Investment Company Act No. 811-5186
As filed with the Securities and Exchange Commission on September 6, 1996
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[x] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss. 240.14a-11(c) or ss. 240.14a-12
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American Skandia Trust
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Payment of Filing Fee (Check the appropriate box):
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[x] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
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[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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<PAGE>
American Skandia Life
Assurance Corporation
1 Corporate Drive
P.O. Box 883
Shelton, CT 06484-0883
Telephone (203) 926-1888
Fax (203) 929-8071
September 23, 1996
Dear Valued Customer,
As an American Skandia Life Assurance Corporation ("ASLAC") contract owner who
beneficially owns shares of the Seligman International Equity Portfolio (the
"Portfolio"), you are cordially invited to a special meeting of the shareholders
of the Portfolio to be held at the offices of ASLAC, 10th Floor, One Corporate
Drive, Shelton, CT, on October 11, 1996 at 1:00 p.m.
At the special meeting, shareholders are being asked to approve or disapprove
the following four proposals:
I. A proposal to approve a new Investment Management Agreement, with
American Skandia Investment Services, Inc. ("ASISI"), an affiliate of ASLAC,
pursuant to which ASISI will continue to act as investment manager of the
Portfolio.
II. A proposal to approve a new Sub-Advisory Agreement between ASISI and
Putnam Investment Management, Inc. regarding investment advice to the Portfolio.
III. A proposal to approve a change in the investment objective for the
Portfolio.
IV. A proposal to approve certain changes in the Portfolio's fundamental
investment restrictions.
Approval of Proposals I and II are made contingent upon each other. Moreover,
unless Proposals I and II are each approved, neither Proposal III nor IV will be
effected by the Portfolio. Therefore, a vote against either Proposal I or II
will have the effect of a vote against each other, as well as a vote against
both Proposals III and IV.
If Proposals I and II are approved by the Portfolio's shareholders, the name of
the Portfolio will be changed to the "AST Putnam International Equity Portfolio"
effective October 15, 1996.
Your vote is important no matter how large or small your holdings are. We urge
you to read the Proxy Statement thoroughly and to indicate your voting
instructions on the enclosed Proxy Card, date and sign it, and return it
promptly in the envelope provided to be received by American Skandia on or
before the close of business on October 9, 1996. The shares which you
beneficially own will be voted in accordance with instructions received by that
date. All shares of the Portfolio for which instructions are not received will
be voted in the same proportion as the votes cast by contract owners on the
proxy issues presented.
Any questions or concerns you may have regarding the special meeting or the
proxy should be directed to your financial representative.
Sincerely,
Gordon C. Boronow
President and Chief Operating Officer
American Skandia Life Assurance Corporation
<PAGE>
American Skandia Life
Assurance Corporation
1 Corporate Drive
P.O. Box 883
Shelton, CT 06484-0883
Telephone (203) 926-1888
Fax (203) 929-8071
September 23, 1996
Dear Registered Representative,
Please be advised that a special meeting of the shareholders of the Seligman
Henderson International Equity Portfolio (the "Portfolio") of the American
Skandia Trust will be held at the offices of American Skandia Life Assurance
Corporation ("ASLAC"), 10th Floor, One Corporate Drive, Shelton, CT, on October
11, 1996 at 1:00 p.m.
All ASLAC contract owners beneficially owning shares in the Portfolio as of
September 6, 1996 (the "Contractowners") have been sent the enclosed Notice of
Special Meeting, a Proxy Statement and a Proxy Card. The Contractowners have
been asked to complete the Proxy Card and return it to ASLAC by October 9, 1996.
Shares will be voted in accordance with properly completed Proxy Cards received
by that date. ASLAC will vote shares for which voting instructions are not
received by that date in the same proportion as the votes cast by the
Contractowners on the proxy issues presented.
The shareholders are being asked to approve or disapprove the following four
proposals:
I. A proposal to approve a new Investment Management Agreement, with
American Skandia Investment Services, Inc. ("ASISI"), an affiliate of ASLAC,
pursuant to which ASISI will continue to act as investment manager of the
Portfolio.
II. A proposal to approve a new Sub-Advisory Agreement between ASISI and
Putnam Investment Management, Inc. regarding investment advice to the Portfolio.
III. A proposal to approve a change in the investment objective for the
Portfolio.
IV. A proposal to approve certain changes in the Portfolio's fundamental
investment restrictions.
Approval of Proposals I and II are made contingent upon each other. Moreover,
unless Proposals I and II are each approved, neither Proposal III nor IV will be
effected by the Portfolio. Therefore, a vote against either Proposal I or II
will have the effect of a vote against each other, as well as a vote against
both Proposals III and IV.
The current Sub-advisor to the Portfolio is Seligman Henderson Co. If Proposals
I and II are approved by the Portfolio's shareholders, the name of the Portfolio
will be changed to the "AST Putnam International Equity Portfolio" effective
October 15, 1996.
Any questions or concerns you may have regarding the special meeting or the
proxy should be directed to ASLAC at 1-800-SKANDIA. A report of your clients
receiving proxy packets are available upon request.
Sincerely,
Gordon C. Boronow
President and Chief Operating Officer
American Skandia Life Assurance Corporation
<PAGE>
-- PRELIMINARY COPY --
AMERICAN SKANDIA TRUST
One Corporate Drive
P.O. Box 883
Shelton, Connecticut 06484
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS OF THE
SELIGMAN HENDERSON INTERNATIONAL EQUITY PORTFOLIO
To be held
October 11, 1996
To the Shareholders of the Seligman Henderson International Equity
Portfolio of American Skandia Trust:
Notice is hereby given that this Special Meeting of Shareholders of the
Seligman Henderson International Equity Portfolio (the "Portfolio") of American
Skandia Trust (the "Trust"), will be held at One Corporate Drive, Shelton,
Connecticut 06484 on October 11, 1996 at 1:00 p.m. Eastern Time, or at such
adjourned time as may be necessary for the holders of a majority of the
outstanding shares of the Portfolio to vote (the "Meeting"), for the following
purposes:
I. To consider the approval of a new Investment Management Agreement
between the Trust andAmerican Skandia Investment Services, Incorporated
regarding management of the Portfolio.
II. To consider the approval of a new Sub-Advisory Agreement between
American Skandia Investment Services, Incorporated and Putnam Investment
Management, Inc. regarding investment advice to the Portfolio.
III. To consider the approval of a change in the Portfolio's investment
objective.
IV. To consider the approval of changes in the Portfolio's fundamental
investment restrictions.
V. To transact such other business as may properly come before the Meeting
or any adjournment thereof.
The matters referred to above are discussed in detail in the Proxy
Statement attached to this Notice. The Board of Trustees has fixed the close of
business on September 6, 1996 as the record date for determining shareholders
entitled to notice of, and to vote at, the Meeting, and only holders of record
of shares at the close of business on that date are entitled to notice of, and
to vote at, the Meeting. Each share of the Portfolio is entitled to one vote
with respect to proposals on which the Portfolio's shareholders are entitled to
vote.
You are cordially invited to attend the Meeting. All shareholders are
requested to complete, date and sign the enclosed form of proxy and return it
promptly in the envelope provided for that purpose. The enclosed proxy is being
solicited on behalf of the Board of Trustees.
YOUR VOTE IS IMPORTANT. IN ORDER TO AVOID THE UNNECESSARY EXPENSE OF FURTHER
SOLICITATION, WE URGE YOU TO INDICATE VOTING INSTRUCTIONS ON THE ENCLOSED PROXY,
DATE AND SIGN IT, AND RETURN IT PROMPTLY IN THE ENVELOPE PROVIDED, NO MATTER HOW
LARGE OR SMALL YOUR HOLDINGS MAY BE. YOU MAY REVOKE IT AT ANY TIME PRIOR TO ITS
USE. THEREFORE, BY APPEARING AT THE MEETING, AND REQUESTING REVOCATION PRIOR TO
THE VOTING, YOU MAY REVOKE THE PROXY AND YOU CAN THEN VOTE IN PERSON.
By order of the Board of Trustees
Mary Ellen O'Leary
Corporate Secretary
American Skandia Trust
September 23, 1996
<PAGE>
PROXY STATEMENT -- PRELIMINARY COPY
AMERICAN SKANDIA TRUST
One Corporate Drive
P.O. Box 883
Shelton, Connecticut 06484
SPECIAL MEETING OF SHAREHOLDERS OF THE
SELIGMAN HENDERSON INTERNATIONAL EQUITY PORTFOLIO
OF
AMERICAN SKANDIA TRUST
To be held
October 11, 1996
This proxy statement and enclosed form of proxy are being furnished in
connection with the solicitation of proxies by the Board of Trustees of American
Skandia Trust (the "Trust") for use at a Special Meeting of Shareholders of the
Seligman Henderson International Equity Portfolio (the "Portfolio") of the Trust
to be held at One Corporate Drive, Shelton, Connecticut 06484 on October 11,
1996 at 1:00 p.m. Eastern Time (the "Meeting"), or at any adjournment thereof,
for the purposes set forth in the accompanying Notice of Meeting ("Notice"). The
first mailing of proxies and proxy statements to shareholders is anticipated to
be on or about September 23, 1996.
The costs of the Meeting, including the solicitation of proxies, will
be paid by American Skandia Investment Services, Incorporated ("ASISI" or the
"Manager"), the Investment Manager to the Portfolio. Voting instructions will be
solicited principally by mailing this Proxy Statement and its enclosures, but
proxies also may be solicited by telephone, telegraph, or in person by officers
or agents of the Trust or American Skandia Life Assurance Corporation ("ASLAC").
The Trust will forward proxy materials to record owners for any beneficial
owners that such record owners may represent.
The Annual Report of the Trust (the "Report"), including audited
financial statements for 1995, has been previously sent to shareholders. Such
report, however, does not form any part of the proxy soliciting material. The
Trust will furnish an additional copy of the Report, as well as the most recent
Semi-annual Report of the Trust, to a shareholder upon request, without charge,
by writing to the Trust at the above address or by calling 1-800-752-6342.
Shareholders of record at the close of business on September 6, 1996
(the "Record Date") are entitled to notice of, and to vote at, the Meeting. Each
shareholder is entitled to one vote for each full share. As of the Record Date,
the following number of shares of beneficial interest of the Portfolio were
outstanding: ____________. As of the Record Date, there is no beneficial owner
of more than 5% of the shares of the Portfolio to the knowledge of the Trust.
Currently, the Trust serves as a funding vehicle for certain variable
annuities issued by ASLAC, a stock life insurance company. By order of the
Securities and Exchange Commission, dated August 1, 1995, the Trust was granted
exemptive relief permitting it to offer and sell shares directly to qualified
pension and retirement plans outside the separate account context. As of the
Record Date, nearly 100% of the Portfolio's shares were legally owned by ASLAC.
ASLAC holds Portfolio shares attributable to variable annuity contracts in
American Skandia Life Assurance Corporation Variable Account Class B-1, Class
B-2, and Class B-3 (collectively, for purposes of this Proxy Statement, "ASLAC
Variable Accounts"), each of which is an investment company registered as such
under the Investment Company Act of 1940, as amended (the "Investment Company
Act"). ASLAC Variable Accounts have various sub-accounts, each of which invests
exclusively in a corresponding portfolio of an underlying fund. ASLAC will
solicit voting instructions from variable annuity contract owners who
beneficially own shares of the Portfolio represented in the Seligman Henderson
International Equity Sub-account as of the Record Date (the "Contractowners").
All shares of the Portfolio held by the Contractowners will be voted by
ASLAC in accordance with voting instructions received from such Contractowners
at the Meeting and any adjournments thereof. ASLAC is entitled to vote shares
for which voting instructions are not received and will vote such shares in the
same proportion as the votes cast by the Contractowners on the proxy issues
presented. ASLAC has fixed the close of business on October 9, 1996 as the last
day for which voting instructions will be accepted.
Timely, properly executed proxies will be voted as Contractowners
instruct. The Board of Trustees intends to bring before the Meeting the matters
set forth in Proposals I, II, III and IV of the foregoing Notice. Unless
instructions to the contrary are marked, proxies will be voted FOR each of the
proposals set forth in the Notice. The Trustees do not expect any other business
to be brought before the meeting. If, however, any other matters are properly
presented to the meeting for action, it is intended that the persons named in
the enclosed proxy will vote in accordance with their judgment. A Contractowner
executing and returning a proxy may revoke it at any time prior to its exercise
by written notice of such revocation to the Secretary of the Trust, by execution
of a subsequent proxy, or by voting in person at the Meeting.
The presence in person or by proxy of the holders of a majority of the
outstanding shares is required to constitute a quorum at the Meeting. Since
ASLAC is the legal owner of nearly 100% of the Portfolio's shares, ASLAC's
presence at the Meeting constitutes a quorum under the Trust's By-laws. Shares
beneficially held by Contractowners present in person or represented by proxy at
the Meeting will be counted for the purpose of calculating the votes cast on the
issues before the Meeting.
Approval of each proposal requires the vote of a "majority of the
outstanding voting securities" of the Portfolio, as defined in the Investment
Company Act, which means the vote of 67% or more of the shares of the Portfolio
present at the Meeting, if the holders of more than 50% of the outstanding
shares of the Portfolio are present or represented by proxy, or the vote of more
than 50% of the outstanding shares of the Portfolio, whichever is less. Approval
of Proposals I and II are made contingent upon each other. Moreover, unless
Proposals I and II are each approved, neither Proposal III nor IV will be
effected by the Portfolio. Therefore, a vote against either Proposal I or II
will have the effect of a vote against each other, as well as a vote against
both Proposals III and IV.
In the event that sufficient votes to approve any proposal are not
received, the persons named as proxies may propose one or more adjournments of
the Meeting to permit further solicitation of proxies. Any such adjournment will
require the affirmative vote of a majority of those shares represented at the
Meeting in person or by proxy. If a quorum is present, the persons named as
proxies will vote those proxies which they are entitled to vote FOR the proposal
in favor of such adjournment and will vote those proxies required to be voted
AGAINST the proposal against any such adjournment. Any proposals for which
sufficient favorable votes have been received by the time of the Meeting may be
acted upon and such vote shall be considered final regardless of whether the
Meeting is adjourned to permit additional solicitation with respect to any other
proposal. Proxies submitted without voting instructions will be voted FOR the
proposals.
PROPOSAL I
APPROVAL OF A NEW INVESTMENT MANAGEMENT AGREEMENT BETWEEN THE TRUST
AND AMERICAN SKANDIA INVESTMENT SERVICES, INCORPORATED
Background
Since May 1, 1992, ASISI has served as Investment Manager to the
Portfolio pursuant to an Investment Management Agreement (the "Present
Investment Management Agreement") with the Trust. The Present Investment
Management Agreement, effective May 1, 1992 and as annually renewed thereafter,
provides, among other things, that in carrying out its responsibility to
supervise and manage all aspects of the Portfolio's operations, the Manager may
engage, subject to the approval of the Board of Trustees and, where required,
the shareholders of the Portfolio, a Sub-adviser to provide advisory services in
relation to the Portfolio, and delegate to the Sub-adviser duties to, among
other things:
(1) obtain and evaluate pertinent information about significant
developments and economic, statistical and financial data, domestic,
foreign or otherwise, whether affecting the economy generally or the
Portfolio, and whether concerning the individual issuers whose
securities are included in the Portfolio or the activities in which
they engage, or with respect to securities which the Manager considers
desirable for inclusion in the Portfolio;
(2) determine what issuers and securities shall be represented in the
Portfolio's portfolio and regularly report them in writing to the Board
of Trustees;
(3) formulate and implement continuing programs for the purchases and
sales of the securities of such issuers and regularly report in writing
on them to the Board of Trustees;
(4) take all actions on behalf of the Portfolio which appear to the
Trust necessary to carry into effect such purchase and sale programs
and supervisory functions as mentioned earlier, including the placing
of orders for the purchase and sale of portfolio securities.
In accordance with this provision for delegation of authority, the
Manager has entered into a sub-advisory agreement (the "Present Sub-Advisory
Agreement"), effective May 1, 1995 and as annually renewed thereafter, with
Seligman Henderson Co. ("Seligman Henderson"), pursuant to which the above
duties have been delegated by the Manager to Seligman Henderson. Seligman
Henderson, or an affiliate, has served as Sub-adviser to the Portfolio since May
1, 1992.
The Present Investment Management Agreement and the Present
Sub-Advisory Agreement were initially approved by the Board of Trustees,
including a majority of the Trustees who are not "interested persons" of the
Trust (as defined under the Investment Company Act) (the "Independent
Trustees"), on April 20, 1992, and annually renewed thereafter. On March 7,
1995, the Board of Trustees, including a majority of the Independent Trustees,
reapproved the Present Investment Management Agreement and approved the Present
Sub-Advisory Agreement in its current form. Both agreements were last approved
by the Board of Trustees, including a majority of the Independent Trustees, on
April 16, 1996.
The Board of Trustees, through the Manager, has received a tendered
resignation from Seligman Henderson as Sub-adviser to the Portfolio. At a
meeting held on September 3, 1996, the Board of Trustees received a proposal
from the Manager to engage Putnam Investment Management, Inc. ("Putnam
Management") to provide sub-advisory services for the Portfolio. In connection
with its recommendation, the Manager proposed to enter into a new investment
management agreement with the Trust (the "New Investment Management Agreement")
and a new sub-advisory agreement (the "New Sub-Advisory Agreement") with Putnam
Management, both of which would become effective October 15, 1996. The terms and
conditions of the New Investment Management Agreement are identical in all
material respects with those of the Present Investment Management Agreement,
with the exception of the effective date and termination date, a change in the
name of the Portfolio to the "AST Putnam International Equity Portfolio", a
reduced investment management fee rate, and a modified expense limitation. The
terms and conditions of the New Sub-Advisory Agreement are identical in all
material respects with those of the Present Sub-Advisory Agreement, with the
exception of the identity of the service provider, the effective date and
termination date, the name of the Portfolio, a reduced sub-advisory fee rate
payable by the Manager, and additional representations of the Sub-adviser
concerning review of documents and rendering of advice (which, in certain
instances, provide clarification of responsibilities).
As hereinafter described in greater detail, Putnam Management is a
subsidiary of Putnam Investments, Inc., a holding company which in turn is
wholly owned by Marsh & McLennan Companies, Inc., a publicly-owned holding
company whose principal businesses are international insurance and reinsurance
brokerage, employee benefit consulting and investment management. Putnam
Management is one of America's oldest and largest money management firms,
managing mutual funds since 1937. At July 31, 1996, Putnam Management and its
affiliates managed assets in excess of $146 billion.
In support of its recommendation to engage Putnam Management as
Sub-adviser to the Portfolio, the Manager informed the Board of Trustees of its
belief that, based upon its discussions with Putnam Management, implementation
of certain revised investment strategies would be desirable and the appointment
of Putnam Management would facilitate the implementation of the desired
strategies. Such investment strategies, reflected in proposed changes to the
Portfolio's investment objective and certain fundamental investment restrictions
as described under Proposals III and IV herein, are similar to those employed by
Putnam Management in its management of the Putnam International Growth Fund (the
"Putnam Fund"), an open-end management company with a current investment
objective and current investment restrictions substantially similar to those
proposed herein. In the opinion of the Manager, engagement of Putnam Management
as Sub-adviser to the Portfolio would also assist in developing new markets for
the Portfolio and efforts to increase the Portfolio's net assets.
On September 3, 1996, the Board of Trustees, including a majority of
the Independent Trustees, voted unanimously to approve the New Investment
Management Agreement and the New Sub-Advisory Agreement, each effective October
15, 1996 (or four business days after any subsequent approval of such agreements
by the Portfolio's shareholders, whichever is later), and authorized the
submission of the new agreements for shareholder approval. The Board of Trustees
also approved a change in the name of the Portfolio to the "AST Putnam
International Equity Portfolio," subject to shareholder approval of Proposals I
and II described herein. Subject to the receipt of shareholder approval, the
Present Investment Management Agreement and the Present Sub-Advisory Agreement
will be terminated as discussed herein as of the opening of business on October
15, 1996.
The Present Investment Management Agreement
The following description of the material terms of the Present
Investment Management Agreement is qualified in its entirety by reference to the
form of such agreement attached to this Proxy Statement as Exhibit A-1.
