the "Founders Capital Appreciation Portfolio" to
the "AST Janus Small-Cap Growth Portfolio" and the New Sub-Advisory Agreement
will become effective.
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 CHANGE IN THE
PORTFOLIO'S INVESTMENT OBJECTIVE
Change in Portfolio Investment Objective
The Portfolio's current fundamental investment objective (the
"Investment Objective"), which may not be changed without approval of the
shareholders of the Portfolio, is as follows:
The investment objective of the Portfolio is to seek capital
appreciation.
The Board of Trustees recommends that the shareholders retain the same
investment objective for the Portfolio, but that the shareholders approve making
the investment objective "non-fundamental," which would mean that it could be
changed by the Board of Trustees of the Trust, if appropriate in its judgment,
without the approval of the shareholders of the Portfolio. The Manager proposed
to the Board of Trustees that the Investment Objective be reclassified from
fundamental to non-fundamental to provide the Board of Trustees with flexibility
to change the objective when circumstances in the securities market generally or
with respect to the Portfolio specifically would render such a change to be in
the best interests of the Portfolio's shareholders. The Investment Company Act
does not require the investment objective to be classified as "fundamental." If
the Shareholders of the Portfolio approve this Proposal, the Board of Trustees
thereafter would be permitted to change the Investment Objective without the
delay and expense to the Portfolio of arranging for shareholder approval.
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 increase the Portfolio's
investment flexibility, and (ii) to conform the fundamental investment
restrictions applicable to the Portfolio to those applicable to certain other
portfolios of the Trust.
The Portfolio currently is subject to certain investment restrictions
that are "fundamental" policies and may not be changed without approval of the
shareholders of the Portfolio (collectively, the "Affected Investment
Restrictions"). The Portfolio also is subject to certain non-fundamental
investment restrictions that may be changed by the Board of Trustees without
shareholder approval.
If this Proposal III is approved by the shareholders, the Portfolio
will 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. The nature and scope of these Continuing Investment Restrictions
compared to certain Affected Investment Restrictions are discussed in more
detail below.
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 the transactions.
The Manager, after discussions with Janus, has proposed to the Board of
Trustees that certain Affected Investment Restrictions discussed below either be
(1) replaced by similar "non-fundamental" investment restrictions, (2)
eliminated and replaced by comparable Continuing Investment Restrictions, or (3)
eliminated completely. As noted above, these changes will increase the
Portfolio's investment flexibility and conform the Portfolio's restrictions with
the restrictions applicable to other portfolios of the Trust. Except to the
extent that they are being replaced by Continuing Investment Restrictions, the
Investment Company Act does not require any of these Affected Investment
Restrictions to be classified as "fundamental." Moreover, the prohibitions
underlying certain of the Affected Investment Restrictions reflect the
requirements of the Investment Company Act and, in the absence of such
restrictions, would still be applicable to the Portfolio. The prohibitions
underlying certain other investment restrictions reflect the requirements of
state securities laws that no longer are applicable to the Portfolio.
The Manager does not believe that approval of the changes to the
Portfolio's fundamental restrictions would significantly affect the day-to-day
management of, and the investment decisions made for, the Portfolio, either as
the Portfolio is currently managed or as it would be managed under the New
Sub-Advisory Agreement. Like approval of Proposal II, approval of this Proposal
III would permit the Board of Trustees to change any "non-fundamental"
investment restrictions (if permitted under applicable law) without the delay
and expense to the Portfolio of arranging for shareholder approval.
Reclassification of Certain Investment Restrictions from "Fundamental" to
"Non-Fundamental"
The following Affected Investment Restrictions are being proposed to be
replaced by similar non-fundamental restrictions as discussed below.
(1) The Portfolio is subject to the following two Affected Investment
Restrictions concerning the purchase of securities on margin:
The Portfolio will not purchase any securities on
margin except to obtain such short term credits as may be
necessary for the clearance of transactions.
A Portfolio will not buy any securities or other
property on margin (except for such short-term credits as are
necessary for the clearance of transactions).
The Manager has proposed to the Board of Trustees that the two Affected
Investment Restrictions set forth above be replaced by the following
non-fundamental investment restriction:
The Portfolio does not currently intend to purchase securities
on margin, except that the Portfolio may obtain such
short-term credits as are necessary for the clearance of
transactions, and provided that the margin payments and other
deposits in connection with transactions in futures, options,
swaps and forward contracts shall not be deemed to constitute
purchasing securities on margin.
The proposed non-fundamental restriction concerning the purchase of
securities on margin clarifies certain matters, including that the restriction
does not apply to futures contracts, options and other instruments that require
payments referred to as "margin" or similar deposits. By replacing the above
Affected Investment Restriction with the proposed non-fundamental investment
restriction, the Board of Trustees, if deemed appropriate in its judgment, would
be able to modify or eliminate the investment restriction without the attendant
delay and expense of arranging for a shareholders meeting. The Portfolio's
ability to engage in margin transactions is limited by current positions taken
by the Commission that such transactions involve the issuance of senior
securities and by other investment restrictions that permit the Portfolio to
borrow money only in limited circumstances.
(2) The Portfolio is subject to the following Affected Investment
Restriction concerning short sales of securities:
The Portfolio will not sell securities short.
The Manager has proposed to the Board of Trustees that the Affected
Investment Restriction set forth above be replaced by the following
non-fundamental investment restriction:
The Portfolio does not currently intend to sell securities
short, unless it owns or has the right to obtain securities
equivalent in kind and amount to the securities sold short
without the payment of any additional consideration therefor,
and provided that transactions in futures, options, swaps and
forward contracts are not deemed to constitute selling
securities short.
