File No. 33-24962
As filed December 6, 2000
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM N-14
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 |X|
Pre-Effective Amendment No. |_|
Post-Effective Amendment No. |_|
(Check appropriate box or boxes)
American Skandia Trust
(Exact Name of Registrant as Specified in Charter)
(203) 926-1888
(Area Code and Telephone Number)
One Corporate Drive
Shelton, CT 06484
Address of Principal Executive Offices:
(Number, Street, City, State, Zip Code)
Edward P. Macdonald, Esq.
Secretary, American Skandia Trust
One Corporate Drive
Shelton, CT 06484
Name and Address of Agent for Service:
(Number and Street) (City) (State) (Zip Code)
Copies to:
Robert K. Fulton, Esquire
Stradley Ronon Stevens & Young, LLP
2600 One Commerce Square
Philadelphia, PA 19103-7098
Approximate Date of Proposed Public Offering: As soon as
practicable after this Registration Statement becomes effective
under the Securities Act of 1933, as amended.
It is proposed that this filing will become effective on January 5, 2001, pursuant to Rule 488.
Title of the securities being registered: Shares of beneficial interest of the AST Alger All-Cap Growth
Portfolio of American Skandia Trust. No filing fee is due because Registrant is relying on Section 24(f)
of the Investment Company Act of 1940, as amended.
American Skandia Life
Assurance Corporation
One Corporate Drive
P.O. Box 883
Shelton, CT 06484-0883
Telephone (203) 926-1888
Fax (203) 929-8071
January __, 2001
Dear Valued Customer,
As an American Skandia Life Assurance Corporation ("ASLAC") contract owner or policy holder who
beneficially owns shares of the AST Alger Mid-Cap Growth Portfolio (the "Mid-Cap Portfolio") of American
Skandia Trust (the "Trust"), you are cordially invited to a special meeting of the shareholders of the
Portfolio to be held at the offices of ASLAC, One Corporate Drive, Shelton, CT, on February __, 2001 at
10:00 a.m.
The special meeting is very important to the future of the Mid-Cap Portfolio. At the special meeting,
shareholders are being asked to approve or disapprove, as more fully described in the attached
Prospectus/Proxy Statement, a Plan of Reorganization that would result in shares of the Mid-Cap Portfolio
that you beneficially own being exchanged for those of the AST Alger All-Cap Growth Portfolio of the Trust
(the "All-Cap Portfolio" and, together with the Mid-Cap Portfolio, the "Portfolios"). The Trustees of the
Trust unanimously recommend that you consider and approve this proposal. If the shareholders of the
Mid-Cap Portfolio approve the proposal, you will beneficially own shares of the All-Cap Portfolio equal in
value to your investment in the Mid-Cap Portfolio. You will no longer own shares of the Mid-Cap
Portfolio, and the Mid-Cap Portfolio will no longer exist.
You will not have a taxable gain or loss on the exchange of your shares in the proposed transaction.
American Skandia Investment Services, Incorporated, the Portfolios' investment manager, believes that the
All-Cap Portfolio's investment policy to invest in securities of growth companies of all sizes, rather
than the medium sized companies that are the primary investments of the Mid-Cap Portfolio, is better
suited to the management style and expertise of Fred Alger Management, Inc., the sub-advisor for the
Portfolios. Except for the market capitalization of the securities they invest in, each Portfolio has
similar investment objectives and investment policies. Although the fees and expenses of the All-Cap
Portfolio are higher than those of the Mid-Cap Portfolio, the larger fund that would result from the
transaction may be able to benefit from reduced trading costs and increased operational efficiencies,
leading to reductions in the expenses that are borne by shareholders for the operation of the All-Cap
Portfolio.
Your vote is important no matter how large or small your holdings are. We urge you to read the
Prospectus/Proxy Statement thoroughly and to indicate your voting instructions on the enclosed Proxy
Card(s), date and sign it, and return it promptly in the envelope provided to be received by American
Skandia on or before the close of business on February __, 2001. The shares that you beneficially own
will be voted in accordance with instructions received by that date. All shares of the Portfolio for
which instructions are not received will be voted in the same proportion as the votes cast by contract
owners on the proxy issues presented.
Any questions or concerns you may have regarding the special meeting or the proxy should be directed to
your financial representative.
Sincerely,
Gordon C. Boronow
President and Deputy Chief Executive Officer
American Skandia Life Assurance Corporation
SPECIAL MEETING OF SHAREHOLDERS
OF THE AST ALGER MID-CAP GROWTH PORTFOLIO
OF
AMERICAN SKANDIA TRUST
To be held
February __, 2001
To the Shareholders of the AST Alger Mid-Cap Growth Portfolio of American Skandia Trust:
Notice is hereby given that a Special Meeting of Shareholders of the AST Alger Mid-Cap Growth
Portfolio (the "Mid-Cap Portfolio") of American Skandia Trust (the "Trust"), will be held at One Corporate
Drive, Shelton, Connecticut 06484 on February __, 2001 at 10:00 a.m. Eastern Time, or at such adjourned
time as may be necessary to vote (the "Meeting"), for the following purposes:
I. To approve a Plan of Reorganization of the Trust on behalf of the Mid-Cap Portfolio and
the AST Alger All-Cap Portfolio of the Trust (the "All-Cap Portfolio"), that provides for the acquisition
of substantially all of the assets of the Mid-Cap Portfolio in exchange for shares of the All-Cap
Portfolio, the distribution of such shares to the shareholders of the Mid-Cap Portfolio, and the complete
liquidation and dissolution of the Mid-Cap Portfolio.
II. To transact such other business as may properly come before the Meeting or any
adjournment thereof.
A copy of the Plan of Reorganization is attached as Exhibit A to the Prospectus/Proxy Statement.
The matters referred to above are discussed in detail in the Prospectus/Proxy Statement attached
to this Notice. The Board of Trustees has fixed the close of business on December __, 2000 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 Mid-Cap 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. Alternatively, you may vote electronically as described in the
Prospectus/Proxy Statement. 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 A 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
Edward P. Macdonald
Secretary
American Skandia Trust
January __, 2001
PROSPECTUS/PROXY STATEMENT
TABLE OF CONTENTS
Page
----
Cover Page................................................................................................. Cover
Summary .................................................................................................
The Proposal......................................................................................
Shareholder voting................................................................................
Comparisons of Some Important Features.....................................................................
Investment objectives and policies of the Portfolios..............................................
Risks of investing in the Portfolios..............................................................
Management of the Trust and the Portfolios........................................................
The Distribution plan.............................................................................
Fees and expenses.................................................................................
Financial information about the Portfolios........................................................
Other key features of the Portfolios..............................................................
Reasons for the Transaction................................................................................
Information about the Transaction..........................................................................
Closing of the Transaction........................................................................
Expenses of the Transaction.......................................................................
Tax consequences of the Transaction...............................................................
Characteristics of All-Cap Portfolio shares.......................................................
Capitalizations of the Portfolios and Capitalization after the Transaction........................
Voting Information.........................................................................................
Required vote.....................................................................................
How to vote.......................................................................................
Revoking proxies..................................................................................
Other matters.....................................................................................
Who may vote......................................................................................
Solicitations of proxies..........................................................................
Additional Information about the Trust and the Portfolios..................................................
Principal Holders of Shares................................................................................
Exhibits to Prospectus/Proxy Statement
Exhibit A - Plan of Reorganization (attached).....................................................
Exhibit B - Prospectus for the AST Alger Mid-Cap Growth Portfolio and AST Alger All-Cap Portfolio
of the Trust dated October 23, 2000 (enclosed) ..........................................
AMERICAN SKANDIA TRUST
One Corporate Drive
P.O. Box 883
Shelton, Connecticut 06484
PROSPECTUS/PROXY STATEMENT
Dated January [effective date], 2001
--------------
Acquisition of the Assets of the AST Alger Mid-Cap Portfolio
By and in exchange for shares of the AST Alger All-Cap Growth Portfolio
This Prospectus/Proxy Statement solicits proxies to be voted at a Special Meeting (the "Meeting")
of shareholders the AST Alger Mid-Cap Growth Portfolio (the "Mid-Cap Portfolio") of American Skandia Trust
(the "Trust"), to approve or disapprove a Plan of Reorganization (the "Plan"). If shareholders of the
Mid-Cap Portfolio vote to approve the Plan, you will receive shares of the AST Alger All-Cap Growth
Portfolio (the "All-Cap Portfolio" and, together with the Mid-Cap Portfolio, the "Portfolios") of the
Trust equal in value to your investment in shares of the Mid-Cap Portfolio. The Mid-Cap Portfolio will
then be liquidated and dissolved.
The Meeting will be held at the offices of the Portfolios' investment manager, American Skandia
Investment Services, Inc. ("ASISI"), which are located at One Corporate Drive, Shelton, Connecticut 06484
on February __, 2001 at 10:00 a.m. Eastern time. The Board of Trustees of the Trust is soliciting these
proxies on behalf of the Mid-Cap Portfolio. This Prospectus/Proxy Statement will first be sent to
shareholders on or about January [mail date], 2001.
---------
The Trust serves primarily as an underlying mutual fund for variable annuity contracts and
variable life insurance policies ("variable insurance products") issued by life insurance companies,
including American Skandia Life Assurance Corporation ("ASLAC"), an affiliate of ASISI. ASLAC holds
assets invested in these contracts and policies in various variable accounts, each of which is divided
into sub-accounts investing exclusively in a mutual fund or in a portfolio of a mutual fund. Therefore,
variable annuity contract owners and variable life insurance policy holders ("Contractowners") who have
allocated their assets to the AST Alger Mid-Cap Growth Sub-Account are indirectly invested in the Mid-Cap
Portfolio through their contracts or policies and should consider themselves shareholders of the Mid-Cap
Portfolio for purposes of this Prospectus/Proxy Statement
The investment objective of the All-Cap Portfolio is long-term capital growth, as is the
investment objective of the Mid-Cap Portfolio.
This Prospectus/Proxy Statement gives the information about the proposed reorganization and
shares of the All-Cap Portfolio that you should know before investing. You should retain it for future
reference. Additional information about the All-Cap Portfolio and the proposed reorganization has been
filed with the SEC and can be found in the following documents:
|_| The Prospectus for the Portfolios dated October 23, 2000 is enclosed with and considered a part
of this Prospectus/Proxy Statement.
|_| A Statement of Additional Information (SAI) relating to this Prospectus/Proxy Statement dated
January [effective date], 2001, has been filed with the SEC and is incorporated by reference into
this Prospectus/Proxy Statement.
You may request a free copy of the SAI relating to this Prospectus/Proxy Statement or other
documents related to the Trust without charge by calling 1-800-752-6342 or by writing to the Trust at the
above address.
The SEC has not approved or disapproved these securities or passed upon the adequacy of this
Prospectus/Proxy Statement. Any representation to the contrary is a criminal offense.
Mutual fund shares are not deposits or obligations of, or guaranteed or endorsed by, any bank,
and are not insured by the Federal Deposit Insurance Corporation or any other U.S. government agency.
Mutual fund shares involve investment risks, including the possible loss of principal.
SUMMARY
This is only a summary of certain information contained in this Prospectus/Proxy Statement. You
should read the more complete information in the rest of this Prospectus/Proxy Statement, including the
Plan (attached as Exhibit A) and the Prospectus for the Portfolios (enclosed as Exhibit B).
The Proposal.
You are being asked to consider and approve a Plan of Reorganization that will have the effect of
combining the Mid-Cap Portfolio and the All-Cap Portfolio of the Trust into a single Portfolio. If
shareholders of the Mid-Cap Portfolio vote to approve the Plan, the assets of the Mid-Cap Portfolio will
be transferred to the All-Cap Portfolio and Mid-Cap Portfolio shareholders will exchange their shares of
the Mid-Cap Portfolio for All-Cap Portfolio shares of equal dollar value. The proposed reorganization is
referred to in this Prospectus/Proxy Statement as the "Transaction." As a result of the Transaction, you
will cease to be a shareholder of the Mid-Cap Portfolio and will become a shareholder of the All-Cap
Portfolio.
For the reasons set forth in the "Reasons for the Transaction" section, the Board of Trustees of
the Trust has determined that the Transaction is in the best interests of the shareholders of the Mid-Cap
Portfolio and also concluded that no dilution in value would result to the shareholders of either
Portfolio as a result of the Transaction.
The Board of Trustees of the Trust, on behalf of both the Mid-Cap Portfolio and the All-Cap Portfolio, has
approved the Plan and unanimously recommends that you vote to approve the Plan.
Shareholder voting.
Shareholders who own shares of the Mid-Cap Portfolio at the close of business on December __,
2000, will be entitled to vote at the Meeting, and will be entitled to one vote for each full share and a
fractional vote for each fractional share that they hold. To approve the Transaction, a majority of the
outstanding shares of the Mid-Cap Portfolio must be voted in favor of the Plan.
Please vote by proxy as soon as you receive this Prospectus/Proxy Statement. You may place your
vote by completing and signing the enclosed proxy card or over the Internet. If you vote by either of
these methods, your votes will be officially cast at the Meeting by the persons appointed as proxies.
You can revoke your proxy or change your voting instructions at any time until the vote is taken
at the Meeting. For more details about shareholder voting, see the "Voting Information" section of this
Prospectus/Proxy Statement.
COMPARISONS OF SOME IMPORTANT FEATURES
The investment objectives and policies of the Portfolios.
This section describes the differences between the investment policies of the Mid-Cap Portfolio
and the All-Cap Portfolio. For a complete description of the investment policies and risks of the All-Cap
Portfolio, you should read the Prospectus for the Portfolios that is enclosed with this Prospectus/Proxy
Statement.
The investment strategies of the Mid-Cap Portfolio and All-Cap Portfolio are substantially
similar. The investment objective, seeking long-term capital growth, is the same for both Portfolios.
Both invest primarily in growth stocks; specifically, they seek to invest in high unit volume growth
companies (vital, creative companies that offer goods and services to a rapidly expanding marketplace) and
positive life cycle change companies (companies experiencing a major change that is expected to produce
advantageous results).
The essential difference in the investment strategies of the Portfolios is the market
capitalization of the stocks in which they invest. Market capitalization is the total market value of a
company's outstanding stock, and is often used to classify companies by size. The Mid-Cap Portfolio
invests primarily in midsize companies (those having market capitalizations within the range of companies
in the S&P(R)MidCap 400 Index), while the All-Cap Portfolio may invest companies of all sizes, and may
emphasize either larger or small companies at a given time based on the assessment of particular companies
and market conditions by the Portfolio's sub-advisor.
Besides market capitalization, there are few notable differences in the investment strategies of
the Portfolios. Each Portfolio may invest up to 20% of its total assets in securities denominated in
foreign currencies, and each may engage in certain other investment practices that are not expected to be
used extensively. The All-Cap Portfolio may purchase and sell call and put options on securities and
securities indices to increase gain or to hedge against the risk of unfavorable price movements, and may
purchase and sell stock index futures contracts and related options, while the Mid-Cap Portfolio does not
have the authority to engage in these practices.
The fundamental investment restrictions of the Mid-Cap Portfolio and the All-Cap Portfolio are
identical. Some of these restrictions are that each Portfolio will not: with respect to 75% of its
assets, purchase the securities of any issuer if more than 5% of the Portfolio's total assets would be
invested in the securities of such issuer or if the Portfolio would hold more than 10% of the outstanding
voting securities of such issuer; or borrow money except for non-leveraging, temporary or emergency
purposes, and then only in an amount not exceeding 33 1/3% of the value of the total assets of that
Portfolio. The full text of these investment restrictions can be found in the Trust's Statement of
Additional Information dated October 23, 2000, which is available upon request.
Risks of investing in the Portfolios.
Like all investments, an investment in either Portfolio involves risk. There is no assurance
that either of the Portfolios will meet its investment objective. As with any fund investing primarily in
equity securities, the value of the securities held by a Portfolio may decline. These declines may be
substantial. In addition, the growth stocks in which each Portfolio invests tend to fluctuate in price
more than other types of stocks. Prices of growth stocks tend to be higher in relation to their
companies' earnings, and may be more sensitive to market, political and economic developments than other
stocks.
Securities of smaller companies tend to be subject to more abrupt and erratic price movements
than securities or larger companies. Therefore, the Mid-Cap Portfolio, as a fund investing primarily in
midsize companies, can be expected to be subject to less risk than a small-cap fund and more risk than a
large-cap fund. The level of risk to which the All-Cap Portfolio is subject will vary depending upon the
size of the companies it is invested in at a given time.
Although the All-Cap Portfolio is not expected to invest to a substantial degree in options and
futures contracts as described above, investments in these instruments might serve to increase the All-Cap
Portfolio's level of risk relative to the Mid-Cap Portfolio. In addition, each Portfolio may invest up to
100% of its assets in cash, commercial paper, high-grade bonds or cash equivalents for temporary defensive
reasons if the Portfolio's sub-advisor believes that adverse market or other conditions warrant. However,
while a Portfolio is in a defensive position, the opportunity to achieve its investment objective of
long-term capital growth will be limited.
Management of the Trust and the Portfolios.
ASISI, located at One Corporate Drive, Shelton, Connecticut, acts as investment manager to the
Trust's various investment portfolios. ASISI has served as investment manager since 1992, and currently
serves as investment manager to a total of 66 investment company portfolios (including the Portfolios).
ASISI is an indirect wholly-owned subsidiary of Skandia Insurance Company Ltd. ("Skandia"). Skandia is a
Swedish company that owns, directly or indirectly, a number of insurance companies in many countries.
The Trust's Investment Management Agreements with ASISI (the "Management Agreements") provide
that ASISI will furnish each applicable portfolio with investment advice and administrative services
subject to the supervision of the Board of Trustees and in conformity with the stated policies of the
applicable portfolio. ASISI has engaged sub-advisors to conduct the investment programs of each
portfolio, including the purchase, retention and sale of portfolio securities. As noted above, ASISI is
responsible for monitoring the activities of the Sub-advisors and reporting on such activities to the
Board of Trustees.
ASISI has retained Fred Alger Management, Inc. ("Alger"), located at One World Trade Center,
Suite 9333, New York, New York 10048, to serve as sub-advisor for the Mid-Cap Portfolio and the All-Cap
Portfolio. Alger has been an investment advisor since 1964, and as of June 30, 2000 managed mutual fund
and other assets totaling approximately $21.2 billion.
In general, the Investment Company Act of 1940 (the "Investment Company Act") requires that all
contracts pursuant to which persons serve as investment advisers (including sub-advisors) to investment
companies be approved by shareholders. The Trust and ASISI, however, have obtained an exemption from the
Securities and Exchange Commission that permits ASISI, subject to approval by the Board of Trustees, to
change sub-advisors for certain portfolios of the Trust and to enter into new sub-advisory agreements,
without obtaining shareholder approval of the changes. This exemption (which is similar to exemptions
granted to other investment companies that are organized in a similar manner as the Trust) is intended to
facilitate the efficient supervision and management of the sub-advisors by ASISI and the Trustees. ASISI
is able to rely on this exemption with respect to the All-Cap Portfolio and most of the other portfolios
of the Trust, but not with respect to the Mid-Cap Portfolio. Consequently, if the Plan is approved and
the Transaction completed, current Mid-Cap Portfolio shareholders will be invested in a Portfolio that is
unlike the Mid-Cap Portfolio in that sub-advisory changes can be made without the approval of such
shareholders.
The portfolio managers responsible for the management of the Mid-Cap Portfolio are David Alger
and Ron Tartaro. Both have managed the Portfolio since its inception. The portfolio managers responsible
for the management of the All-Cap Portfolio are David Alger and Seilai Khoo. Mr. Alger has managed the
All-Cap Portfolio since its inception, while Ms. Khoo has been managing the Portfolio since June 2000.
Mr. Alger has been employed by Alger since 1971 and served as Executive Vice President and Director of
Research prior to being named President in 1995. Mr. Tartaro has been employed by Alger since 1990 as a
senior research analyst until 1995 and as a Senior Vice President since 1995. Ms. Khoo has been employed
by Alger since 1989, and has been a Senior Vice President and Portfolio Manager since 1995.
Under the Management Agreement with respect to the Mid-Cap Portfolio, such Portfolio is obligated
to pay ASISI an annual management fee equal to 0.80% of its average daily net assets. Under the Management
Agreement with respect to the All-Cap Portfolio, such Portfolio is obligated to pay ASISI an annual
management fee equal to 0.95% of its average daily net assets. Therefore, if the Plan is approved and the
Transaction completed, Mid-Cap Portfolio shareholders will be invested in a Portfolio with, and will
indirectly bear, a higher management fee. ASISI pays Alger a portion of the management fee for the
Portfolios for the performance of sub-advisory services at no additional cost to either Portfolio.
Because the sub-advisory fee rate for each Portfolio is the same, the higher management fee for the
All-Cap Portfolio benefits ASISI.
