<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
(Amendment No. )
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 14
a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
SUNAMERICA SERIES TRUST
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement; if other than the Registrant)
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.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transactioncomputed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
-----------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-----------------------------------------------------------------------
(5) Total fee paid:
/ / 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:
-----------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE>
SUNAMERICA INC.
The SunAmerica Center
733 Third Avenue
New York, NY 10017
212.551.5969
800.858.8850
Dear Shareholder,
On August 19, 1998, SunAmerica Inc. entered into an agreement with American
International Group, Inc. ("AIG"), the leading U.S.-based international
insurance organization. Under the terms of the agreement, AIG will acquire
SunAmerica Inc. and, consequently, SunAmerica Asset Management Corp. ("SAAMCo")
will become a part of AIG. SunAmerica will not change its name and no
organizational changes are planned which would effect services. As a result of
this transaction, it is necessary for the shareholders of SunAmerica Series
Trust (one of two underlying investment Trusts of your variable annuity), for
which SAAMCo acts as investment manager, to approve a new investment management
agreement.
In addition, shareholders are also being asked to approve certain other
matters that have been set forth in the Notice of Special Meeting of
Shareholders. These include approving MASSACHUSETTS FINANCIAL SERVICES COMPANY
("MFS") AS THE REPLACEMENT SUBADVISER WITH RESPECT TO THE GROWTH/PHOENIX
INVESTMENT COUNSEL ("GROWTH PHOENIX") AND BALANCED/PHOENIX INVESTMENT COUNSEL
("BALANCED PHOENIX") PORTFOLIOS, as well as adjusting the fee arrangements with
respect to the Growth Phoenix, Balanced Phoenix and Alliance Growth Portfolios.
We have enclosed a Q&A to help you better understand matters relating to this
proxy vote.
THE BOARD MEMBERS OF YOUR TRUST BELIEVE THAT EACH OF THE PROPOSALS SET FORTH
IN THIS NOTICE OF SPECIAL MEETING IS IMPORTANT AND RECOMMEND THAT YOU READ THE
ENCLOSED MATERIALS CAREFULLY AND THEN VOTE FOR ALL PROPOSALS.
Since all of the Trusts which underlie SunAmerica life company variable
annuities are required to conduct shareholder meetings, you will receive more
than one proxy card if you are a shareholder in more than one Trust. IT IS VERY
IMPORTANT THAT YOU RESPOND TO ALL PROXY CARDS THAT YOU RECEIVE. In addition,
there are five ways to record your vote(s): Internet, touch-tone telephone, live
operator, fax or mail. Some of these options may not be available to all
shareholders. Please refer to the insert accompanying these proxy materials to
see which of these options you can use. If we do not receive a response by one
of these methods after a reasonable time, you may receive a call from our proxy
solicitor, Shareholder Communications Corporation, reminding you to vote your
shares.
If you have questions regarding the proxy voting process, you may call
Shareholder Communications Corporation toll-free at 1-800-248-3249.
YOUR VOTE IS IMPORTANT!
We appreciate your cooperation and continued support.
Sincerely,
[LOGO]
Eli Broad
CHAIRMAN, PRESIDENT AND
CHIEF EXECUTIVE OFFICER OF SUNAMERICA
INC.
<PAGE>
November 1998
SUNAMERICA SERIES TRUST
IMPORTANT NEWS
FOR SUNAMERICA SERIES TRUST SHAREHOLDERS
While we encourage you to read the full text of the enclosed Proxy
Statement, here is a brief overview of some matters affecting your investment in
the Trust which require a shareholder vote. SunAmerica Series Trust is the
underlying investment in your variable annuity issued by Anchor National Life
Insurance Company and First SunAmerica Life Insurance Company.
Q & A: QUESTIONS AND ANSWERS
Q. WHAT IS HAPPENING?
A. SunAmerica Inc. ("SunAmerica"), the parent company of SunAmerica Asset
Management Corp. ("SAAMCo"), your Trust's adviser, has agreed to merge
with and into American International Group, Inc. ("AIG"). AIG is the
leading U.S.-based international insurance organization. As a result of
the proposed merger, there will be a change in ownership of SAAMCo. The
following pages give you additional information on AIG, the proposed
merger and the matters on which you are being asked to vote. THE BOARD
MEMBERS OF YOUR TRUST, INCLUDING THOSE WHO ARE NOT AFFILIATED WITH THE
TRUST, AIG, SAAMCO OR SUNAMERICA, UNANIMOUSLY RECOMMEND THAT YOU VOTE
FOR THESE PROPOSALS.
Q. WHY DID YOU SEND ME THIS BOOKLET?
A. You are receiving these proxy materials--a booklet that includes the
Proxy Statement and one or more voting instructions cards--because you
have the right to provide voting instructions on the important proposals
concerning your investment in the Trust.
Q. WHY ARE MULTIPLE CARDS ENCLOSED?
A. [If your investment is allocated among more than one Portfolio in your
annuity contract, you will receive a voting instructions card for each
Portfolio].
Q. WHY AM I BEING ASKED TO VOTE ON THE PROPOSED NEW ADVISORY AGREEMENT
IN PROPOSAL NO. 2?
A. The Investment Company Act of 1940, which regulates investment companies
such as your Trust, requires a vote whenever there is a change in
control of an investment company's adviser. Upon a change of control,
the advisory agreement between the investment adviser and the investment
company terminates. SunAmerica's merger with AIG will result in a change
of control of SAAMCo and therefore requires shareholder approval of a
new advisory agreement between your Trust and SAAMCo. Each new advisory
agreement that shareholders are being asked to vote on in Proposal No. 2
is identical in all material respects to the existing advisory
agreement.
Q. WHY AM I BEING ASKED TO VOTE ON THE PROPOSED NEW SUBADVISORY
AGREEMENT IN PROPOSAL NO. 3?
A. Each subadvisory agreement provides that it terminates automatically if
the advisory agreement with SAAMCo terminates. Because SunAmerica's
merger with AIG will cause the termination of SAAMCo's advisory
agreement, shareholder approval of the new subadvisory agreement is
required. Each new subadvisory agreement that shareholders are being
asked to vote on in Proposal No. 3 is identical in all material respects
to the existing subadvisory agreement that it replaces.
<PAGE>
Q. WHAT ELSE AM I BEING ASKED TO VOTE ON?
A. You are being asked to elect a Board of Trustees. One consequence of the
merger, as required by the Investment Company Act of 1940, is that the
composition of your Board be changed so that at least 75% of the
Trustees are not interested persons of the Trust. Currently, as required
by the Investment Company Act, 40% of the Trustees are not interested
persons. Also, in order to save the expense of a subsequent meeting, if
your contract relates to an investment in the Alliance Growth, Growth/
Phoenix Investment Counsel or Balanced/Phoenix Investment Counsel
Portfolios, you are being asked to vote on certain changes to the
advisory and subadvisory arrangements for each of those Portfolios.
Changes to these three Portfolios are being proposed independent of the
AIG-SunAmerica merger. In addition, you are being asked to vote to
change certain of the fundamental investment restrictions of the Trust.
Finally, you are being asked to vote to ratify the Board's selection of
the Trust's independent accountants.
Q. HOW WILL THE AIG MERGER AFFECT ME?
A. The merger should have no impact on the operations of the Trust and its
Portfolios. SAAMCo has assured the Trustees that there will be no
reduction in the nature or quality of its services to the Trust as a
result of the merger, and in fact anticipates that its resources may be
enhanced.
Q. HOW DOES THE BOARD OF TRUSTEES RECOMMEND THAT I VOTE?
A. After careful consideration, the Board of your Trust, including those
Trustees who are not affiliated with the Trust, AIG, SAAMCo or
SunAmerica, recommend that you vote FOR all of the proposals on the
enclosed voting instructions card.
Q. WHOM DO I CALL FOR MORE INFORMATION OR TO PLACE MY VOTE?
A You have several different ways to provide your Trust with your voting
instructions. These ways include mail, speaking with a representative on
the telephone, fax, touch-tone voting and voting on-line over the
Internet. Not all of these options are available to all of you and you
should refer to the insert accompanying this Q&A to see which of these
options you can use. If you need more information on how to vote or if
you have any questions, please call your Trust's information agent,
Shareholder Communications Corporation, at 1-800-248-3249.
YOUR VOTE IS IMPORTANT AND WILL HELP AVOID THE ADDITIONAL
EXPENSE OF ANOTHER SOLICITATION.
THANK YOU FOR RESPONDING TO YOUR VOTING INSTRUCTIONS CARD(S) PROMPTLY.
<PAGE>
SUNAMERICA SERIES TRUST
P.O. BOX 54299
LOS ANGELES, CALIFORNIA 90054-0299
------------------------
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
---------------------
To the Shareholders:
NOTICE IS HEREBY GIVEN that a special meeting (the "Meeting") of
shareholders of Cash Management, Corporate Bond, Global Bond, High-Yield Bond,
Worldwide High Income, SunAmerica Balanced, Balanced/Phoenix Investment Counsel,
Asset Allocation, Utility, Growth-Income, Federated Value, Venture Value, "Dogs"
of Wall Street, Alliance Growth, Growth/Phoenix Investment Counsel, Putnam
Growth, Real Estate, Aggressive Growth, International Growth and Income, Global
Equities, International Diversified Equities, and Emerging Markets (each a
"Portfolio" and together the "Portfolios"), each a separate portfolio of
SunAmerica Series Trust (the "Trust"), will be held on December 30, 1998 at
[ .m.], Eastern time, at the offices of SunAmerica Asset Management Corp.
("SAAMCo" or the "Adviser"), The SunAmerica Center, 733 Third Avenue, New York,
NY 10017 for the purpose of considering the following proposals with respect to
the Trust or with respect to one or more of its Portfolios, as indicated below.
Proposal Nos. 2 and 3 will be effective only upon consummation of the proposed
acquisition of SunAmerica Inc. by American International Group, Inc. pursuant to
an Agreement and Plan of Merger dated as of August 19, 1998, as more fully
described in the Proxy Statement attached hereto.