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 owns or has the right to obtain securities equivalent in
kind and amount to the securities sold short (short sales "against-the-box").
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, options and similar instruments by
explicitly excluding them from the application of the restriction on short
sales.
By replacing the above Affected Investment Restriction with the
proposed non-fundamental investment restriction, 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 other than short
sales "against-the-box," 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.
(3) The Portfolio is subject to the following Affected Investment
Restriction concerning investment of companies for the purpose of exercising
control or management:
A 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 Affected
Investment Restriction set forth above be replaced by the following
substantially identical non-fundamental investment restriction:
The Portfolio may not invest in companies for the purpose of
exercising control or management.
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 Objective is made non-fundamental.
Moreover, replacement of the Affected Investment Objective with the above
identical non-fundamental restriction would enable the Board of Trustees, if
deemed appropriate in its judgment, to modify or eliminate the restriction so
that the Portfolio could attempt to influence management of issuers when it is
permissible and appropriate to do so, including instances where issuers of
portfolio securities may be in default on their obligations.
Elimination of Certain Fundamental Investment Restrictions
The following Affected Investment Restrictions are being proposed to be
eliminated and, in certain cases, replaced by similar Continuing Investment
Restrictions as discussed below.
(1) The Portfolio also is subject to the following Affected Investment
Restriction concerning industry concentration of investments:
The Portfolio will not make any investment which would
concentrate 25% or more of the Portfolio's total assets in the
securities of issuers having their principal business
activities in the same industry, provided that this limitation
does not apply to obligations issued or guaranteed by the U.S.
government, its agencies or instrumentalities.
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.
(2) The Portfolio also is subject to the following Affected Investment
Restriction concerning loans:
The Portfolio will not make loans to other persons; the
purchase of a portion of an issue of publicly distributed
bonds, debentures or other securities is not considered the
making of a loan by the Portfolio. The Portfolio may also
enter into repurchase agreements by purchasing U.S. Government
securities with a simultaneous agreement with the seller to
repurchase them at the original purchase price plus accrued
interest.
The Manager has proposed to the Board of Trustees that the Affected
Investment Restriction set forth above be eliminated. If eliminated, the
Portfolio 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 policies and restrictions. 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.
(3) The Portfolio also is subject to the following Affected Investment
Restriction concerning borrowings:
The Portfolio will not borrow money, except for extraordinary
or emergency purposes, and then only from banks in amounts up
to 10% of the Portfolio's net assets computed at the lesser of
cost or value.
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
Restriction 2. The elimination of the Affected Investment Restriction will
increase the amount that the Portfolio may borrow, and will expand the
circumstances under which the Portfolio may borrow to include not only
borrowings for extraordinary or emergency purposes, but also borrowings for
other temporary purposes and borrowings that may be deemed to result from other
investments and investment practices (only when consistent with the Portfolio's
investment objective and policies and subject to applicable legal or regulatory
asset coverage requirements). The Portfolio also would be permitted to borrow
from parties other than banks if permitted to do so by law. 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.
(4) The Portfolio also is subject to the following two Affected
Investment Restrictions:
A Portfolio will not underwrite securities issued by others
except to the extent the Portfolio may be deemed an underwriter
when purchasing or selling securities.
The Portfolio will not underwrite the securities of other
issuers.
The Manager has proposed to the Board that the two Affected Investment
Restrictions set forth above be eliminated. If the above Affected Investment
Restrictions are eliminated, Continuing Restriction 3 would continue to prohibit
the Portfolio from acting as an underwriter, although the restriction would make
clear that it does not apply to the Portfolio's own securities, or to the extent
that the Portfolio may be deemed to be an underwriter (within the meaning of the
Securities Act of 1933) in purchasing or selling portfolio securities.
(5) The Portfolio also is subject to the following two Affected
Investment Restrictions:
A Portfolio will not issue senior securities.
AMERICAN SKANDIA TRUST
Proxy for Special Meeting of Shareholders of THE
FOUNDERS CAPITAL APPRECIATION PORTFOLIO
to be held on DECEMBER 30, 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 10:00 a.m., Eastern Time, on
December 30, 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 Founders Capital Appreciation Portfolio of the Trust. If a contract is
jointly held, each contract owner named should sign. If only one signs, his or
her signature will be binding. If the contract owner is a trust, custodial
account or other entity, the name of the trust or the custodial account should
be entered and the trustee, custodian, etc. should sign in his or her own name,
indicating that he or she is "Trustee," "Custodian," or other applicable
designation. If the contract owner is a partnership, the partnership should be
entered and the partner should sign in his or her own name, indicating that he
or she is a "Partner."
THIS PROXY IS BEING SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES OF THE TRUST.
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
<S> <C>
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED DETACH AND RETURN THIS PORTION ONLY
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AMERICAN SKANDIA TRUST - FOUNDERS CAPITAL APPRECIATION PORTFOLIO
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<CAPTION>
THE BOARD OF TRUSTEES OF THE TRUST RECOMMENDS VOTING FOR THE FOLLOWING PROPOSALS:
THE UNITS REPRESENTED HEREBY WILL BE VOTED AS INDICATED OR FOR THE PROPOSALS IF
NO CHOICE IS INDICATED.
