Investment Company Act No. 811-5186
As filed with the Securities and Exchange Commission on August 6, 1999
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of
1934
Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss. 240.14a-11(c) or ss. 240.14a-12
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American Skandia Trust
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Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
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1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
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2) Form, Schedule or Registration Statement No.:
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4) Date Filed:
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<PAGE>
SPECIAL MEETINGS OF SHAREHOLDERS
OF THE AST AIM BALANCED PORTFOLIO
(FORMERLY THE AST PUTNAM BALANCED PORTFOLIO)
AND THE AST AIM INTERNATIONAL EQUITY PORTFOLIO
(FORMERLY THE AST PUTNAM INTERNATIONAL EQUITY PORTFOLIO)
OF
AMERICAN SKANDIA TRUST
To be held
September 30, 1999
To the Shareholders of the AST AIM Balanced Portfolio and AST AIM International
Equity Portfolio of American Skandia Trust:
Notice is hereby given that Special Meetings of Shareholders of the AST
AIM Balanced Portfolio (formerly, the AST Putnam Balanced Portfolio) and the AST
AIM International Equity Portfolio (formerly, the AST Putnam International
Equity Portfolio) (the "Portfolios") of American Skandia Trust (the "Trust"),
will be held at One Corporate Drive, Shelton, Connecticut 06484 on September 30,
1999 at 10:00 a.m. and 10:30 a.m. Eastern Time, respectively, or at such
adjourned time as may be necessary to vote (the "Meetings"), for the following
purposes:
I. To consider the approval of a New Sub-advisory Agreement between
American Skandia Investment Services, Incorporated and A I M Capital Management,
Inc. for the AST AIM Balanced Portfolio.
II. To consider the approval of a New Sub-advisory Agreement between
American Skandia Investment Services, Incorporated and A I M Capital Management,
Inc. for the AST AIM International Equity Portfolio.
III. To consider the approval of the reclassification of the Portfolio's
investment objective from "fundamental" to "non-fundamental."
IV. To consider the approval of the reclassification of the Portfolio's
investment objective from "fundamental" to "non-fundamental."
V. To consider the approval of changes in fundamental investment
restrictions concerning diversification of investments.
VI. To consider the approval of changes in a fundamental investment
restriction concerning the purchase or sale of real estate.
VII. To consider the approval of changes in a fundamental investment
restriction concerning concentration of investments in various industries.
VIII.To consider the approval of changes in fundamental investment
restrictions concerning investments in commodities.
IX. To consider the approval of changes in fundamental investment
restrictions concerning underwriting securities of other issuers.
X. To consider the approval of changes in a fundamental investment
restrictions concerning borrowings.
XI. To consider the approval of changes in a fundamental investment
restriction concerning loans.
XII. To consider the approval of changes in a fundamental investment
restriction concerning the issuance of senior securities.
The shareholders of the AST AIM Balanced Portfolio are entitled to vote
on Proposals I, III and V-XII. The shareholders of the AST AIM International
Equity Portfolio are entitled to vote on Proposals II and IV-XII.
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 August 6, 1999 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 on
each proposal on which the 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 of
proxy and return it promptly in the envelope provided for that purpose.
Alternatively, you may vote electronically as described in the Proxy Statement.
The enclosed proxy is being solicited on behalf of the Board of Trustees.
YOUR VOTE IS IMPORTANT. IN ORDER TO AVOID THE UNNECESSARY EXPENSE OF FURTHER
SOLICITATION, WE URGE YOU TO INDICATE VOTING INSTRUCTIONS ON THE ENCLOSED PROXY,
DATE AND SIGN IT, AND RETURN IT PROMPTLY IN THE ENVELOPE PROVIDED, NO MATTER HOW
LARGE OR SMALL YOUR HOLDINGS MAY BE. YOU MAY REVOKE IT AT ANY TIME PRIOR TO ITS
USE. THEREFORE, BY APPEARING AT A MEETING, AND REQUESTING REVOCATION PRIOR TO
THE VOTING, YOU MAY REVOKE THE PROXY AND YOU CAN THEN VOTE IN PERSON.
By order of the Board of Trustees
Eric C. Freed
Secretary
American Skandia Trust
August 25, 1999
<PAGE>
PROXY STATEMENT
AMERICAN SKANDIA TRUST
One Corporate Drive
P.O. Box 883
Shelton, Connecticut 06484
SPECIAL MEETINGS OF SHAREHOLDERS
OF THE AST AIM BALANCED PORTFOLIO
(FORMERLY THE AST PUTNAM BALANCED PORTFOLIO)
AND THE AST AIM INTERNATIONAL EQUITY PORTFOLIO
(FORMERLY THE AST PUTNAM INTERNATIONAL EQUITY PORTFOLIO)
OF
AMERICAN SKANDIA TRUST
To be held
September 30, 1999
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
AST AIM Balanced Portfolio (formerly the AST Putnam Balanced Portfolio) (the
"Balanced Portfolio") and the AST AIM International Equity Portfolio (formerly
the AST Putnam International Equity Portfolio)(the "International Portfolio"
and, together with the Balanced Portfolio, the "Portfolios") of the Trust to be
held at One Corporate Drive, Shelton, Connecticut 06484 on September 30, 1999 at
10:00 a.m. and 10:30 a.m. Eastern Time, respectively (the "Meetings"), or at any
adjournment thereof, for the purposes set forth in the accompanying Notice of
Meetings ("Notice"). The first mailing of proxies and proxy statements to
shareholders is anticipated to be on or about August 25, 1999.
You may vote by indicating voting instructions on the enclosed proxy
(or proxies) and returning it (them) in the envelope provided, or you may vote
by visiting http://www.americanskandia.com, looking for the "Vote" link and
following the instructions provided. Voting instructions will be solicited
principally by mailing this Proxy Statement and its enclosures, but proxies also
may be solicited by telephone, facsimile, through electronic means such as
e-mail, or in person by officers or 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.
Neither the Trust nor the Portfolios will pay any of the costs of the Meeting,
including the costs related to the solicitation of proxies.
The following table sets forth each Proposal, as well as the Portfolios
that will vote on the Proposal:
<TABLE>
<CAPTION>
PROPOSAL PORTFOLIOS
<S> <C> <C>
I. Approval of a New Sub-Advisory Agreement AST AIM Balanced Portfolio
between American Skandia Investment Services,
Incorporated and A I M Capital Management, Inc.
for the AST AIM Balanced Portfolio.
II. Approval of a New Sub-Advisory Agreement AST AIM International Equity Portfolio
between American Skandia Investment Services,
Incorporated and A I M Capital Management, Inc.
for the AST AIM International Equity Portfolio.
III. Approval of a Change in the Balanced Portfolio's AST AIM Balanced Portfolio
Investment Objective and Reclassification of the Portfolio's
Investment Objective from "Fundamental" to "Non-fundamental".
IV. Approval of a Change in the International Portfolio's AST AIM International Equity Portfolio
Investment Objective and Reclassification of the
Portfolio's Investment Objective from "Fundamental"
to "Non-fundamental".
V. Approval of Changes in Fundamental Investment AST AIM Balanced Portfolio
Restrictions Concerning Diversification of Investments. AST AIM International Equity Portfolio
VI. Approval of Changes in Fundamental Investment AST AIM Balanced Portfolio
Restrictions Concerning the Purchase or Sale of AST AIM International Equity Portfolio
Real Estate.
VII. Approval of Changes in Fundamental Investment AST AIM Balanced Portfolio
Restrictions Concerning Industry Concentration AST AIM International Equity Portfolio
of Investments.
VIII. Approval of Changes in Fundamental Investment AST AIM Balanced Portfolio
Restrictions Concerning Investments in Commodities. AST AIM International Equity Portfolio
IX. Approval of Changes in Fundamental Investment AST AIM Balanced Portfolio
Restrictions Concerning Underwriting Securities AST AIM International Equity Portfolio
of Other Issuers.
X. Approval of Changes in Fundamental Investment AST AIM Balanced Portfolio
Restrictions Concerning Borrowings. AST AIM International Equity Portfolio
XI. Approval of Changes in Fundamental Investment AST AIM Balanced Portfolio
Restrictions Concerning Loans. AST AIM International Equity Portfolio
XII. Approval of Changes in Fundamental Investment AST AIM Balanced Portfolio
Restrictions Concerning the Issuance of Senior AST AIM International Equity Portfolio
Securities.
</TABLE>
The Annual Report of the Trust (the "Report"), including audited
financial statements for the fiscal year ended December 31, 1998, has been
previously sent to shareholders. The most recent Semi-annual Report of the
Trust, including unaudited semi-annual financial statements for the period ended
June 30, 1999, will be sent to shareholders by approximately ______, 1999. The
Trust will furnish an additional copy of the Report, as well as the most recent
Semi-annual Report of the Trust when available, 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 August 6, 1999 (the
"Record Date") are entitled to notice of, and to vote at, the Meeting. Each
shareholder is entitled to one vote for each full share. As of the Record Date,
the following number of shares of beneficial interest of each Portfolio were
outstanding:
PORTFOLIO SHARES
AST AIM Balanced Portfolio
AST AIM International Equity Portfolio
As of the Record Date, there is no beneficial owner of more than 5% of the
shares of any of the above Portfolios to the knowledge of the Trust.
Currently, the Trust serves as an underlying mutual fund for variable
annuities issued by life insurance companies, including ASLAC. As of the Record
Date, 100% of the Portfolios' shares were legally owned by ASLAC. ASLAC holds
Portfolio shares attributable to variable annuity contracts in American Skandia
Life Assurance Corporation Variable Account B (Class 1 Sub-Accounts), ASLAC
Variable Account B (Class 2 Sub-Accounts), ASLAC Variable Account B (Class 3
Sub-Accounts), ASLAC Variable Account F and ASLAC Variable Account Q
(collectively, for purposes of this Proxy Statement, "ASLAC Variable Accounts"),
each of which except for ASLAC Variable Account Q is an investment company
registered as such under the Investment Company Act of 1940, as amended (the
"Investment Company Act"). ASLAC Variable Accounts have various sub-accounts,
each of which invests exclusively in a corresponding portfolio of an underlying
fund. ASLAC will solicit voting instructions from variable annuity contract
owners who hold as of the Record Date units of the AST AIM Balanced Sub-accounts
and/or the AST AIM International Equity Sub-accounts, and who therefore
beneficially own shares of the Portfolio(s) (the "Contractowners"). Because
Contractowners are indirectly invested in the Portfolio(s) through their
contracts and have the right to instruct ASLAC how to vote shares of the
Portfolio(s) on all matters requiring a shareholder vote, Contractowners should
consider themselves shareholders of the Portfolio(s) for purposes of this Proxy
Statement.
American Skandia Investment Services, Incorporated ("ASISI" or the
"Manager") 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.
ASIHC is indirectly owned by Skandia Insurance Company Ltd., a Swedish company
located at Sveavagen 44, S-103, Stockholm, Sweden.
Until May 3, 1999, Putnam Investment Management, Inc. ("Putnam"), One
Post Office Square, Boston, Massachusetts 02109, served as sub-advisor to the
Portfolios, and, subject to the supervision and control of ASISI and the Board
of Trustees, determined the securities to be purchased for and sold from the
Portfolios. Putnam is a subsidiary of Putnam Investments, Inc., a holding
company which in turn is wholly-owned by Marsh & McLennan Companies, Inc., a
publicly-owned holding company.
Since the resignation of Putnam as of the close of business on May 3,
1999, A I M Capital Management, Inc. ("AIM"), 11 Greenway Plaza, Suite 100,
Houston, Texas 77046-1173, has served as sub-advisor to the Portfolios under
interim Sub-advisory Agreements with ASISI, 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 Portfolios. AIM has acted as an investment
advisor since 1986 and, together with its parent, A I M Advisors, Inc.,
currently advises or manages over 110 investment portfolios encompassing a broad
range of investment objectives.
The Administrator of the Portfolios, and every other portfolio of the
Trust, is PFPC Inc., a Delaware corporation located at 103 Bellevue Parkway,
Wilmington, Delaware 19809.
All shares of the Portfolios held by the Contractowners will be voted
by ASLAC in accordance with voting instructions received from such
Contractowners at the Meetings and any adjournments thereof. ASLAC is entitled
to vote shares for which voting instructions are not received and will vote such
shares in the same proportion as the votes cast by the Contractowners on the
proxy issues presented. ASLAC has fixed the close of business on September 28,
1999 as the last day for which voting instructions will be accepted.
Timely, properly executed proxies will be voted as Contractowners
instruct. The Board of Trustees intends to bring before the Meetings the matters
set forth in Proposals I through XII of the foregoing Notice (collectively, the
"Proposals"). Unless instructions to the contrary are marked, proxies will be
voted FOR each of the Proposals. The Trustees do not expect any other business
to be brought before the Meetings. If, however, any other matters are properly
presented to a Meeting for action, it is intended that the persons named in the
enclosed proxy will vote in accordance with their judgment. A Contractowner
executing and returning a proxy may revoke it at any time prior to its exercise
by written notice of such revocation to the Secretary of the Trust, by execution
of a subsequent proxy, or by voting in person at 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 Portfolios' 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 each of the Proposals as to a Portfolio requires the vote
of a "majority of the outstanding voting securities" of the applicable
Portfolio, as defined in the Investment Company Act, which means the vote of 67%
or more of the shares of the applicable Portfolio present at the Meeting, if the
holders of more than 50% of the outstanding shares of the applicable Portfolio
are present or represented by proxy, or the vote of more than 50% of the
outstanding shares of the applicable Portfolio, whichever is less. The approval
of each Proposal is not contingent upon approval of any other Proposal.
Therefore, any Proposal that is approved by shareholders of a Portfolio will be
implemented with respect to that Portfolio notwithstanding the outcome of the
vote on any other Proposal.
In the event that sufficient votes to approve any Proposal are not
received, the persons named as proxies may propose one or more adjournments of 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 which they are entitled to vote FOR or AGAINST any such adjournment in
their discretion. Any Proposals for which sufficient favorable votes have been
received by the time of a Meeting may be acted upon and such vote shall be
considered final regardless of whether the Meeting is adjourned to permit
additional solicitation with respect to any other Proposal. Proxies submitted
without voting instructions will be voted FOR the Proposals.
PROPOSALS I and II
PROPOSAL I
APPROVAL OF A NEW SUB-ADVISORY AGREEMENT BETWEEN
AMERICAN SKANDIA INVESTMENT SERVICES, INCORPORATED
AND A I M CAPITAL MANAGEMENT, INC. FOR THE AST AIM BALANCED PORTFOLIO
PROPOSAL II
APPROVAL OF A NEW SUB-ADVISORY AGREEMENT BETWEEN
AMERICAN SKANDIA INVESTMENT SERVICES, INCORPORATED
AND A I M CAPITAL MANAGEMENT, INC. FOR THE AST AIM INTERNATIONAL EQUITY
PORTFOLIO
Background
ASISI has served as Investment Manager to the International Portfolio since
_____, 1992 pursuant to an investment management agreement with the Trust. ASISI
has served as Investment Manager to the Balanced Portfolio since its
commencement of operations on January 4, 1994 pursuant to an investment
management agreement with the Trust. (The investment management agreement for
the Balanced Portfolio and the investment management agreement for the
International Portfolio are referred to together herein as the "Investment
Management Agreements".) The Investment Management Agreements each provide,
among other things, that in carrying out its responsibility to supervise and
manage all aspects of the Portfolio's operations, the Manager may engage,
subject to the approval of the Board of Trustees and, where required, the
shareholders of the Portfolio, a sub-advisor to provide advisory services in
relation to the Portfolio, and delegate to the sub-advisor the duty, among other
things to formulate and implement the Portfolio's investment program, including
the duty to determine what issuers and securities will be purchased for or sold
from the Portfolio.
In accordance with this provision for delegation of authority,
effective October 15, 1996, the Manager entered into sub-advisory agreements
with Putnam for the Balanced Portfolio (the "Putnam Balanced Sub-Advisory
Agreement") and for the International Portfolio (the "Putnam International
Sub-Advisory Agreement" and together with the Putnam Balanced Sub-Advisory
Agreement, the "Putnam Sub-Advisory Agreements"), pursuant to which the above
duties were delegated by the Manager to Putnam.
The Investment Management Agreements and the Putnam Sub-Advisory
Agreements have been annually 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"), since the
Portfolios' inception. The Present Investment Management Agreements and Putnam
Sub-Advisory Agreements were approved by the shareholders of each Portfolio on
October __, 1996 in connection with Putnam becoming the Sub-advisor for the
Portfolios.
On March 4, 1999, the Board of Trustees, through the Manager, received
a tendered resignation from Putnam as sub-advisor to the Portfolios. At a
meeting held on April 9, 1999, the Board of Trustees received a proposal from
the Manager to replace Putnam with AIM as sub-advisor to the Portfolios. At an
in-person meeting held on April 21, 1999, the Board of Trustees gave formal
approval to new sub-advisory agreements with A I M Capital Management, Inc. for
the Balanced Portfolio (the "New AIM Balanced Sub-Advisory Agreement") and for
the International Portfolio (the "New AIM International Sub-Advisory Agreement",
and together with the New AIM Balanced Sub-Advisory Agreement, the "New AIM
Sub-Advisory Agreements"). At this meeting, the Board of Trustees also approved
changing the investment objective of each Portfolio and certain investment
policies and restrictions applicable to the Portfolios, as described in
Proposals III through XII. At this Meeting, the Board of Trustees authorized the
submission of these matters for shareholder approval and the preparation of this
proxy statement.
The Investment Management Agreements, including the fees payable to the
Manager thereunder, have not been and are not proposed to be changed in
connection with the sub-advisory and other changes discussed herein, except to
reflect the change in the name of the Portfolio in each respective Investment
Management Agreement. Therefore, shareholder approval of new Investment
Management Agreements is not required.
As hereinafter described in greater detail, the terms and conditions of
the New AIM Sub-Advisory Agreements are generally similar in all material
respects to those of the Putnam Sub-Advisory Agreements. In support of its
recommendation to engage AIM, the Manager informed the Board of Trustees of its
belief that appointment of AIM as sub-advisor to the Portfolios pursuant to
these terms would facilitate the formulation and execution of an investment
program for the Portfolios that would be in the best interests of the
Portfolios' shareholders. In the opinion of the Manager, engagement of AIM as
sub-advisor to the Portfolios would also assist in efforts to increase the
Portfolios' net assets.
The Putnam Sub-Advisory Agreements were terminated as of the close of
business on May 3, 1999. The New AIM Sub-Advisory Agreements will not become
effective until the opening of business on September 23, 1999 (or two business
days after the date on which the applicable New Agreements have received
shareholder approval, whichever is later) (such date being hereinafter referred
to as the "Effective Date"). Consequently, AIM has served as sub-advisor to the
Portfolios under interim sub-advisory agreements (the "Interim AIM Sub-Advisory
Agreements") since May 4, 1999. The Interim AIM Sub-Advisory Agreements will
terminate as of the Effective Date. If the New AIM Sub-Advisory Agreements are
disapproved by shareholders, or are not approved prior to September 30, 1999,
the Interim AIM Sub-Advisory Agreements will terminate automatically. In that
event, the Manager will attempt to obtain shareholder approval of a sub-advisory
agreement with AIM or another sub-advisor, who will provide sub-advisory
services to the Portfolios on an "at-cost" basis until such shareholder approval
is obtained.
The Putnam Sub-Advisory Agreements
The following description of the Putnam Balanced Sub-Advisory Agreement
and the Putnam International Sub-Advisory Agreement is qualified in its entirety
by reference to the form of such agreement attached to this Proxy Statement as
Exhibits A-1 and A-2, respectively.