1. For the Trust, to elect a slate of four members to its Board of Trustees
to hold office until their successors are duly elected and qualified;
2. For each Portfolio except the Balanced/Phoenix Investment Counsel
("Phoenix Balanced") and Growth/Phoenix Investment Counsel ("Phoenix Growth")
Portfolios, separately, to approve or disapprove a new investment advisory and
management agreement between the Trust, on behalf of each Portfolio, and SAAMCo,
the terms of which are identical in all material respects to the existing
investment advisory and management agreement with SAAMCo;
3. For each of the Portfolios indicated below, to approve or disapprove a
new subadvisory agreement, the terms of which are identical in all material
respects to the existing subadvisory agreement with respect to each Portfolio,
between SAAMCo and:
(a) Alliance Capital Management L.P. ("Alliance") for Global Equities,
Alliance Growth and Growth-Income Portfolios;
(b) Davis Selected Advisers, L.P. for each of the Venture Value and Real
Estate Portfolios;
(c) Federated Investment Counseling for each of the Corporate Bond,
Federated Value and Utility Portfolios;
(d) Goldman Sachs Asset Management for Asset Allocation Portfolio;
(e) Goldman Sachs Asset Management--International for Global Bond
Portfolio;
(f) Morgan Stanley Asset Management Inc. for each of the International
Diversified Equities and Worldwide High Income Portfolios;
(g) Putnam Investment Management, Inc. for each of the Putnam Growth,
International Growth and Income and Emerging Markets Portfolios;
4. For Alliance Growth Portfolio, to approve or disapprove (a) an amendment
to the investment advisory and management agreement between the Trust and SAAMCo
in order to revise the breakpoints
<PAGE>
in the advisory fee the Alliance Growth Portfolio pays to SAAMCo and (b) an
amendment to the subadvisory agreement between SAAMCo and Alliance in order to
revise the breakpoints in the subadvisory fee the Adviser pays to Alliance;
5. For the Phoenix Growth and the Phoenix Balanced Portfolios, (a) to
approve or disapprove a new investment advisory and management agreement between
the Trust and SAAMCo, the terms of which are identical in all material respects
to the existing investment advisory and management agreement with SAAMCo except
with respect to revised breakpoints in the advisory fee each such Portfolio pays
to SAAMCo, and (b) to approve or disapprove a new subadvisory agreement between
SAAMCo and Massachusetts Financial Services Company, the proposed new subadviser
for each of the Phoenix Growth and Phoenix Balanced Portfolios, with respect to
each of the Phoenix Growth and Phoenix Balanced Portfolios;
6. For each Portfolio, separately, to approve or disapprove changing the
fundamental investment restriction relating to:
(a) the ability to engage in borrowing transactions;
(b) the ability to engage in lending transactions;
7. For the Trust, to ratify the selection of independent accountants; and
8. To transact such other business as may properly come before the Meeting
or any adjournments thereof.
The Trustees have fixed the close of business on October 30, 1998 as the
record date for determining the number of shares outstanding and the contract
owners entitled to give voting instructions at the Meeting and at any and all
adjournments thereof.
By Order of the Boards of Trustees,
Susan L. Harris
SECRETARY
November , 1998
EACH CONTRACT OWNER IS URGED TO EXERCISE THE RIGHT TO GIVE VOTING INSTRUCTIONS
FOR THE SPECIAL MEETING OF SHAREHOLDERS OF THE TRUST BY FILLING IN, DATING AND
SIGNING THE ENCLOSED VOTING INSTRUCTIONS CARD(S) AND RETURNING IT IN THE RETURN
ENVELOPE PROVIDED. CONTRACT OWNERS ALSO HAVE THE OPTION TO PROVIDE VOTING
INSTRUCTIONS BY CALLING AN AGENT OF THE TRUST OR CONTRACT HOLDERS MAY PROVIDE
VOTING INSTRUCTIONS BY TELEPHONE OR ON THE INTERNET BY FOLLOWING THE
INSTRUCTIONS ON THE INSERT ACCOMPANYING THE VOTING INSTRUCTIONS CARD(S).
<PAGE>
PRELIMINARY COPY
SUNAMERICA SERIES TRUST
P.O. BOX 54299
LOS ANGELES, CALIFORNIA 90054-0299
------------------------
PROXY STATEMENT
---------------------
SPECIAL MEETING OF SHAREHOLDERS
DECEMBER 30, 1998, [ .M.]
SunAmerica Series Trust (the "Trust") is an open-end management investment
company registered under the Investment Company Act of 1940, as amended (the
"1940 Act") and currently consists of twenty-five investment portfolios. This
Proxy Statement relates to twenty-two of the portfolios (the "Portfolios"). (The
three Portfolios not included in this Proxy Statement--Equity Income, Equity
Index and Small Company Value-- commenced operations subsequent to the date for
determining which contract owners are entitled to give voting instructions with
respect to the Portfolios and are not participating in the upcoming meeting.)
Shares of the Portfolios are offered to the Variable Separate Account and to the
Variable Annuity Account Four of Anchor National Life Insurance Company ("Anchor
National") and to the FS Variable Separate Account of First SunAmerica Life
Insurance Company ("First SunAmerica," and collectively with Anchor National,
the "Life Companies"), to fund benefits under certain variable annuity contracts
("contracts") issued by the Life Companies. SunAmerica Asset Management Corp.
("SAAMCo" or the "Adviser") serves as investment adviser, manager and
administrator for the Trust.
In accordance with applicable law, this Proxy Statement is being mailed, on
or about November , 1998 on behalf of the Board of Trustees of the Trust (the
"Trustees" or the "Board"), to the shareholders of each of the respective
Portfolios for their use in obtaining voting instructions from contract owners
on the proposals to be considered at a Special Meeting (the "Meeting") of
shareholders of the Trust scheduled to be held at the offices of SAAMCo, The
SunAmerica Center, 733 Third Avenue, New York, New York 10017, on December 30,
1998 at [ .m], Eastern time. The Trustees have fixed the close of business
on October 30, 1998 as the record date (the "Record Date") for determining the
number of shares outstanding and the contract owners entitled to be present at
the Meeting and give voting instructions to the Life Companies with respect to
their respective "portion" of shares of the Trust or each Portfolio as of the
Record Date.
A listing of the proposals described in this Proxy Statement and the
Portfolio(s) to which each applies is set forth below.
<TABLE>
<CAPTION>
SUMMARY OF PROPOSAL PORTFOLIOS TO WHICH PROPOSAL APPLIES
- ------------------------------------------------------ ------------------------------------------------------
<S> <C>
1. To elect a slate of four members to the Board of All Portfolios--vote together as a single class
Trustees to hold office until their successors are
duly elected and qualified.
</TABLE>
1
<PAGE>
<TABLE>
<CAPTION>
SUMMARY OF PROPOSAL PORTFOLIOS TO WHICH PROPOSAL APPLIES
- ------------------------------------------------------ ------------------------------------------------------
<S> <C>
2. To approve or disapprove a new investment advisory Cash Management, Corporate Bond, Global Bond,
and management agreement between the Trust and SAAMCo, High-Yield Bond, Worldwide High Income, SunAmerica
the terms of which are identical in all material Balanced, Asset Allocation, Utility, Growth-Income,
respects to the existing investment advisory and Federated Value, Venture Value, "Dogs" of Wall Street,
management agreement. Alliance Growth, Putnam Growth, Real Estate,
Aggressive Growth, International Growth and Income,
Global Equities, International Diversified Equities,
and Emerging Market--vote separately by Portfolio
3.(a). To approve or disapprove a new subadvisory Global Equities, Alliance Growth and Growth- Income
agreement, the terms of which are identical in all Portfolios--vote separately by Portfolio
material respects to the existing subadvisory
agreement with respect to each Portfolio, between
SAAMCo and Alliance Capital Management L.P.
("Alliance").
3.(b). To approve or disapprove a new subadvisory Venture Value and Real Estate Portfolios--vote
agreement, the terms of which are identical in all separately by Portfolio
material respects to the existing subadvisory
agreement with respect to each Portfolio, between
SAAMCo and Davis Selected Advisers, L.P. ("Davis").
3.(c). To approve or disapprove a new subadvisory Corporate Bond, Federated Value and Utility
agreement, the terms of which are identical in all Portfolios--vote separately by Portfolio
material respects to the existing subadvisory
agreement with respect to each Portfolio, between
SAAMCo and Federated Investment Counseling
("Federated").
3.(d). To approve or disapprove a new subadvisory Asset Allocation Portfolio
agreement, the terms of which are identical in all
material respects to the existing subadvisory
agreement with respect to each Portfolio, between
SAAMCo and Goldman Sachs Asset Management ("GSAM").
3.(e). To approve or disapprove a new subadvisory Global Bond Portfolio
agreement, the terms of which are identical in all
material respects to the existing subadvisory
agreement with respect to each Portfolio, between
SAAMCo and Goldman Sachs Asset
Management--International ("GSAM-- International").
3.(f). To approve or disapprove a new subadvisory International Diversified Equities and Worldwide High
agreement, the terms of which are identical in all Income Portfolios--vote separately by Portfolio
material respects to the existing subadvisory
agreement with respect to each Portfolio, between
SAAMCo and Morgan Stanley Asset Management Inc.
("MSAM").
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
SUMMARY OF PROPOSAL PORTFOLIOS TO WHICH PROPOSAL APPLIES
- ------------------------------------------------------ ------------------------------------------------------
<S> <C>
3.(g). To approve or disapprove a new subadvisory Putnam Growth, International Growth and Income and
agreement, the terms of which are identical in all Emerging Markets Portfolios--vote separately by
material respects to the existing subadvisory Portfolio
agreement with respect to each Portfolio, between
SAAMCo and Putnam Investment Management, Inc.
("Putnam").
4. To approve or disapprove (a) an amendment to the Alliance Growth Portfolio
investment advisory and management agreement between
the Trust and the Adviser in order to revise the
breakpoints in the fees the Alliance Growth Portfolio
pays to the Adviser and (b) an amendment to the
subadvisory agreement between the Adviser and Alliance
in order to revise the breakpoints in the subadvisory
fee the Adviser pays to Alliance.
5. To approve or disapprove (a) a new investment Phoenix Growth and Phoenix Balanced Portfolios--vote
advisory and management agreement between the Trust separately by Portfolio
and SAAMCo, the terms of which are identical in all
material respects to the existing investment advisory
and management agreement with SAAMCo except with
respect to revised breakpoints in the advisory fees
each of Phoenix Growth and Phoenix Balanced pays to
SAAMCo, and (b) to approve or disapprove a new
subadvisory agreement between SAAMCo and Massachusetts
Financial Services Company ("MFS"), the proposed new
subadviser for each of the Growth/Phoenix Investment
Counsel ("Phoenix Growth") and the Balanced/Phoenix
Investment Counsel ("Phoenix Balanced") Portfolios,
with respect to each of the Phoenix Growth and Phoenix
Balanced Portfolios.
