Investment Company Act No. 811-5186
As filed with the Securities and Exchange Commission on May 13, 1997
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss. 240.14a-11(c) or ss. 240.14a-12
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American Skandia Trust
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Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
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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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[ ] 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
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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
May 14, 1997
Dear Valued Customer,
As an American Skandia Life Assurance Corporation ("ASLAC") contract owner
who beneficially owns shares of the INVESCO Equity Income Portfolio and/or the
Federated High Yield Portfolio (the "Portfolios")of the American Skandia Trust
("AST"), you are cordially invited to special meetings of the shareholders of
the Portfolios to be held at the offices of ASLAC, 10th Floor, One Corporate
Drive, Shelton, CT, on June 12, 1997 at 10:00 a.m.
Shareholders of the INVESCO Equity Income Portfolio are being asked to approve
or disapprove a proposal to approve a new Sub-Advisory Agreement between
American Skandia Investment Services, Inc. ("ASISI") and INVESCO Trust Company
("INVESCO") regarding investment advice to the Portfolio. As more fully
explained in the attached Proxy Statement, because of a recent merger involving
INVESCO's parent company, the prior Sub-Advisory Agreement between ASISI and
INVESCO regarding the Portfolio terminated automatically, as a matter of law.
The new agreement will be on terms substantially identical to the prior
agreement, and approval of the proposal will in no way increase the advisory
fees, sub-advisory fees or expenses of the Portfolio or change the level, nature
or quality of services you receive.
Shareholders of the Federated High Yield Portfolio are being asked to approve a
proposal to remove the Portfolio's fundamental investment restriction limiting
the Portfolio's investment in restricted securities to 10% of its net assets. In
recent years, more offerings of high yield securities have been made without
registration under the federal securities laws. While securities sold in these
offerings are "restricted" because they are subject to certain restrictions on
resale, regulatory changes have resulted in these restricted securities being
more liquid and easily saleable. Therefore, as more fully explained in the
attached Proxy Statement, the Board of Trustees of AST and the Portfolio's
sub-adviser believe that the investment restriction on restricted securities is
unnecessary and may result in the Portfolio not being able to participate in
certain securities offerings that may be advantageous to it.
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(s), date and sign it, and return it
promptly in the envelope provided to be received by American Skandia on or
before the close of business on June 10, 1997. The shares that you beneficially
own will be voted in accordance with instructions received by that date. All
shares of a 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 meetings or
the proxy should be directed to your financial representative.
Sincerely,
/s/ Gordon C. Boronow
Gordon C. Boronow
President and Chief Operating Officer
American Skandia Life Assurance Corporation
<PAGE>
AMERICAN SKANDIA TRUST
One Corporate Drive
P.O. Box 883
Shelton, Connecticut 06484
NOTICE OF SPECIAL MEETINGS OF SHAREHOLDERS
OF THE
INVESCO EQUITY INCOME PORTFOLIO
AND THE
FEDERATED HIGH YIELD PORTFOLIO
To be held
June 12, 1997
To the Shareholders of the INVESCO Equity Income and Federated High Yield
Portfolio of American Skandia Trust:
Notice is hereby given that Special Meetings of Shareholders of the INVESCO
Equity Income Portfolio and Federated High Yield Portfolio (the "Portfolios") of
American Skandia Trust (the "Trust") will be held at One Corporate Drive,
Shelton, Connecticut 06484 on June 12, 1997 at 10:00 a.m. Eastern Time, or at
such adjourned time as may be necessary for the holders of a majority of the
outstanding shares of each Portfolio to vote (the "Meetings"), for the following
purposes:
To consider the approval of a new Sub-Advisory Agreement between American
Skandia Investment Services, Incorporated and INVESCO Trust Company regarding
investment advice to the INVESCO Equity Income Portfolio.
To consider the removal of the Federated High Yield Portfolio's fundamental
investment restriction limiting the Portfolio's investment in restricted
securities to 10% of its net assets.
III. To transact such other business as may properly come before the
Meetings or any adjournments thereof.
The shareholders of the INVESCO Equity Income Portfolio are entitled to
vote on Proposal I. The shareholders of the Federated High Yield Portfolio are
entitled to vote on Proposal II.
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 April 18, 1997 as the record date for determining shareholders
entitled to notice of, and to vote at, the Meetings, and only holders of record
of shares at the close of business on that date are entitled to notice of, and
to vote at, the Meetings. Each share of a Portfolio is entitled to one vote with
respect to the proposal on which a Portfolio's shareholders are entitled to
vote.
You are cordially invited to attend the Meetings. If you do not expect to
attend, you are requested to complete, date and sign the enclosed form (or
forms) of proxy and return it promptly in the envelope provided for that
purpose. The proxy is being solicited on behalf of the Board of Trustees.
YOUR VOTE IS IMPORTANT. IN ORDER TO AVOID THE UNNECESSARY EXPENSE OF
FURTHER SOLICITATION, WE URGE YOU TO INDICATE VOTING INSTRUCTIONS ON THE
ENCLOSED PROXY (OR PROXIES), DATE AND SIGN IT, AND RETURN IT PROMPTLY IN THE
ENVELOPE PROVIDED, NO MATTER HOW LARGE OR SMALL YOUR HOLDINGS MAY BE. YOU MAY
REVOKE 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
/s/ Eric C. Freed
Eric C. Freed
Secretary
American Skandia Trust
May 14, 1997
<PAGE>
PROXY STATEMENT
AMERICAN SKANDIA TRUST
One Corporate Drive
P.O. Box 883
Shelton, Connecticut 06484
SPECIAL MEETINGS OF SHAREHOLDERS OF THE
INVESCO EQUITY INCOME PORTFOLIO
AND THE
FEDERATED HIGH YIELD PORTFOLIO
OF
AMERICAN SKANDIA TRUST
To be held
June 12, 1997
This proxy statement and enclosed form of proxy are being furnished in
connection with the solicitation of proxies by the Board of Trustees of American
Skandia Trust (the "Trust") for use at Special Meetings of Shareholders of the
INVESCO Equity Income Portfolio (the "INVESCO Portfolio") and the Federated High
Yield Portfolio (the "Federated Portfolio") (collectively, the "Portfolios") of
the Trust to be held at One Corporate Drive, Shelton, Connecticut 06484 on June
12, 1997, at 10:00 a.m. Eastern Time (the "Meetings"), or at any adjournments
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 May 14, 1997.
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 costs of the Meeting of the Federated Portfolio, including the cost of
solicitation of proxies for the Meeting, will be paid by the Federated
Portfolio. Neither the Trust nor the INVESCO Portfolio will pay any of the costs
of the Meeting of the INVESCO Portfolio, including the costs related to the
solicitation of proxies.
The Annual Report of the Trust (the "Report"), including audited
financial statements for the fiscal year ended December 31, 1996, has been
previously sent to shareholders. The Trust will furnish an additional copy of
the Report 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 April 18, 1997 (the
"Record Date") are entitled to notice of, and to vote at, the Meetings. Each
shareholder is entitled to one vote for each full share. As of the Record Date,
29,478,312.136 shares of beneficial interest of the INVESCO Portfolio were
outstanding, and 20,915,143.215 shares of beneficial interest of the Federated
Portfolio were outstanding. As of the Record Date, there is no beneficial owner
of more than 5% of the shares of any Portfolio of the Trust to the knowledge of
the Trust. Collectively, the Trustees and Officers of the Trust own less than 1%
of the Trust's outstanding shares.
Currently, the Trust serves as an underlying mutual fund for variable
annuities issued by life insurance companies, including ASLAC. As of the Record
Date, over 99% of each Portfolio's shares were legally owned by ASLAC. ASLAC
holds assets attributable to its variable annuity contract obligations in ASLAC
Variable Account B (Class 1 Sub-Accounts), ASLAC Variable Account B (Class 2
Sub-Accounts) and ASLAC Variable Account B (Class 3 Sub-Accounts) (collectively,
for purposes of this Proxy Statement, "ASLAC Variable Accounts"), each of which
is an investment company registered as such under the Investment Company Act of
1940, as amended (the "Investment Company Act"). ASLAC Variable Accounts have
various sub-accounts, each of which invests exclusively in a mutual fund or in a
portfolio of a mutual fund. ASLAC will solicit voting instructions from variable
annuity contract owners who beneficially own shares of the Portfolios
represented in the INVESCO Equity Income Sub-account and the Federated High
Yield Sub-account as of the Record Date (the "Contractowners"). Because
Contractowners are indirectly invested in the Portfolios through their contracts
and have the right to instruct ASLAC how to vote shares of the Portfolios on all
matters requiring a shareholder vote, Contractowners should consider themselves
Shareholders of the Portfolios for purposes of this Proxy Statement.
American Skandia Investment Services, Incorporated ("ASISI") is the
investment manager for all the Trust's investment portfolios, including the
Portfolios. ASISI is a wholly-owned subsidiary of American Skandia Investment
Holding Corporation ("ASIHC"). ASIHC is also the owner of all the outstanding
shares of ASLAC and American Skandia Marketing, Incorporated ("ASM"), which is
the principal underwriter of ASLAC variable annuity contracts. The principal
offices of ASISI, ASIHC, ASLAC and ASM are located in the same building at One
Corporate Drive, Shelton, Connecticut 06484.