The Present Investment Management Agreement requires the Manager to furnish
the Portfolio with, at a minimum, investment advice and investment management
and administrative services with respect to the Portfolio, subject to the
supervision of the Board of Trustees and in conformity with the stated policies
of the Portfolio. Under the terms of the Present Investment Management
Agreement, the Manager's services to the Portfolio are not to be deemed
exclusive, and the Manager is permitted to render investment advisory and
corporate administrative or other services to others (including other investment
companies) and to engage in other activities. The Manager may engage a
sub-adviser to provide advisory services in relation to the Portfolio.
The Manager is responsible for certain expenses in connection with the
trading function and investment program of the Portfolio. The Manager is
required to furnish, at its expense and without cost to the Trust, the services
of a President, Secretary, and one or more Vice Presidents of the Trust, to the
extent such additional officers may be required by the Trust for the proper
conduct of its affairs, and to provide or obtain for the Portfolio, and
thereafter supervise, such executive, administrative, clerical and shareholder
servicing services as are deemed advisable by the Board of Trustees. The Trust
pays other expenses, including, but not limited to, brokerage commissions,
legal, auditing, taxes or governmental fees, the cost of preparing share
certificates, custodian, depository, transfer and shareholder service agent
costs, expenses of issue, sale, redemption and repurchase of shares, expenses of
registering and qualifying shares for sale, insurance premiums on property or
personnel (including officers and Trustees if available) of the Trust which
inure to its benefit, expenses relating to Trustee and shareholder meetings, the
cost of preparing and distributing reports and notices to shareholders, the fees
and other expenses incurred by the Trust in connection with membership in
investment company organizations, and the cost of printing copies of
prospectuses and statements of additional information distributed to
shareholders.
The Present Investment Management Agreement also provides that in the
absence of willful misfeasance, bad faith, gross negligence or reckless
disregard of obligations or duties thereunder on the part of the Manager or any
of its officers, trustees, or employees, the Manager shall not be subject to
liability to the Trust or to any shareholder of the Portfolio for any act or
omission in the course of, or connected with, rendering services thereunder or
for any losses that may be sustained in the purchase, holding or sale of any
security.
In full compensation for the services furnished by the Manager under the
Present Investment Management Agreement, the Manager receives an annual
investment advisory fee, payable monthly, of 1.0% of the average daily net
assets of the Portfolio. Additionally, under the terms of the Present Investment
Management Agreement, if and to the extent the total of all ordinary business
expenses of the Portfolio for any fiscal year of the Trust, including all
management and administration fees, but excluding brokerage commissions and
fees, taxes, interest and extraordinary expenses, such as litigation ("Portfolio
Expenses"), exceeds the most restrictive expense limits imposed by any statute
or regulatory authority of any jurisdiction in which shares of the Portfolio are
offered for sale (the "Most Restrictive Expense Limits"), the Manager agrees, if
required to do so pursuant to such applicable statute or regulatory authority,
to pay to the Trust such excess expenses no later than the last day of the first
month of the next succeeding fiscal year of the Trust. Notwithstanding these
terms, the Manager has voluntarily agreed to waive a portion of its investment
management fee equal to .15% of the Portfolio's assets in excess of $75 million,
as well as to reimburse Portfolio Expenses in excess of 1.75% of the first $100
million of the Portfolio's average daily net assets. Such voluntary agreements
may be terminated by the Manager at any time. The aggregate fee paid by the
Trust to the Manager for services rendered under the Present Investment
Management Agreement for the fiscal year ended December 31, 1995 was $2,198,484.
The Present Investment Management Agreement provides that it will
continue in effect from year to year if specifically approved at least annually,
either by the Board of Trustees or by the vote of a majority of the Portfolio's
outstanding voting securities (as defined under the Investment Company Act) and
by the affirmative vote of a majority of the Board of Trustees who are not
parties to the agreement or interested persons of a party to the agreement
(other than as trustees of the Trust) by votes cast in person at a meeting
specifically called for such purpose. These provisions reflect the requirements
of the Investment Company Act. The Present Investment Management Agreement may
be terminated at any time, without the payment of any penalty or prejudice to
the completion of any transaction already initiated on behalf of the Portfolio,
on 60 days' written notice to the other party to the agreement by (i) the vote
of the Board of Trustees; (ii) the vote of a majority of the Portfolio's
outstanding voting securities; or (iii) the Manager. The Present Investment
Management Agreement will terminate effective May 1, 1997, if not reapproved, or
automatically in the event of its "assignment" (as defined under the Investment
Company Act).
Subject to receipt of shareholder approval of Proposals I and II
described herein, the Present Investment Management Agreement will be terminated
as of the opening of business on October 15, 1996. The decision to terminate the
Present Investment Management Agreement rather than to allow its continuance
reflects the determination of the Board of Trustees and the Manager that it
would be in the interests of the Portfolio's shareholders to enter into the New
Investment Management Agreement described below. If the Present Investment
Management Agreement is terminated, the Manager's compensation thereunder shall
be prorated to the date of termination.
The New Investment Management Agreement
The following description of the material terms of the New Investment
Management Agreement is qualified in its entirety by reference to the form of
such Agreement attached to this Proxy Statement as Exhibit A-2.
The terms and conditions of the New Investment Management Agreement are
identical in all material respects to those of the Present Investment Management
Agreement, with the exception of the effective date and termination date, the
name of the Portfolio, a reduced investment management fee rate, and a modified
expense limitation. As compensation for the services to be performed and the
facilities to be furnished by the Manager under the New Investment Management
Agreement, the Manager will receive a fee payable monthly at an annual rate of
1.0% of the average daily net assets of the Portfolio not in excess of $75
million, plus .85% of the Portfolio's average daily net assets over $75 million.
Such compensation, although lower than the compensation payable under the terms
of the Present Investment Management Agreement, is identical to the compensation
payable to the Manager under the Present Investment Management Agreement taking
into account the application of the Manager's current voluntary fee waiver, as
discussed previously. If the New Investment Management Agreement is made
effective, the Manager's current voluntary fee waiver will no longer be
applicable.
In addition, under the terms of the New Investment Management
Agreement, if and to the extent that Portfolio Expenses exceed (i) 1.75% on the
first $100 million of the Portfolio's average daily net assets, and (ii) 1.50%
with respect to the Portfolio's average daily net assets over $100 million, the
Manager agrees, if required to do so pursuant to applicable statute or
regulatory authority, to pay to the Trust such excess expenses no later than the
last day of the first month of the next succeeding fiscal year of the Fund;
provided that, in the event the Most Restrictive Expense Limits is at any time
established at a limit higher than 1.75% or no limit at all, with respect to the
Portfolio's average daily net assets over $100 million, the Manager agrees to
reimburse the Trust, from that point forward, for Portfolio Expenses in excess
of 1.75% on all of the average daily net assets of the Portfolio. Such expense
limitation, although modified from the expense limitation provided under the
terms of the Present Investment Management Agreement, remains substantially
unchanged taking into account the application of the Manager's current voluntary
expense limitation agreement, as discussed previously, and the current Most
Restrictive Expense Limits. Currently, the Most Restrictive Expense Limits would
require the Manager to reimburse the Trust for Portfolio Expenses in excess of
2.5% of the first $30 million of the Portfolio's average daily net assets, plus
2.0% of the next $70 million, plus 1.5% of the Portfolio's average daily net
assets over $100 million. Under the proposed expense limitation, the Manager
would continue to reimburse the Trust for Portfolio expenses in excess of 1.75%
on the first $100 million of the Portfolio's average daily net assets, as
provided under the Manager's current expense limitation agreement, and to
reimburse the Trust for Portfolio expenses in excess of 1.50% with respect to
the Portfolio's average daily net assets over $100 million. Indeed, under the
proposed expense limitation, in the event the Most Restrictive Expense Limits is
at any time established at a limit higher than 1.75% or no limit at all, with
respect to the Portfolio's average daily net assets over $100 million, the
Manager agrees to establish the expense limitation, from that point forward, at
1.75% with respect to all of the average daily net assets of the Portfolio.
For the year ending December 31, 1995, the amount of the investment
management fee paid to the Manager for services rendered under the Present
Investment Management Agreement was $2,198,484. If the New Investment Management
Agreement had been in effect for the year ending December 31, 1995, the amount
of the investment management fee paid to the Manager for services rendered under
the New Investment Management Agreement would have been the same amount paid to
the Manager under the Present Investment Management Agreement, as the new
investment management fee rate incorporates the application of the Manager's
current voluntary fee waiver.
If the New Investment Management Agreement is approved by the
shareholders of the Portfolio, it will become effective October 15, 1996
(subject also to shareholder approval of Proposal II), or four business days
after any subsequent approval of the agreement by the Portfolio's shareholders,
whichever is later. The New Investment Management Agreement will continue in
effect from year to year if specifically approved at least annually, either by
the Board of Trustees or by the vote of a majority of the Portfolio's
outstanding voting securities (as defined under the Investment Company Act). In
either event, such continuance shall also be approved by the vote of a majority
of the Board of Trustees who are not parties to the agreement or interested
persons of a party to the agreement (other than as trustees of the Trust) cast
in person at a meeting called for the purpose of voting on such continuance.
These provisions reflect the requirements of the Investment Company Act. Like
the Present Investment Management Agreement, the New Investment Management
Agreement may be terminated at any time, without penalty or prejudice to the
completion of any transactions already initiated on behalf of the Portfolio, on
60 days' written notice to the other party to the agreement by (i) the vote of
the Board of Trustees; (ii) the vote of a majority of the Portfolio's
outstanding voting securities; or (iii) the Manager. The New Investment
Management Agreement would terminate effective October 15, 1997, if not
reapproved, or automatically in the event of its "assignment" (as defined under
the Investment Company Act).
The Manager and Other Information
The Manager is registered as an investment adviser with the Securities
and Exchange Commission pursuant to the Investment Advisers Act of 1940, as
amended, as well as with the securities commissions of thirty-two state
jurisdictions. The Manager does not currently serve as investment adviser or
sub-adviser to any registered investment company other than the Trust. The
principal executive officer of the Manager is Jan R. Carendi, who is also a
director of the Manager and Executive Vice President and Member of Executive
Management Group, Skandia Insurance Company Ltd. ("SICL"), Sveavagen 44, S-103
50 Stockholm, Sweden. The other officers and directors of the Manager and the
officers of the Manager who are also officers or members of the Board of
Trustees of the Trust are set forth below:
<TABLE>
<CAPTION>
<S> <C> <C>
Name and Position with ASISI Principal Occupation and Address
Jan R. Carendi* Executive Vice President and
Chief Executive Officer Member of Executive Management Group
and Director Skandia Insurance Company Ltd.
Sveavagen 44, S-103 50 Stockholm, Sweden
Gordon C. Boronow* President and Chief Operating Officer
Director American Skandia Life Assurance Corporation
One Corporate Drive, Shelton, CT 06484
Thomas M. Mazzaferro* Executive Vice President and Chief Financial Officer
President, Chief Operating Officer, American Skandia Life Assurance Corporation
Chief Financial Officer and Director One Corporate Drive, Shelton, CT 06484
C. Ake Svensson Vice President and Corporate Controller
Treasurer and Director American Skandia Investment Holding Corporation
One Corporate Drive, Shelton, CT 06484
N. David Kuperstock Vice President, Product Development
Director American Skandia Life Assurance Corporation
One Corporate Drive, Shelton, CT 06484
Rodney D. Runestad Vice President and Valuation Actuary
Director American Skandia Life Assurance Corporation
One Corporate Drive, Shelton, CT 06484
Wade A. Dokken President, Chief Operating Officer
Director and Chief Marketing Officer
American Skandia Marketing, Incorporated
One Corporate Drive, Shelton, CT 06484
Richard G. Davy, Jr.* Controller
Controller American Skandia Investment Services, Incorporated
One Corporate Drive, Shelton, CT 06484
M. Priscilla Pannell* Assistant Corporate Secretary
Corporate Secretary American Skandia Life Assurance Corporation
One Corporate Drive, Shelton, CT 06484
Kristen E. Newall Administrative Coordinator
Assistant Corporate Secretary American Skandia Investment Holding Corporation
One Corporate Drive, Shelton, CT 06484
*Individuals who are also Trustees or officers of the Trust.
</TABLE>
The Manager is a wholly-owned subsidiary of American Skandia Investment
Holding Corporation ("ASIHC"), a Delaware corporation. ASIHC is also the owner
of all the issued and outstanding shares of ASLAC and American Skandia
Marketing, Incorporated ("ASM"), which is the principal underwriter of ASLAC
variable annuity contracts. ASIHC is indirectly owned by SICL, a Swedish
company. The Manager's, ASIHC's, ASLAC's, and ASM's principal offices are
located in the same building at One Corporate Drive, Shelton, Connecticut 06484.
The Administrator of the Portfolio, and every other portfolio of the
Trust, as that term is defined under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), is PFPC Inc., a Delaware corporation located at
103 Bellevue Parkway, Wilmington, Delaware 19809.
The Evaluation by the Board of Trustees
In evaluating the New Investment Management Agreement, the Board of
Trustees reviewed materials furnished by the Manager and Putnam Management.
These materials included financial statements and information regarding the
Manager and Putnam Management and their respective personnel and operations.
Consideration was given to comparative fee and expense information concerning
other mutual funds with similar investment objectives published by a widely
recognized industry authority and to potential indirect benefits in connection
with the Portfolio and its investment operations, including any which may arise
in connection with brokerage transactions.
In evaluating the New Investment Management Agreement, the Board of
Trustees considered that (1) the scope and quality of the services which the
Manager has provided under the Present Investment Management Agreement and
expects to provide under the New Investment Management Agreement have been and
are satisfactory; (2) the investment management fee rate payable to the Manager
under the New Investment Management Agreement is competitive and will be lower
than the investment management fee rate payable under the Present Investment
Management Agreement; (3) although the investment management fee rate payable
under the terms of the New Investment Management Agreement is lower than the
investment management fee rate payable under the terms of the Present Investment
Management Agreement, the effective rate of compensation payable to the Manager
under the New Investment Management Agreement remains unchanged taking into
account the application of the Manager's current voluntary fee waiver, as
discussed previously; and (4) the terms and conditions of the New Investment
Management Agreement will remain materially unchanged from those of the Present
Investment Management Agreement, except for the effective date and termination
date, the name of the Portfolio, a reduced investment management fee rate, and a
modified expense limitation. The Board also gave consideration to the fact that
the sub-advisory fee payable by the Manager under the New Sub-Advisory Agreement
would be different than the sub-advisory fee payable under the Present
Sub-Advisory Agreement, taking into account the Sub-adviser's current voluntary
fee waiver (as discussed under Proposal II of this Proxy Statement), with the
result that the effective rate of compensation realized by the Manager after
paying the sub-advisory fee under the new fee structure would have been 13.6%
lower than that realized under the present fee structure for the year ending
December 31, 1995. The Board of Trustees also considered the Manager's present
distribution strategies and willingness to devote appropriate resources to
develop new markets for the Portfolio. The Board of Trustees also received
assurances from the Manager that the scope and quality of its services would not
be diminished under the terms of the New Investment Management Agreement.
Based upon its evaluation, the Board of Trustees determined that the
continuance of the Manager's role as Investment Manager of the Portfolio likely
would offer the Portfolio continued access to effective management and advisory
services and capabilities. The Board of Trustees concluded further that the
terms of the New Investment Management Agreement, including the fees
contemplated thereby, are fair and reasonable and in the best interests of the
Portfolio and its shareholders.
In order to provide for the services described in the New Investment
Management Agreement, the shareholders are being asked to approve the New
Investment Management Agreement.
THE TRUSTEES, INCLUDING THE INDEPENDENT TRUSTEES,
RECOMMEND THAT THE SHAREHOLDERS VOTE "FOR" PROPOSAL I.
ANY UNMARKED PROXIES WILL BE SO VOTED.
PROPOSAL II
APPROVAL OF A NEW SUB-ADVISORY AGREEMENT BETWEEN
AMERICAN SKANDIA INVESTMENT SERVICES, INCORPORATED
AND PUTNAM INVESTMENT MANAGEMENT, INC.
The Present Sub-Advisory Agreement
The following description of the Present Sub-Advisory Agreement is
qualified in its entirety by reference to the form of such agreement attached to
this Proxy Statement as Exhibit A-3.
Seligman Henderson, or an affiliate, has advised the Portfolio since
May 1, 1992. Under the terms of the Present Sub-Advisory Agreement, Seligman
Henderson has agreed to furnish the Manager with investment advisory services in
connection with a continuous investment program for the Portfolio which is to be
managed in accordance with the investment objective, investment policies and
restrictions of the Portfolio as set forth in the Prospectus and Statement of
Additional Information of the Trust and in accordance with the Trust's
Declaration of Trust and By-laws. Subject to the supervision and control of the
Manager, which is in turn subject to the supervision and control of the Board of
Trustees, Seligman Henderson, in its discretion, determines and selects the
securities to be purchased for and sold from the Portfolio from time to time and
places orders with and gives instructions to brokers, dealers and others for all
such transactions and causes such transactions to be executed.
Additionally, pursuant to the terms of the Present Sub-Advisory
Agreement, Seligman Henderson obtains and evaluates pertinent information about
significant developments and economic, statistical and financial data, domestic,
foreign or otherwise, whether affecting the economy generally or the Portfolio,
and concerning the individual issuers whose securities are included in the
Portfolio or the activities in which they engage, or with respect to securities
which Seligman Henderson considers desirable for inclusion in the Portfolio.
In furnishing the services under the Present Sub-Advisory Agreement,
Seligman Henderson has agreed to comply with the requirements of the Investment
Company Act applicable to it, and the regulations promulgated thereunder.
Seligman Henderson also represents and warrants that it is authorized to enter
into the Present Sub-Advisory Agreement and perform the services contemplated to
be performed thereunder. Seligman Henderson, at its expense, has agreed to
furnish all necessary investment facilities, including salaries of personnel
required for it to execute its duties faithfully.
The Present Sub-Advisory Agreement requires Seligman Henderson to use
commercially reasonable efforts and act in good faith in the performance of its
services under the Present Sub-Advisory Agreement. However, so long as Seligman
Henderson has acted in good faith and has used its commercially reasonable
efforts, then in the absence of willful misconduct, bad faith, gross negligence
or reckless disregard of its obligations under the Present Sub-Advisory
Agreement, Seligman Henderson shall not be liable to the Trust or its
shareholders or to the Manager for any act or omission resulting in any loss
suffered in any portfolio of the Trust in connection with any service to be
provided therein.
The Manager is responsible for payment of Seligman Henderson's
compensation under the Present Sub-Advisory Agreement. Seligman Henderson's
compensation for the services provided under the Present Sub-Advisory Agreement
is computed at an annual rate and is payable monthly in arrears, based on the
average daily net assets of the Portfolio for each month. For all services
rendered, the Manager calculates and pays Seligman Henderson at the annual rate
of 1.0% of the portion of the Portfolio's average daily net assets not in excess
of $100 million, plus .75% of the portion of the Portfolio's average daily net
assets over $100 million. In computing the fee to be paid to Seligman Henderson,
the net asset value of the Portfolio is valued as set forth in the current
registration statement of the Trust. Notwithstanding these terms, Seligman
Henderson has voluntarily agreed to waive a portion of its fee equal to .25% of
the Portfolio's average daily net assets not in excess of $50 million, plus .35%
of the portion over $50 million but not in excess of $75 million, plus .50% of
the portion over $75 million but not in excess of $100 million, plus .25% of the
portion over $100 million. Seligman Henderson may terminate this voluntary
agreement at any time. The aggregate fee paid by the Manager to Seligman
Henderson for services rendered under the Present Sub-Advisory Agreement for the
fiscal year ended December 31, 1995 was $1,389,549.
The Present Sub-Advisory Agreement provides that it shall remain in
effect for one year from the date of the agreement, and is renewable annually
thereafter by specific approval of the Board of Trustees of the Trust or by vote
of a majority of the outstanding voting securities of the Portfolio. Any such
renewal shall be approved by the vote of a majority of the Trustees who are not
interested persons under the Investment Company Act, cast in person at a meeting
called for the purpose of voting on such renewal. The Present Sub-Advisory
Agreement may be terminated at any time without penalty upon 60 days' written
notice to the other party to the agreement, and will automatically terminate in
the event of its "assignment" by either party (as defined under the Investment
Company Act) or (provided Seligman Henderson has received prior written notice
thereof) upon termination of the Present Investment Management Agreement. Unless
the Present Sub-Advisory Agreement is renewed, or otherwise terminated, the
agreement will terminate effective May 1, 1997.