6. To approve or disapprove changing the fundamental
investment restriction relating to:
(a) the ability to engage in borrowing transac- All Portfolios--vote separately by Portfolio
tions; and
(b) the ability to engage in lending transactions; All Portfolios--vote separately by Portfolio
7. To ratify the selection of independent All Portfolios--vote together as a single class
accountants.
8. To transact such other business as may properly All Portfolios
come before the Meeting or any adjournments thereof.
</TABLE>
3
<PAGE>
The Trust expects that the solicitation of voting instructions from contract
owners will be made by mail, and solicitation also may be made by telephone
communications from officers or employees of SAAMCo, the Life Companies, or
their affiliates, who will not receive any compensation therefor from the Trust.
In addition, Shareholder Communications Corporation ("SCC"), a professional
proxy solicitation firm, has been engaged to assist in the solicitation of
voting instructions. None of the costs of the solicitation will be borne by the
Trust or the Portfolios. In connection with the solicitation of voting
instructions, the Life Companies will furnish a copy of this Proxy Statement to
all contract owners.
Contract owners may also provide their voting instructions through telephone
touch-tone voting or Internet voting. These options require contract owners to
input a twelve digit control number which is located on each voting instructions
card. Subsequent to inputting these numbers, contract owners will be prompted to
provide their voting instructions on each proposal. Contract owners will have an
opportunity to review their voting instructions and make any necessary changes
before submitting their voting instructions and terminating their telephone call
or Internet link. Contract owners who vote on the Internet, in addition to
confirming their voting instructions prior to submission, will also receive an
e-mail confirming their voting instructions.
As the Meeting date approaches, certain contract owners may receive a
telephone call from a representative of SCC if their voting instructions have
not yet been received. Authorization to permit SCC to execute voting
instructions may be obtained by telephonically transmitted instructions from
contract holders. Voting instructions that are obtained telephonically will be
recorded in accordance with the procedures set forth below. The Trustees believe
that these procedures are reasonably designed to ensure that the identity of the
contract owner providing the voting instruction is accurately determined and
that the voting instructions of the contract owner are accurately determined.
The cost of this assistance is expected to be approximately $145,000 and, as
stated above, will not be borne by the Trust or the Portfolios.
In all cases where telephonic voting instructions are solicited, the SCC
representative is required to ask for each contract owner's full name, address,
social security or taxpayer identification number, title (if the contract owner
is authorized to act on behalf of an entity, such as a corporation), and the
portion of shares beneficially owned and to confirm that the contract owner has
received the Proxy Statement and voting instructions card in the mail. If the
information solicited agrees with the information provided to SCC, then the SCC
representative has the responsibility to explain the process, read the proposals
listed on the voting instructions card, and ask for the contract owner's
instructions on each proposal. The SCC representative, although permited to
answer questions about the process, is not permitted to recommend to the
contract owner how to vote, other than to read any recommendation set forth in
the Proxy Statement. The SCC representative will record the contract owner's
instructions on the card. Within 72 hours, SCC will send the contract owner a
letter or mailgram to confirm his or her voting instructions and ask the
contract owner to call 1-800-248-3249 immediately if his or her instructions are
not correctly reflected in the confirmation.
If the contract holder wishes to participate in the Meeting, but does not
wish to give his or her proxy by telephone communication with SCC, telephone
touch-tone voting or Internet voting, the contract owner may still submit the
voting instructions card originally sent with the Proxy Statement or attend in
person. Should contract owners require additional information regarding the
Proxy Statement or replacement voting instructions cards, they may contact SCC
toll-free at 1-800-248-3249. Voting instructions executed by contract owners may
be revoked by (i) a written instrument received by the Secretary of the Trust at
any time before they are exercised; (ii) delivery of a later-dated proxy; or
(iii) attendance at the Meeting and voting in person.
4
<PAGE>
The following table sets forth the share ownership of the Portfolios and the
Trust as a whole as of the Record Date:
<TABLE>
<CAPTION>
NUMBER OF SHARES NUMBER OF SHARES NUMBER OF SHARES
(%) HELD BY (%) HELD BY (%) HELD BY
TOTAL NUMBER VARIABLE SEPARATE VARIABLE ANNUITY FS VARIABLE SEPARATE
OF SHARES ACCOUNT OF ACCOUNT FOUR OF ACCOUNT OF
PORTFOLIO OUTSTANDING ANCHOR NATIONAL ANCHOR NATIONAL FIRST SUN AMERICA
- ----------------------------------------------- ------------- ------------------- ------------------- ---------------------
<S> <C> <C> <C> <C>
Cash Management Portfolio......................
Corporate Bond Portfolio.......................
Global Bond Portfolio..........................
High-Yield Bond Portfolio......................
Worldwide High Income Portfolio................
SunAmerica Balanced Portfolio..................
Balanced/Phoenix Investment Counsel
Portfolio....................................
Asset Allocation Portfolio.....................
Equity Income Portfolio........................
Utility Portfolio..............................
Equity Index Portfolio.........................
Growth-Income Portfolio........................
Federated Value Portfolio......................
Venture Value Portfolio........................
"Dogs" of Wall Street Portfolio................
Alliance Growth Portfolio......................
Growth/Phoenix Investment Counsel Portfolio....
Putnam Growth Portfolio........................
Real Estate Portfolio..........................
Aggressive Growth Portfolio....................
Small Company Value Portfolio..................
International Growth and Income Portfolio......
Global Equities Portfolio......................
International Diversified Equities Portfolio...
Emerging Markets Portfolio.....................
Trust..........................................
</TABLE>
[There were no persons who, as of the Record Date, were known to the Trust
to have allocated contributions under annuity contracts beneficially owned by
such person, such that, upon the pass through of voting rights by the Life
Companies, they would have the right to give voting instructions with respect to
more than 5% of the outstanding shares of the Trust or any Portfolio.] [CONFIRM]
To the knowledge of management, the Trustees and executive officers of the
Trust, both individually and as a group, owned less than 1% of the outstanding
shares of the Trust and each respective Portfolio as of the Record Date.
The Life Companies, the holders of record shares of each Portfolio, are
required to "pass through" to their contract owners the right to vote shares of
each Portfolio. The Trust expects that the Life Companies will vote 100% of the
shares of the Portfolios held by their respective separate accounts. The Life
Companies will vote shares of the Portfolios for which no instructions have been
received in the same proportion as they vote shares for which they have received
instructions. Abstentions will have the effect of a negative vote on Proposal
Nos. 2, 3, 4, 5 or 6. Unmarked voting instructions from contract owners will be
voted in favor of the proposals. The Life Companies, as record shareholders of
each of the Portfolios, may
5
<PAGE>
adjourn the Meeting to the extent permitted by law, if necessary to obtain
additional voting instructions from contract owners. Neither the Trust nor the
Portfolios will bear the costs of preparing and distributing to contract owners
additional proxy materials, if required in connection with any adjournment.
Approval of each proposal, except Proposals No. 1 and 7, with respect to
each applicable Portfolio, requires the affirmative vote of a majority of the
outstanding voting securities of that Portfolio. "Majority" for this purpose
means more than 50% of the outstanding shares of the Portfolio. Each such
proposal must be approved by shareholders of the respective Portfolio voting
separately. Approval of a Proposal with respect to one Portfolio is not
conditioned on approval by shareholders of any other Portfolio.
For Proposal No. 1, the candidates receiving a majority of the votes cast at
the Meeting will be elected. Approval of Proposal No. 7 requires a majority of
the votes cast at the Meeting. Shareholders of all Portfolios of the Trust vote
together as a single class with respect to Proposal Nos. 1 and 7.
All information in the Proxy Statement about the current and proposed
subadvisers to the Portfolios (each, a "Subadviser" and collectively, the
"Subadvisers") has been provided by each respective Subadviser. All information
in the Proxy Statement about SAAMCo and the Life Companies has been provided by
SAAMCo and the Life Companies, respectively. All information in the Proxy
Statement about American International Group, Inc. ("AIG") has been provided by
AIG.
The Trustees do not know of any other business to be brought before the
Meeting. If any other matters properly come before the Meeting, the proxies
named by the shareholders will vote on such matters in their discretion.
------------------------
6
<PAGE>
ELECTION OF FOUR TRUSTEES
PROPOSAL NO. 1
INTRODUCTION
On August 19, 1998, SunAmerica Inc. ("SunAmerica") and AIG entered into an
Agreement and Plan of Merger (the "Merger Agreement") pursuant to which
SunAmerica will merge with and into AIG (the "Merger") with AIG as the
corporation surviving the Merger. Under the terms of the Merger Agreement, each
share of common stock, $1.00 par value per share, of SunAmerica outstanding at
the effective time of the Merger will be converted into 0.855 shares of common
stock, $2.50 par value per share, of AIG. SunAmerica and AIG expect that the
closing of the Merger (the "Closing") will take place during either the last
quarter of 1998 or the first quarter of 1999.
The Merger is subject to certain regulatory approvals and other customary
conditions as well as to the approval of the Merger by the stockholders of
SunAmerica and AIG. Shareholders of the Trust are not being asked to vote on the
Merger of SunAmerica and AIG.
SECTION 15(f) OF THE 1940 ACT
Section 15(f) of the 1940 Act provides that an investment adviser (such as
SAAMCo) to a registered investment company, and the affiliates of such adviser,
may receive any amount or benefit in connection with a sale of any interest in
such investment adviser which results in an assignment of an investment advisory
contract if the following two conditions are satisfied: (1) for a period of
three years after such assignment, at least 75% of the board of directors of the
investment company cannot be "interested persons" (within the meaning of Section
2(a)(19) of the 1940 Act) of the new investment adviser or its predecessor; and
(2) no "unfair burden" (as defined in the 1940 Act) may be imposed on the
investment company as a result of the assignment or any express or implied
terms, conditions or understandings applicable thereto.
Consistent with the first condition of Section 15(f), SunAmerica and AIG
have agreed in the Merger Agreement that, for a period of three years after the
Closing, they will not take or recommend any action that would cause more than
25% of the Trustees of the Trust to be interested persons of the entity acting
as the Trust's investment adviser.