The Distribution Plan.
The Trust has adopted a Distribution Plan (the "Distribution Plan") under Rule 12b-1 under the
Investment Company Act to permit American Skandia Marketing, Inc. ("ASM"), an affiliate of ASISI and
ASLAC, to receive brokerage commissions in connection with purchases and sales of securities held by
certain portfolios of the Trust, and to use these commissions to promote the sale of shares of the various
portfolios. Under the Distribution Plan, transactions for the purchase and sale of securities for a
portfolio may be directed to certain brokers for execution ("clearing brokers") who have agreed to pay
part of the brokerage commissions received on these transactions to ASM for "introducing" transactions to
the clearing broker. In turn, ASM uses the brokerage commissions received as an introducing broker to pay
various distribution-related expenses (such as advertising, printing of sales materials, and payments to
broker-dealers who sell variable insurance products the premiums for which are invested in shares of the
Trust), as well as to cover administrative costs associated with the operation of the Distribution Plan.
The administrative costs are expected to be small in relation to the revenues received, and the
distribution-related activities paid for under the Distribution Plan may include:
o printing and mailing of Trust prospectuses, statements of additional information, any supplements
thereto and shareholder reports for existing and prospective Contractowners;
o development, preparation, printing and mailing of Trust advertisements and sales literature;
o holding or participating in seminars and sales meetings designed to promote the sale of Trust
shares;
o paying marketing fees requested by selling broker-dealers;
o obtaining information and providing explanations to Contractowners regarding portfolio investment
objectives and policies and other information about the Trust and its portfolios, including the
performance of the portfolios;
o training sales personnel regarding sales of variable insurance products and shares of the Trust;
and
o personal service to Contractowners and/or maintenance of Contractowner accounts.
No portfolio pays any new fees or charges resulting from the Distribution Plan, nor is it expected that
the brokerage commissions paid by a portfolio will increase as the result of directing commissions under
the Distribution Plan.
ASM may receive brokerage commissions under the Distribution Plan on purchases and sales of
securities for the All-Cap Portfolio (and for most of the other portfolios of the Trust), but not for the
Mid-Cap Portfolio. Consequently, if the Plan is approved and the Transaction completed, current Mid-Cap
Portfolio shareholders will be invested in a portfolio that is unlike the Mid-Cap Portfolio in that
portfolio brokerage commissions can be directed to ASM to pay distribution-related expenses.
Fees and expenses.
The following table describes the fees and expenses that you may pay if you hold shares of the
Portfolios, as well as the projected fees and expenses of the All-Cap Portfolio after the Transaction.
The following table does not reflect any fees and expenses of the variable insurance products through
which Portfolio shares are purchased.
All-Cap All-Cap Portfolio
-------- -----------------
Mid-Cap Portfolio1 Portfolio2 After Transaction3
------------------ ---------- ------------------
Shareholder Fees
(fees paid directly from your investment)
Maximum Sales Charge (Load)
Imposed on Purchases......................... None None None
Maximum Deferred Sales Charge (Load)........... None None None
Maximum Sales Charge (Load) Imposed on
Reinvested Dividends......................... None None None
Redemption Fee................................. None None None
Exchange Fee................................... None None None
Annual Fund Operating Expenses
(expenses that are deducted from Portfolio assets)
Management Fees 0.80% 0.95% 0.95%
Estimated Distribution (12b-1) Fees4 N/A 0.00% 0.00%
Other Expenses 0.23% 0.28% 0.16%
----- ----- -----
Total Annual Portfolio Operating Expenses 1.03% 1.23% 1.11%
===== ===== =====
Fee Waivers and Expense Reimbursements5 0.19% N/A N/A
----- ---
Net Annual Portfolio Operating Expenses 0.84% 1.23% 1.11%
===== ===== =====
1 The Mid-Cap Portfolio commenced operations in November 2000. "Other Expenses" are based on estimated
amounts for the fiscal year ending December 31, 2000.
2 The All-Cap Portfolio commenced operations in January 2000. "Other Expenses" and "Estimated
Distribution Fees" are based on actual amounts for the semi-annual period ended June 30, 2000.
3 Projected expenses based on current and anticipated All-Cap Portfolio expenses.
4 As discussed in greater detail above under "The Distribution Plan," the Trustees of the Trust have
adopted a Distribution Plan under Rule 12b-1 to permit ASM to receive brokerage commissions in connection
with purchases and sales of securities held by certain portfolios of the Trust, and to use these
commissions to promote the sale of shares of the portfolios. While the brokerage commission rates and
amounts paid by a portfolio are not expected to increase as a result of the Distribution Plan, the staff
of the Securities and Exchange Commission takes the position that commission amounts received under the
Distribution Plan should be reflected as distribution expenses of the portfolio. The Distribution Plan is
not applicable to the Mid-Cap Portfolio, and the Mid-Cap Portfolio therefore may not pay commissions to
ASM under it. The All-Cap Portfolio may pay commissions under the Distribution Plan, but did not do so
for the period on which the amounts shown in the table are based.
5 The Investment Manager has agreed to reimburse and/or waive fees for the Mid-Cap Portfolio until the
sooner of November 13, 2001 or the date of the closing of the Transaction.
Expense Examples - These examples are intended to help you compare the cost of investing in each Portfolio
with the cost of investing in other mutual funds. They assume that you invest $10,000, that you receive a
5% return each year, that the Portfolios' total operating expenses remain the same, and that any expense
waivers and reimbursements remain in effect only for the periods during which they are binding. Although
your actual costs may be higher or lower, based on the above assumptions your costs would be:
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Mid-Cap Portfolio $87 $271 N/A N/A
All-Cap Portfolio $125 $390 $676 $1,489
Projected All-Cap Portfolio (after Transaction) $113 $353 $612 $1,352
Other key features of the Portfolios.
Shares of each portfolio of the Trust are sold only to separate accounts of insurance companies
for the purpose of investing assets attributable to variable insurance products, and to certain
tax-deferred retirement plans. The separate accounts place orders to purchase and redeem shares of the
Trust at their net asset value based on, among other things, the amount of premium payments to be invested
and the amount of surrender or transfer requests to be effected that day under the variable insurance
products. There are no sales commissions charged on the purchase or sale of shares of the Portfolios,
although sales charges may apply to transactions in the variable insurance products.
Each Portfolio of the Trust complies with the diversification requirements of section 817(h) of
the Internal Revenue Code of 1986, as amended (the "Code"). In general, each Portfolio declares and distributes
a dividend from its net investment income annually, and distributes any net realized long- and short-term capital
gains at least annually either during or after the close of the Portfolio's fiscal year. Distributions are made
to the various separate accounts (not to Contractowners) in the form of additional shares (not in cash).
REASONS FOR THE TRANSACTION
The Transaction would be the second step in a two-step process that is intended to provide
shareholders with the benefits of (1) a Portfolio with investment policies that are better suited to the
investment style of its Sub-advisor, (2) greater oversight of the management of the Portfolio by ASISI,
and (3) the increased efficiency of a larger Portfolio.
Prior to November 13, 2000, Contractowners who have assets allocated to the Mid-Cap Portfolio
instead had assets allocated to the Alger American MidCap Growth Portfolio of The Alger American Fund (the
"Alger American Fund"). In the first step in the process, shares of the Alger American Fund beneficially
owned by ASLAC Contractowners were redeemed and shares of the Mid-Cap Portfolio were purchased with the
proceeds of the redemption, as permitted under an order of the Securities and Exchange Commission. This
transfer effectively made such Contractowners shareholders of the Mid-Cap Portfolio. The Mid-Cap
Portfolio has not been offered or sold to Contractowners other than former holders of the Alger American
Fund. Like the other portfolios of the Trust, the management of the Mid-Cap Portfolio by its Sub-advisor
is subject to the oversight of ASISI, the Portfolio's investment manager. ASISI did not provide similar
oversight with respect to the Alger American Fund, as it had no investment advisory relationship with
respect to that fund. The Mid-Cap Portfolio is, however, essentially identical to the Alger American Fund
in terms of its investment objective and policies, its fees and expenses, and other features.
The Transaction would be the second step in the process. The Board of Trustees of the Trust (the
"Board") has recommended that the Plan, which describes the Transaction and its details and conditions, be
approved by the Mid-Cap Portfolio shareholders because of the potential benefits to shareholders relating
to the investment policies of the All-Cap Portfolio, certain features of the All-Cap Portfolio, and the
combination of the two Portfolios into a single, larger Portfolio.
The Plan was presented to the Board at a meeting held on September 8, 2000 based on information
provided to the Board by ASISI at such meeting and at a meeting held on June 1, 2000. At such meetings,
the Board was informed by ASISI that the investment policies of the All-Cap Portfolio are better suited to
the investment expertise of the sub-adviser of both Portfolios, i.e., finding desirable growth stocks
without regard to capitalization. The Board also considered that the larger fund that would result from
the Transaction may be able to benefit from reduced trading costs and increased operational efficiencies.
The Board was also reminded of its prior approval of the Distribution Plan as described above for
most of the other portfolios of the Trust, including the All-Cap Portfolio. The Distribution Plan is
designed to improve ASM's ability to attract new investments in the Trust by enabling it to compensate
broker-dealers who sell variable insurance products adequately and in the most effective manner at no
additional cost of the portfolios. The resulting increase in portfolio assets should enable the
portfolios to achieve greater economies of scale and thereby lower their per-share operating expenses. In
its approval of the Distribution Plan, the Board also considered its potential benefits to ASISI and ASM,
including that an increase in the assets of the portfolios would increase the management fees paid to
ASISI, and that payment of distribution expenses out of brokerage commission could reduce the need for ASM
to pay such expenses out of other resources available to it.
Also, the Board was reminded of its prior approval to seek the exemptive order authorizing it to
select and change sub-advisors for most of the Trust's portfolios, including the All-Cap Portfolio,
without obtaining shareholder approval of such changes. This "manager-of-managers" authority is intended
to facilitate the supervision and management of the sub-advisors by ASISI and the Board without the
substantial costs and delays that result from the need to hold shareholder meetings. While
manager-of-managers authority allows for less shareholder scrutiny of proposed contracts with additional
or replacement sub-advisors, the addition or replacement of sub-advisors would still take place only after
careful review by ASISI and the Board.
The Board also was provided with information about the expenses of both Portfolios, and was
informed by ASISI that the higher fees for the All-Cap Portfolio were competitive compared to the fees of
other funds with similar structures and investment objectives and policies, including other portfolios of
the Trust. The Board was also provided with information about the tax consequences of the Transaction.
During the course of its deliberations, the Board was informed that the expenses of the Transaction will
be borne by ASLAC or its affiliates, and not by the Trust or either Portfolio.
The Board, including a majority of the Trustees who are not interested persons of the Trust,
unanimously concluded that the Transaction is in the best interests of the shareholders of the Mid-Cap
Portfolio and that no dilution of value would result to the shareholders of the Mid-Cap Portfolio or the
All-Cap Portfolio from the Transaction, and the Board approved the Plan and recommended that shareholders
of Mid-Cap Portfolio vote to approve the Transaction.
For the reasons discussed above, the Board of Trustees unanimously recommends that you
vote For the Plan.
If shareholders of the Mid-Cap Portfolio do not approve the Plan, the Board will consider other
possible courses of action for the Mid-Cap Portfolio, including consolidation of the Mid-Cap Portfolio
with funds other than the All-Cap Portfolio.
INFORMATION ABOUT THE TRANSACTION
This is only a summary of the Plan. You should read the actual Plan attached as Exhibit A. (The
Plan also governs a separate transaction involving two portfolios of the Trust other than the Mid-Cap
Portfolio and All-Cap Portfolio; Mid-Cap Portfolio shareholders may disregard the information in the Plan
regarding this other transaction.)
Closing of the Transaction.
If shareholders of the Mid-Cap Portfolio approve the Plan, the Transaction will take place after
various conditions are satisfied by the Trust on behalf of the Mid-Cap Portfolio and the All-Cap
Portfolio, including the preparation of certain documents. The Trust will determine a specific date for
the actual Transaction to take place. This is called the closing date. If the shareholders of the
Mid-Cap Portfolio do not approve the Plan, the Transaction will not take place.
If the shareholders of the Mid-Cap Portfolio approve the Plan, the Mid-Cap Portfolio will deliver
to the All-Cap Portfolio substantially all of its assets on the closing date. In exchange, shareholders
of the Mid-Cap Portfolio will beneficially own shares of the All-Cap Portfolio that have a value equal to
the dollar value of the assets delivered to the All-Cap Portfolio. The stock transfer books of the
Mid-Cap Portfolio will be permanently closed on the closing date. Requests to transfer or redeem assets
allocated to the Mid-Cap Portfolio may be submitted at any time before 4:00 p.m. Eastern time on the
closing date; requests that are received in proper form prior to that time will be effected prior to the
closing.
To the extent permitted by law, the Trust may amend the Plan without shareholder approval. It
may also agree to terminate and abandon the Transaction at any time before or, to the extent permitted by
law, after the approval by shareholders of the Mid-Cap Portfolio.
Expenses of the Transaction.
The expenses resulting from the Transaction will be paid by ASLAC or its affiliates, and not by
the Trust or either Portfolio.
Tax consequences of the Transaction.
The Transaction is intended to qualify as a tax-free reorganization for federal income tax
purposes under Section 368(a)(1) of the Internal Revenue Code of 1986, as amended. Based on certain
assumptions and representations received from the Trust, on behalf of the Portfolios, it is the opinion of
Stradley Ronon Stevens & Young, LLP, counsel to the Trust, that shareholders of the Mid-Cap Portfolio will
not recognize any gain or loss for federal income tax purposes as a result of the exchange of their shares
of the Mid-Cap Portfolio for shares of the All-Cap Portfolio and that neither the All-Cap Portfolio nor
its shareholders will recognize any gain or loss upon receipt of the assets of the Mid-Cap Portfolio.
Because the Portfolios are offered through tax-deferred variable insurance products, however,
Contractowners generally would not recognize any gain or loss even if the Transaction did not qualify as a
tax-free reorganization. Contractowners should consult the prospectuses of their variable insurance
products for information on the federal tax consequences of owning the product. You should also consult
your tax advisor as to state and local tax consequences, if any, of the Transaction, because this
discussion only relates to the federal income tax consequences.
Characteristics of All-Cap Portfolio shares.
Shares of the All-Cap Portfolio will be distributed to shareholders of the Mid-Cap Portfolio and
will have the same legal characteristics as the shares of the Mid-Cap Portfolio with respect to such
matters as voting rights, assessibility, conversion rights, and transferability.
Capitalizations of the Portfolios and Capitalization after the Transaction.
The following table sets forth, as of November 20, 2000, the capitalization of shares of the
Mid-Cap Portfolio and the All-Cap Portfolio. The table also shows the projected capitalization of All-Cap
Portfolio shares as adjusted to give effect to the proposed Transaction. The capitalization of the
All-Cap Portfolio is likely to be different when the Transaction is consummated.
All-Cap
Portfolio
All-Cap Projected after
Mid-Cap Portfolio Portfolio Transaction
(unaudited) (unaudited) (unaudited)
----------- ----------- -----------
Net assets (millions)...................... $968 $207 $1175
Total shares outstanding .................. 100,527,576 29,545,237 167,834,508
Net asset value per share.................. $9.63 $7.00 $7.00
VOTING INFORMATION
Required vote.
The affirmative vote of a majority of the total number of outstanding shares of the Mid-Cap
Portfolio is necessary to approve the Plan. Each shareholder will be entitled to one vote for each full
share, and a fractional vote for each fractional share of the Mid-Cap Portfolio held at the close of
business on December __, 2000 (the "Record Date"). If sufficient votes to approve the Plan are not
received by the date of the Meeting, the Meeting may be adjourned to permit further solicitations of
proxies.
As stated above, ASLAC is the legal owner of 100% of the Mid-Cap Portfolio's shares. Shares of
the Portfolio will be voted by ASLAC with respect to the Plan in accordance with instructions received
from Contractowners. In addition, ASLAC is entitled to vote shares for which no proxy is received and
will vote such shares (for the Plan, against the Plan and abstain) in the same proportion as the votes
cast by Contractowners. Therefore, ASLAC's presence at the Meeting is sufficient to constitute a quorum
under the Trust's By-laws, and all of the shares of the Mid-Cap Portfolio will be voted in some manner by
ASLAC.
An abstention is not counted as an affirmative vote of the type necessary to approve the Plan
and, therefore, will have the same effect as a vote against the Plan.
How to vote.
You can vote in any one of three ways:
o By mail, with the enclosed proxy card.
o In person at the Meeting.
o Through the Internet by visiting HTTP://WWW.AMERICANSKANDIA.COM, looking for the "Vote" link and
following the instructions provided.
If you simply sign and date the proxy but give no voting instructions, your shares will be voted in favor
of the Plan and in accordance with the views of management upon any unexpected matters that come before
the Meeting or adjournment of the Meeting.
Revoking proxies.
You may revoke your proxy at any time before it is voted by sending a written notice to the
Secretary of the Trust expressly revoking your proxy, by signing and forwarding to the Fund a later-dated
proxy, or by attending the Meeting and voting in person.
Other matters.
The Board of Trustees of the Trust does not intend to bring any matters before the Meeting other
than those described in this Prospectus/Proxy Statement. It is not aware of any other matters to be
brought before the Meeting by others. If any other matter legally comes before the Meeting, it is
intended that the persons named in the enclosed proxy will vote in accordance with their judgment.
Who may vote.
Shareholders of record of the Mid-Cap Portfolio on the Record Date will be entitled to vote at
the meeting. On the Record Date, there were ______________ outstanding shares of the Mid-Cap Portfolio
issued and outstanding.
Solicitation of proxies.
Voting instructions will be solicited principally by mailing this Prospectus/Proxy Statement and
its enclosures, but proxies also may be solicited by telephone, facsimile, through electronic means such
as e-mail, or in person by officers or representatives of the Trust or ASLAC. If the record owner of a
contract or policy is a broker-dealer firm, custodian, nominee or fiduciary, the Trust may send proxy
materials to the record owner for any beneficial owners that such record owner may represent. The Trust
may reimburse broker-dealer firms, custodians, nominees and fiduciaries for their reasonable expenses
incurred in connection with proxy solicitations of such beneficial owners.
ADDITIONAL INFORMATION ABOUT THE TRUST AND THE PORTFOLIOS
The Mid-Cap Portfolio and the All-Cap Portfolio are separate series of the Trust, which is an
open-end management investment company registered with the SEC under the Investment Company Act. Each
Portfolio is, in effect, a separate mutual fund. Detailed information about the Trust and each Portfolio
is contained in the Prospectus for the Portfolios which is enclosed with and considered a part of this
Prospectus/Proxy Statement. Additional information about the Trust and each Portfolio is included in the
Trust's SAI, dated October 23, 2000, which has been filed with the SEC and is incorporated into the SAI
relating to this Prospectus/Proxy Statement.
You may request a free copy of the Trust's Annual Report to Shareholders for the fiscal year
ended December 31, 1999 and the Trust's Semiannual Report to Shareholders for the six month period ended
June 30, 2000 by calling 1-800-752-6342 or by writing to the Trust at One Corporate Drive, P.O. Box 883,
Shelton, CT 06484.
The Fund files proxy materials, reports and other information with the SEC in accordance with the
informational requirements of the Securities Exchange Act of 1934 and the Investment Company Act. These
materials can be inspected and copied at: the SEC's Public Reference Room at 450 Fifth Street NW,
Washington, DC 20549, and at the Regional Offices of the SEC located in New York City at 7 World Trade
Center, Suite 1300, New York, NY 10048 and in Chicago at 500 West Madison Street, Suite 1400, Chicago,
IL 60661. Also, copies of such material can be obtained from the SEC's Public Reference Section,
Washington, DC 20549-6009, upon payment of prescribed fees, or from the SEC's Internet address at
http://www.sec.gov.
PRINCIPAL HOLDERS OF SHARES
As noted above, 100% of the shares of the Mid-Cap Portfolio were owned of record by ASLAC as of
the Record Date. As of the Record Date, ASLAC owned of record __% of the shares of the All-Cap
Portfolio. The name and address of each person who is known to the Trust to have beneficially owned as of
the Record Date more than 5% of the shares of either Alger Portfolio were:
Mid-Cap Portfolio
Name and Address Percentage (%)
--------------------------------------------------------------- -------------------------------------------
All-Cap Portfolio
Name and Address Percentage (%)
--------------------------------------------------------------- -------------------------------------------
As of the Record Date, the officers and Trustees of the Trust, as a group, owned less than 1% of
the outstanding voting shares of the All-Cap Portfolio.