Subject to the receipt of shareholder approval of Proposals I and II
described herein, the Present Sub-Advisory Agreement will be terminated by the
resignation of Seligman Henderson as Sub-adviser to the Portfolio, as of the
opening of business on October 15, 1996. Both the Manager and Seligman Henderson
have mutually agreed that it would be in the interests of the Portfolio
shareholders for the Manager to accept the resignation of Seligman Henderson as
Sub-adviser to the Portfolio. The termination, rather than continuance, of the
Present Sub-Advisory Agreement reflects the Manager's determination that it
would be in the interests of the Portfolio's shareholders to enter into the New
Sub-Advisory Agreement described below. If the Present Sub-Advisory Agreement is
terminated, Seligman Henderson's compensation thereunder shall be prorated to
the date of termination.
Seligman Henderson's offices are located at 100 Park Avenue, New York,
New York 10017. As at December 31, 1995, Seligman Henderson managed assets
totaling approximately $24 billion, including over $268 million in assets of the
Portfolio. As at June 30, 1996, Seligman Henderson managed assets of the
Portfolio totaling approximately $325.6 million.
The New Sub-Advisory Agreement
The following description of the New Sub-Advisory Agreement is
qualified in its entirety by reference to the form of such agreement attached to
this Proxy Statement as Exhibit A-4.
The terms and conditions of the New Sub-Advisory Agreement are identical in
all material respects to those of the Present Sub-Advisory Agreement, with the
exception of the identity of the service provider, the effective date and
termination date, the name of the Portfolio, a reduced sub-advisory fee rate
payable by the Manager, and additional representations of the Sub-adviser
concerning review of documents and rendering advice (which, in certain
instances, provide clarification of responsibilities). As compensation for the
services to be rendered under the New Sub-Advisory Agreement, the Manager, and
not the Trust or the Portfolio, will pay Putnam Management a fee at the annual
rate of .65% of the portion of the average daily net assets of the Portfolio not
in excess of $150 million, plus .55% of the portion of the Portfolio's average
daily net assets over $150 million but not in excess of $300 million, plus .45%
of the portion of the Portfolio's average daily net assets over $300 million.
Such compensation payable by the Manager, although lower than the compensation
payable under the terms of the Present Sub-Advisory Agreement, may not be lower
than the compensation payable by the Manager at various asset levels of the
Portfolio taking into account the application of the Sub-adviser's current
voluntary fee waiver, as discussed previously. If the New Sub-Advisory Agreement
is made effective, the Sub-adviser's current voluntary fee waiver will no longer
be applicable. In computing the fee to be paid to Putnam Management, the net
asset value of the Portfolio shall be valued as set forth in the then current
registration statement of the Trust. If the New Sub-Advisory Agreement is
terminated, the payment shall be prorated to the date of termination.
Based on net assets of the Portfolio at August 27, 1996 of
$325,809,000, the effective annual sub-advisory fee rate payable by the Manager
under the New Sub-Advisory Agreement would be 0.59% as compared to 0.55% under
the Present Sub-Advisory Agreement, taking into account the Sub-adviser's
current voluntary fee waiver, as discussed previously. For the year ending
December 31, 1995, the amount of the sub-advisory fee paid by the Manager to
Seligman Henderson for services rendered under the Present Sub-Advisory
Agreement was $1,389,549. If the New Sub-Advisory Agreement had been effect for
the year ending December 31, 1995, the amount of the sub-advisory fee paid by
the Manager to Putnam Management for services rendered under the New
Sub-Advisory Agreement would have been $1,499,650, an increase of 7.9% above the
actual amount paid.
If the New Sub-Advisory Agreement is approved by the shareholders of
the Portfolio, it will become effective October 15, 1996 (subject also to
shareholder approval of Proposal I), or four business days after any subsequent
approval of the agreement by the Portfolio's shareholders, whichever is later.
The New Sub-Advisory Agreement will remain in effect for an initial one year
term, and is renewable thereafter by specific approval of the Board of Trustees
or by vote of a majority of the outstanding voting securities of the Portfolio
(as defined under the Investment Company Act). In either event, such renewal
shall also be approved by the vote of a majority of the Independent Trustees,
cast in person at a meeting called for the purpose of voting on such renewal.
Like the Present Sub-Advisory Agreement, the New Sub-Advisory Agreement may be
terminated at any time without penalty upon 60 days' written notice to the other
party to the agreement, and will automatically terminate in the event of its
"assignment" by either party (as defined under the Investment Company Act) or
(provided Putnam Management has received prior written notice thereof) upon
termination of the New Investment Management Agreement.
The Manager believes that changes in the investment strategies recommended
by Putnam Management and the regard for the high quality of Putnam Management's
investment advisory capabilities will facilitate efforts to increase the
Portfolio's assets with beneficial effects on portfolio and Trust expenses. As
discussed herein, the Board of Trustees and the Manager believe that the
modified fee structure for the Portfolio under the New Investment Management
Agreement and the New Sub-Advisory Agreement accurately reflects the high
quality of services to be provided under these agreements.
The Proposed Sub-Adviser
Putnam Management is a wholly owned subsidiary of Putnam Investments, Inc.,
One Post Office Square, Boston, Massachusetts 02109, a holding company that is
in turn wholly owned by Marsh & McLennan Companies, Inc., which has executive
offices at 1166 Avenue of the Americas, New York, New York 10036. Marsh &
McLennan Companies, Inc. and its operating subsidiaries are professional
services firms with insurance and reinsurance brokering, consulting and
investment management businesses. At July 31, 1996, Putnam Management and its
affiliates managed assets in excess of $146 billion.
The directors of Putnam Management are George Putnam, Lawrence J. Lasser,
and Gordon H. Silver. The principal occupations of Messrs. Putnam, Lasser, and
Silver are as officers and directors of Putnam Management and certain of its
corporate affiliates. Mr. Putnam is the Chairman of the Trustees of the Putnam
family of funds. Mr. Lasser is the President and Chief Executive Officer of
Putnam Management. Mr. Silver is Senior Administrative Officer of Putnam
Management and other Putnam entities. The address of Putnam Management and the
business address of the directors and officers of Putnam Management is One Post
Office Square, Boston, Massachusetts 02109.
Putnam Management acts as investment adviser to various publicly owned
investment companies, some of which have investment objectives similar to the
investment objective of the Portfolio as contemplated by Proposal III of this
Proxy Statement (collectively, the "Comparable Putnam Funds"). For each
Comparable Putnam Fund, the chart below lists the total assets at June 30, 1996,
as well as the current management fee rate payable to Putnam Management:
<TABLE>
<CAPTION>
Total Net Assets
Comparable Putnam Fund at June 30, 1996 Management Fee Rate
- - ---------------------- ---------------- -------------------
<S> <C> <C>
Putnam International $ 295,307,762 .80% of the first $500 million of average net
Growth Fund assets; plus .70% of the next $500 million; plus .65%
of the next $500 million; plus .60% of any excess over
$1.5 billion.
Putnam Asia Pacific $ 457,409,536 Same as previous.
Growth Fund
Putnam Europe Growth Fund $ 223,681,161 Same as previous.
Putnam Global Growth Fund $ 3,440,623,072 Same as previous.
Putnam Capital Manager Trust: $ 91,594,000 Same as previous.
PCM Asia Pacific Fund
Putnam Capital Manager Trust: $ 1,060,490,000 .60% of average net assets.
PCM Global Growth Fund
Putnam Investment Funds: $ 3,258,017 .80% of the first $500 million of average net
Putnam International Fund** assets; plus .70% of the next $500 million; plus .65%
of the next $500 million; plus .60% of the next $5
billion; plus .575% of the next $5 billion; plus .555%
of the next $5 billion; plus .54% of the next $5 billion;
plus .53% thereafter.
Putnam Investment Funds: $ 3,230,650 Same as previous.
Putnam Japan Fund**
- - ------------------------- --------------
All Comparable Putnam Funds $ 5,574,594,198
</TABLE>
** With respect to these funds, Putnam Management has agreed to waive its fees
and, if necessary, reimburse expenses if the expenses of the fund exceed 1.45%
per annum. Portfolio transaction expenses, taxes, payments under distribution
plans and extraordinary expenses are excluded from the limitation.
Putnam Management does not believe that the management fee rates set
forth above are directly comparable to the fees to be paid to Putnam Management
with respect to the management of the Portfolio under the New Sub-Advisory
Agreement since, for the funds listed above, Putnam Management provides a full
range of administrative services in addition to portfolio management.
The Evaluation by the Board of Trustees
In evaluating the New Sub-Advisory Agreement, the Board of Trustees
reviewed materials furnished by the Manager and Putnam Management. These
materials included financial statements and information regarding the Manager
and Putnam Management and their respective personnel and operations.
Consideration was given to the reduced sub-advisory fee rate payable under the
New Sub-Advisory Agreement and the amount of fees that would have been paid by
the Manager if such agreement had been in effect during the past fiscal year,
taking into account the Sub-adviser's current voluntary fee waiver, as discussed
previously. Consideration also was given to comparative fee and expense
information concerning other mutual funds with similar investment objectives
published by a widely recognized industry authority and to potential indirect
benefits in connection with the Portfolio and its investment operations,
including any which may arise in connection with brokerage transactions.
In evaluating the New Sub-Advisory Agreement, the Board of Trustees
considered that (1) the reputation and standing of Putnam Management in the U.S.
mutual fund industry is generally excellent in light of, among other things, the
rating by nationally recognized fund rating services of funds managed by Putnam
Management; (2) the services to be delivered by Putnam Management to the
Portfolio's shareholders are expected to be of high quality; (3) the
sub-advisory fee rate payable to Putnam Management under the New Sub-Advisory
Agreement is competitive and will be lower than the sub-advisory fee rate
payable under the Present Sub-Advisory Agreement; (4) although the sub-advisory
fee rate payable under the terms of the New Sub-Advisory Agreement is lower than
the sub-advisory fee rate payable under the terms of the Present Sub-Advisory
Agreement, compensation payable by the Manager under the New Sub-advisory
Agreement may not be lower at various asset levels of the Portfolio taking into
account the application of the Sub-adviser's current voluntary fee waiver, as
discussed previously; (5) the terms and conditions of the New Sub-Advisory
Agreement will remain materially unchanged from those of the Present
Sub-Advisory Agreement, except for the identity of the service provider, the
effective date and termination date, the name of the Portfolio, a reduced
sub-advisory fee rate payable by the Manager, and additional representations of
the Sub-adviser concerning review of documents and rendering advice (which, in
certain instances, provide clarification of responsibilities); (6) Putnam
Management has significant experience in managing investment portfolios with
investment objectives similar to the investment objective described in Proposal
III and, if approved, would apply to the Portfolio (the "Comparable Putnam
Funds," as defined earlier); and (7) Putnam Management managed combined assets
of the Comparable Putnam Funds totaling approximately $5.6 billion as at June
30, 1996. The Board of Trustees also received assurances that Putnam Management
has considerable staffing resources available and adequate capitalization to
provide high quality management services.
Based upon its evaluation, the Board of Trustees determined that the
Manager's engagement of Putnam Management as Sub-adviser to the Portfolio likely
would offer the Portfolio continued access to effective management and advisory
services and capabilities. The Board of Trustees concluded further that the
terms of the New Sub-Advisory Agreement, including the fees contemplated
thereby, are fair and reasonable and in the best interests of the Portfolio and
its shareholders.
In order to provide for the services described in the New Sub-Advisory
Agreement, the shareholders are being asked to approve the New Sub-Advisory
Agreement.
Portfolio Brokerage
Subject to the supervision of the Manager and the Board of Trustees,
decisions to buy and sell securities for each portfolio of the Trust, including
the Portfolio, are made by the portfolio's respective Sub-adviser. Subject to
the direction of the Manager, each Sub-adviser is authorized to allocate the
orders placed by it on behalf of the applicable portfolio to brokers who also
may provide research or statistical material, or other services to the portfolio
or the Sub-adviser for the use of the applicable portfolio. Such allocation
shall be in such amounts and proportions as the Sub-adviser shall determine in
accordance with the policy set forth in the Trust's Prospectus and Statement of
Additional Information or as the Board of Trustees may determine from time to
time, and the Sub-adviser will report such allocations either to the Manager,
which will report on such allocations to the Board of Trustees, or, if requested
by the Manager, directly to the Board of Trustees. Such reports will indicate
the brokers to whom such allocations have been made and the basis therefor. The
Sub-adviser may consider sale of shares of the portfolio, as well as the
recommendations of the Manager, as factors in the selection of brokers to
execute portfolio transactions for a portfolio, subject to the requirements of
best net price and most favorable execution.
Change in Portfolio Name
If Proposals I and II are approved, as of October 15, 1996, the name of
the Portfolio will be changed from the "Seligman Henderson International Equity
Portfolio" to the "AST Putnam International Equity Portfolio," and the New
Investment Management Agreement and the New Sub-Advisory Agreement will become
effective.
As discussed earlier, the Portfolio's investment program will be based
upon the current investment program employed by Putnam Management in connection
with its management of the Putnam International Growth Fund (the "Putnam Fund,"
as defined earlier). In the opinion of the Manager and Putnam Management, the
proposed name is consistent with the proposed investment objective for the
Portfolio, as described more fully under Proposal III herein, and the overall
investment strategy to be employed by Putnam Management in managing the
Portfolio.
Proposals I and II are both made contingent upon shareholder approval
of each other. If either of Proposals I or II is not approved, the Present
Investment Management Agreement and the Present Sub-Advisory Agreement will
continue in effect.
THE TRUSTEES, INCLUDING THE INDEPENDENT TRUSTEES,
RECOMMEND THAT THE SHAREHOLDERS VOTE "FOR" PROPOSAL II.
ANY UNMARKED PROXIES WILL BE SO VOTED.
PROPOSAL III
APPROVAL OF A CHANGE IN THE
PORTFOLIO'S INVESTMENT OBJECTIVE
The Portfolio's current fundamental investment objective, which may not
be changed without approval of the shareholders of the Portfolio, is the
following:
The Portfolio seeks long-term capital appreciation consistent with
preservation of capital primarily through investments in securities of
non-United States issuers.
While the Sub-adviser may invest the assets of the Portfolio in
securities of issuers domiciled in any country, under normal conditions
investments will be made in three principal international regions: the United
Kingdom and Continental Europe, the Pacific Basin countries, and Latin America.
The Sub-adviser believes that the Portfolio will usually have assets invested in
each of these international regions. Although under normal market conditions the
Portfolio will be invested in a minimum of five countries, the Portfolio may
have assets invested in many countries. Investments will not normally be made in
securities of issuers located in the United States or Canada. Some of the
countries in which the Portfolio may invest may be considered to be developing
and may involve special risks.
The Portfolio may invest in all types of securities, most of which will
be denominated in foreign currencies. The Portfolio may also invest in
securities represented by European Depository Receipts or American Depository
Receipts. Since opportunities for long-term growth are primarily expected from
equity securities, the Portfolio will normally invest substantially all of its
assets in such securities, including common stock, securities convertible into
common stock, depository receipts for these securities and warrants. The
Portfolio may, however, invest up to 25% of its assets in preferred stock and
debt securities if the Sub-adviser believes that the capital appreciation
available from an investment in such securities will equal or exceed the capital
appreciation available from an investment in equity securities.
Equity securities in which the Portfolio will invest may be listed on a
foreign stock exchange or traded in foreign over-the-counter markets. There is
no minimum capitalization requirement for a security to be eligible for
inclusion in the Portfolio. The Portfolio will generally purchase securities of
medium to large size companies in the principal international markets, although
it may purchase securities of companies which have a lower market capitalization
in the smaller regional markets. With respect to the Portfolio's investment in
debt securities, there is no requirement that all such securities be rated by a
recognized rating agency. However, it is the policy of the Portfolio that
investments for the Portfolio in debt securities, whether rated or unrated, will
be made only if there are, in the opinion of the Sub-adviser, of equivalent
quality to "investment grade" securities. "Investment grade" securities are
those rated within the four highest quality grades as determined by Moody's
Investor Service, Inc. ("Moody's") or Standard & Poor's Corporation ("S&P's").
Securities rated within the highest of the four investment grade categories
(i.e., Aaa by Moody's and AAA by S&P's) are judged to be of the best quality and
carry the smallest degree of risk. Securities rated with the lowest of the four
categories (i.e., Baa by Moody's and BBB by S&P's) lack quality investment
characteristics and, in fact, may be speculative.
The Board of Trustees recommends that the shareholders adopt the
following fundamental investment objective for the Portfolio, which, if
approved, may not be changed without subsequent approval of the shareholders of
the Portfolio:
The Portfolio seeks capital appreciation.
As amended, the investment objective of the Portfolio would be
substantially similar to the current investment objective of the Putnam
International Growth Fund (the "Putnam Fund," as defined earlier), an open-end
management investment company to which Putnam Management acts as investment
adviser. The Portfolio seeks its objective by investing primarily in equity
securities of companies located in a country outside the United States. By
investing in a diversified portfolio of foreign securities, the Sub-adviser
attempts to reduce the risks associated with being invested in the economy of
only one country. The countries which the Sub-adviser believes offer attractive
opportunities for investment may change from time to time.
The Portfolio's investments will normally include common stocks,
preferred stocks, securities convertible into common or preferred stocks, and
warrants to purchase common or preferred stocks. The Portfolio may also invest
to a lesser extent in debt securities and other types of investments if the
Sub-adviser believes purchasing them would help achieve the Portfolio's
objective. The Portfolio will, under normal circumstances, invest at least 65%
of its total assets in issuers located in at least three different countries
other than the United States. The Portfolio may hold a portion of its assets in
cash or money market instruments. The Portfolio may also invest in securities of
issuers in emerging markets, as well as more developed markets. Investing in
emerging markets generally involves more risks than in investing in developed
markets.
The Portfolio will not limit its investments to any particular type of
company. The Portfolio may invest in companies, large or small, whose earnings
are believed to be in a relatively strong growth trend, or in companies in which
significant further growth is not anticipated but whose market value per share
is thought to be undervalued. It may invest in small and relatively less
well-known companies which meet these characteristics. Smaller companies may
present greater opportunities for capital appreciation, but may also involve
greater risks. They may have limited product lines, markets for financial
resources, or may depend on a limited management group. Their securities may
trade less frequently and in limited volume. As a result, the prices of these
securities may fluctuate more than prices of securities of larger, more
established companies.
At times, the Sub-adviser may judge that conditions in the
international securities markets make pursuing the Portfolio's basic investment
strategy inconsistent with the best interests of its shareholders. At such
times, the Sub-adviser may temporarily use alternative strategies, primarily
designed to reduce fluctuations in the value of the portfolio assets. In
implementing these defensive strategies, the Portfolio may invest without limit
in securities primarily traded in the U.S. markets, or in any other securities
the Sub-adviser considers consistent with such defensive strategies.
The Manager has expressed its belief to the Board of Trustees that the
proposed change to the investment objective of the Portfolio is in the interests
of the shareholders of the Portfolio.
This Proposal III is made contingent upon shareholder approval of
Proposals I and II. If either of Proposals I or II is not approved, the current
investment objective will continue in effect and will apply to the Portfolio.
THE TRUSTEES, INCLUDING THE INDEPENDENT TRUSTEES,
RECOMMEND THAT THE SHAREHOLDERS VOTE "FOR" PROPOSAL III.
ANY UNMARKED PROXIES WILL BE SO VOTED.
PROPOSAL IV
APPROVAL OF CHANGES IN THE PORTFOLIO'S
FUNDAMENTAL INVESTMENT RESTRICTIONS
As described in more detail below, the Board of Trustees, including the
Independent Trustees, are recommending to the shareholders of the Portfolio that
they approve a number of changes to the Portfolio's fundamental investment
restrictions. Generally, the purpose behind these proposed changes is to conform
the investment program of the Portfolio with the current investment program
employed by Putnam Management in its management of the Putnam International
Growth Fund (the "Putnam Fund," as defined earlier). If this Proposal IV is
approved, the investment restrictions as proposed below would be substantially
similar to the current corresponding investment restrictions of the Putnam Fund.
