Investment Company Act No. 811-5186
As filed with the Securities and Exchange Commission on August 9, 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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2) Aggregate number of securities to which transaction applies:
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pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
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4) Date Filed:
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<PAGE>
SPECIAL MEETINGS OF SHAREHOLDERS
OF THE AST AMERICAN CENTURY INCOME & GROWTH PORTFOLIO
(FORMERLY THE AST PUTNAM VALUE GROWTH & INCOME PORTFOLIO)
OF
AMERICAN SKANDIA TRUST
To be held
September 30, 1999
To the Shareholders of the various Portfolios of American Skandia Trust:
Notice is hereby given that a Special Meeting of Shareholders of the
AST American Century Income & Growth Portfolio (formerly, the AST Putnam Value
Growth & Income Portfolio) (the "Portfolio") of American Skandia Trust (the
"Trust"), will be held at One Corporate Drive, Shelton, Connecticut 06484 on
September 30, 1999 at 11:00 a.m. Eastern Time, or at such adjourned time as may
be necessary to vote (the "Meeting"), for the following purposes:
I. To consider the approval of a New Sub-advisory Agreement between
American Skandia Investment Services, Incorporated and American Century
Investment Management, Inc. for the AST American Century Income & Growth
Portfolio.
II. To consider the approval of the reclassification of the Portfolio's
investment objective from "fundamental" to "non-fundamental."
III. To consider the approval of changes in fundamental investment
restrictions concerning diversification of investments.
IV. To consider the approval of changes in a fundamental investment
restriction concerning the purchase or sale of real estate.
V. To consider the approval of changes in a fundamental investment
restriction concerning concentration of investments in various industries.
VI. To consider the approval of changes in a fundamental investment
restriction concerning investments in commodities.
VII. To consider the approval of changes in a fundamental investment
restriction concerning underwriting securities of other issuers.
VIII. To consider the approval of changes in a fundamental investment
restriction concerning borrowings.
IX. To consider the approval of changes in a fundamental investment
restriction concerning loans.
X. To consider the approval of changes in a fundamental investment
restriction concerning the issuance of senior securities.
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 Meeting, and only holders of record
of shares at the close of business on that date are entitled to notice of, and
to vote at, the Meeting. Each share of the Portfolio is entitled to one vote on
each proposal.
You are cordially invited to attend the Meeting. If you do not expect
to attend, you are requested to complete, date and sign the enclosed form of
proxy and return it promptly in the envelope provided for that purpose.
Alternatively, you may vote electronically as described in the Proxy Statement.
The enclosed proxy is being solicited on behalf of the Board of Trustees.
<PAGE>
YOUR VOTE IS IMPORTANT. IN ORDER TO AVOID THE UNNECESSARY EXPENSE OF FURTHER
SOLICITATION, WE URGE YOU TO INDICATE VOTING INSTRUCTIONS ON THE ENCLOSED PROXY,
DATE AND SIGN IT, AND RETURN IT PROMPTLY IN THE ENVELOPE PROVIDED, NO MATTER HOW
LARGE OR SMALL YOUR HOLDINGS MAY BE. YOU MAY REVOKE IT AT ANY TIME PRIOR TO ITS
USE. THEREFORE, BY APPEARING AT THE MEETING, AND REQUESTING REVOCATION PRIOR TO
THE VOTING, YOU MAY REVOKE THE PROXY AND YOU CAN THEN VOTE IN PERSON.
By order of the Board of Trustees
Eric C. Freed
Secretary
American Skandia Trust
August 25, 1999
<PAGE>
PROXY STATEMENT
AMERICAN SKANDIA TRUST
One Corporate Drive
P.O. Box 883
Shelton, Connecticut 06484
SPECIAL MEETING OF SHAREHOLDERS
OF THE AST AMERICAN CENTURY INCOME & GROWTH PORTFOLIO
(FORMERLY THE AST PUTNAM VALUE GROWTH & INCOME 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 a Special Meeting of Shareholders of the
AST American Century Income & Growth Portfolio (formerly the AST Putnam Value
Growth & Income Portfolio) (the "Portfolio") of the Trust to be held at One
Corporate Drive, Shelton, Connecticut 06484 on September 23, 1999 at 11:00 a.m.
Eastern Time (the "Meeting"), or at any adjournment thereof, for the purposes
set forth in the accompanying Notice of Meeting ("Notice"). The first mailing of
proxies and proxy statements to shareholders is anticipated to be on or about
August 25, 1999.