For Against Abstain
<S> <C> <C> <C> <C>
I. PROPOSAL TO APPROVE A NEW SUB-ADVISORY
AGREEMENT BETWEEN AMERICAN SKANDIA INVESTMENT
SERVICES, INCORPORATED AND JANUS CAPITAL
CORPORATION REGARDING INVESTMENT ADVICE TO THE
FOUNDERS CAPITAL APPRECIATION PORTFOLIO. [] [] []
II. PROPOSAL TO APPROVE CHANGE IN THE PORTFOLIO'S
INVESTMENT OBJECTIVE. [] [] []
III. PROPOSAL TO APPROVE CHANGES IN THE PORTFOLIO'S
FUNDAMENTAL INVESTMENT RESTRICTIONS. [] [] []
</TABLE>
<TABLE>
<CAPTION>
Please be sure to sign and date this Proxy
<S> <C> <C> <C>
- --------------------------------- Date: ________ ---------------------------------- Date: _________
Signature [PLEASE SIGN WITHIN BOX] Signature (Joint Owners)
- -----------------------------------------------------------------------------------------------------------------------------------
DETACH CARD
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The Portfolio will not issue any senior securities.
The Manager has proposed to the Board that the two Affected Investment
Restrictions set forth above be eliminated. 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. Continuing Restriction 1 prohibits the Portfolio from
issuing senior securities except as permitted by the Investment Company Act.
(6) The Portfolio also is subject to the following Affected Investment
Restriction concerning investments in commodities and real estate:
The Portfolio will not invest in commodities, commodity
futures contracts, real estate, real estate mortgage loans or
other illiquid interests in real estate, except that the
Portfolio may invest in securities of issuers which invest in
commodities, commodity futures contracts, real estate, real
estate mortgage loans or other illiquid interests in real
estate.
The Manager has proposed to the Board that the Affected Investment Restriction
set forth above be eliminated. With respect to investments by the Portfolio in
real estate, Continuing Restriction 4 prohibits direct investments in real
estate but makes clear that ownership of securities or other instruments backed
by real estate or securities of all issuers engaged in the real estate business
will be permitted. 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. The additional real estate-related investments
permitted under Continuing Restriction 4 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 commodity futures contracts.
Generally, Continuing Restriction 5 makes clear that its prohibition on
investments in commodities does not apply to options, futures transactions and
forward currency contracts otherwise permitted by the Portfolio's investment
policies or to indirect investments in commodities through securities
investments. Continuing Restriction 5 also clarifies that acquiring physical
commodities as a result of owning securities or instruments will not constitute
a violation of its prohibitions.
(7) 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 or exemptive or other relief from these
requirements is obtained from the Commission, the Portfolio would not be
required to hold a shareholders' meeting with its attendant delay and expense in
order to make additional investments in other investment companies if such
investments are of potential benefit to the Portfolio.
(8) 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:
A Portfolio will not purchase or retain securities of any
issuer (other than the shares of such Portfolio) if to the
Trust's knowledge, the officers and Trustees of the Trust and
the officers and directors of the Investment Manager who
individually own beneficially more than 1/2 of 1% of the
outstanding securities of such issuer, together own
beneficially more than 5% of such outstanding securities.
The 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 Investment Company Act.
Addition of Fundamental Investment Restriction
The Portfolio currently is not explicitly subject to any fundamental
investment restriction that is comparable to Continuing Restriction 8, which
relates to the diversification of the Portfolio's investments. However, the
Investment Company Act requires shareholder approval before a "diversified" fund
(as defined in the Investment Company Act) such as the Portfolio may change its
status to non-diversified. Therefore, Continuing Restriction 8, which mirrors
the Investment Company Act definition of a diversified fund, will merely serve
to make explicit a requirement to which the Portfolio is currently subject.
THE TRUSTEES, INCLUDING THE INDEPENDENT TRUSTEES, RECOMMEND THAT THE
SHAREHOLDERS VOTE "FOR" PROPOSAL III. ANY UNMARKED PROXIES WILL BE SO VOTED.
Changes in Non-Fundamental Investment Policies
As discussed above, the Portfolio's investment objective of seeking
capital appreciation will not be changed as a result of approval of the
Proposals, except to make the objective non-fundamental. However, in order to
conform the investment policies of the Portfolio to the investment program that
has been formulated by Janus, a number of changes to the non-fundamental
investment policies of the Portfolio will be implemented if the New Sub-Advisory
Agreement is approved. The following description outlines the investment
policies of the Portfolio as it is currently managed, and compares such policies
to those under which the Portfolio would be managed under the New Sub-Advisory
Agreement. Shareholder approval of these changes is not required; the following
description is being provided solely for the information of the Portfolio's
shareholders.
In general, investment decisions for the Portfolio currently are based
on an approach which normally will have the Portfolio's total assets invested at
least 65% in common stocks of U.S. companies with market capitalizations or
annual revenues of $1.5 billion or less. In selecting the small and medium-sized
companies in which the Portfolio will invest, Founders attempts to identify
companies with capable management and fertile operating areas, as well as sound
financial and accounting policies, effective research and successful product
development and marketing, efficient service, and pricing flexibility. The
Portfolio attempts to avoid investing in companies where operating results may
be affected adversely by excessive competition, severe government regulation, or
unsatisfactory productivity.
The Portfolio's primary emphasis on small and medium-sized companies
may involve greater risk and fluctuations in value than is customarily
associated with an emphasis on more established companies. While common stocks
usually constitute a large majority of the Portfolio's holdings, 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. The Portfolio may, from
time to time, take positions in, among other things, securities convertible into
common stock, preferred stocks, bonds, debentures, and other corporate
obligations if the sub-advisor believes that these investments offer
opportunities to help achieve the Portfolio's objective of capital appreciation.
In addition, the Portfolio may purchase securities of foreign issuers (and use
forward foreign currency exchange contracts in connection with its foreign
investments), may enter into options and futures contracts for hedging purposes,
may invest in illiquid securities, and may make temporary investments in cash or
cash equivalents if Founders determines it to be appropriate for purposes of
enhancing liquidity or preserving capital in light of prevailing market or
economic conditions.