Reclassification of Certain Investment Restrictions from "Fundamental" to
"Non-Fundamental"
The Portfolio currently is subject to certain investment restrictions
which are "fundamental" policies and may not be changed without approval of the
shareholders of the Portfolio. The Portfolio also is subject to certain
non-fundamental investment restrictions which may be changed by the Board of
Trustees without shareholder approval.
The Manager, after discussions with Putnam Management, has proposed to
the Board of Trustees that certain of the Portfolio's investment restrictions
discussed below be reclassified from "fundamental" investment restrictions to
"non-fundamental" investment restrictions to provide the Portfolio with
additional flexibility to pursue its investment objective consistent with
applicable laws in effect from time to time. The Investment Company Act does not
require any of these investment restrictions to be classified as "fundamental."
Moreover, many of the prohibitions underlying these investment restrictions
reflect the requirements of the Investment Company Act and certain state
securities laws and, in the absence of such restrictions, would still be
applicable to the Portfolio. If the Shareholders of the Portfolio approve this
Proposal IV, the Board of Trustees thereafter may change any one or more of such
"non-fundamental" investment restrictions without the delay and expense to the
Portfolio of arranging for shareholder approval to the extent provided under
applicable law.
(1) The Portfolio currently is subject to the following fundamental
investment restriction concerning investment in illiquid securities:
The Portfolio will not purchase a security if as a result, more than
10% of its net assets in the aggregate, at market value, would be
invested in securities which cannot be readily resold because of legal
or contractual restrictions on resale or for which there is no readily
available market, or repurchase agreements maturing in more than seven
days or securities used as a cover for written over-the-counter
options, if any.
The Manager has proposed to the Board of Trustees that the above
fundamental investment restriction be replaced by the following proposed
non-fundamental investment restriction:
The Portfolio will not invest in (a) securities which at the time of
such investment are not readily marketable, (b) securities restricted
as to resale, excluding securities determined by the Trustees of the
Trust (or the person designated by the Trustees of the Trust to make
such determinations) to be readily marketable, and (c) repurchase
agreements maturing in more than seven days, if, as a result, more than
15% of the Portfolio's net assets (taken at current value) would be
invested in securities described in (a), (b) and (c) above.
The present fundamental investment restriction of the Portfolio no
longer reflects current regulatory requirements and is unnecessarily
restrictive. The proposed non-fundamental investment restriction reflects the
current requirements of the Securities and Exchange Commission (the "SEC") with
respect to investments in illiquid securities. If the proposed change is
approved, the Portfolio would be permitted to invest a greater percentage of its
assets in securities for which market quotations are not readily available.
Moreover, the proposed restriction makes clear that investments in securities
restricted as to resale determined by the Trustees or their designees to be
readily marketable are excluded from the restriction's percentage limitation.
Investments in illiquid securities may impair the Portfolio's ability to
determine the fair market value of such investments for purposes of calculating
the Portfolio's net asset value.
By reclassifying the investment restriction from fundamental to
non-fundamental, the Board of Trustees would also be afforded flexibility to
consider future modifications or elimination of the investment restriction if
deemed appropriate.
(2) The Portfolio currently is subject to the following fundamental
investment restriction concerning investment in warrants:
The Portfolio will not invest in warrants if, at the time of
acquisition, the investment in warrants, valued at the lower of cost or
market value, would exceed 5% of the Portfolio's net assets. For
purposes of this restriction, warrants acquired by the Portfolio in
units or attached to securities may be deemed to be without value.
The Manager has proposed to the Board of Trustees that the above
fundamental investment restriction be replaced by the following proposed
non-fundamental investment restriction:
The Portfolio will not invest in warrants (other than warrants acquired
by the Portfolio as a part of a unit or attached to securities at the
time of purchase) if, as a result, such investments (valued at the
lower of cost or market) would exceed 10% of the value of the
Portfolio's net assets; provided that not more than 2% of the
Portfolio's net assets may be invested in warrants not listed on any
principal foreign or domestic exchange.
If this Proposal IV is approved, the proposed investment restriction
would more closely reflect the current investment restriction applicable to the
Putnam Fund regarding investments in warrants. The effect of the adoption would
be to increase from 5% to 10% the percentage of the Portfolio's net assets which
may be invested in warrants, but with the new restriction that only 2% of the
Portfolio's net assets may be invested in warrants which are not listed on a
major exchange. Under the current restriction, warrants acquired by the
Portfolio in units or attached to securities "may be deemed to be without value"
with the effect that such warrants would be excluded from the percentage
limitation on warrant investments. Under the proposed restriction, warrants
acquired by the Portfolio in units or attached to securities would be excluded
from the percentage limitation whether or not they have been deemed to be
without value.
By reclassifying the investment restriction from fundamental to
non-fundamental, the Board of Trustees would also be afforded flexibility to
consider future modifications or elimination of the investment restriction if
deemed appropriate.
(3) The Portfolio currently is subject to the following fundamental
investment restriction concerning the purchase of securities of issuers which
have a record of less than three years' continuous operation ("unseasoned"
issuers):
The Portfolio will not purchase a security if as a result, more than 5%
of the value of that Portfolio's assets, at market value, would be
invested in the securities of issuers which, with their predecessors,
have been in business less than three years.
The Manager has proposed to the Board of Trustees that the above
fundamental investment restriction be replaced by the following proposed
non-fundamental investment restriction:
The Portfolio will not invest in securities of any issuer if the party
responsible for payment, together with any predecessors, has been in
operation for less than three consecutive years and, as a result of the
investment, the aggregate of such investments would exceed 5% of the
value of the Portfolio's net assets; provided, however, that this
restriction shall not apply to any obligation of the United States or
its agencies or instrumentalities.
The prohibition underlying the current fundamental investment
restriction reflects the requirements of applicable state securities law and, in
the absence of such restriction, would still be applicable to the Portfolio. The
proposed non-fundamental investment restriction more closely reflects the
applicable state law requirement. Under the proposed non-fundamental
restriction, the Portfolio would continue to be permitted to invest up to 5% of
its assets in "unseasoned" issuers. However, the proposed restriction would make
clear that obligations of the United States or its agencies or instrumentalities
are excluded from the percentage limitation.
By reclassifying the investment restriction from fundamental to
non-fundamental, the Board of Trustees would also be afforded flexibility to
consider future modifications or elimination of the investment restriction if
deemed appropriate.
(4) The Portfolio currently is subject to the following fundamental
investment restriction concerning the purchase of securities of other investment
companies:
The Portfolio will not purchase securities of other investment
companies, except in connection with a merger, consolidation,
acquisition or reorganization, or by purchase in the open market of
securities of closed-end investment companies where no underwriter or
dealer's commission or profit, other than a customary broker's
commission, is involved and only if immediately thereafter not more
than 10% of this Portfolio's total assets, at market value, would be
invested in such securities, or by investing no more than 5% of the
Portfolio's total assets in other open-end investment companies or by
purchasing no more than 3% of any one open-end investment company's
securities.
The Manager has proposed to the Board of Trustees that the above
fundamental investment restriction be replaced by the following proposed
non-fundamental investment restriction:
The Portfolio will not invest in the securities of other registered
investment companies, except by purchase in the open market including
only customary brokers' commissions, and except as they may be acquired
as part of a merger, consolidation or acquisition of assets.
If this Proposal IV is approved, the Portfolio would continue to be
subject to a substantially similar investment restriction, since the prohibition
underlying the current fundamental investment restriction of the Portfolio
reflects the requirements of the Investment Company Act and, in the absence of
such restriction, would still apply to the Portfolio. Under the proposed
non-fundamental investment restriction, however, in the event that the
Investment Company Act or applicable state law is amended, the Portfolio would
not be required to conduct a shareholders meeting, with attendant delay and
expense, in order to respond to any provisions of the amended law of potential
benefit to the Portfolio.
(5) The Portfolio currently is subject to the following fundamental
investment restriction concerning the purchase of securities or property on
margin:
The Portfolio will not buy any securities or other property on margin
(except for such short-term credits as are necessary for the clearance
of transactions).
The Manager has proposed to the Board of Trustees that the above
fundamental investment restriction be replaced by the following proposed
non-fundamental investment restriction:
The Portfolio will not purchase securities on margin, except such
short-term credits as may be necessary for the clearance of purchases
and sales of securities, and except that it may make margin payments in
connection with futures contracts and options.
The prohibition underlying the current fundamental investment
restriction was intended to reflect the requirements of applicable state
securities law which permit margin payments in connection with financial futures
contracts and related options. The current restriction is therefore
unnecessarily restrictive and the adoption of the proposed restriction would
conform the investment program for the Portfolio to the Putnam Fund investment
program. In the absence of such restriction, the restriction as proposed would
still be applicable to the Portfolio under state securities law. If this
Proposal IV is approved and the current fundamental investment restriction is
reclassified as a substantially similar non-fundamental investment restriction,
the Board of Trustees, if deemed appropriate in its judgment, would have the
flexibility to respond to any future changes in applicable law and modify the
investment restriction without the attendant delay and expense of arranging for
a shareholders meeting.
(6) The Portfolio currently is subject to the following fundamental
investment restriction concerning investment in companies for the purpose of
exercising control or management:
The Portfolio will not invest in companies for the purpose of
exercising control or management.
The Manager has proposed to the Board of Trustees that the above
fundamental investment restriction be replaced by the following proposed
non-fundamental investment restriction:
A Portfolio will not make investments for the purpose of gaining
control of a company's management.
If this Proposal IV is approved, the Portfolio would continue to be
subject to the same investment restriction, since the proposed non-fundamental
investment restriction reflects the requirements of the current fundamental
investment restriction. Under the proposed investment restriction, however, the
Board of Trustees, if deemed appropriate in its judgment, would have the
flexibility to respond to any future changes in applicable law and modify the
investment restriction without the attendant delay and expense of arranging for
a shareholders meeting. It is not the intent of the Portfolio to control or
manage any company and the Portfolio generally is precluded from doing so under
various laws. Subject to these laws, it may be in the Portfolio's interest from
time to time to make additional investments in a company to obtain the ability
to influence the management of the company. For example, the Portfolio,
consistent with applicable law, may wish to influence the management of a
company in which there is an existing investment by the Portfolio where the
company is experiencing financial difficulties.
(7) The Portfolio currently is subject to the following fundamental
investment restriction concerning the purchase or retention of securities of
certain issuers:
The Portfolio will not purchase or retain securities of any issuer
(other than the shares of such Portfolio) if to the Trust's knowledge,
the officers and Trustees of the Trust and the officers and directors
of the Investment Manager who individually own beneficially more than
1/2 of 1% of the outstanding securities of such issuer, together own
beneficially more than 5% of such outstanding securities.
The Manager has proposed to the Board of Trustees that the above
fundamental investment restriction be replaced by the following proposed
non-fundamental investment restriction:
The Portfolio will not invest in securities of any issuer if, to the
knowledge of the Portfolio, officers and Trustees of the Trust and
officers and directors of the Investment Manager and the Sub-advisor
who beneficially own more than 0.5% of the shares or securities of that
issuer together own more than 5%.
The prohibition underlying the current fundamental investment
restriction reflects the requirements of applicable state securities law and, in
the absence of such restriction, would still be applicable to the Portfolio. If
this Proposal IV is approved and the current fundamental investment restriction
is reclassified as a substantially similar non-fundamental investment
restriction, the Board of Trustees, if deemed appropriate in its judgment, would
have the flexibility to respond to any future changes in applicable law and
modify the investment restriction without the attendant delay and expense of
arranging for a shareholders meeting.
(8) The Portfolio currently is subject to the following fundamental
investment restriction concerning the making of short sales:
The Portfolio will not make short sales except short sales made
"against the box" to defer recognition of taxable gains or losses.
The Manager has proposed to the Board of Trustees that the above
fundamental investment restriction be replaced by the following proposed
non-fundamental investment restriction:
The Portfolio will not make short sales of securities or maintain a
short sale position for the account of the Portfolio unless at all
times when a short position is open it owns an equal amount of such
securities or owns securities which, without payment of any further
consideration, are convertible into or exchangeable for securities of
the same issue as, and at least equal in amount to, the securities sold
short.
If this Proposal IV is approved, the proposed investment restriction
would more closely reflect the current investment restriction applicable to the
Putnam Fund regarding the making of short sales. The current restriction allows
short sales only to the extent made "against-the-box" and would limit such
transactions further to those made for the purpose of deferring recognition of
taxable gains or losses. The proposed investment restriction would allow short
sales "against-the-box" for purposes other than deferral of taxable gains or
losses. The proposed restriction therefore would enlarge the ability of Putnam
Management to effect short sales "against-the-box." The adoption of the proposed
restriction may have the effect of increasing the Portfolio's exposure to losses
in connection with such transactions.
By reclassifying the investment restriction from fundamental to
non-fundamental, the Board of Trustees would also be afforded flexibility to
consider future modifications or elimination of the investment restriction if
deemed appropriate.
(9) The Portfolio currently is subject to the following fundamental
investment restriction concerning investment in mineral exploration or
development programs:
The Portfolio will not invest directly in oil, gas, or other mineral
exploration or development programs; however, the Portfolio may
purchase securities of issuers whose principal business activities fall
within such areas.
The Manager has proposed to the Board of Trustees that the above
fundamental investment restriction be replaced by the following proposed
non-fundamental investment restriction:
The Portfolio will not buy or sell oil, gas or other mineral leases,
rights or royalty contracts, although it may purchase securities of
issuers which deal in, represent interests in, or are secured by
interests in such leases, rights, or contracts, and it may acquire or
dispose of such leases, rights, or contracts acquired through the
exercise of its rights as a holder of debt obligations secured thereby.
If this Proposal IV is approved, the proposed non-fundamental
investment restriction would more closely reflect the current investment
restriction applicable to the Putnam Fund regarding investments in oil and gas
and other mineral interests. It would also explicitly permit the Portfolio to
purchase securities representing interests in or secured by interests in mineral
leases, rights or royalty contracts, and to acquire or dispose of leases, rights
or contracts acquired through the exercise of rights as a holder of debt
obligations secured thereby, all transactions which in the Manager's view are
permissible under the present restriction. If adopted, the Portfolio would
continue to be permitted to invest in securities of issuers which engage in
whole or in part in activities involving such interests.
By reclassifying the investment restriction from fundamental to
non-fundamental, the Board of Trustees would also be afforded flexibility to
consider future modifications or elimination of the investment restriction if
deemed appropriate.
Changes in Certain Fundamental Investment Restrictions:
In addition to the proposed changes discussed above, the Manager has
proposed to the Board of Trustees that certain other of the Portfolio's
fundamental investment restrictions discussed below be changed in the following
manner:
(1) The Portfolio currently is subject to the following fundamental
investment restriction concerning the loaning of money:
The Portfolio will not make loans of money or securities other than (a)
through the purchase of securities in accordance with the Portfolio's
investment objective, (b) through repurchase agreements and (c) by
lending securities in an amount not to exceed 33 1/3% of the
Portfolio's total assets to broker-dealers or other institutional
investors where the borrower of such securities provides cash or cash
equivalents as collateral (such cash equivalents will be limited to
securities issued or guaranteed by the U.S. Government, its agencies or
instrumentalities) at all times in an amount at least equal to 100% of
the value of the borrowed securities, marked to market, and the
Portfolio will retain the right to obtain any dividend, interest or
other distribution on the securities and any increase in their market
value and may invest the cash collateral and earn additional income, or
it may receive an agreed-upon amount of interest income from the
borrower who has delivered equivalent collateral or secured a letter of
credit. The Portfolio reserves the right to terminate such arrangement
at any time (such right of termination may be exercised, among other
reasons, to obtain the return of the securities on loan for the purpose
of voting on any matters considered material by the Portfolio). The
Portfolio will make only loans of securities for nine months or less.
The Manager has proposed to the Board of Trustees that the above
fundamental investment restriction be replaced by the following proposed
fundamental investment restriction:
The Portfolio will not make loans, except by purchase of debt
obligations in which the Portfolio may invest consistent with its
investment policies, by entering into repurchase agreements, or by
lending its portfolio securities.
If this Proposal IV is approved, the proposed investment restriction
would more closely reflect the current investment restriction of the Putnam Fund
regarding the making of loans. The current investment restriction limits
securities lending transaction to 33 1/3% of the Portfolio's assets and to
transactions in which the counter-parties are broker-dealers or institutions. In
addition, the present restriction further specifies the terms and conditions of
such transactions. The proposed investment restriction, however, would allow the
Portfolio to enter into securities loans without limitation and would not limit
the counter-parties in securities lending transactions to broker-dealers or
institution or specify the terms of permissible securities lending transactions.
Adoption of the proposed fundamental investment restriction would therefore
afford greater flexibility to Putnam Management to the extent that such
transactions are not governed by the requirements of the Investment Company Act.
(2) The Portfolio currently is subject to the following fundamental
investment restriction concerning investment in real estate:
The Portfolio will not purchase or sell real estate (although it may
purchase securities secured by real estate interests or interests
therein, or issued by companies or investment trusts which invest in
real estate or interests therein).
The Manager has proposed to the Board of Trustees that the above
fundamental investment restriction be replaced by the following proposed
fundamental investment restriction:
The Portfolio will not purchase or sell real estate, although it may
purchase securities of other issuers which deal in real estate,
securities which are secured by interests in real estate, and
securities representing interests in real estate, and it may acquire
and dispose of real estate or interests in real estate acquired through
the exercise of its rights as a holder of debt obligations secured by
real estate or interest therein.
If this Proposal IV is approved, the proposed investment restriction
would more closely reflect the current investment restriction applicable to the
Putnam Fund regarding investments in real estate. Unlike the current investment
restriction, the proposed restriction would allow investments in securities
representing interests in real estate and would explicitly permit the Portfolio
to acquire and dispose of real estate or interests in real estate acquired
through the exercise of rights as a holder of debt obligations secured by real
estate or interests therein, transactions which the Manager believes are allowed
under the current investment restriction.
(3) The Portfolio currently is subject to the following fundamental
investment restriction concerning the underwriting of securities:
The Portfolio will not underwrite securities issued by others except to
the extent that the Portfolio may be deemed an underwriter when
purchasing or selling securities.
The Manager has proposed to the Board of Trustees that the above
fundamental investment restriction be replaced by the following proposed
fundamental investment restriction:
The Portfolio will not underwrite securities issued by other persons
except to the extent that, in connection with the disposition of its
portfolio investments, it may be deemed to be an underwriter under
certain federal securities laws.
The current and proposed investment restrictions are substantially
similar. If this Proposal IV is approved, the proposed investment restriction
would more closely reflect the current restriction applicable to the Putnam Fund
regarding the underwriting of securities.
(4) The Portfolio currently is subject to the following fundamental
investment restriction concerning investment in a single issuer:
As to 75% of the value of its total assets, the Portfolio will not
invest more than 5% of its total assets, at market value, in the
securities of any one issuer (except securities issued or guaranteed by
the U.S. Government, its agencies or instrumentalities).
The Manager has proposed to the Board of Trustees that the above
fundamental investment restriction be replaced by the following proposed
fundamental investment restriction:
The Portfolio will not, with respect to 75% of its total assets, invest
in the securities of any issuer if, immediately after such investment,
more than 5% of the total assets of the Portfolio (taken at current
value) would be invested in the securities of such issuer; provided
that this limitation does not apply to obligations issued or guaranteed
as to interest or principal by the U.S. government or its agencies or
instrumentalities.
If this Proposal IV is approved, the Portfolio would continue to be
subject to a substantially similar investment restriction, since the prohibition
underlying the current fundamental investment restriction of the Portfolio
reflects the requirements of the Investment Company Act. The proposed investment
restriction, however, would more closely reflect the current investment
restriction applicable to the Putnam Fund regarding investments in a single
issuer.
(5) The Portfolio currently is subject to the following fundamental
investment restriction concerning investment in a single industry:
The Portfolio will not purchase a security if as a result, more than
25% of its total assets, at market value, would be invested in the
securities of issuers principally engaged in the same industry (except
securities issued or guaranteed by the U.S. Government, its agencies or
instrumentalities).