You may vote be indicating voting instructions on the enclosed proxy
and returning it 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 Portfolio will pay any of the costs of the Meeting, including the
costs related to the solicitation of proxies.
The Annual Report of the Trust (the "Report"), including audited
financial statements for the fiscal year ended December 31, 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 the Portfolio were
outstanding:_________________. As of the Record Date, there is no beneficial
owner of more than 5% of the shares of the Portfolio to the knowledge of the
Trust.
Currently, the Trust serves as an underlying mutual fund for variable
annuities issued by life insurance companies, including ASLAC. As of the Record
Date, 100% of the Portfolio's shares were legally owned by ASLAC. ASLAC holds
Portfolio shares attributable to variable annuity contracts in ASLAC 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 American Century Income & Growth Sub-accounts, and who
therefore beneficially own shares of the Portfolio (the "Contractowners").
Because Contractowners are indirectly invested in the Portfolio through their
contracts and have the right to instruct ASLAC how to vote shares of the
Portfolio on all matters requiring a shareholder vote, Contractowners should
consider themselves shareholders of the Portfolio for purposes of this Proxy
Statement.
American Skandia Investment Services, Incorporated ("ASISI"or the
"Manager") is the investment manager for all the Trust's investment portfolios,
including the Portfolio. ASISI is a wholly-owned subsidiary of American Skandia
Investment Holding Corporation ("ASIHC"). ASIHC is also the owner of all the
outstanding shares of ASLAC and American Skandia Marketing, Incorporated
("ASM"), which is the principal underwriter of ASLAC variable annuity contracts.
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
Portfolio, 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
Portfolio. 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, American Century Investment Management, Inc. ("American Century"),
American Century Tower, 4500 Main Street, Kansas City, Missouri 64111, has
served as sub-advisor to the Portfolio under an interim Sub-advisory Agreement
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
Portfolio. American Century has been providing investment advisory services to
investment companies and institutional clients since 1958. As of June 30, 1999,
American Century and its affiliates managed assets totaling approximately $80
billion.
The Administrator of the Portfolio, and every other portfolio of the
Trust, is PFPC Inc., a Delaware corporation located at 103 Bellevue Parkway,
Wilmington, Delaware 19809.
All shares of the Portfolio held by the Contractowners will be voted by
ASLAC in accordance with voting instructions received from such Contractowners
at the Meeting and any adjournments thereof. ASLAC is entitled to vote shares
for which voting instructions are not received and will vote such shares in the
same proportion as the votes cast by the Contractowners on the proxy issues
presented. ASLAC has fixed the close of business on 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 Meeting the matters
set forth in Proposals I through X 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 meeting. If, however, any other matters are properly
presented to the meeting for action, it is intended that the persons named in
the enclosed proxy will vote in accordance with their judgment. A Contractowner
executing and returning a proxy may revoke it at any time prior to its exercise
by written notice of such revocation to the Secretary of the Trust, by execution
of a subsequent proxy, or by voting in person at the Meeting.
The presence in person or by proxy of the holders of a majority of the
outstanding shares is required to constitute a quorum at the Meeting. Since
ASLAC is the legal owner of 100% of the Portfolio's shares, ASLAC's presence at
the Meeting constitutes a quorum under the Trust's By-laws. Shares beneficially
held by Contract-owners present in person or represented by proxy at the Meeting
will be counted for the purpose of calculating the votes cast on the issues
before the Meeting.
Approval of each of the Proposals requires the vote of a "majority of
the outstanding voting securities" of the Portfolio, as defined in the
Investment Company Act, which means the vote of 67% or more of the shares of the
Portfolio present at the Meeting, if the holders of more than 50% of the
outstanding shares of the Portfolio are present or represented by proxy, or the
vote of more than 50% of the outstanding shares of the Portfolio, whichever is
less. The approval of each Proposal is not contingent upon approval of any other
Proposal. Therefore, any Proposal that is approved will be implemented
notwithstanding the outcome of the vote on any other Proposal.
In the event that sufficient votes to approve any proposal are not
received, the persons named as proxies may propose one or more adjournments of
the Meeting to permit further solicitation of proxies. Any such adjournment will
require the affirmative vote of a majority of those shares represented at the
Meeting in person or by proxy. The persons named as proxies will vote those
proxies 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 the Meeting may be acted upon and such vote shall be
considered final regardless of whether the Meeting is adjourned to permit
additional solicitation with respect to any other Proposal. Proxies submitted
without voting instructions will be voted FOR the Proposals.