Under a Sub-advisory Agreement with ASISI, INVESCO Trust Company
("ITC") serves as sub-adviser to the INVESCO Portfolio and, subject to the
supervision and control of ASISI and the Board of Trustees, determines the
securities to be purchased for and sold from the Portfolio. ITC is located at
7800 East Union Avenue, Denver, Colorado 80237. The Sub-adviser is a trust
company incorporated in 1969, and is a wholly-owned subsidiary of INVESCO Funds
Group, Inc. ("IFG"), which is located at the same address. IFG is a wholly-owned
subsidiary of INVESCO North American Holdings, Inc. ("INAH"), 1315 Peachtree
Street, N.E., Atlanta, Georgia 30309. INAH is an indirect wholly-owned
subsidiary of AMVESCAP PLC ("AMVESCAP").1 The corporate headquarters of AMVESCAP
is located at 11 Devonshire Square, London EC2M 4YR, England.
Under a Sub-advisory Agreement with ASISI, Federated Investment
Counseling ("Federated") serves as sub-adviser to the Federated Portfolio and,
subject to the supervision and control of ASISI and the Board of Trustees,
determines the securities to be purchased for and sold from the Portfolio.
Federated is a wholly-owned subsidiary of Federated Investors, and both are
located at Federated Investors Tower, Pittsburgh, Pennsylvania 15222-3779.
The Administrator of the Portfolios, and every other portfolio of the
Trust, is PFPC Inc., a Delaware corporation located at 103 Bellevue Parkway,
Wilmington, Delaware 19809
Shareholders of the INVESCO Portfolio are being asked to consider and
vote on a new sub-advisory agreement for the Portfolio. As explained in more
detail below, the former sub-advisory agreement for the Portfolio terminated
automatically, by operation of law, upon the consummation of the merger (the
"Merger") of A I M Management Group Inc. ("AIM") and a direct, wholly-owned
subsidiary of INVESCO PLC. (INVESCO PLC is the former name of AMVESCAP.)
Shareholders are not being asked to approve the Merger; rather, they are being
asked to continue the existing sub-advisory relationship for the Portfolio under
a new contract that has been in effect since the time of the Merger (the "New
Sub-advisory Agreement"). The Merger and the terms of the New Sub-advisory
Agreement are discussed below. Other than the date of the agreement and certain
provisions related to the operation of the agreement prior to shareholder
approval, the proposed new sub-advisory agreement is identical in form and terms
to the present agreement.
Shareholders of the Federated Portfolio are being asked to consider and
vote on a proposal to remove the Portfolio's fundamental investment restriction
limiting the Portfolio's investment in restricted securities to 10% of its net
assets. Based on information provided by Federated, the Trustees have concluded
that such restriction is unnecessary and, in light of recent developments in the
market for high yield securities, may result in the Portfolio not being able to
participate in certain securities offerings that may be advantageous to it.
The following table summarizes which Portfolio is being solicited for
each proposal:
PROPOSAL PORTFOLIO
I. Approval of New INVESCO Equity Income Portfolio
Sub-Advisory Agreement
Between ASISI and IFG
II. Removal of the Federated High Yield Portfolio
Restriction Limiting Investment
in Restricted Securities to 10%
of Net Assets
All shares of the Portfolios held by the Contractowners will be voted by ASLAC
in accordance with voting instructions received from such Contractowners.
Proxies submitted without voting instructions will be voted FOR the proposal set
forth in the Notice. ASLAC is entitled to vote shares for which no proxy is
received and will vote such shares in the same proportion as the votes cast by
the Contractowners on the proxy issues presented. ASLAC has fixed the close of
business on June 10, 1997 as the last day for which voting instructions will be
accepted.
PROPOSAL I
APPROVAL OF A NEW SUB-ADVISORY AGREEMENT BETWEEN
AMERICAN SKANDIA INVESTMENT SERVICES, INCORPORATED
AND INVESCO TRUST COMPANY
Background
Since the Portfolio commenced operations on January 4, 1994, ASISI has
served as investment adviser to the INVESCO Portfolio pursuant to an Investment
Management Agreement (the "Investment Management Agreement") with the Trust. The
Investment Management Agreement, effective January 3, 1994 and as annually
renewed thereafter, provides, among other things, that in carrying out its
responsibility to supervise and manage all aspects of the INVESCO Portfolio's
operations, ASISI 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. Under the Investment Management
Agreement, ASISI may delegate to a sub-adviser the duty, among other things, to
formulate and implement the Portfolio's investment program, including the duty
to determine what issuers and securities will be purchased for and sold from the
Portfolio. In accordance with this provision for delegation of authority, ASISI
entered into a sub-advisory agreement (the "Former Sub-advisory Agreement"),
effective January 3, 1994 and revised in non-material respects on May 1, 1996,
with ITC, pursuant to which those duties were delegated to ITC. ITC has served
as sub-adviser to the Portfolio since January 3, 1994.
The Former Sub-Advisory Agreement was initially approved by the Board
of Trustees, including a majority of the Trustees who are not "interested
persons" of the Trust (as defined under the Investment Company Act) (the
"Independent Trustees"), on November 23, 1993. The Former Sub-advisory Agreement
was not, and was not required to be, approved by the shareholders of the
Portfolio.
ITC is an indirect, wholly-owned subsidiary of AMVESCAP, which, prior
to the Merger, was known as INVESCO PLC ("INVESCO"). AMVESCAP is a publicly
traded holding company organized under the laws of England in 1935. The ordinary
shares of AMVESCAP, 25 pence nominal value per share (the "Ordinary Shares"),
are traded on the London Stock Exchange. AMVESCAP's subsidiaries provide
investment advisory services throughout the world. As of February 28, 1997, the
total assets advised by AMVESCAP and its subsidiaries were approximately $165
billion. AIM is a holding company that has been engaged in the financial
services business since 1976 and, together with its affiliates, advises or
manages 46 investment company portfolios comprising the A I M Family of Funds.
On November 4, 1996, INVESCO entered into an agreement of merger (the
"Merger Agreement") with AIM pursuant to which a wholly-owned U.S. subsidiary of
INVESCO would acquire all the issued and outstanding shares of AIM capital stock
for consideration valued on November 4, 1996 at approximately $1.6 billion, plus
the amount of AIM net income from September 1, 1996 through February 28, 1997,
the date the Merger was consummated (the "Closing Date"), minus dividends paid
during such period and subject to adjustments for certain balance sheet items
and transaction expenses. The consideration included 290 million new Ordinary
Shares (including Ordinary Shares issuable in respect of vested and unvested AIM
options) of INVESCO valued on November 4, 1996 at approximately $1.1 billion.
The balance of the consideration was paid in cash. Upon consummation of the
Merger, the former shareholders of AIM owned approximately 45% of INVESCO's (or
AMVESCAP's) total outstanding capital stock on a fully-diluted basis.
In connection with the Merger, the following agreements were executed:
Voting Agreement. Certain former AIM shareholders and their spouses,
the prior directors of INVESCO, and the existing directors of AMVESCAP (who held
in the aggregate approximately 25% of the Ordinary Shares of AMVESCAP
outstanding immediately following the consummation of the Merger) agreed to vote
as directors and as shareholders to ensure that: (a) the AMVESCAP Board will
have fifteen members, consisting of four executive directors and three
non-executive directors designated by the senior management of INVESCO prior to
the Merger, four executive directors and three non-executive directors
designated by the senior management of AIM prior to the Merger, and a Chairman;
(b) the initial Chairman was Charles W. Brady (who was, prior to the Merger, the
Chairman of INVESCO) and the initial Vice Chairman was Charles T. Bauer (who
was, prior to the Merger, Chairman of AIM); and (c) the parties will vote at any
AMVESAP shareholder meetings on resolutions (other than those in respect of the
election of directors) supported by two-thirds of the AMVESCAP Board in the same
proportion as votes are cast by unaffiliated shareholders. The Voting Agreement
will terminate on the earlier of the fourth anniversary of the Closing Date or
the date on which a resolution proposed by an INVESCO-designated board member is
approved by the AMVESCAP Board despite being voted against by each
AIM-designated board member present at such AMVESCAP Board meeting.
Standstill Agreement and Transfer Restriction Agreements. Certain
former AIM shareholders and their spouses and certain significant shareholders
of INVESCO before the Merger agreed, under certain circumstances for a maximum
period of five years, not to engage in a number of specified activities that
might result in a change of ownership or control positions of AMVESCAP existing
as of the Closing Date. The AIM shareholders and AMVESCAP's current Chairman
will be restricted in their ability to transfer their shares of AMVESCAP for a
period of up to five years.
ITC has advised the Trust that the Merger did not and is not expected
to impact in any manner the Sub-advisory services provided to the INVESCO
Portfolio by ITC. No material change in investment philosophy, policies or
strategies occurred or is envisioned. ITC continues to be an indirect
wholly-owned subsidiary of AMVESCAP. The Merger Agreement did not, by its terms,
contemplate any changes, other than changes in the ordinary course of business,
in the management or operation of ITC relating to the INVESCO Portfolio, the
personnel managing the Portfolio, or the services provided to the Portfolio by
ITC. The Merger also did not result in material changes in the business,
corporate structure or composition of the senior management or personnel of the
Sub-adviser. Based on the foregoing, ITC has advised the Trust that it does not
believe that the Merger has caused or will cause a reduction in the quality of
services previously provided to the INVESCO Portfolio, or that the Merger has
had or will have any adverse effect on ITC's ability to fulfill its obligations
under the New Sub-advisory Agreement or to operate its business in a manner
consistent with its past practices.
The Former Sub-advisory Agreement, as required by Section 15 of the
Investment Company Act, provided for its automatic termination in the event of
its assignment. Any change of control of the Sub-adviser is deemed to be an
assignment under the Investment Company Act. Because, upon consummation of the
Merger, the former shareholders of AIM owned more than 25% of AMVESCAP's
Ordinary Shares outstanding after the Merger, a change of control of AMVESCAP
may be deemed to have occurred. Such a change of control would cause an
automatic termination of the Former Sub-advisory Agreement under the Investment
Company Act.