The Manager has proposed to the Board of Trustees that the above
fundamental investment restriction be replaced by the following proposed
fundamental investment restriction:
The Portfolio will not purchase securities (other than securities of
the U.S. government, its agencies or instrumentalities) if, as a result
of such purchase, more than 25% of the Portfolio's total assets would
be invested in any one industry.
The current and proposed investment restrictions are substantially
similar. If this Proposal IV is approved, the proposed investment restriction
would more closely reflect the current investment restriction applicable to the
Putnam Fund regarding investments in a single industry. Among other clarifying
changes, the proposed investment restriction recognizes that the value of
portfolio securities may be determined, and in the case of certain securities,
may have to be determined, by means other than "market value" in accordance with
the Investment Company Act.
(6) The Portfolio currently is subject to the following fundamental
investment restriction concerning the ownership of a certain percentage of the
outstanding voting securities of a single issuer:
The Portfolio will not purchase a security if as a result, the Portfolio
would own more than 10% of the outstanding voting securities of any issuer.
The Manager has proposed to the Board of Trustees that the above
fundamental investment restriction be replaced by the following proposed
fundamental investment restriction:
The Portfolio will not, with respect to 75% of its total assets, acquire
more than 10% of the voting securities of any issuer.
The proposed fundamental investment restriction would allow the
Portfolio maximum flexibility to conduct its investment program as a
"diversified" investment company under the Investment Company Act. The
Investment Company Act prohibits a diversified fund, such as the Portfolio, from
investing with respect to 75% of its total assets in securities of an issuer if
as a result the Portfolio would own more than 10% of the outstanding voting
securities of such issuer. The proposed investment restriction reflects the more
flexible limitations of the Investment Company Act as the Portfolio will be able
to purchase more than 10% of the outstanding voting securities of an issuer with
respect to 25% of its total assets. The current fundamental investment
restriction could impair the Portfolio's ability to pursue its investment
objective by unnecessarily preventing it from investing in desirable
opportunities.
This Proposal IV is made contingent upon shareholder approval of
Proposals I and II. If either of Proposals I or II is not approved, the current
fundamental investment restrictions will continue in effect and will apply to
the Portfolio.
THE TRUSTEES, INCLUDING THE INDEPENDENT TRUSTEES,
RECOMMEND THAT THE SHAREHOLDERS VOTE "FOR" PROPOSAL IV.
ANY UNMARKED PROXIES WILL BE SO VOTED.
Shareholder Proposals
The Trust is not required to hold and will not ordinarily hold annual
shareholders' meetings. The Board of Trustees may call special meetings of the
shareholders for action by shareholder vote as required by the Investment
Company Act or the Trust's Declaration of Trust.
Pursuant to rules adopted by the SEC under the Exchange Act, a
shareholder may include in proxy statements relating to annual and other
meetings of the shareholders of the Trust certain proposals for shareholder
action which he or she intends to introduce at such special meetings; provided,
among other things, that such proposal must be received by the Trust a
reasonable time before a solicitation of proxies is made for such meeting.
Timely submission of a proposal does not necessarily mean that the proposal will
be included.
By order of the Board of Trustees
Mary Ellen O'Leary
Corporate Secretary
American Skandia Trust
12914-1
<PAGE>
LIST OF EXHIBITS
EXHIBIT A-1 Form of Present Investment Management Agreement
EXHIBIT A-2 Form of New Investment Management Agreement
EXHIBIT A-3 Form of Present Sub-Advisory Agreement
EXHIBIT A-4 Form of New Sub-Advisory Agreement
<PAGE>
EXHIBIT A-1
HENDERSON INTERNATIONAL GROWTH FUND
INVESTMENT MANAGEMENT AGREEMENT
THIS AGREEMENT is made this 30th day of April, 1992 by and between
Henderson International Growth Fund, a Massachusetts business trust (the
"Fund"), and American Skandia Life Investment Management, Inc., a Connecticut
corporation (the "Investment Manager").
W I T N E S E T H
WHEREAS, the Fund is registered as an open-end, diversified management
investment company under the Investment Company Act of 1940, as amended (the
"Investment Company Act"), and the rules and regulations promulgated thereunder;
and
WHEREAS, the Investment Manager is registered as an investment adviser
under the Investment Advisers Act of 1940, as amended (the "Investment Advisers
Act"); and
WHEREAS, the Fund and the Investment Manager desire to enter into an
agreement to provide for the management of the assets of the Fund on the terms
and conditions hereinafter set forth.
NOW THEREFORE, in consideration of the mutual covenants herein
contained and other good and valuable consideration, the receipt whereof is
hereby acknowledged, the parties hereto agree as follows:
1. Management. The Investment Manager shall act as investment manager
for the Fund and shall, in such capacity, manage the investment operations of
the Fund, including the purchase, retention, disposition and lending of
securities, subject at all times to the policies and control of the Fund's Board
of Trustees. The Investment Manager shall give the Fund the benefit of its best
judgments, efforts and facilities in rendering its services as investment
manager.
2. Duties of Investment Manager. In carrying out its obligation under
paragraph 1 hereof, the Investment Manager shall:
(a) supervise and manage all aspects of the Fund's operations;
(b) provide the Fund or obtain for it, and thereafter supervise, such
executive, administrative, clerical and shareholder servicing services as are
deemed advisable by the Fund's Board of Trustees;
(c) arrange, but not pay for, the periodic updating of prospectuses and
supplements thereto, proxy material, tax returns, reports to the Fund's
shareholders, reports to and filings with the Securities and Exchange
Commission, state Blue Sky authorities and other applicable regulatory
authorities;
(d) provide to the Board of Trustees of the Fund on a regular basis,
written financial reports and analyses of the Fund's securities transactions and
the operations of comparable investment companies;
(e) obtain and evaluate pertinent information about significant
developments and economic statistical and financial data, domestic, foreign or
otherwise, whether affecting the economy generally or the Fund, and whether
concerning the individual issuers whose securities are included in the Fund or
the activities in which they engage, or with respect to securities which the
Investment Manager considers desirable for inclusion in the Fund;
(f) determine what issues and securities shall be represented in the Fund's
portfolio and regularly report them in writing to the Board of Trustees;
(g) formulate and implement continuing programs for the purchases and sales
of the securities of such issuers and regularly report in writing thereon to the
Board of Trustees; and
(h) take, on behalf of the Fund, all actions which appear to the Fund
necessary to carry into effect such purchase and sale programs and supervisory
functions as aforesaid, including the placing of orders for the purchase and
sale of portfolio securities.
3. Broker-Dealer Relationships. The Investment Manager is responsible
for decisions to buy and sell securities for the Fund, broker-dealer selection,
and negotiation of its brokerage commission rates. The Investment Manager shall
determine the securities to be purchased or sold by the Fund pursuant to its
determination with or through such persons, brokers or dealers, in conformity
with the policy with respect to brokerage as set forth in the Fund's Prospectus
and Statement of Additional Information, or as the Board of Trustees may
determine from time to time. Generally, the Investment Manager's primary
consideration is placing Fund securities transactions with broker-dealers for
execution is to obtain and maintain the availability of, execution at the best
net price and in the most effective manner possible. The Investment Manager may
consider sale of the shares of the Fund, subject to the requirements of best net
price and most favorable execution.
Consistent with this policy, the Investment Manager will take the
following into consideration: the best net price available; the reliability,
integrity and financial condition of the broker-dealer; the size of and
difficulty in executing the order; and the value of the expected contribution of
the broker-dealer to the investment performance of the Fund on a continuing
basis. Accordingly, the cost of the brokerage commissions to the Fund may be
greater than that available from other brokers if the difference is reasonably
justified by other aspects of the portfolio execution services offered. Subject
to such policies and procedures as the Board of Trustees of the Fund may
determine, the Investment Manager shall not be deemed to have acted unlawfully
or to have breached any duty solely by reason of its having caused the Fund to
pay a broker or dealer that provides research services to the Investment Manager
for the Fund's use an amount of commission for effecting a portfolio investment
transaction in excess of the amount of commission another broker or dealer would
have charged for effecting that transaction, if the Investment Manager,
determines in good faith that such amount of commission was reasonable in
relation to the value of the research services provided by such broker, viewed
in terms of either that particular transaction or the Investment Manager's
ongoing responsibilities with respect to the Fund. The Investment Manager is
further authorized to allocate the orders placed by it on behalf of the Fund to
such brokers and dealers who also provide research or statistical material, or
other services to the Fund or the Investment Manager. Such allocation shall be
in such amounts and proportions as the Investment Manager shall determine and
the Investment Manager will report on said allocations to the Board of Trustees
of the Fund regularly as requested by the Board and, in any event, at least once
each year if no specific request is made, indicating the brokers to whom such
allocations have been made and the basis therefor.
4. Control by Board of Trustees. Any investment program undertaken by the
Investment Manager pursuant to this Agreement, as well as any other activities
undertaken by the Investment Manager on behalf of the Fund pursuant thereto,
shall at all times be subject to any directives of the Board of Trustees of the
Fund.
5. Compliance with Applicable Requirements. In carrying out its obligations
under this Agreement, the Investment Manager shall at all times conform to:
(a) all applicable provisions of the Investment Company Act and Investment
Advisers Act and any rules and regulations adopted thereunder, as amended; and
(b) the provisions of the Registration Statements of the Fund under the
Securities Act of 1933 and the Investment Company Act, including the investment
objectives, policies and restrictions, and permissible investments specified
therein; and
(c) the provisions of the Declaration of Trust of the Fund, as amended; and
(d) the provisions of the By-Laws of the Fund, as amended; and
(e) any other applicable provisions of state and federal law.
6. Expenses. The expenses connected with the Fund shall be allocable
between the Fund and the Investment Manager as follows:
(a) The Investment Manager shall furnish, at its expense and without cost
to the Fund, the services of a President, Secretary, and one or more Vice
Presidents of the Fund, to the extent at such additional officers may be
required by the Fund for the proper conduct of its affairs.
(b) The Investment Manager shall further maintain, at its expense and
without cost to the Fund, a trading function in order to carry out its
obligations under subparagraphs (f), (g) and (h) of paragraph 2 hereof to place
orders for the purchase and sale of portfolio securities for the Fund.
(c) Nothing in subparagraph (a) hereof shall be construed to require the
Investment Manager to bear:
(i) any of the costs (including applicable office space, facilities and
equipment) of the services of a principal financial officer of the Fund whose
normal duties consist of maintaining the financial accounts and books and
records of the Fund; including the reviewing of calculations of net asset value
and preparing tax returns; or
(ii) any of the costs (including applicable office space, facilities and
equipment) of the services of any of the personnel operating under the direction
of such principal financial officer. Notwithstanding the obligation of the Fund
to bear the expense of the functions referred to in clauses (i) and (ii) of this
subparagraph (c), the Investment Manager may pay the salaries, including any
applicable employment or payroll taxes and other salary costs, of the principal
financial officer and other personnel carrying out such functions and the Fund
shall reimburse the Investment Manager therefor upon proper accounting.
(d) All of the ordinary business expenses incurred in the operations of the
Fund and the offering of its shares shall be borne by the Fund unless
specifically provided otherwise in this paragraph 6. These expenses include but
are not limited to brokerage commissions, legal, auditing, taxes or governmental
fees, the cost of preparing share certificates, custodian, depository, transfer
and shareholder service agent costs, expenses of issue, sale, redemption and
repurchase of shares, expenses or registering and qualifying shares for sale,
insurance premiums on property or personnel (including officers and trustees if
available) of the Fund which inure to its benefit, expenses relating to trustee
and shareholder meetings, the cost of preparing and distributing reports and
notices to shareholders, the fees and other expenses incurred by the Fund in
connection with membership in investment company organizations and the cost of
printing copies of prospectuses and statements of additional information
distributed to shareholders.
7. Delegation of Responsibilities. Upon the request of the Fund's Board of
Trustees, the Investment Manager may perform services on behalf of the Fund
which are not required by this Agreement. Such services will be performed on
behalf of the Fund and the Investment Manager's cost in rendering such services
may be billed monthly to the Fund, subject to examination by the Fund's
independent accountants. Payment or assumption by the Investment Manager of any
Fund expense that the Investment Manager is not required to pay or assume under
this Agreement shall not relieve the Investment Manager of any of its
obligations to the Fund nor obligate the Investment Manager to pay or assume any
similar Fund expense on any subsequent occasion.
8. Engagement of Sub-advisors and Broker-Dealers. The Investment Manager
may engage, subject to approval of the Fund's Board of Trustees, and where
required, the shareholders of the Fund, a sub-advisor to provide advisory
services in relation to the Fund. Under such sub-advisory agreement, the
Investment Manager may delegate to the sub-advisor the duties outlined in
subparagraph (e), (f), (g) and (h) of paragraph 2 hereof.
9. Compensation. The Fund shall pay the Investment Manager in full
compensation for services rendered hereunder an annual investment advisory fee,
payable monthly, of 1.0% of the average daily net assets of the Fund.
10. Expense Limitation. If, for any fiscal year of the Fund, the total of
all ordinary business expenses of the Fund, including all investment advisory
and administration fees but excluding brokerage commissions and fees, taxes,
interest and extraordinary expenses such as litigation, would exceed the most
restrictive expense limits imposed by any statute or regulatory authority of any
jurisdiction in which shares of the Fund are offered for sale ("Applicable
statute or regulatory authority"), as such limits may be raised or lowered from
time to time, the Investment Manager agrees, if required to do so pursuant to
such applicable statute or regulatory authority, to pay to the Fund such excess
expenses no later than the last day of the first month of the next succeeding
fiscal year of the Fund. For the purposes of this paragraph, the term "fiscal
year" shall exclude the portion of the Fund's current fiscal year which shall
have elapsed prior to the date hereof and shall include the portion of the then
current fiscal year which shall have elapsed at the date of termination of this
Agreement.
11. Non-Exclusivity. The services of the Investment Manager to the Fund are
not to be deemed to be exclusive, and the Investment Manager shall be free to
render investment advisory and corporate administrative or other services to
others (including other investment companies) and to engage in other activities.
It is understood and agreed that officers and directors of the Investment
Manager may serve as officers or trustees of the Fund, and that officers or
trustees of the Fund may serve as officers or directors of the Investment
Manager to the extent permitted by law; and that the officers and directors of
the Investment Manager are not prohibited from engaging in any other business
activity or from rendering services to any other person, or from serving as
partners, officers or directors of any other firm or corporation, including
other investment companies.
12. Term and Approval. This Agreement shall become effective on May 1, 1992
and shall continue in force and effect from year to year, provided that such
continuance is specifically approved at least annually:
(a) (i) by the Fund's Board of Trustees or (ii) by the vote of a majority
of the Fund's outstanding voting securities (as defined in Section 2(a)(42) of
the Investment Company Act); and
(b) by the affirmative vote of a majority of the trustees who are not
parties to this Agreement or interested persons of a party to this Agreement
(other than as Fund trustees), by votes case in person at a meeting specifically
called for such purpose.
13. Termination. This Agreement may be terminated at any time without the
payment of any penalty or prejudice to the completion of any transactions
already initiated on behalf of the Fund, by vote of the Fund's Board of Trustees
or by vote of a majority of the Fund's outstanding voting securities, or by the
Investment Manager, on sixty (60) days' written notice to the other party. This
notice provided for herein may be waived by either party. This Agreement
automatically terminates in the event of its assignment, the term "assignment"
for the purpose having the meaning defined in Section 2(a)(4) of the Investment
Company Act.
14. Liability of Investment Manager and Indemnification. In the absence of
willful misfeasance, bad faith, gross negligence or reckless disregard of
obligations or duties hereunder on the part of the Investment Manager or any of
its officers, trustees or employees, it shall not be subject to liability to the
Fund or to any shareholder of the Fund for any act or omission in the course of,
or connected with, rendering services hereunder or for any losses that may be
sustained in the purchase, holding or sale of any security.
15. Liability of Trustees and Shareholders. A copy of the Agreement and
Declaration of Trust of the Fund is on file with the Secretary of The
Commonwealth of Massachusetts, and notice is hereby given that this instrument
is executed on behalf of the trustees of the Fund as trustees and not
individually and that the obligations of this instrument are not binding upon
any of the trustees or shareholders individually but are binding only upon the
assets and property of the Fund. Federal and state laws impose responsibilities
under certain circumstances on persons who act in good faith, and therefore,
nothing herein shall in any way constitute a waiver of limitation of any rights
which the Fund or Investment Manager may have under applicable law.
16. Notice. Any notice under this Agreement shall be in writing, addressed
and delivered or mailed postage paid to the other party at such address as such
other party may designate for the receipt of such notice. Until further notice,
it is agreed that the address of the Fund shall be 126 High Street, Boston,
Massachusetts, 02110, and the address of the Investment Manager shall be Tower
One Corporate Drive, Shelton, Connecticut 06484.
17. Questions of Interpretation. Any question of interpretation of any term
or provisions of this Agreement having a counterpart in or otherwise derived
from a term or provision of the Investment Company Act, shall be resolved by
reference to such term or provision of the Act and to interpretations thereof,
if any, by the United States Courts or in the absence of any controlling
decision of any such court, by rules, regulations or orders of the Securities
and Exchange Commission issued pursuant to said Act. In addition, where the
effect of a requirement of the Investment Company Act, reflected in any
provision of this Agreement is released by rules, regulation or order of the
Securities and Exchange Commission, such provision shall be deemed to
incorporate the effect of such rule, regulation or order.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in duplicate by their respective officers on the day and year first
above written.
HENDERSON INTERNATIONAL GROWTH FUND
Attest: By _______________________________
- - -----------------------------------
AMERICAN SKANDIA LIFE INVESTMENT
MANAGEMENT, INC.
Attest: By _______________________________
- - -----------------------------------
<PAGE>
EXHIBIT A-2
INVESTMENT MANAGEMENT AGREEMENT
THIS AGREEMENT is made this 15th day of October, 1996 by and
between American Skandia Trust, a Massachusetts business trust (the "Fund"), and
American Skandia Investment Services, Incorporated, a Connecticut corporation
(the "Investment Manager");
W I T N E S E T H
WHEREAS, the Fund is registered as an open-end, diversified
management investment company under the Investment Company Act of 1940, as
amended (the "Investment Company Act"), and the rules and regulations
promulgated thereunder; and
WHEREAS, the Investment Manager is registered as an investment
adviser under the Investment Advisers Act of 1940, as amended (the "Investment
Advisers Act"); and
WHEREAS, the Fund and the Investment Manager desire to enter into
an agreement to provide for the management of the assets of the AST Putnam
International Equity Portfolio (the "Portfolio") on the terms and conditions
hereinafter set forth.
NOW THEREFORE, in consideration of the mutual covenants herein
contained and other good and valuable consideration, the receipt whereof is
hereby acknowledged, the parties hereto agree as follows:
1. Management. The Investment Manager shall act as investment manager for
the Portfolio and shall, in such capacity, manage the investment operations of
the Portfolio, including the purchase, retention, disposition and lending of
securities, subject at all times to the policies and control of the Fund's Board
of Trustees. The Investment Manager shall give the Portfolio the benefit of its
best judgments, efforts and facilities in rendering its services as investment
manager.
2. Duties of Investment Manager. In carrying out its obligation under
paragraph 1 hereof, the Investment Manager shall:
(a) supervise and manage all aspects of the Portfolio's operations:
(b) provide the Portfolio or obtain for it, and thereafter supervise, such
executive, administrative, clerical and shareholder servicing services as are
deemed advisable by the Fund's Board of Trustees;
(c) arrange, but not pay for, the periodic updating of prospectuses and
supplements thereto, proxy material, tax returns, reports to the Portfolio's
shareholders, reports to and filings with the Securities and Exchange
Commission, state Blue Sky authorities and other applicable regulatory
authorities;
(d) provide to the Board of Trustees of the Fund on a regular basis,
written financial reports and analyses on the Portfolio's securities
transactions and the operations of comparable investment companies;
(e) obtain and evaluate pertinent information about significant
developments and economic, statistical and financial data, domestic, foreign or
otherwise, whether affecting the economy generally or the Portfolio, and whether
concerning the individual issuers whose securities are included in the Portfolio
or the activities in which they engage, or with respect to securities which the
Investment Manager considers desirable for inclusion in the Portfolio;
(f) determine what issuers and securities shall be represented in the
Portfolio's portfolio and regularly report them in writing to the Board of
Trustees;
(g) formulate and implement continuing programs for the purchases and sales
of the securities of such issuers and regularly report in writing thereon to the
Board of Trustees; and
(h) take, on behalf of the Portfolio, all actions which appear to the Fund
necessary to carry into effect such purchase and sale programs and supervisory
functions as aforesaid, including the placing of orders for the purchase and
sale of portfolio securities.