PROPOSAL I
APPROVAL OF A NEW SUB-ADVISORY AGREEMENT BETWEEN
AMERICAN SKANDIA INVESTMENT SERVICES, INCORPORATED
AND AMERICAN CENTURY INVESTMENT MANAGEMENT, INC.
Background
ASISI has served as Investment Manager to the Portfolio since the
Portfolio's commencement of operations on January 2, 1997 pursuant to an
Investment Management Agreement with the Trust. The Investment Management
Agreement, effective December 30, 1996, provides, among other things, that in
carrying out its responsibility to supervise and manage all aspects of the
Portfolio's operations, the Manager may engage, subject to the approval of the
Board of Trustees and, where required, the shareholders of the Portfolio, a
sub-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, the
Manager entered into a sub-advisory agreement, effective December 30, 1996, with
Putnam (the "Putnam Sub-Advisory Agreement"), pursuant to which the above duties
were delegated by the Manager to Putnam.
The Investment Management Agreement and the Putnam Sub-Advisory
Agreement 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 Portfolio's inception. The Investment Management Agreement and Putnam
Sub-Advisory Agreement were not, and were not required to be, approved by the
shareholders of the Portfolio after the Portfolio commenced operations.
On March 4, 1999, the Board of Trustees, through the Manager, received
a tendered resignation from Putnam as sub-advisor to the Portfolio. At a meeting
held on April 9, 1999, the Board of Trustees received a proposal from the
Manager to replace Putnam with American Century as sub-advisor to the Portfolio.
At an in-person meeting held on April 21, 1999, the Board of Trustees gave
formal approval to a new sub-advisory agreement with American Century (the "New
American Century Sub-Advisory Agreement"). At this meeting, the Board of
Trustees also approved, as described in Proposals II through X, changing the
Portfolio's investment objective from a "fundamental" policy to a
"non-fundamental" policy and effecting various changes to the stated investment
policies and restrictions applicable to the Portfolio. 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 Agreement, including the fee payable to the
Manager thereunder, is not proposed to be changed in connection with the
sub-advisory and other changes discussed herein, except to reflect the change in
the Portfolio's name. Therefore, shareholder approval of a new Investment
Management Agreement is not required.
As hereinafter described in greater detail, the terms and conditions of
the New American Century Sub-Advisory Agreement are identical in all material
respects with those of the Putnam Sub-Advisory Agreement, with the exception of
a decreased fee rate, the effective date, the identity of the Sub-advisor, and
the change in the name of the Portfolio. In support of its recommendation to
engage American Century, the Manager informed the Board of Trustees of its
belief that appointment of American Century as sub-advisor to the Portfolio
pursuant to these terms would facilitate the formulation and execution of an
investment program for the Portfolio that would be in the best interests of the
Portfolio's shareholders. In the opinion of the Manager, engagement of American
Century as sub-advisor to the Portfolio would also assist in efforts to increase
the Portfolio's net assets.
The Putnam Sub-Advisory Agreement was terminated as of the close of
business on May 3, 1999. If approved by shareholders, the New American Century
Sub-Advisory Agreement will become effective September 30, 1998 (the "Effective
Date"). Consequently, American Century has served as sub-advisor to the
Portfolio under an interim sub-advisory agreement (the "Interim American Century
Sub-Advisory Agreement") since May 4, 1999. The Interim American Century
Sub-Advisory Agreement will terminate as of the Effective Date. If the New
American Century Sub-Advisory Agreement is disapproved by shareholders, or is
not approved prior to September 30, 1999, the Interim American Century
Sub-Advisory Agreement will terminate automatically. In that event, the Manager
will attempt to obtain shareholder approval of a sub-advisory agreement with
American Century or another sub-advisor, who will provide sub-advisory services
to the Portfolio on an "at-cost" basis until such shareholder approval is
obtained.
The Putnam Sub-Advisory Agreement
The following description of the Putnam Sub-Advisory Agreement is
qualified in its entirety by reference to the form of such agreement attached to
this Proxy Statement as Exhibit A-1.
Under the terms of the Putnam Sub-Advisory Agreement, Putnam agreed to
furnish the Manager with investment advisory services in connection with a
continuous investment program for the Portfolio which is to be managed in
accordance with the investment objective, investment policies and restrictions
of the Portfolio as set forth in the Prospectus and Statement of Additional
Information of the Trust and in accordance with the Trust's Declaration of Trust
and By-laws. Subject to the supervision and control of the Manager, which is in
turn subject to the supervision and control of the Board of Trustees, Putnam, in
its discretion, determined and selected the securities to be purchased for and
sold from the Portfolio and placed orders with and gave instructions to brokers,
dealers and others to cause such transactions to be executed.