Accordingly, in anticipation of the consummation of the Merger and in
order to ensure continuity of advisory services provided to the INVESCO
Portfolio by ITC, the Board of Trustees of the Trust met on February 12, 1997 to
consider the approval of the New Sub-advisory Agreement. At that meeting, the
Board, including a majority of those Trustees who are not "interested persons"
of the Trust as such term is defined in the Investment Company Act (the
"Independent Trustees") approved the New Sub-advisory Agreement. In addition,
because the Trust did not have sufficient time to hold a meeting of shareholders
of the Portfolio, as required by the Investment Company Act, to approve to New
Sub-advisory Agreement prior to the Closing Date, the Trust sought exemptive
relief from the Securities and Exchange Commission to permit such meeting of
shareholders to occur up 120 days after the Closing Date. The Trust was granted
such exemptive relief on March 5, 1997. Under the conditions of the order
granting such relief, the sub-advisory fees payable to the Sub-adviser after the
Closing Date have been paid into an interest-bearing escrow account. If the New
Sub-advisory Agreement is approved by shareholders, such fees will be paid to
ITC. If the New Sub-advisory Agreement is not approved, such fees will be
returned to the Portfolio.
<PAGE>
Evaluation of the Board of Trustees
At the above-mentioned special meeting of the Board of Trustees of the
Trust, at which all of the Independent Trustees were in attendance, the Trustees
evaluated the New Sub-advisory Agreement. Prior to and during the meeting the
Independent Directors requested and received all information they deemed
necessary to determine whether the New Sub-advisory Agreement is in the best
interests of the INVESCO Portfolio and its shareholders. At the meeting, the
Independent Trustees reviewed a letter provided by ITC stating that the Merger
would not impact in any manner the sub-advisory services, including portfolio
management services, provided to the INVESCO Portfolio by ITC. The letter also
stated that the portfolio managers and investment disciplines of the Portfolio
would remain exactly the same following the Merger.
In evaluating the New Sub-advisory Agreement, the Independent Directors
considered the quality and scope of the services provided by ITC under the
Former Sub-advisory Agreement, and viewed as particularly significant that no
material change in the scope or quality of services provided by the ITC was
anticipated, and that there would be no change in the compensation payable to
ITC. In addition, the Board considered that, except for the dates of its
execution and effectiveness and certain provisions related to the escrow
arrangements, the terms of the New Sub-advisory Agreement were the same, in all
material respects, as the terms of the Former Sub-advisory Agreement.
Furthermore, the Board considered the excellent reputation and substantial
experience of AIM in the mutual fund industry. Finally, in determining that the
New Sub-advisory Agreement should be approved even though shareholder approval
could not be obtained prior to the Closing Date, the Board considered that the
sub-advisory fees would be paid into escrow and that, under the conditions of
the exemptive order, ITC is required to advise the Trust if there is a material
change in the manner of or the personnel providing services under the New
Sub-advisory Agreement prior to its approval by Portfolio shareholders.
Based on the Trustees' review and their evaluation of the materials
they received, and in consideration of all factors deemed relevant to them, the
Trustees determined that the New Sub-advisory Agreement is in the best interests
of the Portfolio and its shareholders. Accordingly, the Board, including all of
the Independent Trustees, approved the New Sub-advisory Agreement and voted to
recommend that the Portfolio's shareholders also vote to approve such agreement.
<PAGE>
The New and Former Sub-advisory Agreements
The New Sub-advisory Agreement became effective as of the Closing Date,
contingent upon approval by the shareholders of the Portfolio. If shareholders
approve the New Sub-advisory Agreement, it will remain in effect for an initial
term of one year from the Closing Date, and may be renewed annually thereafter
by specific approval of the Board of Trustees or the shareholders of the
Portfolio. As discussed above, the material terms and provisions of the New
Sub-advisory Agreement, other than its effective date and the provisions related
to the escrow arrangements, are the same, in all substantive respects, as those
of the Former Sub-advisory Agreement. Those terms and provisions are summarized
below.
Under the terms of the New Sub-advisory Agreement, ITC has agreed to
furnish the Investment Manager with investment advisory services in connection
with a continuous investment program for the Portfolio, which is to be managed
in accordance with the investment objective, investment policies and
restrictions of the Portfolio as set forth in the Prospectus and Statement of
Additional Information of the Trust and in accordance with the Trust's
Declaration of Trust and By-laws. Subject to the supervision and control of the
Investment Manager, which is in turn subject to the supervision and control of
the Board of Trustees, ITC, in its discretion, determines and selects the
securities to be purchased for and sold from the Portfolio and places orders
with and gives instructions to brokers, dealers and others to cause such
transactions to be executed. Additionally, under the New Sub-advisory Agreement,
ITC obtains and evaluates pertinent information about significant developments
and economic, statistical and financial data, whether affecting the economy
generally or the INVESCO Portfolio, information concerning the individual
issuers whose securities are included in the Portfolio or the activities in
which they engage, or information with respect to securities that ITC considers
desirable for inclusion in the Portfolio.
Under the Agreements, sub-advisory fees are paid by ASISI, not
by the INVESCO Portfolio or its shareholders. For its fee, ITC has agreed to
furnish at its expenses all necessary investment facilities, including salaries
of personnel, required for it to execute its duties under the Agreement
faithfully. ITC's compensation for the services provided under the New
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, ASISI calculates and pays ITC at the annual rate of
.50% of the portion of the Portfolio's average daily net assets not in excess of
$25 million, .45% of the portion of the Portfolio's average daily net assets
over $25 million but not in excess of $75 million, .40% of the portion of the
Portfolio's average daily net assets over $75 million but not in excess of $100
million, and .35% of the portion of the Portfolio's average daily net assets
over $100 million. The aggregate fee paid by ASISI to ITC for services rendered
under the Former Sub-Advisory Agreement for the fiscal year ended December 31,
1996 was $979,103.
The New Sub-Advisory Agreement is renewable annually 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). Any renewal by the Board requires the approval by the vote of a majority
of the Trustees who are not interested persons under the Investment Company Act,
cast in person at a meeting called for the purpose of voting on such renewal.
The New Sub-Advisory 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 ITC has received prior
written notice thereof) upon termination of the Investment Management Agreement.
Under the Agreements, ITC will use its best efforts and good faith in
the performance of its services. However, so long as ITC has acted in good faith
and used its best efforts, then in the absence of willful misconduct, bad faith,
gross negligence or reckless disregard by ITC of its obligations under the
Agreement, neither ITC nor any of its directors, officers or employees shall be
liable to the Trust or ASISI for any loss suffered by the INVESCO Portfolio in
connection with the services provided under the Agreement.
Information Concerning ITC
ITC served as adviser or sub-adviser to 55 investment company portfolios as of
December 31, 1996, including the Portfolio. These 55 portfolios had aggregate
assets of approximately $12.7 billion as of December 31, 1996. In addition, ITC
provides investment management services to private clients, including employee
benefit plans that may be invested in a collective trust sponsored by ITC.
The following table lists other investment companies or investment company
portfolios for which the ITC acts as sub-adviser that have similar investment
objectives as the Portfolio, as well as the rate of sub-advisory compensation
payable to ITC and the net assets of the fund or portfolio.
- ------------------ ------------------- ---------------------- ----------------
Fund 1940 Act Objective Sub-Advisory Net Assets
Fee Rate (in 000's)
(based on average (at February
net assets) 28, 1997)
- ------------------ ------------------- ---------------------- ----------------
- ------------------ ------------------- ---------------------- ----------------
INVESCO Current Income .25% of the first $4,353,059
Industrial $200 million;
Income Fund .20% over $200
million
- ------------------ ------------------- ---------------------- ----------------
- ------------------ ------------------- ---------------------- ----------------
Utilities Capital .25% of the first $151,181
Portfolio* Appreciation and $200 million;
Income .20% over $200
million
- ------------------ ------------------- ---------------------- ----------------
- ------------------ ------------------- ---------------------- ----------------
INVESCO Variable Current Income .375% of the first $23,476
Investment Funds $500 million;
- - Industrial .325% of the next
Income Portfolio* $500 million;
.275% over $1 billion
- ------------------ ------------------- ---------------------- ----------------
- ------------------ ------------------- ---------------------- ----------------
INVESCO Variable Capital .30% of the first $2,888
Investment Funds Appreciation and $500 million;
- - Utilities Income .275% of the next
Portfolio* $500 million;
.225% over $1 billion
- ------------------ ------------------- ---------------------- ----------------
*Indicates that ITC has waived or absorbed fees during the fund's past
fiscal year.
The principal executive officer and directors of the Sub-adviser and
their principal occupations are:
Dan J. Hesser, President and Director, also President, Chief
Executive Officer and Director of IFG; Hubert L. Harris Jr., Chairman of
the Board and Director, also President of INVESCO Services Inc. and
Director of IFG; and Charles P. Mayer, Senior Vice President and Director,
also Director of IFG.
<PAGE>
PROPOSAL II
APPROVAL OR DISAPPROVAL OF THE REMOVAL OF THE
FEDERATED PORTFOLIO'S
FUNDAMENTAL INVESTMENT RESTRICTION LIMITING THE
PORTFOLIO'S
INVESTMENT IN RESTRICTED SECURITIES TO 10% OF ITS NET
ASSETS
One of the Federated Portfolio's current fundamental investment
restrictions provides that the Portfolio will not "invest more than 10% of its
net assets in securities subject to restrictions on resale under federal
securities laws." The Sub-adviser has informed the Trust that this restriction
unduly constrains the Portfolio's ability to participate in new offerings of
high yield securities. In recent years, more of these offerings have been made
without initial registration under the Securities Act of 1933 (the "Securities
Act"). The securities sold in these offerings usually are exchanged by the
issuer at a later date for securities that have been registered under the
Securities Act. However, until the exchange, these securities are subject to
restrictions on resale and are therefore subject to the Federated Portfolio's
fundamental restriction on "restricted securities."