3. Broker-Dealer Relationships. The Investment Manager is responsible for
decisions to buy and sell securities for the Portfolio, broker-dealer selection,
and negotiation of its brokerage commission rates. The Investment Manager shall
determine the securities to be purchased or sold by the Portfolio pursuant to
its determinations with or through such persons, brokers or dealers, in
conformity with the policy with respect to brokerage as set forth in the Fund's
Prospectus and Statement of Additional Information, or as the Board of Trustees
may determine from time to time. Generally, the Investment Manager's primary
consideration in placing Portfolio securities transactions with broker-dealers
for execution is to obtain and maintain the availability of, execution at the
best net price and in the most effective manner possible. The Investment Manager
may consider sale of the shares of the Portfolio, subject to the requirements of
best net price and most favorable execution.
Consistent with this policy, the Investment Manager will take the
following into consideration: the best net price available; the reliability,
integrity and financial condition of the broker-dealer; the size of and
difficulty in executing the order; and the value of the expected contribution of
the broker-dealer to the investment performance of the Portfolio on a continuing
basis. Accordingly, the cost of the brokerage commissions to the Portfolio may
be greater than that available from other brokers if the difference is
reasonably justified by other aspects of the portfolio execution services
offered. Subject to such policies and procedures as the Board of Trustees of the
Fund may determine, the Investment Manager shall not be deemed to have acted
unlawfully or to have breached any duty solely by reason of its having caused
the Portfolio to pay a broker or dealer that provides research services to the
Investment Manager for the Portfolio's use an amount of commission for effecting
a portfolio investment transaction in excess of the amount of commission another
broker or dealer would have charged for effecting that transaction, if the
Investment Manager, determines in good faith that such amount of commission was
reasonable in relation to the value of the research services provided by such
broker, viewed in terms of either that particular transaction or the Investment
Manager's ongoing responsibilities with respect to the Portfolio. The Investment
Manager is further authorized to allocate the orders placed by it on behalf of
the Portfolio to such brokers and dealers who also provide research or
statistical material, or other services to the Fund or the Investment Manager.
Such allocation shall be in such amounts and proportions as the Investment
Manager shall determine and the Investment Manager will report on said
allocations to the Board of Trustees of the Fund regularly as requested by the
Board and, in any event, at least once each calendar year if no specific request
is made, indicating the brokers to whom such allocations have been made and the
basis therefor.
4. Control by Board of Trustees. Any investment program undertaken by the
Investment Manager pursuant to this Agreement, as well as any other activities
undertaken by the Investment Manager on behalf of the Fund pursuant thereto,
shall at all times be subject to any directives of the Board of Trustees of the
Fund.
5. Compliance with Applicable Requirements. In carrying out its obligations
under this Agreement, the Investment Manager shall at all times conform to:
(a) all applicable provisions of the Investment Company Act and Investment
Advisers Act and any rules and regulations adopted thereunder, as amended; and
(b) the provisions of the Registration Statements of the Fund under the
Securities Act of 1933 and the Investment Company Act, including the investment
objectives, policies and restrictions, and permissible investments specified
therein; and
(c) the provisions of the Declaration of Trust of the Fund, as amended; and
(d) the provisions of the By-laws of the Fund, as amended; and
(e) any other applicable provisions of state and federal law.
6. Expenses. The expenses connected with the Fund shall be allocable
between the Fund and the Investment Manager as follows:
(a) The Investment Manager shall furnish, at its expense and without cost
to the Fund, the services of a President, Secretary, and one or more Vice
Presidents of the Fund, to the extent that such additional officers may be
required by the Fund for the proper conduct of its affairs.
(b) The Investment Manager shall further maintain, at its expense and
without cost to the Fund, a trading function in order to carry out its
obligations under subparagraphs (f), (g) and (h) of paragraph 2 hereof to place
orders for the purchase and sale of portfolio securities for the Portfolio.
(c) Nothing in subparagraph (a) hereof shall be construed to require the
Investment Manager to bear:
(i) any of the costs (including applicable office space,
facilities and equipment) of the services of a principal
financial officer of the Fund whose normal duties consist of
maintaining the financial accounts and books and records of the
Fund; including the reviewing of calculations of net asset value
and preparing tax returns; or
(ii) any of the costs (including applicable office space,
facilities and equipment) of the services of any of the personnel
operating under the direction of such principal financial
officer. Notwithstanding the obligation of the Fund to bear the
expense of the functions referred to in clauses (i) and (ii) of
this subparagraph (c), the Investment Manager may pay the
salaries, including any applicable employment or payroll taxes
and other salary costs, of the principal financial officer and
other personnel carrying out such functions and the Fund shall
reimburse the Investment Manager therefor upon proper accounting.
(d) All of the ordinary business expenses incurred in the operations of the
Fund and the offering of its shares shall be borne by the Fund unless
specifically provided otherwise in this paragraph 6. These expenses include but
are not limited to brokerage commissions, legal, auditing, taxes or governmental
fees, the cost of preparing share certificates, custodian, depository, transfer
and shareholder service agent costs, expenses of issue, sale, redemption and
repurchase of shares, expenses of registering and qualifying shares for sale,
insurance premiums on property or personnel (including officers and trustees if
available) of the Fund which inure to its benefit, expenses relating to trustee
and shareholder meetings, the cost of preparing and distributing reports and
notices to shareholders, the fees and other expenses incurred by the Fund in
connection with membership in investment company organizations and the cost of
printing copies of prospectuses and statements of additional information
distributed to shareholders.
7. Delegation of Responsibilities. Upon the request of the Fund's
Board of Trustees, the Investment Manager may perform services on behalf of the
Fund which are not required by this Agreement. Such services will be performed
on behalf of the Fund and the Investment Manager's cost in rendering such
services may be billed monthly to the Fund, subject to examination by the Fund's
independent accountants. Payment or assumption by the Investment Manager of any
Fund expense that the Investment Manager is not required to pay or assume under
this Agreement shall not relieve the Investment Manager of any of its
obligations to the Fund nor obligate the Investment Manager to pay or assume any
similar Fund expense on any subsequent occasion.
8. Engagement of Sub-advisors and Broker-Dealers. The Investment
Manager may engage, subject to approval of the Fund's Board of Trustees, and
where required, the shareholders of the Portfolio, a sub-advisor to provide
advisory services in relation to the Portfolio. Under such sub-advisory
agreement, the Investment Manager may delegate to the sub-advisor the duties
outlined in subparagraphs (e), (f), (g) and (h) of paragraph 2 hereof.
9. Compensation. The Fund shall pay the Investment Manager in
full compensation for services rendered hereunder an annual investment advisory
fee, payable monthly, of 1.00% of the average daily net assets of the Portfolio
not in excess of $75 million; plus .85% of the Portfolio's average daily net
assets over $75 million.
10. Expense Limitation. If, for any fiscal year of the Fund, the total of
all ordinary business expenses of the Portfolio, including all investment
advisory and administration fees but excluding brokerage commissions and fees,
taxes, interest and extraordinary expenses such as litigation ("Portfolio
Expenses"), would exceed (i) 1.75% on the first $100 million of the Portfolio's
average daily net assets, and (ii) 1.50% with respect to the Portfolio's average
daily net assets over $100 million, the Investment Manager agrees, if required
to do so pursuant to applicable statute or regulatory authority, to pay to the
Fund such excess expenses no later than the last day of the first month of the
next succeeding fiscal year of the Fund; provided that, in the event the most
restrictive expense limits imposed by any statute or regulatory authority of any
jurisdiction in which shares of the Portfolio are offered for sale is at any
time established at a limit higher than 1.75% or no limit at all, with respect
to the Portfolio's average daily net assets over $100 million, the Manager
agrees to reimburse the Fund, from that point forward, for Portfolio Expenses in
excess of 1.75% on all of the average daily net assets of the Portfolio. For the
purposes of this paragraph, the term "fiscal year" shall exclude the portion of
the Fund's current fiscal year which shall have elapsed prior to the date hereof
and shall include the portion of the then current fiscal year which shall have
elapsed at the date of termination of this Agreement.
11. Non-Exclusivity. The services of the Investment Manager to
the Portfolio are not to be deemed to be exclusive, and the Investment Manager
shall be free to render investment advisory and corporate administrative or
other services to others (including other investment companies) and to engage in
other activities. It is understood and agreed that officers or directors of the
Investment Manager may serve as officers or trustees of the Fund, and that
officers or trustees of the Fund may serve as officers or directors of the
Investment Manager to the extent permitted by law; and that the officers and
directors of the Investment Manager are not prohibited from engaging in any
other business activity or from rendering services to any other person, or from
serving as partners, officers or directors of any other firm or corporation,
including other investment companies.
12. Term and Approval. This Agreement shall become effective on
October 15, 1996 and shall continue in force and effect from year to year,
provided that such continuance is specifically approved at least annually:
(a) (i) by the Fund's Board of Trustees or (ii) by the vote of a majority
of the Portfolio's outstanding voting securities (as defined in Section 2(a)(42)
of the Investment Company Act); and
(b) by the affirmative vote of a majority of the trustees who are not
parties to this Agreement or interested persons of a party to this Agreement
(other than as Fund trustees), by votes cast in person at a meeting specifically
called for such purpose.
13. Termination. This Agreement may be terminated at any time
without the payment of any penalty or prejudice to the completion of any
transactions already initiated on behalf of the Portfolio, by vote of the Fund's
Board of Trustees or by vote of a majority of the Portfolio's outstanding voting
securities, or by the Investment Manager, on sixty (60) days' written notice to
the other party. The notice provided for herein may be waived by either party.
This Agreement automatically terminates in the event of its assignment, the term
"assignment" for the purpose having the meaning defined in Section 2(a)(4) of
the Investment Company Act.
14. Liability of Investment Manager and Indemnification. In the
absence of willful misfeasance, bad faith, gross negligence or reckless
disregard of obligations or duties hereunder on the part of the Investment
Manager or any of its officers, trustees or employees, it shall not be subject
to liability to the Fund or to any shareholder of the Portfolio for any act or
omission in the course of, or connected with, rendering services hereunder or
for any losses that may be sustained in the purchase, holding or sale of any
security.
15. Liability of Trustees and Shareholders. A copy of the
Agreement and Declaration of Trust of the Fund is on file with the Secretary of
The Commonwealth of Massachusetts, and notice is hereby given that this
instrument is executed on behalf of the trustees of the Fund as trustees and not
individually and that the obligations of this instrument are not binding upon
any of the trustees or shareholders individually but are binding only upon the
assets and property of the Fund. Federal and state laws impose responsibilities
under certain circumstances on persons who act in good faith, and therefore,
nothing herein shall in any way constitute a waiver of limitation of any rights
which the Fund or Investment Manager may have under applicable law.
16. Notices. Any notices under this Agreement shall be in
writing, addressed and delivered or mailed postage paid to the other party at
such address as such other party may designate for the receipt of such notice.
Until further notice, it is agreed that the address of the Fund shall be 126
High Street, Boston, Massachusetts, 02110, and the address of the Investment
Manager shall be One Corporate Drive, Shelton, Connecticut 06484.
17. Questions of Interpretation. Any question of interpretation
of any term or provision of this Agreement having a counterpart in or otherwise
derived from a term or provision of the Investment Company Act, shall be
resolved by reference to such term or provision of the Act and to
interpretations thereof, if any, by the United States Courts or in the absence
of any controlling decision of any such court, by rules, regulations or orders
of the Securities and Exchange Commission issued pursuant to said Act. In
addition, where the effect of a requirement of the Investment Company Act,
reflected in any provision of this Agreement is released by rules, regulation or
order of the Securities and Exchange Commission, such provision shall be deemed
to incorporate the effect of such rule, regulation or order.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed in duplicate by their respective officers on the day and year
first above written.
AMERICAN SKANDIA TRUST
Attest: By_________________________________
Gordon C. Boronow
___________________________________ Vice President
AMERICAN SKANDIA INVESTMENT
Attest: SERVICES, INCORPORATED
____________________________________ By_________________________________
Thomas M. Mazzaferro
President & Chief Operating Officer
<PAGE>
EXHIBIT A-3
SUB-ADVISORY AGREEMENT
THIS AGREEMENT is between American Skandia Life Investment Management, Inc.
(the "Advisor") and Seligman Henderson Co. (the "Sub-Advisor").
WHEREAS American Skandia Trust (the "Trust") is a Massachusetts business
trust organized with one or more series of shares, and is registered as an
investment company under the Investment Company Act of 1940 (the "ICA"); and
WHEREAS the Advisor was incorporated in 1991 under the laws of the State of
Connecticut; and
WHEREAS the Sub-Advisor was organized in 1991 under the laws of the State
of New York as a general partnership between J. & W. Seligman & Co. Incorporated
and Henderson International, Inc., each partner owning equal 50% interests in
the joint venture; and
WHEREAS the trustees of the Trust (the "Trustees") have engaged the Advisor
to act as investment manager for the Henderson International Growth Portfolio of
the Trust under the terms of a management agreement, dated May 1, 1992 (the
"Management Agreement"); and
WHEREAS the Advisor had engaged Henderson International, Inc. (or the
"Prior Sub-Advisor") as sub-advisor for the Henderson Investment Growth
Portfolio of the Trust under the terms of a sub-advisory agreement, dated May 1,
1992 (the "Prior Sub-Advisory Agreement"); and
WHEREAS the Trust, Advisor and Prior Sub-Advisor desire to terminate the
Prior Sub-Advisory Agreement; and
WHEREAS the Advisor has proposed to engage the Sub-Advisor and the Trustees
have approved (a) the termination of the Prior Sub-Advisory Agreement and (b)
the engagement of the Sub-Advisor to provide investment advice and other
investment services set forth below, effective May 1, 1995, contingent upon
shareholder approval and execution of this Agreement; and
WHEREAS the Trust will change the name of the Henderson International
Growth Portfolio to the Seligman Henderson International Equity Portfolio (the
"Portfolio"), effective May 1, 1995, contingent upon shareholder approval and
execution of this Agreement.
NOW, THEREFORE the Advisor and the Sub-Advisor agree as follows:
1. Investment Services. The Sub-Advisor will furnish the Advisor with investment
advisory services in connection with a continuous investment program for the
Portfolio which is to be managed in accordance with the investment objective,
investment policies and restrictions of the Portfolio as set forth in the
Prospectus and Statement of Additional Information of the Trust and in
accordance with the Trust's Declaration of Trust and By-Laws. Advisor will
promptly furnish Sub-Advisor with any amendments to such documents. Such
amendments will not be effective with respect to the Sub-Advisor until receipt
thereof.
Subject to the supervision and control of the Advisor, which is in turn subject
to the supervision and control of the Trust's Board of Trustees, the Sub-Advisor
will in its discretion determine and select the securities to be purchased for
and sold from the Portfolio from time to time and will place orders with and
give instructions to brokers, dealers and others for all such transactions and
cause such transactions to be executed. The Portfolio will be maintained by a
custodian bank (the "Custodian") and the Advisor will authorize the Custodian to
honor orders and instructions by employees of the Sub-Advisor authorized by the
Advisor to settle transactions in respect of the Portfolio. No assets may be
withdrawn from the Portfolio other than for settlement of transactions on behalf
of the Portfolio except upon the written authorization of appropriate officers
of the Trust who shall have been certified as such by proper authorities of the
Trust prior to the withdrawal.
The Sub-Advisor will obtain and evaluate pertinent information about significant
developments and economic, statistical and financial data, domestic, foreign or
otherwise, whether affecting the economy generally or the Portfolio, and
concerning the individual issuers whose securities are included in the Portfolio
or the activities in which they engage, or with respect to securities which the
Sub-Advisor considers desirable for inclusion in the Portfolio.
In furnishing the services under this Agreement, the Sub-Advisor will comply
with the requirements of the ICA applicable to it, and the regulations
promulgated thereunder.
Nothing in this Agreement shall be implied to prevent the Advisor from engaging
other sub-advisors to provide investment advice and other services in relation
to portfolios of the Trust for which Sub-Advisor does not provide such services,
or to prevent Advisor from providing such services itself in relation to such
portfolios.
2. Delivery of Documents to Sub-Advisor. The Advisor has furnished the
Sub-Advisor with copies of each of the following documents:
(a) The Declaration of Trust of the Trust as in effect on the date hereof;
(b) The By-Laws of the Trust in effect on the date hereof;
(c) The resolutions of the Trustees approving the engagement of the
Sub-Advisor as Sub-Advisor to the Advisor and approving the form of this
Agreement;
(d) The resolutions of the Trustees selecting the Advisor as investment
manager to the Trust and approving the form of the Advisor's Management
Agreement with the Trust;
(e) The Advisor's Management Agreement with the Trust;
(f) The Code of Ethics of the Trust and of the Advisor as currently in
effect; and (g) A list of companies the securities of which are not to be bought
or sold for the Portfolio.
The Advisor will furnish the Sub-Advisor from time to time with copies, properly
certified or otherwise authenticated, of all amendments of or supplements to the
foregoing, if any. Such amendments or supplements as to items (a) through (f)
above will be provided within 30 days of the time such materials became
available to the Advisor. Such amendments or supplements as to item (g) above
will be provided not later than the end of the business day next following the
date such amendments or supplements become known to the Advisor.
3. Delivery of Documents to the Advisor. The Sub-Advisor has furnished the
Advisor with copies of each of the following documents:
(a) The Sub-Advisor's Form ADV as filed with the Securities and Exchange
Commission;
(b) The Sub-Advisor's most recent balance sheet;
(c) Separate lists of persons who the Sub-Advisor wishes to have authorized
to give written and/or oral instructions to Custodians of Trust assets for the
Portfolio;
(d) The Code of Ethics of the Sub-Advisor as currently in effect.
The Sub-Advisor will furnish the Advisor from time to time with copies, properly
certified or otherwise authenticated, of all material amendments of or
supplements to the foregoing, if any. Such amendments or supplements as to items
(a) through (d) above will be provided within 30 days of the time such materials
became available to the Sub-Advisor.
4. Investment Advisory Facilities. The Sub-Advisor, at its expense, will
furnish all necessary investment facilities, including salaries of personnel
required for it to execute its duties faithfully.
5. Execution of Portfolio Transactions. Sub-Advisor is responsible for decisions
to buy and sell securities for the Portfolio, broker-dealer selection, and
negotiation of its brokerage commission rates. Sub-Advisor shall determine the
securities to be purchased or sold by the Portfolio pursuant to its
determinations with or through such persons, brokers or dealers, in conformity
with the policy with respect to brokerage as set forth in the Trust's Prospectus
and Statement of Additional Information, or as the Board of Trustees may
determine from time to time as communicated to the Sub-Advisor. Generally,
Sub-Advisor's primary consideration in placing Portfolio securities transactions
with broker-dealers for execution is to obtain and maintain the availability of
best execution in the most effective manner possible. The Sub-Advisor may
consider sale of shares issued by the Portfolio, as communicated by Advisor to
Sub-advisor, as well as recommendations of the Advisor, subject in every case to
the requirement of best execution.