The Putnam Sub-Advisory Agreement required Putnam to use its best
efforts and good faith in the performance of its services under such Agreement.
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 Agreement, 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 to be provided under the Putnam Sub-Advisory
Agreement.
The Manager was responsible for payment of Putnam's compensation under
the Putnam Sub-Advisory Agreement. Putnam's compensation for the services
provided under the Putnam Sub-Advisory Agreement was computed at an annual rate
and was payable monthly in arrears, based on the average daily net assets of the
Portfolio for each month. For all services rendered, 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 registration statement of the Trust.
The Putnam Sub-Advisory Agreement 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 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. The Putnam
Sub-Advisory Agreement 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 Investment Management Agreement.
The Putnam Sub-Advisory Agreement was terminated by Putnam as of the
close of business on May 3, 1999. The Manager believed that it was in the
interests of the Portfolio's shareholders for the Manager to accept the
resignation of Putnam as sub-advisor to the Portfolio. Putnam's compensation
under the Putnam Sub-Advisory Agreement was prorated to the date of termination.
The New American Century Sub-Advisory Agreement
The following description of the New American Century Sub-Advisory
Agreement is qualified in its entirety by reference to the form of such
agreement attached to this Proxy Statement as Exhibit A-2.
The terms and conditions of the New American Century Sub-Advisory
Agreement are identical in all material respects to those of the Putnam
Sub-Advisory Agreement, with the exception of the identity of the Sub-advisor,
the decreased sub-advisory fee rates payable by the Manager, the effective date,
and the name of the Portfolio. In addition, certain clarifying changes that are
not believed to be material have been made to the New American Century
Sub-Advisory Agreement. As compensation for the services to be rendered under
the New American Century Sub-Advisory Agreement, the Manager, and not the Trust
or the Portfolio, will pay American Century a fee at the annual rate of .40 of
1% of the average daily net assets of the Portfolio not in excess of $100
million, plus .35 of 1% of the portion of the net assets in excess of $100
million. In computing the fee to be paid to American Century, 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 American Century 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 Sub-Advisory Agreement was $693,921. If the New American Century
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 American Century for
services rendered under the New American Century Sub-Advisory Agreement would
have been $_______________, a decrease of __% from the actual amount paid to
Putnam during such period.
If the New American Century Sub-Advisory Agreement is approved by the
shareholders of the Portfolio, it will become effective on the Effective Date
(as defined earlier). The New American Century Sub-Advisory Agreement will
remain in effect for an initial one year term and is renewable thereafter by
specific approval of the Board of Trustees or by vote of a majority of the
outstanding voting securities of the Portfolio (as defined under the Investment
Company Act). In either event, such renewal shall also be approved by the vote
of a majority of the Independent Trustees, cast in person at a meeting called
for the purpose of voting on such renewal. Like the Putnam Sub-Advisory
Agreement, the New American Century Sub-Advisory Agreement may be terminated at
any time without penalty upon 60 days' written notice to the other party to the
agreement, and will automatically terminate in the event of its "assignment" by
either party (as defined under the Investment Company Act) or (provided American
Century has received prior written notice thereof) upon termination of the New
Investment Management Agreement.
As discussed in more detail below, the Board of Trustees and the
Manager believe that approval of the New American Century Sub-Advisory Agreement
is in the best interests of the Portfolio and its shareholders because of the
high quality of services expected to be provided under the New American Century
Sub-Advisory Agreement. In addition, the New American Century Sub-Advisory
Agreement could facilitate efforts to increase the Portfolio's assets, which may
have beneficial effects on Portfolio and Trust expenses.
The Proposed Sub-Advisor
American Century, American Century Tower, 4500 Main Street, Kansas
City, Missouri 64111, has been providing investment advisory services to
investment companies and institutional clients since 1958. As of June 30, 1999,
American Century and its affiliates managed assets totaling approximately $80
billion.
The directors of American Century are James E. Stowers, Jr. (whose
principal occupation is Chairman of American Century), James E. Stowers III
(whose principal occupation is Chief Executive Officer of American Century) and
William M. Lyons (whose principal occupation is Executive Vice President of
American Century).