This fundamental policy on restricted securities was intended to
reflect the Securities and Exchange Commission (the "Commission") interpretive
position that, in order to maintain sufficient liquidity to meet shareholder
redemptions, mutual fund portfolios such as the Portfolio should limit their
investments in illiquid securities. Specifically, the Commission had required
mutual funds to limit illiquid securities to not more than 10% of net assets (as
discussed below, the current limit is 15%). In the past, because there was no
exemption from the Securities Act to permit secondary trading in restricted
securities, essentially all restricted securities were considered illiquid and
were subject to the limitation on illiquid securities.
The market for high yield securities has changed substantially in
recent years. In 1990, the Commission adopted Rule 144A under the Securities
Act. Rule 144A provides a safe harbor for the resale of certain restricted
securities to "qualified institutional buyers" without compliance with the
registration requirements of the Securities Act of 1933. "Qualified
institutional buyer" generally includes a broker-dealer that owns or manages $10
million or more of securities and other entities that own or manage $100 million
or more of securities.
In connection with the adoption of Rule 144A, the Commission stated
that securities eligible for resale under the Rule ("Rule 144A Securities")
would not necessarily be considered illiquid for purposes of the limitation on
the purchase of illiquid securities by mutual funds. Specifically, the
Commission stated that "[t]he determination of liquidity of Rule 144A securities
in the portfolio of [a mutual fund] is a question of fact for the directors to
determine, based upon the trading markets for the specific security." Under this
position, the Portfolio's Sub-adviser may determine, in accordance with
guidelines established and monitored by the Trustees of the Trust, that a Rule
144A security is liquid. Even though the Rule 144A Security is determined to be
liquid and is not subject to the Commission's limitation on illiquid securities,
the security would still be restricted and would be subject to a limitation on
the purchase of restricted securities, such as that of the Portfolio.
In accordance with the Commission's position on the liquidity of Rule
144A securities, the Board of Trustees has adopted guidelines under which the
Sub-adviser may determine the liquidity of Rule 144A Securities. The guidelines
require the Sub-adviser to consider the following factors in making this
determination:
1. The frequency of trades and quotes for the security;
2. The volatility of quotations and trade prices for the security;
3. The number of dealers willing to purchase or sell the security
and the number of potential purchasers;
4. Dealer undertakings to make a market in the security;
5. The nature of the security and the nature of the marketplace
trades (e.g., the time needed to dispose of the security, the
method of soliciting offers, and the mechanics of transfer);
6. The rating of the security and the financial condition and
prospects of the issuer of the security; and
7. Such other factors as may be relevant to the Portfolio's
ability to dispose of the security.
The Federated Portfolio currently relies on Rule 144A to trade
unregistered high yield securities, subject to its existing fundamental
restriction on restricted securities. In accordance with the Trustee's
guidelines, Federated has determined that some of these Rule 144A securities are
liquid. This includes many securities acquired in unregistered offerings that
have not yet been exchanged for securities registered under the Securities Act.
However, the Portfolio's current investment restriction applies to the
acquisition of any restricted security, regardless of its eligibility for resale
under Rule 144A or its liquidity. Consequently, the restriction may prevent the
Portfolio from acquiring a liquid high yield security, simply because it has not
yet been registered under the Securities Act.
The Commission has modified its position regarding the amount that a
mutual fund portfolio may invest in illiquid securities, increasing the amount
from 10% to 15% of net assets. Restricted securities are subject to this
limitation unless they have been determined to be liquid in accordance with the
Trustee's guidelines. In order to comply with the Commission's current position
on illiquid securities, the Portfolio has and will continue to have a policy
limiting its investments in illiquid securities to not more than 15% of net
assets. Subject to applicable law and regulatory positions, the Trustees may
change this policy on illiquid securities, or the guidelines and factors for
determining the liquidity of restricted securities, without the approval of or
any notice to the Portfolio's shareholders. This will allow the Portfolio to
respond to future developments in the market for and regulation of high yield
securities without the delay and expense of a shareholder meeting.
Therefore, if the proposal is approved, the Portfolio will remain
subject to a 15% limitation on investments in unregistered high yield securities
that do not meet the Trustees' guidelines for liquidity. While this limitation
is designed to ensure that the Portfolio has sufficient liquidity to meet
shareholder redemption requests, the Portfolio nonetheless could be forced to
dispose of securities when it would not be advantageous to do so or could have
difficulty meeting redemption requests during periods of heavy redemptions.
At a meeting held on April 11, 1997, the Board of Trustees unanimously
approved the removal of the Portfolio's fundamental investment restriction
limiting the Portfolio's investment in restricted securities to 10% of its net
assets, and approved the submission of the Proposal for shareholder approval.
The Trustees also voted to recommend that the shareholders vote to approve the
Proposal to remove the restriction.
Other Matters and Shareholder Proposals
The Board of Trustees intends to bring before the Meetings the
Proposals set forth herein and in the foregoing Notice. The Trustees do not
expect any other business to be brought before the Meetings. If, however, any
other matters are properly presented to the meetings for action, it is intended
that the persons named in the enclosed proxy will vote in accordance with their
judgment. A Contractowner executing and returning a proxy may revoke it at any
time prior to its exercise by written notice of such revocation to the Secretary
of the Trust, by execution of a subsequent proxy, or by voting in person at a
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 Meetings. Since
ASLAC is the legal owner of 100% of the Portfolio's shares, ASLAC's presence at
a Meeting constitutes a quorum under the Trust's By-laws. Shares beneficially
held by Contractowners present in person or represented by proxy at a Meeting
will be counted for the purpose of calculating the votes cast on the issues
before the Meeting. Approval of either proposal requires the vote of a "majority
of the outstanding voting securities," as defined in the Investment Company Act,
of the Portfolio to which the proposal relates, which means the vote of 67% or
more of the shares of the Portfolio present at the Meeting, if the holders of
more than 50% of the outstanding shares of the Portfolio are present or
represented by proxy, or the vote of more than 50% of the outstanding shares of
the Portfolio, whichever is less.
In the event that sufficient votes to approve a proposal are not
received, the persons named as proxies may propose one or more adjournments of a
Meeting to permit further solicitation of proxies. Any such adjournment will
require the affirmative vote of a majority of those shares represented at the
Meeting in person or by proxy. The persons named as proxies will vote those
proxies that they are entitled to vote FOR or AGAINST any such adjournment
proposal in their discretion.
The Trust is not required to hold and will not ordinarily hold annual
shareholders' meetings. The Board of Trustees may call special meetings of the
shareholders for action by shareholder vote as required by the Investment
Company Act or the Trust's Declaration of Trust.
Pursuant to rules adopted by the Commission, a shareholder may include
in proxy statements relating to annual and other meetings of the shareholders of
the Trust certain proposals for shareholder action which he or she intends to
introduce at such special meetings; provided, among other things, that such
proposal must be received by the Trust a reasonable time before a solicitation
of proxies is made for such meeting. Timely submission of a proposal does not
necessarily mean that the proposal will be included.
By order of the Board of
Trustees
Eric C. Freed
Secretary
American Skandia Trust
<PAGE>
LIST OF EXHIBITS
EXHIBIT A Form of Former Sub-Advisory
Agreement for the INVESCO
Equity Income Portfolio
EXHIBIT B Form of New Sub-Advisory
Agreement for the INVESCO
Equity Income Portfolio
<PAGE>
EXHIBIT A
SUB-ADVISORY AGREEMENT
THIS AGREEMENT is between American Skandia Investment Services,
Incorporated (the "Investment Manager") and INVESCO Trust Company (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 INVESCO Equity Income Portfolio
(the "Portfolio") under the terms of a management agreement, dated January 3,
1994, with the Trust (the "Management Agreement"); and
WHEREAS the Investment Manager has engaged the Sub-Advisor and the Trustees have
approved the engagement of the Sub-Advisor to provide investment advice and
other investment services set forth below;
NOW, THEREFORE the Investment Manager and the Sub-Advisor agree as follows:
1. Investment Services. The Sub-Advisor will furnish the Investment Manager with
investment advisory services in connection with a continuous investment program
for the Portfolio which is to be managed in accordance with the investment
objective, investment policies and restrictions of the Portfolio as set forth in
the Prospectus and Statement of Additional Information of the Trust and in
accordance with the Trust's Declaration of Trust and By-Laws. Officers,
directors, and employees of Sub-Advisor will be available to consult with
Investment Manager and the Trust, their officers, employees and Trustees
concerning the business of the Trust. Investment Manager will promptly furnish
Sub-Advisor with any amendments to such documents. Such amendments will not be
effective with respect to the Sub-Advisor until receipt thereof.
Subject to the supervision and control of the Investment Manager, which
is in turn subject to the supervision and control of the Trust's Board of
Trustees, the Sub-Advisor, will in its discretion determine and select the
securities to be purchased for and sold from the Portfolio from time to time and
will place orders with and give instructions to brokers, dealers and others for
all such transactions and cause such transactions to be executed. The Portfolio
will be maintained by a custodian bank (the "Custodian") and the Investment
Manager will authorize the Custodian to honor orders and instructions by
employees of the Sub-Advisor authorized by the Investment Manager to settle
transactions in respect of the Portfolio. No assets may be withdrawn from the
Portfolio other than for settlement of transactions on behalf of the Portfolio
except upon the written authorization of appropriate officers of the Trust who
shall have been certified as such by proper authorities of the Trust prior to
the withdrawal.