If the New Sub-advisory Agreement is approved, investment decisions for
the Portfolio will similarly be based on an approach which normally will have
the Portfolio's total assets invested at least 65% in common stocks of companies
with market capitalizations of less than $1.5 billion or annual gross revenues
of less than $500 million. Janus will generally take a "bottom-up" approach to
building the Portfolio, in which it seeks to identify individual companies with
earnings growth potential that may not be recognized by the market at large.
Securities generally will be selected without regard to any defined industry
sector or similarly defined selection procedure, and realization of income will
not be a significant investment consideration.
As under the Present Sub-advisory Agreement, the smaller or newer
issuers that the Portfolio will tend to invest in are more likely to realize
substantial growth as well as suffer more significant losses than larger or more
established issuers. While Janus will invest substantially all of the
Portfolio's assets in common stocks to the extent it believes that the relevant
market environment favors profitable investing in those securities, the
Portfolio may also invest to a lesser degree in other types of securities,
including certain types of securities in which the Portfolio may not currently
invest. The other types of securities in which the Portfolio may invest include
preferred stocks, warrants, convertible securities, debt securities (including
high-yield bonds), mortgage- and asset-backed securities, zero coupon,
pay-in-kind and step coupon securities. In addition, the Portfolio may enter
into futures contracts, options and other derivative securities for hedging
purposes or, to a limited extent, to enhance return, and may sell securities
short "against-the-box."
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 is 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
SUB-ADVISORY AGREEMENT
THIS AGREEMENT is between American Skandia Investment Services, Incorporated
(the "Investment Manager") and Founders Asset Management LLC (the
"Sub-Advisor").
WHEREAS American Skandia Trust (the "Trust") is a Massachusetts business trust
organized with one or more series of shares, and is registered as an investment
company under the Investment Company Act of 1940 (the "ICA"); and
WHEREAS the trustees of the Trust (the "Trustees") have engaged the Investment
Manager to act as investment manager for the Founders Capital Appreciation
Portfolio (the "Portfolio") under the terms of a management agreement, dated
January 3, 1994, with the Trust (the "Management Agreement"); and
WHEREAS the Investment Manager has engaged the Sub-Advisor and the Trustees have
approved the engagement of the Sub-Advisor to provide investment advice and
other investment services set forth below;
NOW, THEREFORE the Investment Manager and the Sub-Advisor agree as follows:
1. Investment Services. The Sub-Advisor will furnish the Investment Manager with
investment advisory services in connection with a continuous investment program
for the Portfolio which is to be managed in accordance with the investment
objective, investment policies and restrictions of the Portfolio as set forth in
the Prospectus and Statement of Additional Information of the Trust and in
accordance with the Trust's Declaration of Trust and By-Laws. Officers,
directors, and employees of Sub-Advisor will be available to consult with
Investment Manager and the Trust, their officers, employees and Trustees
concerning the business of the Trust. Investment Manager will promptly furnish
Sub-Advisor with any amendments to such documents. Such amendments will not be
effective with respect to the Sub-Advisor until receipt thereof.
Subject to the supervision and control of the Investment Manager, which
is in turn subject to the supervision and control of the Trust's Board of
Trustees, the Sub-Advisor, will in its discretion determine and select the
securities to be purchased for and sold from the Portfolio from time to time and
will place orders with and give instructions to brokers, dealers and others for
all such transactions and cause such transactions to be executed. The Portfolio
will be maintained by a custodian bank (the "Custodian") and the Investment
Manager will authorize the Custodian to honor orders and instructions by
employees of the Sub-Advisor authorized by the Investment Manager to settle
transactions in respect of the Portfolio. No assets may be withdrawn from the
Portfolio other than for settlement of transactions on behalf of the Portfolio
except upon the written authorization of appropriate officers of the Trust who
shall have been certified as such by proper authorities of the Trust prior to
the withdrawal.
The Sub-Advisor will obtain and evaluate pertinent information about
significant developments and economic, statistical and financial data, domestic,
foreign or otherwise, whether affecting the economy generally or the Portfolio,
and concerning the individual issuers whose securities are included in the
Portfolio or the activities in which they engage, or with respect to securities
which the Sub-Advisor considers desirable for inclusion in the Portfolio.
The Sub-Advisor represents that it reviewed the Registration Statement
of the Trust, including any amendments or supplements thereto, and any Proxy
Statement relating to the approval of this Agreement, as filed with the
Securities and Exchange Commission and represents and warrants that with respect
to disclosure about the Sub-Advisor or information relating directly or
indirectly to the Sub-Advisor, such Registration Statement or Proxy Statement
contains, as of the date hereof, no untrue statement of any material fact and
does not omit any statement of material fact which was required to be stated
therein or necessary to make the statements contained therein not misleading.
The Sub-Advisor further represents and warrants that it is an investment advisor
registered under the Investment Advisers Act of 1940, as amended, and under the
laws of all jurisdictions in which the conduct of its business hereunder
requires such registration.
Sub-Advisor shall use its best judgment, effort, and advice in
rendering services under this Agreement.
In furnishing the services under this Agreement, the Sub-Advisor will
comply with the requirements of the ICA and subchapters L and M (including,
respectively, Section 817(h) and Section 851(b)(1), (2), and (3)) of the
Internal Revenue Code, applicable to the Portfolio, and the regulations
promulgated thereunder. Sub-Advisor shall comply with (i) other applicable
provisions of state or federal law; (ii) the provision of the Declaration of
Trust and By-Laws of the Trust; (iii) policies and determinations of the Trust
and Investment Manager; (iv) the fundamental policies and investment
restrictions of the Trust, as set out in the Trust's registration statement
under the ICA, or as amended by the Trust's shareholders; (v) the Prospectus and
Statement of Additional Information of the Trust; and (vi) investment guidelines
or other instructions received in writing from Investment Manager. Sub-Advisor
shall supervise and monitor the investment program of the Portfolio.