American Century acts as investment advisor or sub-advisor to various
other registered investment companies, some series of which have investment
objectives and programs similar to the proposed investment objective (as set
forth in Proposal II of this Proxy Statement) and investment program for the
Portfolio (collectively, the "Comparable American Century Funds"). As an
investment adviser to the Comparable American Century Funds, American Century
performs certain administrative and other duties, which it will not be required
to perform for the Portfolio under the New American Century Sub-Advisory
Agreement. For each Comparable American Century Fund, the chart below lists the
net assets at June 30, 1999, as well as the current advisory or sub-advisory fee
rate payable to American Century:
<TABLE>
<CAPTION>
- --------------------- -------------- -------------- -----------------------------------------------------------------
Comparable American Advisor or Total Net Advisory Fee Rate
Century Fund Sub-Advisor Assets
at June 30,
1999
(in millions)
<S> <C> <C> <C>
- --------------------- -------------- -------------- -----------------------------------------------------------------
- --------------------- -------------- -------------- -----------------------------------------------------------------
American Century Advisor
Income & Growth Fund
- --------------------- -------------- -------------- -----------------------------------------------------------------
- --------------------- -------------- -------------- -----------------------------------------------------------------
VP Income & Growth Advisor
Fund
- --------------------- -------------- -------------- -----------------------------------------------------------------
- --------------------- -------------- -------------- -----------------------------------------------------------------
Mainstay Income & Sub-Advisor
Growth Fund
- --------------------- -------------- -------------- -----------------------------------------------------------------
</TABLE>
The Evaluation by the Board of Trustees
In evaluating the New American Century Sub-Advisory Agreement, the
Board of Trustees reviewed materials furnished by the Manager and American
Century, including information about American Century's personnel, operations
and anticipated management of the Portfolio. Consideration was given to the
decreased fee rates payable by the Manager under the New American Century
Sub-Advisory Agreement and the fact that the Investment Management fees payable
by the Portfolio will remain the same. Therefore, although the Manager's net
compensation will increase, the Portfolio's shareholders will not pay any
additional fees as a result of the change in sub-advisors.
The Board of Trustees also gave consideration to the basis for the
Manager's recommendation of American Century, including (1) the performance of
other funds with similar investment objectives and investment styles that are
managed by American Century, (2) the American Century personnel who will be
involved in the management of the Portfolio, (3) the experience of the Trust and
the Manager with the sub-advisory services provided by American Century,
including the high quality services provided by American Century for two other
portfolios of the Trust and for another investment company portfolio for which
the Manager serves as investment manager, and (4) the overall excellent
reputation and standing of American Century in the U.S. mutual fund industry.
The Board of Trustees also considered that the terms of the New
American Century Sub-Advisory Agreement will remain materially unchanged from
those of the Putnam Sub-Advisory Agreement, except as discussed above. In
addition to considering the investment advisory capabilities of American Century
in terms of potential benefits in investment performance, the Board of Trustees
also considered that the capabilities and reputation of American Century may
facilitate efforts to increase the Portfolio's assets, which could result in
reductions in Portfolio and Trust expenses.
Based upon its evaluation, the Board of Trustees concluded that the
Manager's engagement of American Century as Sub-Advisor to the Portfolio likely
would offer the Portfolio access to highly effective management and advisory
services and capabilities. The Board of Trustees concluded further that the
terms of the New American Century Sub-Advisory Agreement, including the fees
contemplated thereby, are fair and reasonable and in the best interests of the
Portfolio and its shareholders.
In order to provide for the services described in the New American
Century Sub-Advisory Agreement, the shareholders are being asked to approve the
New American Century Sub-Advisory Agreement.
THE TRUSTEES, INCLUDING THE INDEPENDENT TRUSTEES,
RECOMMEND THAT THE SHAREHOLDERS VOTE "FOR" PROPOSAL I.
ANY UNMARKED PROXIES WILL BE SO VOTED.
PROPOSAL II
APPROVAL OF RECLASSIFICATION OF PORTFOLIO INVESTMENT OBJECTIVE FROM
FUNDAMENTAL TO NON-FUNDAMENTAL
The current investment objective for the Portfolio is as follows:
The primary investment objective of the Portfolio is to seek capital
growth. Current income is a secondary investment objective.