From October 15, 1996, Putnam has served as sub-advisor to the
Portfolios. Under the terms of the Putnam Sub-Advisory Agreements, Putnam agreed
to furnish the Manager with investment advisory services in connection with a
continuous investment program for the Portfolios which are to be managed in
accordance with the investment objective, investment policies and restrictions
of the Portfolios as set forth in the prospectus and Statement of Additional
Information of the Trust and in accordance with the Trust's Declaration of Trust
and By-laws. Subject to the supervision and control of the Manager, which is in
turn subject to the supervision and control of the Board of Trustees, Putnam, in
its discretion, determined and selected the securities to be purchased for and
sold from the Portfolios and placed orders with and gave instructions to
brokers, dealers and others to cause such transactions to be executed.
The Putnam Sub-Advisory Agreements required Putnam to use its best
efforts and good faith in the performance of its services under such Agreements.
However, so long as Putnam acted in good faith and used its best efforts, then
in the absence of willful misfeasance, bad faith, gross negligence or reckless
disregard of its obligations under the Putnam Sub-Advisory Agreements, Putnam
would not be liable to the Trust or its shareholders or to the Manager for any
act or omission resulting in any loss suffered in any portfolio of the Trust in
connection with any service provided under the Putnam Sub-Advisory Agreements.
Fees. The Manager was responsible for payment of Putnam's compensation
under the Putnam Sub-Advisory Agreements. The compensation to Putnam for the
services provided under the Putnam Sub-Advisory Agreements was computed at an
annual rate and was payable monthly in arrears, based on the average daily net
assets of the applicable Portfolio for each month. The compensation was as
follows:
For all services rendered for the Balanced Portfolio, the Manager
calculated and paid Putnam at the annual rate of .45 of 1% of the portion of the
Portfolio's average daily net assets not in excess of $150 million, plus .40 of
1% of the portion of the Portfolio's average daily net assets in excess of $150
million but not in excess of $300 million, plus .35 of 1% of the portion of the
Portfolio's average daily net assets in excess of $300 million. In computing the
fee to be paid to Putnam, the net asset value of the Portfolio was valued as set
forth in the current registration statement of the Trust.
For all services rendered for the International Portfolio, the Manager
calculated and paid Putnam at the annual rate of .65 of 1% of the portion of the
Portfolio's average daily net assets not in excess of $150 million, plus .55 of
1% of the portion of the Portfolio's average daily net assets in excess of $150
million but not in excess of $300 million, plus .45 of 1% of the portion of the
Portfolio's average daily net assets in excess of $300 million. In computing the
fee to be paid to Putnam, the net asset value of the Portfolio was valued as set
forth in the current registration statement of the Trust.
Term and Termination. Each of the Putnam Sub-Advisory Agreements
provided that it shall remain in effect for one year from the date of the
agreement, and was renewable annually thereafter by specific approval of the
Board of Trustees or by vote of a majority of the outstanding voting securities
of the applicable Portfolio (as defined under the Investment Company Act). In
either event, such renewal was also required to be approved by the vote of a
majority of the Independent Trustees, cast in person at a meeting called for the
purpose of voting on such renewal. Each of the Putnam Sub-Advisory Agreements
could be terminated at any time without penalty upon 60 days' written notice to
the other party to the agreement, and would automatically terminate in the event
of its "assignment" by either party (as defined under the Investment Company
Act) or (provided Putnam had received prior written notice thereof) upon
termination of the applicable Present Investment Management Agreement.
The Putnam Sub-Advisory Agreements were terminated by Putnam as of the
close of business on May 3, 1999. The Manager believed that it was in the
interests of the Portfolios' shareholders for the Manager to accept the
resignation of Putnam as sub-advisor to the Portfolios. Putnam's compensation
under the Putnam Sub-Advisory Agreements was prorated to the date of
termination.
The New AIM Sub-Advisory Agreements
The following description of the New AIM Balanced Sub-Advisory
Agreement and the New AIM International Sub-Advisory Agreement is qualified in
its entirety by reference to the forms of such agreements attached to this Proxy
Statement as Exhibit A-3 and A-4, respectively.
The terms and conditions of the New AIM Sub-Advisory Agreements are the
same in all material respects to those of the Putnam Sub-Advisory Agreements,
with the exception of (1) the identity of the service provider, (2) the
decreased sub-advisory fee rates payable by the Manager, (3) the effective date,
(4) the name of the Portfolio, and (5) certain changes relating to AIM's
compliance responsibilities and the parties indemnification that are discussed
in more detail below. In addition, certain clarifying changes that are not
believed to be material have been made to the New AIM Sub-Advisory Agreements.
New AIM Balanced Sub-Advisory Agreement Fees. As compensation for the
services to be rendered under the New AIM Balanced Sub-Advisory Agreement, the
Manager, and not the Trust or the Portfolio, will pay AIM a fee at the annual
rate of .45 of 1% of the portion of the combined average daily net assets of the
Portfolio and the series of American Skandia Advisor Funds, Inc. that is managed
by AIM and identified by AIM and the Manager as being similar to the Portfolio,
not in excess of $75 million, plus .40 of 1% of the portion of the combined
average daily net assets in excess of $75 million but not in excess of $150
million, plus .35 of 1% of the portion of the Portfolio's average daily net
assets in excess of $150 million. In computing the fee to be paid to AIM, the
net asset value of the Portfolio shall be valued as set forth in the then
current registration statement of the Trust. If the New AIM Balanced
Sub-Advisory Agreement is terminated, the payment will be prorated to the date
of termination.
For the fiscal year ended December 31, 1998, the amount of the
sub-advisory fee paid by the Manager to Putnam for services rendered under the
Putnam Balanced Sub-Advisory Agreement was $1,580,154. If the New AIM Balanced
Sub-Advisory Agreement had been effect for the year ending December 31, 1998,
the amount of the sub-advisory fee paid by the Manager to AIM for services
rendered under the New AIM Balanced Sub-Advisory Agreement would have been $ , a
decrease of __% from the actual amount paid to Putnam during such period.
New AIM International Sub-Advisory Agreement Fees. As compensation for
the services to be rendered under the New AIM International Sub-Advisory
Agreement, the Manager, and not the Trust or the Portfolio, will pay AIM a fee
at the annual rate of .55 of 1% of the portion of the combined average daily net
assets of the Portfolio and the series of American Skandia Advisor Funds, Inc.
that is managed by AIM and identified by AIM and the Manager as being similar to
the Portfolio, not in excess of $75 million, plus .45 of 1% of the portion of
the combined average daily net assets in excess of $75 million. In computing the
fee to be paid to AIM, the net asset value of the Portfolio shall be valued as
set forth in the then current registration statement of the Trust. If the New
AIM International Sub-Advisory Agreement is terminated, the payment will be
prorated to the date of termination.
For the fiscal year ended December 31, 1998, the amount of the
sub-advisory fee paid by the Manager to Putnam for services rendered under the
Putnam International Sub-Advisory Agreement was $2,557,327. If the New AIM
International Sub-Advisory Agreement had been effect for the year ending
December 31, 1998, the amount of the sub-advisory fee paid by the Manager to AIM
for services rendered under the New AIM International Sub-Advisory Agreement
would have been $ , a decrease of __% from the actual amount paid to Putnam
during such period.
The New AIM Sub-Advisory Agreements require the Sub-Advisor to use its
best efforts to comply with certain provisions of the Internal Revenue Code that
permit the Portfolios to receive the favorable tax treatment most similar mutual
funds receive. The Putnam Sub-Advisory Agreements required Putnam to comply with
such provisions, without providing Putnam any defense that it did not comply
despite using its best efforts to do so. Furthermore, the provisions in the New
AIM Sub-Advisory Agreements setting forth when each party must indemnify the
other party for any losses that result from the party's conduct differ somewhat
from the similar provisions in the Putnam Sub-Advisory Agreements. Specifically,
under the New AIM Sub-Advisory Agreements, an obligation to indemnify a party
will arise only if, among other requirements, the party seeking indemnification
was not negligent in the performance of its duties. In contrast, under the
Putnam Sub-Advisory Agreements, an indemnification obligation could arise only
if the party seeking indemnification was not grossly negligent.
If the New AIM Sub-Advisory Agreements are approved by the shareholders
of the Portfolios, they will become effective on the Effective Date (as defined
earlier). The New AIM Sub-Advisory Agreements will remain in effect for an
initial one year term and are renewable thereafter by specific approval of the
Board of Trustees or by vote of a majority of the outstanding voting securities
of the applicable Portfolio (as defined under the Investment Company Act). In
either event, such renewal shall also be approved by the vote of a majority of
the Independent Trustees, cast in person at a meeting called for the purpose of
voting on such renewal. Like the Putnam Sub-Advisory Agreement, the New AIM
Sub-Advisory Agreements each may be terminated at any time without penalty upon
60 days' written notice to the other party to the agreement, and each will
automatically terminate in the event of its "assignment" by either party (as
defined under the Investment Company Act) or (provided AIM has received prior
written notice thereof) upon termination of the applicable Investment Management
Agreement.
As discussed in more detail below, the Board of Trustees and the
Manager believe that approval of the New AIM Sub-Advisory Agreements is in the
best interests of the Portfolios and the Portfolios' shareholders because of the
high quality of services expected to be provided under the New AIM Sub-Advisory
Agreements. In addition, the New AIM Sub-Advisory Agreements could facilitate
efforts to increase the Portfolios' assets, which may have beneficial effects on
Portfolio and Trust expenses.
The Proposed Sub-Advisor
AIM has acted as an investment advisor since 1986 and, together with
its parent, A I M Advisors, Inc., advises or manages over 110 investment
portfolios encompassing a broad range of investment objectives. As of June 30,
1999, AIM managed approximately $_______ billion in assets.
AIM is a wholly owned subsidiary of A I M Advisors, Inc., which is in
turn a wholly owned subsidiary of A I M Management Group, Inc. AIM, A I M
Advisors, Inc. and A I M Management Group, Inc. are located at 11 Greenway
Plaza, Suite 100, Houston, Texas 77046-1173. A I M Management Group is a wholly
owned subsidiary of AVZ Inc. AVZ Inc., located at 1315 Peachtree Street,
Atlanta, Georgia 30309, is a wholly owned subsidiary of AMVESCAP PLC. AMVESCAP
PLC is located at 11 Devonshire Square, London, EC2M 4YR, England.
The directors of AIM are as follows: Charles T. Bauer (who is Chairman
of the Board of Directors of AIM and a number of its affiliates and Vice
Chairman and Director of AMVESCAP PLC), Gary T. Crum (who is President of AIM
and also is a director and/or officer of a number of AIM's affiliates, including
a Director of AMVESCAP PLC), and Robert H. Graham (who is Senior Vice President
of AIM and also is a director and/or officer of a number of AIM's affiliates,
including a Director of AMVESCAP PLC). Each director can be reached at 11
Greenway Plaza, Suite 100, Houston, Texas 77046-1173.
AIM does not act as investment advisor or sub-advisor to any other
registered investment companies or series that have investment objectives and
programs similar to the proposed investment objectives and programs for the
Portfolios set forth in Proposals III and IV of this Proxy Statement. However, A
I M Advisors, Inc. acts as investment advisor to certain funds or series with
objectives and programs similar to the Portfolios and that are managed by the
same individuals that manage the Portfolios.
The Evaluation by the Board of Trustees
In evaluating the New AIM Sub-Advisory Agreements, the Board of
Trustees reviewed materials furnished by the Manager and AIM, including
information about AIM's personnel, operations and anticipated management of the
Portfolios. Consideration was given to the decreased fee rates payable by the
Manager under the New AIM Sub-Advisory Agreements and the fact that the
Investment Management fees payable by the Portfolios will remain the same.
Therefore, although the Manager's net compensation will increase, the
Portfolios' respective shareholders will not pay any additional fees as a result
of the change in sub-advisors.
The Board of Trustees also gave consideration to the basis for the
Manager's recommendation of AIM, including (1) the performance of other funds
with similar investment objectives and investment styles that are managed by AIM
or its affiliates, (2) the AIM personnel who will be involved in the management
of the Portfolio, (3) the Manager's assessment of AIM's operational and
compliance capabilities, and (4) the overall excellent reputation and standing
of AIM in the U.S. mutual fund industry.
The Board of Trustees also considered that the terms of the New AIM
Sub-Advisory Agreements will remain materially unchanged from those of the
Putnam Sub-Advisory Agreements, except as discussed above. In addition to
considering the investment advisory capabilities of AIM in terms of potential
benefits in investment performance, the Board of Trustees also considered that
the capabilities and reputation of AIM may facilitate efforts to increase the
Portfolios' assets, with could result in reductions in Portfolio and Trust
expenses through spreading fixed costs over a larger asset base.
Based upon its evaluation, the Board of Trustees concluded that the
Manager's engagement of AIM as Sub-Advisor to the Portfolios likely would offer
the Portfolios access to highly effective management and advisory services and
capabilities. The Board of Trustees concluded further that the terms of the New
AIM Sub-Advisory Agreements, including the fees contemplated thereby, are fair
and reasonable and in the best interests of the Portfolios and their respective
shareholders.
In order to provide for the services described in the New AIM
Sub-Advisory Agreements, the shareholders are being asked to approve the New AIM
Sub-Advisory Agreements.
THE TRUSTEES, INCLUDING THE INDEPENDENT TRUSTEES, RECOMMEND THAT THE
SHAREHOLDERS OF THE AST AIM BALANCED PORTFOLIO VOTE "FOR" PROPOSAL I, AND THAT
THE SHAREHOLDERS OF THE AST AIM INTERNATIONAL EQUITY PORTFOLIO VOTE "FOR"
PROPOSAL II. ANY UNMARKED PROXIES WILL BE SO VOTED.
PROPOSAL III
APPROVAL OF A CHANGE IN THE
INVESTMENT OBJECTIVE OF THE AST AIM BALANCED PORTFOLIO
AND RECLASSIFICATION OF PORTFOLIO INVESTMENT OBJECTIVE
FROM "FUNDAMENTAL" TO "NON-FUNDAMENTAL"
The Balanced Portfolio's current fundamental investment objective (the
"Present Investment Objective"), which may not be changed without approval of
the shareholders of the Balanced Portfolio, is as follows:
The investment objective of the Portfolio is to provide a
well-diversified portfolio of stocks and bonds that will produce both
capital growth and current income.
The Board of Trustees recommends that the shareholders adopt the
following investment objective for the Balanced Portfolio (the "Proposed
Investment Objective"), and that the shareholders of the Balanced Portfolio
approve making the Proposed Investment Objective "non-fundamental", which, if
approved, would mean that it could be changed by the Board of Trustees of the
Trust without subsequent approval of the shareholders of the Balanced Portfolio:
The investment objective of the Portfolio is to achieve as high a total
return as possible, consistent with preservation of capital, by
investing in a broadly diversified portfolio of high-yielding
securities, including common stocks, preferred stocks, convertible
securities and bonds.
The Present Investment Objective and the Proposed Investment Objective
are similar, and the approval of the Proposed Investment Objective is not
expected to affect the management of the Balanced Portfolio on a day-to-day
basis. The Proposed Investment Objective specifies in greater detail the
securities the Balanced Portfolio intends to invest in to achieve its objective.
For this reason, the Manager and the Board believe that it would be in the
interests of the stockholders to approve the Proposed Investment Objective.
The Board of Trustees also recommends that the shareholders approve
making the Proposed Investment Objective "non-fundamental," which would mean
that it could be changed by the Board of Trustees of the Trust, if appropriate
in its judgment, without the approval of the shareholders of the Balanced
Portfolio. The Manager proposed to the Board of Trustees that the Investment
Objective be reclassified from fundamental to non-fundamental to provide the
Board of Trustees with flexibility to change the objective. It is not expected
that the Board of Trustees will use this flexibility frequently. However, the
Board of Trustees would be in a position to change the investment objective in
circumstances when such a change would, in the Board's judgment, be in the best
interests of the Portfolio's shareholders. Such circumstances could include
changes in the securities markets generally that would render achievement of the
Proposed Investment Objective or any future objective unlikely on an ongoing
basis, or changes with respect to the Balanced Portfolio specifically, such as a
change in the Portfolio's Sub-advisor. The Investment Company Act does not
require the investment objective to be classified as "fundamental."
The Trust has filed with the Securities and Exchange Commission an
application for an order which, if granted, would permit the Manager, subject to
approval by the Board of Trustees of the Trust, to change sub-advisors for a
portfolio of the Trust in the future, and to permit the Manager to enter into
new sub-advisory agreements, without obtaining shareholder approval of the
changes. This order (which has been granted to other investment companies that
are organized in a similar manner as the Trust) is intended to facilitate the
efficient supervision and management of the Trust's various sub-advisors by the
Manager and the Trustees. Making the Proposed Investment Objective for the
Balanced Portfolio non-fundamental will facilitate the Manager's exercise of its
authority to replace or appoint sub-advisors under this order by allowing
changes to the Portfolio's investment objective to conform to the investment
program of a new sub-advisor.
If the Shareholders of the Balanced Portfolio approve this Proposal,
the Board of Trustees thereafter would be permitted to change the Investment
Objective without the delay and expense to the Portfolio of arranging for
shareholder approval. To obtain shareholder approval, the Portfolio would be
required to hold a shareholder meeting at which such change would be voted upon,
and to prepare and send a proxy statement to Contractowners seeking their
instructions as to how to vote shares at such meeting. Therefore, obtaining
shareholder approval to change the Portfolio's investment objective is likely to
involve a delay of at least 2-3 months and, assuming that the number of
Contractowners whose assets are invested in the Portfolio remain constant at
current levels, to involve printing, mailing and legal costs exceeding $ to $ .
In addition to those changes to the Balanced Portfolio's investment
objective and policies that require shareholder approval, certain changes that
do not require shareholder approval have been made to the Portfolio's investment
policies in connection with AIM becoming sub-advisor to the Portfolio. However,
the basic investment program of the Portfolio (i.e., investing in a "balanced"
portfolio of stocks and bonds) has not changed.
As sub-advised by AIM, the Balanced Portfolio invests, normally, a
minimum of 30% and a maximum of 70% of its total assets in equity securities and
a minimum of 30% and a maximum of 70% of its total assets in non-convertible
debt securities. When Putnam served as Sub-advisor, a minimum of 25% of the
Balanced Portfolio's total assets would be invested in fixed income securities.
Identical to Putnam's limitation, the Balanced Portfolio may invest up to 20% of
its total assets in foreign securities. In selecting the percentages of assets
to be invested in equity or debt securities, AIM considers such factors as
general market and economic conditions, as well as market, economic, industry
and company trends, yields, interest rates and changes in fiscal and monetary
policies. AIM will primarily purchase equity securities for growth of capital
and debt securities for income purposes. However, AIM will focus on companies
whose securities have the potential for both capital appreciation and income
generation. AIM considers whether to sell a security when it believes that the
security no longer has that potential.
In addition, as reflected in the registration statement for the Trust
(which includes the Trust's prospectus), AIM may make for the Balanced Portfolio
additional types of investments and engage in additional portfolio management
techniques beyond those previously described in the registration statement. For
example, in seeking the Proposed Investment Objective, the Balanced Portfolio
may invest up to 25% of its total assets in convertible securities. Of course,
the level of risk associated with an investment in the Portfolio will depend
upon the investments actually made on its behalf by AIM. The Portfolio may not
necessarily buy any or all of the types of securities or use any or all of the
techniques that are described in the registration statement or herein. Special
risk factors apply to the types of investments that may be made and techniques
that may be utilized by the Portfolio, including investments in foreign
securities, options, futures contracts, convertible securities and lower-rated
debt securities.