AMERICAN SKANDIA TRUST
Proxy for Special Meeting of Shareholders of THE
AST ALGER MID-CAP GROWTH PORTFOLIO
to be held on February ___, 2001
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 the "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 February ___, 2001 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 Prospectus/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 Notice of Special Meeting
of Shareholders of the AST Alger Mid-Cap Growth Portfolio of the Trust and the accompanying
Prospectus/Proxy Statement. 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:
TO VOTE BY THE INTERNET
VISIT OUR WEBSITE:
WWW.AMERICANSKANDIA.COM
-----------------------
AND CLICK ON THE VOTE LINK
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: KEEP THIS PORTION FOR YOUR RECORDS
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED DETACH AND RETURN THIS PORTION ONLY
AMERICAN SKANDIA TRUST - AST ALGER MID-CAP GROWTH PORTFOLIO
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
1. PROPOSAL TO APPROVE a PLAN OF REORGANIZATION OF THE TRUST ON BEHALF OF
THE ast aLGER MID-CAP GROWTH PORTFOLIO (THE "MID-CAP PORTFOLIO") AND THE
AST ALGER ALL-CAP GROWTH PORTFOLIO (THE "aLL-cAP PORTFOLIO") OF THE
tRUST, THAT PROVIDES FOR THE ACQUISITION OF SUBSTANTIALLY ALL OF THE
ASSETS OF THE MID-CAP gROWTH PORTFOLIO IN EXCHANGE FOR SHARES OF THE
ALL-CAP PORTFOLIO, THE DISTRIBUTION OF SUCH SHARES TO THE SHAREHOLDERS OF
THE MID-CAP PORTFOLIO, AND THE LIQUIDATION AND DISSOLUTION OF THE MID-CAP
PORTFOLIO.
Please be sure to sign and date this Proxy
__________________________________ Date: _________ ___________________________
Date: ________
Signature [PLEASE SIGN WITHIN BOX] Signature (Joint Owners)
-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
DETACH CARD
If you would like to receive future shareholder communications (e.g., proxy statements, prospectuses and
shareholder reports) in an electronic format (e.g. E-mail or download from www.AmericanSkandia.com) when
available, please provide your E-mail address in the space provided below. We will notify you as
electronic documents become available. For additional information on this option, please refer to the
back cover of the AST proxy statement.

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EXHIBITS TO PROSPECTUS/PROXY STATEMENT
Exhibit
-------
A Plan of Reorganization by American Skandia Trust on behalf of the AST Alger All-Cap
Portfolio and the AST Alger Mid-Cap Portfolio
B Prospectus for the AST Alger All-Cap Portfolio and the AST Alger Mid-Cap Portfolio of
American Skandia Trust dated October 23, 2000 (enclosed)
A-22
Exhibit A
Plan of Reorganization by American Skandia Trust
FORM OF PLAN OF REORGANIZATION
THIS PLAN OF REORGANIZATION (the "Plan") is made as of this _____ th day of ______________, 2000, by
American Skandia Trust (the "Trust"), a business trust organized under the laws of the Commonwealth of
Massachusetts with its principal place of business at One Corporate Drive, Shelton, Connecticut 06484, on
behalf of the AST MFS Growth Portfolio, the AST Alger All-Cap Growth Portfolio (the AST MFS Growth
Portfolio and the AST Alger All-Cap Growth Portfolio are referred to herein as the "Acquiring
Portfolios"), the AST Alger Growth Portfolio, and the AST Alger Mid-Cap Growth Portfolio (the AST Alger
Growth Portfolio and the AST Alger Mid-Cap Growth Portfolio are referred to herein as the "Acquired
Portfolios"), all series of the Trust. Together, the Acquiring Portfolios and Acquired Portfolios are
referred to as the "Portfolios."
The reorganizations (hereinafter referred to as the "Reorganization") will consist of (i) the acquisition
by each Acquiring Portfolio, of substantially all of the property, assets and goodwill of the
corresponding Acquired Portfolio and the assumption by such Acquiring Portfolio of all of the liabilities
of the Corresponding Acquired Portfolio in exchange solely for full and fractional shares of beneficial
interest, par value $0.001 each, of the Acquiring Portfolio ("Acquiring Portfolio Shares"); (ii) the
distribution of Acquiring Portfolio Shares to the shareholders of each corresponding Acquired Portfolio
according to their respective interests in complete liquidation of the Acquired Portfolio; and (iii) the
dissolution of each Acquired Portfolio as soon as practicable after the closing (as defined in Section 3,
hereinafter called the "Closing"), all upon and subject to the terms and conditions of this Plan
hereinafter set forth.
Each Acquiring Portfolio is identified in the table below opposite its corresponding Acquired
Portfolio:
Acquiring Portfolio Acquired Portfolio
------------------- ------------------
AST MFS Growth Portfolio AST Alger Growth Portfolio
AST Alger All-Cap Growth Portfolio AST Alger Mid-Cap Growth Portfolio
In order to consummate the Plan, the following actions shall be taken by the Trust on behalf of
the Acquiring Portfolios and Acquired Portfolios:
1. Sale and Transfer of Assets, Liquidation and Dissolution of Acquired Portfolio.
-------------------------------------------------------------------------------
(a) Subject to the terms and conditions of this Plan, the Trust on behalf of each Acquired
Portfolio shall convey, transfer and deliver to the corresponding Acquiring Portfolio at the Closing all
of the Acquired Portfolio's then existing assets subject to its liabilities, free and clear of all liens,
encumbrances, and claims whatsoever (other than shareholders' rights of redemption), except for cash, bank
deposits, or cash equivalent securities in an estimated amount necessary to (i) discharge its unpaid
liabilities on its books at the Closing Date, including, but not limited to, its income dividends and
capital gains distributions, if any, payable for the period prior to, and through, the Closing Date; and
(ii) pay such contingent liabilities as the Board of Trustees shall reasonably deem to exist against the
Acquired Portfolio, if any, at the Closing Date, for which contingent and other appropriate liabilities
reserves shall be established on the Acquired Portfolio's books (hereinafter "Net Assets"). Each Acquired
Portfolio shall also retain any and all rights that it may have over and against any person that may have
accrued up to and including the close of business on the Closing Date.
(b) Subject to the terms and conditions of this Plan, the Trust on behalf of each Acquiring
Portfolio shall at the Closing deliver to the corresponding Acquired Portfolio the number of Acquiring
Portfolio Shares, determined by dividing the net asset value per share of the shares of the corresponding
Acquired Portfolio ("Acquired Portfolio Shares") on the Closing Date by the net asset value per share of
the corresponding Acquiring Portfolio Shares, and multiplying the result thereof by the number of
outstanding Acquired Portfolio Shares as of the close of regular trading on the New York Stock Exchange
(the "NYSE") on the Closing Date. All such values shall be determined in the manner and as of the time
set forth in Section 2 hereof.
(c) Immediately following the Closing, each Acquired Portfolio shall distribute pro rata to
its shareholders of record as of the close of business on the Closing Date, the Acquiring Portfolio Shares
received by the Acquired Portfolio pursuant to this Section 1 and then shall terminate and dissolve. Such
liquidation and distribution shall be accomplished by the establishment of accounts on the share records
of the Trust relating to each Acquiring Portfolio and noting in such accounts the type and amounts of such
Acquiring Portfolio Shares that such former Acquired Portfolio shareholders are due based on their
respective holdings of the Acquired Portfolio as of the close of business on the Closing Date. Fractional
Acquiring Portfolio Shares shall be carried to the third decimal place. The Acquiring Portfolios shall
not issue certificates representing the Acquiring Portfolio shares in connection with such exchange.
2. Valuation.
----------
(a) The value of each Acquired Portfolio's Net Assets to be transferred to the corresponding
Acquiring Portfolio hereunder shall be computed as of the close of regular trading on the NYSE on the
Closing Date (the "Valuation Time") using the valuation procedures set forth in Trust's currently
effective prospectus.
(b) The net asset value of a share of each Acquiring Portfolio shall be determined to the
third decimal point as of the Valuation Time using the valuation procedures set forth in the Trust's
currently effective prospectus.
(c) The net asset value of a share of each Acquired Portfolio shall be determined to the
third decimal point as of the Valuation Time using the valuation procedures set forth in the Trust's
currently effective prospectus.
3. Closing and Closing Date.
-------------------------
The Closing Date shall be February ___, 2001, or such later date as determined by the Trust's
officers. The Closing shall take place at the principal office of the Trust at 5:00 P.M. Eastern time on
the Closing Date. The Trust on behalf of each Acquired Portfolio shall have provided for delivery as of
the Closing of each Acquired Portfolio's Net Assets to be transferred to the account of the corresponding
Acquiring Portfolio at the Acquiring Portfolios' Custodian, PFPC Trust Company, Airport Business Center,
International Court 2, 200 Stevens Drive, Philadelphia, PA 19113. Also, the Trust on behalf of each
Acquired Portfolio shall produce at the Closing a list of names and addresses of the shareholders of
record of the Acquired Portfolio Shares and the number of full and fractional shares owned by each such
shareholder, all as of the Valuation Time, certified by its transfer agent or by its President to the best
of its or his or her knowledge and belief. The Trust on behalf of each Acquiring Portfolio shall issue
and deliver a confirmation evidencing the Acquiring Portfolio Shares to be credited to the corresponding
Acquired Portfolio's account on the Closing Date to the Secretary of the Trust, or shall provide evidence
satisfactory to the Acquired Portfolio that such Acquiring Portfolio Shares have been registered in an
account on the books of the Acquiring Portfolio in such manner as the Trust on behalf of Acquired
Portfolio may request.
4. Representations and Warranties by the Trust on behalf of each Acquired Portfolio.
---------------------------------------------------------------------------------
The Fund makes the following representations and warranties about each Acquired Portfolio:
(a) Each Acquired Portfolio is a series of the Trust, a business trust organized under the laws of
the Commonwealth of Massachusetts and validly existing and in good standing under the laws of that
jurisdiction. The Trust is duly registered under the Investment Company Act of 1940, as amended (the
"1940 Act"), as an open-end, management investment company and all of the Acquired Portfolio Shares sold
were sold pursuant to an effective registration statement filed under the Securities Act of 1933, as
amended (the "1933 Act").
(b) The Trust is authorized to issue an unlimited number of shares of beneficial interest, par value
$0.001 each, each outstanding share of which is fully paid, non-assessable, fully transferable and has
full voting rights and currently issues shares of forty-one (41) series. The Trust is authorized to issue
an unlimited number of shares of beneficial interest of each series.
(c) The financial statements appearing in the Trust's Annual Report to Shareholders for the
fiscal year ended December 31, 1999, audited by Deloitte & Touche LLP, and its Semiannual Report to
Shareholders for the six months ended June 30, 2000, fairly present the financial position of each
Acquired Portfolio as of such dates and the results of its operations for the periods indicated in
conformity with generally accepted accounting principles applied on a consistent basis.
(d) The Trust has the necessary power and authority to conduct each Acquired Portfolio's
business as such business is now being conducted.
(e) The Trust on behalf of each Acquired Portfolio is not a party to or obligated under any
provision of the Trust's Amended and Restated Declaration of Trust or By-laws, or any contract or any
other commitment or obligation, and is not subject to any order or decree, that would be violated by its
execution of or performance under this Plan.
(f) Neither Acquired Portfolio is under the jurisdiction of a court in a Title 11 or similar
case within the meaning of Section 368(a)(3)(A) of the Internal Revenue Code of 1986, as amended (the
"Code").
(g) Neither Acquired Portfolio has any unamortized or unpaid organizational fees or expenses.
(h) Each Acquired Portfolio has qualified as a regulated investment company under the Code
since its inception and will continue to qualify at the Closing, and the consummation of the transactions
contemplated by this Plan will not cause such Acquired Portfolio to fail to satisfy the requirements of
subchapter M of the Code. Each Acquired Portfolio also has satisfied the diversification requirements of
Section 817(h) of the Code since its inception and will continue to satisfy such requirements at the
Closing.
5. Representations and Warranties by the Fund on behalf of each Acquiring Portfolio.
---------------------------------------------------------------------------------
The Fund makes the following representations and warranties about each Acquiring Portfolio:
(a) Each Acquiring Portfolio is a series of the Trust, a business trust organized under the
laws of the Commonwealth of Massachusetts and validly existing and in good standing under the laws of that
jurisdiction. The Trust is duly registered under the 1940 Act as an open-end, management investment
company and all of the Acquiring Portfolio Shares sold have been sold pursuant to an effective
registration statement filed under the Securities Act of 1933, as amended (the "1933 Act").
(b) The Trust is authorized to issue an unlimited number of shares of beneficial interest,
par value $0.001 each, each outstanding share of which is fully paid, non-assessable, fully transferable
and has full voting rights and currently issues shares of forty-one (41) series. The Trust is authorized
to issue an unlimited number of shares of beneficial interest of each series. Acquiring Portfolio Shares
to be issued pursuant to this Plan will be fully paid, non-assessable, freely transferable and have full
voting rights.
(c) At the Closing, Acquiring Portfolio Shares will be eligible for offering to the public
in those states of the United States and jurisdictions in which the shares of the corresponding Acquired
Portfolio are presently eligible for offering to the public, and there are a sufficient number of
Acquiring Portfolio Shares registered under the 1933 Act to permit the transfers contemplated by this Plan
to be consummated.
(d) The financial statements appearing in the Trust's Annual Report to Shareholders for the
fiscal year ended December 31, 1999, audited by Deloitte & Touche LLP, and its Semiannual Report to
Shareholders for the six months ended June 30, 2000, fairly present the financial position of each
Acquiring Portfolio as of such dates and the results of its operations for the periods indicated in
conformity with generally accepted accounting principles applied on a consistent basis.
(e) The Trust has the necessary power and authority to conduct each Acquiring Portfolio's
business as such business is now being conducted.
(f) The Trust on behalf of each Acquiring Portfolio is not a party to or obligated under any
provision of the Trust's Amended and Restated Declaration of Trust or By-laws, or any contract or any
other commitment or obligation, and is not subject to any order or decree, that would be violated by its
execution of or performance under this Plan.
(g) Neither the Trust nor either of the Acquired Portfolios is under the jurisdiction of a
court in Title 11 or similar case within the meaning of Section 368(a)(3)(A) of the Code.
(h) Each Acquiring Portfolio has qualified as a regulated investment company under the Code
since its inception and will continue to qualify at the Closing, and the consummation of the transactions
contemplated by this Plan will not cause such Acquiring Portfolio to fail to satisfy the requirements of
subchapter M of the Code. Each Acquiring Portfolio also has satisfied the diversification requirements of
Section 817(h) of the Code since its inception and will continue to satisfy such requirements at the
Closing.
6. Representations and Warranties by the Trust on behalf of the Portfolios.
------------------------------------------------------------------------
The Trust makes the following representations and warranties about each of the Portfolios:
(a) The statement of assets and liabilities to be created by the Trust for each of the
Portfolios as of the Valuation Time for the purpose of determining the number of Acquiring Portfolio
Shares to be issued pursuant to Section 1 of this Plan will accurately reflect the Net Assets in the case
of the Acquired Portfolios and the net assets in the case of the Acquiring Portfolios, and outstanding
shares, as of such date, in conformity with generally accepted accounting principles applied on a
consistent basis.
(b) At the Closing, the Portfolios will have good and marketable title to all of the
securities and other assets shown on the statement of assets and liabilities referred to in "(a)" above,
free and clear of all liens or encumbrances of any nature whatsoever, except such imperfections of title
or encumbrances as do not materially detract from the value or use of the assets subject thereto, or
materially affect title thereto.
(c) Except as may be disclosed in the Trust's current effective prospectus, there is no
material suit, judicial action, or legal or administrative proceeding pending or threatened against any of
the Portfolios.
(d) There are no known actual or proposed deficiency assessments with respect to any taxes
payable by any of the Portfolios.
(e) The execution, delivery, and performance of this Plan have been duly authorized by all
necessary action of the Trust's Board of Trustees, and this Plan constitutes a valid and binding
obligation enforceable in accordance with its terms.
(f) It anticipates that consummation of this Plan will not cause any of the Portfolios to
fail to conform to the requirements of Subchapter M of the Code for Federal income taxation as a RIC at
the end of each fiscal year or to conform to the requirements of Section 817(h) at the end of each tax
quarter.
(g) The Trust has the necessary power and authority to conduct the business of the
Portfolios, as such business is now being conducted.
7. Intentions of the Trust on behalf of the Portfolios.
----------------------------------------------------
(a) The Trust intends to operate each Portfolio's respective business as presently conducted
between the date hereof and the Closing.
(b) The Trust intends that the Acquired Portfolios will not acquire the Acquiring Portfolio
Shares for the purpose of making distributions thereof to anyone other than the Acquired Portfolio's
shareholders.
(c) The Trust on behalf of each Acquired Portfolio intends, if this Plan is consummated, to
liquidate and dissolve each Acquired Portfolio.
(d) The Trust intends that, by the Closing, all of the Portfolios' Federal and other tax
returns and reports required by law to be filed on or before such date shall have been filed, and all
Federal and other taxes shown as due on said returns shall have either been paid or adequate liability
reserves shall have been provided for the payment of such taxes.
(e) At the Closing, the Trust on behalf of each Acquired Portfolio intends to have available
a copy of the shareholder ledger accounts, certified by the Trust's transfer agent or its President to the
best of its or his or her knowledge and belief, for all the shareholders of record of Acquired Portfolio
Shares as of the Valuation Time who are to become shareholders of the corresponding Acquiring Portfolio as
a result of the transfer of assets that is the subject of this Plan.
(f) The Trust intends to mail to each shareholder of record of each Acquired Portfolio
entitled to vote at the meeting of its shareholders at which action on this Plan is to be considered, in
sufficient time to comply with requirements as to notice thereof, a Combined Proxy Statement and
Prospectus that complies in all material respects with the applicable provisions of Section 14(a) of the
Securities Exchange Act of 1934, as amended, and Section 20(a) of the 1940 Act, and the rules and
regulations, respectively, thereunder.
(g) The Trust intends to file with the U.S. Securities and Exchange Commission a
registration statement or statements on Form N-14 under the 1933 Act relating to the Acquiring Portfolio
Shares issuable hereunder ("Registration Statements"), and will use its best efforts to provide that the
Registration Statements become effective as promptly as practicable. At the time a Registration Statement
becomes effective, it will: (i) comply in all material respects with the applicable provisions of the
1933 Act, and the rules and regulations promulgated thereunder; and (ii) not contain any untrue statement
of material fact or omit to state a material fact required to be stated therein or necessary to make the
statements therein not misleading. At the time a Registration Statement becomes effective, at the time of
the shareholders' meeting of the Acquired Portfolio, and at the Closing Date, the prospectus and statement
of additional information included in the Registration Statement will not contain any untrue statement of
a material fact or omit to state a material fact necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading.
8. Conditions Precedent to be Fulfilled by Trust on behalf of the Portfolios.
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The consummation of the Plan with respect to an Acquiring Portfolio and its corresponding
Acquired Portfolio shall be subject to the following conditions:
(a) That: (i) all the representations and warranties contained herein concerning the
relevant Portfolios shall be true and correct as of the Closing with the same effect as though made as of
and at such date; (ii) performance of all obligations required by this Plan to be performed by the Trust
on behalf of the relevant Portfolios shall occur prior to the Closing; and (iii) the Trust shall execute a
certificate signed by the President or a Vice President and by the Secretary or equivalent officer to the
foregoing effect.
(b) That the form of this Plan shall have been adopted and approved by the appropriate
action of the Board of Trustees of the Trust on behalf of the relevant Portfolios.
(c) That the U.S. Securities and Exchange Commission shall not have issued an unfavorable
management report under Section 25(b) of the 1940 Act or instituted or threatened to institute any
proceeding seeking to enjoin consummation of the Plan under Section 25(c) of the 1940 Act. And, further,
no other legal, administrative or other proceeding shall have been instituted or threatened that would
materially affect the financial condition of a Portfolio or would prohibit the transactions contemplated
hereby.
(d) That the Plan contemplated hereby shall have been adopted and approved by the
appropriate action of the shareholders of the Acquired Portfolio at an annual or special meeting or any
adjournment thereof.
(e) That a distribution or distributions shall have been declared for each relevant
Portfolio, prior to the Closing Date that, together with all previous distributions, shall have the effect
of distributing to shareholders of each Portfolio (i) all of its ordinary income and all of its capital
gain net income, if any, for the period from the close of its last fiscal year to the Valuation Time and
(ii) any undistributed ordinary income and capital gain net income from any prior period. Capital gain
net income has the meaning assigned to such term by Section 1222(9) of the Code.