Nothing in this Agreement shall be implied to prevent the Investment
Manager from engaging other sub-advisors to provide investment advice and other
services in relation to portfolios of the Trust for which Sub-Advisor does not
provide such services, or to prevent Investment Manager from providing such
services itself in relation to such portfolios.
2. Delivery of Documents to Sub-Advisor. The Investment Manager has furnished
the Sub-Advisor with copies of each of the following documents:
(a) The Declaration of Trust of the Trust as in effect on the date hereof;
(b) The By-laws of the Trust in effect on the date hereof;
(c) The resolutions of the Trustees approving the engagement of the
Sub-Advisor as Sub-Advisor to the Investment Manager and approving the form
of this agreement;
(d) The resolutions of the Trustees selecting the Investment Manager as
investment manager to the Trust and approving the form of the Investment
Manager's Management Agreement with the Trust;
(e) The Investment Manager's Management Agreement with the Trust;
(f) The Code of Ethics of the Trust and of the Investment Manager as
currently in effect; and
(g) A list of companies the securities of which are not to be bought or
sold for the Portfolio because of non-public information regarding such
companies that is available to Investment Manager or the Trust, or which,
in the sole opinion of the Investment Manager, it believes such non-public
information would be deemed to be available to Investment Manager and/or
the Trust.
The Investment Manager will furnish the Sub-Advisor from time to time with
copies, properly certified or otherwise authenticated, of all amendments of or
supplements to the foregoing, if any. Such amendments or supplements as to items
(a) through (f) above will be provided within 30 days of the time such materials
became available to the Investment Manager. Such amendments or supplements as to
item (g) above will be provided not later than the end of the business day next
following the date such amendments or supplements become known to the Investment
Manager.
3. Delivery of Documents to the Investment Manager. The Sub-Advisor has
furnished the Investment Manager with copies of each of the following documents:
(a) The Sub-Advisor's Form ADV as filed with the Securities and Exchange
Commission;
(b) The Sub-Advisor's most recent balance sheet;
(c) Separate lists of persons who the Sub-Advisor wishes to have authorized
to give written and/or oral instructions to Custodians of Trust assets for
the Portfolio;
(d) The Code of Ethics of the Sub-Advisor as currently in effect.
The Sub-Advisor will furnish the Investment Manager from time to time with
copies, properly certified or otherwise authenticated, of all material
amendments of or supplements to the foregoing, if any. Such amendments or
supplements as to items (a) through (d) above will be provided within 30 days of
the time such materials became available to the Sub-Advisor.
4. Investment Advisory Facilities. The Sub-Advisor, at its expense, will furnish
all necessary investment facilities, including salaries of personnel required
for it to execute its duties faithfully.
5. Execution of Portfolio Transactions. Sub-Advisor is responsible for decisions
to buy and sell securities for the Portfolio, broker-dealer selection, and
negotiation of its brokerage commission rates. Sub-Advisor shall determine the
securities to be purchased or sold by the Portfolio pursuant to its
determinations with or through such persons, brokers or dealers, in conformity
with the policy with respect to brokerage as set forth in the Trust's Prospectus
and Statement of Additional Information, or as the Board of Trustees may
determine from time to time. Generally, Sub-Advisor's primary consideration in
placing Portfolio securities transactions with broker-dealers for execution is
to obtain and maintain the availability of best execution at the best net price
and in the most effective manner possible.
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. Allocations of
orders placed by the Sub-Advisor on behalf of the Trust to such broker-dealers
shall be in such amounts and proportions as the Sub-Advisor shall determine and
the Sub-Advisor will report on said allocations to the Investment Manager
regularly as requested by the Investment Manager and, in any event, at least
once each calendar year if no specific request is made, indicating the brokers
to whom such allocations have been made and the basis therefor.
6. Reports by Sub-Advisor. The Sub-Advisor shall furnish the Investment Manager
monthly, quarterly and annual reports concerning transactions and performance of
the Portfolio, including information required in the Trust's Registration, in
such form as may be mutually agreed, to review the Portfolio and discuss the
management of it. The Sub-Advisor shall permit the financial statements, books
and records with respect to the Portfolio to be inspected and audited by the
Trust, the Investment Manager or their agents at all reasonable times during
normal business hours. The Sub-Advisor shall immediately notify and forward to
both Investment Manager and legal counsel for the Trust any legal process served
upon it on behalf of the Investment Manager or the Trust. The Sub-Advisor shall
promptly notify the Investment Manager of any changes in any information
required to be disclosed in the Trust's Registration Statement.
7. Compensation of Sub-Advisor. The amount of the compensation to the
Sub-Advisor is computed at an annual rate. The fee is payable monthly in
arrears, based on the average daily net assets of the Portfolio for each month,
at the annual rates shown below.
For all services rendered, the Investment Manager will calculate and
pay the Sub-Advisor at the annual rate of: .65 of 1% of the portion of the net
assets of the Portfolio not in excess of $75 million; .60 of 1% of the portion
of the net assets over $75 million but not in excess of $150 million; and .55 of
1% of the portion in excess of $150 million.
In computing the fee to be paid to the Sub-Advisor, the net asset value
of the Portfolio shall be valued as set forth in the then current registration
statement of the Trust. If this agreement is terminated, the payment shall be
prorated to the date of termination.
Investment Manager and Sub-Advisor shall not be considered as partners
or participants in a joint venture. Sub-Advisor will pay its own expenses for
the services to be provided pursuant to this Agreement and will not be obligated
to pay any expenses of Investment Manager or the Trust. Except as otherwise
provided herein, Investment Manager and the Trust will not be obligated to pay
any expenses of Sub-Advisor.