The Manager has expressed its belief to the Board of Trustees that
adoption of the Proposed Investment Objective is in the interests of the
shareholders of the Portfolio.
THE TRUSTEES, INCLUDING THE INDEPENDENT TRUSTEES, RECOMMEND THAT THE
SHAREHOLDERS OF THE AST AIM BALANCED PORTFOLIO VOTE "FOR" PROPOSAL III. ANY
UNMARKED PROXIES WILL BE SO VOTED.
PROPOSAL IV
APPROVAL OF A CHANGE IN THE
INVESTMENT OBJECTIVE OF THE AST AIM INTERNATIONAL EQUITY PORTFOLIO
AND RECLASSIFICATION OF PORTFOLIO INVESTMENT OBJECTIVE
FROM "FUNDAMENTAL" TO "NON-FUNDAMENTAL"
The International Portfolio's current fundamental investment objective
(the "Present Investment Objective"), which may not be changed without approval
of the shareholders of the International Portfolio, is as follows:
The investment objective of the Portfolio is to seek capital growth.
The Board of Trustees recommends that the shareholders adopt the
following investment objective for the International Portfolio (the "Proposed
Investment Objective"), and that the shareholders approve making the Proposed
Investment Objective "non-fundamental", which, if approved, would mean that it
could be changed by the Board of Trustees of the Trust without subsequent
approval of the shareholders of the Portfolio:
The investment objective of the Portfolio is to provide long-term
growth of capital by investing in a diversified portfolio on
international equity securities.
The Present Investment Objective and the Proposed Investment Objective
are similar, and the approval of the Proposed Investment Objective is not
expected to affect the management of the International Portfolio on a day-to-day
basis. The Proposed Investment Objective specifies in greater detail the
securities the International Portfolio intends to invest in to achieve its
objective. For this reason, the Manager and the Board believe that it would be
in the interests of the stockholders to approve the Proposed Investment
Objective.
The Board of Trustees also recommends that the shareholders approve
making the Proposed Investment Objective "non-fundamental," which would mean
that it could be changed by the Board of Trustees of the Trust, if appropriate
in its judgment, without the approval of the shareholders of the International
Portfolio. The Manager proposed to the Board of Trustees that the Investment
Objective be reclassified from fundamental to non-fundamental to provide the
Board of Trustees with flexibility to change the objective. It is not expected
that the Board of Trustees will use this flexibility frequently. However, the
Board of Trustees would be in a position to change the investment objective in
circumstances when such a change would, in the Board's judgment, be in the best
interests of the Portfolio's shareholders. Such circumstances could include
changes in the securities markets generally that would render achievement of the
Proposed Investment Objective or any future objective unlikely on an ongoing
basis, or changes with respect to the International Portfolio specifically, such
as a change in the Portfolio's Sub-advisor. The Investment Company Act does not
require the investment objective to be classified as "fundamental."
The Trust has filed with the Securities and Exchange Commission an
application for an order which, if granted, would permit the Manager, subject to
approval by the Board of Trustees of the Trust, to change sub-advisors for a
portfolio of the Trust in the future, and to permit the Manager to enter into
new sub-advisory agreements, without obtaining shareholder approval of the
changes. This order (which has been granted to other investment companies that
are organized in a similar manner as the Trust) is intended to facilitate the
efficient supervision and management of the Trust's various sub-advisors by the
Manager and the Trustees. Making the Proposed Investment Objective for the
International Portfolio non-fundamental will facilitate the Manager's exercise
of its authority to replace or appoint sub-advisors under this order by allowing
changes to the Portfolio's investment objective to conform to the investment
program of a new sub-advisor.
If the Shareholders of the International Portfolio approve this
Proposal, the Board of Trustees thereafter would be permitted to change the
Proposed Investment Objective without the delay and expense to the Portfolio of
arranging for shareholder approval. To obtain shareholder approval, the
Portfolio would be required to hold a shareholder meeting at which such change
would be voted upon, and to prepare and send a proxy statement to Contractowners
seeking their instructions as to how to vote shares at such meeting. Therefore,
obtaining shareholder approval to change the Portfolio's investment objective is
likely to involve a delay of at least 2-3 months and, assuming that the number
of Contractowners whose assets are invested in the Portfolio remain constant at
current levels, to involve printing, mailing and legal costs exceeding $ to $ .
In addition to those changes to the International Portfolio's
investment objective and policies that require shareholder approval, certain
changes that do not require shareholder approval have been made to the
Portfolio's investment policies in connection with AIM becoming sub-advisor to
the Portfolio. However, the basic investment program of the Portfolio (i.e.,
investing in equity securities of foreign companies) has not changed.
As Sub-advised by AIM, the International Portfolio invests, normally,
at least 70% of its total assets in marketable equity securities of foreign
companies that are listed on a recognized foreign securities exchange or traded
in a foreign over-the-counter market. The Portfolio normally invests in a
diversified portfolio that includes companies located in at least four countries
outside the United States. When Putnam served as Sub-advisor, the Portfolio
would invest at least 65% of its total assets in companies located in at least
three different countries other than the United States. AIM does not intend to
invest more than 20% of the Portfolio's total assets in (i) companies located in
developing countries (i.e., those that are in the initial stages of their
industrial cycles), (ii) debt or preferred equity securities exchangeable for or
convertible into marketable equity securities, and (iii) high-grade short-term
debt securities, including U.S. Government obligations, investment grade
corporate bonds or taxable municipal securities whether denominated in U.S.
dollars or foreign securities. As Sub-advised by Putnam, the Portfolio could
invest in companies in developing countries, but was not subject to any specific
percentage limitation on such investments. AIM focuses on companies that have
experienced above-average, long-term growth in earnings and have strong
prospects for future growth. In selecting countries in which the Portfolio will
invest, AIM considers such factors as the prospect for relative economic growth
among countries or regions, economic or political conditions, currency
fluctuations, tax considerations and the liquidity of a particular security. AIM
considers whether to sell a particular security when any of those factors
materially changes.
Of course, the level of risk associated with an investment in the
International Portfolio will depend upon the investments actually made on its
behalf by AIM. The Portfolio may not necessarily buy any or all of the types of
securities or use any or all of the techniques that are described in the
registration statement or herein. Special risk factors apply to the types of
investments that may be made and techniques that may be utilized by the
Portfolio, including investments in options, futures contracts and convertible
securities.
The Manager has expressed its belief to the Board of Trustees that
adoption of the Proposed Investment Objective is in the interests of the
shareholders of the Portfolio.
THE TRUSTEES, INCLUDING THE INDEPENDENT TRUSTEES, RECOMMEND THAT THE
SHAREHOLDERS OF THE AST AIM INTERNATIONAL EQUITY PORTFOLIO VOTE "FOR" PROPOSAL
IV. ANY UNMARKED PROXIES WILL BE SO VOTED.
PROPOSALS V - XII
APPROVAL OF CHANGES IN THE PORTFOLIOS'
FUNDAMENTAL INVESTMENT RESTRICTIONS
As described in more detail below, the Board of Trustees, including the
Independent Trustees, are recommending to the shareholders of the Portfolios
that they approve a number of changes to the Portfolios' fundamental investment
restrictions, including the elimination of certain restrictions. Generally, the
purposes behind these proposed changes are (i) to increase the Portfolios'
investment flexibility, and (ii) to conform the fundamental restrictions
applicable to the Portfolios to those which are applicable to other portfolios
of the Trust.
The Portfolios currently are subject to certain investment restrictions
which are "fundamental" policies and may not be changed without approval of the
shareholders of the Portfolios (collectively, the "Current Investment
Restrictions"). The Portfolios also are subject to certain non-fundamental
investment restrictions which may be changed by the Board of Trustees without
shareholder approval.
The Manager, after discussions with AIM, has proposed to the Board of
Trustees that the Current Investment Restrictions discussed below be eliminated
and replaced by similar fundamental investment restrictions (collectively, the
"New Investment Restrictions"). As noted above, these changes will conform the
Portfolios' restrictions to the restrictions applicable to other portfolios of
the Trust. In addition, many of the changes are intended to ensure that the
Portfolios have the flexibility to alter, if approved by the Board of Trustees
without shareholder approval, the Portfolios' investment programs to reflect
changes in applicable law.
If Proposals V through XII are approved by the shareholders, the
Portfolios will be subject to the following New Investment Restrictions, which
are substantially identical to those applicable to certain other portfolios of
the Trust and are similar to fundamental restrictions currently applicable to
the Portfolios:
1. The Portfolio may not issue senior securities, except as permitted under the
Investment Company Act. 2. The Portfolio may not borrow money, except that the
Portfolio may (i) borrow money for non-leveraging, temporary or emergency
purposes, and (ii) engage in reverse repurchase agreements and make other
investments or engage in other transactions, which may involve a borrowing, in a
manner consistent with the Portfolio's investment objective and policies;
provided that the combination of (i) and (ii) shall not exceed 33 1/3% of the
value of the Portfolio's assets (including the amount borrowed) less liabilities
(other than borrowings) or such other percentage permitted by law. Any
borrowings which come to exceed this amount will be reduced in accordance with
applicable law. Subject to the above limitations, the Portfolio may borrow from
banks or other persons to the extent permitted by applicable law. 3. The
Portfolio may not underwrite securities issued by other persons, except to the
extent that the Portfolio may be deemed to be an underwriter (within the meaning
of the Securities Act of 1933) in connection with the purchase and sale of
portfolio securities. 4. The Portfolio may not purchase or sell real estate
unless acquired as a result of the ownership of securities or other instruments;
provided that this restriction shall not prohibit a Portfolio from investing in
securities or other instruments backed by real estate or in securities of
companies engaged in the real estate business. 5. The Portfolio may not purchase
or sell physical commodities unless acquired as a result of the ownership of
securities or instruments; provided that this restriction shall not prohibit the
Portfolio from (i) engaging in permissible options and futures transactions and
forward foreign currency contracts in accordance with the Portfolio's investment
policies, or (ii) investing in securities of any kind. 6. The Portfolio may not
make loans, except that the Portfolio may (i) lend portfolio securities in
accordance with the Portfolio's investment policies in amounts up to 33 1/3% of
the total assets of the Portfolio taken at market value, (ii) purchase money
market securities and enter into repurchase agreements, and (iii) acquire
publicly distributed or privately placed debt securities. 7. The Portfolio may
not purchase any security if, as a result, more than 25% of the value of the
Portfolio's assets would be invested in the securities of issuers having their
principal business activities in the same industry; provided that this
restriction does not apply to investments in obligations issued or guaranteed by
the U.S. Government or any of its agencies or instrumentalities (or repurchase
agreements with respect thereto). 8. The Portfolio may not, with respect to 75%
of the value of its total assets, purchase the securities of any issuer (other
than securities issued or guaranteed by the U. S. Government or any of its
agencies or instrumentalities) if, as a result, (i) more that 5% of the value of
the Portfolio's total assets would be invested in the securities of such issuer,
or (ii) more than 10% of the outstanding voting securities of such issuer would
be held by the Portfolio.
The following notes, which are not fundamental policies and may be
changed without shareholder approval, should be read in conjunction with the New
Investment Restrictions:
If a restriction on a Portfolio's investments is adhered to at the time
an investment is made, a subsequent change in the percentage of
Portfolio assets invested in certain securities or other instruments,
or change in average duration of the Portfolio's investment portfolio,
resulting from changes in the value of the Portfolio's total assets,
will not be considered a violation of the restriction; provided,
however, that the asset coverage requirement applicable to borrowings
shall be maintained in the manner contemplated by applicable law.
With respect to New Investment Restrictions (2) and (6), a Portfolio
will not borrow or lend to any other fund unless it applies for and
receives an exemptive order from the Securities and Exchange Commission
(the "Commission"), if so required, or the Commission issues rules
permitting such transactions. There is no assurance the Commission
would grant any order requested by a Portfolio or promulgate any rules
allowing such transactions.
With respect to New Investment Restriction (6), the restriction on
making loans is not considered to limit a Portfolio's investments in
loan participations and assignments.
With respect to New Investment Restriction (7), a Portfolio will not
consider a bank-issued guaranty or financial guaranty insurance as a
separate security for purposes of determining the percentage of the
Portfolio's assets invested in the securities of issuers in a
particular industry.
If Proposals V through XII are approved by the shareholders of each
Portfolio and implemented, the Portfolios will be subject to the New Investment
Restrictions and the New Investment Restrictions will be the only fundamental
investment restrictions applicable to the Portfolios.
The Manager recommends the following changes to the Current Investment
Restrictions as they apply to the Portfolio.
PROPOSAL V
The Portfolios are each subject to the following two Current Investment
Restrictions concerning diversification of investments:
o The Portfolio will not with respect to 75% of its total assets, invest in
the securities of any issuer if, immediately after such investment, more
than 5% of the total assets of the Portfolio (taken at current value) would
be invested in the securities of such issuer; provided that this limitation
does not apply to obligations issued or guaranteed as to interest or
principal by the U.S. government or its agencies or instrumentalities.
o The Portfolio will not with respect to 75% of its total assets, acquire
more than 10% of the outstanding voting securities of any issuer.
The Manager has proposed to the Board of Trustees that the two Current
Investment Restrictions set forth above be eliminated. The Investment Company
Act prohibits a diversified fund, such as each of the Portfolios, from investing
with respect to 75% of its total assets in securities of an issuer if as a
result more than 5% of the Portfolio's assets would be invested in such issuer
or the Portfolio would own more than 10% of the outstanding voting securities of
such issuer. If this Proposal V is adopted and implemented, each Portfolio would
be subject to New Investment Restriction 8 concerning diversification of
investments, which more succinctly reflects the limitations of the Investment
Company Act than the Current Investment Restrictions.
PROPOSAL VI
The Portfolios are each subject to the following Current Investment
Restriction concerning the purchase or sale of real estate:
The Portfolio will not purchase or sell real estate, although
it may purchase securities of issuers which deal in real
estate, securities which are secured by interests in real
estate, and securities which represent interests in real
estate, and it may acquire and dispose of real estate or
interests in real estate acquired through the exercise of its
rights as a holder of debt obligations secured by real estate
or interests therein.
Management has proposed to the Board of Trustees that the above Current
Investment Restriction be eliminated because it is substantially similar to New
Investment Restriction 4. However, Current Investment Restriction 4 would permit
each Portfolio to acquire real estate as a result of its ownership of all
securities and instruments not just through its exercise of rights as an owner
of debt securities.
PROPOSAL VII
The Portfolios are each subject to the following Current Investment
Restriction concerning concentration of investments in various industries:
The Portfolio will not Purchase securities (other than
securities of the U.S. government, its agencies or
instrumentalities) if, as a result of such purchase, more than
25% of the Portfolio's total assets would be invested in any
one industry.
Management has proposed to the Board of Trustees that the above Current
Investment Restriction be eliminated because it is substantially similar to New
Investment Restriction 7. However, New Investment Restriction 7 clarifies that
the Portfolios may each invest in securities guaranteed by the U.S. Government
or its agencies or instrumentalities and in repurchase agreements with respect
to U.S. Government securities without regard to this Restriction.
PROPOSAL VIII
The Portfolios are subject to the following Current Investment
Restrictions concerning investments in commodities:
AST AIM Balanced Portfolio
The Portfolio will not invest in commodities or commodity
contracts except that it may purchase or sell financial
futures contracts and options thereon.
AST AIM International Equity Portfolio
The Portfolio will not purchase or sell commodities or
commodity contracts, except that the Portfolio may purchase
and sell financial futures contracts and related options.
Management has proposed to the Board of Trustees that the above Current
Investment Restrictions be eliminated. If this Proposal VIII is adopted and
implemented, the Portfolios would each be subject to New Investment Restriction
5 concerning investments in commodities, which prohibits the purchase or sale of
physical commodities, subject to certain exceptions. Replacement of the above
Current Investment Restrictions with New Investment Restriction 5 in effect
would narrow the prohibition against purchases or sales of commodities to
transactions only in physical commodities. While each Portfolio is permitted
under the Current Investment Restrictions to purchase and sell financial futures
contracts and options thereon, the proposed elimination would increase each
Portfolio's flexibility to engage in all types of options and futures
transactions and forward foreign currency contracts but only if permissible
under the each Portfolio's investment policies and otherwise. In addition, New
Investment Restriction 5 would permit each Portfolio to acquire physical
commodities as the result of the ownership of securities or other instruments.
PROPOSAL IX
The Portfolios are subject to the following Current Investment
Restrictions concerning underwriting the securities of other issuers:
AST AIM Balanced Portfolio
The Portfolio will not underwrite securities issued by others
except to the extent that the Portfolio may be deemed an
underwriter when purchasing or selling securities.
AST AIM International Equity Portfolio
The Portfolio will not underwrite securities issued by other
persons except to the extent that, in connection with the
disposition of its portfolio investments, it may be deemed to
be an underwriter under certain federal securities laws.
The Manager has proposed to the Board of Trustees that the above
Current Investment Restrictions be eliminated because the Current Investment
Restrictions are substantially similar to New Investment Restriction 3. However,
the replacement of the Current Investment Restriction for the International
Portfolio with New Investment Restriction would provide that the limitation does
not apply if the Portfolio is deemed to be an underwriter in connection with the
purchase of securities.
PROPOSAL X
The Balanced Portfolio is subject to the following Current Investment
Restriction concerning borrowings:
AST AIM Balanced Portfolio
The Portfolio will not borrow money in excess of 10% of the
value (taken at the lower of cost or current value) of its
total assets (not including the amount borrowed) at the time
the borrowing is made, and then only from banks as a temporary
measure to facilitate the meeting of redemption requests (not
for leverage) which might otherwise require the untimely
disposition of portfolio investments or for extraordinary or
emergency purposes. Such borrowings will be repaid before any
additional investments are purchased.
The Manager has proposed to the Board of Trustees that the above
Current Investment Restriction be eliminated. The limitations set forth are
unnecessarily restrictive and could impair the Balanced Portfolio's ability to
seek its Proposed Investment Objective. If the above Current Investment
Restriction is eliminated, the Portfolio would be subject to New Investment
Restriction 2. The elimination of the Current Investment Restriction will
increase the amount that the Balanced Portfolio may borrow, and will clarify
that the Portfolio may engage in investment techniques (such as reverse
repurchase agreements) that may be deemed to involve borrowings (only when
consistent with the Portfolio's investment objective and policies and subject to
applicable legal or regulatory asset coverage requirements). The Portfolio also
would be permitted to borrow from parties other than banks if permitted to do so
by law. New Restriction 2 would permit more flexibility to the Portfolio to
borrow for temporary as well as emergency purposes, while still imposing a
limitation reflecting requirements of the Investment Company Act.
The International Portfolio is subject to the following Current
Investment Restriction concerning borrowings:
AST AIM International Equity Portfolio
The Portfolio will not borrow money except from banks and then
in amounts not in excess of 331/3% of its total assets. The
Portfolio may borrow at prevailing interest rates and invest
the funds in additional securities. The Portfolio's borrowings
are limited so that immediately after such borrowing the value
of the Portfolio's assets (including borrowings) less its
liabilities (not including borrowings) is at least three times
the amount of the borrowings. Should the Portfolio, for any
reason, have borrowings that do not meet the above test then,
within three business days, the Portfolio must reduce such
borrowings so as to meet the necessary test. Under such a
circumstance, the Portfolio may have to liquidate securities
at a time when it is disadvantageous to do so.