(f) That there shall be delivered to the Trust on behalf of each Acquired Portfolio an
opinion from Messrs. Stradley, Ronon, Stevens & Young, LLP, counsel to the Trust, to the effect that,
provided the acquisition contemplated hereby is carried out in accordance with this Plan and in accordance
with representations provided by the Trust in certificates delivered to such counsel:
(1) The acquisition by each Acquiring Portfolio of substantially all the
assets of the corresponding Acquired Portfolio, as provided for herein, in exchange for Acquiring
Portfolio Shares and the assumption by each such Acquiring Portfolio of certain of the corresponding
Acquired Portfolio's liabilities followed by the distribution by each such Acquired Portfolio to its
respective holders of voting shares of the corresponding Acquired Portfolio in complete liquidation will
qualify as a reorganization within the meaning of Section 368(a)(1) of the Code, and each Portfolio will
each be a "party to the reorganization" within the meaning of Section 368(b) of the Code;
(2) No gain or loss will be recognized by an Acquired Portfolio upon the
transfer of substantially all of its assets to its corresponding Acquiring Portfolio in exchange solely
for voting shares of the Acquiring Portfolio and the assumption by the Acquiring Portfolio of certain of
the Acquired Portfolio's liabilities (Sections 361(a) and 357(a) of the Code);
(3) No gain or loss will be recognized by an Acquired Portfolio upon the
distribution of voting shares of the corresponding Acquiring Portfolio to its shareholders pursuant to the
liquidations of the Acquired Portfolio (in pursuance of the Plan) (Section 361(c)(1) of the Code);
(4) No gain or loss will be recognized by an Acquiring Portfolio upon the
receipt of substantially all of the assets of its corresponding Acquired Portfolio in exchange solely for
voting shares of the Acquiring Portfolio (Section 1032(a) of the Code);
(5) The basis of the assets of an Acquired Portfolio received by its
corresponding Acquiring Portfolio will be the same as the basis of such assets to the Acquired Portfolio
immediately prior to the exchange (Section 362(b) of the Code);
(6) The holding period of the assets of an Acquired Portfolio received by
its corresponding Acquiring Portfolio will include the period during which such assets were held by the
Acquired Portfolio (Section 1223(2) of the Code);
(7) No gain or loss will be recognized by the shareholders of an Acquired
Portfolio upon the exchange of their shares in the Acquired Portfolio for voting shares of the
corresponding Acquiring Portfolio (including fractional shares to which they may be entitled) (Section
354(a) of the Code);
(8) The basis of the Acquiring Portfolio Shares received by the
corresponding Acquired Portfolio's shareholders (including fractional shares to which they may be
entitled) shall be the same as the basis of the Acquired Portfolio Shares exchanged therefor (Section
358(a)(1) of the Code);
(9) The holding period of Acquiring Portfolio Shares received by the
corresponding Acquired Portfolio's shareholders (including fractional shares to which they may be
entitled) will include the holding period of the Acquired Portfolio's Shares surrendered in exchange
therefor, provided that the Acquired Portfolio's Shares were held as a capital asset on the effective date
of the Reorganization (Section 1223(1) of the Code); and
(10) Each Acquiring Portfolio will succeed to and take into account as of
the date of the transfer (as defined in Section 1.381(b)-1(b) of the Treasury Regulations) the items of
the corresponding Acquired Portfolio described in Section 381 (c) of the Code, subject to the conditions
and limitations specified in Sections 381, 382, 383 and 384 of the Code and the Income Tax Regulations
thereunder.
(g) That there shall be delivered to the Trust on behalf of the Portfolios an opinion in
form and substance satisfactory to it from Messrs. Stradley Ronon Stevens & Young, LLP, counsel to the
Trust, to the effect that, subject in all respects to the effects of bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance, and other laws now or hereafter affecting generally the
enforcement of creditors' rights:
(1) Acquiring Portfolio Shares to be issued pursuant to the terms of this
Plan have been duly authorized and, when issued and delivered as provided in this Plan, will have been
validly issued and fully paid and will be non-assessable by the Trust, on behalf of the Acquiring
Portfolio;
(2) All actions required to be taken by the Trust and/or Portfolios to
authorize and effect the Plan contemplated hereby have been duly authorized by all necessary action on the
part of the Trust and the Portfolios;
(3) Neither the execution, delivery nor performance of this Plan by the
Trust violates any provision of the Trust's Amended and Restated Declaration of Trust or By-laws, or the
provisions of any agreement or other instrument known to such counsel to which the Trust is a party or by
which the Portfolios are otherwise bound; this Plan is the legal, valid and binding obligation of the
Trust and each Portfolio and is enforceable against the Trust and/or each Portfolio in accordance with its
terms; and
(4) The Trust's registration statement of which the prospectus dated
October 23, 2000 relating to each Portfolio is a part (the "Prospectus") is, at the time of the signing of
this Plan, effective under the 1933 Act, and, to the best knowledge of such counsel, no stop order
suspending the effectiveness of such registration statement has been issued, and no proceedings for such
purpose have been instituted or are pending before or threatened by the U.S. Securities and Exchange
Commission under the 1933 Act, and nothing has come to counsel's attention that causes it to believe that,
at the time the Prospectus became effective, or at the time of the signing of this Plan, or at the
Closing, such Prospectus (except for the financial statements and other financial and statistical data
included therein, as to which counsel need not express an opinion), contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein or necessary to make the
statements therein not misleading; and such counsel knows of no legal or government proceedings required
to be described in the Prospectus, or of any contract or document of a character required to be described
in the Prospectus that is not described as required.
In giving the opinions set forth above, counsel may state that it is relying on certificates of
the officers of the Trust with regard to matters of fact, and certain certifications and written
statements of governmental officials with respect to the good standing of the Trust.
(h) That the Trust's Registration Statement with respect to the Acquiring Portfolio Shares
to be delivered to the corresponding Acquired Portfolio's shareholders in accordance with this Plan shall
have become effective, and no stop order suspending the effectiveness of the Registration Statement or any
amendment or supplement thereto, shall have been issued prior to the Closing Date or shall be in effect at
Closing, and no proceedings for the issuance of such an order shall be pending or threatened on that date.
(i) That the Acquiring Portfolio Shares to be delivered hereunder shall be eligible for sale
by the Acquiring Portfolio with each state commission or agency with which such eligibility is required in
order to permit the Acquiring Portfolio Shares lawfully to be delivered to each shareholder of the
corresponding Acquired Portfolio.
(j) That, at the Closing, there shall be transferred to each Acquiring Portfolio aggregate
Net Assets of the corresponding Acquired Portfolio comprising at least 90% in fair market value of the
total net assets and 70% of the fair market value of the total gross assets recorded on the books of
Acquired Portfolio on the Closing Date.
9. Expenses.
---------
(a) The Trust represents and warrants that there are no broker or finders' fees payable by
it in connection with the transactions provided for herein.
(b) The expenses of entering into and carrying out the provisions of this Plan shall be
borne by American Skandia Life Assurance Corporation or its affiliates.
10. Termination; Postponement; Waiver; Order.
-----------------------------------------
(a) Anything contained in this Plan to the contrary notwithstanding, this Plan may be
terminated and abandoned at any time (whether before or after approval thereof by the shareholders of an
Acquired Portfolio) prior to the Closing or the Closing may be postponed by the Trust on behalf of a
Portfolio by resolution of the Board of Trustees, if circumstances develop that, in the opinion of the
Board, make proceeding with the Plan inadvisable. The termination or abandonment of this Plan or the
postponement of the Closing with respect to any Acquiring Portfolio and its corresponding Acquired
Portfolio shall not affect the performance of this Plan by the other Portfolios unless this Plan is
terminated or abandoned or the closing is postponed with respect to those other Portfolios.
(b) If the transactions contemplated by this Plan have not been consummated by April 30,
2001, the Plan shall automatically terminate on that date, unless a later date is agreed to by the Trust
on behalf of the relevant Portfolios.
(c) In the event of termination of this Plan with respect to an Acquiring Portfolio and its
corresponding Acquired Portfolio pursuant to the provisions hereof, the same shall become void and have no
further effect with respect to such Acquiring Portfolio or Acquired Portfolio, and neither the Fund, the
Acquiring Portfolio nor the Acquired Portfolio, nor the directors, officers, agents or shareholders shall
have any liability in respect of this Plan.
(d) At any time prior to the Closing, any of the terms or conditions of this Plan may be
waived by the party who is entitled to the benefit thereof by action taken by the Trust's Board of
Trustees if, in the judgment of such Board of Trustees, such action or waiver will not have a material
adverse affect on the benefits intended under this Plan to its shareholders, on behalf of whom such action
is taken.
(e) The respective representations and warranties contained in Sections 4 to 6 hereof shall
expire with and be terminated by the Plan of Reorganization, and neither the Trust nor any of its
officers, directors, agents or shareholders nor the Portfolios nor any of their shareholders shall have
any liability with respect to such representations or warranties after the Closing. This provision shall
not protect any officer, director, agent or shareholder of any of the Portfolios or the Trust against any
liability to the entity for which that officer, director, agent or shareholder so acts or to any of the
Trust's shareholders to which that officer, director, agent or shareholder would otherwise be subject by
reason of willful misfeasance, bad faith, gross negligence, or reckless disregard of the duties in the
conduct of such office.
(f) If any order or orders of the U.S. Securities and Exchange Commission with respect to
this Plan shall be issued prior to the Closing and shall impose any terms or conditions that are
determined by action of the Board of Trustees of the Trust on behalf of the Portfolios to be acceptable,
such terms and conditions shall be binding as if a part of this Plan without further vote or approval of
the shareholders of the Acquired Portfolios, unless such terms and conditions shall result in a change in
the method of computing the number of Acquiring Portfolio Shares to be issued to the corresponding
Acquired Portfolio in which event, unless such terms and conditions shall have been included in the proxy
solicitation material furnished to the shareholders of the corresponding Acquired Portfolio prior to the
meeting at which the transactions contemplated by this Plan shall have been approved, this Plan shall not
be consummated and shall terminate unless the Trust on behalf of the Acquired Portfolio shall promptly
call a special meeting of shareholders at which such conditions so imposed shall be submitted for approval.
11. Entire Plan and Amendments.
---------------------------
This Plan embodies the entire plan of the Trust on behalf of the Portfolios and there are no
agreements, understandings, restrictions, or warranties between the parties other than those set forth
herein or herein provided for. This Plan may be amended only by the Trust on behalf of a Portfolio in
writing. Neither this Plan nor any interest herein may be assigned without the prior written consent of
the Trust on behalf of the Portfolio corresponding to the Portfolio making the assignment.
12. Notices.
--------
Any notice, report, or demand required or permitted by any provision of this Plan shall be in
writing and shall be deemed to have been given if delivered or mailed, first class postage prepaid,
addressed to the Trust at One Corporate Drive, P.O. Box 883, Shelton, CT 06484, Attention: Secretary.
13. Governing Law.
--------------
This Plan shall be governed by and carried out in accordance with the laws of the Commonwealth of
Massachusetts.
IN WITNESS WHEREOF, American Skandia Trust, on behalf of the AST MFS Growth Portfolio, AST Alger
All-Cap Growth Portfolio, AST Alger Growth Portfolio and AST Alger Mid-Cap Growth Portfolio, has executed
this Plan by its duly authorized officer, all as of the date and year first-above written.
AMERICAN SKANDIA TRUST
on behalf of
AST MFS Growth Portfolio,
AST Alger All-Cap Growth Portfolio,
AST Alger Growth Portfolio, and
AST Alger Mid-Cap Growth Portfolio.
Attest: By:
---------------------------------- ------------------------------------
EXHIBIT B
Prospectus dated October 23, 2000
The Prospectus for the AST Alger All-Cap Growth Portfolio and the AST Alger Mid-Cap Growth
Portfolio of American Skandia Trust dated October 23, 2000, is part of this Prospectus/Proxy Statement and
will be included in the proxy solicitation mailing to shareholders. The above-referenced prospectus
follows.
PROSPECTUS October 23, 2000
AMERICAN SKANDIA TRUST
One Corporate Drive, Shelton, Connecticut 06484
-------------------------------------------------------------------------------------------------------------------
American Skandia Trust (the "Trust") is an investment company made up of 41 separate portfolios ("Portfolios"),
two of which are offered through this Prospectus:
AST Alger Mid-Cap Growth Portfolio
AST Alger All-Cap Growth Portfolio
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION NOR HAS THE
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The Trust is an investment vehicle for life insurance companies ("Participating Insurance Companies") writing
variable annuity contracts and variable life insurance policies. Shares of the Trust may also be sold directly
to certain tax-deferred retirement plans. Each variable annuity contract and variable life insurance policy
involves fees and expenses not described in this Prospectus. Please read the Prospectus for the variable annuity
contract and variable life insurance policy for information regarding the contract or policy, including its fees
and expenses.
TABLE OF CONTENTS
Caption Page
Risk/Return Summary...............................................................................................3
Past Performance..................................................................................................5
Fees and Expenses of the Portfolios...............................................................................6
Investment Objectives and Policies................................................................................7
AST Alger Mid-Cap Growth Portfolio...........................................................................8
AST Alger All-Cap Growth Portfolio...........................................................................9
Portfolio Turnover...............................................................................................10
Net Asset Value..................................................................................................10
Purchase and Redemption of Shares................................................................................10
Management of the Trust..........................................................................................11
Tax Matters......................................................................................................12
Financial Highlights.............................................................................................14
Certain Risk Factors and Investment Methods......................................................................16
Risk/Return Summary
American Skandia Trust (the "Trust") is comprised of forty-one investment portfolios (the
"Portfolios"). The Portfolios are designed to provide a wide range of investment options. Each Portfolio has
its own investment goal and style (and, as a result, its own level of risk). Some of the Portfolios offer
potential for high returns with correspondingly higher risk, while others offer stable returns with relatively
less risk. It is possible to lose money when investing even in the most conservative of the Portfolios.
Investments in the Portfolios are not bank deposits and are not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency.
It is not possible to provide an exact measure of the risk to which a Portfolio is subject, and a
Portfolio's risk will vary based on the securities that it holds at a given time. Nonetheless, based on each
Portfolio's investment style and the risks typically associated with that style, it is possible to assess in a
general manner the risks to which a Portfolio will be subject. The following discussion highlights the
investment strategies and risks of each Portfolio. Additional information about each Portfolio's potential
investments and its risks is included in this Prospectus under "Investment Objectives and Policies."
Capital Growth Portfolios:
Portfolio: Investment Goal: Primary Investments:
Alger Mid-Cap Growth Long-term capital growth The Portfolio invests primarily in the equity securities of
medium-sized companies.
Alger All-Cap Growth Long-term capital growth The Portfolio invests primarily in common and preferred
stocks.
Principal Investment Strategies:
The AST Alger Mid-Cap Growth Portfolio invests primarily in equity securities, such as common or preferred
stocks, that are listed on U.S. exchanges or in the over-the-counter market. The Portfolio invests primarily in
growth stocks. The Sub-advisor believes that these stocks are those of two types of companies:
o High Unit Volume Growth Companies. These are vital creative companies that offer goods or services to a
rapidly expanding marketplace. They include both established and emerging firms, offering new or improved
products, or firms simply fulfilling an increased demand for an existing product line.
o Positive Life Cycle Change Companies. These are companies experiencing a major change that is expected
to produce advantageous results. These changes may be as varied as new management, products or
technologies, restructurings or reorganizations, or mergers and acquisitions.
The Portfolio focuses on midsize companies with promising potential. Under normal circumstances, the Portfolio
invests primarily in the equity securities of companies having a market capitalization within the range of
companies in the S&P(R)MidCap 400 Index.
The AST Alger All-Cap Growth Portfolio invests primarily in equity securities, such as common or preferred
stocks, that are listed on U.S. exchanges or in the over-the-counter market. The Portfolio may invest in the
equity securities of companies of all sizes, and may emphasize either larger or smaller companies at a given time
based on the Sub-advisor's assessment of particular companies and market conditions.
The Portfolio invests primarily in growth stocks. The Sub-advisor believes that these stocks are those of two
types of companies:
o High Unit Volume Growth Companies. Vital creative companies that offer goods or services to a rapidly
expanding marketplace. They include both established and emerging firms, offering new or improved products,
or firms simply fulfilling an increased demand for an existing product line.
o Positive Life Cycle Change Companies. Companies experiencing a major change that is expected to produce
advantageous results. These changes may be as varied as new management, products or technologies,
restructurings or reorganizations, or mergers and acquisitions.
Principal Risks:
o All of the capital growth portfolios are equity funds, and the primary risk of each is that the value of
the stocks they hold will decline. Stocks can decline for many reasons, including reasons related to the
particular company, the industry of which it is a part, or the securities markets generally. These declines
can be substantial.
o The risk to which the capital growth portfolios are subject depends in part on the size of the companies
in which the particular portfolio invests. Securities of smaller companies tend to be subject to more
abrupt and erratic price movements than securities of larger companies, in part because they may have
limited product lines, markets, or financial resources. Market capitalization, which is the total market
value of a company's outstanding stock, is often used to classify companies based on size. Therefore, the
AST Alger Mid-Cap Growth Portfolio can be expected to be subject to somewhat less risk than a fund investing
primarily in small-cap companies, but more than that of many funds investing primarily in large-cap
companies. The AST Alger All-Cap Growth Portfolio may invest in equity securities of companies without
regard to capitalization, and may include large and small companies at the same time.
o The AST Alger Mid-Cap Growth Portfolio and the AST Alger All-Cap Growth Portfolio generally take a
growth approach to investing rather than a value approach. Value stocks are believed to be selling at
prices lower than what they are actually worth, while growth stocks are those of companies that are expected
to grow at above-average rates. A portfolio investing primarily in growth stocks will tend to be subject to
more risk than a value fund, although this will not always be the case.
Past Performance
No performance information is included for the AST Alger Mid-Cap Growth Portfolio or the AST Alger
All-Cap Growth Portfolio because these Portfolios commenced operations after January, 1999.
FEES AND EXPENSES OF THE PORTFOLIOS: The table below describes the fees and expenses that you may pay if you buy
and hold shares of the Portfolios. Unless otherwise indicated, the expenses shown below are for the year ending
December 31, 1999.
SHAREHOLDER TRANSACTION EXPENSES (fees paid directly from your investment):
Maximum Sales Charge (Load) Imposed on Purchases NONE*
Maximum Deferred Sales Charge (Load) NONE*
Maximum Sales Charge (Load) Imposed on Reinvested Dividends NONE*
Redemption Fees NONE*
Exchange Fee NONE*
* Because shares of the Portfolios may be purchased through variable insurance products, the prospectus of the
relevant product should be carefully reviewed for information on the charges and expenses of those products.
This table does not reflect any such charges.
ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from Portfolio assets, in %):
Management Estimated Other Total Annual Fee Waivers Net Annual
Fees Distribution Expenses Portfolio and Expense Fund
and Operating Reimbursement(4)Operating
Portfolio: Service Expenses Expenses
(12b-1)
Fees(3)
------------------------------------ ------------ ------------- ------------- --------------- --------------- ---------------
AST Alger Mid-Cap Growth(1) 0.80 0.00 0.23 1.03 0.18 0.85
AST Alger All-Cap Growth(2) 0.95 0.00 0.28 1.23 N/A 1.23
(1) This Portfolio commenced operations in October 2000. "Other Expenses" and "Estimated Distribution and
Service Fees" shown are based on estimated amounts for the fiscal year ending December 31, 2000.
(2) This Portfolio commenced operations in January 2000. "Other Expenses" and "Estimated Distribution and
Service Fees" shown are based on actual amounts for the semi-annual period ended June 30, 2000.
(3) As discussed below under "Management of the Trust - Fees and Expenses, the Trustees adopted a Distribution
Plan (the "Distribution Plan") under Rule 12b-1 to permit an affiliate of the Trust's Investment Manager to
receive brokerage commissions in connection with purchases and sales of securities held by the Portfolios, and to
use these commissions to promote the sale of shares of the Portfolio. While the brokerage commission rates and
amounts paid by the various Portfolios are not expected to increase as a result of the Distribution Plan, the
staff of the Securities and Exchange Commission recently takes the position that commission amounts received
under the Distribution Plan should be reflected as distribution expenses of the Funds. The Distribution Fee
estimates are derived and annualized from data regarding commission amounts directed to the affiliate under the
Distribution Plan from such Plan's commencement of operations for each Portfolio (in late July through early
August 1999) until December 31, 1999. Actual commission amounts directed under the Distribution Plan will vary
and the amounts directed during the first full fiscal year of the Plan's operations may differ substantially from
the annualized amounts listed in the above chart.
(4) The Investment Manager has agreed to reimburse and/or waive fees for certain Portfolios until at least April
30, 2001. The caption "Total Annual Fund Operating Expenses" reflects the Portfolios' fees and expenses before
such waivers and reimbursements, while the caption "Net Annual Fund Operating Expenses" reflects the effect of
such waivers and reimbursements.
EXPENSE EXAMPLES:
This example is intended to help you compare the cost of investing in the Portfolios with the cost of
investing in other mutual funds.