8. Confidential Treatment. It is understood that any information or
recommendation supplied by the Sub-Advisor in connection with the performance of
its obligations hereunder is to be regarded as confidential and for use only by
the Investment Manager, the Trust or such persons the Investment Manager may
designate in connection with the Portfolio. It is also understood that any
information supplied to Sub-Advisor in connection with the performance of its
obligations hereunder, particularly, but not limited to, any list of securities
which, on a temporary basis, may not be bought or sold for the Portfolio, is to
be regarded as confidential and for use only by the Sub-Advisor in connection
with its obligation to provide investment advice and other services to the
Portfolio.
9. Representations of the Parties. Each party to this Agreement hereby
acknowledges that it is registered as an investment advisor under the Investment
Advisers Act of 1940, it will use its reasonable best efforts to maintain such
registration, and it will promptly notify the other if it ceases to be so
registered, if its registration is suspended for any reason, or if it is
notified by any regulatory organization or court of competent jurisdiction that
it should show cause why its registration should not be suspended or terminated.
10. Liability. The Sub-Advisor shall use its best efforts and good faith in the
performance of its services hereunder. However, so long as the Sub-Advisor has
acted in good faith and has used its best efforts, then in the absence of
willful misfeasance, bad faith, gross negligence or reckless disregard for its
obligations hereunder, it shall not be liable to the Trust or its shareholders
or to the Investment Manager for any act or omission resulting in any loss
suffered in any portfolio of the Trust in connection with any service to be
provided herein. The Federal laws impose responsibilities under certain
circumstances on persons who act in good faith, and therefore, nothing herein
shall in any way constitute a waiver of limitation of any rights which the Trust
or Investment Manager may have under applicable law.
The Investment Manager agrees that the Sub-Advisor shall not be liable
for any failure to recommend the purchase or sale of any security on behalf of
the Portfolio on the basis of any information which might, in Sub-Advisor's
opinion, constitute a violation of any federal or state laws, rules or
regulations.
11. Other Activities of Sub-Advisor. Investment Manager agrees that the
Sub-Advisor and any of its partners or employees, and persons affiliated with it
or with any such partner or employee may render investment management or
advisory services to other investors and institutions, and such investors and
institutions may own, purchase or sell, securities or other interests in
property the same as or similar to those which are selected for purchase,
holding or sale for the Portfolio, and the Sub-Advisor shall be in all respects
free to take action with respect to investments in securities or other interests
in property the same as or similar to those selected for purchase, holding or
sale for the Portfolio. The Investment Manager understands that the Sub-Advisor
shall not favor or disfavor any of the Sub-Advisor's clients or class of clients
in the allocation of investment opportunities, so that to the extent practical,
such opportunities will be allocated among the Sub-Advisor's clients over a
period of time on a fair and equitable basis. 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
Senior Vice President & Chief Operating Officer
Sub-Advisor: Founders Asset Management LLC
Founders Financial Center
2930 East Third Avenue
Denver, Colorado 80206
Attention: David Ray
14. Indemnification. The Sub-Advisor agrees to indemnify and hold harmless
Investment Manager, any affiliated person within the meaning of Section 2(a)(3)
of the 1940 Act ("affiliated person") of Investment Manager and each person, if
any who, within the meaning of Section 15 of the Securities Act of 1933 (the
"1933 Act"), controls ("controlling person") Investment Manager, against any and
all losses, claims, damages, liabilities or litigation (including reasonable
legal and other expenses), to which Investment Manager or such affiliated person
or controlling person may become subject under the 1933 Act, the 1940 Act, the
Investment Adviser's Act of 1940 ("Adviser's Act"), under any other statute, at
common law or otherwise, arising out of Sub-Advisor's responsibilities as
portfolio manager of the Portfolio (1) to the extent of and as a result of the
willful misconduct, bad faith, or gross negligence by Sub-Advisor, any of
Sub-Advisor's employees or representatives or any affiliate of or any person
acting on behalf of Sub-Advisor, or (2) as a result of any untrue statement or
alleged untrue statement of a material fact contained in a prospectus or
statement of additional information covering the Portfolio or the Trust or any
amendment thereof or any supplement thereto or the omission or alleged omission
to state therein a material fact required to be stated therein or necessary to
make the statement therein not misleading, if such a statement or omission was
made in reliance upon written information furnished to Investment Manager, the
Trust or any affiliated person of the Investment Manager or the Trust or upon
verbal information confirmed by the Sub-Advisor in writing or (3) to the extent
of, and as a result of, the failure of the Sub-Advisor to execute, or cause to
be executed, Portfolio transactions according to the standards and requirements
of the 1940 Act; provided, however, that in no case is Sub-Advisor's indemnity
in favor of Investment Manager or any affiliated person or controlling person of
Investment Manager deemed to protect such person against any liability to which
any such person would otherwise be subject by reason of willful misconduct, bad
faith or gross negligence in the performance of its duties or by reason of its
reckless disregard of its obligations and duties under this Agreement.