The Manager has proposed to the Board of Trustees that the above
Current Investment Restriction be eliminated. The limitations set forth are
unnecessarily restrictive and could impair the International Portfolio's ability
to seek its Proposed Investment Objective. If the above fundamental investment
restriction is eliminated, the International Portfolio would be subject to New
Investment Restriction 2. The elimination of the Current Investment Restriction
will clarify that the Portfolio may engage in investment techniques (such as
reverse repurchase agreements) that may be deemed to involve borrowings (only
when consistent with the Portfolio's investment objective and policies and
subject to applicable legal or regulatory asset coverage requirements). Under
New Investment Restriction 2, the Portfolio would not be restricted from
borrowing more than 33 1/3% of its total assets if permitted to do so by future
changes in the law, and would be permitted to borrow from parties other than
banks if permitted by law. Therefore, while New Restriction 2 reflects that the
Portfolio is subject to applicable law regarding borrowings, it would permit
more flexibility to the Portfolio in the event the applicable law is ever
revised. However, New Investment Restriction 2 may be more restrictive in one
respect than the above Current Investment Restriction, as New Investment
Restriction 2 permits borrowing only for non-leveraging purposes, while the
above Current Investment Restriction permits the International Portfolio to
invest the proceeds of borrowings in additional securities, which may involve
leverage.
PROPOSAL XI
The Portfolios are each subject to the following Current Investment
Restriction concerning loans:
The Portfolio will not make loans, except by purchase of debt
obligations in which the Portfolio may invest consistent with
its investment policies, by entering into repurchase
agreements, or by lending its portfolio securities.
The Manager has proposed to the Board of Trustees that the above
Current Investment Restriction be eliminated because it is substantially
identical to New Investment Restriction 6. New Investment Restriction 6 sets
forth, with respect to securities loans, the current 331/3% of assets maximum
specified by the Securities and Exchange Commission.
PROPOSAL XII
The Portfolios are each subject to the following Current Investment
Restriction concerning the issuance of senior securities:
The Portfolio will not issue senior securities.
The Manager has proposed to the Board of Trustees that the above
Current Investment Restriction be eliminated. The issuance of senior securities
by an open-end investment company is governed by and generally prohibited under
the requirements of the Investment Company Act, subject to certain exceptions
for borrowing arrangements. To maximize each Portfolio's flexibility and allow
each Portfolio to respond to changes in the Investment Company Act, New
Investment Restriction 1, which prohibits each Portfolio from issuing senior
securities except as permitted by the Investment Company Act, would replace the
above Current Investment Restriction.
THE TRUSTEES, INCLUDING THE INDEPENDENT TRUSTEES, RECOMMEND THAT THE
SHAREHOLDERS OF EACH OF THE AST AIM BALANCED AND AST AIM INTERNATIONAL EQUITY
PORTFOLIOS VOTE "FOR" PROPOSALS V-XII. ANY UNMARKED PROXIES WILL BE SO VOTED.
Shareholder Proposals
The Trust is not required to hold and will not ordinarily hold annual
shareholders' meetings. The Board of Trustees may call special meetings of the
shareholders for action by shareholder vote as required by the Investment
Company Act or the Trust's Declaration of Trust.
Pursuant to rules adopted by the Commission, a shareholder may include
in proxy statements relating to annual and other meetings of the shareholders of
the Trust certain proposals for shareholder action which he or she intends to
introduce at such special meetings; provided, among other things, that such
proposal must be received by the Trust a reasonable time before a solicitation
of proxies is made for such meeting. Timely submission of a proposal does not
necessarily mean that the proposal will be included.
<PAGE>
By order of the Board of Trustees
Eric C. Freed
Secretary
American Skandia Trust
<PAGE>
EXHIBIT A-1
SUB-ADVISORY AGREEMENT
THIS AGREEMENT is between American Skandia Investment Services,
Incorporated (the "Investment Manager") and Putnam Investment Management, Inc.
(the "Sub-Advisor").
WHEREAS American Skandia Trust (the "Trust") is a Massachusetts business trust
organized with one or more series of shares, and is registered as an investment
company under the Investment Company Act of 1940 (the "ICA"); and
WHEREAS the trustees of the Trust (the "Trustees") have engaged the Investment
Manager to act as investment manager for the AST Putnam Balanced Portfolio (the
"Portfolio") under the terms of a management agreement, dated October 15, 1996,
with the Trust (the "Management Agreement"); and
WHEREAS the Investment Manager has engaged the Sub-Advisor and the Trustees have
approved the engagement of the Sub-Advisor to provide investment advice and
other investment services set forth below;
NOW, THEREFORE the Investment Manager and the Sub-Advisor agree as follows:
1. Investment Services. The Sub-Advisor will furnish the Investment Manager with
investment advisory services in connection with a continuous investment program
for the Portfolio which is to be managed in accordance with the investment
objective, investment policies and restrictions of the Portfolio as set forth in
the Prospectus and Statement of Additional Information of the Trust and in
accordance with applicable provisions of the Trust's Declaration of Trust and
By-laws provided to the Sub-Advisor from time to time by the Investment Manager.
Officers, directors, and employees of Sub-Advisor will be available to consult
with Investment Manager and the Trust, their officers, employees and Trustees
concerning the business of the Trust. Investment Manager will promptly furnish
Sub-Advisor with any amendments to any of the foregoing documents (the
"Documents"). Any amendments to the Documents will not be deemed effective with
respect to the Sub-Advisor until the Sub-Advisor's receipt thereof.
Subject to the supervision and control of the Investment Manager, which
is in turn subject to the supervision and control of the Trust's Board of
Trustees, the Sub-Advisor will in its discretion determine and select the
securities to be purchased for and sold from the Portfolio from time to time and
will place orders with and give instructions to brokers, dealers and others for
all such transactions and cause such transactions to be executed. Custody of the
Portfolio will be maintained by a custodian bank (the "Custodian") and the
Investment Manager will authorize the Custodian to honor orders and instructions
by employees of the Sub-Advisor designated by the Investment Manager to settle
transactions in respect of the Portfolio. No assets may be withdrawn from the
Portfolio other than for settlement of transactions on behalf of the Portfolio
except upon the written authorization of appropriate officers of the Trust who
shall have been certified as such by proper authorities of the Trust prior to
the withdrawal. The Sub-Advisor shall not be responsible for the provision of
administrative, bookkeeping or accounting services to the Trust. The Sub-Advisor
shall supply the Investment Manager and the Trust with such information as is
specifically provided herein, as required by the ICA or the Investment Advisers
Act of 1940, as amended (the "Advisers Act") in connection with the
Sub-Advisor's management of the Portfolio, or as may be necessary to supply the
information to the Investment Manager, the Trust, the Trust's Board of Trustees
or their respective agents required to be supplied under this Agreement. Any
records required to be maintained shall be the property of the Trust and
surrendered to the Trust promptly upon request or upon termination of this
Agreement. The Sub-Advisor may retain copies of any records surrendered to the
Trust.
To the extent deemed necessary by the Sub-Advisor in connection with
the investment program for the Portfolio, the Sub-Advisor will obtain and
evaluate pertinent information about significant developments and economic,
statistical and financial data, domestic, foreign or otherwise, whether
affecting the economy generally or the Portfolio, and concerning the individual
issuers whose securities are included in the Portfolio or the activities in
which they engage, or with respect to securities which the Sub-Advisor considers
desirable for inclusion in the Portfolio or such other information as the
Sub-Advisor deems relevant.
The Sub-Advisor represents that it reviewed the Registration Statement
of the Trust, including any amendments or supplements thereto, and any Proxy
Statement relating to the approval of this Agreement, as filed with the
Securities and Exchange Commission and represents and warrants that with respect
to disclosure about the Sub-Advisor or information relating to the Sub-Advisor
or the Sub-Advisor's activities in connection with the investment program for
the Portfolio, such Registration Statement or Proxy Statement contains, as of
the date thereof, no untrue statement of any material fact and does not omit any
statement of material fact which was required to be stated therein or necessary
to make the statements contained therein not misleading. The Sub-Advisor further
represents and warrants that it is an investment advisor registered under the
Advisers Act and under the laws of all jurisdictions in which the conduct of its
business hereunder requires such registration.
Sub-Advisor shall use its best judgment, effort, and advice in
rendering services under this Agreement.
In furnishing the services under this Agreement, the Sub-Advisor will
comply with the requirements of the ICA and subchapters L and M (including,
respectively, Section 817(h) and Section 851(b)(1), (2), (3) and (4)) of the
Internal Revenue Code, applicable to the Portfolio, and the regulations
promulgated thereunder, to the extent such compliance is within the
Sub-Advisor's control. Sub-Advisor shall also comply with (i) other applicable
provisions of state or federal law; (ii) the provisions of the Declaration of
Trust and By-laws of the Trust communicated to the Sub-Advisor pursuant to
paragraph 1 of this Agreement; (iii) policies and determinations of the Trust
and Investment Manager communicated to the Sub-Advisor in writing; (iv) the
fundamental policies and investment restrictions of the Trust, as set out in the
Trust's registration statement under the ICA, or as amended by the Trust's
shareholders; (v) the Prospectus and Statement of Additional Information of the
Trust; and (vi) investment guidelines or other instructions received in writing
from Investment Manager. Sub-Advisor shall supervise and monitor the activities
of its representatives, personnel and agents in connection with the investment
program of the Portfolio.
Nothing in this Agreement shall be implied to prevent the Investment
Manager from engaging other sub-advisors to provide investment advice and other
services in relation to portfolios of the Trust for which Sub-Advisor does not
provide such services, or to prevent Investment Manager from providing such
services itself in relation to such portfolios.
2. Delivery of Documents to Sub-Advisor. The Investment Manager has furnished
the Sub-Advisor with copies of each of the following documents:
(a) The Declaration of Trust of the Trust as in effect on the date hereof;
(b) The By-laws of the Trust in effect on the date hereof;
(c) The resolutions of the Trustees approving the engagement of the
Sub-Advisor as Sub-Advisor to the Investment Manager and approving the
form of this agreement;
(d) The resolutions of the Trustees selecting the Investment Manager as
investment manager to the Trust and approving the form of the
Investment Manager's Management Agreement with the Trust;
(e) The Investment Manager's Management Agreement with the Trust;
(f) The Code of Ethics of the Trust and of the Investment Manager as
currently in effect; and
(g) A list of companies the securities of which are not to be bought or
sold for the Portfolio because of non-public information regarding
such companies that is available to Investment Manager or the Trust,
or which, in the sole opinion of the Investment Manager, it believes
such non-public information would be deemed to be available to
Investment Manager and/or the Trust.
The Investment Manager will furnish the Sub-Advisor from time to time
with copies, properly certified or otherwise authenticated, of all amendments of
or supplements to the foregoing, if any. Such amendments or supplements as to
items (a) through (f) above will be provided within 30 days of the time such
materials became available to the Investment Manager. Such amendments or
supplements as to item (g) above will be provided not later than the end of the
business day next following the date such amendments or supplements become known
to the Investment Manager.
3. Delivery of Documents to the Investment Manager. The Sub-Advisor has
furnished the Investment Manager with copies of each of the following documents:
(a) The Sub-Advisor's Form ADV as filed with the Securities and Exchange
Commission;
(b) The Sub-Advisor's most recent balance sheet;
(c) Separate lists of persons who the Sub-Advisor wishes to have
authorized to give written and/or oral instructions to Custodians of
Trust assets for the Portfolio;
(d) The Code of Ethics of the Sub-Advisor as currently in effect.
The Sub-Advisor will thereafter furnish the Investment Manager with
copies, properly certified or otherwise authenticated, of all material
amendments of or supplements to items (a), (c) and (d) above within 30 days of
the time such materials become available to the Sub-Advisor. With respect to
item (b) above, the Sub-Advisor will thereafter furnish the Investment Manager,
within 30 days of the time such materials become available to the Sub-Advisor,
with a copy of the Sub-Advisor's audited balance sheet as at the end of each
fiscal year of the Sub-Advisor.
4. Investment Advisory Facilities. The Sub-Advisor, at its expense, will furnish
all necessary investment facilities, including salaries of personnel required
for it to execute its duties faithfully.
5. Execution of Portfolio Transactions. Sub-Advisor is responsible for decisions
to buy and sell securities for the Portfolio, broker-dealer selection, and
negotiation of its brokerage commission rates. Sub-Advisor shall determine the
securities to be purchased or sold by the Portfolio pursuant to its
determinations with or through such persons, brokers or dealers, in conformity
with the policy with respect to brokerage as set forth in the Trust's Prospectus
and Statement of Additional Information, or as the Board of Trustees may
determine from time to time. Generally, Sub-Advisor's primary consideration in
placing Portfolio securities transactions with broker-dealers for execution is
to obtain and maintain the availability of best execution at the best net price
and in the most effective manner possible. The Sub-Advisor may consider sale of
the shares of the Portfolio, as well as recommendations of the Investment
Manager, subject to the requirements of best net price and most favorable
execution.
Consistent with this policy, the Sub-Advisor will take the following
into consideration: the best net price available; the reliability, integrity and
financial condition of the broker-dealer; the size of and difficulty in
executing the order; and the value of the expected contribution of the
broker-dealer to the investment performance of the Portfolio on a continuing
basis. Accordingly, the cost of the brokerage commissions to the Portfolio may
be greater than that available from other brokers if the difference is
reasonably justified by other aspects of the portfolio execution services
offered. Subject to such policies and procedures as the Board of Trustees of the
Trust may determine, the Sub-Advisor shall not be deemed to have acted
unlawfully or to have breached any duty solely by reason of its having caused
the Portfolio to pay a broker-dealer that provides research services to the
Sub-Advisor for the Portfolio's use an amount of commission for effecting a
portfolio investment transaction in excess of the amount of commission another
broker-dealer would have charged for effecting that transaction, if the
Sub-Advisor determines in good faith that such amount of commission was
reasonable in relation to the value of the research services provided by such
broker, viewed in terms of either that particular transaction or the
Sub-Advisor's ongoing responsibilities with respect to the Portfolio. The
Sub-Advisor is further authorized to allocate the orders placed by it on behalf
of the Portfolio to such broker-dealers who also provide research or statistical
material, or other services to the Portfolio or the Sub-Advisor. Such allocation
shall be in such amounts and proportions as the Sub-Advisor shall determine in
good faith in conformity with its responsibilities under applicable laws, rules
and regulations and the Sub-Advisor will report on said allocations to the
Investment Manager regularly as requested by the Investment Manager and, in any
event, at least once each calendar year if no specific request is made,
indicating the brokers to whom such allocations have been made and the basis
therefor.
6. Reports by Sub-Advisor. The Sub-Advisor shall furnish the Investment Manager
monthly, quarterly and annual reports concerning transactions and performance of
the Portfolio, including information requested for inclusion in the Trust's
Registration Statement, in such form as may be mutually agreed, to review the
Portfolio and discuss the management of it. The Sub-Advisor shall permit the
financial statements, books and records with respect to the Portfolio to be
inspected and audited by the Trust, the Investment Manager or their agents at
all reasonable times during normal business hours. The Sub-Advisor shall
immediately notify and forward to the Investment Manager and the Trust any legal
process served upon it on behalf of the Investment Manager or the Trust. The
Sub-Advisor shall promptly notify the Investment Manager of any changes in any
information concerning the Sub-Advisor or the Sub-Advisors activities in
connection with the investment program for the Portfolio required to be
disclosed in the Trust's Registration Statement.
7. Compensation of Sub-Advisor. The amount of the compensation to the
Sub-Advisor is computed at an annual rate. The fee is payable monthly in
arrears, based on the average daily net assets of the Portfolio for each month,
at the annual rates shown below.
For all services rendered, the Investment Manager will calculate and
pay the Sub-Advisor at the annual rate of: .45 of 1% of the portion of the
average daily net assets of the Portfolio not in excess of $150 million; plus
.40 of 1% of the portion of the average daily net assets of the Portfolio over
$150 million but not in excess of $300 million; plus .35 of 1% of the portion of
the average daily net assets of the Portfolio in excess of $300 million.
In computing the fee to be paid to the Sub-Advisor, the net asset value
of the Portfolio shall be valued as set forth in the then current registration
statement of the Trust. If this agreement is terminated, the payment shall be
prorated to the date of termination.
Investment Manager and Sub-Advisor shall not be considered as partners
or participants in a joint venture. Sub-Advisor will pay its own expenses for
the services to be provided pursuant to this Agreement and will not be obligated
to pay any expenses of Investment Manager or the Trust. Except as otherwise
provided herein, Investment Manager and the Trust will not be obligated to pay
any expenses of Sub-Advisor.
8. Confidential Treatment. It is understood that any information or
recommendation supplied by the Sub-Advisor in connection with the performance of
its obligations hereunder is to be regarded as confidential and for use only by
the Investment Manager, the Trust or such persons the Investment Manager may
designate in connection with the Portfolio. It is also understood that any
information supplied to Sub-Advisor in connection with the performance of its
obligations hereunder, particularly, but not limited to, any list of securities
which, on a temporary basis, may not be bought or sold for the Portfolio, is to
be regarded as confidential and for use only by the Sub-Advisor in connection
with its obligation to provide investment advice and other services to the
Portfolio.
9. Representations of the Parties. Each party to this Agreement hereby
acknowledges that it is registered as an investment advisor under the Advisers
Act, that it will use its reasonable best efforts to maintain such registration,
and that it will promptly notify the other if it ceases to be so registered, if
its registration is suspended for any reason, or if it is notified by any
regulatory organization or court of competent jurisdiction that it should show
cause why its registration should not be suspended or terminated.
10. Liability. The Sub-Advisor shall use its best efforts and good faith in the
performance of its services hereunder. However, so long as the Sub-Advisor has
acted in good faith and has used its best efforts, then in the absence of
willful misfeasance, bad faith, gross negligence or reckless disregard for its
obligations hereunder, it shall not be liable to the Trust or its shareholders
or to the Investment Manager for any act or omission resulting in any loss
suffered in any portfolio of the Trust in connection with any service to be
provided herein. The Federal laws impose responsibilities under certain
circumstances on persons who act in good faith, and therefore, nothing herein
shall in any way constitute a waiver of limitation of any rights which the Trust
or Investment Manager may have under applicable law.
The Investment Manager agrees that the Sub-Advisor shall not be liable
for any failure to recommend the purchase or sale of any security on behalf of
the Portfolio on the basis of any information which might, in Sub-Advisor's
opinion, constitute a violation of any federal or state laws, rules or
regulations.
11. Other Activities of Sub-Advisor. Investment Manager agrees that the
Sub-Advisor and any of its partners or employees, and persons affiliated with it
or with any such partner or employee may render investment management or
advisory services to other investors and institutions, and such investors and
institutions may own, purchase or sell, securities or other interests in
property the same as or similar to those which are selected for purchase,
holding or sale for the Portfolio, and the Sub-Advisor shall be in all respects
free to take action with respect to investments in securities or other interests
in property the same as or similar to those selected for purchase, holding or
sale for the Portfolio. Purchases and sales of individual securities on behalf
of the Portfolio and other portfolios of the Trust or accounts for other
investors or institutions will be made on a basis that is equitable to all
portfolios of the Trust and other accounts. Nothing in this agreement shall
impose upon the Sub-Advisor any obligation to purchase or sell or recommend for
purchase or sale, for the Portfolio any security which it, its partners,
affiliates or employees may purchase or sell for the Sub-Advisor or such
partner's, affiliate's or employee's own accounts or for the account of any
other client, advisory or otherwise.