The Example assumes that you invest $10,000 in a Portfolio for the time periods indicated. The Example
also assumes that your investment has a 5% return each year, that the Portfolios' total operating expenses remain
the same, and that any expense waivers and reimbursements remain in effect only for the periods during which they
are binding. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
After:
Portfolio: 1 yr. 3 yrs. 5 yrs. 10 yrs.
AST Alger Mid-Cap Growth 87 271 N/A N/A
AST Alger All-Cap Growth 125 390 676 1,489
INVESTMENT OBJECTIVES AND POLICIES:
The investment objective, policies and limitations for each of the Portfolios are described below.
While certain policies apply to all Portfolios, generally each Portfolio has a different investment objective and
investment focus. As a result, the risks, opportunities and returns of investing in each Portfolio will differ.
The investment objectives and policies of the Portfolios generally are not fundamental policies and may be
changed by the Trustees without shareholder approval.
There can be no assurance that the investment objective of any Portfolio will be achieved. Risks
relating to certain types of securities and instruments in which the Portfolios may invest are described in this
Prospectus under "Certain Risk Factors and Investment Methods."
If approved by the Trustees, the Trust may add more Portfolios and may cease to offer any existing
Portfolios in the future.
AST ALGER MID-CAP GROWTH PORTFOLIO:
Investment Objective: The investment objective of the Portfolio is to seek long-term capital growth.
Principal Investment Policies and Risks:
The Portfolio invests primarily in equity securities, such as common or preferred stocks, that are
listed on U.S. exchanges or in the over-the-counter market.
The Portfolio invests primarily in growth stocks. The Sub-advisor believes that these stocks are those
of two types of companies:
o High Unit Volume Growth Companies. These are vital, creative companies that offer goods or services to
a rapidly expanding marketplace. They include both established and emerging firms, offering new or improved
products, or firms simply fulfilling an increased demand for an existing product line.
o Positive Life Cycle Change Companies. These are companies experiencing a major change that is expected
to produce advantageous results. These changes may be as varied as new management, products or
technologies, restructurings or reorganizations, or mergers and acquisitions.
The Portfolio focuses on midsize companies with promising potential. Under normal circumstances, the
Portfolio invests primarily in the equity securities of companies having a market capitalization within the range
of companies in the S&P(R)MidCap 400 Index. The Portfolio may invest up to 35% of its total assets in equity
security of companies that, at the time of purchase, have total market capitalization outside the range of
companies in the S&P MidCap 400 Index and in excess of 35% (up to 100% of its assets) during temporary defensive
periods.
As with any fund investing primarily in equity securities, the value of the securities held by the
Portfolio may decline. These declines can be substantial. In addition, the growth stocks in which the Portfolio
invests primarily tend to fluctuate in price more than other types of stocks. Prices of growth stocks tend to be
higher in relation to their companies' earnings, and may be more sensitive to market, political and economic
developments than other stocks.
Because the Portfolio invests primarily in the securities of medium-sized companies, there is a
possibility of greater risk than a fund that invests in larger, more established companies. Increased risk may
result from such factors as inexperienced management and limited financial resources.
Other Investments:
Foreign Securities. The Portfolio may invest up to 20% of the value of its total assets, measured at
the time of investment, in equity and debt securities that are denominated in foreign currencies. There is no
limitation on the percentage of the Portfolio's assets that may be invested in securities of foreign companies
that are denominated in U.S. dollars. In addition, the Portfolio may enter into foreign currency transactions,
including forward foreign currency contracts and options on foreign currencies, to manage currency risks, to
facilitate transactions in foreign securities, and to repatriate dividend or interest income received in foreign
currencies.
Short sales "against the box." The Portfolio may from time to time makes short sales "against the box."
A discussion of these investments and their risks is included in this Prospectus under "Certain Risk
Factors and Investment Methods."
Temporary Investments. The Portfolio may invest up to 100% of its assets in cash, commercial paper,
high-grade bonds or cash equivalents for temporary defensive reasons if the Sub-advisor believes that adverse
market or other conditions warrant. This is to attempt to protect the Portfolio from a temporary unacceptable
risk of loss. However, while the Portfolio is in a defensive position, the opportunity to achieve its investment
objective of long-term capital growth will be limited.
AST ALGER ALL-CAP GROWTH PORTFOLIO:
Investment Objective: The investment objective of the Portfolio is to seek long-term capital growth.
Principal Investment Policies and Risks:
The Portfolio invests primarily in equity securities, such as common or preferred stocks, that are
listed on U.S. exchanges or in the over-the-counter market. The Portfolio may invest in the equity securities of
companies of all sizes, and may emphasize either larger or smaller companies at a given time based on the
Sub-advisor's assessment of particular companies and market conditions.
The Portfolio invests primarily in growth stocks. The Sub-advisor believes that these stocks are those
of two types of companies:
High Unit Volume Growth Companies. These are vital, creative companies that offer goods or services to
a rapidly expanding marketplace. They include both established and emerging firms, offering new or improved
products, or firms simply fulfilling an increased demand for an existing product line.
Positive Life Cycle Change Companies. These are companies experiencing a major change that is expected
to produce advantageous results. These changes may be as varied as new management, products or technologies,
restructurings or reorganizations, or mergers and acquisitions.
As with any fund investing primarily in equity securities, the value of the securities held by the
Portfolio may decline. These declines can be substantial. In addition, the growth stocks in which the Portfolio
invests primarily tend to fluctuate in price more than other types of stocks. Prices of growth stocks tend to be
higher in relation to their companies' earnings, and may be more sensitive to market, political and economic
developments than other stocks. The Portfolio's level of risk will vary based upon the size of the companies it
invests in at a given time. To the extent that the Portfolio emphasizes small-cap stocks, it will be subject to
a level of risk higher than a fund investing primarily in more conservative "large-cap" stocks.
Other Investments:
In addition to investing in common and preferred stocks, the Portfolio may invest in securities
convertible into or exchangeable for equity securities, including warrants and rights. The Portfolio may invest
up to 20% of its total assets in foreign securities. (American Depositary Receipts or other U.S. dollar
denominated securities of foreign issuers are not subject to the 20% limitation.)
The Fund may purchase put and call options and write (sell) put and covered call options on securities
and securities indices to increase gain or to hedge against the risk of unfavorable price movements. However,
the Sub-advisor does not currently intend to rely on these option strategies extensively, if at all. The
Portfolio may purchase and sell stock index futures contracts and options on stock index futures contracts. The
Portfolio may sell securities "short against the box."
An additional discussion of these types of investments and their risks is included in this Prospectus
under "Certain Risk Factors and Investment Methods."
Temporary Investments. The Portfolio may invest up to 100% of its assets in cash, commercial paper,
high-grade bonds or cash equivalents for temporary defensive reasons if the Sub-advisor believes that adverse
market or other conditions warrant. This is to attempt to protect the Portfolio from a temporary unacceptable
risk of loss. However, while the Portfolio is in a defensive position, the opportunity to achieve its investment
objective of long-term capital growth will be limited.
PORTFOLIO TURNOVER:
Each Portfolio may sell its portfolio securities, regardless of the length of time that they have been
held, if the Sub-advisor and/or the Investment Manager determines that it would be in the Portfolio's best
interest to do so. It may be appropriate to buy or sell portfolio securities due to economic, market, or other
factors that are not within the Sub-advisor's or Investment Manager's control. Such transactions will increase a
Fund's "portfolio turnover." A 100% portfolio turnover rate would occur if all of the securities in a portfolio
of investments were replaced during a given period.
Although turnover rates may vary substantially from year to year, it is anticipated that the following
Portfolio may regularly have annual rates of turnover exceeding 100%:
AST Alger Mid-Cap Growth Portfolio
A high rate of portfolio turnover involves correspondingly higher brokerage commission expenses and
other transaction costs, which are borne by a Portfolio and will reduce its performance.
NET ASSET VALUE:
The net asset value per share ("NAV") of each Portfolio is determined as of the close of the New York
Stock Exchange (the "NYSE") (normally 4:00 p.m. Eastern Time) on each day that the NYSE is open for business.
NAV is determined by dividing the value of a Portfolio's total assets, less any liabilities, by the number of
total shares of that Portfolio outstanding. In general, the assets of each Portfolio are valued on the basis of
market quotations. However, in certain circumstances where market quotations are not readily available or are
believed to be inaccurate, assets are valued by methods that are believed to accurately reflect their fair
value. Because NAV is calculated and purchases may be made only on business days, and because securities traded
on foreign exchanges may trade on other days, the value of a Portfolio's investments may change on days when
shares cannot be purchased or redeemed.
PURCHASE AND REDEMPTION OF SHARES:
Purchases of shares of the Portfolios may be made only by separate accounts of Participating Insurance
Companies for the purpose of investing assets attributable to variable annuity contracts and variable life
insurance policies ("contractholders"), or by qualified plans. The separate accounts of the Participating
Insurance Companies place orders to purchase and redeem shares of the Trust based on, among other things, the
amount of premium payments to be invested and the amount of surrender and transfer requests to be effected on
that day under the variable annuity contracts and variable life insurance policies. Orders are effected on days
on which the NYSE is open for trading. Orders received before 4:00 P.M. Eastern time are effected at the NAV
determined as of 4:00 P.M. Eastern Time on that same day. Orders received after 4:00 P.M. Eastern Time are
effected at the NAV calculated the next business day. Payment for redemptions will be made within seven days
after the request is received. The Trust does not assess any fees, either when it sells or when it redeems its
securities. However, surrender charges, mortality and expense risk fees and other charges may be assessed by
Participating Insurance Companies under the variable annuity contracts or variable life insurance policies.
Please refer to the prospectuses for the variable annuity contracts and variable insurance policies for further
information on these fees.
As of the date of this Prospectus, American Skandia Life Assurance Corporation ("ASLAC") and Kemper
Investors Life Insurance Company are the only Participating Insurance Companies. The profit sharing plan
covering employees of ASLAC and its affiliates, which is a retirement plan qualified under Section 401(a) of the
Internal Revenue Code of 1986, as amended, also may directly own shares of the Trust. Certain conflicts of
interest may arise as a result of investment in the Trust by various insurance companies for the benefit of their
contractholders and by various qualified plans. These conflicts could arise because of differences in the tax
treatment of the various investors, because of actions of the Participating Insurance Companies and/or the
qualified plans, or other reasons. The Trust does not currently expect that any material conflicts of interest
will arise. Nevertheless, the Trustees intend to monitor events in order to identify any material irreconcilable
conflicts and to determine what action, if any, should be taken in response to such conflicts. Should any
conflict arise that would require a substantial amount of assets to be withdrawn from the Trust, orderly
portfolio management could be disrupted.
MANAGEMENT OF THE TRUST:
Investment Manager: American Skandia Investment Services, Incorporated ("ASISI"), One Corporate Drive, Shelton,
Connecticut, acts as Investment Manager to the Trust. ASISI has served as Investment Manager since 1992, and
currently serves as Investment Manager to a total of 66 investment company portfolios (including the Portfolios
of the Trust). ASISI is an indirect wholly-owned subsidiary of Skandia Insurance Company Ltd. ("Skandia").
Skandia is a Swedish company that owns, directly or indirectly, a number of insurance companies in many
countries. The predecessor to Skandia commenced operations in 1855.
The Trust's Investment Management Agreements with ASISI (the "Management Agreements") provide that ASISI
will furnish each applicable Portfolio with investment advice and administrative services subject to the
supervision of the Board of Trustees and in conformity with the stated policies of the applicable Portfolio. The
Investment Manager has engaged a Sub-advisor to conduct the investment programs of each Portfolio, including the
purchase, retention and sale of portfolio securities. The Investment Manager is responsible for monitoring the
activities of the Sub-advisor and reporting on such activities to the Trustees. The Investment Manager must also
provide, or obtain and supervise, the executive, administrative, accounting, custody, transfer agent and
shareholder servicing services that are deemed advisable by the Trustees.
The Trust has obtained an exemption from the Securities and Exchange Commission that permits ASISI,
subject to approval by the Board of Trustees of the Trust, to change sub-advisors for a Portfolio and to enter
into new sub-advisory agreements, without obtaining shareholder approval of the changes. This exemption (which
is similar to exemptions granted to other investment companies that are organized in a similar manner as the
Trust) is intended to facilitate the efficient supervision and management of the sub-advisors by ASISI and the
Trustees.
Sub-advisor:
Fred Alger Management, Inc. ("Alger"), One World Trade Center, Suite 9333, New York, New York 10048,
serves as Sub-advisor for the AST Alger Mid-Cap Growth Portfolio and the AST Alger All-Cap Growth Portfolio.
Alger has been an investment advisor since 1964, and as of June 30, 2000 managed mutual fund and other assets
totaling approximately $21.2 billion.
The portfolio managers responsible for the management of the AST Alger Mid-Cap Growth are David Alger
and Ron Tartaro. Both have managed these Portfolios since their inception. Mr. Alger has been employed by Alger
since 1971 and served as Executive Vice President and Director of Research prior to being named President in
1995. Mr. Tartaro has been employed by Alger since 1990 as a senior research analyst until 1995 and as a Senior
Vice President since 1995.
The portfolio managers responsible for the management of the AST Alger All-Cap Growth Portfolio are
David Alger and Seilai Khoo. Mr. Alger has managed the Portfolio since its inception, while Ms. Khoo has been
managing the Portfolio since June 2000. Mr. Alger has been employed by Alger since 1971 and served as Executive
Vice President and Director of Research prior to being named President in 1995. Ms. Khoo has been employed by
Alger since 1989, and has been a Senior Vice President and Portfolio Manager since 1995.
Fees and Expenses:
Investment Management Fees. ASISI receives a fee, payable each month, for the performance of its
services. ASISI pays each Sub-advisor a portion of such fee for the performance of the Sub-advisory services at
no additional cost to any Portfolio. The Investment Management fee for each Portfolio will differ, reflecting
the differing objectives, policies and restrictions of each Portfolio. Each Portfolio's fee is accrued daily for
the purposes of determining the sale and redemption price of the Portfolio's shares.
The investment management fee rate for the AST Alger Mid-Cap Growth Portfolio, which had not commenced
operations prior to the date of this Prospectus, is an annual rate of .80% of the average daily net assets of the
Portfolio. The investment management fee rate for the AST Alger All-Cap Growth Portfolio, which commenced
operations in January 2000, is an annual rate of .95% of the average daily net assets of the Portfolio.
For more information about investment management fees, including voluntary fee waivers and the fee rates
applicable at various asset levels, and the fees payable by ASISI to the Sub-advisor, please see the Trust's SAI
under "Investment Advisory and Other Services."
Other Expenses. In addition to Investment Management fees, each Portfolio pays other expenses,
including costs incurred in connection with the maintenance of its securities law registrations, printing and
mailing prospectuses and statements of additional information to shareholders, certain office and financial
accounting services, taxes or governmental fees, brokerage commissions, custodial, transfer and shareholder
servicing agent costs, expenses of outside counsel and independent accountants, preparation of shareholder
reports and expenses of trustee and shareholder meetings. The Trust may also pay Participating Insurance
Companies for printing and delivery of certain documents (including prospectuses, semi-annual and annual reports
and any proxy materials) to holders of variable annuity contracts and variable life insurance policies whose
assets are invested in the Trust. Expenses not directly attributable to any specific Portfolio or Portfolios are
allocated on the basis of the net assets of the Portfolios.
Distribution Plan. The Trust has adopted a Distribution Plan (the "Distribution Plan") under Rule 12b-1
under the Investment Company Act of 1940 to permit American Skandia Marketing, Inc. ("ASM"), an affiliate of
ASISI, to receive brokerage commissions in connection with purchases and sales of securities held by the
Portfolios, and to use these commissions to promote the sale of shares of the Portfolios. Under the Distribution
Plan, transactions for the purchase and sale of securities for a Portfolio may be directed to certain brokers for
execution ("clearing brokers") who have agreed to pay part of the brokerage commissions received on these
transactions to ASM for "introducing" transactions to the clearing broker. In turn, ASM will use the brokerage
commissions received as an introducing broker to pay various distribution-related expenses, such as advertising,
printing of sales materials, and payments to dealers. No Portfolio will pay any new fees or charges resulting
from the Distribution Plan, nor is it expected that the brokerage commissions paid by a Portfolio will increase
as the result of implementation of the Distribution Plan.
TAX MATTERS:
Each Portfolio intends to distribute substantially all its net investment income. Dividends from
investment income are expected to be declared and distributed annually although the Trustees of the Trust may
decide to declare dividends at other intervals. Similarly, any net realized long- and short-term capital gains
of each Portfolio will be declared and distributed at least annually either during or after the close of the
Portfolio's fiscal year. Distributions will be made to the various separate accounts of the Participating
Insurance Companies and to qualified plans (not to holders of variable insurance contracts or to plan
participants) in the form of additional shares (not in cash). The result is that the investment performance of
the Portfolios, either in the form of dividends or capital gains, will be reflected in the value of the variable
contracts or the qualified plans.
Holders of variable annuity contracts or variable life insurance policies should consult the
prospectuses of their respective contracts or policies for information on the federal income tax consequences to
such holders, and plan participants should consult any applicable plan documents for information on the federal
income tax consequences to such participants. In addition, variable contract owners and qualified plan
participants may wish to consult with their own tax advisors as to the tax consequences of investments in the
Trust, including the application of state and local taxes.
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FINANCIAL HIGHLIGHTS: The financial highlights table is intended to help you understand the financial
performance for the AST Alger All-Cap Growth Portfolio since its inception. Certain information reflects
financial results for a single Portfolio share. The total returns in the table represent the rate that an
investor would have earned or lost in the Portfolio. Except for the financial information for the period ended
June 30, 2000, which is unaudited, the information has been audited by Deloitte & Touche LLP, the Trust's
independent auditors. The report of the independent auditors, along with the Portfolio's financial statements,
are included in the annual reports of the separate accounts funding the variable annuity contracts and variable
life insurance policies, which are available without charge upon request to the Trust at One Corporate Drive,
Shelton, Connecticut or by calling (800) 752-6342. No financial information is included for the AST Alger
Mid-Cap Growth Portfolio, which had not commenced operations prior to October 23, 2000.
INCREASE (DECREASE) FROM
INVESTMENT OPERATIONS LESS DISTRIBUTIONS
NET ASSET NET NET ASSET
VALUE INVESTMENT NET REALIZED TOTAL FROM FROM NET FROM NET VALUE
PERIOD BEGINNING INCOME & UNREALIZED INVESTMENT INVESTMENT REALIZED TOTAL END
PORTFOLIO ENDED OF PERIOD (LOSS) GAIN (LOSS) OPERATIONS INCOME GAINS DISTRIBUTIONS OF PERIOD
AST Alger All-Cap 06/30/00**(2)$10.00$ -- $(1.23) $(1.23)$ -- $ -- $ -- $8.77
Growth
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(1) Annualized.
(2) Commenced operations on December 31, 1999.
** Unaudited.
RATIOS OF EXPENSES
SUPPLEMENTAL DATA TO AVERAGE NET ASSETS*
AFTER ADVISORY BEFORE ADVISORY RATIO OF NET
NET ASSETS AT PORTFOLIO FEE WAIVER FEE WAIVER INVESTMENT INCOME
TOTAL END OF PERIOD TURNOVER AND EXPENSE AND EXPENSE (LOSS) TO AVERAGE
RETURN (IN 000'S) RATE REIMBURSEMENT REIMBURSEMENT NET ASSETS
(12.30%) $238,798 53% 1.23%(1) 1.23%(1) 0.00%(1)
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CERTAIN RISK FACTORS AND INVESTMENT METHODS:
The following is a description of certain securities and investment methods that the Portfolios may
invest in or use, and certain of the risks associated with such securities and investment methods. The primary
investment focus of each Portfolio is described above under "Investment Objective and Policies" and an investor
should refer to that section to obtain information about each Portfolio. In general, whether a particular
Portfolio may invest in a specific type of security or use an investment method is described above or in the
Company's SAI under "Investment Programs of the Funds." As noted below, however, certain risk factors and
investment methods apply to all or most of the Portfolios.
DERIVATIVE INSTRUMENTS:
To the extent permitted by the investment objectives and policies of a Portfolio, a Portfolio may invest
in securities and other instruments that are commonly referred to as "derivatives." For instance, a Portfolio
may purchase and write (sell) call and put options on securities, securities indices and foreign currencies,
enter into futures contracts and use options on futures contracts, and enter into swap agreements with respect to
foreign currencies, interest rates, and securities indices. In general, derivative instruments are securities or
other instruments whose value is derived from or related to the value of some other instrument or asset.
There are many types of derivatives and many different ways to use them. Some derivatives and
derivative strategies involve very little risk, while others can be extremely risky and can lead to losses in
excess of the amount invested in the derivative. A Portfolio may use derivatives to hedge against changes in
interest rates, foreign currency exchange rates or securities prices, to generate income, as a low cost method of
gaining exposure to a particular securities market without investing directly in those securities, or for other
reasons.