Currently, the investment objective for the Portfolio is a
"fundamental" investment policy and may not be changed without shareholder
approval. The Manager proposed to the Board of Trustees of the Trust that the
investment objective for the Portfolio, as set forth above, be reclassified from
fundamental to non-fundamental to provide the Board of Trustees with flexibility
to change the objective of the Portfolio. 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 Portfolio's
current investment objective unlikely on an ongoing basis, or changes with
respect to the Portfolio specifically, such as a change in the Portfolio's
sub-advisor that makes appropriate a change in the Portfolio's investment
objective to conform to the new sub-advisor's investment program. 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 Portfolio's investment objective
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 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 $ .
THE TRUSTEES, INCLUDING THE INDEPENDENT TRUSTEES,
RECOMMEND THAT THE SHAREHOLDERS VOTE "FOR" PROPOSAL II.
ANY UNMARKED PROXIES WILL BE SO VOTED.
PROPOSALS III - X
APPROVAL OF CHANGES IN THE PORTFOLIO'S
FUNDAMENTAL INVESTMENT RESTRICTIONS
As described in more detail below, the Board of Trustees, including the
Independent Trustees, are recommending to the shareholders of the Portfolio that
they approve a number of changes to the Portfolio's fundamental investment
restrictions, including the elimination of certain restrictions. Generally, the
purposes behind these proposed changes are (i) to increase the Portfolio's
investment flexibility, and (ii) to conform the fundamental restrictions
applicable to the Portfolio to those which are applicable to other portfolios of
the Trust.
The Portfolio currently is subject to certain investment restrictions
which are "fundamental" policies and may not be changed without approval of the
shareholders of the Portfolio (collectively, the "Current Investment
Restrictions"). The Portfolio also is subject to certain non-fundamental
investment restrictions which may be changed by the Board of Trustees without
shareholder approval.
The Manager, after discussions with American Century, 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 Portfolio's restrictions to the restrictions applicable to
other portfolios of the Trust. In addition, many of the changes are intended to
ensure that the Portfolio has the flexibility to alter, if approved by the Board
of Trustees without shareholder approval, the Portfolio's investment program to
reflect changes in applicable law.
If Proposals III through X are approved by the shareholders, the
Portfolio 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 Portfolio:
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 the Portfolio's investments is adhered to at the
time an investment is made, a subsequent change in the percentage of
Portfolio assets invested in certain securities or other instruments,
or change in average duration of the Portfolio's investment portfolio,
resulting from changes in the value of the Portfolio's total assets,
will not be considered a violation of the restriction; provided,
however, that the asset coverage requirement applicable to borrowings
shall be maintained in the manner contemplated by applicable law.
With respect to New Investment Restrictions (2) and (6), the 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 the 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 the Portfolio's investments in
loan participations and assignments.
If Proposals III through X are approved by shareholders and
implemented, the Portfolio will be subject to the New Investment Restrictions
and the New Investment Restrictions will be the only fundamental investment
restrictions applicable to the Portfolio.
The Manager recommends the following changes to these Affected
Investment Restrictions as they apply to the Portfolio.
PROPOSAL III
The Portfolio is 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 the Portfolio, 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 of the
Portfolio would own more than 10% of the outstanding voting securities of such
issuer. If this Proposal III is adopted and implemented, the 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 IV
The Portfolio also is 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, 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
Affected Investment Restriction be eliminated because it is substantially
similar to New Investment Restriction 4. However, New Investment Restriction 4
would permit the Portfolio to acquire real estate as a result of its ownership
of all securities instruments not just through its exercise of rights as an
owner of debt securities.
PROPOSAL V
The Portfolio also is 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 Portfolio may 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 VI
The Portfolio also is subject to the following Current Investment
Restriction concerning investments in commodities:
The Portfolio will not purchase or sell commodities or
commodity contracts except that the Portfolio may purchase and
sell financial futures contracts and options.
Management has proposed to the Board of Trustees that the above Current
Investment Restriction be eliminated. If this Proposal VI is adopted and
implemented, the Portfolio would 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 Restriction with New Investment Restriction 5 in effect would
narrow the prohibition against purchases or sales of commodities to transactions
only in physical commodities. While the Portfolio is permitted under the Current
Investment Restriction to purchase and sell financial futures contracts and
options, the proposed elimination would increase the Portfolio's flexibility to
engage in all types of options and futures transactions and forward foreign
currency contracts but only if permissible under the Portfolio's investment
policies and otherwise. In addition, New Investment Restriction 5 would permit
the Portfolio to acquire physical commodities as the result of the ownership of
securities or other instruments.