12. Continuance and Termination. This Agreement shall remain in full force and
effect for one year from the date hereof, and is renewable annually thereafter
by specific approval of the Board of Trustees of the Trust or by vote of a
majority of the outstanding voting securities of the Portfolio. Any such renewal
shall be approved by the vote of a majority of the Trustees who are not
interested persons under the ICA, cast in person at a meeting called for the
purpose of voting on such renewal. This agreement may be terminated without
penalty at any time by the Investment Manager or Sub-Advisor upon 60 days
written notice, and will automatically terminate in the event of its assignment
by either party to this Agreement, as defined in the ICA, or (provided
Sub-Advisor has received prior written notice thereof) upon termination of the
Investment Manager's Management Agreement with the Trust.
13. Notification. Sub-Advisor will notify the Investment Manager within a
reasonable time of any change in the personnel of the Sub-Advisor with
responsibility for making investment decisions in relation to the Portfolio or
who have been authorized to give instructions to a Custodian of the Trust.
Any notice, instruction or other communication required or contemplated
by this agreement shall be in writing. All such communications shall be
addressed to the recipient at the address set forth below, provided that either
party may, by notice, designate a different address for such party.
Investment Manager: American Skandia Investment Services, Incorporated
One Corporate Drive
Shelton, Connecticut 06484
Attention: Thomas M. Mazzaferro
President & Chief Operating Officer
Sub-Advisor: Putnam Investment Management, Inc.
One Post Office Square
Boston, Massachusetts 02109
Attention: Charles A. Ruys de Perez, Esq.
Senior Vice President & Senior Counsel
14. Indemnification. The Sub-Advisor agrees to indemnify and hold harmless
Investment Manager, any affiliated person within the meaning of Section 2(a)(3)
of the ICA ("affiliated person") of Investment Manager and each person, if any
who, within the meaning of Section 15 of the Securities Act of 1933 (the "1933
Act"), controls ("controlling person") Investment Manager, against any and all
losses, claims, damages, liabilities or litigation (including reasonable legal
and other expenses), to which Investment Manager or such affiliated person or
controlling person may become subject under the 1933 Act, the ICA, the Advisers
Act, under any other statute, at common law or otherwise, arising out of
Sub-Advisor's responsibilities as portfolio manager of the Portfolio (1) to the
extent of and as a result of the willful misconduct, bad faith, or gross
negligence by Sub-Advisor, any of Sub-Advisor's employees or representatives or
any affiliate of or any person acting on behalf of Sub-Advisor, or (2) as a
result of any untrue statement or alleged untrue statement of a material fact
relating to the Sub-Advisor or the Sub-Advisor's activities in connection with
the investment program for the Portfolio contained in a prospectus or statement
of additional information covering the Portfolio or the Trust or any amendment
thereof or any supplement thereto or the omission or alleged omission to state
therein such a material fact required to be stated therein or necessary to make
the statement therein not misleading, if such a statement or omission was made
in reliance upon written information furnished to the Investment Manager, the
Trust or any affiliated person of the Investment Manager or the Trust by the
Sub-Advisor or upon verbal information confirmed by the Sub-Advisor in writing
or (3) to the extent of, and as a result of, the failure of the Sub-Advisor to
execute, or cause to be executed, Portfolio transactions according to the
standards and requirements of the ICA; provided, however, that in no case is
Sub-Advisor's indemnity in favor of Investment Manager or any affiliated person
or controlling person of Investment Manager deemed to protect such person
against any liability to which any such person would otherwise be subject by
reason of willful misconduct, bad faith or gross negligence in the performance
of its duties or by reason of its reckless disregard of its obligations and
duties under this Agreement; and, provided further, that in the case of an
alleged untrue statement or omission of a material fact for which the
Sub-Advisor provides this indemnity, the Investment Manager shall reimburse the
Sub-Advisor for all amounts paid pursuant to this indemnity unless a court of
competent jurisdiction shall issue a final judgment finding that such an untrue
statement or omission of material fact did occur.
The Investment Manager agrees to indemnify and hold harmless
Sub-Advisor, any affiliated person of Sub-Advisor and each controlling person of
Sub-Advisor, if any, against any and all losses, claims, damages, liabilities or
litigation (including reasonable legal and other expenses), to which Sub-Advisor
or such affiliated person or controlling person may become subject under the
1933 Act, the ICA, the Advisers Act, under any other statute, at common law or
otherwise, arising out of Investment Manager's responsibilities as investment
manager of the Portfolio (1) to the extent of and as a result of the willful
misconduct, bad faith, or gross negligence by Investment Manager, any of
Investment Manager's employees or representatives or any affiliate of or any
person acting on behalf of Investment Manager, or (2) as a result of any untrue
statement or alleged untrue statement of a material fact contained in a
prospectus or statement of additional information covering the Portfolio or the
Trust or any amendment thereof or any supplement thereto or the omission or
alleged omission to state therein such a material fact required to be stated
therein or necessary to make the statement therein not misleading, if such a
statement or omission was made by the Trust other than in reliance upon written
information furnished by Sub-Advisor, or any affiliated person of the
Sub-Advisor or other than upon verbal information confirmed by the Sub-Advisor
in writing; provided, however, that in no case is Investment Manager's indemnity
in favor of Sub-Advisor or any affiliated person or controlling person of
Sub-Advisor deemed to protect such person against any liability to which any
such person would otherwise be subject by reason of willful misconduct, bad
faith or gross negligence in the performance of its duties or by reason of its
reckless disregard of its obligations and duties under this Agreement.
15. Warranty. The Investment Manager represents and warrants that (i) the
appointment of the Sub-Advisor by the Investment Manager has been duly
authorized and (ii) it has acted and will continue to act in connection with the
transactions contemplated hereby, and the transactions contemplated hereby are,
in conformity with the ICA, the Trust's governing documents and other applicable
laws.
The Sub-Advisor represents and warrants that it is authorized to
perform the services contemplated to be performed hereunder.
16. Governing Law. This agreement is made under, and shall be governed by and
construed in accordance with, the laws of the State of Connecticut.
The effective date of this agreement is October 15, 1996.
FOR THE INVESTMENT MANAGER: FOR THE SUB-ADVISOR:
/s/Thomas Mazzaferro /s/Charles A. Ruys de Perez
Thomas Mazzaferro Senior Vice President
President & Chief Operating Officer
Date: 09/27/96 Date: 10/15/96
Attest: /s/Ivette Aquilino Attest: /s/
<PAGE>
EXHIBIT A-2
SUB-ADVISORY AGREEMENT
THIS AGREEMENT is between American Skandia Investment Services,
Incorporated (the "Investment Manager") and Putnam Investment Management, Inc.
(the "Sub-Advisor").
WHEREAS American Skandia Trust (the "Trust") is a Massachusetts business trust
organized with one or more series of shares, and is registered as an investment
company under the Investment Company Act of 1940 (the "ICA"); and
WHEREAS the trustees of the Trust (the "Trustees") have engaged the Investment
Manager to act as investment manager for the AST Putnam International Equity
Portfolio (the "Portfolio") under the terms of a management agreement, dated
October 15, 1996, with the Trust (the "Management Agreement"); and
WHEREAS the Investment Manager has engaged the Sub-Advisor and the Trustees have
approved the engagement of the Sub-Advisor to provide investment advice and
other investment services set forth below;
NOW, THEREFORE the Investment Manager and the Sub-Advisor agree as follows:
1. Investment Services. The Sub-Advisor will furnish the Investment Manager with
investment advisory services in connection with a continuous investment program
for the Portfolio which is to be managed in accordance with the investment
objective, investment policies and restrictions of the Portfolio as set forth in
the Prospectus and Statement of Additional Information of the Trust and in
accordance with applicable provisions of the Trust's Declaration of Trust and
By-laws provided to the Sub-Advisor from time to time by the Investment Manager.
Officers, directors, and employees of Sub-Advisor will be available to consult
with Investment Manager and the Trust, their officers, employees and Trustees
concerning the business of the Trust. Investment Manager will promptly furnish
Sub-Advisor with any amendments to any of the foregoing documents (the
"Documents"). Any amendments to the Documents will not be deemed effective with
respect to the Sub-Advisor until the Sub-Advisor's receipt thereof.
Subject to the supervision and control of the Investment Manager, which
is in turn subject to the supervision and control of the Trust's Board of
Trustees, the Sub-Advisor will in its discretion determine and select the
securities to be purchased for and sold from the Portfolio from time to time and
will place orders with and give instructions to brokers, dealers and others for
all such transactions and cause such transactions to be executed. Custody of the
Portfolio will be maintained by a custodian bank (the "Custodian") and the
Investment Manager will authorize the Custodian to honor orders and instructions
by employees of the Sub-Advisor designated by the Investment Manager to settle
transactions in respect of the Portfolio. No assets may be withdrawn from the
Portfolio other than for settlement of transactions on behalf of the Portfolio
except upon the written authorization of appropriate officers of the Trust who
shall have been certified as such by proper authorities of the Trust prior to
the withdrawal. The Sub-Advisor shall not be responsible for the provision of
administrative, bookkeeping or accounting services to the Trust. The Sub-Advisor
shall supply the Investment Manager and the Trust with such information as is
specifically provided herein, as required by the ICA or the Investment Advisers
Act of 1940, as amended (the "Advisers Act") in connection with the
Sub-Advisor's management of the Portfolio, or as may be necessary to supply the
information to the Investment Manager, the Trust, the Trust's Board of Trustees
or their respective agents required to be supplied under this Agreement. Any
records required to be maintained shall be the property of the Trust and
surrendered to the Trust promptly upon request or upon termination of this
Agreement. The Sub-Advisor may retain copies of any records surrendered to the
Trust.
To the extent deemed necessary by the Sub-Advisor in connection with
the investment program for the Portfolio, the Sub-Advisor will obtain and
evaluate pertinent information about significant developments and economic,
statistical and financial data, domestic, foreign or otherwise, whether
affecting the economy generally or the Portfolio, and concerning the individual
issuers whose securities are included in the Portfolio or the activities in
which they engage, or with respect to securities which the Sub-Advisor considers
desirable for inclusion in the Portfolio or such other information as the
Sub-Advisor deems relevant.
The Sub-Advisor represents that it reviewed the Registration Statement
of the Trust, including any amendments or supplements thereto, and any Proxy
Statement relating to the approval of this Agreement, as filed with the
Securities and Exchange Commission and represents and warrants that with respect
to disclosure about the Sub-Advisor or information relating to the Sub-Advisor
or the Sub-Advisor's activities in connection with the investment program for
the Portfolio, such Registration Statement or Proxy Statement contains, as of
the date thereof, no untrue statement of any material fact and does not omit any
statement of material fact which was required to be stated therein or necessary
to make the statements contained therein not misleading. The Sub-Advisor further
represents and warrants that it is an investment advisor registered under the
Advisers Act and under the laws of all jurisdictions in which the conduct of its
business hereunder requires such registration.
Sub-Advisor shall use its best judgment, effort, and advice in
rendering services under this Agreement.
In furnishing the services under this Agreement, the Sub-Advisor will
comply with the requirements of the ICA and subchapters L and M (including,
respectively, Section 817(h) and Section 851(b)(1), (2), (3) and (4)) of the
Internal Revenue Code, applicable to the Portfolio, and the regulations
promulgated thereunder, to the extent such compliance is within the
Sub-Advisor's control. Sub-Advisor shall also comply with (i) other applicable
provisions of state or federal law; (ii) the provisions of the Declaration of
Trust and By-laws of the Trust communicated to the Sub-Advisor pursuant to
paragraph 1 of this Agreement; (iii) policies and determinations of the Trust
and Investment Manager communicated to the Sub-Advisor in writing; (iv) the
fundamental policies and investment restrictions of the Trust, as set out in the
Trust's registration statement under the ICA, or as amended by the Trust's
shareholders; (v) the Prospectus and Statement of Additional Information of the
Trust; and (vi) investment guidelines or other instructions received in writing
from Investment Manager. Sub-Advisor shall supervise and monitor the activities
of its representatives, personnel and agents in connection with the investment
program of the Portfolio.
Nothing in this Agreement shall be implied to prevent the Investment
Manager from engaging other sub-advisors to provide investment advice and other
services in relation to portfolios of the Trust for which Sub-Advisor does not
provide such services, or to prevent Investment Manager from providing such
services itself in relation to such portfolios.
2. Delivery of Documents to Sub-Advisor. The Investment Manager has furnished
the Sub-Advisor with copies of each of the following documents:
(a) The Declaration of Trust of the Trust as in effect on the date hereof;
(b) The By-laws of the Trust in effect on the date hereof;
(c) The resolutions of the Trustees approving the engagement of the
Sub-Advisor as Sub-Advisor to the Investment Manager and approving the
form of this agreement;
(d) The resolutions of the Trustees selecting the Investment Manager as
investment manager to the Trust and approving the form of the
Investment Manager's Management Agreement with the Trust;
(e) The Investment Manager's Management Agreement with the Trust;
(f) The Code of Ethics of the Trust and of the Investment Manager as
currently in effect; and
(g) A list of companies the securities of which are not to be bought or
sold for the Portfolio because of non-public information regarding
such companies that is available to Investment Manager or the Trust,
or which, in the sole opinion of the Investment Manager, it believes
such non-public information would be deemed to be available to
Investment Manager and/or the Trust.
The Investment Manager will furnish the Sub-Advisor from time to time
with copies, properly certified or otherwise authenticated, of all amendments of
or supplements to the foregoing, if any. Such amendments or supplements as to
items (a) through (f) above will be provided within 30 days of the time such
materials became available to the Investment Manager. Such amendments or
supplements as to item (g) above will be provided not later than the end of the
business day next following the date such amendments or supplements become known
to the Investment Manager.
3. Delivery of Documents to the Investment Manager. The Sub-Advisor has
furnished the Investment Manager with copies of each of the following documents:
(a) The Sub-Advisor's Form ADV as filed with the Securities and Exchange
Commission;
(b) The Sub-Advisor's most recent balance sheet;
(c) Separate lists of persons who the Sub-Advisor wishes to have
authorized to give written and/or oral instructions to Custodians of
Trust assets for the Portfolio;
(d) The Code of Ethics of the Sub-Advisor as currently in effect.
The Sub-Advisor will thereafter furnish the Investment Manager with
copies, properly certified or otherwise authenticated, of all material
amendments of or supplements to items (a), (c) and (d) above within 30 days of
the time such materials become available to the Sub-Advisor. With respect to
item (b) above, the Sub-Advisor will thereafter furnish the Investment Manager,
within 30 days of the time such materials become available to the Sub-Advisor,
with a copy of the Sub-Advisor's audited balance sheet as at the end of each
fiscal year of the Sub-Advisor.
4. Investment Advisory Facilities. The Sub-Advisor, at its expense, will furnish
all necessary investment facilities, including salaries of personnel required
for it to execute its duties faithfully.
5. Execution of Portfolio Transactions. Sub-Advisor is responsible for decisions
to buy and sell securities for the Portfolio, broker-dealer selection, and
negotiation of its brokerage commission rates. Sub-Advisor shall determine the
securities to be purchased or sold by the Portfolio pursuant to its
determinations with or through such persons, brokers or dealers, in conformity
with the policy with respect to brokerage as set forth in the Trust's Prospectus
and Statement of Additional Information, or as the Board of Trustees may
determine from time to time. Generally, Sub-Advisor's primary consideration in
placing Portfolio securities transactions with broker-dealers for execution is
to obtain and maintain the availability of best execution at the best net price
and in the most effective manner possible. The Sub-Advisor may consider sale of
the shares of the Portfolio, as well as recommendations of the Investment
Manager, subject to the requirements of best net price and most favorable
execution.
Consistent with this policy, the Sub-Advisor will take the following
into consideration: the best net price available; the reliability, integrity and
financial condition of the broker-dealer; the size of and difficulty in
executing the order; and the value of the expected contribution of the
broker-dealer to the investment performance of the Portfolio on a continuing
basis. Accordingly, the cost of the brokerage commissions to the Portfolio may
be greater than that available from other brokers if the difference is
reasonably justified by other aspects of the portfolio execution services
offered. Subject to such policies and procedures as the Board of Trustees of the
Trust may determine, the Sub-Advisor shall not be deemed to have acted
unlawfully or to have breached any duty solely by reason of its having caused
the Portfolio to pay a broker-dealer that provides research services to the
Sub-Advisor for the Portfolio's use an amount of commission for effecting a
portfolio investment transaction in excess of the amount of commission another
broker-dealer would have charged for effecting that transaction, if the
Sub-Advisor determines in good faith that such amount of commission was
reasonable in relation to the value of the research services provided by such
broker, viewed in terms of either that particular transaction or the
Sub-Advisor's ongoing responsibilities with respect to the Portfolio. The
Sub-Advisor is further authorized to allocate the orders placed by it on behalf
of the Portfolio to such broker-dealers who also provide research or statistical
material, or other services to the Portfolio or the Sub-Advisor. Such allocation
shall be in such amounts and proportions as the Sub-Advisor shall determine in
good faith in conformity with its responsibilities under applicable laws, rules
and regulations and the Sub-Advisor will report on said allocations to the
Investment Manager regularly as requested by the Investment Manager and, in any
event, at least once each calendar year if no specific request is made,
indicating the brokers to whom such allocations have been made and the basis
therefor.
6. Reports by Sub-Advisor. The Sub-Advisor shall furnish the Investment Manager
monthly, quarterly and annual reports concerning transactions and performance of
the Portfolio, including information requested for inclusion in the Trust's
Registration Statement, in such form as may be mutually agreed, to review the
Portfolio and discuss the management of it. The Sub-Advisor shall permit the
financial statements, books and records with respect to the Portfolio to be
inspected and audited by the Trust, the Investment Manager or their agents at
all reasonable times during normal business hours. The Sub-Advisor shall
immediately notify and forward to the Investment Manager and the Trust any legal
process served upon it on behalf of the Investment Manager or the Trust. The
Sub-Advisor shall promptly notify the Investment Manager of any changes in any
information concerning the Sub-Advisor or the Sub-Advisors activities in
connection with the investment program for the Portfolio required to be
disclosed in the Trust's Registration Statement.
7. Compensation of Sub-Advisor. The amount of the compensation to the
Sub-Advisor is computed at an annual rate. The fee is payable monthly in
arrears, based on the average daily net assets of the Portfolio for each month,
at the annual rates shown below.
For all services rendered, the Investment Manager will calculate and
pay the Sub-Advisor at the annual rate of: .65 of 1% of the portion of the
average daily net assets of the Portfolio not in excess of $150 million; plus
.55 of 1% of the portion of the average daily net assets of the Portfolio over
$150 million but not in excess of $300 million; plus .45 of 1% of the portion of
the average daily net assets of the Portfolio in excess of $300 million.
In computing the fee to be paid to the Sub-Advisor, the net asset value
of the Portfolio shall be valued as set forth in the then current registration
statement of the Trust. If this agreement is terminated, the payment shall be
prorated to the date of termination.
Investment Manager and Sub-Advisor shall not be considered as partners
or participants in a joint venture. Sub-Advisor will pay its own expenses for
the services to be provided pursuant to this Agreement and will not be obligated
to pay any expenses of Investment Manager or the Trust. Except as otherwise
provided herein, Investment Manager and the Trust will not be obligated to pay
any expenses of Sub-Advisor.
8. Confidential Treatment. It is understood that any information or
recommendation supplied by the Sub-Advisor in connection with the performance of
its obligations hereunder is to be regarded as confidential and for use only by
the Investment Manager, the Trust or such persons the Investment Manager may
designate in connection with the Portfolio. It is also understood that any
information supplied to Sub-Advisor in connection with the performance of its
obligations hereunder, particularly, but not limited to, any list of securities
which, on a temporary basis, may not be bought or sold for the Portfolio, is to
be regarded as confidential and for use only by the Sub-Advisor in connection
with its obligation to provide investment advice and other services to the
Portfolio.