The use of these strategies involves certain special risks, including the risk that the price movements
of derivative instruments will not correspond exactly with those of the investments from which they are derived.
In addition, strategies involving derivative instruments that are intended to reduce the risk of loss can also
reduce the opportunity for gain. Furthermore, regulatory requirements for a Portfolio to set aside assets to
meet its obligations with respect to derivatives may result in a Portfolio being unable to purchase or sell
securities when it would otherwise be favorable to do so, or in a Portfolio needing to sell securities at a
disadvantageous time. A Portfolio may also be unable to close out its derivatives positions when desired. There
is no assurance that a Portfolio will engage in derivative transactions. Certain derivative instruments and some
of their risks are described in more detail below.
Options. Most of the Portfolios may purchase or write (sell) call or put options on securities,
financial indices or currencies. The purchaser of an option on a security or currency obtains the right to
purchase (in the case of a call option) or sell (in the case of a put option) the security or currency at a
specified price within a limited period of time. Upon exercise by the purchaser, the writer (seller) of the
option has the obligation to buy or sell the underlying security at the exercise price. An option on a
securities index is similar to an option on an individual security, except that the value of the option depends
on the value of the securities comprising the index, and all settlements are made in cash.
A Portfolio will pay a premium to the party writing the option when it purchases an option. In order
for a call option purchased by a Portfolio to be profitable, the market price of the underlying security must
rise sufficiently above the exercise price to cover the premium and other transaction costs. Similarly, in order
for a put option to be profitable, the market price of the underlying security must decline sufficiently below
the exercise price to cover the premium and other transaction costs.
Generally, the Portfolios will write call options only if they are covered (i.e., the Fund owns the
security subject to the option or has the right to acquire it without additional cost). By writing a call
option, a Portfolio assumes the risk that it may be required to deliver a security for a price lower than its
market value at the time the option is exercised. Effectively, a Portfolio that writes a covered call option
gives up the opportunity for gain above the exercise price should the market price of the underlying security
increase, but retains the risk of loss should the price of the underlying security decline. A Portfolio will
write call options in order to obtain a return from the premiums received and will retain the premiums whether or
not the options are exercised, which will help offset a decline in the market value of the underlying
securities. A Portfolio that writes a put option likewise receives a premium, but assumes the risk that it may
be required to purchase the underlying security at a price in excess of its current market value.
A Portfolio may sell an option that it has previously purchased prior to the purchase or sale of the
underlying security. Any such sale would result in a gain or loss depending on whether the amount received on
the sale is more or less than the premium and other transaction costs paid on the option. A Portfolio may
terminate an option it has written by entering into a closing purchase transaction in which it purchases an
option of the same series as the option written.
Futures Contracts and Related Options. The AST Alger All-Cap Growth Portfolio may enter into financial
futures contracts and related options. The seller of a futures contract agrees to sell the securities or
currency called for in the contract and the buyer agrees to buy the securities or currency at a specified price
at a specified future time. Financial futures contracts may relate to securities indices, interest rates or
foreign currencies. Futures contracts are usually settled through net cash payments rather than through actual
delivery of the securities underlying the contract. For instance, in a stock index futures contract, the two
parties agree to take or make delivery of an amount of cash equal to a specified dollar amount times the
difference between the stock index value when the contract expires and the price specified in the contract. The
Portfolio may use futures contracts to hedge against movements in securities prices, interest rates or currency
exchange rates, or as an efficient way to gain exposure to these markets.
An option on a futures contract gives the purchaser the right, in return for the premium paid, to assume
a position in the contract at the exercise price at any time during the life of the option. The writer of the
option is required upon exercise to assume the opposite position.
Under regulations of the Commodity Futures Trading Commission ("CFTC"), no Portfolio will:
(i) purchase or sell futures or options on futures contracts or stock indices for purposes other
than bona fide hedging transactions (as defined by the CFTC) if as a result the sum of the initial margin
deposits and premiums required to establish positions in futures contracts and related options that do not fall
within the definition of bona fide hedging transactions would exceed 5% of the fair market value of each
Portfolio's net assets; and
(ii) enter into any futures contracts if the aggregate amount of that Portfolio's commitments under
outstanding futures contracts positions would exceed the market value of its total assets.
Risks of Options and Futures Contracts. Options and futures contracts can be highly volatile and their
use can reduce a Portfolio's performance. Successful use of these strategies requires the ability to predict
future movements in securities prices, interest rates, currency exchange rates, and other economic factors. If a
Sub-advisor seeks to protect a Portfolio against potential adverse movements in the relevant financial markets
using these instruments, and such markets do not move in the predicted direction, the Portfolio could be left in
a less favorable position than if such strategies had not been used. A Portfolio's potential losses from the use
of futures extends beyond its initial investment in such contracts.
Among the other risks inherent in the use of options and futures are (a) the risk of imperfect
correlation between the price of options and futures and the prices of the securities or currencies to which they
relate, (b) the fact that skills needed to use these strategies are different from those needed to select
portfolio securities and (c) the possible need to defer closing out certain positions to avoid adverse tax
consequences. With respect to options on stock indices and stock index futures, the risk of imperfect
correlation increases the more the holdings of the Portfolio differ from the composition of the relevant index.
These instruments may not have a liquid secondary market. Option positions established in the over-the-counter
market may be particularly illiquid and may also involve the risk that the other party to the transaction fails
to meet its obligations.
FOREIGN SECURITIES:
Investments in securities of foreign issuers may involve risks that are not present with domestic
investments. While investments in foreign securities can reduce risk by providing further diversification, such
investments involve "sovereign risks" in addition to the credit and market risks to which securities generally
are subject. Sovereign risks includes local political or economic developments, potential nationalization,
withholding taxes on dividend or interest payments, and currency blockage (which would prevent cash from being
brought back to the United States). Compared to United States issuers, there is generally less publicly
available information about foreign issuers and there may be less governmental regulation and supervision of
foreign stock exchanges, brokers and listed companies. Foreign issuers are not generally subject to uniform
accounting and auditing and financial reporting standards, practices and requirements comparable to those
applicable to domestic issuers. In some countries, there may also be the possibility of expropriation or
confiscatory taxation, difficulty in enforcing contractual and other obligations, political or social instability
or revolution, or diplomatic developments that could affect investments in those countries.
Securities of some foreign issuers are less liquid and their prices are more volatile than securities of
comparable domestic issuers. Further, it may be more difficult for the Trust's agents to keep currently informed
about corporate actions and decisions that may affect the price of portfolio securities. Brokerage commissions
on foreign securities exchanges, which may be fixed, may be higher than in the United States. Settlement of
transactions in some foreign markets may be less frequent or less reliable than in the United States, which could
affect the liquidity of investments. For example, securities that are traded in foreign markets may trade on
days (such as Saturday or Holidays) when a Portfolio does not compute its price or accept purchase or redemption
orders. As a result, a shareholder may not be able to act on developments taking place in foreign countries as
they occur.
American Depositary Receipts ("ADRs"), European Depositary Receipts ("EDRs"), Global Depositary Receipts
("GDRs"), and International Depositary Receipts ("IDRs"). ADRs are U.S. dollar-denominated receipts generally
issued by a domestic bank evidencing its ownership of a security of a foreign issuer. ADRs generally are
publicly traded in the United States. ADRs are subject to many of the same risks as direct investments in
foreign securities, although ownership of ADRs may reduce or eliminate certain risks associated with holding
assets in foreign countries, such as the risk of expropriation. EDRs, GDRs and IDRs are receipts similar to ADRs
that typically trade in countries other than the United States.
Depositary receipts may be issued as sponsored or unsponsored programs. In sponsored programs, the
issuer makes arrangements to have its securities traded as depositary receipts. In unsponsored programs, the
issuer may not be directly involved in the program. Although regulatory requirements with respect to sponsored
and unsponsored programs are generally similar, the issuers of unsponsored depositary receipts are not obligated
to disclose material information in the United States and, therefore, the import of such information may not be
reflected in the market value of such securities.
Developing Countries. Although none of the Portfolios invest primarily in securities of issuers in
developing countries, many of the Funds may invest in these securities to some degree. Many of the risks
described above with respect to investing in foreign issuers are accentuated when the issuers are located in
developing countries. Developing countries may be politically and/or economically unstable, and the securities
markets in those countries may be less liquid or subject to inadequate government regulation and supervision.
Developing countries have often experienced high rates of inflation or sharply devalued their currencies against
the U.S. dollar, causing the value of investments in companies located in these countries to decline. Securities
of issuers in developing countries may be more volatile and, in the case of debt securities, more uncertain as to
payment of interest and principal. Investments in developing countries may include securities created through
the Brady Plan, under which certain heavily-indebted countries have restructured their bank debt into bonds.
Currency Fluctuations. Investments in foreign securities may be denominated in foreign currencies. The
value of a Portfolio's investments denominated in foreign currencies may be affected, favorably or unfavorably,
by exchange rates and exchange control regulations. A Portfolio's share price may, therefore, also be affected
by changes in currency exchange rates. Foreign currency exchange rates generally are determined by the forces of
supply and demand in foreign exchange markets, including perceptions of the relative merits of investment in
different countries, actual or perceived changes in interest rates or other complex factors. Currency exchange
rates also can be affected unpredictably by the intervention or the failure to intervene by U.S. or foreign
governments or central banks, or by currency controls or political developments in the U.S. or abroad. In
addition, a Portfolio may incur costs in connection with conversions between various currencies.
Foreign Currency Transactions. A Portfolio that invests in securities denominated in foreign currencies
will need to engage in foreign currency exchange transactions. Such transactions may occur on a "spot" basis at
the exchange rate prevailing at the time of the transaction. Alternatively, a Portfolio may enter into forward
foreign currency exchange contracts. A forward contract involves an obligation to purchase or sell a specified
currency at a specified future date at a price set at the time of the contract. A Portfolio may enter into a
forward contract when it wishes to "lock in" the U.S. dollar price of a security it expects to or is obligated to
purchase or sell in the future. This practice may be referred to as "transaction hedging." In addition, when a
Portfolio's Sub-advisor believes that the currency of a particular country may suffer or enjoy a significant
movement compared to another currency, the Portfolio may enter into a forward contract to sell or buy the first
foreign currency (or a currency that acts as a proxy for such currency). This practice may be referred to as
"portfolio hedging." In any event, the precise matching of the forward contract amounts and the value of the
securities involved generally will not be possible. No Portfolio will enter into a forward contract if it would
be obligated to sell an amount of foreign currency in excess of the value of the Fund's securities or other
assets denominated in or exposed to that currency, or will sell an amount of proxy currency in excess of the
value of securities denominated in or exposed to the related currency. The effect of entering into a forward
contract on a Portfolio's share price will be similar to selling securities denominated in one currency and
purchasing securities denominated in another. Although a forward contract may reduce a Portfolio's losses on
securities denominated in foreign currency, it may also reduce the potential for gain on the securities if the
currency's value moves in a direction not anticipated by the Sub-advisor. In addition, foreign currency hedging
may entail significant transaction costs.
COMMON AND PREFERRED STOCKS:
Stocks represent shares of ownership in a company. Generally, preferred stock has a specified dividend
and ranks after bonds and before common stocks in its claim on the company's income for purposes of receiving
dividend payments and on the company's assets in the event of liquidation. (Some of the Sub-advisors consider
preferred stocks to be equity securities for purposes of the various Portfolios' investment policies and
restrictions, while others consider them fixed income securities.) After other claims are satisfied, common
stockholders participate in company profits on a pro rata basis; profits may be paid out in dividends or
reinvested in the company to help it grow. Increases and decreases in earnings are usually reflected in a
company's stock price, so common stocks generally have the greatest appreciation and depreciation potential of
all corporate securities.
FIXED INCOME SECURITIES:
Most of the Portfolios, including the Portfolios that invest primarily in equity securities, may invest
to some degree in bonds, notes, debentures and other obligations of corporations and governments. Fixed-income
securities are generally subject to two kinds of risk: credit risk and market risk. Credit risk relates to the
ability of the issuer to meet interest and principal payments as they come due. The ratings given a security by
Moody's Investors Service, Inc. ("Moody's") and Standard & Poor's Corporation ("S&P"), which are described in
detail in the Appendix to the Company's SAI, provide a generally useful guide as to such credit risk. The lower
the rating, the greater the credit risk the rating service perceives to exist with respect to the security.
Increasing the amount of Portfolio assets invested in lower-rated securities generally will increase the
Portfolio's income, but also will increase the credit risk to which the Portfolio is subject. Market risk relates
to the fact that the prices of fixed income securities generally will be affected by changes in the level of
interest rates in the markets generally. An increase in interest rates will tend to reduce the prices of such
securities, while a decline in interest rates will tend to increase their prices. In general, the longer the
maturity or duration of a fixed income security, the more its value will fluctuate with changes in interest rates.
Lower-Rated Fixed Income Securities. Lower-rated high-yield bonds (commonly known as "junk bonds") are
those that are rated lower than the four highest categories by a nationally recognized statistical rating
organization (for example, lower than Baa by Moody's or BBB by S&P), or, if not rated, are of equivalent
investment quality as determined by the Sub-advisor. Lower-rated bonds are generally considered to be high risk
investments as they are subject to greater credit risk than higher-rated bonds. In addition, the market for
lower-rated bonds may be thinner and less active than the market for higher-rated bonds, and the prices of
lower-rated high-yield bonds may fluctuate more than the prices of higher-rated bonds, particularly in times of
market stress. Because the risk of default is higher in lower-rated bonds, a Sub-advisor's research and analysis
tend to be very important ingredients in the selection of these bonds. In addition, the exercise by an issuer of
redemption or call provisions that are common in lower-rated bonds may result in their replacement by lower
yielding bonds.
Bonds rated in the four highest ratings categories are frequently referred to as "investment grade."
However, bonds rated in the fourth category (Baa or BBB) are considered medium grade and may have speculative
characteristics.
MORTGAGE-BACKED SECURITIES:
Mortgage-backed securities are securities representing interests in "pools" of mortgage loans on
residential or commercial real property and that generally provide for monthly payments of both interest and
principal, in effect "passing through" monthly payments made by the individual borrowers on the mortgage loans
(net of fees paid to the issuer or guarantor of the securities). Mortgage-backed securities are frequently
issued by U.S. Government agencies or Government-sponsored enterprises, and payments of interest and principal on
these securities (but not their market prices) may be guaranteed by the full faith and credit of the U.S.
Government or by the agency only, or may be supported by the issuer's ability to borrow from the U.S. Treasury.
Mortgage-backed securities created by non-governmental issuers may be supported by various forms of insurance or
guarantees.
Like other fixed-income securities, the value of a mortgage-backed security will generally decline when
interest rates rise. However, when interest rates are declining, their value may not increase as much as other
fixed-income securities, because early repayments of principal on the underlying mortgages (arising, for example,
from sale of the underlying property, refinancing, or foreclosure) may serve to reduce the remaining life of the
security. If a security has been purchased at a premium, the value of the premium would be lost in the event of
prepayment. Prepayments on some mortgage-backed securities may necessitate that a Portfolio find other
investments, which, because of intervening market changes, will often offer a lower rate of return. In addition,
the mortgage securities market may be particularly affected by changes in governmental regulation or tax policies.
Collateralized Mortgage Obligations (CMOs). CMOs are a type of mortgage pass-through security that are
typically issued in multiple series with each series having a different maturity. Principal and interest
payments from the underlying collateral are first used to pay the principal on the series with the shortest
maturity; in turn, the remaining series are paid in order of their maturities. Therefore, depending on the type
of CMOs in which a Portfolio invests, the investment may be subject to greater or lesser risk than other types of
mortgage-backed securities.
Stripped Mortgage-Backed Securities. Stripped mortgage-backed securities are mortgage pass-through
securities that have been divided into interest and principal components. "IOs" (interest only securities)
receive the interest payments on the underlying mortgages while "POs" (principal only securities) receive the
principal payments. The cash flows and yields on IO and PO classes are extremely sensitive to the rate of
principal payments (including prepayments) on the underlying mortgage loans. If the underlying mortgages
experience higher than anticipated prepayments, an investor in an IO class of a stripped mortgage-backed security
may fail to recoup fully its initial investment, even if the IO class is highly rated or is derived from a
security guaranteed by the U.S. Government. Conversely, if the underlying mortgage assets experience slower than
anticipated prepayments, the price on a PO class will be affected more severely than would be the case with a
traditional mortgage-backed security. Unlike other fixed-income and other mortgage-backed securities, the value
of IOs tends to move in the same direction as interest rates.
ASSET-BACKED SECURITIES:
Asset-backed securities conceptually are similar to mortgage pass-through securities, but they are
secured by and payable from payments on assets such as credit card, automobile or trade loans, rather than
mortgages. The credit quality of these securities depends primarily upon the quality of the underlying assets
and the level of credit support or enhancement provided. In addition, asset-backed securities involve prepayment
risks that are similar in nature to those of mortgage pass-through securities.
CONVERTIBLE SECURITIES AND WARRANTS:
Certain of the Portfolios may invest in convertible securities. Convertible securities are bonds,
notes, debentures and preferred stocks that may be converted into or exchanged for shares of common stock. Many
convertible securities are rated below investment grade because they fall below ordinary debt securities in order
of preference or priority on the issuer's balance sheet. Convertible securities generally participate in the
appreciation or depreciation of the underlying stock into which they are convertible, but to a lesser degree.
Frequently, convertible securities are callable by the issuer, meaning that the issuer may force conversion
before the holder would otherwise choose.
Warrants are options to buy a stated number of shares of common stock at a specified price any time
during the life of the warrants. The value of warrants may fluctuate more than the value of the securities
underlying the warrants. A warrant will expire without value if the rights under such warrant are not exercised
prior to its expiration date.
WHEN-ISSUED, DELAYED-DELIVERY AND FORWARD COMMITMENT TRANSACTIONS:
The Alger Mid-Cap Growth Portfolio may purchase securities on a when-issued, delayed-delivery or forward
commitment basis. These transactions generally involve the purchase of a security with payment and delivery due
at some time in the future. A Portfolio does not earn interest on such securities until settlement and bears the
risk of market value fluctuations in between the purchase and settlement dates. If the seller fails to complete
the sale, the Fund may lose the opportunity to obtain a favorable price and yield. While the Portfolio will
generally engage in such when-issued, delayed-delivery and forward commitment transactions with the intent of
actually acquiring the securities, a Portfolio may sometimes sell such a security prior to the settlement date.
Certain Portfolios may also sell securities on a delayed-delivery or forward commitment basis.
If the Portfolio does so, it will not participate in future gains or losses on the security. If the other party
to such a transaction fails to pay for the securities, the Portfolio could suffer a loss.
ILLIQUID AND RESTRICTED SECURITIES:
Subject to guidelines adopted by the Trustees of the Trust, the AST Alger All-Cap Growth Portfolio may
invest up to 15% of its net assets in illiquid securities and the AST Alger Mid-Cap Growth Portfolio, may invest
up to 10% of its net assets in illiquid securities. Illiquid securities are those that, because of the absence
of a readily available market or due to legal or contractual restrictions on resale, cannot be sold within seven
days in the ordinary course of business at approximately the amount at which the Fund has valued the investment.
Therefore, a Portfolio may find it difficult to sell illiquid securities at the time considered most advantageous
by its Sub-advisor and may incur expenses that would not be incurred in the sale of securities that were freely
marketable.
Certain securities that would otherwise be considered illiquid because of legal restrictions on resale
to the general public may be traded among qualified institutional buyers under Rule 144A of the Securities Act of
1933. These Rule 144A securities, and well as commercial paper that is sold in private placements under Section
4(2) of the Securities Act, may be deemed liquid by the Portfolio's Sub-advisor under the guidelines adopted by
the Trustees of the Trust. However, the liquidity of a Portfolio's investments in Rule 144A securities could be
impaired if trading does not develop or declines.
REPURCHASE AGREEMENTS:
Each Portfolio may enter into repurchase agreements. Repurchase agreements are agreements by which a
Portfolio purchases a security and obtains a simultaneous commitment from the seller to repurchase the security
at an agreed upon price and date. The resale price is in excess of the purchase price and reflects an agreed
upon market rate unrelated to the coupon rate on the purchased security. Repurchase agreements must be fully
collateralized and can be entered into only with well-established banks and broker-dealers that have been deemed
creditworthy by the Sub-advisor. Repurchase transactions are intended to be short-term transactions, usually
with the seller repurchasing the securities within seven days. Repurchase agreements that mature in more than
seven days are subject to a Portfolio's limit on illiquid securities.