PROPOSAL VII
The Portfolio also is subject to the following Current Investment
Restriction concerning underwriting the securities of other issuers:
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 an
underwriter under certain federal securities laws.
The Manager has proposed to the Board of Trustees that the above
Current Investment Restriction be eliminated because the Current Investment
Restriction is substantially similar to New Investment Restriction 3. However,
New Investment Restriction 3 makes clear that the Portfolio may underwrite
securities to the extent that it may be deemed to be an underwriter in
connection with the purchase of portfolio securities.
PROPOSAL VIII
The Portfolio also is subject to the following Current Investment
Restriction concerning borrowings:
The Portfolio will not borrow money in excess of 33 1/3% 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 Portfolio's ability to seek its
investment objective. If the above fundamental investment restriction is
eliminated, the 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 in excess of
33 1/3% of its total assets if permitted to do so by future changes in
applicable law, and would be permitted to borrow from parties other than banks
if permitted by law. Therefore, while New Investment Restriction 2 reflects that
the Portfolio is subject to applicable law regarding borrowings, it would permit
more flexibility to the Portfolio in the event that applicable law is revised.
PROPOSAL IX
The Portfolio also is 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 X
The Portfolio also is subject to the following Current Investment
Restriction concerning the issuance of senior securities:
The Portfolio will not issue any class of securities which is
senior to the Portfolio's shares of beneficial interest.
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 the Portfolio's flexibility and allow
the Portfolio to respond to changes in the Investment Company Act, New
Investment Restriction 1, which prohibits the 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 VOTE "FOR" PROPOSALS III-X.
ANY UNMARKED PROXIES WILL BE SO VOTED.
<PAGE>
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.
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 Value Growth & Income
Portfolio (the "Portfolio") under the terms of a management agreement, dated
December 30, 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 net assets over $150 million but not in excess
of $300 million; plus .35 of 1% of the portion of the net assets over $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 December 30, 1996.
FOR THE INVESTMENT MANAGER: FOR THE SUB-ADVISOR:
/s/Thomas Mazzaferro /s/JoAnn Virassi
Thomas Mazzaferro JoAnn Virassi
President & Chief Operating Officer Senior Vice President
Date: 12/11/96 Date: 12/23/96
Attest: /s/Ivette T. Aquilino Attest: /s/Kathleen M. Young
<PAGE>
EXHIBIT A-2
SUB-ADVISORY AGREEMENT
THIS AGREEMENT is between American Skandia Investment Services,
Incorporated (the "Investment Manager") and American Century 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 American Century Income &
Growth 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 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, as reasonably requested from time to time.
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 requested by the Trust's
Board of Trustees. Any records required to be maintained under the ICA 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.
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 subchapter M (including and Section
851(b)(1), (2) and (3)) and Section 817(h) 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
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 by the Investment Manager in writing; (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 timely furnish the Investment Manager with
a copy of the document, properly certified or otherwise authenticated, upon
request by the Investment Manager.
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. Notwithstanding the above, nothing shall require the Sub-Advisor to
use a broker that provides research services or to use a particular broker that
the Investment Manager has recommended.
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: .40 of 1% of the portion of the
average daily net assets of the Portfolio not in excess of $100 million; plus
.35 of 1% of the portion of the net assets over $100million.
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 effective 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. Each party
further acknowledges that it is registered under the laws of all jurisdictions
in which the conduct of its business hereunder requires such registration.
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, subject to the investment
objective, investment policies and investment restrictions of the Portfolio as
set forth in the Trust's Registration Statement as in effect from time to time,
the Sub-Advisor's adherence to an investment style generally used by the
Sub-Advisor in managing any of its domestic or foreign equity or fixed income
mutual funds shall not be considered a failure by the Sub-Advisor to use its
best judgment, efforts and advice under this Agreement. The Investment Manager
shall consult from time to time with the Sub-Advisor to review the Sub-Advisor's
performance under this Agreement. In the event that any claim is made by the
Investment Manager against the Sub-Advisor based upon a failure by the
Sub-Advisor to use its best judgment, efforts and advice in rendering services
under this Agreement, the Investment Manager shall bear the burden of proving
such failure.