With respect to the second condition of Section 15(f), an unfair burden on
an investment company is defined in the 1940 Act to include any arrangement
during the two-year period after any such transaction occurs whereby the
investment adviser or its predecessor or successor, or any interested person of
such adviser, predecessor or successor, receives or is entitled to receive any
compensation of two types, either directly or indirectly. The first type is
compensation from any person in connection with the purchase or sale of
securities or other property to, from or on behalf of the investment company,
other than bona fide ordinary compensation as principal underwriter for such
company. The second type is compensation from the investment company or its
security holders for other than bona fide investment advisory or other services.
In the Merger Agreement, SunAmerica and AIG have agreed not to take or
recommend any action that would constitute an unfair burden on the Trust or the
Portfolios within the meaning of Section 15(f).
INFORMATION REGARDING NOMINEES
At a meeting held on October 15, 1998, the Trustees, including all of those
Trustees who are not interested persons of SunAmerica, AIG or any Subadviser
(the "Disinterested Trustees"), unanimously nominated the 4 persons described
below for election as Trustees, to take office effective upon their election.
Three of the nominees are currently Trustees of the Trust. The Board of Trustees
currently consists of five members, two of whom will resign effective upon the
election of the nominees listed in this
7
<PAGE>
Proxy Statement, to ensure that at least 75% of the Board will consist of
Trustees who are not interested persons of SunAmerica, AIG or any Subadviser. If
elected, each will serve until his or her successor is duly elected and
qualified. It is the intention of the persons named in the accompanying form of
proxy to vote for the election of each of the nominees named below, each of whom
has consented to be a nominee.
If any of the nominees become unavailable for election as a Trustee before
the meeting, proxies will be voted for the other persons that the Trustees
recommend.
Biographical data concerning all nominees is listed below.
PRINCIPAL OCCUPATION AND OTHER INFORMATION
The nominee designated by an asterisk (*), James K. Hunt, is an "interested
person," as that term is defined in the 1940 Act, of the Trust and of the
Adviser because Mr. Hunt is an officer of affiliates of the Adviser.
Unless otherwise noted, the address of each individual listed below is 1
SunAmerica Center, Los Angeles, California, 90067-6022.
<TABLE>
<CAPTION>
POSITION PRINCIPAL OCCUPATION(S)
NAME, AGE, AND ADDRESS WITH THE TRUST DURING PAST FIVE YEARS
- ------------------------------------ --------------------------------- ---------------------------------
<S> <C> <C>
James K. Hunt, *47.................. Chairman and President of the
Trustee since 1994 Trust (since 1994); Executive
Vice President, SunAmerica
Investments, Inc. (1993 to
present); President, SunAmerica
Corporate Finance (since January
1994); Trustee, Anchor Pathway
Fund ("APF") and Seasons Series
Trust ("Seasons").
Monica C. Lozanto, 42............... Associate Publisher, LA OPINION
3257 Purdue Avenue (newspaper publishing concern)
Los Angeles, CA 90066 since 1995; Director, First
Interstate Bank of California
from 1994-1996; Editor, LA
OPINION from 1991-1995.
Allan L. Sher, 66................... Director, Board of Governors,
Trustee since 1997 American Stock Exchange (1991 to
present); Trustee, APF and
Seasons.
William M. Wardlaw, 51.............. Partner, Freeman Spogli & Co.,
Trustee since 1997 Incorporated (privately owned
merchant banking firm)
(1988-Present); Trustee, APF and
Seasons.
</TABLE>
The Trustees met 5 times during the fiscal year ended November 30, 1997. The
incumbents attended 93% of the aggregate number of meetings of the Trustees. The
Board of Trustees does not have a standing audit, nominating or compensation
committee.
8
<PAGE>
EXECUTIVE OFFICERS OF THE TRUST
Currently, the principal executive officers of the Trust are all officers
and/or employees of Anchor National or its affiliates. The principal executive
officers of the Trust are expected to remain the same after the Closing.
The following table sets forth certain information furnished by each of the
current principal executive officers of the Trust who are not listed above as
nominees.
Unless otherwise noted, the address of each individual listed below is 1
SunAmerica Center, Los Angeles, California 90067-6022.
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION(S)
NAME, ADDRESS AND AGE POSITION WITH THE TRUST DURING PAST FIVE YEARS
- --------------------------------- -------------------------------------- --------------------------------------
<S> <C> <C>
Scott L. Robinson, 52............ Senior Vice President, Treasurer and Senior Vice President and Controller,
Controller of the Trust (since 1993) SunAmerica (since 1991); Senior Vice
President of Anchor National (since
1988); Senior Vice President,
Treasurer and Controller, APF and
Seasons; Joined SunAmerica in 1978.
Susan L. Harris, 41.............. Vice President, Counsel and Secretary Senior Vice President (since November
of the Trust (since 1993) 1995), Secretary (since 1995) and
General Counsel--Corporate Affairs
(since December 1994), SunAmerica;
Senior Vice President and Secretary,
Anchor National (since 1990); Vice
President, Counsel and Secretary,
APF and Seasons; Joined SunAmerica
in 1985.
Peter C. Sutton, 34 ............. Vice President and Assistant Treasurer Senior Vice President, SAAMCo (since
The SunAmerica Center of the Trust (since October 1994) April 1997); Treasurer (since
733 Third Avenue February 1996), SunAmerica Equity
New York, New York 10017-3204 Funds, SunAmerica Income Funds and
SunAmerica Money Market Funds, Inc.
("SunAmerica Mutual Funds" or
"SAMF"), Anchor Series Trust ("AST")
and Style Select Series, Inc.
("Style Select"); Vice President and
Assistant Treasurer, APF (since
October 1994) and Seasons (since
April 1997); Formerly, Vice
President, SAAMCo (1994-1997);
Controller, SAMF and AST
(1993-1996); Joined SAAMCo in 1990.
</TABLE>
9
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION(S)
NAME, ADDRESS AND AGE POSITION WITH THE TRUST DURING PAST FIVE YEARS
- --------------------------------- -------------------------------------- --------------------------------------
<S> <C> <C>
Robert M. Zakem, 40 ............. Vice President and Assistant Secretary Senior Vice President, General Counsel
The SunAmerica Center of the Trust (since September 1993) and Assistant Secretary, SAAMCo
733 Third Avenue (since April 1993); Secretary and
New York, New York 10017-3204 Chief Compliance Officer (since
1993), SAMF and AST, (since 1996)
Style Select; Executive Vice
President, General Counsel and
Director, SunAmerica Capital
Services, Inc. (since February
1993); Vice President, General
Counsel and Assistant Secretary,
SunAmerica Fund Services, Inc.
(since January 1994); Vice President
and Assistant Secretary, APF (since
September 1993) and Seasons (since
April 1997).
</TABLE>
All officers of the Trust are elected annually and serve until their
successors are elected and qualified.
REMUNERATION OF TRUSTEES AND OFFICERS
The Trust pays no salaries or compensation to any of its officers, all of
whom are officers or employees of Anchor National or its affiliates. The Trust
pays an annual fee of $7,000, plus $500 for each meeting attended, and expenses
to each Trustee who is not an officer or employee of Anchor National or its
affiliates for attendance at meetings of the Board of Trustees. The following
table sets forth information summarizing the compensation of each of the
Trustees for his services as Trustee for the fiscal year ended November 30,
1997.
COMPENSATION TABLE
<TABLE>
<CAPTION>
TOTAL
COMPENSATION
PENSION OR FROM TRUST AND
AGGREGATE RETIREMENT BENEFITS ESTIMATED ANNUAL FUND COMPLEX
COMPENSATION ACCRUED AS PART OF BENEFITS UPON PAID TO
INDEPENDENT TRUSTEE FROM TRUST TRUST'S EXPENSES RETIREMENT TRUSTEES*
- --------------------------------------- ------------- ----------------------- ------------------ ----------------
<S> <C> <C> <C> <C>
Richards D. Barger**................... $ 9,000 -- $ 23,000
Frank L. Ellsworth***.................. $ 2,250 -- $ 5,500
William M. Wardlaw..................... $ 6,250 -- $ 15,250
Norman J. Metcalfe**................... $ 9,000 -- $ 23,000
Allan L. Sher.......................... $ 6,750 -- $ 17,500
</TABLE>
- ------------------------
* Information is as of November 30, 1997 for the three funds in the complex
which pay fees to these Trustees (the Trust, APF and Seasons).
** Messrs. Barger and Metcalfe are currently Trustees. They are not standing
for re-election.
*** Mr. Ellsworth served as a Trustee until January 1997.
10
<PAGE>
THE BOARD OF TRUSTEES UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS
VOTE "FOR" EACH OF THE NOMINEES UNDER PROPOSAL NO. 1
------------------------
APPROVAL OR DISAPPROVAL OF NEW INVESTMENT ADVISORY AND MANAGEMENT
AGREEMENTS BETWEEN THE TRUST AND SAAMCO
ON BEHALF OF THE FOLLOWING PORTFOLIOS:
CASH MANAGEMENT
CORPORATE BOND
GLOBAL BOND
HIGH-YIELD BOND
WORLDWIDE HIGH INCOME
SUNAMERICA BALANCED
ASSET ALLOCATION
UTILITY
GROWTH-INCOME
FEDERATED VALUE
VENTURE VALUE
"DOGS" OF WALL STREET
ALLIANCE GROWTH
PUTNAM GROWTH
REAL ESTATE
AGGRESSIVE GROWTH
INTERNATIONAL GROWTH AND INCOME
GLOBAL EQUITIES
INTERNATIONAL DIVERSIFIED EQUITIES
EMERGING MARKET
PROPOSAL NO. 2
The Board of Trustees of the Trust is submitting for approval by the
shareholders of each Portfolio, a new investment advisory and management
agreement (each, a "New Advisory Agreement" and together, the "New Advisory
Agreements") between the Trust, on behalf of each applicable Portfolio, and
SAAMCo, the terms of which are identical in all material respects to the current
investment advisory and management agreement with respect to each applicable
Portfolio (each an "Existing Advisory Agreement" and together, the "Existing
Advisory Agreements"). This Proposal does not, however, relate to the Growth
Phoenix and Balanced Phoenix Portfolios, which are discussed separately in
Proposal No. 5.
As required by the 1940 Act, each Existing Advisory Agreement provides for
automatic termination upon assignment. The Closing of the Merger will constitute
an assignment, as that term is defined in the 1940 Act, of the Existing Advisory
Agreements, and, consequently, their termination. Accordingly, New Advisory
Agreements with SAAMCo to take effect upon the Closing are being proposed for
approval by the shareholders of each applicable Portfolio, even though those
agreements will be identical in all material respects to, and essentially a
continuation of, the Existing Advisory Agreements with SAAMCo. (The Existing
Advisory Agreements and New Advisory Agreements are sometimes collectively
referred to as the "Advisory Agreements.")