A Portfolio that enters into a repurchase agreement may lose money in the event that the other party
defaults on its obligation and the Portfolio is delayed or prevented from disposing of the collateral. A
Portfolio also might incur a loss if the value of the collateral declines, and it might incur costs in selling
the collateral or asserting its legal rights under the agreement. If a defaulting seller filed for bankruptcy or
became insolvent, disposition of collateral might be delayed pending court action.
BORROWING:
Each Portfolio may borrow money from banks. Each Portfolio's borrowings are limited so that immediately
after such borrowing the value of the Portfolio's assets (including borrowings) less its liabilities (not
including borrowings) is at least three times the amount of the borrowings. Should a Portfolio, for any reason,
have borrowings that do not meet the above test, such Portfolio must reduce such borrowings so as to meet the
necessary test within three business days. If a Portfolio borrows money, its share price may fluctuate more
widely until the borrowing is repaid.
LENDING PORTFOLIO SECURITIES:
Each Portfolio may lend securities with a value of up to 33 1/3% of its total assets to broker-dealers,
institutional investors, or others for the purpose of realizing additional income. Voting rights on loaned
securities typically pass to the borrower, although a Portfolio has the right to terminate a securities loan,
usually within three business days, in order to vote on significant matters or for other reasons. All securities
loans will be collateralized by cash or securities issued or guaranteed by the U.S. Government or its agencies at
least equal in value to the market value of the loaned securities. Nonetheless, lending securities involves
certain risks, including the risk that the Portfolio will be delayed or prevented from recovering the collateral
if the borrower fails to return a loaned security.
OTHER INVESTMENT COMPANIES:
The Company has made arrangements with certain money market mutual funds so that the Sub-advisors for
the various Portfolios can "sweep" excess cash balances of the Portfolios to those funds for temporary investment
purposes. In addition, certain Sub-advisors may invest Portfolio assets in money market funds that they advise
or in other investment companies. Mutual funds pay their own operating expenses, and the Portfolios, as
shareholders in the money market funds, will indirectly pay their proportionate share of such funds' expenses.
SHORT SALES "AGAINST THE BOX":
While neither Portfolio will make short sales generally, the AST Alger Mid-Cap Growth Portfolio may make
short sales "against the box." A short sale against the box involves selling a security that the Portfolio owns,
or has the right to obtain without additional costs, for delivery at a specified date in the future. A Portfolio
may make a short sale against the box to hedge against anticipated declines in the market price of a portfolio
security. If the value of the security sold short increases instead, the Portfolio loses the opportunity to
participate in the gain.
Mailing Address
American Skandia Trust
One Corporate Drive
Shelton, CT 06484
Investment Manager
American Skandia Investment Services, Incorporated
One Corporate Drive
Shelton, CT 06484
Sub-Advisor
Fred Alger Management, Inc.
Custodians
PFPC Trust Company
Airport Business Center, International Court 2
200 Stevens Drive
Philadelphia, PA 19113
The Chase Manhattan Bank
One Pierrepont Plaza
Brooklyn, NY 11201
Administrator
Transfer and Shareholder Servicing Agent
PFPC Inc.
103 Bellevue Parkway
Wilmington, DE 19809
Independent Accountants
Deloitte & Touche LLP
Two World Financial Center
New York, NY 10281
Legal Counsel
Stradley Ronon Stevens & Young, LLP
2600 One Commerce Square
Philadelphia, PA 19103
INVESTOR INFORMATION SERVICES:
Shareholder inquiries should be made by calling (800) 752-6342 or by writing to the American Skandia
Trust at One Corporate Drive, Shelton, Connecticut 06484.
Additional information about the Portfolios is included in a Statement of Additional Information, which
is incorporated by reference into this Prospectus. Additional information about the Portfolios' investments is
available in the annual and semi-annual reports to holders of variable annuity contracts and variable life
insurance policies. In the annual reports, you will find a discussion of the market conditions and investment
strategies that significantly affected each Portfolio's performance during its last fiscal year. The Statement
of Additional Information and additional copies of annual and semi-annual reports are available without charge by
calling the above number.
The information in the Trust's filings with the Securities and Exchange Commission (including the
Statement of Additional Information) is available from the Commission. Copies of this information may be
obtained, upon payment of duplicating fees, by electronic request to [email protected] or by writing the Public
Reference Section of the Commission, Washington, D.C. 20549-0102. The information can also be reviewed and
copied at the Commission's Public Reference Room in Washington, D.C. Information on the operation of the Public
Reference Room may be obtained by calling the Commission at 1-800-942-8090. Finally, information about the Trust
is available on the EDGAR database on the Commission's Internet site at http://www.sec.gov.
Investment Company Act File No. 811-5186
STATEMENT OF ADDITIONAL INFORMATION
FOR
AMERICAN SKANDIA TRUST
Dated January [ ], 2001
Acquisition of the Assets of
the AST Alger Mid-Cap Growth Portfolio,
a series of American Skandia Trust
By and in exchange for shares of the
the AST Alger All-Cap Growth Portfolio,
also a series of American Skandia Trust
This Statement of Additional Information (SAI) relates specifically to the proposed delivery of
substantially all of the assets of the AST Alger Mid-Cap Growth Portfolio for shares of the AST Alger
All-Cap Growth Portfolio.
This SAI consists of this Cover Page and the following documents. Each of these documents is
enclosed with and is legally considered to be a part of this SAI:
1. American Skandia Trust's Statement of Additional Information dated October 23, 2000.
2. American Skandia Trust's Annual Report to Shareholders dated December 31, 1999.
3. American Skandia Trust's Semiannual Report to Shareholders for the six months ended
June 30, 2000.
4. Projected (Pro Forma) after Transaction Financial Statements.
This SAI is not a Prospectus; you should read this SAI in conjunction with the Prospectus/Proxy
Statement dated January [ ], 2001, relating to the above-referenced transaction. You can request a copy
of the Prospectus/Proxy Statement by calling 1-800-752-6342 or by writing to the American Skandia Trust at
One Corporate Drive, P.O. Box 883, Shelton, CT 06484.
Attachments to SAI (page 1 of 4)
The American Skandia Trust Statement of Additional Information dated October 23, 2000 is part of
this SAI and will be provided to all shareholders requesting this SAI. For purposes of this EDGAR filing,
the above-referenced SAI is incorporated herein by reference to the Trust's SAI filed under Rule 497(c) on
October 25, 2000.
Attachments to SAI (page 2 of 4)
American Skandia Trust's Annual Report to Shareholders dated December 31, 1999 is part of this
SAI and will be provided to all shareholders requesting this SAI. For purposes of this EDGAR filing, the
above-referenced Shareholder Report is incorporated herein by reference to the electronic filing made on
February 23, 2000.
Attachments to SAI (page 3 of 4)
American Skandia Trust's Semiannual Report to Shareholders dated June 30, 2000 is part of this
SAI and will be provided to all shareholders requesting this SAI. For purposes of this EDGAR filing, the
above-referenced Shareholder Report is incorporated herein by reference to the electronic filing made on
August 22, 2000.
Attachments to SAI (page 4 of 4)
The following are projected (pro forma) financial statements that were prepared to indicate the
anticipated financial information for the All-Cap Portfolio following the completion of the
reorganization. They consist of a [Pro Forma Combining Statement of Assets and Liabilities]; a Pro Forma
Combining Statement of Operations; notes relating to the combining Statements; and a Combined Pro Forma
Statement of Investments.
AMERICAN SKANDIA TRUST
PRO FORMA STATEMENT OF ASSETS AND LIABILITIES
November 20, 2000 (Unaudited)
(Amounts in thousands, except per share amounts)
AST Alger Mid-Cap Growth AST Alger All-Cap Growth Adjustments Pro Forma Combined (Note 1)
---------------------------- ------------------------- ------------ -------------------------
Assets
Investments in securities at value (A) ................................................... .$ 971,428,357 $ 207,658,689 $ $ 1,179,087,046
Foreign currency at value (B)............................................................. 0
Unrealized appreciation on foreign currency exchange contracts............................ 0
Receivable for:
Securities sold....................................................................... 3,998,552 1,963,212 5,961,764
Dividends and interest................................................................ 12,532 94,031 106,563
--------------------- ------------------------- ------------ -------------------------
Total Assets.................................................................. 975,439,441 209,715,932 1,185,155,373
--------------------- ------------------------- ------------ -------------------------
Liabilities
Cash overdraft............................................................................ 3,339,261 840,074 4,179,335
Payable for:
Securities purchased.................................................................. 4,116,619 1,899,017 6,015,636
Futures variation margin.............................................................. 0
Advisory fees ........................................................................ 137,979 145,481 55,699 339,159
Shareholder servicing fees ........................................................... 19,490 12,088 31,578
Accrued dividends .................................................................... 0
Accrued expenses and other liabilities ................................................... 6,247 57,512 (4,790) 58,969
--------------------- ------------------------- ------------ -------------------------
Total Liabilities............................................................. 7,619,596 2,954,172 50,909 10,624,677
--------------------- ------------------------- ------------ -------------------------
Net Assets.............................................................................................. $ 967,819,845 $ 206,761,760 $ (50,909) $ 1,174,530,696
===================== ========================= ============ =========================
Components of Net Assets
Common stock (unlimited number of shares authorized, $.001 par
value per share)..................................................................................... $ 100,528 $ 29,545 $ $ 130,073
Additional paid-in capital.............................................................................. 1,005,092,186 305,878,747 1,310,970,933
Undistributed net investment income (loss).............................................................. 15,821 (174,287) (50,909) (209,375)
Accumulated net realized gain (loss) on investments.................................................... (536,473) (69,735,158) (70,271,631)
Accumulated net unrealized appreciation (depreciation) on investments....... (36,852,217) (29,237,087) (66,089,304)
--------------------- ------------------------- ------------ -------------------------
Net Assets.............................................................................................. $ 967,819,845 $ 206,761,760 $ (50,909) $ 1,174,530,696
===================== ========================= ============ =========================
Shares of common stock outstanding...................................................................... 100,527,576 29,545,237 167,838,407
Net asset value, offering and redemption price per share ............................................... $ 9.63 $ 7.00 $ $ 7.00
===================== ========================= ============ =========================
(A) Investments at cost................................................................................. $ 1,008,280,575 $ 236,895,776 $ $ 1,245,176,351
===================== ========================= ============ =========================
(B) Foreign currency at cost............................................................................ $ -- $ -- $ $
See Notes to Pro Forma Financial Statements.
AMERICAN SKANDIA TRUST
PRO FORMA STATEMENT OF OPERATIONS
For the Period Ended November 20, 2000 (Unaudited)
(Amounts in thousands)
AST Alger Mid-Cap Growth (1) AST Alger All-Cap Growth Adjustments Pro Forma
Combined (Note 1)
--------------------- ------------------------ -------------------------
---------------------
Investment Income
Interest.................................................................................. $ 173,240 $ 1,621,428 $ $
1,794,668
Dividends ................................................................................ 6,296 250,236
256,532
Foreign taxes withheld ................................................................... 0 (3,055)
(3,055)
--------------------- ------------------------
---------------------
Total Investment Income....................................................... 179,536 1,868,609
2,048,145
--------------------- ------------------------
---------------------
Expenses
Investment advisory fees ................................................................. 155,920 1,631,087 29,235 (a)
1,816,242
Shareholder servicing fees ............................................................... 19,490 169,798
189,288
Administration and accounting fees........................................................ 9,498 162,422 (3,883)(b)
168,037
Custodian fees............................................................................ 2,670 70,184 (730)(c)
72,124
Audit and legal fees ..................................................................... 1,644 2,599
4,243
Trustees' fees............................................................................ 480 1,318
1,798
Miscellaneous expenses.................................................................... 478 5,487 (177)(d)
5,788
--------------------- ------------------------ -------------------------
---------------------
Total Expenses................................................................ 190,180 2,042,895 24,445
2,257,520
Less: Advisory fee waivers and expense
reimbursements.............................................................. (26,464) -- 26,464
0
--------------------- ------------------------ -------------------------
---------------------
Net Expenses.................................................................. 163,716 2,042,895 50,909
2,257,520
--------------------- ------------------------ -------------------------
---------------------
Net Investment Income (Loss)............................................................................ 15,820 (174,286) (50,909)
(209,375)
--------------------- ------------------------ -------------------------
---------------------
Realized and Unrealized Gain (Loss) on
Investments
Net realized gain (loss) on:
Securities.................................................................... (536,473) (69,735,158)
(70,271,631)
Foreign currency transactions................................................. -- --
--
--------------------- ------------------------
---------------------
Net realized gain (loss) (536,473) (69,735,158)
(70,271,631)
--------------------- ------------------------
---------------------
Net change in unrealized appreciation (depreciation) on:
Securities............................................................................. (36,852,217) (29,237,086)
(66,089,303)
--------------------- ------------------------
---------------------
Net change in unrealized appreciation (depreciation)...................................... (36,852,217) (29,237,086)
(66,089,303)
--------------------- ------------------------
---------------------
Net gain (loss) on investments............................................................ (37,388,690) (98,972,244)
(136,360,934)
--------------------- ------------------------
---------------------
Net Increase (Decrease) in Net Assets Resulting
from Operations......................................................................... $ (37,372,870) $ (99,146,530) $ (50,909) $
(136,570,309)
===================== ======================== =========================
=====================
(1) Commenced operations on November 13, 2000
(a) Reflects increased rate of management fee applicable to AST Alger All-Cap Growth Portfolio
(b) Reflects savings in administration and accounting fees from the consolidation of Portfolio assets
(c) Reflects the savings in asset-based and transaction-based custody fees from the consolidation of Portfolio assets
(d) Reflects the elimination of certain expenses charged to individual Portfolios
PRO FORMA SCHEDULE OF INVESTMENTS
AST ALGER MID-CAP GROWTH/AST ALGER ALL-CAP GROWTH
NOVEMBER 20, 2000 (UNAUDITED)
ALGER MID-CAP ALGER ALL-CAP ALGER MID-CAP ALGER ALL-CAP
GROWTH GROWTH PRO FORMA GROWTH GROWTH
PRO FORMA
SHARES SHARES COMBINED VALUE ($) VALUE ($)
COMBINED ($)
COMMON STOCK
ADVERTISING LAMAR ADVERTISING CO. 265,600 - 265,600 10,358,400 -
10,358,400
AEROSPACE GENERAL DYNAMICS CORP. 94,500 - 94,500 6,898,500 -
6,898,500
AIRLINES CONTINENTAL AIRLINES INC CL-B 90,800 - 90,800 4,244,900 -
4,244,900
BROADCASTING ATamp;T CORP.-LIBERTY MEDIA GROUP CL-A - 73,000 73,000 - 1,131,500
1,131,500
BUILDING MATERIALS HOME DEPOT, INC. - 135,250 135,250 - 5,257,844
5,257,844
BUSINESS SERVICES OPENWAVE SYSTEMS, INC. 130,803 56,900 187,703 10,423,384 4,534,219
14,957,603
CABLE TELEVISION COMCAST CORP. CL-A - 74,100 74,100 - 2,649,075
2,649,075
COMPUTER HARDWARE DELL COMPUTER CORP. - 62,700 62,700 - 1,465,613
1,465,613
COMPUTER SERVICES & SOFTWARE AMERICA ONLINE, INC. - 91,400 91,400 - 4,304,026
4,304,026
ARIBA, INC. - 58,900 58,900 - 3,968,388
3,968,388
BEA SYSTEMS, INC. - 47,400 47,400 - 2,903,250
2,903,250
CISCO SYTEMS, INC. - 145,600 145,600 - 7,462,000
7,462,000
COMMERCE ONE, INC. 358,300 36,800 395,100 14,421,575 1,481,200
15,902,775
CSG SYSTEMS INTL, INC. 109,400 - 109,400 4,799,925 -
4,799,925
EMC CORP. MA - 43,500 43,500 - 3,493,594
3,493,594
EXODUS COMMUNICATIONS, INC. 133,400 60,400 193,800 3,485,075 1,577,950
5,063,025
I2 TECHNOLOGIES, INC. - 38,465 38,465 - 4,394,626
4,394,626
INTUIT, INC. 599,100 - 599,100 31,976,963 -
31,976,963
MERCURY INTERACTIVE CORP - 30,000 30,000 - 2,437,500
2,437,500
ORACLE CORP. - 171,200 171,200 - 4,237,200
4,237,200
PEOPLESOFT INC. 437,600 - 437,600 16,984,350 -
16,984,350
SOLECTRON CORP. - 136,100 136,100 - 4,669,931
4,669,931
SUN MICROSYSTEMS, INC. - 92,100 92,100 - 7,517,663
7,517,663
YAHOO!, INC. - 6,300 6,300 - 307,913
307,913
CONSUMER PRODUCTS & SERVICES SOUTHERN ENERGY, INC. 37,800 - 37,800 876,488 -
876,488
DIVERSIFIED TYCO INTERNATIONAL LTD. - 49,400 49,400 - 2,741,700
2,741,700
ELECTRONIC COMPONENTS & EQUIPMENT ALTERA CORP. 600,900 126,200 727,100 18,102,113 3,801,775
21,903,888
BEST BUY CO., INC. 181,600 - 181,600 5,902,000 -
5,902,000
FLEXTRONICS INTERNATIONAL LTD 97,900 - 97,900 2,799,328 -
2,799,328
GENERAL ELECTRIC CO. - 130,000 130,000 - 6,508,125
6,508,125
MICROCHIP TECHNOLOGY, INC. 977,900 - 977,900 26,831,131 -
26,831,131
SANMINA CORP. 314,100 - 314,100 29,289,825 -
29,289,825
TEXAS INSTRUMENTS, INC. - 24,550 24,550 - 1,038,772
1,038,772
VISHAY INTERTECHNOLOGY, INC. 164,500 - 164,500 4,400,375 -
4,400,375
ENERGY SERVICES BJ SERVICES CO 596,500 21,400 617,900 35,491,750 1,273,300
36,765,050
CALPINE CORP 508,200 38,400 546,600 18,009,338 1,360,800
19,370,138
COOPER CAMERON CORP. 492,700 - 492,700 27,591,200 -
27,591,200
DEVON ENERGY CORPORATION 268,900 - 268,900 14,020,446 -
14,020,446
DUKE POWER CO. - 14,500 14,500 - 1,285,969
1,285,969
ENRON RESOURCES, INC. 305,800 - 305,800 12,920,050 -
12,920,050
NABORS INDUSTRIES,INC. 765,000 24,700 789,700 39,405,150 1,272,297
40,677,447
SANTA FE INTERNATIONAL CORP 245,800 - 245,800 8,034,588 -
8,034,588
SMITH INTERNATIONAL INC. 297,800 - 297,800 20,269,013 -
20,269,013
TRANSOCEAN SEDCO FOREX, INC. 235,600 - 235,600 11,618,025 -
11,618,025
FINANCIAL SERVICES AMERICAN EXPRESS CO. - 11,100 11,100 - 584,138
584,138
CONCORD EFS, INC. 161,900 - 161,900 7,083,125 -
7,083,125
FISERV, INC. 100,300 - 100,300 4,983,656 -
4,983,656
INVESTMENT TECHNOLOGY GROUP 101,900 - 101,900 3,591,975 -
3,591,975
JABIL CIRCUIT, INC. 118,800 - 118,800 5,561,325 -
5,561,325
SCHWAB, CHARLES CORP. (NEW) - 80,000 80,000 - 2,265,000
2,265,000
STATE STREET CORP - 17,600 17,600 - 2,107,424
2,107,424
STILWELL FINANCIAL, INC. 706,600 17,850 724,450 28,617,300 722,925
29,340,225
FINANCIAL-BANK & TRUST BANK OF NEW YORK CO.,INC. - 37,900 37,900 - 1,968,431
1,968,431
CITIGROUP, INC. - 147,666 147,666 - 7,291,009
7,291,009
FOOD SAFEWAY INC. CO. NEW - 88,100 88,100 - 5,153,850
5,153,850
INDUSTRIAL PRODUCTS MILLIPORE CORP. 513,500 - 513,500 23,717,281 -
23,717,281