9. Representations of the Parties. Each party to this Agreement hereby
acknowledges that it is registered as an investment advisor under the Advisers
Act, that it will use its reasonable best efforts to maintain such registration,
and that it will promptly notify the other if it ceases to be so registered, if
its registration is suspended for any reason, or if it is notified by any
regulatory organization or court of competent jurisdiction that it should show
cause why its registration should not be suspended or terminated.
10. Liability. The Sub-Advisor shall use its best efforts and good faith in the
performance of its services hereunder. However, so long as the Sub-Advisor has
acted in good faith and has used its best efforts, then in the absence of
willful misfeasance, bad faith, gross negligence or reckless disregard for its
obligations hereunder, it shall not be liable to the Trust or its shareholders
or to the Investment Manager for any act or omission resulting in any loss
suffered in any portfolio of the Trust in connection with any service to be
provided herein. The Federal laws impose responsibilities under certain
circumstances on persons who act in good faith, and therefore, nothing herein
shall in any way constitute a waiver of limitation of any rights which the Trust
or Investment Manager may have under applicable law.
The Investment Manager agrees that the Sub-Advisor shall not be liable
for any failure to recommend the purchase or sale of any security on behalf of
the Portfolio on the basis of any information which might, in Sub-Advisor's
opinion, constitute a violation of any federal or state laws, rules or
regulations.
11. Other Activities of Sub-Advisor. Investment Manager agrees that the
Sub-Advisor and any of its partners or employees, and persons affiliated with it
or with any such partner or employee may render investment management or
advisory services to other investors and institutions, and such investors and
institutions may own, purchase or sell, securities or other interests in
property the same as or similar to those which are selected for purchase,
holding or sale for the Portfolio, and the Sub-Advisor shall be in all respects
free to take action with respect to investments in securities or other interests
in property the same as or similar to those selected for purchase, holding or
sale for the Portfolio. Purchases and sales of individual securities on behalf
of the Portfolio and other portfolios of the Trust or accounts for other
investors or institutions will be made on a basis that is equitable to all
portfolios of the Trust and other accounts. Nothing in this agreement shall
impose upon the Sub-Advisor any obligation to purchase or sell or recommend for
purchase or sale, for the Portfolio any security which it, its partners,
affiliates or employees may purchase or sell for the Sub-Advisor or such
partner's, affiliate's or employee's own accounts or for the account of any
other client, advisory or otherwise.
12. Continuance and Termination. This Agreement shall remain in full force and
effect for one year from the date hereof, and is renewable annually thereafter
by specific approval of the Board of Trustees of the Trust or by vote of a
majority of the outstanding voting securities of the Portfolio. Any such renewal
shall be approved by the vote of a majority of the Trustees who are not
interested persons under the ICA, cast in person at a meeting called for the
purpose of voting on such renewal. This agreement may be terminated without
penalty at any time by the Investment Manager or Sub-Advisor upon 60 days
written notice, and will automatically terminate in the event of its assignment
by either party to this Agreement, as defined in the ICA, or (provided
Sub-Advisor has received prior written notice thereof) upon termination of the
Investment Manager's Management Agreement with the Trust.
13. Notification. Sub-Advisor will notify the Investment Manager within a
reasonable time of any change in the personnel of the Sub-Advisor with
responsibility for making investment decisions in relation to the Portfolio or
who have been authorized to give instructions to a Custodian of the Trust.
Any notice, instruction or other communication required or contemplated
by this agreement shall be in writing. All such communications shall be
addressed to the recipient at the address set forth below, provided that either
party may, by notice, designate a different address for such party.
Investment Manager: American Skandia Investment Services, Incorporated
One Corporate Drive
Shelton, Connecticut 06484
Attention: Thomas M. Mazzaferro
President & Chief Operating Officer
Sub-Advisor: Putnam Investment Management, Inc.
One Post Office Square
Boston, Massachusetts 02109
Attention: Charles A. Ruys de Perez, Esq.
Senior Vice President & Senior Counsel
14. Indemnification. The Sub-Advisor agrees to indemnify and hold harmless
Investment Manager, any affiliated person within the meaning of Section 2(a)(3)
of the ICA ("affiliated person") of Investment Manager and each person, if any
who, within the meaning of Section 15 of the Securities Act of 1933 (the "1933
Act"), controls ("controlling person") Investment Manager, against any and all
losses, claims, damages, liabilities or litigation (including reasonable legal
and other expenses), to which Investment Manager or such affiliated person or
controlling person may become subject under the 1933 Act, the ICA, the Advisers
Act, under any other statute, at common law or otherwise, arising out of
Sub-Advisor's responsibilities as portfolio manager of the Portfolio (1) to the
extent of and as a result of the willful misconduct, bad faith, or gross
negligence by Sub-Advisor, any of Sub-Advisor's employees or representatives or
any affiliate of or any person acting on behalf of Sub-Advisor, or (2) as a
result of any untrue statement or alleged untrue statement of a material fact
relating to the Sub-Advisor or the Sub-Advisor's activities in connection with
the investment program for the Portfolio contained in a prospectus or statement
of additional information covering the Portfolio or the Trust or any amendment
thereof or any supplement thereto or the omission or alleged omission to state
therein such a material fact required to be stated therein or necessary to make
the statement therein not misleading, if such a statement or omission was made
in reliance upon written information furnished to the Investment Manager, the
Trust or any affiliated person of the Investment Manager or the Trust by the
Sub-Advisor or upon verbal information confirmed by the Sub-Advisor in writing
or (3) to the extent of, and as a result of, the failure of the Sub-Advisor to
execute, or cause to be executed, Portfolio transactions according to the
standards and requirements of the ICA; provided, however, that in no case is
Sub-Advisor's indemnity in favor of Investment Manager or any affiliated person
or controlling person of Investment Manager deemed to protect such person
against any liability to which any such person would otherwise be subject by
reason of willful misconduct, bad faith or gross negligence in the performance
of its duties or by reason of its reckless disregard of its obligations and
duties under this Agreement; and, provided further, that in the case of an
alleged untrue statement or omission of a material fact for which the
Sub-Advisor provides this indemnity, the Investment Manager shall reimburse the
Sub-Advisor for all amounts paid pursuant to this indemnity unless a court of
competent jurisdiction shall issue a final judgment finding that such an untrue
statement or omission of material fact did occur.
The Investment Manager agrees to indemnify and hold harmless
Sub-Advisor, any affiliated person of Sub-Advisor and each controlling person of
Sub-Advisor, if any, against any and all losses, claims, damages, liabilities or
litigation (including reasonable legal and other expenses), to which Sub-Advisor
or such affiliated person or controlling person may become subject under the
1933 Act, the ICA, the Advisers Act, under any other statute, at common law or
otherwise, arising out of Investment Manager's responsibilities as investment
manager of the Portfolio (1) to the extent of and as a result of the willful
misconduct, bad faith, or gross negligence by Investment Manager, any of
Investment Manager's employees or representatives or any affiliate of or any
person acting on behalf of Investment Manager, or (2) as a result of any untrue
statement or alleged untrue statement of a material fact contained in a
prospectus or statement of additional information covering the Portfolio or the
Trust or any amendment thereof or any supplement thereto or the omission or
alleged omission to state therein such a material fact required to be stated
therein or necessary to make the statement therein not misleading, if such a
statement or omission was made by the Trust other than in reliance upon written
information furnished by Sub-Advisor, or any affiliated person of the
Sub-Advisor or other than upon verbal information confirmed by the Sub-Advisor
in writing; provided, however, that in no case is Investment Manager's indemnity
in favor of Sub-Advisor or any affiliated person or controlling person of
Sub-Advisor deemed to protect such person against any liability to which any
such person would otherwise be subject by reason of willful misconduct, bad
faith or gross negligence in the performance of its duties or by reason of its
reckless disregard of its obligations and duties under this Agreement.
15. Warranty. The Investment Manager represents and warrants that (i) the
appointment of the Sub-Advisor by the Investment Manager has been duly
authorized and (ii) it has acted and will continue to act in connection with the
transactions contemplated hereby, and the transactions contemplated hereby are,
in conformity with the ICA, the Trust's governing documents and other applicable
laws.
The Sub-Advisor represents and warrants that it is authorized to
perform the services contemplated to be performed hereunder.
16. Governing Law. This agreement is made under, and shall be governed by and
construed in accordance with, the laws of the State of Connecticut.
The effective date of this agreement is October 15, 1996.
FOR THE INVESTMENT MANAGER: FOR THE SUB-ADVISOR:
/s/Thomas Mazzaferro /s/Charles A. Ruys de Perez
Thomas Mazzaferro Senior Vice President
President & Chief Operating Officer
Date: 09/27/96 Date: 10/15/96
Attest: /s/Ivette Aquilino Attest: /s/
<PAGE>
EXHIBIT A-3
SUB-ADVISORY AGREEMENT
THIS AGREEMENT is between American Skandia Investment Services, Incorporated
(the "Investment Manager") and A I M Capital Management, Inc. (the
"Sub-Advisor").
WHEREAS American Skandia Trust (the "Trust") is a Massachusetts business trust
organized with one or more series of shares, and is registered as an investment
company under the Investment Company Act of 1940 (the "ICA"); and
WHEREAS the trustees of the Trust (the "Trustees") have engaged the Investment
Manager to act as investment manager for the AST AIM Balanced Portfolio (the
"Portfolio") under the terms of a management agreement, dated May 4, 1999, with
the Trust (the "Management Agreement"); and
WHEREAS the Investment Manager has engaged the Sub-Advisor and the Trustees have
approved the engagement of the Sub-Advisor to provide investment advice and
other investment services set forth below;
NOW, THEREFORE the Investment Manager and the Sub-Advisor agree as follows:
1. Investment Services. The Sub-Advisor will furnish the Investment Manager with
investment advisory services in connection with a continuous investment program
for the Portfolio which is to be managed in accordance with the investment
objective, investment policies and restrictions of the Portfolio as set forth in
the Prospectus and Statement of Additional Information of the Trust and in
accordance with applicable provisions of the Trust's Declaration of Trust and
By-laws provided to the Sub-Advisor from time to time by the Investment Manager.
Officers, directors, and employees of Sub-Advisor will be available to consult
with Investment Manager and the Trust, their officers, employees and Trustees
concerning the business of the Portfolio. Investment Manager will promptly
furnish Sub-Advisor with any amendments to any of the foregoing documents (the
"Documents"). Any amendments to the Documents will not be deemed effective with
respect to the Sub-Advisor until the Sub-Advisor's receipt thereof.
Subject to the supervision and control of the Investment Manager, which
is in turn subject to the supervision and control of the Trust's Board of
Trustees, the Sub-Advisor will in its discretion determine and select the
securities to be purchased for and sold from the Portfolio from time to time and
will place orders with and give instructions to brokers, dealers and others for
all such transactions and cause such transactions to be executed. Custody of the
Portfolio will be maintained by a custodian bank (the "Custodian") and the
Investment Manager will authorize the Custodian to honor orders and instructions
by employees of the Sub-Advisor designated by the Investment Manager to settle
transactions in respect of the Portfolio. No assets may be withdrawn from the
Portfolio other than for settlement of transactions on behalf of the Portfolio
except upon the written authorization of appropriate officers of the Trust who
shall have been certified as such by proper authorities of the Trust prior to
the withdrawal. The Sub-Advisor shall not be responsible for the provision of
administrative, bookkeeping or accounting services to the Trust. Any records
required to be maintained by the Sub-advisor shall be the property of the Trust
and surrendered to the Trust promptly upon request or upon termination of this
Agreement. The Sub-Advisor may retain copies of any records surrendered to the
Trust.
To the extent deemed necessary by the Sub-Advisor in connection with
the investment program for the Portfolio, the Sub-Advisor will obtain and
evaluate pertinent information about significant developments and economic,
statistical and financial data, domestic, foreign or otherwise, whether
affecting the economy generally or the Portfolio, and concerning the individual
issuers whose securities are included in the Portfolio or the activities in
which they engage, or with respect to securities which the Sub-Advisor considers
desirable for inclusion in the Portfolio or such other information as the
Sub-Advisor deems relevant.
The Sub-Advisor represents that it has reviewed the Registration Statement of
the Trust filed with the Securities and Exchange Commission on April 28, 1999
and provided to the Sub-Advisor by the Investment Manager. The Sub-Advisor
further represents and warrants that, with respect to disclosure about the
Sub-Advisor and the investment program for the Portfolio furnished or commented
upon in writing by the Sub-Advisor to the Investment Manager or the Trust
expressly for use in such Registration Statement, such Registration Statement
contains, as of the date thereof, no untrue statement of 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, in light of the
circumstances under which they were made, not misleading; provided, however,
that the Sub-Advisor makes no representations or warranties regarding (i) the
accuracy or adequacy of any disclosure in such Registration Statement regarding
the degree and nature of the risks associated with particular types of
investments, or (ii) any disclosure in the Registration Statement with respect
to which the Investment Manager did not include information provided by the
Sub-Advisor expressly for use therein.
In furnishing the services under this Agreement, the Sub-Advisor will
comply with the requirements of the ICA and will use its best efforts to cause
the Portfolio to comply with the adequate diversification requirements of
Section 817(h)(2) and the Subchapter M qualification requirements of Section
851(b)(2) and (3) of the Internal Revenue Code, applicable to the Portfolio, and
the regulations promulgated thereunder, to the extent such compliance is within
the Sub-Advisor's control. Sub-Advisor shall also comply with (i) other
applicable provisions of federal law; (ii) the provisions of the Declaration of
Trust and By-laws of the Trust communicated to the Sub-Advisor pursuant to
paragraph 1 of this Agreement; (iii) policies and determinations of the Trust
and Investment Manager communicated to the Sub-Advisor in writing; (iv) the
fundamental policies and investment restrictions of the Trust, as set out in the
Trust's registration statement under the ICA, or as amended by the Trust's
shareholders, and communicated to the Sub-Advisor; (v) the Prospectus and
Statement of Additional Information of the Trust as provided to the Sub-Advisor;
and (vi) investment guidelines or other instructions received in writing from
Investment Manager. Sub-Advisor shall supervise and monitor the activities of
its representatives, personnel and agents in connection with the investment
program of the Portfolio.
Unless the Investment Manager gives the Sub-Advisor written
instructions to the contrary, the Sub-Advisor shall use its good faith judgment
in a manner that it reasonably believes best serves the interests of the
Portfolio's shareholders to vote or abstain from voting all proxies solicited by
or with respect to the issuers of securities in which assets of the Portfolio
may be invested.
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) A certificate of the inspector of election from the meeting of
shareholders of the Portfolio at which this Agreement was approved,
which certificate indicates that such shareholders have approved this
Agreement;
(e) 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;
(f) The Investment Manager's Management Agreement with the Trust;
(g) The Code of Ethics of the Trust and of the Investment Manager as
currently in effect; and
(h) A list of companies the securities of which are not to be bought or
sold for the Portfolio because of non-public information regarding
such companies that is available to Investment Manager or the Trust,
or which, in the sole opinion of the Investment Manager, it believes
such non-public information would be deemed to be available to
Investment Manager and/or the Trust.
The Investment Manager will furnish the Sub-Advisor from time to time
with copies, properly certified or otherwise authenticated, of all amendments of
or supplements to the foregoing, if any. Such amendments or supplements as to
items (a) through (g) 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 (h) above will be provided not later than the end of the
business day next following the date such amendments or supplements become known
to the Investment Manager.
3. Delivery of Documents to the Investment Manager. The Sub-Advisor has
furnished the Investment Manager with copies of each of the following documents:
(a) The Sub-Advisor's Form ADV as filed with the Securities and Exchange
Commission;
(b) The Sub-Advisor's most recent balance sheet;
(c) Separate lists of persons who the Sub-Advisor wishes to have
authorized to give written and/or oral instructions to Custodians of
Trust assets for the Portfolio;
(d) The Code of Ethics of the Sub-Advisor as currently in effect.
The Sub-Advisor will thereafter furnish the Investment Manager with
copies, properly certified or otherwise authenticated, of all material
amendments of or supplements to items (a), (c) and (d) above within 30 days of
the time such materials become available to the Sub-Advisor. With respect to
item (b) above, the Sub-Advisor will thereafter furnish the Investment Manager,
within 30 days of the time such materials become available to the Sub-Advisor,
with a copy of the Sub-Advisor's audited balance sheet as at the end of each
fiscal year of the Sub-Advisor.
4. Investment Advisory Facilities. The Sub-Advisor, at its expense, will furnish
all necessary investment facilities, including salaries of personnel required
for it to execute its duties faithfully.
5. Execution of Portfolio Transactions. The Sub-Advisor is responsible for
decisions to buy and sell securities for the Portfolio, broker-dealer selection,
and negotiation of 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, the Sub-Advisor's primary consideration
in placing Portfolio securities transactions with broker-dealers for execution
is to obtain and maintain the availability of best execution at the best net
price and in the most effective manner possible. The Sub-Advisor may consider
sale of the shares of the Portfolio, as well as recommendations of the
Investment Manager, subject to the requirements of best net price and most
favorable execution and, if applicable, legal requirements relating to the use
of broker-dealers affiliated with the Trust.
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 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 overall responsibilities
with respect to the Portfolio and to other clients of the Sub-Advisor as to
which the Sub-Advisor exercises investment discretion. The Sub-Advisor is
further authorized to allocate the orders placed by it on behalf of the
Portfolio to such broker-dealers who also provide research or statistical
material, or other services to the Portfolio or the Sub-Advisor. Such allocation
shall be in such amounts and proportions as the Sub-Advisor shall determine in
good faith in conformity with its responsibilities under applicable laws, rules
and regulations and the Sub-Advisor will report on said allocations to the
Investment Manager regularly as requested by the Investment Manager and, in any
event, at least once each calendar year if no specific request is made,
indicating the brokers to whom such allocations have been made and the basis
therefor.
6. Reports by Sub-Advisor. The Sub-Advisor shall furnish the Investment Manager
monthly, quarterly and annual reports concerning transactions and performance of
the Portfolio, including information requested for inclusion in the Trust's
Registration Statement, in such form as may be mutually agreed, to review the
Portfolio and discuss the management of it. The Sub-Advisor shall supply the
Investment Manager and the Trust with such information as may be necessary to
respond to a specific request of the Trust's Board of Trustees or its agents.
The Sub-Advisor shall permit the books and records with respect to the Portfolio
to be inspected and audited by the Trust, the Investment Manager or their agents
at all reasonable times during normal business hours. The Sub-Advisor shall
immediately notify and forward to the Investment Manager and the Trust any legal
process served upon it on behalf of the Investment Manager or the Trust. The
Investment Manager and the Trust shall immediately notify and forward to the
Sub-Advisor any legal process served upon them on behalf of the Sub-Advisor. The
Sub-Advisor shall promptly notify the Investment Manager of any changes in any
information concerning the Sub-Advisor or the investment program for the
Portfolio required to be disclosed in the Trust's Registration Statement.
7. Compensation of Sub-Advisor. The amount of the compensation to the
Sub-Advisor is computed at an annual rate. The fee is payable monthly in
arrears, based on the average daily net assets of the Portfolio for each month,
at the annual rates shown below.
For all services rendered, the Investment Manager will calculate and
pay the Sub-Advisor at the annual rate equal to the following percentages of the
combined average daily net assets of the Portfolio and the series of American
Skandia Advisor Funds, Inc. that is managed by the Sub-advisor and identified by
the Sub-Advisor and the Investment Manager as being similar to the Portfolio:
.45 of 1% of the portion of the combined average daily net assets not in excess
of $75 million; plus .40 of 1% of the portion of the combined average daily net
assets over $75 million but not in excess of $150 million; plus .35 of 1% of the
portion of the combined average daily net assets in excess of $150 million.