In addition, each of the current subadvisory agreements (each, an "Existing
Subadvisory Agreement" and together, the "Existing Subadvisory Agreements")
between SAAMCo and the respective Subadviser to each Portfolio provides for
termination upon termination of the Existing Advisory Agreement. Accordingly,
each of the Existing Subadvisory Agreements will also terminate upon the Closing
of the Merger.
11
<PAGE>
New Subadvisory Agreements are therefore also being separately proposed for
approval by shareholders and are described in Proposal No. 3.
Although it is anticipated that the Closing will take place subsequent to
the shareholders' consideration and vote upon this Proposal No. 2 regarding New
Advisory Agreements, Proposal No. 3 regarding New Subadvisory Agreements, and
Proposal No. 5 relating to the Phoenix Growth and Phoenix Balanced Portfolios
(to the extent described in such proposal), it is possible that due to
unforeseen delays in the holding of the Meeting, the Closing will occur first.
If the Closing were to occur prior to the shareholders' vote upon such
Proposals, there would technically be a termination of the Existing Advisory and
Subadvisory Agreements (collectively, the "Existing Agreements"). To ensure the
uninterrupted receipt by the Portfolios of investment advice and management
services, SAAMCo and the Trust have applied for an exemptive order (the
"Exemptive Order") from the Securities and Exchange Commission (the "SEC") that
would allow SAAMCo and the current Subadvisers to continue to provide services
to the Portfolios, with the advisory and subadvisory fees being paid into escrow
during the period between the termination of the Existing Agreements and
shareholder approval of the New Agreements. The fees will be released from
escrow and paid to SAAMCo and the Subadvisers, respectively, only if the
shareholders approve, respectively, Proposal Nos. 2, 3 and 5. There can be no
assurance that the SEC will grant the requested Exemptive Order.
Shareholders of Alliance Growth are also being asked, in addition, to
approve certain changes to its advisory and subadvisory arrangements. These
changes are described in Proposal No. 4 and are not related to the Merger
between SunAmerica and AIG.
APPROVAL OF THE NEW ADVISORY AGREEMENTS
As described below, the Trustees are proposing that shareholders of each
Portfolio approve a New Advisory Agreement with SAAMCo and, as described in
Proposal No. 3, in connection therewith, new subadvisory agreements between
SAAMCo and each Subadviser (each a "New Subadvisory Agreement," together the
"New Subadvisory Agreements" and together with the New Advisory Agreements, the
"New Agreements"), to become effective as of the Closing. A description of the
New Advisory Agreements and the services to be provided by SAAMCo is set forth
below. This description is qualified in its entirety by reference to the form of
the New Advisory Agreement attached to this Proxy Statement as Exhibit A.
As more fully described below, the proposed New Advisory Agreements,
including advisory fees, are identical in all material respects to the Existing
Advisory Agreements. The New Advisory Agreements differ from the Existing
Advisory Agreements only with respect to the effective dates.
At a meeting held on October 15, 1998, the Trustees, including all of the
Disinterested Trustees, unanimously approved the New Agreements. In connection
with this approval, the Trustees considered that the terms of the Merger
Agreement do not contemplate any changes in the overall form of the advisory and
subadvisory contracts, the advisory fees, or any of the Portfolio's objectives
or policies. Among other things, the Trustees considered the fact that although
ultimate ownership of SAAMCo's parent company will change, senior officers of
SAAMCo had assured the Trustees that there would be no change in the personnel
providing services to the Trust and its applicable Portfolios and no diminution
in the nature or quality of those services. Senior officers of SAAMCo also
informed the Trustees that they did not foresee any changes in the day-to-day
operations of SAAMCo as a result of the Merger. As part of their deliberations,
the Trustees also took into account the following, among other factors: the
nature and quality of the services provided or reasonably anticipated to be
provided and the results achieved or reasonably anticipated to be achieved by
SAAMCo; the amount and structure of investment advisers' fees generally and the
fees payable under the New Agreements; and the organizational capability and
financial condition of SAAMCo and its affiliates.
The Trustees also took into account the financial strength of AIG, the
management, personnel and operations of AIG, the commitment of AIG to the
financial services industry, and the proposed structure
12
<PAGE>
of the Merger. The Trustees based their determinations in this regard on
discussions with representatives of AIG at the meeting and a review of materials
provided by AIG in connection with the meeting. The Trustees also considered the
additional resources that were likely to be available to SAAMCo following the
Closing.
RECOMMENDATION OF THE BOARD OF TRUSTEES
Based on the considerations set forth above, the Trustees, including all of
the Disinterested Trustees, unanimously determined that it was necessary and in
the best interests of each applicable Portfolio and its shareholders to enter
into the New Advisory Agreements and to recommend approval of the New Advisory
Agreements by shareholders.
INFORMATION ABOUT THE ADVISER
SAAMCO. SAAMCo is a Delaware corporation and an indirect, wholly owned
subsidiary of Anchor National, which is an indirect wholly owned subsidiary of
SunAmerica, an investment grade financial services company with approximately
$55 billion in assets. SAAMCo provides investment advice and management services
to the Trust, other mutual funds and private accounts. As of June 30, 1998,
SAAMCo managed, advised or administered assets of more than $15 billion. The
address of SAAMCo is The SunAmerica Center, 733 Third Avenue, New York, NY
10017-3204. The principal business address of Anchor National and SunAmerica is
1 SunAmerica Center, Century City, Los Angeles, California 90067-6022. SAAMCo is
the investment adviser to other investment companies having similar investment
objectives to the Portfolios as indicated in Exhibit B.
The following chart lists the principal executive officers and directors of
SAAMCo and their principal occupations, if different from their positions with
SAAMCo:
<TABLE>
<CAPTION>
NAME POSITION WITH SAAMCO AND PRINCIPAL OCCUPATION
- ----------------------- --------------------------------------------------------------------------------------
<S> <C>
Peter A. Harbeck President, Chief Executive Officer and Director
Susan L. Harris Secretary and Director; Senior Vice President, General Counsel-Corporate Affairs and
Secretary, SunAmerica; Senior Vice President, Director and Secretary, Anchor
National and First SunAmerica
Jay S. Wintrob Director; Vice Chairman and Director of SunAmerica; Executive Vice President and
Director of Anchor National and First SunAmerica
P. Christopher Leary Executive Vice President and Director of Fixed Income
J. Steven Neamtz Executive Vice President
Per Furmark Senior Vice President
Vorise Midgette Senior Vice President
Peter C. Sutton Senior Vice President
Robert M. Zakem Senior Vice President, General Counsel and Assistant Secretary
</TABLE>
The business address of each of the above listed persons other than Ms.
Harris and Mr. Wintrob is The SunAmerica Center, 733 Third Avenue, New York, New
York 10017-3204. The business address of Ms. Harris and Mr. Wintrob is 1
SunAmerica Center, Century City, Los Angeles, California 90067-6022. In
addition, Ms. Harris also serves as Vice President, Counsel and Secretary to the
Trust; Mr. Sutton serves as Vice President and Assistant Treasurer of the Trust
and Mr. Zakem serves as Vice President and Assistant Secretary of the Trust.
13
<PAGE>
Pursuant to the Existing Advisory Agreement dated as of September 16, 1992,
as amended from time to time, SAAMCo has agreed to provide investment
management, advisory and administrative services to the Trust. The Existing
Advisory Agreement was last submitted to shareholders of the Trust on September
16, 1992, for the purpose of obtaining the initial shareholder approval. An
amendment to the Existing Advisory Agreement was submitted to shareholders of
one Trust Portfolio on March 21, 1997.
The annual advisory fees which SAAMCo is entitled to receive from the
applicable Portfolios, and which will be payable to SAAMCo following the Closing
provided the New Agreements are approved by the shareholders of the applicable
Portfolios, is set forth below in the section entitled "Information About the
New Advisory Agreements."
AIG. American International Group, Inc., a Delaware corporation, is a
holding company which through its subsidiaries is primarily engaged in a broad
range of insurance and insurance related activities and financial services in
the United States and abroad. Its member companies write property, casualty,
marine, life and financial services insurance in approximately 130 countries and
jurisdictions. At December 31, 1997, AIG and its subsidiaries had approximately
40,000 employees.
AIG, through its subsidiaries, is also engaged in a range of financial
services activities. AIG's asset management operations are carried out primarily
by AIG Global Investment Group, Inc., a direct wholly owned subsidiary of AIG,
and its affiliates (collectively, "AIG Global"). AIG Global manages the
investment portfolios of various AIG subsidiaries, as well as third party
assets, and is responsible for product design and origination, marketing and
distribution of third party asset management products, including offshore and
private investment funds and direct investment. As of June 30, 1998, AIG Global
managed more than $86 billion of assets, of which approximately $10.8 billion
represented assets of unaffiliated third parties. AIG Capital Management Corp.,
an indirect wholly owned subsidiary of AIG Global Investment Group, Inc., serves
as investment adviser to The AIG Money Market Fund, a separate series of The
Advisors' Inner Circle Fund, a registered investment company. In addition, AIG
Global Investment Corp., an AIG Global group company, serves as the
sub-investment adviser to an unaffiliated registered investment company. AIG
companies do not otherwise provide investment advice to any registered
investment companies.
AIG's common stock is listed on the New York Stock Exchange, as well as the
stock exchanges in London, Paris, Switzerland and Tokyo. For 1997, AIG reported
net income of $3.3 billion on revenues of $30.6 billion. Total assets at
December 31, 1997 were $164.0 billion. For the six months ended June 30, 1998,
AIG reported net income of $1.8 billion on revenues of $15.8 billion, and
period-end total assets of $176.1 billion. AIG's headquarters are located at 70
Pine Street, New York, New York 10270.
INFORMATION ABOUT THE NEW ADVISORY AGREEMENTS
As stated above, the form of the New Advisory Agreement is annexed to this
Proxy Statement as Exhibit A.