Consistent with this policy, the Sub-Advisor will take the following into
consideration: the best net price available; the reliability, integrity and
financial condition of the broker-dealer; the size of and difficulty in
executing the order; the general execution and operational capabilities of the
broker-dealer to effect the proposed transactions and the value of the expected
contribution of the broker-dealer to the investment performance of the Portfolio
on a continuing basis. Accordingly, the cost of the brokerage commissions to the
Portfolio may be greater than that available from other brokers if the
difference is reasonably justified by other aspects of the portfolio execution
services offered. Subject to such policies and procedures as the Board of
Trustees of the Trust may determine, as are communicated to the Sub-Advisor, the
Sub-Advisor shall not be deemed to have acted unlawfully or to have breached any
duty solely by reason of its having caused the Portfolio to pay a broker-dealer
that provides research services to the Sub-Advisor an amount of commission for
effecting a portfolio investment transaction in excess of the amount of
commission another broker-dealer would have charged for effecting that
transaction, if the Sub-Advisor determines in good faith that such amount of
commission was reasonable in relation to the value of the research services
provided by such broker, viewed in terms of either that particular transaction
or the Sub-Advisor's ongoing responsibilities with respect to the Portfolio or
its other clients. The Sub-Advisor is further authorized to allocate the orders
placed by it on behalf of the Portfolio to such broker-dealers who also provide
research and research related services to the Sub-Advisor, or other services to
the Portfolio or the Sub-Advisor. Such allocation shall be in such amounts and
proportions as the Sub-Advisor shall determine in good faith to be reasonable in
relation to the value of the services provided by such broker, viewed in terms
of either that particular transaction or the Sub-Advisor's ongoing
responsibilities with respect to the Portfolio or its other clients. The
Sub-Advisor will report on said allocations to the Advisor regularly as
requested by the Advisor and, in any event, at least once each calendar year if
no specific request is made, indicating the brokers to whom such allocations
have been made and the basis therefor. It is understood the services provided by
such brokers may be used by the Sub-Advisor in connection with its services to
other clients and are of the type that qualify for the safe harbor in Section
28(e) of the Securities Exchange Act of 1934.
6. Reports by Sub-Advisor. The Sub-Advisor shall furnish the Advisor monthly,
quarterly and annual reports concerning transactions and performance of the
Portfolio, including information required to be disclosed in the Trust's
registration statement, in such form as may be mutually agreed, to review the
Portfolio and discuss the management of it. The Sub-Advisor shall permit the
financial statements, books and records with respect to the Portfolio to be
inspected and audited by the Trust, the Advisor or their agents at all
reasonable times during normal business hours. The Sub-Advisor shall immediately
notify and forward to both Advisor and legal counsel for the Trust any legal
process served upon it on behalf of the Advisor or the Trust. The Sub-Advisor
shall promptly notify the Advisor of any changes in any information required to
be disclosed in the Trust's registration statement.
7. Compensation of Sub-Advisor. The amount of the compensation to the
Sub-Advisor is computed at an annual rate. The fee is payable monthly in
arrears, based on the average daily net assets of the Portfolio for each month,
at the annual rates shown below.
For all services rendered, the Advisor will calculate and pay the Sub-Advisor at
the annual rate of 1% of the portion of average daily net assets of the
Portfolio not in excess of $100 million; plus .75 of 1% of the portion of the
net assets over $100 million.
In computing the fee to be paid to the Sub-Advisor, the net asset value of the
Portfolio shall be valued as set forth in the then current registration
statement of the Trust. If this Agreement is terminated, the payment shall be
prorated to the date of termination.
Advisor and Sub-Advisor shall not be considered as partners or participants in a
joint venture. Sub-Advisor will pay its own expenses for the services to be
provided pursuant to this Agreement and will not be obligated to pay any
expenses of Advisor or the Trust. Except as otherwise provided herein, Advisor
and the Trust will not be obligated to pay any expenses of Sub-Advisor.
8. Confidential Treatment. Subject to Section 11 of this Agreement, it is
understood that any information or recommendation supplied by the Sub-Advisor in
connection with the performance of its obligations hereunder is to be regarded
as confidential and for use only by the Advisor, the Trust or such persons the
Advisor may designate in connection with the Portfolio.
9. Representations of the Parties. The Advisor and Sub-Advisor each hereby
acknowledges that it is registered as an investment advisor under the Investment
Advisers Act of 1940 ("Advisers Act"), it will use commercially reasonable
efforts to maintain such registration, and it will promptly notify the other if
it ceases to be so registered, if its registration is suspended for any reason,
or if it is notified by any regulatory organization or court of competent
jurisdiction that it should show cause why its registration should not be
suspended or terminated.
10. Liability. The Sub-Advisor shall use commercially reasonable efforts and act
in good faith in the performance of its services hereunder. However, so long as
the Sub-Advisor has acted in good faith and has used its commercially reasonable
efforts, then in the absence of willful misconduct, bad faith, gross negligence
or reckless disregard for its obligations hereunder, it shall not be liable to
the Trust or its shareholders or to the Advisor for any act or omission
resulting in any loss suffered in any portfolio of the Trust in connection with
any service to be provided herein. The Federal laws impose responsibilities
under certain circumstances on persons who act in good faith, and therefore,
nothing herein shall in any way constitute a waiver of limitation of any rights
which the Trust or Advisor or Sub-Advisor may have under applicable law.
The Advisor agrees that the Sub-Advisor shall not be liable for any failure to
recommend the purchase or sale of any security on behalf of the Portfolio on the
basis of any information which might, in Sub-Advisor's reasonable opinion,
constitute a violation of any federal or state laws, rules or regulations.
11. Other Activities of Sub-Advisor. Advisor agrees that the Sub-Advisor and any
of its partners or employees, and persons affiliated with it or with any such
partner or employee may render investment management or advisory services to
other investors and institutions, and such investors and institutions may own,
purchase or sell, securities or other interests in property the same as or
similar to those which are selected for purchase, holding or sale for the
Portfolio, and the Sub-Advisor shall be in all respects free to take action with
respect to investments in securities or other interests in property the same as
or similar to those selected for purchase, holding or sale for the Portfolio.
Purchases and sales of individual securities on behalf of the Portfolio and
other portfolios of the Trust or accounts for other investors or institutions
will be made on a basis that is equitable to all portfolios of the Trust and
other accounts. Nothing in this Agreement shall impose upon the Sub-Advisor any
obligation to purchase or sell or recommend for purchase or sale, for the
Portfolio any security which it, its partners, affiliates or employees may
purchase or sell for the Sub-Advisor or such partner's, affiliate's or
employee's own accounts or for the account of any other client, advisory or
otherwise.
12. Continuance and Termination. This Agreement shall remain in full force and
effect for one year from the date hereof, and is renewable annually thereafter
by specific approval of the Board of Trustees of the Trust or by vote of a
majority of the outstanding voting securities of the Portfolio. Any such renewal
shall be approved by the vote of a majority of the Trustees who are not
interested persons under the ICA, cast in person at a meeting called for the
purpose of voting on such renewal. This Agreement may be terminated without
penalty at any time by the Advisor or Sub-Advisor upon 60 days written notice,
and will automatically terminate in the event of its assignment by either party
to this Agreement, as defined in the ICA, or (provided Sub-Advisor has received
prior written notice thereof) upon termination of the Advisor's Management
Agreement with the Trust.
13. Notification. Sub-Advisor will notify the Advisor within a reasonable
time of (i) any change in the personnel of the Sub-Advisor with responsibility
for making investment decisions in relation to the Portfolio or who have been
authorized to give instructions to a Custodian of the Trust, or (ii) any change
of a partner of the Sub-Advisor.
Any notice, instruction or other communication required or contemplated by this
Agreement shall be in writing. All such communications shall be addressed to the
recipient at the address set forth below, provided that either party may, by
notice, designate a different address for such party.
Advisor: American Skandia Life Investment Management, Inc.
Attention: Thomas Mazzaferro
President & Chief Operating Officer
One Corporate Drive
Shelton, Connecticut, 06484
Sub-Advisor: Seligman Henderson Co.
Attention: Richard Garland
100 Park Avenue
New York, NY 10017
14. Indemnification. The Sub-Advisor, J. & W. Seligman & Co. Incorporated,
and Henderson International, Inc., agree jointly and severally to indemnify and
hold harmless the Trust, Trustees, Advisor, and any affiliated person within the
meaning of Section 2(a)(3) of the ICA ("affiliated person") of the Trust,
Trustees, Advisor, and each person, if any who, within the meaning of Section 15
of the Securities Act of 1933 (the "1933 Act"), controls ("controlling person")
Advisor, against any and all losses, claims, damages, liabilities or litigation
(including reasonable legal and other expenses), to which the Trust, Trustees,
Advisor or such affiliated person or controlling person may become subject under
the 1933 Act, the ICA, the Advisers Act, any other statute, at common law or
otherwise, arising out of Sub-Advisor's responsibilities as portfolio manager of
the Portfolio (1) to the extent of and as a result of the willful misconduct,
bad faith, or gross negligence by Sub-Advisor, any of Sub-Advisor's employees or
representatives or any affiliate of or any person acting on behalf of
Sub-Advisor, or (2) as a result of any untrue statement or alleged untrue
statement of a material fact contained in a prospectus, statement of additional
information, or other publicly distributed document covering the Portfolio or
the Trust or any amendment thereof or any supplement thereto or the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statement therein not misleading, if such a statement
or omission was made in reliance upon written information furnished by the
Sub-Advisor to Advisor, the Trust or any affiliated person of the Advisor or the
Trust or upon verbal information confirmed by the Sub-Advisor in writing or (3)
to the extent of, and as a result of, the failure of the Sub-Advisor to execute,
or cause to be executed, Portfolio transactions according to the standards and
requirements of the ICA; provided, however, that in no case is Sub-Advisor's
indemnity in favor of Trust, Trustees, Advisor or any affiliated person or
controlling person of Advisor deemed to protect such person against any
liability to which any such person would otherwise be subject by reason of
willful misconduct, bad faith or gross negligence in the performance of its
duties or by reason of its reckless disregard of its obligations and duties
under this Agreement.
The Advisor agrees to indemnify and hold harmless Sub-Advisor, any affiliated
person within the meaning of Section 2(a)(3) of the ICA ("affiliated person") of
Sub-Advisor and each person, if any who, within the meaning of Section 15 of the
1933 Act, controls ("controlling person") Sub-Advisor, against any and all
losses, claims, damages, liabilities or litigation (including reasonable legal
and other expenses), to which Sub-Advisor or such affiliated person or
controlling person may become subject under the 1933 Act, the ICA, the Advisers
Act, any other statute, at common law or otherwise, arising out of Advisor's
responsibilities as investment manager of the Portfolio (1) to the extent of and
as a result of the willful misconduct, bad faith, or gross negligence by
Advisor, any of Advisor's employees or representatives or any affiliate of or
any person acting on behalf of Advisor, or (2) as a result of any untrue
statement or alleged untrue statement of a material fact contained in a
prospectus, statement of additional information, or other publicly distributed
document covering the Portfolio or the Trust or any amendment thereof or any
supplement thereto or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statement
therein not misleading, if such a statement or omission was made by the Trust,
other than in reliance upon written information furnished by Sub-Advisor, or any
affiliated person of the Sub-Advisor or other than upon verbal information
confirmed by the Sub-Advisor in writing; provided, however, that in no case is
Advisor's indemnity in favor of Sub-Advisor or any affiliated person or
controlling person of Sub-Advisor deemed to protect such person against any
liability to which any such person would otherwise be subject by reason of
willful misconduct, bad faith or gross negligence in the performance of its
duties or by reason of its reckless disregard of its obligations and duties
under this Agreement.
Prior Sub-Advisor agrees to indemnify and hold harmless the Trust, Trustees,
Advisor, and any affiliated person within the meaning of Section 2(a)(3) of the
ICA ("affiliated person") of the Trust, Trustees, Advisor, and each person, if
any who, within the meaning of Section 15 of the Securities Act of 1933 (the
"1933 Act"), controls ("controlling person") Advisor, against any and all
losses, claims, damages, liabilities or litigation (including reasonable legal
and other expenses), to which the Trust, Trustees, Advisor or such affiliated
person or controlling person may become subject under the 1933 Act, the ICA, the
Advisers Act, any other statute, at common law or otherwise, arising out of
Prior Sub-Advisor's responsibilities as former portfolio manager of the
Portfolio (1) to the extent of and as a result of the willful misconduct, bad
faith, or gross negligence by Prior Sub-Advisor, any of Prior Sub-Advisor's
employees or representatives or any affiliate of or any person acting on behalf
of Prior Sub-Advisor, or (2) as a result of any untrue statement or alleged
untrue statement of a material fact contained in a prospectus, statement of
additional information, or other publicly distributed document covering the
Portfolio or the Trust or any amendment thereof or any supplement thereto or the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statement therein not misleading, if
such a statement or omission was made in reliance upon written information
furnished by the Prior Sub-Advisor to Advisor, the Trust or any affiliated
person of the Advisor or the Trust or upon verbal information confirmed by the
Prior Sub-Advisor in writing or (3) to the extent of, and as a result of, the
failure of the Prior Sub-Advisor to execute, or cause to be executed, Portfolio
transactions according to the standards and requirements of the ICA; provided,
however, that in no case is Prior Sub-Advisor's indemnity in favor of Trust,
Trustees, Advisor or any affiliated person or controlling person of Advisor
deemed to protect such person against any liability to which any such person
would otherwise be subject by reason of willful misconduct, bad faith or gross
negligence in the performance of its duties or by reason of its reckless
disregard of its obligations and duties under this Agreement.
15. Warranty. The Advisor represents and warrants that (i) the appointment of
the Sub-Advisor by the Advisor has been duly authorized and (ii) it has acted
and will continue to act in connection with the transactions contemplated
hereby, and the transactions contemplated hereby are, in conformity with the
ICA, the Trust's governing documents and other applicable laws.
The Sub-Advisor represents and warrants that it is authorized to enter into this
Agreement and perform the services contemplated to be performed hereunder. The
Sub-Advisor also represents and warrants that it intends to retain the services
of all the personnel of the Prior Sub-Advisor with responsibility for making
investment decisions in relation to the Portfolio.
16. Governing Law. This Agreement is made under, and shall be governed by
and construed in accordance with, the laws of the State of Connecticut.
The effective date of this Agreement is May 1, 1995.
FOR THE ADVISOR: FOR THE SUB-ADVISOR:
- - ------------------------------- --------------------------------
Thomas Mazzaferro Rodney G. D. Smith
President and Chief Operating Officer Chief Executive Officer
Date: _______________________ Date: _______________________
Attest: _______________________ Attest: _______________________
FOR THE SOLE PURPOSE OF SECTION 14 (INDEMNIFICATION):
- - ------------------------------- --------------------------------
J. & W. Seligman & Co. Incorporated Henderson International, Inc.
Date: ______________________ Date: _______________________
Attest: _______________________ Attest: _______________________
<PAGE>
EXHIBIT A-4
SUB-ADVISORY AGREEMENT
THIS AGREEMENT is between American Skandia Investment Services,
Incorporated (the "Investment Manager") and Putnam Investment Management, Inc.
(the "Sub-Advisor").
WHEREAS American Skandia Trust (the "Trust") is a Massachusetts business trust
organized with one or more series of shares, and is registered as an investment
company under the Investment Company Act of 1940 (the "ICA"); and
WHEREAS the trustees of the Trust (the "Trustees") have engaged the Investment
Manager to act as investment manager for the AST Putnam International Equity
Portfolio (the "Portfolio") under the terms of a management agreement, dated
October 15, 1996, with the Trust (the "Management Agreement"); and
WHEREAS the Investment Manager has engaged the Sub-Advisor and the Trustees have
approved the engagement of the Sub-Advisor to provide investment advice and
other investment services set forth below;
NOW, THEREFORE the Investment Manager and the Sub-Advisor agree as follows:
1. Investment Services. The Sub-Advisor will furnish the Investment Manager with
investment advisory services in connection with a continuous investment program
for the Portfolio which is to be managed in accordance with the investment
objective, investment policies and restrictions of the Portfolio as set forth in
the Prospectus and Statement of Additional Information of the Trust and in
accordance with applicable provisions of the Trust's Declaration of Trust and
By-laws provided to the Sub-Advisor from time to time by the Investment Manager.
Officers, directors, and employees of Sub-Advisor will be available to consult
with Investment Manager and the Trust, their officers, employees and Trustees
concerning the business of the Trust. Investment Manager will promptly furnish
Sub-Advisor with any amendments to any of the foregoing documents (the
"Documents"). Any amendments to the Documents will not be deemed effective with
respect to the Sub-Advisor until the Sub-Advisor's receipt thereof.
Subject to the supervision and control of the Investment Manager, which
is in turn subject to the supervision and control of the Trust's Board of
Trustees, the Sub-Advisor will in its discretion determine and select the
securities to be purchased for and sold from the Portfolio from time to time and
will place orders with and give instructions to brokers, dealers and others for
all such transactions and cause such transactions to be executed. Custody of the
Portfolio will be maintained by a custodian bank (the "Custodian") and the
Investment Manager will authorize the Custodian to honor orders and instructions
by employees of the Sub-Advisor designated by the Investment Manager to settle
transactions in respect of the Portfolio. No assets may be withdrawn from the
Portfolio other than for settlement of transactions on behalf of the Portfolio
except upon the written authorization of appropriate officers of the Trust who
shall have been certified as such by proper authorities of the Trust prior to
the withdrawal. The Sub-Advisor shall not be responsible for the provision of
administrative, bookkeeping or accounting services to the Trust. The Sub-Advisor
shall supply the Investment Manager and the Trust with such information as is
specifically provided herein, as required by the ICA or the Investment Advisers
Act of 1940, as amended (the "Advisers Act") in connection with the
Sub-Advisor's management of the Portfolio, or as may be necessary to supply the
information to the Investment Manager, the Trust, the Trust's Board of Trustees
or their respective agents required to be supplied under this Agreement. Any
records required to be maintained shall be the property of the Trust and
surrendered to the Trust promptly upon request or upon termination of this
Agreement. The Sub-Advisor may retain copies of any records surrendered to the
Trust.
To the extent deemed necessary by the Sub-Advisor in connection with
the investment program for the Portfolio, the Sub-Advisor will obtain and
evaluate pertinent information about significant developments and economic,
statistical and financial data, domestic, foreign or otherwise, whether
affecting the economy generally or the Portfolio, and concerning the individual
issuers whose securities are included in the Portfolio or the activities in
which they engage, or with respect to securities which the Sub-Advisor considers
desirable for inclusion in the Portfolio or such other information as the
Sub-Advisor deems relevant.
The Sub-Advisor represents that it reviewed the Registration Statement
of the Trust, including any amendments or supplements thereto, and any Proxy
Statement relating to the approval of this Agreement, as filed with the
Securities and Exchange Commission and represents and warrants that with respect
to disclosure about the Sub-Advisor or information relating to the Sub-Advisor
or the Sub-Advisor's activities in connection with the investment program for
the Portfolio, such Registration Statement or Proxy Statement contains, as of
the date thereof, no untrue statement of any material fact and does not omit any
statement of material fact which was required to be stated therein or necessary
to make the statements contained therein not misleading. The Sub-Advisor further
represents and warrants that it is an investment advisor registered under the
Advisers Act and under the laws of all jurisdictions in which the conduct of its
business hereunder requires such registration.
Sub-Advisor shall use its best judgment, effort, and advice in
rendering services under this Agreement.
In furnishing the services under this Agreement, the Sub-Advisor will
comply with the requirements of the ICA and subchapters L and M (including,
respectively, Section 817(h) and Section 851(b)(1), (2), (3) and (4)) of the
Internal Revenue Code, applicable to the Portfolio, and the regulations
promulgated thereunder, to the extent such compliance is within the
Sub-Advisor's control. Sub-Advisor shall also comply with (i) other applicable
provisions of state or federal law; (ii) the provisions of the Declaration of
Trust and By-laws of the Trust communicated to the Sub-Advisor pursuant to
paragraph 1 of this Agreement; (iii) policies and determinations of the Trust
and Investment Manager communicated to the Sub-Advisor in writing; (iv) the
fundamental policies and investment restrictions of the Trust, as set out in the
Trust's registration statement under the ICA, or as amended by the Trust's
shareholders; (v) the Prospectus and Statement of Additional Information of the
Trust; and (vi) investment guidelines or other instructions received in writing
from Investment Manager. Sub-Advisor shall supervise and monitor the activities
of its representatives, personnel and agents in connection with the investment
program of the Portfolio.
Nothing in this Agreement shall be implied to prevent the Investment
Manager from engaging other sub-advisors to provide investment advice and other
services in relation to portfolios of the Trust for which Sub-Advisor does not
provide such services, or to prevent Investment Manager from providing such
services itself in relation to such portfolios.