In computing the fee to be paid to the Sub-Advisor, the net asset value
of the Portfolio shall be valued as set forth in the then current registration
statement of the Trust. If this Agreement is terminated, the payment shall be
prorated to the date of termination. The fee for the period from the effective
date of the Agreement to the end of the month during which the effective date
occurs shall be prorated according to the proportion that such period bears to
the full monthly period.
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, including without
limitation brokerage expenses and custodian fees. Except as otherwise provided
herein, Investment Manager and the Trust will not be obligated to pay any
expenses of Sub-Advisor.
Unless otherwise agreed in writing by the Investment Manager and
Sub-Advisor, the waiver by the Investment Manager of any fees it is entitled to
receive under the Management Agreement shall not offset the obligation of the
Investment Manager to compensate the Sub-Advisor pursuant to this paragraph 7.
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 (the "Advisers Act"), that it will use its reasonable best
efforts to maintain such registration, and that it will promptly notify the
other if it ceases to be so registered, if its registration is suspended for any
reason, or if it is notified by any regulatory organization or court of
competent jurisdiction that it should show cause why its registration should not
be suspended or terminated.
10. Liability. The Sub-Advisor shall use its best efforts and judgment and shall
act in good faith in rendering services hereunder. However, so long as the
Sub-Advisor has acted in good faith and has used its best efforts and judgment,
the Sub-Advisor, its officers, directors and employees shall not be liable for
any error of judgment or mistake of law or for any loss suffered by the
Portfolio, any shareholder of the Portfolio or the Investment Manager in
connection with the matters to which this Agreement relates, provided that
nothing in this Agreement shall be deemed to protect or purport to protect the
Sub-Advisor against any liability to the Investment Manager, the Trust or to the
shareholders of the Portfolio to which the Sub-Advisor would otherwise be
subject by reason of willful misfeasance, bad faith or gross negligence on its
part in the performance of its duties or by reason of the Sub-Advisor's reckless
disregard of its obligations and duties under this Agreement.
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 officers or employees, and persons affiliated with it
or with any such officer 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 the Sub-Advisor believes
is equitable to all accounts. The Investment Manager and the Trust recognize
that in some cases this procedure may adversely affect the size of the position
obtainable for the Portfolio. In addition, the Investment Manager and the Trust
understand (i) that the persons employed by the Sub-Advisor to assist in the
performance of the Sub-Advisor's duties under this Agreement generally will not
devote their full time to such service, and (ii) the Sub-Advisor and any
affiliate of the Sub-Advisor may engage in and devote time and attention to
other businesses or to rendering services of whatever kind or nature. 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 officers, affiliates or employees may purchase or sell for the Sub-Advisor
or such officer'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 also 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 or by the Board of Trustees of the Trust or by a vote of the
outstanding voting securities of the Portfolio, and will automatically terminate
in the event of its assignment by either party to this Agreement, as defined in
the ICA, or (provided Sub-Advisor has received prior written notice thereof)
upon termination of the Investment Manager's Management Agreement with the
Trust.
13. Notification. Sub-Advisor will notify the Investment Manager within a
reasonable time of any change in the personnel of the Sub-Advisor with
responsibility for making investment decisions in relation to the Portfolio or
who have been authorized to give instructions to a Custodian of the Trust.
Any notice, instruction or other communication required or contemplated
by this Agreement shall be in writing. All such communications shall be
addressed to the recipient at the address set forth below, provided that either
party may, by notice, designate a different address for such party.
Investment Manager: American Skandia Investment Services, Incorporated
One Corporate Drive
Shelton, Connecticut 06484
Attention: John Birch
Senior Vice President & Chief Operating Officer
Sub-Advisor: A I M Capital Management, Inc.
11 Greenway Plaza, Suite 100
Houston, Texas 77046-1173
Attention: Nancy L. Martin
General Counsel
14. Indemnification. The Sub-Advisor agrees to indemnify and hold harmless
Investment Manager, any affiliated person within the meaning of Section 2(a)(3)
of the ICA ("affiliated person") of Investment Manager and each person, if any
who, within the meaning of Section 15 of the Securities Act of 1933 (the "1933
Act"), controls ("controlling person") Investment Manager, against any and all
losses, claims, damages, liabilities or litigation (including reasonable legal
and other expenses), to which Investment Manager or such affiliated person or
controlling person may become subject under the 1933 Act, the ICA, the Advisers
Act, under any other statute, at common law or otherwise, arising out of
Sub-Advisor's responsibilities as portfolio manager of the Portfolio (1) to the
extent of and as a result of the willful misconduct, bad faith, or gross
negligence by Sub-Advisor, any of Sub-Advisor's employees or representatives or
any affiliate of or any person acting on behalf of Sub-Advisor, or (2) as a
result of any untrue statement or alleged untrue statement of a material fact
relating to the Sub-Advisor or the investment program for the Portfolio
contained in a prospectus or statement of additional information covering the
Portfolio or the Trust or any amendment thereof or any supplement thereto or the
omission or alleged omission to state therein such a material fact required to
be stated therein or necessary to make the statement therein not misleading, if
such a statement or omission was made in reliance upon and in conformity with
written information furnished or commented upon by the Sub-Advisor to the
Investment Manager, the Trust or any affiliated person of the Investment Manager
or the Trust expressly for use in such a prospectus or statement of additional
information or upon verbal information confirmed by the Sub-Advisor in writing
or (3) to the extent of, and as a result of, a violation by the Sub-Advisor of
the requirements of the ICA governing executions of Portfolio transactions;
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
negligence in the performance of its duties or by reason of its reckless
disregard of its obligations and duties under this Agreement; and, provided
further, that in the case of an alleged untrue statement or omission of a
material fact for which the Sub-Advisor provides this indemnity, the Investment
Manager shall reimburse the Sub-Advisor for all amounts paid pursuant to this
indemnity unless a court of competent jurisdiction shall issue a final judgment
finding that such an untrue statement or omission of material fact did occur;
and, provided further, that in no event shall Sub-Advisor be required to
indemnify the Investment Manager for any consequential damages.
The Investment Manager agrees to indemnify and hold harmless
Sub-Advisor, any affiliated person of Sub-Advisor and each controlling person of
Sub-Advisor, if any, against any and all losses, claims, damages, liabilities or
litigation (including reasonable legal and other expenses), to which Sub-Advisor
or such affiliated person or controlling person may become subject under the
1933 Act, the ICA, the Advisers Act, under any other statute, at common law or
otherwise, arising out of Investment Manager's responsibilities as investment
manager of the Portfolio (1) to the extent of and as a result of the willful
misconduct, bad faith, or gross negligence by Investment Manager, any of
Investment Manager's employees or representatives or any affiliate of or any
person acting on behalf of Investment Manager, or (2) as a result of any untrue
statement or alleged untrue statement of a material fact contained in a
prospectus or statement of additional information covering the Portfolio or the
Trust or any amendment thereof or any supplement thereto or the omission or
alleged omission to state therein such a material fact required to be stated
therein or necessary to make the statement therein not misleading, if such a
statement or omission was made by the Trust other than in reliance upon and in
conformity with written information furnished or commented upon by Sub-Advisor
or any affiliated person of the Sub-Advisor expressly for use in such a
prospectus or statement of additional information 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 negligence in the performance of
its duties or by reason of its reckless disregard of its obligations and duties
under this Agreement; and, provided further, that in no event shall Investment
Manager be required to indemnify the Sub-Advisor for any consequential damages.
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. Any question of interpretation of any term or provision of
this Agreement having a counterpart in or otherwise derived from a term or
provision of the ICA or the Advisers Act shall be resolved by reference to such
term or provision of the ICA or the Advisers Act and to interpretations thereof,
if any, by the United States courts or, in the absence of any controlling
decision of any such court, by rules, regulations or orders of the Securities
and Exchange Commission issued pursuant to the ICA or the Advisers Act. In
addition, where the effect of a requirement of the ICA or the Advisers Act
reflected in any provision of this Agreement is revised by rule, regulation or
order of the Securities and Exchange Commission, such provision shall be deemed
to incorporate the effect of such rule, regulation or order. To the extent
federal law does not apply, this Agreement shall be governed by and construed in
accordance with the laws of the State of Connecticut.
The effective date of this agreement is September [insert], 1999.
FOR THE INVESTMENT MANAGER: FOR THE SUB-ADVISOR:
- --------------------------------- ---------------------------------
John Birch
Senior Vice President & Chief Operating Officer
Date: ___________________ Date:_______________________
Attest:_____________________ Attest:_______________________
<PAGE>
EXHIBIT A-4
SUB-ADVISORY AGREEMENT
THIS AGREEMENT is between American Skandia Investment Services, Incorporated
(the "Investment Manager") and A I M Capital Management, Inc. (the
"Sub-Advisor").
WHEREAS American Skandia Trust (the "Trust") is a Massachusetts business trust
organized with one or more series of shares, and is registered as an investment
company under the Investment Company Act of 1940 (the "ICA"); and
WHEREAS the trustees of the Trust (the "Trustees") have engaged the Investment
Manager to act as investment manager for the AST AIM International Equity
Portfolio (the "Portfolio") under the terms of a management agreement, dated May
4, 1999, with the Trust (the "Management Agreement"); and
WHEREAS the Investment Manager has engaged the Sub-Advisor and the Trustees have
approved the engagement of the Sub-Advisor to provide investment advice and
other investment services set forth below;
NOW, THEREFORE the Investment Manager and the Sub-Advisor agree as follows:
1. Investment Services. The Sub-Advisor will furnish the Investment Manager with
investment advisory services in connection with a continuous investment program
for the Portfolio which is to be managed in accordance with the investment
objective, investment policies and restrictions of the Portfolio as set forth in
the Prospectus and Statement of Additional Information of the Trust and in
accordance with applicable provisions of the Trust's Declaration of Trust and
By-laws provided to the Sub-Advisor from time to time by the Investment Manager.
Officers, directors, and employees of Sub-Advisor will be available to consult
with Investment Manager and the Trust, their officers, employees and Trustees
concerning the business of the Portfolio. Investment Manager will promptly
furnish Sub-Advisor with any amendments to any of the foregoing documents (the
"Documents"). Any amendments to the Documents will not be deemed effective with
respect to the Sub-Advisor until the Sub-Advisor's receipt thereof.
Subject to the supervision and control of the Investment Manager, which
is in turn subject to the supervision and control of the Trust's Board of
Trustees, the Sub-Advisor will in its discretion determine and select the
securities to be purchased for and sold from the Portfolio from time to time and
will place orders with and give instructions to brokers, dealers and others for
all such transactions and cause such transactions to be executed. Custody of the
Portfolio will be maintained by a custodian bank (the "Custodian") and the
Investment Manager will authorize the Custodian to honor orders and instructions
by employees of the Sub-Advisor designated by the Investment Manager to settle
transactions in respect of the Portfolio. No assets may be withdrawn from the
Portfolio other than for settlement of transactions on behalf of the Portfolio
except upon the written authorization of appropriate officers of the Trust who
shall have been certified as such by proper authorities of the Trust prior to
the withdrawal. The Sub-Advisor shall not be responsible for the provision of
administrative, bookkeeping or accounting services to the Trust. Any records
required to be maintained by the Sub-advisor shall be the property of the Trust
and surrendered to the Trust promptly upon request or upon termination of this
Agreement. The Sub-Advisor may retain copies of any records surrendered to the
Trust.
To the extent deemed necessary by the Sub-Advisor in connection with
the investment program for the Portfolio, the Sub-Advisor will obtain and
evaluate pertinent information about significant developments and economic,
statistical and financial data, domestic, foreign or otherwise, whether
affecting the economy generally or the Portfolio, and concerning the individual
issuers whose securities are included in the Portfolio or the activities in
which they engage, or with respect to securities which the Sub-Advisor considers
desirable for inclusion in the Portfolio or such other information as the
Sub-Advisor deems relevant.
The Sub-Advisor represents that it has reviewed the Registration
Statement of the Trust filed with the Securities and Exchange Commission on
April 28, 1999 and provided to the Sub-Advisor by the Investment Manager. The
Sub-Advisor further represents and warrants that, with respect to disclosure
about the Sub-Advisor and the investment program for the Portfolio furnished or
commented upon in writing by the Sub-Advisor to the Investment Manager or the
Trust expressly for use in such Registration Statement, such Registration
Statement contains, as of the date thereof, no untrue statement of 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, in light of the
circumstances under which they were made, not misleading; provided, however,
that the Sub-Advisor makes no representations or warranties regarding (i) the
accuracy or adequacy of any disclosure in such Registration Statement regarding
the degree and nature of the risks associated with particular types of
investments, or (ii) any disclosure in the Registration Statement with respect
to which the Investment Manager did not include information provided by the
Sub-Advisor expressly for use therein.
In furnishing the services under this Agreement, the Sub-Advisor will
comply with the requirements of the ICA and will use its best efforts to cause
the Portfolio to comply with the adequate diversification requirements of
Section 817(h)(2) and the Subchapter M qualification requirements of Section 851
(b)(2) and (3) of the Internal Revenue Code, applicable to the Portfolio, and
the regulations promulgated thereunder, to the extent such compliance is within
the Sub-Advisor's control. Sub-Advisor shall also comply with (i) other
applicable provisions of federal law; (ii) the provisions of the Declaration of
Trust and By-laws of the Trust communicated to the Sub-Advisor pursuant to
paragraph 1 of this Agreement; (iii) policies and determinations of the Trust
and Investment Manager communicated to the Sub-Advisor in writing; (iv) the
fundamental policies and investment restrictions of the Trust, as set out in the
Trust's registration statement under the ICA, or as amended by the Trust's
shareholders, and communicated to the Sub-Advisor; (v) the Prospectus and
Statement of Additional Information of the Trust as provided to the Sub-Advisor;
and (vi) investment guidelines or other instructions received in writing from
Investment Manager. Sub-Advisor shall supervise and monitor the activities of
its representatives, personnel and agents in connection with the investment
program of the Portfolio.
Unless the Investment Manager gives the Sub-Advisor written
instructions to the contrary, the Sub-Advisor shall use its good faith judgment
in a manner that it reasonably believes best serves the interests of the
Portfolio's shareholders to vote or abstain from voting all proxies solicited by
or with respect to the issuers of securities in which assets of the Portfolio
may be invested.
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) A certificate of the inspector of election from the meeting of
shareholders of the Portfolio at which this Agreement was approved,
which certificate indicates that such shareholders have approved this
Agreement;
(e) 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;
(f) The Investment Manager's Management Agreement with the Trust;
(g) The Code of Ethics of the Trust and of the Investment Manager as
currently in effect; and
(h) A list of companies the securities of which are not to be bought or
sold for the Portfolio because of non-public information regarding
such companies that is available to Investment Manager or the Trust,
or which, in the sole opinion of the Investment Manager, it believes
such non-public information would be deemed to be available to
Investment Manager and/or the Trust.
The Investment Manager will furnish the Sub-Advisor from time to time
with copies, properly certified or otherwise authenticated, of all amendments of
or supplements to the foregoing, if any. Such amendments or supplements as to
items (a) through (g) 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 (h) above will be provided not later than the end of the
business day next following the date such amendments or supplements become known
to the Investment Manager.
3. Delivery of Documents to the Investment Manager. The Sub-Advisor has
furnished the Investment Manager with copies of each of the following documents:
(a) The Sub-Advisor's Form ADV as filed with the Securities and Exchange
Commission;
(b) The Sub-Advisor's most recent balance sheet;
(c) Separate lists of persons who the Sub-Advisor wishes to have
authorized to give written and/or oral instructions to Custodians of
Trust assets for the Portfolio;
(d) The Code of Ethics of the Sub-Advisor as currently in effect.
The Sub-Advisor will thereafter furnish the Investment Manager with
copies, properly certified or otherwise authenticated, of all material
amendments of or supplements to items (a), (c) and (d) above within 30 days of
the time such materials become available to the Sub-Advisor. With respect to
item (b) above, the Sub-Advisor will thereafter furnish the Investment Manager,
within 30 days of the time such materials become available to the Sub-Advisor,
with a copy of the Sub-Advisor's audited balance sheet as at the end of each
fiscal year of the Sub-Advisor.
4. Investment Advisory Facilities. The Sub-Advisor, at its expense, will furnish
all necessary investment facilities, including salaries of personnel required
for it to execute its duties faithfully.
5. Execution of Portfolio Transactions. The Sub-Advisor is responsible for
decisions to buy and sell securities for the Portfolio, broker-dealer selection,
and negotiation of 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, the Sub-Advisor's primary consideration
in placing Portfolio securities transactions with broker-dealers for execution
is to obtain and maintain the availability of best execution at the best net
price and in the most effective manner possible. The Sub-Advisor may consider
sale of the shares of the Portfolio, as well as recommendations of the
Investment Manager, subject to the requirements of best net price and most
favorable execution and, if applicable, legal requirements relating to the use
of broker-dealers affiliated with the Trust.
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 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 overall responsibilities
with respect to the Portfolio and to other clients of the Sub-Advisor as to
which the Sub-Advisor exercises investment discretion. The Sub-Advisor is
further authorized to allocate the orders placed by it on behalf of the
Portfolio to such broker-dealers who also provide research or statistical
material, or other services to the Portfolio or the Sub-Advisor. Such allocation
shall be in such amounts and proportions as the Sub-Advisor shall determine in
good faith in conformity with its responsibilities under applicable laws, rules
and regulations and the Sub-Advisor will report on said allocations to the
Investment Manager regularly as requested by the Investment Manager and, in any
event, at least once each calendar year if no specific request is made,
indicating the brokers to whom such allocations have been made and the basis
therefor.
6. Reports by Sub-Advisor. The Sub-Advisor shall furnish the Investment Manager
monthly, quarterly and annual reports concerning transactions and performance of
the Portfolio, including information requested for inclusion in the Trust's
Registration Statement, in such form as may be mutually agreed, to review the
Portfolio and discuss the management of it. The Sub-Advisor shall supply the
Investment Manager and the Trust with such information as may be necessary to
respond to a specific request of the Trust's Board of Trustees or its agents.
The Sub-Advisor shall permit the books and records with respect to the Portfolio
to be inspected and audited by the Trust, the Investment Manager or their agents
at all reasonable times during normal business hours. The Sub-Advisor shall
immediately notify and forward to the Investment Manager and the Trust any legal
process served upon it on behalf of the Investment Manager or the Trust. The
Investment Manager and the Trust shall immediately notify and forward to the
Sub-Advisor any legal process served upon them on behalf of the Sub-Advisor. The
Sub-Advisor shall promptly notify the Investment Manager of any changes in any
information concerning the Sub-Advisor or the investment program for the
Portfolio required to be disclosed in the Trust's Registration Statement.
7. Compensation of Sub-Advisor. The amount of the compensation to the
Sub-Advisor is computed at an annual rate. The fee is payable monthly in
arrears, based on the average daily net assets of the Portfolio for each month,
at the annual rates shown below.
For all services rendered, the Investment Manager will calculate and
pay the Sub-Advisor at the annual rate equal to the following percentages of the
combined average daily net assets of the Portfolio and the series of American
Skandia Advisor Funds, Inc. that is managed by the Sub-advisor and identified by
the Sub-Advisor and the Investment Manager as being similar to the Portfolio:
.55 of 1% of the portion of the combined average daily net assets not in excess
of $75 million; plus .45 of 1% of the portion of the combined average daily net
assets in excess of $75 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. The fee for the period from the effective
date of the Agreement to the end of the month during which the effective date
occurs shall be prorated according to the proportion that such period bears to
the full monthly period.