The New Advisory Agreements are identical in all material respects to the
Existing Advisory Agreements, and provide that SAAMCo shall act as investment
adviser to the Trust, manage the Trust's investments, administer its business
affairs, furnish offices, necessary facilities and equipment, provide clerical,
bookkeeping and administrative services, and permit any of SAAMCo's officers or
employees to serve without compensation as Trustees or officers of the Trust if
duly elected to such positions. Under the Advisory Agreements, the Trust agrees
to assume and pay certain charges and expenses of its operations, including:
direct charges relating to the purchase and sale of portfolio securities,
interest charges, fees and expenses of independent legal counsel and independent
accountants, cost of stock certificates and any other expenses (including
clerical expenses) of issue, sale, repurchase or redemption of shares, expenses
of registering and qualifying shares for sale, expenses of printing and
distributing reports, notices and proxy materials to shareholders, expenses of
data processing and related services, shareholder recordkeeping and
14
<PAGE>
shareholder account service, expenses of printing and distributing prospectuses
and statements of additional information, expenses of annual and special
shareholders' meetings, fees and disbursements of transfer agents and
custodians, expenses of disbursing dividends and distributions, fees and
expenses of Trustees who are not employees of SAAMCo or its affiliates,
membership dues in the Investment Company Institute or any similar organization,
all taxes and fees to federal, state or other governmental agencies, insurance
premiums and extraordinary expenses such as litigation expenses.
The Advisory Agreements provide that as compensation for its services,
SAAMCo will receive from the Trust a fee, accrued daily and payable monthly,
based on the net assets of each applicable Portfolio. The following table sets
forth the rate of the advisory fee payable by each applicable Portfolio under
the Advisory Agreements and the total advisory fees received by SAAMCo from each
applicable Portfolio pursuant to the Existing Advisory Agreement for the fiscal
year ended November 30, 1997.
The annual rate of the advisory fees under the New Advisory Agreements is
the same rate that was in effect under the Existing Advisory Agreements.
ADVISORY FEES
<TABLE>
<CAPTION>
ADVISORY FEE FISCAL YEAR END
PORTFOLIO (AS A PERCENTAGE OF DAILY NET ASSETS) NOVEMBER 30, 1997
- ----------------------------------- ---------------------------------------- -----------------------------------
<S> <C> <C>
Cash Management .55% on first $100 million $ 718,297
.50% on next $200 million
.45% thereafter
Corporate Bond .70% on first $50 million $ 325,988
.60% on next $100 million
.55% on next $100 million
.50% thereafter
Global Bond .75% on first $50 million $ 550,533
.65% on next $100 million
.60% on next $100 million
.55% thereafter
High-Yield Bond .70% on first $50 million $ 1,000,566
.65% on next $100 million
.60% on next $100 million
.55% thereafter
Worldwide High Income 1.00% of net assets $ 915,682
SunAmerica Balanced .70% on first $50 million $ 178,845
.65% on next $100 million
.60% on next $150 million
.55% on next $200 million
.50% thereafter
Asset Allocation .75% on first $50 million $ 2,556,963
.65% on next $100 million
.60% on next $100 million
.55% thereafter
Utility .75% on first $150 million $ 100,647
.60% on next $350 million
.50% thereafter
</TABLE>
15
<PAGE>
<TABLE>
<CAPTION>
ADVISORY FEE FISCAL YEAR END
PORTFOLIO (AS A PERCENTAGE OF DAILY NET ASSETS) NOVEMBER 30, 1997
- ------------------------------------- ---------------------------------------- ----------------------
<S> <C> <C>
Growth-Income .70% on first $50 million $ 2,784,063
.65% on next $100 million
.60% on next $150 million
.55% on next $200 million
.50% thereafter
Federated Value .75% on first $150 million $ 237,339
.60% on next $350 million
.50% thereafter
Venture Value .80% on first $100 million $ 5,952,702
.75% on next $400 million
.70% thereafter
"Dogs" of Wall Street .60% of net assets Not Applicable***
Alliance Growth .70% on first $50 million $ 3,145,937
.65% on next $100 million
.60% on next $150 million
.55% on next $200 million
.50% thereafter
Putnam Growth** .85% on first $150 million $ 1,565,910
.80% on next $150 million
.70% thereafter
Global Equities .90% on first $50 million $ 2,337,577
.80% on next $100 million
.70% on next $150 million
.65% thereafter
International Diversified Equities 1.00% of net assets $ 2,127,386
Aggressive Growth .75% on first $100 million $ 506,503
.675% on next $150 million
.625% on next $250 million
.60% thereafter
Real Estate .80% on first $100 million $ 58,800*
.75% on next $400 million
.70% thereafter
International Growth and Income 1.00% on first $150 million $ 125,310*
.90% on next $150 million
.80% thereafter
Emerging Markets 1.25% of net assets $ 99,436*
</TABLE>
For the fiscal year ended November 30, 1997, SAAMCo voluntarily waived fees or
reimbursed expenses of the Utility Portfolio in the amount of $25,537. For the
period June 2, 1997 (commencement of operations) through November 30, 1997,
SAAMCo voluntarily waived fees or reimbursed expenses of each of the following
Portfolios: Real Estate Portfolio - $7,874; International Growth and Income
Portfolio - $52,507; and Emerging Markets Portfolio - $55,614. Certain
Portfolios had recoupments for the fiscal year ended November 30, 1997, and such
recoupments, which are not included as part of the advisory fee in the above
16
<PAGE>
advisory fee table, were as follows: SunAmerica Balanced Portfolio - $9,879;
Federated Value Portfolio - $16,677; and Aggressive Growth Portfolio - $3,186.
- ------------------------
* For the period 6/2/97 (commencement of operations) through 11/30/97.
** Until April 15, 1997, the advisory agreement with respect to the Putnam
Growth Portfolio provided for an advisory fee payable to SAAMCo at the
following annual rates: .85% on the first $50 million of average daily net
assets; .80% on the next $100 million; .70% on the next $100 million; .65%
on the next $100 million; and .60% over $350 million. The advisory agreement
relating to the Putnam Growth Portfolio was amended as of April 15, 1997 to
provide for the annual fee rates reflected in the foregoing table.
*** The "Dogs" of Wall Street Portfolio commenced operations 4/1/98.
Under the terms of the Advisory Agreements, SAAMCo shall not be liable to
the Trust, or to any other person, for any act or omission by it or for any
losses sustained by the Trust or its shareholders, except in the case of willful
misfeasance, bad faith, gross negligence or reckless disregard of duty.
If approved by the shareholders, each New Advisory Agreement will continue
in effect for a period of two years from the Closing, and from year to year
thereafter as to each Portfolio for so long as such renewal is specifically
approved at least annually by (i) the vote of a majority of the Board of
Trustees, or by the vote of a majority (as defined in the 1940 Act) of the
outstanding voting securities of each relevant Portfolio, and (ii) the vote of a
majority of Trustees who are not parties to the New Advisory Agreement or
interested persons (as defined in the 1940 Act) of any such party, cast in
person, at a meeting called for the purpose of voting on such approval. The New
Advisory Agreements provide that they may be terminated by either party without
penalty upon the specified written notice contained in the Agreement. The New
Advisory Agreements also provide for automatic termination upon assignment.
17
<PAGE>
BROKERAGE COMMISSIONS
The following table sets forth the brokerage commissions paid by the
Portfolios and the amounts of the brokerage commissions which were paid to
affiliated broker-dealers of such Portfolios for the fiscal year ended November
30, 1997.
BROKERAGE COMMISSIONS
<TABLE>
<CAPTION>
AMOUNT PAID TO
AFFILIATED
AGGREGATE BROKER-DEALERS AS A
AGGREGATE AMOUNT PAID TO PERCENTAGE OF
BROKERAGE AFFILIATED PORTFOLIO'S AGGREGATE
PORTFOLIO COMMISSIONS BROKER-DEALERS BROKERAGE COMMISSIONS
- ------------------------------------------------------------ ------------ -------------- -----------------------
<S> <C> <C> <C>
Cash Management............................................. -- -- --
Global Bond................................................. -- -- --
Corporate Bond.............................................. -- -- --
High-Yield Bond............................................. $ 90 -- --
Worldwide High Income....................................... -- -- --
SunAmerica Balanced......................................... $ 73,801 -- --
Balanced/Phoenix Investment Counsel......................... $ 153,408 -- --
Asset Allocation............................................ $ 618,233 $ 77,151 12.48%
Utility..................................................... $ 40,772 -- --
Growth-Income............................................... $ 547,081 -- --
Federated Value............................................. $ 77,121 -- --
Venture Value............................................... $ 634,966 $ 87,696 13.81%
Alliance Growth............................................. $1,020,216 -- --
Growth/Phoenix Investment Counsel........................... $ 731,747 $ 1,220 .17%
Putnam Growth (formerly Provident Growth)................... $ 241,968 $ 920 .38%
Real Estate*................................................ $ 53,466 -- --
Global Equities............................................. $1,376,002 -- --
International Diversified Equities.......................... $ 269,652 -- --
Aggressive Growth........................................... $ 251,919 -- --
International Growth and Income*............................ $ 120,957 -- --
Emerging Markets*........................................... $ 80,600 -- --
</TABLE>
- ------------------------
* For the period June 2, 1997 (commencement of operations) through November 30,
1997.
THE BOARD OF TRUSTEES UNANIMOUSLY RECOMMENDS THAT
SHAREHOLDERS VOTE "FOR" PROPOSAL NO. 2
If Proposal No. 2 is not approved by the shareholders of any Portfolio and
the Closing of the Merger is not effectuated, the Trustees will determine the
appropriate actions to be taken with respect to such Portfolio's advisory
arrangements at that time.
------------------------
APPROVAL OR DISAPPROVAL OF NEW SUBADVISORY AGREEMENTS
PROPOSAL NO. 3
The Board of Trustees of the Trust is submitting for approval by the
shareholders of Corporate Bond, Global Bond, Worldwide High Income, Asset
Allocation, Utility, Growth-Income, Federated Value, Venture Value, Alliance
Growth, Putnam Growth, Real Estate, International Growth and Income, Global
Equities, International Diversified Equities and Emerging Markets, a New
Subadvisory Agreement
18
<PAGE>
between SAAMCo and each Subadviser, the terms of which are identical in all
material respects to each Existing Subadvisory Agreement.
As described above in Proposal No. 2, each Existing Subadvisory Agreement
will terminate automatically upon termination of the Existing Advisory
Agreement. Accordingly, New Subadvisory Agreements between SAAMCo and each
Subadviser to take effect upon the Closing are being proposed for approval by
the shareholders of each applicable Portfolio, even though those agreements will
be identical in all material respects to, and essentially a continuation of, the
Existing Subadvisory Agreements between SAAMCo and the respective Subadviser.