11. Other Activities of Sub-Advisor. Investment Manager agrees that the
Sub-Advisor and any of its partners or employees, and persons affiliated with it
or with any such partner or employee may render investment management or
advisory services to other investors and institutions, and such investors and
institutions may own, purchase or sell, securities or other interests in
property the same as or similar to those which are selected for purchase,
holding or sale for the Portfolio, and the Sub-Advisor shall be in all respects
free to take action with respect to investments in securities or other interests
in property the same as or similar to those selected for purchase, holding or
sale for the Portfolio. The Investment Manager understands that the Sub-Advisor
shall not favor or disfavor any client or class of clients in the allocation of
investment opportunities, so that to the extent practical, such opportunities
will be allocated among clients over a period of time on a fair and equitable
basis. Notwithstanding paragraph 8 above, nothing in this agreement shall impose
upon the Sub-Advisor any obligation to (i) purchase or sell, or recommend for
purchase or sale, for the Portfolio any security which it, its partners,
affiliates or employees may purchase or sell for the Sub-Advisor or such
partner's, affiliate's or employee's own accounts or for the account of any
other client, advisory or otherwise; or (ii) to abstain from the purchase or
sale of any security for the Sub-Advisor's other clients, advisory or otherwise,
that the Investment Manager has placed on the list provided pursuant to
paragraph 2(g) above.
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
(as defined in the ICA) by either party to this Agreement 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 contact person and/or 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: American Century Investment Management, Inc.
4500 Main Street
Kansas City, Missouri 64111
Attention: William M. Lyons
Executive Vice President & Chief Operating Officer
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 hereunder (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 and in
conformity with 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 and in
conformity with 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. It is agreed that the Investment Manager's indemnification
obligations under this Section 14 will extend to expenses and costs (including
reasonable attorneys fees) incurred by the Sub-Advisor as a result of any
litigation brought by the Investment Manager alleging Sub-Advisor's failure to
perform its obligations and duties in the manner required under this Agreement
unless judgment is rendered for the Investment Manager.
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 September __, 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 AMERICAN CENTURY INCOME & GROWTH PORTFOLIO
(FORMERLY, THE AST PUTNAM VALUE GROWTH & INCOME 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 11:00 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 BETWEEN AMERICAN
SKANDIA INVESTMENT SERVICES, INCORPORATED AND AMERICAN CENTURY
INVESTMENT MANAGEMENT, INC. FOR THE AST AMERICAN CENTURY INCOME & GROWTH
PORTFOLIO.
2. PROPOSAL TO APPROVE THE RECLASSIFICATION OF THE PORTFOLIO'S INVESTMENT
OBJECTIVE FROM FUNDAMENTAL" TO NON-FUNDAMENTAL."
3 PROPOSAL TO APPROVE A CHANGE IN THE PORTFOLIO'S FUNDAMENTAL INVESTMENT
RESTRICTIONS CONCERNING DIVERSIFICATION OF INVESTMENTS.
4. PROPOSAL TO APPROVE A CHANGE IN THE PORTFOLIO'S FUNDAMENTAL INVESTMENT
RESTRICTION CONCERNING THE PURCHASE OR SALE OF REAL ESTATE.
5. PROPOSAL TO APPROVE A CHANGE IN THE PORTFOLIO'S FUNDAMENTAL INVESTMENT
RESTRICTION CONCERNING CONCENTRATION OF INVESTMENTS IN VARIOUS
INDUSTRIES.
6. PROPOSAL TO APPROVE A CHANGE IN THE PORTFOLIO'S FUNDAMENTAL INVESTMENT
RESTRICTION CONCERNING INVESTMENTS IN COMMODITIES.
7. PROPOSAL TO APPROVE A CHANGE IN THE PORTFOLIO'S FUNDAMENTAL INVESTMENT
RESTRICTION CONCERNING UNDERWRITING SECURITIES OF OTHER ISSUERS.
8. PROPOSAL TO APPROVE A CHANGE IN THE PORTFOLIO'S FUNDAMENTAL INVESTMENT
RESTRICTION CONCERNING BORROWINGS.
9. PROPOSAL TO APPROVE A CHANGE IN THE PORTFOLIO'S FUNDAMENTAL INVESTMENT
RESTRICTION CONCERNING LOANS.
10. 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> <C> <C>
__________________________________ Date: _________ ___________________________ Date: ________
Signature [PLEASE SIGN WITHIN BOX] Signature (Joint Owners)
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
DETACH CARD
If you would like to receive future shareholder communications
(e.g., proxy statements, prospectuses and shareholder reports)
in an electronic format (e.g. E-mail or download from
www.AmericanSkandia.com) when available, please provide your
E-mail address in the space provided below. We will notify you
as electronic documents become available. For additional
information on this option, please refer to the back cover of
the AST proxy statement.
[]
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