INSURANCE AMERICAN INTERNATIONAL GROUP,INC. - 56,216 56,216 - 5,445,925
5,445,925
MARSH & MC-LENNAN COS,INC. - 22,900 22,900 - 2,725,100
2,725,100
INTERNET SERVICES CNET NETWORKS, INC. 381,700 - 381,700 7,514,719 -
7,514,719
MACHINERY & EQUIPMENT DOVER CORP. 130,100 - 130,100 5,529,250 -
5,529,250
SPX CORP. 123,700 - 123,700 13,923,981 -
13,923,981
MEDICAL SUPPLIES & EQUIPMENT AFFYMETRIX, INC. 183,300 20,000 203,300 11,708,288 1,277,500
12,985,788
AMGEN, INC. - 115,350 115,350 - 7,310,306
7,310,306
FOREST LABORATORIES, INC. 350,400 - 350,400 46,406,100 -
46,406,100
GUIDANT - 20,650 20,650 - 1,011,850
1,011,850
LABORATORY CORPORATION OF AMERICA 125,400 - 125,400 17,634,375 -
17,634,375
PFIZER, INC. - 154,450 154,450 - 6,641,350
6,641,350
PHARMACEUTICALS ALLERGAN 57,700 - 57,700 5,174,969 -
5,174,969
ALZA CORP. 1,187,200 - 1,187,200 48,897,800 -
48,897,800
AMERICAN HOME PRODUCTS CORPORATION - 40,800 40,800 - 2,412,300
2,412,300
AMERISOURSE HEALTH CORP. CL-A 229,100 - 229,100 11,054,075 -
11,054,075
BAXTER INTERNATIONAL,INC. - 55,000 55,000 - 4,578,750
4,578,750
CELGENE CORP. - 22,800 22,800 - 1,148,550
1,148,550
CEPHALON, INC. 202,200 - 202,200 8,366,025 -
8,366,025
EXPRESS SCRIPTS INC -CL A 211,900 - 211,900 14,687,319 -
14,687,319
GENENTECH, INC. - 28,400 28,400 - 1,856,650
1,856,650
IMMUNIX CORPORATION NEW - 48,000 48,000 - 1,719,000
1,719,000
LILLIY (ELI), AND CO. - 50,900 50,900 - 4,466,475
4,466,475
QLT PHOTOTHERAPEUTICS, INC. 339,600 12,600 352,200 14,305,650 530,775
14,836,425
WATERS CORPORATION 424,000 - 424,000 28,673,000 -
28,673,000
RESTAURANTS OUTBACK STEAKHOUSE INC. 873,400 - 873,400 22,490,050 -
22,490,050
STARBUCKS CORP. 740,400 - 740,400 36,927,450 -
36,927,450
RETAIL & MERCHANDISING EBAY, INC. 571,100 87,600 658,700 19,702,950 3,022,200
22,725,150
HARLEY DAVIDSON, INC. 173,200 - 173,200 8,140,400 -
8,140,400
WAL-MART STORES, INC. - 128,750 128,750 - 6,123,672
6,123,672
SEMI-CONDUCTORS ATMI, INC. 134,800 - 134,800 2,257,900 -
2,257,900
LINEAR TECHNOLOGY CORP. 422,600 - 422,600 24,008,963 -
24,008,963
NEWPORT CORP. 68,800 - 68,800 4,816,000 -
4,816,000
TERADYNE, INC. 370,200 - 370,200 13,535,438 -
13,535,438
TELECOMMUNICATIONS AMDOCS LIMITED 169,000 40,000 209,000 10,309,000 2,440,000
12,749,000
EFFICIENT NETWORKS, INC. 192,300 - 192,300 7,151,156 -
7,151,156
ENTRAVISION COMMUNICATIONS CORP. -CL A 419,000 - 419,000 6,651,625 -
6,651,625
MCLEODUSA, INC. CL-A - 29,400 29,400 - 387,713
387,713
NOKIA CORP. CL-A (ADR) - 133,650 133,650 - 5,262,469
5,262,469
NORTEL NETWORKS CORP. (HOLDING CO.) - 49,600 49,600 - 1,748,400
1,748,400
QUALCOMM, INC. - 66,907 66,907 - 5,662,005
5,662,005
RESEARCH IN MOTION LTD. - 14,780 14,780 - 1,259,071
1,259,071
SPECTRASITE HOLDINGS, INC. 544,400 - 544,400 8,166,000 -
8,166,000
----------------------------------------------------------------------------------------------
-----------------------------
TOTAL COMMON STOCK 18,639,003 3,388,234 22,027,237 850,741,033 170,199,064
1,020,940,097
----------------------------------------------------------------------------------------------
-----------------------------
(COST $887,593,250, $199,436,151, & $1,087,029,401 RESPECTIVELY)
COMMERCIAL PAPER AES HAWAII, INC. 6.47 12/07/00 6,000,000 - 6,000,000 5,982,747 -
5,982,747
AETNA, INC. 6.58 11/28/00 6,000,000 - 6,000,000 5,992,323 -
5,992,323
ASSET ONE SECURITIZATION 6.56 12/06/00 30,000,000 - 30,000,000 29,918,000 -
29,918,000
AT&T CORP. 6.54 11/21/00 - 4,000,000 4,000,000 - 4,000,000
4,000,000
CAISSE CENTRALE DESJARDINS 6.47 11/30/00 - 4,000,000 4,000,000 - 3,993,530
3,993,530
COLGATE PALMOLIVE CO. 6.46 12/14/00 - 3,000,000 3,000,000 - 2,987,618
2,987,618
CON NAT GAS CO. 6.58 11/30/00 - 300,000 300,000 - 299,507
299,507
CON.NAT.GAS CO. 6.57 11/30/00 30,000,000 - 30,000,000 29,950,725 -
29,950,725
COUNTRYWIDE HOME LOAN 6.52 11/21/00 - 2,000,000 2,000,000 - 2,000,000
2,000,000
FAYETTE FUNDING 6.50 11/21/00 - 500,000 500,000 - 500,000
500,000
MET LIFE FUNDING 6.46 12/05/00 - 6,000,000 6,000,000 - 5,984,927
5,984,927
NATIONAL FUEL GAS CO. 6.55 12/08/00 6,000,000 - 6,000,000 5,981,442 -
5,981,442
NORTHERN ILLNOIS GAS CO. 6.45 11/27/00 - 3,000,000 3,000,000 - 2,996,775
2,996,775
SALOMON SMITH BARNEY 6.49 12/04/00 - 5,000,000 5,000,000 - 4,988,282
4,988,282
SALOMON SMITH BARNEY 6.50 12/18/00 8,000,000 - 8,000,000 7,961,000 -
7,961,000
TOYOTA CREDIT DE P.R. 6.49 12/04/00 30,000,000 - 30,000,000 29,929,692 -
29,929,692
UBS FINANCE 6.46 12/08/00 - 4,000,000 4,000,000 - 3,987,798
3,987,798
WISCONSIN PUBLIC SERVICE 6.50 11/30/00 - 3,000,000 3,000,000 - 2,995,125
2,995,125
----------------------------------------------------------------------------------------------
-----------------------------
TOTAL COMMERCIAL PAPER 116,000,000 34,800,000 150,800,000 115,715,928 34,733,561
150,449,490
----------------------------------------------------------------------------------------------
-----------------------------
(COST $115,557,551, $34,623,306, & $150,180,857 RESPECTIVELY)
SHORT-TERM INVESTMENTS TEMPORARY INVESTMENT CASH FUND 2,485,696 1,363,031 3,848,727 2,485,696 1,363,031
3,848,727
TEMPORARY INVESTMENT FUND 2,485,698 1,363,033 3,848,731 2,485,698 1,363,033
3,848,731
----------------------------------------------------------------------------------------------
-----------------------------
TOTAL SHORT-TERM INVESTMENTS 4,971,394 2,726,064 7,697,458 4,971,394 2,726,064
7,697,458
----------------------------------------------------------------------------------------------
-----------------------------
(COST $4,971,394, $2,726,064, & $7,697,458 RESPECTIVELY)
----------------------------------------------------------------------------------------------
-----------------------------
TOTAL INVESTMENTS 971,428,355 207,658,690
1,179,087,045
(COST OF $1,008,280,575, $236,895,776, & 1,245,176,351, RESPECTIVELY)
LIABILITIES IN EXCESS OF OTHER ASSETS (3,608,510) (896,930)
(4,556,349)
-------------------------------------
-----------------------------
TOTAL NET ASSETS $ 967,819,845 $ 206,761,760 $
1,174,530,696
=====================================
=============================
AMERICAN SKANDIA TRUST
FILE NOS. 33-24962 & 811-5186
FORM N-14
PART C
OTHER INFORMATION
-----------------
Item 15. Indemnification
Section 5.2 of the Registrant's Amended and Restated Declaration of Trust provides as follows:
The Trust shall indemnify each of its Trustees, officers, employees, and agents (including
persons who serve at its request as directors, officers, employees, agents or trustees of another
organization in which it has any interest as a shareholder, creditor or otherwise) against all
liabilities and expenses (including amounts paid in satisfaction of judgments, in compromise, as
fines and penalties, and as counsel fees) reasonably incurred by him in connection with the
defense or disposition of any action, suit or other proceeding, whether civil or criminal, in
which he may be involved or with which he may be threatened, while in office or thereafter, by
reason of his being or having been such a trustee, officer, employee or agent, except with
respect to any matter as to which he shall have been adjudicated to be liable to the Trust or its
Shareholders by reason of having acted in bad faith, willful misfeasance, gross negligence or
reckless disregard of his duties; provided, however, that as to any matter disposed of by a
compromise payment by such person, pursuant to a consent decree or otherwise, no indemnification
either for said payment or for any other expenses shall be provided unless approved as in the
best interests of the Trust, after notice that it involves such indemnification, by at least a
majority of the disinterested Trustees acting on the matter (provided that a majority of the
disinterested Trustees then in office act on the matter) upon a determination, based upon a
review of readily available facts, that (i) such person acted in good faith in the reasonable
belief that his or her action was in the best interests of the Trust and (ii) is not liable to
the Trust or the Shareholders by reason of willful misfeasance, bad faith, gross negligence or
reckless disregard of duties; or the trust shall have received a written opinion from independent
legal counsel approved by the Trustees to the effect that (x) if the matter of good faith and
reasonable belief as to the best interests of the Trust, had been adjudicated, it would have been
adjudicated in favor of such person, and (y) based upon a review of readily available facts such
trustee, officer, employee or agent did not engage in willful misfeasance, gross negligence or
reckless disregard of duty. The rights accruing to any Person under these provisions shall not
exclude any other right to which he may be lawfully entitled; provided that no Person may satisfy
any right of indemnity or reimbursement granted herein or in Section 5.1 or to which he may be
otherwise entitled except out of the property of the Trust, and no Shareholder shall be
personally liable to any Person with respect to any claim for indemnity or reimbursement or
otherwise. The Trustees may make advance payments in connection with indemnification under this
Section 5.2, provided that the indemnified person shall have given a written undertaking to
reimburse the Trust in the event it is subsequently determined that he is not entitled to such
indemnification and, provided further, that the Trust shall have obtained protection,
satisfactory in the sole judgement of the disinterested Trustees acting on the matter (provided
that a majority of the disinterested Trustees then in office act on the matter), against losses
arising out of such advance payments or such Trustees , or independent legal counsel, in a
written opinion, shall have determined, based upon a review of readily available facts that there
is reason to believe that such person will be found to be entitled to such indemnification.
With respect to liability of the Investment Manager to Registrant or to shareholders of the AST
Alger All-Cap Portfolio of the Registrant under the Investment Management Agreement for such Portfolio,
reference is made to Section 13 of the form of Investment Management Agreement incorporated by reference
herein.
With respect to the Sub-Advisors' indemnification of the Investment Manager and its affiliated
and controlling persons, and the Investment Manager's indemnification of each Sub-advisor and its
affiliated and controlling persons, reference is made to Section 14 of the form of Sub-Advisory Agreement
incorporated by reference herein.
Insofar as indemnification for liability arising under the Securities Act of 1933 may be
permitted to trustees, officers and controlling persons of the Registrant pursuant to the foregoing
provisions, or otherwise, the Registrant has been advised that in the opinion of the Securities and
Exchange Commission (the "Commission") such indemnification is against public policy as expressed in the
Act and is, therefore, unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred or paid by a trustee, officer
or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
Item 16. Exhibits
The following exhibits are incorporated by reference to the previously filed document indicated below,
except Exhibits 12(A), 14(A), 16(A) and 16(B):
(1) Copies of the charter of the Registrant as now in effect;
(A) Amended and Restated Declaration of Trust of the Registrant as filed in
Massachusetts on September 23, 1999 and previously filed with Post-Effective
Amendment No. 32 to Registration Statement filed on Form N-1A on October 15,
1999.
(2) Copies of the existing by-laws or corresponding instruments of the Registrant;
(A) By-laws for the Registrant previously filed with Post-Effective Amendment No.
35 to Registration Statement filed on Form N-1A on April 27, 2000.
(3) Copies of any voting trust agreement affecting more than five percent of any class of
equity securities of the Registrant;
Not Applicable
(4) Copies of the agreement of acquisition, reorganization, merger, liquidation and any
amendments to it;
(A) The Plan of Reorganization is included in this registration statement as
Exhibit A to the Prospectus/Proxy Statement
(5) Copies of all instruments defining the rights of holders of the securities being
registered including, where applicable, the relevant portion of the articles of
incorporation or by-laws of the Registrant;
(A) Articles III and VI of the Registrant's Declaration of Trust and Article 11
of the Registrant's By-laws filed with Post-Effective Amendment No. 25 to Registration
Statement filed on Form N-1A on March 2, 1998.
(6) Copies of all investment advisory contracts relating to the management of the assets of
the Registrant;
(A) Investment Management Agreement between Registrant and American Skandia Investment Services,
Incorporated for the AST Alger All-Cap Growth Portfolio was previously filed
with Post-Effective Amendment No. 33 to Registration Statement filed on Form
N-1A on October 19, 1999.
(B) Investment Management Agreement between Registrant and American Skandia
Investment Services, Incorporated for the AST Alger Mid-Cap Growth Portfolio
was previously filed with Post-Effective Amendment No. 37 to Registration
Statement filed on Form N-1A on October 10, 2000.
(C) Sub-Advisory Agreement between American Skandia Investment Services,
Incorporated and Fred Alger Management, Inc. for the AST Alger All-Cap Growth
Portfolio was previously filed with Post-Effective Amendment No. 37 to
Registration Statement filed on Form N-1A on October 10, 2000.
(D) Sub-Advisory Agreement between American Skandia Investment Services,
Incorporated and Fred Alger Management, Inc. for the AST Alger Mid-Cap Growth
Portfolio was previously filed with Post-Effective Amendment No. 37 to
Registration Statement filed on Form N-1A on October 10, 2000.
(7) Copies of each underwriting or distribution contract between the Registrant and a
principal underwriter, and specimens or copies of all agreements between principal
underwriters and dealers;
(A) Sales Agreement between Registrant and American Skandia Life Assurance
Corporation was previously filed with Post-Effective Amendment No. 25 to
Registration Statement filed on Form N-1A on March 2, 1998.
(8) Copies of all bonus, profit sharing, pension, or other similar contracts or arrangements
wholly or partly for the benefit of trustees or officers of the Registrant in their
capacity as such. Furnish a reasonably detailed description of any plan that is not set
forth in a formal document;
Not Applicable
(9) Copies of all custodian agreements and depository contracts under Section 17(f) of the
1940 Act for securities and similar investments of the Registrant, including the
schedule of remuneration;
(A) Amended and Restated Custody Agreement between Registrant and Morgan Stanley Trust Company was
previously filed with Post-Effective Amendment No. 27 to Registration Statement
filed on Form N-1A on October 16, 1998.
(B) Foreign Custody Manager Delegation Amendment was previously filed with Post-Effective Amendment
No. 27 to Registration Statement filed on Form N-1A on October 16, 1998.
(C) Amended Custodian Agreement between Registrant and Provident National Bank was previously filed
with Post-Effective Amendment No. 25 to Registration Statement filed on Form
N-1A on March 2, 1998.
(D) Amendment to Custodian Services Agreement between Registrant and PNC Bank, N.A. was previously
filed with Post-Effective Amendment No. 27 to Registration Statement filed on
Form N-1A on October 16, 1998.
(E) Amendment to Custodian Services Agreement between Registrant and PFPC Trust Company previously
filed with Post-Effective Amendment No. 35 to Registration Statement filed on
Form N-1A on April 27, 2000.
(F) Amended Transfer Agency Agreement between Registrant and Provident Financial Processing
Corporation was previously filed with Post-Effective Amendment No. 25 to
Registration Statement filed on Form N-1A on March 2, 1998.
(10) Copies of any plan entered into by Registrant pursuant to Rule 12b-1 under the 1940 Act
and any agreements with any person relating to implementation of the plan, and copies of
any plan entered into by Registrant pursuant to Rule 18f-3 under the 1940 Act, any
agreement with any person relating to implementation of the plan, any amendment to the
plan, and a copy of the portion of the minutes of the meeting of the Registrant's
trustees describing any action taken to revoke the plan;
(A) Form of Rule 12b-1 plan previously filed with Post-Effective Amendment No. 35
to Registration Statement filed on Form N-1A on April 27, 2000.
(11) An opinion and consent of counsel as to the legality of the securities being registered,
indicating whether they will, when sold, be legally issued, fully paid and nonassessable;
(A) Opinion and consent of counsel was previously filed with Post-Effective
Amendment No. 34 to Registration Statement filed on Form N-1A on February 16,
2000.
(12) An opinion, and consent to their use, of counsel or, in lieu of an opinion, a copy of
the revenue ruling from the Internal Revenue Service, supporting the tax matters and
consequences to shareholders discussed in the prospectus;
(A) Form of Opinion and Consent of Counsel Supporting Tax Matters and Consequences
to Shareholders is filed herewith as Exhibit No. 12(A).
(13) Copies of all material contracts of the Registrant not made in the ordinary course of
business which are to be performed in whole or in part on or after the date of filing
the registration statement;
(A) Amended Administration Agreement between Registrant and Provident Financial Processing
Corporation was previously filed with Post-Effective Amendment No. 25 to
Registration Statement filed on Form N-1A on March 2, 1998.
(B) Service Agreement between American Skandia Investment Services, Incorporated and Kemper Investors
Life Insurance Company was previously filed with Post-Effective Amendment No.
21 to Registration Statement filed on Form N-1A on February 27, 1997.
(14) Copies of any other opinions, appraisals, or rulings, and consents to their use, relied
on in preparing the registration statement and required by Section 7 of the 1933 Act;
(A) Consent of independent auditors is filed herewith as Exhibit No. 14(A).
(15) all financial statements omitted pursuant to Items 14(a)(1);
Not Applicable
(16) Manually signed copies of any power of attorney pursuant to which the name of any person
has been signed to the registration statement; and
(A) Powers of Attorney are filed herewith as Exhibit No. 16(A).
(17) Any additional exhibits which the registrant may wish to file.
Not Applicable
Item 17. Undertakings
(a) The undersigned Registrant agrees that prior to any public reoffering of the
securities registered through the use of prospectus which is part of this
registration statement by any person or party who is deemed to be an
underwriter within the meaning of Rule 145(c) of the Securities Act, the
reoffering prospectus will contain the information called for by the applicable
registration form for reofferings by persons who may be deemed underwriters, in
addition to the information called for by the other items of the applicable
form.
(b) The undersigned Registrant agrees that every prospectus that is filed under
paragraph (1) above will be filed as part of an amendment to the registration
statement and will not be used until the amendment is effective, and that, in
determining any liability under the 1933 Act, each post-effective amendment
shall be deemed to be a new registrations statement for the securities offered
therein, and the offering of the securities at that time shall be deemed top be
the initial bona fide offering of them.
SIGNATURES
----------
As required by the Securities Act of 1933, this registration statement has been signed on behalf of the
Registrant, in the City of Shelton and State of Connecticut, on the 6th day of December, 2000.
American Skandia Trust
----------------------
(Registrant)
By: /s/ Edward P. Macdonald
-----------------------
Edward P. Macdonald
Secretary
As required by the Securities Act of 1933, this Registration Statement has been signed below by
the following persons in the capacities and on the dates indicated.
Signature Title Date
--------- ----- ----
/s/ Jan R. Carendi* President (Principal 12/6/00
------------------ -------
Jan R. Carendi Executive Officer)
and Trustee
/s/ Richard G. Davy, Jr. Treasurer (Chief 12/6/00
------------------------ -------
Richard G. Davy, Jr. Financial and Accounting
Officer)
/s/ David E. A. Carson* Trustee 12/6/00
---------------------- -------
David E. A. Carson
/s/ Julian A. Lerner* Trustee 12/6/00
--------------------- -------
Julian A. Lerner
/s/ Thomas M. O'Brien* Trustee 12/6/00
--------------------- -------
Thomas M. O'Brien
/s/ John A. Pileski* Trustee 12/6/00
------------------- -------
John A. Pileski
/s/ F. Don Schwartz* Trustee 12/6/00
------------------- -------
F. Don Schwartz
*By:/s/ Edward P. Macdonald
-----------------------
Edward P. Macdonald
*Pursuant to Powers of Attorney filed herewith.
AMERICAN SKANDIA TRUST
REGISTRATION STATEMENT ON FORM N-14
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
----------- -----------
(12)(A) Form of Opinion and Consent of Counsel Supporting Tax Matters and Consequences to
Shareholders
(14)(A) Consent of Auditors, Deloitte amp; Touche LLP
(16)(A) Powers of Attorney