(The Existing Subadvisory Agreements and the New Subadvisory Agreements are
hereinafter sometimes collectively referred to as the "Subadvisory Agreements.")
New subadvisory agreements are being proposed for approval by shareholders
of Growth Phoenix and Balanced Phoenix. These new subadvisory agreements are
described in Proposal No. 5.
Shareholders of Alliance Growth are also being asked, in addition, to
approve certain changes with respect to its advisory and subadvisory
arrangements. These changes are described in Proposal No. 4 and are not related
to the Merger between SunAmerica and AIG.
APPROVAL OF THE NEW SUBADVISORY AGREEMENTS
As described below, the Trustees are proposing that shareholders of each
applicable Portfolio approve a New Subadvisory Agreement between SAAMCo and the
respective Portfolio's Subadviser, to become effective as of the Closing. A
description of the New Subadvisory Agreements and the services to be provided by
the Subadvisers is set forth below. This description is qualified in its
entirety by reference to the New Subadvisory Agreements attached to this Proxy
Statement as Exhibits C-1 - C-7.
As more fully described below, the proposed New Subadvisory Agreements,
including subadvisory fees, are identical in all material respects to the
Existing Subadvisory Agreements. The New Subadvisory Agreements differ from the
Existing Subadvisory Agreements only with respect to the effective dates.
At a meeting held on October 15, 1998, the Board of Trustees, including all
the Disinterested Trustees, unanimously approved the New Subadvisory Agreements.
In determining to approve the New Subadvisory Agreements, the Board of Trustees
evaluated the factors they deemed relevant with respect to each applicable
Portfolio, including the factors described in Proposal No.2 with respect to the
New Advisory Agreements. In addition, the Trustees considered the fact that the
terms of the Merger Agreement do not contemplate any changes in the overall form
of the subadvisory contracts or subadvisory fees and that the Merger will have
no effect with respect to the operations of any of the Subadvisers, since they
are independent of SAAMCo.
RECOMMENDATION OF THE BOARD OF TRUSTEES
Based on the considerations set forth above, the Trustees, including all of
the Disinterested Trustees, unanimously determined that it was necessary and in
the best interests of each applicable Portfolio and its shareholders to enter
into the New Subadvisory Agreements and to recommend approval of the New
Subadvisory Agreements by shareholders.
INFORMATION ABOUT THE SUBADVISERS
ALLIANCE CAPITAL MANAGEMENT L.P. The subadviser for the Growth-Income,
Alliance Growth and Global Equities Portfolios is Alliance. Alliance, a Delaware
limited partnership, supervises client accounts with assets totaling over $262.5
billion as of June 30, 1998. As of that date, Alliance was retained as an
investment manager of employee benefit fund assets for 32 of the Fortune 100
companies. Its principal office is located at 1345 Avenue of the Americas, New
York, New York 10105. Alliance does not manage an investment company with
similar investment objectives as Growth-Income or Global Equities. Alliance
19
<PAGE>
is the investment adviser to other investment companies having similar
investment objectives to Alliance Growth as indicated in Exhibit D.
The names, positions with Alliance and principal occupations of the persons
who are its principal executive officers and its directors are as shown below.
Unless otherwise indicated, the business address of each such person is 1345
Avenue of the Americas, New York, New York.
<TABLE>
<CAPTION>
NAME AND ADDRESS POSITION WITH ALLIANCE AND PRINCIPAL OCCUPATION
- ----------------------------------------------------- -----------------------------------------------------------
<S> <C>
Dave Harrell Williams ............................... Chairman of the Board of Directors & CEO ACMC
Alliance Capital Management Corp.
1345 Avenue of the Americas
New York, NY 10105
Benjamin Duke Holloway .............................. Director--ACMC, Financial Consultant
Alliance Capital Management Corp.
1345 Avenue of the Americas
New York, NY 10105
Claude Bebear ....................................... Director--ACMC, Chairman, CEO, AXA-UAP
AXA-UAP
23 Avenue Matignon
Paris, France 75008
Denis Duverne ....................................... Director; Senior Vice President
AXA-UAP International Life--AXA-UAP
23 Avenue Matignon
Paris, France 75008
Frank Savage ........................................ Director; Senior Vice President--ACMC
Alliance Capital Management Corp.
1345 Avenue of the Americas
New York, NY 10105
Luis Javier Bastida ................................. Director; CFO & Member of the Executive Committee--Banco
Bano Bilbao Vizcaya Bilbao Vizcaya
Plaza San Nicolas
1-Bilbao, Spain
Henri de la Croix de Castries ....................... Director; SEVP--Financial Services--AXA-UAP
AXA-UAP
23 Avenue Matignon
Paris, France 75008
Kevin C. Dolan ...................................... Director; Senior Vice President--AXA-UAP
AXA-UAP
23 Avenue Matignon
Paris, France 75008
Heve Hatt ........................................... Director; Executive--AXA-UAP
AXA-UAP
23 Avenue Matignon
Paris, France 75008
</TABLE>
20
<PAGE>
<TABLE>
<CAPTION>
NAME AND ADDRESS POSITION WITH ALLIANCE AND PRINCIPAL OCCUPATION
- ----------------------------------------------------- -----------------------------------------------------------
<S> <C>
Reba White Williams ................................. Director; Special Projects--ACMC; Art Historian
Alliance Capital Management Corp.
1345 Avenue of the Americas
New York, NY 10105
Peter D. Noris ...................................... Director--ACMC; EVP & CIO
The Equitable Life Assurance Society The Equitable Life Assurance Society of the U.S.
787 Seventh Avenue
New York, NY 10019
Robert Bruce Zoellick ............................... Director--ACMC--John M. Olin Professor in National Society
The U.S. Naval Academy Affairs
Donald Hood Brydon .................................. Director--ACMC; Chairman & CEO
AXA Investment Managers S.A. AXA Investment Managers, S.A.
20 Lincoln's Inn Fields
London, England
Edward D. Miller .................................... Director--ACMC; President & CEO--The Equitable Companies
The Equitable Companies Incorporated Incorporated; Chairman & CEO--The Equitable Life Assurance
787 Seventh Avenue Society of the U.S.
New York, NY 10019
Stanley B. Tullin ................................... Director; ACMC; EVP & CFO--The Equitable Companies
The Equitable Companies Incorporated Incorporated; Vice Chairman & CFO--The Equitable Life
787 Seventh Avenue Assurance Society
New York, NY 10019
Michael Hegarty ..................................... Director--ACMC; Vice Chairman & COO--The Equitable
The Equitable Companies Incorporated Companies Incorporated; President, COO & Director--The
787 Seventh Avenue Equitable Life Assurance Society
New York, NY 10019
John D. Carifa ...................................... Director, Vice Chairman & COO--ACMC
Alliance Capital Management Corp.
1345 Avenue of the Americas
New York, NY 10105
Bruce Williams Calvert .............................. Director, Vice Chairman & CIO--ACMC
Alliance Capital Management Corp.
1345 Avenue of the Americas
New York, NY 10105
Alfred Harrison ..................................... Director, Vice Chairman--ACMC
ACMLP
501 Second Avenue South
Suite 500
Minneapolis, MN 55402
</TABLE>
DAVIS SELECTED ADVISERS, L.P. The Subadviser of the Venture Value and Real
Estate Portfolios is Davis, 124 East Marcy Street, Santa Fe, New Mexico 87501.
Venture Advisers, Inc. is the sole General Partner of the limited partnership,
which, in turn, is controlled by Shelby M.C. Davis. Davis provides advisory
services to other investment companies. As of February 28, 1998, Davis had over
$16.58 billion of assets under management. The Subadvisory Agreement with Davis
provides that Davis may delegate any of its responsibilities under the agreement
to one of its affiliates, including Davis Advisers--NY, Inc., a
21
<PAGE>
wholly owned subsidiary; however, Davis remains ultimately responsible (subject
to supervision by SAAMCo) for the assets of the Portfolios allocated to it.
Davis is the investment adviser to other investment companies having a similar
objective to the Venture Value and Real Estate Portfolios as indicated in
Exhibit E.
The names, positions with Davis and principal occupations of the persons who
are its principal executive officers and its directors are as shown below.
Unless otherwise indicated, the business address of each such person is 124 East
Marcy Street, Santa Fe, New Mexico 87501.
<TABLE>
<CAPTION>
NAME AND ADDRESS POSITION WITH DAVIS AND PRINCIPAL OCCUPATION
- -------------------------------------------- ------------------------------------------------
<S> <C>
Shelby M.C. Davis .......................... Chairman--CEO
Christopher C. Davis ....................... Vice Chairman
1009 5th Avenue--11th Floor
New York, New York 10017
Andrew Davis ............................... President
Kenneth C. Eich ............................ Chief Operating Officer
</TABLE>
FEDERATED INVESTMENT COUNSELING. The Subadviser for the Corporate Bond,
Utility and Federated Value Portfolios is Federated, Federated Investors Tower,
1001 Liberty Avenue, Pittsburgh, Pennsylvania 15222-3779. Federated is a wholly
owned subsidiary of Federated Investors, Inc., and together with other
subsidiaries of Federated Investors, Inc., serves as investment adviser to a
number of investment companies and private accounts. With over $157.5 billion
invested across more than 300 funds under management and/or administration as of
September 30, 1998, Federated Investors, Inc. is one of the largest mutual fund
investment managers in the U.S. Federated is the investment adviser to other
investment companies having a similar objective to the Corporate Bond, Utility
and Federated Value Portfolios as indicated in Exhibit F.
22
<PAGE>
The names, positions with Federated and principal occupations of the persons
who are its principal executive officers and its directors are as shown below.
Unless otherwise indicated, the business address of each such person is
Federated Investors Tower, 1001 Liberty Avenue, Pittsburgh, Pennsylvania
15222-3779.
<TABLE>
<CAPTION>
NAME AND ADDRESS POSITION WITH FEDERATED AND PRINCIPAL OCCUPATION
- -------------------------------------------- ------------------------------------------------
<S> <C>
John F. Donohue ............................ Trustee
Chairman, Federated Investors, Inc.
J. Christopher Donahue ..................... Trustee
President/CEO, Federated Investors, Inc.
John W. McGonigle .......................... Trustee
Exec. V.P., Secretary, Federate Investors, Inc.