2. Delivery of Documents to Sub-Advisor. The Investment Manager has
furnished the Sub-Advisor with copies of each of the following documents:
(a) The Declaration of Trust of the Trust as in effect on the date hereof;
(b) The By-laws of the Trust in effect on the date hereof;
(c) The resolutions of the Trustees approving the engagement of the
Sub-Advisor as Sub-Advisor to the Investment Manager and approving the form of
this agreement;
(d) The resolutions of the Trustees selecting the Investment Manager as
investment manager to the Trust and approving the form of the Investment
Manager's Management Agreement with the Trust;
(e) The Investment Manager's Management Agreement with the Trust;
(f) The Code of Ethics of the Trust and of the Investment Manager as
currently in effect; and
(g) A list of companies the securities of which are not to be bought or
sold for the Portfolio because of non-public information regarding such
companies that is available to Investment Manager or the Trust, or which, in the
sole opinion of the Investment Manager, it believes such non-public information
would be deemed to be available to Investment Manager and/or the Trust.
The Investment Manager will furnish the Sub-Advisor from time to time
with copies, properly certified or otherwise authenticated, of all amendments of
or supplements to the foregoing, if any. Such amendments or supplements as to
items (a) through (f) above will be provided within 30 days of the time such
materials became available to the Investment Manager. Such amendments or
supplements as to item (g) above will be provided not later than the end of the
business day next following the date such amendments or supplements become known
to the Investment Manager.
3. Delivery of Documents to the Investment Manager. The Sub-Advisor has
furnished the Investment Manager with copies of each of the following documents:
(a) The Sub-Advisor's Form ADV as filed with the Securities and Exchange
Commission;
(b) The Sub-Advisor's most recent balance sheet;
(c) Separate lists of persons who the Sub-Advisor wishes to have authorized
to give written and/or oral instructions to Custodians of Trust assets for the
Portfolio;
(d) The Code of Ethics of the Sub-Advisor as currently in effect.
The Sub-Advisor will thereafter furnish the Investment Manager with
copies, properly certified or otherwise authenticated, of all material
amendments of or supplements to items (a), (c) and (d) above within 30 days of
the time such materials become available to the Sub-Advisor. With respect to
item (b) above, the Sub-Advisor will thereafter furnish the Investment Manager,
within 30 days of the time such materials become available to the Sub-Advisor,
with a copy of the Sub-Advisor's audited balance sheet as at the end of each
fiscal year of the Sub-Advisor.
4. Investment Advisory Facilities. The Sub-Advisor, at its expense, will
furnish all necessary investment facilities, including salaries of personnel
required for it to execute its duties faithfully.
5. Execution of Portfolio Transactions. Sub-Advisor is responsible for decisions
to buy and sell securities for the Portfolio, broker-dealer selection, and
negotiation of its brokerage commission rates. Sub-Advisor shall determine the
securities to be purchased or sold by the Portfolio pursuant to its
determinations with or through such persons, brokers or dealers, in conformity
with the policy with respect to brokerage as set forth in the Trust's Prospectus
and Statement of Additional Information, or as the Board of Trustees may
determine from time to time. Generally, Sub-Advisor's primary consideration in
placing Portfolio securities transactions with broker-dealers for execution is
to obtain and maintain the availability of best execution at the best net price
and in the most effective manner possible. The Sub-Advisor may consider sale of
the shares of the Portfolio, as well as recommendations of the Investment
Manager, subject to the requirements of best net price and most favorable
execution.
Consistent with this policy, the Sub-Advisor will take the following
into consideration: the best net price available; the reliability, integrity and
financial condition of the broker-dealer; the size of and difficulty in
executing the order; and the value of the expected contribution of the
broker-dealer to the investment performance of the Portfolio on a continuing
basis. Accordingly, the cost of the brokerage commissions to the Portfolio may
be greater than that available from other brokers if the difference is
reasonably justified by other aspects of the portfolio execution services
offered. Subject to such policies and procedures as the Board of Trustees of the
Trust may determine, the Sub-Advisor shall not be deemed to have acted
unlawfully or to have breached any duty solely by reason of its having caused
the Portfolio to pay a broker-dealer that provides research services to the
Sub-Advisor for the Portfolio's use an amount of commission for effecting a
portfolio investment transaction in excess of the amount of commission another
broker-dealer would have charged for effecting that transaction, if the
Sub-Advisor determines in good faith that such amount of commission was
reasonable in relation to the value of the research services provided by such
broker, viewed in terms of either that particular transaction or the
Sub-Advisor's ongoing responsibilities with respect to the Portfolio. The
Sub-Advisor is further authorized to allocate the orders placed by it on behalf
of the Portfolio to such broker-dealers who also provide research or statistical
material, or other services to the Portfolio or the Sub-Advisor. Such allocation
shall be in such amounts and proportions as the Sub-Advisor shall determine in
good faith in conformity with its responsibilities under applicable laws, rules
and regulations and the Sub-Advisor will report on said allocations to the
Investment Manager regularly as requested by the Investment Manager and, in any
event, at least once each calendar year if no specific request is made,
indicating the brokers to whom such allocations have been made and the basis
therefor.
6. Reports by Sub-Advisor. The Sub-Advisor shall furnish the Investment Manager
monthly, quarterly and annual reports concerning transactions and performance of
the Portfolio, including information requested for inclusion in the Trust's
Registration Statement, in such form as may be mutually agreed, to review the
Portfolio and discuss the management of it. The Sub-Advisor shall permit the
financial statements, books and records with respect to the Portfolio to be
inspected and audited by the Trust, the Investment Manager or their agents at
all reasonable times during normal business hours. The Sub-Advisor shall
immediately notify and forward to the Investment Manager and the Trust any legal
process served upon it on behalf of the Investment Manager or the Trust. The
Sub-Advisor shall promptly notify the Investment Manager of any changes in any
information concerning the Sub-Advisor or the Sub-Advisors activities in
connection with the investment program for the Portfolio required to be
disclosed in the Trust's Registration Statement.
7. Compensation of Sub-Advisor. The amount of the compensation to the
Sub-Advisor is computed at an annual rate. The fee is payable monthly in
arrears, based on the average daily net assets of the Portfolio for each month,
at the annual rates shown below.
For all services rendered, the Investment Manager will calculate and
pay the Sub-Advisor at the annual rate of: .65 of 1% of the portion of the
average daily net assets of the Portfolio not in excess of $150 million; plus
.55 of 1% of the portion of the average daily net assets of the Portfolio over
$150 million but not in excess of $300 million; plus .45 of 1% of the portion of
the average daily net assets of the Portfolio in excess of $300 million.
In computing the fee to be paid to the Sub-Advisor, the net asset value
of the Portfolio shall be valued as set forth in the then current registration
statement of the Trust. If this agreement is terminated, the payment shall be
prorated to the date of termination.
Investment Manager and Sub-Advisor shall not be considered as partners
or participants in a joint venture. Sub-Advisor will pay its own expenses for
the services to be provided pursuant to this Agreement and will not be obligated
to pay any expenses of Investment Manager or the Trust. Except as otherwise
provided herein, Investment Manager and the Trust will not be obligated to pay
any expenses of Sub-Advisor.
8. Confidential Treatment. It is understood that any information or
recommendation supplied by the Sub-Advisor in connection with the performance of
its obligations hereunder is to be regarded as confidential and for use only by
the Investment Manager, the Trust or such persons the Investment Manager may
designate in connection with the Portfolio. It is also understood that any
information supplied to Sub-Advisor in connection with the performance of its
obligations hereunder, particularly, but not limited to, any list of securities
which, on a temporary basis, may not be bought or sold for the Portfolio, is to
be regarded as confidential and for use only by the Sub-Advisor in connection
with its obligation to provide investment advice and other services to the
Portfolio.
9. Representations of the Parties. Each party to this Agreement hereby
acknowledges that it is registered as an investment advisor under the Advisers
Act, that it will use its reasonable best efforts to maintain such registration,
and that it will promptly notify the other if it ceases to be so registered, if
its registration is suspended for any reason, or if it is notified by any
regulatory organization or court of competent jurisdiction that it should show
cause why its registration should not be suspended or terminated.
10. Liability. The Sub-Advisor shall use its best efforts and good faith in the
performance of its services hereunder. However, so long as the Sub-Advisor has
acted in good faith and has used its best efforts, then in the absence of
willful misfeasance, bad faith, gross negligence or reckless disregard for its
obligations hereunder, it shall not be liable to the Trust or its shareholders
or to the Investment Manager for any act or omission resulting in any loss
suffered in any portfolio of the Trust in connection with any service to be
provided herein. The Federal laws impose responsibilities under certain
circumstances on persons who act in good faith, and therefore, nothing herein
shall in any way constitute a waiver of limitation of any rights which the Trust
or Investment Manager may have under applicable law.
The Investment Manager agrees that the Sub-Advisor shall not be liable
for any failure to recommend the purchase or sale of any security on behalf of
the Portfolio on the basis of any information which might, in Sub-Advisor's
opinion, constitute a violation of any federal or state laws, rules or
regulations.
11. Other Activities of Sub-Advisor. Investment Manager agrees that the
Sub-Advisor and any of its partners or employees, and persons affiliated with it
or with any such partner or employee may render investment management or
advisory services to other investors and institutions, and such investors and
institutions may own, purchase or sell, securities or other interests in
property the same as or similar to those which are selected for purchase,
holding or sale for the Portfolio, and the Sub-Advisor shall be in all respects
free to take action with respect to investments in securities or other interests
in property the same as or similar to those selected for purchase, holding or
sale for the Portfolio. Purchases and sales of individual securities on behalf
of the Portfolio and other portfolios of the Trust or accounts for other
investors or institutions will be made on a basis that is equitable to all
portfolios of the Trust and other accounts. Nothing in this agreement shall
impose upon the Sub-Advisor any obligation to purchase or sell or recommend for
purchase or sale, for the Portfolio any security which it, its partners,
affiliates or employees may purchase or sell for the Sub-Advisor or such
partner's, affiliate's or employee's own accounts or for the account of any
other client, advisory or otherwise.
12. Continuance and Termination. This Agreement shall remain in full force and
effect for one year from the date hereof, and is renewable annually thereafter
by specific approval of the Board of Trustees of the Trust or by vote of a
majority of the outstanding voting securities of the Portfolio. Any such renewal
shall be approved by the vote of a majority of the Trustees who are not
interested persons under the ICA, cast in person at a meeting called for the
purpose of voting on such renewal. This agreement may be terminated without
penalty at any time by the Investment Manager or Sub-Advisor upon 60 days
written notice, and will automatically terminate in the event of its assignment
by either party to this Agreement, as defined in the ICA, or (provided
Sub-Advisor has received prior written notice thereof) upon termination of the
Investment Manager's Management Agreement with the Trust.
13. Notification. Sub-Advisor will notify the Investment Manager within a
reasonable time of any change in the personnel of the Sub-Advisor with
responsibility for making investment decisions in relation to the Portfolio or
who have been authorized to give instructions to a Custodian of the Trust.
Any notice, instruction or other communication required or contemplated
by this agreement shall be in writing. All such communications shall be
addressed to the recipient at the address set forth below, provided that either
party may, by notice, designate a different address for such party.
Investment Manager: American Skandia Investment Services, Incorporated
One Corporate Drive
Shelton, Connecticut 06484
Attention: Thomas M. Mazzaferro
President & Chief Operating Officer
Sub-Advisor: Putnam Investment Management, Inc.
One Post Office Square
Boston, Massachusetts 02109
Attention: Charles A. Ruys de Perez, Esq.
Senior Vice President & Senior Counsel
14. Indemnification. The Sub-Advisor agrees to indemnify and hold harmless
Investment Manager, any affiliated person within the meaning of Section 2(a)(3)
of the ICA ("affiliated person") of Investment Manager and each person, if any
who, within the meaning of Section 15 of the Securities Act of 1933 (the "1933
Act"), controls ("controlling person") Investment Manager, against any and all
losses, claims, damages, liabilities or litigation (including reasonable legal
and other expenses), to which Investment Manager or such affiliated person or
controlling person may become subject under the 1933 Act, the ICA, the Advisers
Act, under any other statute, at common law or otherwise, arising out of
Sub-Advisor's responsibilities as portfolio manager of the Portfolio (1) to the
extent of and as a result of the willful misconduct, bad faith, or gross
negligence by Sub-Advisor, any of Sub-Advisor's employees or representatives or
any affiliate of or any person acting on behalf of Sub-Advisor, or (2) as a
result of any untrue statement or alleged untrue statement of a material fact
relating to the Sub-Advisor or the Sub-Advisor's activities in connection with
the investment program for the Portfolio contained in a prospectus or statement
of additional information covering the Portfolio or the Trust or any amendment
thereof or any supplement thereto or the omission or alleged omission to state
therein such a material fact required to be stated therein or necessary to make
the statement therein not misleading, if such a statement or omission was made
in reliance upon written information furnished to the Investment Manager, the
Trust or any affiliated person of the Investment Manager or the Trust by the
Sub-Advisor or upon verbal information confirmed by the Sub-Advisor in writing
or (3) to the extent of, and as a result of, the failure of the Sub-Advisor to
execute, or cause to be executed, Portfolio transactions according to the
standards and requirements of the ICA; provided, however, that in no case is
Sub-Advisor's indemnity in favor of Investment Manager or any affiliated person
or controlling person of Investment Manager deemed to protect such person
against any liability to which any such person would otherwise be subject by
reason of willful misconduct, bad faith or gross negligence in the performance
of its duties or by reason of its reckless disregard of its obligations and
duties under this Agreement; and, provided further, that in the case of an
alleged untrue statement or omission of a material fact for which the
Sub-Advisor provides this indemnity, the Investment Manager shall reimburse the
Sub-Advisor for all amounts paid pursuant to this indemnity unless a court of
competent jurisdiction shall issue a final judgment finding that such an untrue
statement or omission of material fact did occur.
The Investment Manager agrees to indemnify and hold harmless
Sub-Advisor, any affiliated person of Sub-Advisor and each controlling person of
Sub-Advisor, if any, against any and all losses, claims, damages, liabilities or
litigation (including reasonable legal and other expenses), to which Sub-Advisor
or such affiliated person or controlling person may become subject under the
1933 Act, the ICA, the Advisers Act, under any other statute, at common law or
otherwise, arising out of Investment Manager's responsibilities as investment
manager of the Portfolio (1) to the extent of and as a result of the willful
misconduct, bad faith, or gross negligence by Investment Manager, any of
Investment Manager's employees or representatives or any affiliate of or any
person acting on behalf of Investment Manager, or (2) as a result of any untrue
statement or alleged untrue statement of a material fact contained in a
prospectus or statement of additional information covering the Portfolio or the
Trust or any amendment thereof or any supplement thereto or the omission or
alleged omission to state therein such a material fact required to be stated
therein or necessary to make the statement therein not misleading, if such a
statement or omission was made by the Trust other than in reliance upon written
information furnished by Sub-Advisor, or any affiliated person of the
Sub-Advisor or other than upon verbal information confirmed by the Sub-Advisor
in writing; provided, however, that in no case is Investment Manager's indemnity
in favor of Sub-Advisor or any affiliated person or controlling person of
Sub-Advisor deemed to protect such person against any liability to which any
such person would otherwise be subject by reason of willful misconduct, bad
faith or gross negligence in the performance of its duties or by reason of its
reckless disregard of its obligations and duties under this Agreement.
15. Warranty. The Investment Manager represents and warrants that (i) the
appointment of the Sub-Advisor by the Investment Manager has been duly
authorized and (ii) it has acted and will continue to act in connection with the
transactions contemplated hereby, and the transactions contemplated hereby are,
in conformity with the ICA, the Trust's governing documents and other applicable
laws.
The Sub-Advisor represents and warrants that it is authorized to
perform the services contemplated to be performed hereunder.
16. Governing Law. This agreement is made under, and shall be governed by
and construed in accordance with, the laws of the State of Connecticut.
The effective date of this agreement is October 15, 1996.
FOR THE INVESTMENT MANAGER: FOR THE SUB-ADVISOR:
- - ----------------------------- ------------------------------
Thomas Mazzaferro
President & Chief Operating Officer
Date: ________________________ Date: _______________________
Attest: _______________________ Attest: _____________________
<PAGE>
APPENDIX
(FORM OF PROXY)
<PAGE>
-- PRELIMINARY COPY --
AMERICAN SKANDIA TRUST
PROXY FOR SPECIAL MEETING OF SHAREHOLDERS OF THE
SELIGMAN HENDERSON INTERNATIONAL EQUITY PORTFOLIO
TO BE HELD ON OCTOBER 11, 1996
The undersigned hereby appoints Cynthia Gorgoretti, Maureen Gulick and
Deirdre Burke and each of them as the proxy or proxies of the undersigned, with
full power of substitution, to vote on behalf of the undersigned all shares of
beneficial interest of the above stated Portfolio of American Skandia Trust (or
"Trust") which the undersigned is entitled to vote at a Special Meeting of the
Shareholders of the Seligman Henderson International Equity Portfolio of the
Trust to be held at 1:00 p.m., Eastern Time, on October 11, 1996 at the offices
of the Trust at One Corporate Drive, 10th Floor, Shelton, Connecticut and at any
adjournments thereof, upon the matters described in the accompanying Proxy
Statement and upon any other business that may properly come before the meeting
or any adjournment thereof. Said proxies are directed to vote or to refrain from
voting pursuant to the Proxy Statement as checked on the reverse side upon the
following matters.
PLEASE SIGN ON THE OTHER SIDE AND RETURN PROMPTLY IN THE ENCLOSED
POSTAGE PAID ENVELOPE.
The undersigned acknowledges receipt with this proxy of a copy of the
Combined Notice of Special Meeting of Shareholders and the Proxy Statement of
the Seligman Henderson International Equity Portfolio of the Trust. If a
contract is jointly held, each contract owner named should sign. If only one
signs, his or her signature will be binding. If the contract owner is a trust,
custodial account or other entity, the name of the trust or the custodial
account should be entered and the trustee, custodian, etc. should sign in his or
her own name, indicating that he or she is "Trustee," "Custodian," or other
applicable designation. If the contract owner is a partnership, the partnership
should be entered and the partner should sign in his or her own name, indicating
that he or she is a "Partner."
<PAGE>
<TABLE>
<CAPTION>
PLEASE MARK VOTES
AS IN THIS EXAMPLE
<S> <C> <C> <C> <C> <C>
For Against Abstain
THE BOARD OF TRUSTEES OF THE TRUST I. PROPOSAL TO APPROVE A NEW INVESTMENT MANAGEMENT
RECOMMENDS VOTING FOR THE FOLLOWING AGREEMENT BETWEEN THE TRUST AND AMERICAN
PROPOSALS: SKANDIA INVESTMENT SERVICES, INCORPORATED
REGARDING MANAGEMENT OF THE SELIGMAN HENDERSON
THE SHARES REPRESENTED HEREBY WILL BE INTERNATIONAL EQUITY PORTFOLIO.
VOTED AS INDICATED OR FOR THE PROPOSALS IF
NO CHOICE IS INDICATED. II. PROPOSAL TO APPROVE A NEW SUB-ADVISORY
AGREEMENT BETWEEN AMERICAN SKANDIA INVESTMENT
THIS PROXY IS BEING SOLICITED ON BEHALF OF SERVICES, INCORPORATED AND PUTNAM INVESTMENT
THE BOARD OF TRUSTEES OF THE TRUST. MANAGEMENT, INC. REGARDING INVESTMENT ADVICE TO
THE SELIGMAN HENDERSON INTERNATIONAL EQUITY
CONTRACT NUMBER: PORTFOLIO.
III. PROPOSAL TO APPROVE A CHANGE IN THE PORTFOLIO'S
INVESTMENT OBJECTIVE.
IV. PROPOSAL TO APPROVE CHANGES IN THE PORTFOLIO'S
FUNDAMENTAL INVESTMENT RESTRICTIONS.
Please be sure to sign and date this Proxy Approval of Proposals I and II are made contingent upon each other.
Each of Proposals III and IV are made contingent upon approval of
Proposals I and II.
</TABLE>
- - ------------------------- -------------------------
Shareholder sign here Co-owner sign here RECORD DATE UNITS:
- - --------------------------------------------------------------------------------
DETACH CARD