The Investment Manager agrees to indemnify and hold harmless
Sub-Advisor, any affiliated person within the meaning of Section 2(a)(3) of the
1940 Act ("affiliated person") of Sub-Advisor and each person, if any who,
within the meaning of Section 15 of the Securities Act of 1933 (the "1933 Act"),
controls ("controlling person") Sub-Advisor, against any and all losses, claims,
damages, liabilities or litigation (including reasonable legal and other
expenses), to which Sub-Advisor or such affiliated person or controlling person
may become subject under the 1933 Act, the 1940 Act, the Investment Adviser's
Act of 1940 ("Adviser's Act"), under any other statute, at common law or
otherwise, arising out of Investment Manager's responsibilities as investment
manager of the Portfolio (1) to the extent of and as a result of the willful
misconduct, bad faith, or gross negligence by Investment Manager, any of
Investment Manager's employees or representatives or any affiliate of or any
person acting on behalf of Investment Manager, or (2) as a result of any untrue
statement or alleged untrue statement of a material fact contained in a
prospectus or statement of additional information covering the Portfolio or the
Trust or any amendment thereof or any supplement thereto or the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statement therein not misleading, if such a statement
or omission was made by the Trust other than in reliance upon written
information furnished by Sub-Advisor, or any affiliated person of the
Sub-Advisor or other than upon verbal information confirmed by the Sub-Advisor
in writing; provided, however, that in no case is Investment Manager's indemnity
in favor of Sub-Advisor or any affiliated person or controlling person of
Sub-Advisor deemed to protect such person against any liability to which any
such person would otherwise be subject by reason of willful misconduct, bad
faith or gross negligence in the performance of its duties or by reason of its
reckless disregard of its obligations and duties under this Agreement.
15. Warranty. The Investment Manager represents and warrants that (i) the
appointment of the Sub-Advisor by the Investment Manager has been duly
authorized and (ii) it has acted and will continue to act in connection with the
transactions contemplated hereby, and the transactions contemplated hereby are,
in conformity with the Investment Company Act of 1940, the Trust's governing
documents and other applicable laws.
The Sub-Advisor represents and warrants that it is authorized to
perform the services contemplated to be performed hereunder.
16. Governing Law. This agreement is made under, and shall be governed by and
construed in accordance with, the laws of the State of Connecticut.
The effective date of this agreement is April 1, 1998.
FOR THE INVESTMENT MANAGER: FOR THE SUB-ADVISOR:
John Birch
Chief Operating Officer
Date: Date:
Attest: Attest:
<PAGE>
EXHIBIT A-2
SUB-ADVISORY AGREEMENT
THIS AGREEMENT is between American Skandia Investment Services, Incorporated
(the "Investment Manager") and Janus Capital Corporation (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 AST Janus Small-Cap Growth
Portfolio (the "Portfolio") under the terms of a management agreement, dated ,
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 upon
reasonable request 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 shall not be responsible for the provision of
administrative, bookkeeping or accounting services to the Portfolio except as
specifically provided herein.
The Sub-Advisor will obtain and evaluate pertinent information about
significant developments and economic, statistical and financial data, domestic,
foreign or otherwise, whether affecting the economy generally or the Portfolio,
and concerning the individual issuers whose securities are included in the
Portfolio or the activities in which they engage, or with respect to securities
which the Sub-Advisor considers desirable for inclusion in the Portfolio.
The Sub-Advisor represents that it reviewed the Registration Statement
of the Trust, including any amendments or supplements thereto, and any Proxy
Statement relating to the approval of this Agreement, as filed with the
Securities and Exchange Commission and provided to the Sub-Advisor by the
Investment Manager, and represents and warrants that with respect to disclosure
about the Sub-Advisor or information relating directly or indirectly to the
Sub-Advisor, such Registration Statement or Proxy Statement contains, as of the
date hereof, no untrue statement of any material fact and does not omit any
statement of material fact which was required to be stated therein or necessary
to make the statements contained therein not misleading. The Sub-Advisor further
represents and warrants that it is an investment advisor registered under the
Investment Advisers Act of 1940, as amended, and under the laws of all
jurisdictions in which the conduct of its business hereunder requires such
registration.
Sub-Advisor shall use its best judgment, effort, and advice in
rendering services under this Agreement.
In furnishing the services under this Agreement, the Sub-Advisor will
comply with the requirements of the ICA and subchapters L and M (including,
respectively, Section 817(h) and Section 851(b)(1), (2), 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 communicated to the Sub-Advisor in writing; (iv) the
fundamental policies and investment restrictions of the Trust, as set out in the
Trust's registration statement under the ICA, or as amended by the Trust's
shareholders; (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.
The Sub-Advisor shall be responsible for the preparation and filing of
Schedule 13G and Form 13-F on behalf of the Portfolio. The Sub-Advisor shall not
be responsible for the preparation or filing of any other reports required of
the Portfolio by any governmental or regulatory agency, except as expressly
agreed to in writing.
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. The Investment Manager shall promptly furnish the Sub-Advisor with
additional information as may be reasonably necessary for, or reasonably
requested by, the Sub-Advisor to perform its responsibilities pursuant to this
Agreement.
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. The Investment Manager shall, to
the extent necessary and within its control, assist in the establishment and
maintenance of brokerage accounts and other accounts the Sub-Advisor deems
advisable to allow for the purchase or sale of securities for the Portfolio
pursuant to this Agreement. 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, including, to the extent permissible
under applicable law, brokers or dealers affiliated with the Sub-Advisor, 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. Allocations of
orders placed by the Sub-Advisor on behalf of the Trust to such broker-dealers
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 indicating the brokers to whom
such allocations have been made and the basis therefor. Purchase or sell orders
for the Portfolio may be aggregated with contemporaneous purchase or sell orders
of other clients of the Sub-Advisor to the extent permissible under applicable
law.
The Sub-Advisor shall have no liability for the acts or omissions of
any custodian of the Portfolio's assets. The Sub-Advisor shall have no
responsibility for the segregation requirement of the ICA or other applicable
law other than to provide notice to the Custodian of any positions requiring
segregation and the Portfolio's assets that may be segregated.