The Sub-Advisor will obtain and evaluate pertinent information about
significant developments and economic, statistical and financial data, domestic,
foreign or otherwise, whether affecting the economy generally or the Portfolio,
and concerning the individual issuers whose securities are included in the
Portfolio or the activities in which they engage, or with respect to securities
which the Sub-Advisor considers desirable for inclusion in the Portfolio.
The Sub-Advisor represents that it reviewed the Registration Statement
of the Trust, including any amendments or supplements thereto, and any Proxy
Statement relating to the approval of this Agreement, as filed with the
Securities and Exchange Commission and represents and warrants that with respect
to disclosure about the Sub-Advisor or information relating directly or
indirectly to the Sub-Advisor, such Registration Statement or Proxy Statement
contains, as of the date hereof, no untrue statement of any material fact and
does not omit any statement of material fact which was required to be stated
therein or necessary to make the statements contained therein not misleading.
The Sub-Advisor further represents and warrants that it is an investment advisor
registered under the Investment Advisers Act of 1940, as amended, and under the
laws of all jurisdictions in which the conduct of its business hereunder
requires such registration.
Sub-Advisor shall use its best judgment, effort, and advice in
rendering services under this Agreement.
In furnishing the services under this Agreement, the Sub-Advisor will
comply with the requirements of the ICA and subchapters L and M (including,
respectively, Section 817(h) and Section 851(b)(1), (2), (3) and (4)) of the
Internal Revenue Code, applicable to the Portfolio, and the regulations
promulgated thereunder. Sub-Advisor shall comply with (i) other applicable
provisions of state or federal law; (ii) the provision of the Declaration of
Trust and By-Laws of the Trust; (iii) policies and determinations of the Trust
and Investment Manager; (iv) the fundamental policies and investment
restrictions of the Trust, as set out in the Trust's registration statement
under the ICA, or as amended by the Trust's shareholders; (v) the Prospectus and
Statement of Additional Information of the Trust; and (vi) investment guidelines
or other instructions received in writing from Investment Manager. Sub-Advisor
shall supervise and monitor the investment program of the Portfolio.
Nothing in this Agreement shall be implied to prevent the Investment
Manager from engaging other sub-advisors to provide investment advice and other
services in relation to portfolios of the Trust for which Sub-Advisor does not
provide such services, or to prevent Investment Manager from providing such
services itself in relation to such portfolios.
2. Delivery of Documents to Sub-Advisor. The Investment Manager has
furnished the Sub-Advisor with copies of each of the following documents:
(a) The Declaration of Trust of the Trust as in effect on the
date hereof;
(b) The By-laws of the Trust in effect on the date hereof;
(c) The resolutions of the Trustees approving the engagement
of the Sub-Advisor as Sub-Advisor to the Investment
Manager and approving the form of this agreement;
(d) The resolutions of the Trustees selecting the Investment
Manager as investment manager to the Trust and approving the
form of the Investment Manager's Management Agreement with the
Trust;
(e) The Investment Manager's Management Agreement with the
Trust;
(f) The Code of Ethics of the Trust and of the Investment
Manager as currently in effect; and
(g) A list of companies the securities of which are not to be
bought or sold for the Portfolio because of non-public
information regarding such companies that is available to
Investment Manager or the Trust, or which, in the sole opinion
of the Investment Manager, it believes such non-public
information would be deemed to be available to Investment
Manager and/or the Trust.
(h) The current Prospectus, Statement of Additional Information and
Part C of the Trust's Registration Statement, and all amendments and supplements
thereto, will be furnished promptly to the Sub-Advisor after filing with the SEC
or the states and the Sub-Advisor will be notified in writing or by telephone as
to the date on which such amendments or supplements are to become effective.
The Investment Manager will furnish the Sub-Advisor from time to time with
copies, properly certified or otherwise authenticated, of all amendments of or
supplements to the foregoing, if any. Such amendments or supplements as to items
(a) through (f) above will be provided within 30 days of the time such materials
became available to the Investment Manager. Such amendments or supplements as to
item (g) above will be provided not later than the end of the business day next
following the date such amendments or supplements become known to the Investment
Manager.
3. Delivery of Documents to the Investment Manager. The Sub-Advisor
has furnished the Investment Manager with copies of each of the following
documents:
(a) The Sub-Advisor's Form ADV as filed with the Securities
and Exchange Commission;
(b) The Sub-Advisor's most recent balance sheet;
(c) Separate lists of persons who the Sub-Advisor wishes to
have authorized to give written and/or oral instructions
to Custodians of Trust assets for the Portfolio;
(d) The Code of Ethics of the Sub-Advisor as currently in
effect.
The Sub-Advisor will furnish the Investment Manager from time to time with
copies, properly certified or otherwise authenticated, of all material
amendments of or supplements to the foregoing, if any. Such amendments or
supplements as to items (a) through (d) above will be provided within 30 days of
the time such materials became available to the Sub-Advisor.
4. Investment Advisory Facilities. The Sub-Advisor, at its expense,
will furnish all necessary investment facilities, including salaries of
personnel required for it to execute its duties faithfully.
5. Execution of Portfolio Transactions. Sub-Advisor is responsible for decisions
to buy and sell securities for the Portfolio, broker-dealer selection, and
negotiation of its brokerage commission rates. Sub-Advisor shall determine the
securities to be purchased or sold by the Portfolio pursuant to its
determinations with or through such persons, brokers or dealers, in conformity
with the policy with respect to brokerage as set forth in the Trust's Prospectus
and Statement of Additional Information, or as the Board of Trustees may
determine from time to time. Generally, Sub-Advisor's primary consideration in
placing Portfolio securities transactions with broker-dealers for execution is
to obtain and maintain the availability of best execution at the best net price
and in the most effective manner possible. The Sub-Advisor may consider sale of
the shares of the Portfolio and/or contracts that permit allocations of contract
values to sub-accounts that purchase shares of the Portfolio, as well as
recommendations of the Investment Manager, subject to the requirements of best
net price and most favorable execution.
Consistent with this policy, the Sub-Advisor will take the
following into consideration: the best net price available; the reliability,
integrity and financial condition of the broker-dealer; the size of and
difficulty in executing the order; and the value of the expected contribution of
the broker-dealer to the investment performance of the Portfolio on a continuing
basis. Accordingly, the cost of the brokerage commissions to the Portfolio may
be greater than that available from other brokers if the difference is
reasonably justified by other aspects of the portfolio execution services
offered. Subject to such policies and procedures as the Board of Trustees of the
Trust may determine, the Sub-Advisor shall not be deemed to have acted
unlawfully or to have breached any duty solely by reason of its having caused
the Portfolio to pay a broker-dealer that provides research services to the
Sub-Advisor for the Portfolio's use an amount of commission for effecting a
portfolio investment transaction in excess of the amount of commission another
broker-dealer would have charged for effecting that transaction, if the
Sub-Advisor determines in good faith that such amount of commission was
reasonable in relation to the value of the research services provided by such
broker, viewed in terms of either that particular transaction or the
Sub-Advisor's ongoing responsibilities with respect to the Portfolio. The
Sub-Advisor is further authorized to allocate the orders placed by it on behalf
of the Portfolio to such broker-dealers who also provide research or statistical
material, or other services to the Portfolio or the Sub-Advisor. Such allocation
shall be in such amounts and proportions as the Sub-Advisor shall determine and
the Sub-Advisor will report on said allocations to the Investment Manager
regularly as requested by the Investment Manager and, in any event, at least
once each calendar year if no specific request is made, indicating the brokers
to whom such allocations have been made and the basis therefor.
6. Reports by Sub-Advisor. The Sub-Advisor shall furnish the Investment Manager
monthly, quarterly and annual reports concerning transactions and performance of
the Portfolio, including information required in the Trust's Registration, in
such form as may be mutually agreed, to review the Portfolio and discuss the
management of it. The Sub-Advisor shall permit the financial statements, books
and records with respect to the Portfolio to be inspected and audited by the
Trust, the Investment Manager or their agents at all reasonable times during
normal business hours. The Sub-Advisor shall immediately notify and forward to
both Investment Manager and legal counsel for the Trust any legal process served
upon it on behalf of the Investment Manager or the Trust. The Sub-Advisor shall
promptly notify the Investment Manager of any changes in any information
required to be disclosed in the Trust's Registration Statement.
7. Compensation of Sub-Advisor. The amount of the compensation to the
Sub-Advisor is computed at an annual rate. The fee is payable monthly in
arrears, based on the average daily net assets of the Portfolio for each
month, at the annual rates shown below.
For all services rendered, the Investment Manager will calculate and
pay the Sub-Advisor at the annual rate of: .50 of 1% of the portion of the net
assets of the Portfolio not in excess of $25 million; .45 of 1% of the portion
of the net assets over $25 million but not in excess of $75 million; .40 of 1%
of the portion in excess of $75 million but not in excess of $100 million; and
.35 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.
Investment Manager and Sub-Advisor shall not be considered as partners
or participants in a joint venture. Sub-Advisor will pay its own expenses for
the services to be provided pursuant to this Agreement and will not be obligated
to pay any expenses of Investment Manager or the Trust. Except as otherwise
provided herein, Investment Manager and the Trust will not be obligated to pay
any expenses of Sub-Advisor.