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, including without
limitation brokerage expenses and custodian fees. Except as otherwise provided
herein, Investment Manager and the Trust will not be obligated to pay any
expenses of Sub-Advisor.
Unless otherwise agreed in writing by the Investment Manager and
Sub-Advisor, the waiver by the Investment Manager of any fees it is entitled to
receive under the Management Agreement shall not offset the obligation of the
Investment Manager to compensate the Sub-Advisor pursuant to this paragraph 7.
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 (the "Advisers Act"), that it will use its reasonable best
efforts to maintain such registration, and that it will promptly notify the
other if it ceases to be so registered, if its registration is suspended for any
reason, or if it is notified by any regulatory organization or court of
competent jurisdiction that it should show cause why its registration should not
be suspended or terminated.
10. Liability. The Sub-Advisor shall use its best efforts and judgment and shall
act in good faith in rendering services hereunder. However, so long as the
Sub-Advisor has acted in good faith and has used its best efforts and judgment,
the Sub-Advisor, its officers, directors and employees shall not be liable for
any error of judgment or mistake of law or for any loss suffered by the
Portfolio, any shareholder of the Portfolio or the Investment Manager in
connection with the matters to which this Agreement relates, provided that
nothing in this Agreement shall be deemed to protect or purport to protect the
Sub-Advisor against any liability to the Investment Manager, the Trust or to the
shareholders of the Portfolio to which the Sub-Advisor would otherwise be
subject by reason of willful misfeasance, bad faith or gross negligence on its
part in the performance of its duties or by reason of the Sub-Advisor's reckless
disregard of its obligations and duties under this Agreement.
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 officers or employees, and persons affiliated with it
or with any such officer 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 the Sub-Advisor believes
is equitable to all accounts. The Investment Manager and the Trust recognize
that in some cases this procedure may adversely affect the size of the position
obtainable for the Portfolio. In addition, the Investment Manager and the Trust
understand (i) that the persons employed by the Sub-Advisor to assist in the
performance of the Sub-Advisor's duties under this Agreement generally will not
devote their full time to such service, and (ii) the Sub-Advisor and any
affiliate of the Sub-Advisor may engage in and devote time and attention to
other businesses or to rendering services of whatever kind or nature. 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 officers, affiliates or employees may purchase or sell for the Sub-Advisor
or such officer'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 also 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 or by the Board of Trustees of the Trust or by a vote of the
outstanding voting securities of the Portfolio, and will automatically terminate
in the event of its assignment by either party to this Agreement, as defined in
the ICA, or (provided Sub-Advisor has received prior written notice thereof)
upon termination of the Investment Manager's Management Agreement with the
Trust.
13. Notification. Sub-Advisor will notify the Investment Manager within a
reasonable time of any change in the personnel of the Sub-Advisor with
responsibility for making investment decisions in relation to the Portfolio or
who have been authorized to give instructions to a Custodian of the Trust.
Any notice, instruction or other communication required or contemplated
by this Agreement shall be in writing. All such communications shall be
addressed to the recipient at the address set forth below, provided that either
party may, by notice, designate a different address for such party.
Investment Manager: American Skandia Investment Services, Incorporated
One Corporate Drive
Shelton, Connecticut 06484
Attention: John Birch
Senior Vice President & Chief Operating Officer
Sub-Advisor: A I M Capital Management, Inc.
11 Greenway Plaza, Suite 100
Houston, Texas 77046-1173
Attention: Nancy L. Martin
General Counsel
14. Indemnification. The Sub-Advisor agrees to indemnify and hold harmless
Investment Manager, any affiliated person within the meaning of Section 2(a)(3)
of the ICA ("affiliated person") of Investment Manager and each person, if any
who, within the meaning of Section 15 of the Securities Act of 1933 (the "1933
Act"), controls ("controlling person") Investment Manager, against any and all
losses, claims, damages, liabilities or litigation (including reasonable legal
and other expenses), to which Investment Manager or such affiliated person or
controlling person may become subject under the 1933 Act, the ICA, the Advisers
Act, under any other statute, at common law or otherwise, arising out of
Sub-Advisor's responsibilities as portfolio manager of the Portfolio (1) to the
extent of and as a result of the willful misconduct, bad faith, or gross
negligence by Sub-Advisor, any of Sub-Advisor's employees or representatives or
any affiliate of or any person acting on behalf of Sub-Advisor, or (2) as a
result of any untrue statement or alleged untrue statement of a material fact
relating to the Sub-Advisor or the investment program for the Portfolio
contained in a prospectus or statement of additional information covering the
Portfolio or the Trust or any amendment thereof or any supplement thereto or the
omission or alleged omission to state therein such a material fact required to
be stated therein or necessary to make the statement therein not misleading, if
such a statement or omission was made in reliance upon and in conformity with
written information furnished or commented upon by the Sub-Advisor to the
Investment Manager, the Trust or any affiliated person of the Investment Manager
or the Trust expressly for use in such a prospectus or statement or additional
information or upon verbal information confirmed by the Sub-Advisor in writing
or (3) to the extent of, and as a result of, a violation by the Sub-Advisor of
the requirements of the ICA governing executions of Portfolio transactions;
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
negligence in the performance of its duties or by reason of its reckless
disregard of its obligations and duties under this Agreement; and, provided
further, that in the case of an alleged untrue statement or omission of a
material fact for which the Sub-Advisor provides this indemnity, the Investment
Manager shall reimburse the Sub-Advisor for all amounts paid pursuant to this
indemnity unless a court of competent jurisdiction shall issue a final judgment
finding that such an untrue statement or omission of material fact did occur;
and, provided further, that in no event shall Sub-Advisor be required to
indemnify the Investment Manager for any consequential damages.
The Investment Manager agrees to indemnify and hold harmless
Sub-Advisor, any affiliated person of Sub-Advisor and each controlling person of
Sub-Advisor, if any, against any and all losses, claims, damages, liabilities or
litigation (including reasonable legal and other expenses), to which Sub-Advisor
or such affiliated person or controlling person may become subject under the
1933 Act, the ICA, the Advisers Act, under any other statute, at common law or
otherwise, arising out of Investment Manager's responsibilities as investment
manager of the Portfolio (1) to the extent of and as a result of the willful
misconduct, bad faith, or gross negligence by Investment Manager, any of
Investment Manager's employees or representatives or any affiliate of or any
person acting on behalf of Investment Manager, or (2) as a result of any untrue
statement or alleged untrue statement of a material fact contained in a
prospectus or statement of additional information covering the Portfolio or the
Trust or any amendment thereof or any supplement thereto or the omission or
alleged omission to state therein such a material fact required to be stated
therein or necessary to make the statement therein not misleading, if such a
statement or omission was made by the Trust other than in reliance upon and in
conformity with written information furnished or commented upon by Sub-Advisor
or any affiliated person of the Sub-Advisor expressly for use in such a
prospectus or statement of additional information 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 negligence in the performance of
its duties or by reason of its reckless disregard of its obligations and duties
under this Agreement; and, provided further, that in no event shall Investment
Manager be required to indemnify the Sub-Advisor for any consequential damages.
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. Any question of interpretation of any term or provision of
this Agreement having a counterpart in or otherwise derived from a term or
provision of the ICA or the Advisers Act shall be resolved by reference to such
term or provision of the ICA or the Advisers Act and to interpretations thereof,
if any, by the United States courts or, in the absence of any controlling
decision of any such court, by rules, regulations or orders of the Securities
and Exchange Commission issued pursuant to the ICA or the Advisers Act. In
addition, where the effect of a requirement of the ICA or the Advisers Act
reflected in any provision of this Agreement is revised by rule, regulation or
order of the Securities and Exchange Commission, such provision shall be deemed
to incorporate the effect of such rule, regulation or order. To the extent
federal law does not apply, this Agreement shall be governed by and construed in
accordance with the laws of the State of Connecticut.
The effective date of this agreement is September [insert], 1999.
FOR THE INVESTMENT MANAGER: FOR THE SUB-ADVISOR:
- --------------------------------- -----------------------------------
John Birch
Senior Vice President & Chief Operating Officer
Date: ___________________ Date:_______________________
Attest:_____________________ Attest:_______________________
<PAGE>
AMERICAN SKANDIA TRUST
PROXY FOR SPECIAL MEETING OF SHAREHOLDERS OF the
AST AIM BALANCED PORTFOLIO
(FORMERLY, THE AST PUTNAM BALANCED PORTFOLIO)
TO BE HELD ON SEPTEMBER 30, 1999
The undersigned hereby appoints Maureen Gulick and Deirdre Burke and
each of them as the proxy or proxies of the undersigned, with full power of
substitution, to vote on behalf of the undersigned all shares of beneficial
interest of the above stated Portfolio of American Skandia Trust (or the
"Trust") which the undersigned is entitled to vote at a Special Meeting of the
Shareholders of the Portfolio to be held at 10:00 a.m., Eastern Time, on
September 30, 1999 at the offices of the Trust at One Corporate Drive, 10th
Floor, Shelton, Connecticut and at any adjournments thereof, upon the matters
described in the accompanying Proxy Statement and upon any other business that
may properly come before the meeting or any adjournment thereof. Said proxies
are directed to vote or to refrain from voting as checked below.
PLEASE SIGN BELOW AND RETURN PROMPTLY IN THE ENCLOSED POSTAGE PAID ENVELOPE.
The undersigned acknowledges receipt with this proxy of a copy of the
Combined Notice of Special Meeting of Shareholders and the Proxy Statement of
the AST AIM Balanced Portfolio of the Trust. If a contract is jointly held, each
contract owner named should sign. If only one signs, his or her signature will
be binding. If the contract owner is a trust, custodial account or other entity,
the name of the trust or the custodial account should be entered and the
trustee, custodian, etc. should sign in his or her own name, indicating that he
or she is "Trustee," "Custodian," or other applicable designation. If the
contract owner is a partnership, the partnership should be entered and the
partner should sign in his or her own name, indicating that he or she is a
"Partner."
THIS PROXY IS BEING SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES OF THE TRUST.
ACCOUNT NUMBER:
UNITS:
CONTROL NO:
TO VOTE BY THE INTERNET
VISIT OUR WEBSITE:
WWW.AMERICANSKANDIA.COM
AND CLICK ON THE VOTE LINK
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
KEEP THIS PORTION FOR YOUR RECORDS
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED DETACH AND RETURN THIS
PORTION ONLY
<PAGE>
AMERICAN SKANDIA TRUST - AST AIM BALANCED PORTFOLIO
THE BOARD OF TRUSTEES OF THE TRUST RECOMMENDS VOTING FOR THE FOLLOWING
PROPOSALS:
THE UNITS REPRESENTED HEREBY WILL BE VOTED AS INDICATED OR FOR THE PROPOSALS IF
NO CHOICE IS INDICATED. The Proposals are numbered to correspond with the
Proposal number in the Proxy Statement.
<TABLE>
<CAPTION>
For Against Abstain
<S> <C>
1. PROPOSAL TO APPROVE A NEW SUB-ADVISORY AGREEMENT BETWEEEN AMERICAN
SKANDIA INVESTMENT SERVICES, INCORPORATED AND A I M CAPITAL MANAGEMENT,
INC. FOR THE AST AIM BALANCED PORTFOLIO.
3. PROPOSAL TO APPROVE THE RECLASSIFICATION OF THE PORTFOLIO'S INVESTMENT
OBJECTIVE FROM "FUNDAMENTAL" TO "NON-FUNDAMENTAL".
5. PROPOSAL TO APPROVE CHANGES IN THE PORTFOLIO'S FUNDAMENTAL INVESTMENT
RESTRICTIONS CONCERNING DIVERSIFICATION OF INVESTMENTS.
6. PROPOSAL TO APPROVE A CHANGE IN THE PORTFOLIO'S FUNDAMENTAL INVESTMENT
RESTRICTION CONCERNING THE PURCHASE OR SALE OF REAL ESTATE.
7. PROPOSAL TO APPROVE A CHANGE IN THE PORTFOLIO'S FUNDAMENTAL INVESTMENT
RESTRICTION CONCERNING CONCENTRATION OF INVESTMENTS IN VARIOUS
INDUSTRIES.
8. PROPOSAL TO APPROVE A CHANGE IN THE PORTFOLIO'S FUNDAMENTAL INVESTMENT
RESTRICTION CONCERNING INVESTMENT IN COMMODITIES.
9. PROPOSAL TO APPROVE A CHANGE IN THE PORTFOLIO'S FUNDAMENTAL INVESTMENT
RESTRICTION CONCERNING UNDERWRITING SECURITIES OF OTHER ISSUERS.
10. PROPOSAL TO APPROVE A CHANGE IN THE PORTFOLIO'S FUNDAMENTAL INVESTMENT
RESTRICTION CONCERNING BORROWINGS.
11. PROPOSAL TO APPROVE A CHANGE IN THE PORTFOLIO'S FUNDAMENTAL INVESTMENT
RESTRICTION CONCERNING LOANS.
12. PROPOSAL TO APPROVE A CHANGE IN THE PORTFOLIO'S FUNDAMENTAL INVESTMENT
RESTRICTION CONCERNING THE ISSUANCE OF SENIOR SECURITIES.
</TABLE>
<TABLE>
<CAPTION>
Please be sure to sign and date this Proxy
<S> <C> <C> <C>
__________________________________ Date: _________ ___________________________ Date: ________
Signature [PLEASE SIGN WITHIN BOX] Signature (Joint Owners)
- -----------------------------------------------------------------------------------------------------------------------------------
DETACH CARD
</TABLE>
If you would like to receive future shareholder communications
(e.g., proxy statements, prospectuses and shareholder reports)
in an electronic format (e.g. E-mail or download from
www.AmericanSkandia.com) when available, please provide your
E-mail address in the space provided below. We will notify you
as electronic documents become available. For additional
information on this option, please refer to the back cover of
the AST proxy statement.
[]
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<PAGE>
AMERICAN SKANDIA TRUST
PROXY FOR SPECIAL MEETING OF SHAREHOLDERS OF THE
AST AIM INTERNATIONAL EQUITY PORTFOLIO
(FORMERLY, THE AST PUTNAM INTERNATIONAL EQUITY PORTFOLIO)
TO BE HELD ON SEPTEMBER 30, 1999
The undersigned hereby appoints Maureen Gulick and Deirdre Burke and
each of them as the proxy or proxies of the undersigned, with full power of
substitution, to vote on behalf of the undersigned all shares of beneficial
interest of the above stated Portfolio of American Skandia Trust (or the
"Trust") which the undersigned is entitled to vote at a Special Meeting of the
Shareholders of the Portfolio to be held at 10:30 a.m., Eastern Time, on
September 30, 1999 at the offices of the Trust at One Corporate Drive, 10th
Floor, Shelton, Connecticut and at any adjournments thereof, upon the matters
described in the accompanying Proxy Statement and upon any other business that
may properly come before the meeting or any adjournment thereof. Said proxies
are directed to vote or to refrain from voting as checked below.
PLEASE SIGN BELOW AND RETURN PROMPTLY IN THE ENCLOSED POSTAGE PAID ENVELOPE.
The undersigned acknowledges receipt with this proxy of a copy of the
Combined Notice of Special Meeting of Shareholders and the Proxy Statement of
the AST AIM International Equity Portfolio of the Trust. If a contract is
jointly held, each contract owner named should sign. If only one signs, his or
her signature will be binding. If the contract owner is a trust, custodial
account or other entity, the name of the trust or the custodial account should
be entered and the trustee, custodian, etc. should sign in his or her own name,
indicating that he or she is "Trustee," "Custodian," or other applicable
designation. If the contract owner is a partnership, the partnership should be
entered and the partner should sign in his or her own name, indicating that he
or she is a "Partner."
THIS PROXY IS BEING SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES OF THE TRUST.
ACCOUNT NUMBER:
UNITS:
CONTROL NO:
TO VOTE BY THE INTERNET
VISIT OUR WEBSITE:
WWW.AMERICANSKANDIA.COM
AND CLICK ON THE VOTE LINK
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
KEEP THIS PORTION FOR YOUR RECORDS
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED DETACH AND RETURN THIS
PORTION ONLY
AMERICAN SKANDIA TRUST - AST AIM INTERNATIONAL EQUITY PORTFOLIO
THE BOARD OF TRUSTEES OF THE TRUST RECOMMENDS VOTING FOR THE FOLLOWING
PROPOSALS:
THE UNITS REPRESENTED HEREBY WILL BE VOTED AS INDICATED OR FOR THE PROPOSALS IF
NO CHOICE IS INDICATED.
The Proposals are numbered to correspond with the Proposal number in the Proxy
Statement.
<TABLE>
<CAPTION>
For Against Abstain
<S> <C>
2. PROPOSAL TO APPROVE A NEW SUB-ADVISORY AGREEMENT BETWEEEN AMERICAN
SKANDIA INVESTMENT SERVICES, INCORPORATED AND A I M CAPITAL MANAGEMENT,
INC. FOR THE AST AIM INTERNATIONAL EQUITY PORTFOLIO.
4. PROPOSAL TO APPROVE THE RECLASSIFICATION OF THE PORTFOLIO'S INVESTMENT
OBJECTIVE FROM "FUNDAMENTAL" TO "NON-FUNDAMENTAL".
5. PROPOSAL TO APPROVE CHANGES IN THE PORTFOLIO'S FUNDAMENTAL INVESTMENT
RESTRICTIONS CONCERNING DIVERSIFICATION OF INVESTMENTS.
6. PROPOSAL TO APPROVE A CHANGE IN THE PORTFOLIO'S FUNDAMENTAL INVESTMENT
RESTRICTION CONCERNING THE PURCHASE OR SALE OF REAL ESTATE.
7. PROPOSAL TO APPROVE A CHANGE IN THE PORTFOLIO'S FUNDAMENTAL INVESTMENT
RESTRICTION CONCERNING CONCENTRATION OF INVESTMENTS IN VARIOUS
INDUSTRIES.
8. PROPOSAL TO APPROVE A CHANGE IN THE PORTFOLIO'S FUNDAMENTAL INVESTMENT
RESTRICTION CONCERNING INVESTMENT IN COMMODITIES.
9. PROPOSAL TO APPROVE A CHANGE IN THE PORTFOLIO'S FUNDAMENTAL INVESTMENT
RESTRICTION CONCERNING UNDERWRITING SECURITIES OF OTHER ISSUERS.
10. PROPOSAL TO APPROVE A CHANGE IN THE PORTFOLIO'S FUNDAMENTAL INVESTMENT
RESTRICTION CONCERNING BORROWINGS.
11. PROPOSAL TO APPROVE A CHANGE IN THE PORTFOLIO'S FUNDAMENTAL INVESTMENT
RESTRICTION CONCERNING LOANS.
12. PROPOSAL TO APPROVE A CHANGE IN THE PORTFOLIO'S FUNDAMENTAL INVESTMENT
RESTRICTION CONCERNING THE ISSUANCE OF SENIOR SECURITIES.
</TABLE>
<TABLE>
<CAPTION>
Please be sure to sign and date this Proxy
<S> <C> <C> <C>
__________________________________ Date: _________ ___________________________ Date: ________
Signature [PLEASE SIGN WITHIN BOX] Signature (Joint Owners)
- ------------------------------------------------------------------------------------------------------------------------------------
DETACH CARD
</TABLE>
If you would like to receive future shareholder communications
(e.g., proxy statements, prospectuses and shareholder reports)
in an electronic format (e.g. E-mail or download from
www.AmericanSkandia.com) when available, please provide your
E-mail address in the space provided below. We will notify you
as electronic documents become available. For additional
information on this option, please refer to the back cover of
the AST proxy statement.
[]
---------------------------------------------------------------
---------------------------------------------------------------