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 relating to the
Sub-Advisor or the Sub-Advisor's activities in connection with the investment
program for the Portfolio. Notwithstanding the foregoing, the Sub-Advisor is not
required to provide proprietary information to the Investment Manager not
otherwise required for the Sub-Advisor to perform its responsibilities pursuant
to this Agreement; nor is the Sub-Advisor responsible for Portfolio accounting
or required to generate information derived from Portfolio accounting data.
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: .50 of 1% of the portion of the
average daily net assets of the Portfolio not in excess of $100 million; plus
.45 of 1% of the portion of the net assets over $100 million but not in excess
of $500 million; plus .40 of 1% of the portion of the net assets over $500
million but not in excess of $1 billion; plus .35 of 1% of the portion of the
net assets over $1 billion.
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. Any reimbursement of management fees required by
any expense limitation provision or in connection with any liability arising out
of its violation of Section 36(b) of the ICA shall be the sole responsibility of
the Investment Manager.
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 (a) 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; (b) it has been duly incorporated and is validly existing and in
good standing as a corporation under the laws of its state of incorporation; (c)
it has all requisite corporate power and authority under the laws of its state
of incorporation and federal securities laws to execute, deliver and to perform
its obligations under this Agreement; (d) all necessary corporate proceedings
have been duly taken by it to authorize the execution, delivery and performance
of this Agreement; and (e) the shares of the Trust have been duly registered
with the Securities and Exchange Commission to the extent required by applicable
law. The Sub-Advisor further represents that it has adopted a written Code of
Ethics in compliance with Rule 17j-1(b) of the ICA. The Sub-Advisor shall be
subject to such Code of Ethics and shall not be subject to any other Code of
Ethics, including the Investment Manager's Code of Ethics, unless specifically
adopted by the Sub-Advisor.
The Investment Manager acknowledges and agrees that the Sub-Advisor
makes no representation or warranty, express or implied, that any level of
performance or investment results will be achieved by the Portfolio or that the
Portfolio will perform comparably with any standard or index, including other
clients of the Sub-Advisor, whether public or private.
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. The Investment Manager understands that the Sub-Advisor
shall not favor or disfavor any of the Sub-Advisor's clients or class of clients
in the allocation of investment opportunities, so that to the extent practical,
such opportunities will be allocated among the Sub-Advisor's clients over a
period of time on a fair and equitable basis. Nothing in this agreement shall
impose upon the Sub-Advisor any obligation (i) 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, or (ii) to abstain from the purchase or
sale of any security for the Sub-Advisor's other clients, advisory or otherwise,
which the Investment Manager has placed on the list provided pursuant to
paragraph 6(g) of this Agreement.
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
Senior Vice President & Chief Operating Officer
Sub-Advisor: Janus Capital Corporation
100 Fillmore Street
Denver, CO 80206-4923
Attention: General Counsel
14. Indemnification. The Sub-Advisor agrees to indemnify and hold harmless
Investment Manager, any affiliated person within the meaning of Section 2(a)(3)
of the 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 __________________________.
FOR THE INVESTMENT MANAGER: FOR THE SUB-ADVISOR:
John Birch
Chief Operating Officer
Date: Date:
Attest: Attest:
<PAGE>
AMERICAN SKANDIA TRUST
Proxy for Special Meeting of Shareholders of THE
FOUNDERS CAPITAL APPRECIATION PORTFOLIO
to be held on DECEMBER 30, 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 10:00 a.m., Eastern Time, on
December 30, 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 Founders Capital Appreciation Portfolio of the Trust. If a contract is
jointly held, each contract owner named should sign. If only one signs, his or
her signature will be binding. If the contract owner is a trust, custodial
account or other entity, the name of the trust or the custodial account should
be entered and the trustee, custodian, etc. should sign in his or her own name,
indicating that he or she is "Trustee," "Custodian," or other applicable
designation. If the contract owner is a partnership, the partnership should be
entered and the partner should sign in his or her own name, indicating that he
or she is a "Partner."
THIS PROXY IS BEING SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES OF THE TRUST.
ACCOUNT NUMBER:
UNITS:
CONTROL NO:
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<CAPTION>
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: KEEP THIS PORTION FOR YOUR RECORDS
<S> <C>
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED DETACH AND RETURN THIS PORTION ONLY
</TABLE>
AMERICAN SKANDIA TRUST - FOUNDERS CAPITAL APPRECIATION PORTFOLIO
<TABLE>
<CAPTION>
THE BOARD OF TRUSTEES OF THE TRUST RECOMMENDS VOTING FOR THE FOLLOWING PROPOSALS:
THE UNITS REPRESENTED HEREBY WILL BE VOTED AS INDICATED OR FOR THE PROPOSALS IF
NO CHOICE IS INDICATED.
For Against Abstain
<S> <C> <C> <C> <C>
I. PROPOSAL TO APPROVE A NEW SUB-ADVISORY
AGREEMENT BETWEEN AMERICAN SKANDIA INVESTMENT
SERVICES, INCORPORATED AND JANUS CAPITAL
CORPORATION REGARDING INVESTMENT ADVICE TO THE
FOUNDERS CAPITAL APPRECIATION PORTFOLIO. [] [] []
II. PROPOSAL TO APPROVE CHANGE IN THE PORTFOLIO'S
INVESTMENT OBJECTIVE. [] [] []
III. PROPOSAL TO APPROVE CHANGES IN THE PORTFOLIO'S
FUNDAMENTAL INVESTMENT RESTRICTIONS. [] [] []
</TABLE>
<TABLE>
<CAPTION>
Please be sure to sign and date this Proxy
<S> <C> <C> <C>
- --------------------------------- Date: ________ ---------------------------------- Date: _________
Signature [PLEASE SIGN WITHIN BOX] Signature (Joint Owners)
- -----------------------------------------------------------------------------------------------------------------------------------
DETACH CARD
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