8. Confidential Treatment. It is understood that any information or
recommendation supplied by the Sub-Advisor in connection with the performance of
its obligations hereunder is to be regarded as confidential and for use only by
the Investment Manager, the Trust or such persons the Investment Manager may
designate in connection with the Portfolio. It is also understood that any
information supplied to Sub-Advisor in connection with the performance of its
obligations hereunder, particularly, but not limited to, any list of securities
which, on a temporary basis, may not be bought or sold for the Portfolio, is to
be regarded as confidential and for use only by the Sub-Advisor in connection
with its obligation to provide investment advice and other services to the
Portfolio.
9. Representations of the Parties. Each party to this Agreement hereby
acknowledges that it is registered as an investment advisor under the Investment
Advisers Act of 1940, it will use its reasonable best efforts to maintain such
registration, and it will promptly notify the other if it ceases to be so
registered, if its registration is suspended for any reason, or if it is
notified by any regulatory organization or court of competent jurisdiction that
it should show cause why its registration should not be suspended or terminated.
10. Liability. The Sub-Advisor shall use its best efforts and good faith in the
performance of its services hereunder. However, so long as the Sub-Advisor has
acted in good faith and has used its best efforts, then in the absence of
willful misfeasance, bad faith, gross negligence or reckless disregard for its
obligations hereunder, neither the Sub-Advisor nor any of its directors,
officers or employees shall 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 directors, officers, partners or employees, and
persons affiliated with it or with any such director, officer, 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 directors, officers, partners, affiliates
or employees may purchase or sell for the Sub-Advisor or such director's,
officer's, 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: INVESCO Trust Company
7800 East Union Avenue
Suite 1100
Denver, Colorado 80237
Attention: Glen A. Payne, Esq.
14. Indemnification. The Sub-Advisor agrees to indemnify and hold harmless
Investment Manager, any affiliated person within the meaning of Section 2(a)(3)
of the 1940 Act ("affiliated person") of Investment Manager and each person, if
any who, within the meaning of Section 15 of the Securities Act of 1933 (the
"1933 Act"), controls ("controlling person") Investment Manager, against any and
all losses, claims, damages, liabilities or litigation (including reasonable
legal and other expenses), to which Investment Manager or such affiliated person
or controlling person may become subject under the 1933 Act, the 1940 Act, the
Investment Adviser's Act of 1940 ("Adviser's Act"), under any other statute, at
common law or otherwise, arising out of Sub-Advisor's responsibilities as
portfolio manager of the Portfolio (1) to the extent of and as a result of the
willful misconduct, bad faith, or gross negligence by Sub-Advisor, any of
Sub-Advisor's employees or representatives or any affiliate of or any person
acting on behalf of Sub-Advisor, or (2) as a result of any untrue statement or
alleged untrue statement of a material fact contained in a prospectus or
statement of additional information covering the Portfolio or the Trust or any
amendment thereof or any supplement thereto or the omission or alleged omission
to state therein a material fact required to be stated therein or necessary to
make the statement therein not misleading, if such a statement or omission was
made in reliance upon written information furnished to Investment Manager, the
Trust or any affiliated person of the Investment Manager or the Trust or upon
verbal information confirmed by the Sub-Advisor in writing or (3) to the extent
of, and as a result of, the failure of the Sub-Advisor to execute, or cause to
be executed, Portfolio transactions according to the standards and requirements
of the 1940 Act; provided, however, that in no case is Sub-Advisor's indemnity
in favor of Investment Manager or any affiliated person or controlling person of
Investment Manager deemed to protect such person against any liability to which
any such person would otherwise be subject by reason of willful misconduct, bad
faith or gross negligence in the performance of its duties or by reason of its
reckless disregard of its obligations and duties under this Agreement.
The Investment Manager agrees to indemnify and hold harmless
Sub-Advisor, any affiliated person within the meaning of Section 2(a)(3) of the
1940 Act ("affiliated person") of Sub-Advisor and each person, if any who,
within the meaning of Section 15 of the Securities Act of 1933 (the "1933 Act"),
controls ("controlling person") Sub-Advisor, against any and all losses, claims,
damages, liabilities or litigation (including reasonable legal and other
expenses), to which Sub-Advisor or such affiliated person or controlling person
may become subject under the 1933 Act, the 1940 Act, the Investment Adviser's
Act of 1940 ("Adviser's Act"), under any other statute, at common law or
otherwise, arising out of Investment Manager's responsibilities as investment
manager of the Portfolio (1) to the extent of and as a result of the willful
misconduct, bad faith, or gross negligence by Investment Manager, any of
Investment Manager's employees or representatives or any affiliate of or any
person acting on behalf of Investment Manager, or (2) as a result of any untrue
statement or alleged untrue statement of a material fact contained in a
prospectus or statement of additional information covering the Portfolio or the
Trust or any amendment thereof or any supplement thereto or the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statement therein not misleading, if such a statement
or omission was made by the Trust other than in reliance upon written
information furnished by Sub-Advisor, or any affiliated person of the
Sub-Advisor or other than upon verbal information confirmed by the Sub-Advisor
in writing; provided, however, that in no case is Investment Manager's indemnity
in favor of Sub-Advisor or any affiliated person or controlling person of
Sub-Advisor deemed to protect such person against any liability to which any
such person would otherwise be subject by reason of willful misconduct, bad
faith or gross negligence in the performance of its duties or by reason of its
reckless disregard of its obligations and duties under this Agreement.
15. Warranty. The Investment Manager represents and warrants that (i) the
appointment of the Sub-Advisor by the Investment Manager has been duly
authorized and (ii) it has acted and will continue to act in connection with the
transactions contemplated hereby, and the transactions contemplated hereby are,
in conformity with the Investment Company Act of 1940, the Trust's governing
documents and other applicable laws.
The Sub-Advisor represents and warrants that it is authorized to
perform the services contemplated to be performed hereunder.
16. Governing Law. This agreement is made under, and shall be governed
by and construed in accordance with, the laws of the State of Connecticut.
17. Severability. Each provision of this Agreement is intended to
be severable. If any provision of this Agreement is held to be illegal or
made invalid by court decision, statute, rule or otherwise, such illegality
or invalidity will not affect the validity or enforceability of the
remainder of this Agreement.
The effective date of this agreement is May 1, 1996.
FOR THE INVESTMENT MANAGER: FOR THE SUB-ADVISOR:
Thomas Mazzaferro
President & Chief Operating Officer
Date: Date:
Attest: Attest:
<PAGE>
EXHIBIT B
SUB-ADVISORY AGREEMENT
THIS AGREEMENT is between American Skandia Investment Services,
Incorporated (the "Investment Manager") and INVESCO Trust Company (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 INVESCO Equity Income Portfolio
(the "Portfolio") under the terms of a management agreement, dated January 3,
1994, with the Trust (the "Management Agreement"); and
WHEREAS the Investment Manager has engaged the Sub-Advisor and the Trustees have
approved the engagement of the Sub-Advisor to provide investment advice and
other investment services set forth below, effective February 28, 1997,
contingent upon shareholder approval and execution of this Agreement.
NOW, THEREFORE the Investment Manager and the Sub-Advisor agree as follows:
1. Investment Services. The Sub-Advisor will furnish the Investment Manager with
investment advisory services in connection with a continuous investment program
for the Portfolio which is to be managed in accordance with the investment
objective, investment policies and restrictions of the Portfolio as set forth in
the Prospectus and Statement of Additional Information of the Trust and in
accordance with the Trust's Declaration of Trust and By-Laws. Officers,
directors, and employees of Sub-Advisor will be available to consult with
Investment Manager and the Trust, their officers, employees and Trustees
concerning the business of the Trust. Investment Manager will promptly furnish
Sub-Advisor with any amendments to such documents. Such amendments will not be
effective with respect to the Sub-Advisor until receipt thereof.
Subject to the supervision and control of the Investment Manager, which
is in turn subject to the supervision and control of the Trust's Board of
Trustees, the Sub-Advisor, will in its discretion determine and select the
securities to be purchased for and sold from the Portfolio from time to time and
will place orders with and give instructions to brokers, dealers and others for
all such transactions and cause such transactions to be executed. The Portfolio
will be maintained by a custodian bank (the "Custodian") and the Investment
Manager will authorize the Custodian to honor orders and instructions by
employees of the Sub-Advisor authorized by the Investment Manager to settle
transactions in respect of the Portfolio. No assets may be withdrawn from the
Portfolio other than for settlement of transactions on behalf of the Portfolio
except upon the written authorization of appropriate officers of the Trust who
shall have been certified as such by proper authorities of the Trust prior to
the withdrawal.
The Sub-Advisor will obtain and evaluate pertinent information about
significant developments and economic, statistical and financial data, domestic,
foreign or otherwise, whether affecting the economy generally or the Portfolio,
and concerning the individual issuers whose securities are included in the
Portfolio or the activities in which they engage, or with respect to securities
which the Sub-Advisor considers desirable for inclusion in the Portfolio.
The Sub-Advisor represents that it reviewed the Registration Statement
of the Trust, including any amendments or supplements thereto, and any Proxy
Statement relating to the approval of this Agreement, as filed with the
Securities and Exchange Commission and represents and warrants that with respect
to disclosure about the Sub-Advisor or information relating directly or
indirectly to the Sub-Advisor, such Registration Statement or Proxy Statement
contains, as of the date hereof, no untrue statement of any material fact and
does not omit any statement of material fact which was required to be stated
therein or necessary to make the statements contained therein not misleading.
The Sub-Advisor further represents and warrants that it is an investment advisor
registered under the Investment Advisers Act of 1940, as amended (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. Sub-Advisor shall comply with (i) other applicable
provisions of state or federal law; (ii) the provision of the Declaration of
Trust and By-Laws of the Trust; (iii) policies and determinations of the Trust
and Investment Manager; (iv) the fundamental policies and investment
restrictions of the Trust, as set out in the Trust's registration statement
under the ICA, or as amended by the Trust's shareholders; (v) the Prospectus and
Statement of Additional Information of the Trust; and (vi) investment guidelines
or other instructions received in writing from Investment Manager. Sub-Advisor
shall supervise and monitor the investment program of the Portfolio.
Nothing in this Agreement shall be implied to prevent the Investment
Manager from engaging other sub-advisors to provide investment advice and other
services in relation to portfolios of the Trust for which Sub-Advisor does not
provide such services, or to prevent Investment Manager from providing such
services itself in relation to such portfolios.
2. Delivery of Documents to Sub-Advisor. The Investment Manager has
furnished the Sub-Advisor with copies of each of the following documents:
(a) The Declaration of Trust of the Trust as in effect on the
date hereof;
(b) The By-laws of the Trust in effect on the date hereof;
(c) The resolutions of the Trustees approving the engagement
of the Sub-Advisor as Sub-Advisor to the Investment
Manager and approving the form of this agreement;
(d) The resolutions of the Trustees selecting the Investment
Manager as investment manager to the Trust and approving the
form of the Investment Manager's Management Agreement with the
Trust;
(e) The Investment Manager's Management Agreement with the
Trust;
(f) The Code of Ethics of the Trust and of the Investment
Manager as currently in effect; and
(g) A list of companies the securities of which are not to be
bought or sold for the Portfolio because of non-public
information regarding such companies that is available to
Investment Manager or the Trust, or which, in the sole opinion
of the Investment Manager, it believes such non-public
information would be deemed to be available to Investment
Manager and/or the Trust.
(h) The current Prospectus, Statement of Additional
Information and Part C of the Trust's Registration
Statement, and all amendments and supplements thereto,
will be furnished promptly to the Sub-Advisor after filing
with the SEC or the states and the Sub-Advisor will be
notified in writing or by telephone as to the date on
which such amendments or supplements are to become
effective.
The Investment Manager will furnish the Sub-Advisor from time to time
with copies, properly certified or otherwise authenticated, of all amendments of
or supplements to the foregoing, if any. Such amendments or supplements as to
items (a) through (f) above will be provided within 30 days of the time such
materials became available to the Investment Manager. Such amendments or
supplements as to item (g) above will be provided not later than the end of the
business day next following the date such amendments or supplements become known
to the Investment Manager.
3. Delivery of Documents to the Investment Manager. The Sub-Advisor
has furnished the Investment Manager with copies of each of the following
documents:
(a) The Sub-Advisor's Form ADV as filed with the Securities
and Exchange Commission;
(b) The Sub-Advisor's most recent balance sheet;
(c) Separate lists of persons who the Sub-Advisor wishes to
have authorized to give written and/or oral instructions
to Custodians of Trust assets for the Portfolio;
(d) The Code of Ethics of the Sub-Advisor as currently in
effect.
The Sub-Advisor will furnish the Investment Manager from time to time
with copies, properly certified or otherwise authenticated, of all material
amendments of or supplements to the foregoing, if any. Such amendments or
supplements as to items (a) through (d) above will be provided within 30 days of
the time such materials became available to the Sub-Advisor.
4. Investment Advisory Facilities. The Sub-Advisor, at its expense,
will furnish all necessary investment facilities, including salaries of
personnel required for it to execute its duties faithfully.
5. Execution of Portfolio Transactions. Sub-Advisor is responsible for decisions
to buy and sell securities for the Portfolio, broker-dealer selection, and
negotiation of its brokerage commission rates. Sub-Advisor shall determine the
securities to be purchased or sold by the Portfolio pursuant to its
determinations with or through such persons, brokers or dealers, in conformity
with the policy with respect to brokerage as set forth in the Trust's Prospectus
and Statement of Additional Information, or as the Board of Trustees may
determine from time to time. Generally, Sub-Advisor's primary consideration in
placing Portfolio securities transactions with broker-dealers for execution is
to obtain and maintain the availability of best execution at the best net price
and in the most effective manner possible. The Sub-Advisor may consider sale of
the shares of the Portfolio and/or contracts that permit allocations of contract
values to sub-accounts that purchase shares of the Portfolio, as well as
recommendations of the Investment Manager, subject to the requirements of best
net price and most favorable execution.
Consistent with this policy, the Sub-Advisor will take the
following into consideration: the best net price available; the reliability,
integrity and financial condition of the broker-dealer; the size of and
difficulty in executing the order; and the value of the expected contribution of
the broker-dealer to the investment performance of the Portfolio on a continuing
basis. Accordingly, the cost of the brokerage commissions to the Portfolio may
be greater than that available from other brokers if the difference is
reasonably justified by other aspects of the portfolio execution services
offered. Subject to such policies and procedures as the Board of Trustees of the
Trust may determine, the Sub-Advisor shall not be deemed to have acted
unlawfully or to have breached any duty solely by reason of its having caused
the Portfolio to pay a broker-dealer that provides research services to the
Sub-Advisor for the Portfolio's use an amount of commission for effecting a
portfolio investment transaction in excess of the amount of commission another
broker-dealer would have charged for effecting that transaction, if the
Sub-Advisor determines in good faith that such amount of commission was
reasonable in relation to the value of the research services provided by such
broker, viewed in terms of either that particular transaction or the
Sub-Advisor's ongoing responsibilities with respect to the Portfolio. The
Sub-Advisor is further authorized to allocate the orders placed by it on behalf
of the Portfolio to such broker-dealers who also provide research or statistical
material, or other services to the Portfolio or the Sub-Advisor. Such allocation
shall be in such amounts and proportions as the Sub-Advisor shall determine and
the Sub-Advisor will report on said allocations to the Investment Manager
regularly as requested by the Investment Manager and, in any event, at least
once each calendar year if no specific request is made, indicating the brokers
to whom such allocations have been made and the basis therefor.
6. Reports by Sub-Advisor. The Sub-Advisor shall furnish the Investment Manager
monthly, quarterly and annual reports concerning transactions and performance of
the Portfolio, including information required in the Trust's Registration, in
such form as may be mutually agreed, to review the Portfolio and discuss the
management of it. The Sub-Advisor shall permit the financial statements, books
and records with respect to the Portfolio to be inspected and audited by the
Trust, the Investment Manager or their agents at all reasonable times during
normal business hours. The Sub-Advisor shall immediately notify and forward to
both Investment Manager and legal counsel for the Trust any legal process served
upon it on behalf of the Investment Manager or the Trust. The Sub-Advisor shall
promptly notify the Investment Manager of any changes in any information
required to be disclosed in the Trust's Registration Statement.
7. Compensation of Sub-Advisor. The amount of the compensation to the
Sub-Advisor is computed at an annual rate. The fee is payable monthly in
arrears, based on the average daily net assets of the Portfolio for each
month, at the annual rates shown below.
For all services rendered, the Investment Manager will calculate and
pay the Sub-Advisor at the annual rate of: .50 of 1% of the portion of the net
assets of the Portfolio not in excess of $25 million; .45 of 1% of the portion
of the net assets over $25 million but not in excess of $75 million; .40 of 1%
of the portion in excess of $75 million but not in excess of $100 million; and
.35 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, except as hereinafter set forth in this
Section 7.
From the date of this Agreement to the date on which the Agreement is
initially approved by the shareholders of the Portfolio as required by the ICA
and Section 12 hereof, the fee payable to the Sub-Advisor hereunder shall be
deposited by the Investment Manager in an escrow account maintained with an
escrow agent mutually acceptable to the parties hereto (the "Escrow Account"),
and paid to the Sub-Advisor only upon receipt of such shareholder approval. In
the event that the shareholders of the Portfolio do not approve this Agreement
as required by the ICA and Section 12 hereof, the Sub-Advisor shall not be
entitled to receive any of the amount maintained in the Escrow Account.
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. Sub-Advisor will be
responsible for payment of all costs and expenses of obtaining initial
shareholder approval of this Agreement, including proxy solicitation costs and
expenses, and for payment of all costs and expenses associated with the
establishment, maintenance and termination of the Escrow Account. 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, it will use its reasonable best efforts to maintain such registration, and
it will promptly notify the other if it ceases to be so registered, if its
registration is suspended for any reason, or if it is notified by any regulatory
organization or court of competent jurisdiction that it should show cause why
its registration should not be suspended or terminated.
10. Liability. The Sub-Advisor shall use its best efforts and good faith in the
performance of its services hereunder. However, so long as the Sub-Advisor has
acted in good faith and has used its best efforts, then in the absence of
willful misfeasance, bad faith, gross negligence or reckless disregard for its
obligations hereunder, neither the Sub-Advisor nor any of its directors,
officers or employees shall 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 directors, officers, partners or employees, and
persons affiliated with it or with any such director, officer, 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 directors, officers, partners, affiliates
or employees may purchase or sell for the Sub-Advisor or such director's,
officer's, 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 become effective upon the
date first written below and, subject to its approval by a vote of the majority
of the outstanding voting securities of the Portfolio in accordance with the
ICA, 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 Management Agreement. This Agreement shall
automatically terminate if not approved by a vote of the majority of the
outstanding voting securities of the Portfolio as required by the ICA.
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: INVESCO Trust Company
7800 East Union Avenue
Suite 1100
Denver, Colorado 80237
Attention: Glen A. Payne, Esq.
14. Indemnification. The Sub-Advisor agrees to indemnify and hold harmless
Investment Manager, any affiliated person within the meaning of Section 2(a)(3)
of the ICA ("affiliated person") of Investment Manager and each person, if any
who, within the meaning of Section 15 of the Securities Act of 1933 (the "1933
Act"), controls ("controlling person") Investment Manager, against any and all
losses, claims, damages, liabilities or litigation (including reasonable legal
and other expenses), to which Investment Manager or such affiliated person or
controlling person may become subject under the 1933 Act, the ICA, the Advisers
Act, under any other statute, at common law or otherwise, arising out of
Sub-Advisor's responsibilities as portfolio manager of the Portfolio (1) to the
extent of and as a result of the willful misconduct, bad faith, or gross
negligence by Sub-Advisor, any of Sub-Advisor's employees or representatives or
any affiliate of or any person acting on behalf of Sub-Advisor, or (2) as a
result of any untrue statement or alleged untrue statement of a material fact
contained in a prospectus or statement of additional information covering the
Portfolio or the Trust or any amendment thereof or any supplement thereto or the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statement therein not misleading, if
such a statement or omission was made in reliance upon written information
furnished to Investment Manager, the Trust or any affiliated person of the
Investment Manager or the Trust or upon verbal information confirmed by the
Sub-Advisor in writing or (3) to the extent of, and as a result of, the failure
of the Sub-Advisor to execute, or cause to be executed, Portfolio transactions
according to the standards and requirements of the ICA; provided, however, that
in no case is Sub-Advisor's indemnity in favor of Investment Manager or any
affiliated person or controlling person of Investment Manager deemed to protect
such person against any liability to which any such person would otherwise be
subject by reason of willful misconduct, bad faith or gross negligence in the
performance of its duties or by reason of its reckless disregard of its
obligations and duties under this Agreement.
The Investment Manager agrees to indemnify and hold harmless
Sub-Advisor, any affiliated person 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, under any other statute, at common law or
otherwise, arising out of Investment Manager's responsibilities as investment
manager of the Portfolio (1) to the extent of and as a result of the willful
misconduct, bad faith, or gross negligence by Investment Manager, any of
Investment Manager's employees or representatives or any affiliate of or any
person acting on behalf of Investment Manager, or (2) as a result of any untrue
statement or alleged untrue statement of a material fact contained in a
prospectus or statement of additional information covering the Portfolio or the
Trust or any amendment thereof or any supplement thereto or the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statement therein not misleading, if such a statement
or omission was made by the Trust other than in reliance upon written
information furnished by Sub-Advisor, or any affiliated person of the
Sub-Advisor or other than upon verbal information confirmed by the Sub-Advisor
in writing; provided, however, that in no case is Investment Manager's indemnity
in favor of Sub-Advisor or any affiliated person or controlling person of
Sub-Advisor deemed to protect such person against any liability to which any
such person would otherwise be subject by reason of willful misconduct, bad
faith or gross negligence in the performance of its duties or by reason of its
reckless disregard of its obligations and duties under this Agreement.
15. Warranty. The Investment Manager represents and warrants that (i) the
appointment of the Sub-Advisor by the Investment Manager has been duly
authorized and (ii) it has acted and will continue to act in connection with the
transactions contemplated hereby, and the transactions contemplated hereby are,
in conformity with the ICA, the Trust's governing documents and other applicable
laws.
The Sub-Advisor represents and warrants that it is authorized to
perform the services contemplated to be performed hereunder.
16. Governing Law. This agreement is made under, and shall be governed
by and construed in accordance with, the laws of the State of Connecticut.
17. Severability. Each provision of this Agreement is intended to
be severable. If any provision of this Agreement is held to be illegal or
made invalid by court decision, statute, rule or otherwise, such illegality
or invalidity will not affect the validity or enforceability of the
remainder of this Agreement.
<PAGE>
The effective date of this agreement is February 28, 1997.
FOR THE INVESTMENT MANAGER: FOR THE SUB-ADVISOR:
Thomas Mazzaferro
President & Chief Operating Officer
Date: Date:
Attest: Attest:
16524-1
- --------
1 The intermediary companies between INAH and AMVESCAP are as follows:
INVESCO, Inc., INVESCO Group Services, Inc. and INVESCO North American
Group, Ltd., each of which is wholly owned by its immediate parent.
<PAGE>
PROXY FOR SPECIAL MEETING OF SHAREHOLDERS OF THE
INVESCO EQUITY INCOME PORTFOLIO
TO BE HELD ON JUNE 12, 1997
The undersigned hereby appoints Maureen Gulick and Deirdre Burke and each
of them as the proxy or proxies of the undersigned, with full power of
substitution, to vote on behalf of the undersigned all shares of beneficial
interest of the above stated Portfolio of American Skandia Trust (or "Trust")
that the undersigned is entitled to vote at a Special Meeting of the
Shareholders of the Invesco Equity Income Portfolio to be held at 10:00 a.m.,
Eastern Time, on June 12, 1997 at the offices of the Trust at One Corporate
Drive, 10th Floor, Shelton, Connecticut and at any adjournments thereof, upon
the matters described in the accompanying Proxy Statement and upon any other
business that may properly come before the meeting or any adjournment thereof.
Said proxies are directed to vote or to refrain from voting as checked on the
reverse side. If any other matters are properly presented to the meeting for
action, it is intended that the proxies will vote in accordance with their
judgment.
PLEASE SIGN BELOW AND RETURN PROMPTLY IN THE ENCLOSED POSTAGE PAID ENVELOPE.
The undersigned acknowledges receipt with this proxy of a copy of the
Combined Notice of Special Meeting of Shareholders and the Proxy Statement of
the 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."
CONTRACT NO:
UNITS:
CONTROL NO:
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: []
KEEP THIS PORTION FOR YOUR RECORDS
- --------------------------------------------------------------------------------
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
<TABLE>
<CAPTION>
AMERICAN SKANDIA TRUST - INVESCO EQUITY INCOME PORTFOLIO
Vote on Proposal For Against Abstain
<S> <C> <C> <C> <C>
THE BOARD OF TRUSTEES OF THE TRUST I. TO APPROVE A NEW SUB-ADVISORY AGREEMENT [] [] []
RECOMMENDS VOTING FOR THE FOLLOWING BETWEEN AMERICAN SKANDIA INVESTMENT SERVICES,
PROPOSAL: INCORPORATED AND INVESCO TRUST COMPANY
REGARDING INVESTMENT ADVICE TO THE INVESCO
THE SHARES REPRESENTED HEREBY WILL BE EQUITY INCOME PORTFOLIO.
VOTED AS INDICATED OR FOR THE PROPOSAL IF
NO CHOICE IS INDICATED.
THIS PROXY IS BEING SOLICITED ON BEHALF OF
THE BOARD OF TRUSTEES OF THE TRUST.
</TABLE>
<TABLE>
<CAPTION>
Please be sure to sign and date this Proxy
<S> <C> <C> <C>
_________________________ Date:___________ _________________________ Date: ____________
Signature [PLEASE SIGN WITHIN BOX] Signature [Co-owner]
- ---------------------------------------------------------------------------------
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AMERICAN SKANDIA TRUST
PROXY FOR SPECIAL MEETING OF SHAREHOLDERS OF THE
FEDERATED HIGH YIELD PORTFOLIO
TO BE HELD ON JUNE 12, 1997
The undersigned hereby appoints Maureen Gulick and Deirdre Burke and each
of them as the proxy or proxies of the undersigned, with full power of
substitution, to vote on behalf of the undersigned all shares of beneficial
interest of the above stated Portfolio of American Skandia Trust (or "Trust")
that the undersigned is entitled to vote at a Special Meeting of the
Shareholders of the Federated High Yield Portfolio to be held at 10:00 a.m.,
Eastern Time, on June 12, 1997 at the offices of the Trust at One Corporate
Drive, 10th Floor, Shelton, Connecticut and at any adjournments thereof, upon
the matters described in the accompanying Proxy Statement and upon any other
business that may properly come before the meeting or any adjournment thereof.
Said proxies are directed to vote or to refrain from voting as checked on the
reverse side. If any other matters are properly presented to the meeting for
action, it is intended that the proxies will vote in accordance with their
judgment.
PLEASE SIGN BELOW AND RETURN PROMPTLY IN THE ENCLOSED POSTAGE PAID ENVELOPE.
The undersigned acknowledges receipt with this proxy of a copy of the
Combined Notice of Special Meeting of Shareholders and the Proxy Statement of
the 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."
CONTRACT NO:
UNITS:
CONTROL NO:
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: []
KEEP THIS PORTION FOR YOUR RECORDS
- --------------------------------------------------------------------------------
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
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<CAPTION>
AMERICAN SKANDIA TRUST -FEDERATED HIGH YIELD PORTFOLIO
Vote on Proposal For Against Abstain
<S> <C> <C> <C> <C>
THE BOARD OF TRUSTEES OF THE TRUST I. PROPOSAL TO REMOVE THE PORTFOLIO'S [] [] []
RECOMMENDS VOTING FOR THE FOLLOWING FUNDAMENTAL INVESTMENT RESTRICTION LIMITING THE
PROPOSALS: PORTFOLIO'S INVESTMENT IN RESTRICTED SECURITIES
TO 10% OF ITS NET ASSETS.
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THE SHARES REPRESENTED HEREBY WILL BE
VOTED AS INDICATED OR FOR THE PROPOSALS IF
NO CHOICE IS INDICATED.
THIS PROXY IS BEING SOLICITED ON BEHALF OF
THE BOARD OF TRUSTEES OF THE TRUST.
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<CAPTION>
Please be sure to sign and date this Proxy
<S> <C> <C> <C>
_________________________ Date:___________ _________________________ Date: ____________
Signature [PLEASE SIGN WITHIN BOX] Signature [Co-owner]
- --------------------------------------------------------------------------------
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