Mark D. Olson .............................. Trustee
107 West Market Street ..................... Attorney, Wilson, Halbrook & Bayard
Georgetown, DE 19947
John B. Fisher ............................. President
William D. Dawson, III ..................... Exec. Vice President
J. Thomas Madden ........................... Exec. Vice President
Henry A. Frantzen .......................... Exec. Vice President
Edward C. Gonzales ......................... Vice President
Stephen A. Keen ............................ Vice President and Secretary
General Counsel, Federated Investors, Inc.
Thomas R. Donahue .......................... Treasurer, CFO and Assistant Treasurer
</TABLE>
GOLDMAN SACHS ASSET MANAGEMENT. The Subadviser for the Asset Allocation
Portfolio is GSAM, a separate operating division of Goldman, Sachs & Co.
Goldman, Sachs & Co. is a New York limited partnership with its principal
offices at 85 Broad Street, New York, New York 10004.
GSAM serves a wide range of clients including private and public pension
funds, endowments, foundations, banks, thrifts, insurance companies,
corporations, and private investors and family groups. The asset management
services are divided into the following areas: institutional fixed income
investment management; global currency management; institutional equity
investment management; fund management; money market mutual fund management and
administration; and private asset management. As of September 21, 1998, GSAM,
together with its affiliates, acted as investment adviser, administrator or
distributor for approximately $167 billion in assets. GSAM is the investment
adviser to other investment companies having a similar objective to the Asset
Allocation Portfolio as indicated in Exhibit G.
The names, positions with GSAM and principal occupations of the persons who
are its principal executive officers and its directors are as shown below.
Unless otherwise indicated, the business address of each such person is 85 Broad
Street, New York, New York 10004.
Goldman Sachs Asset Management is a separate operating division of Goldman,
Sachs & Co., which is governed by an Executive Committee. The names, positions
and principal occupations of the persons
23
<PAGE>
who comprise the Executive Committee are shown below. Unless otherwise
indicated, the business address of each such person is 85 Broad Street, New
York, New York 10004.
<TABLE>
<CAPTION>
POSITION WITH GSAM
NAME AND ADDRESS AND PRINCIPAL OCCUPATION
- --------------------------------------------------------------- -----------------------------
<S> <C>
Jon A. Corzine ................................................ Chief Executive Officer
Investment Banking
Robert J. Hurst ............................................... Managing Director
Investment Banking
Henry M. Paulson, Jr. ......................................... Chief Operating Officer
Investment Banking
John A. Thain ................................................. Chief Financial Officer
85 Broad Street Investment Banking
New York, NY 10004 and
Peterborough Court
133 Fleet Street
London EC4A 2BB England
John L. Thornton .............................................. Managing Director
Peterborough Court Investment Banking
133 Fleet Street
London EC3A 2BB England
Roy J. Zuckerberg ............................................. Managing Director
One New York Plaza Investment Banking
New York, NY 10004
</TABLE>
David B. Ford and John P. McNulty are co-heads of Goldman Sachs Asset
Management. Their business addresses are: One New York Plaza, New York, New York
10004.
GOLDMAN SACHS ASSET MANAGEMENT-INTERNATIONAL. The Subadviser for the Global
Bond Portfolio is GSAM-International, an affiliate of Goldman, Sachs & Co.
GSAM-International was organized in 1990 as a company with limited liability
under the laws of England. It is authorized to conduct investment advisory
business in the United Kingdom as a member of the Investment Management
Regulatory Organization Limited, a United Kingdom self-regulatory organization.
GSAM and GSAM-International are able to draw on the research and market
expertise of Goldman, Sachs & Co. in making investment decisions for the
Portfolios for which they act as Subadviser. In performing their subadvisory
services, GSAM and GSAM-International, while remaining ultimately responsible
for the management of the Portfolios are able to draw upon the research and
expertise of their affiliate offices, for portfolio decisions and management
with respect to certain portfolio securities. GSAM-International is the
investment adviser to other investment companies having a similar objective to
the Global Bond Portfolio as indicated in Exhibit H.
24
<PAGE>
The names, positions with GSAM-International and principal occupations of
the persons who are its principal executive officers and its directors are as
shown below.
<TABLE>
<CAPTION>
POSITION WITH
GSAM-INTERNATIONAL AND
NAME AND ADDRESS PRINCIPAL OCCUPATION
- ------------------------------------------------------------- -------------------------------
<S> <C>
David W. Blood .............................................. Director
Goldman Sachs Asset Management International Investment Banking
133 Fleet Street
London, EC4A 2BB, England
Paul C. Deighton ............................................ Director
Goldman Sachs Asset Management International Investment Banking
133 Fleet Street
London, EC4A 2BB, England
David B. Ford ............................................... Director/CEO
One New York Plaza Investment Banking
New York, NY 10004
John P. McNulty ............................................. Director
One New York Plaza Investment Banking
New York, NY 10004
Gregory K. Palm ............................................. Director
Investment Banking
Theodore T. Sotir ........................................... Director
Goldman Sachs Asset Management International Investment Banking
Peterborough Court
133 Fleet Street
London, EC4A 2BB, England
</TABLE>
MORGAN STANLEY ASSET MANAGEMENT INC. The Subadviser of the Worldwide High
Income and International Diversified Equities Portfolios is MSAM, 1221 Avenue of
the Americas, New York, New York 10020. MSAM is a wholly owned subsidiary of
Morgan Stanley Dean Witter & Co., and provides a broad range of portfolio
management services to customers in the United States and abroad. As of February
28, 1998, MSAM, together with its affiliated institutional investment management
companies, had approximately $154.6 billion of assets under management
(inclusive of assets under fiduciary advisory control).
Morgan Stanley Dean Witter & Co. is a preeminent global financial services
firm that maintains leading market positions in each of its three primary
businesses: securities, asset management and credit services. MSAM is the
investment adviser to other investment companies having a similar objective to
the Worldwide High Income and International Diversified Equities Portfolios as
indicated in Exhibit I.
25
<PAGE>
The names, positions with MSAM and principal occupations of the persons who
are its principal executive officers and its directors are as shown below.
Unless otherwise indicated, the business address of each such person is 1221
Avenue of the Americas, New York, New York 10020.
<TABLE>
<CAPTION>
NAME AND ADDRESS POSITION WITH MSAM AND PRINCIPAL OCCUPATION
- ----------------------------------------- ---------------------------------------------------
<S> <C>
Barton Michael Biggs..................... Chairman, Director & Managing Director
James Michael Allwin..................... President, Director & Managing Director
Marna Whittington........................ Chief Operating Officer & Managing Director
Dennis Garfield Sherva................... Director & Managing Director
Alexander C. Frank....................... Treasurer
</TABLE>
PUTNAM INVESTMENT MANAGEMENT, INC. The Subadviser of the Putnam Growth,
International Growth and Income and Emerging Markets Portfolios is Putnam, a
Massachusetts corporation with principal offices at One Post Office Square,
Boston, Massachusetts. Putnam has been managing mutual funds since 1937 and
serves as investment adviser to the funds in the Putnam Family. Putnam and its
affiliates managed approximately $252 billion as of September 30, 1998. Putnam
is a subsidiary of Putnam Investments, Inc., which, other than a minority
interest owned by employees, is wholly owned by Marsh & McLennan Companies,
Inc., a publicly owned holding company whose principal businesses are
international insurance and reinsurance brokerage, employee benefit consulting
and investment management. Putnam is the investment adviser to other investment
companies having a similar objective to the Putnam Growth, International Growth
and Income and Emerging Markets Portfolios as indicated in Exhibit J.
The names, positions with Putnam and principal occupations of the persons
who are its principal executive officers and its directors are as shown below.
Unless otherwise indicated, the business address of each such person is One Post
Office Square, Boston, Massachusetts.
<TABLE>
<CAPTION>
NAME AND ADDRESS POSITION WITH PUTNAM AND PRINCIPAL OCCUPATION
- ----------------------------------------- ---------------------------------------------------
<S> <C>
Lawrence J. Lasser....................... President, Chief Executive Officer and Director
George Putnam............................ Director and Chairman of the Putnam Funds
Gordon H. Silver......................... Director, Senior Managing Director and Senior
Administrative Officer
</TABLE>
INFORMATION ABOUT THE NEW SUBADVISORY AGREEMENTS
As stated above, the New Subadvisory Agreements are annexed to this Proxy
Statement as Exhibits C-1 - C-7. Under each New Subadvisory Agreement, which is
identical in all material respects to each respective Portfolio's Existing
Subadvisory Agreement, the Subadviser will manage the investment and
reinvestment of the assets of the respective Portfolio for which it is
responsible, subject to the oversight and review of SAAMCo. The Subadviser will
determine in its discretion the securities to be purchased or sold, provide
SAAMCo with records concerning its activities which SAAMCo or the Trust is
required to maintain, and render regular reports to SAAMCo and to officers and
Trustees of the Trust concerning its discharge of the foregoing
responsibilities. Each Subadviser is independent of SAAMCo and will discharge
its responsibilities subject to the policies of the Trustees and the oversight
and supervision of SAAMCo, which pays the Subadvisers' fees.
The following table sets forth the fees that the Adviser pays each
Subadviser under the Subadvisory Agreements on a monthly basis with respect to
each applicable Portfolio for which the Subadviser performs services, computed
on average daily net assets, at an annual rate, and the total subadvisory fees
26
<PAGE>
paid to the Subadviser pursuant to the Existing Subadvisory Agreement for the
fiscal years ended November, 30, 1997.
The rate of the subadvisory fees under the New Subadvisory Agreements is the
same rate that was in effect under the Existing Subadvisory Agreements.
SUBADVISORY FEES
<TABLE>
<CAPTION>
FEE (AS A PERCENTAGE FISCAL YEAR END
SUBADVISER PORTFOLIO OF DAILY NET ASSETS) NOVEMBER 30, 1997
- ----------------------- --------------------------- ----------------------------------- -----------------
<S> <C> <C> <C>
Alliance Alliance Growth .35% on first $50 million $ 1,280,957
.30% on next $100 million
.25% on next $150 million
.20% on next $200 million
.15% thereafter
Growth-Income .35% on first $50 million $ 1,161,812
.30% on next $100 million
.25% on next $150 million
.20% on next $200 million
.15% thereafter
Global Equities .50% on first $50 million $ 1,109,352
.40% on next $100 million
.30% on next $150 million
.25% thereafter
Davis Venture Value .45% on first $100 million $ 3,126,351
.40% on next $400 million
.35% thereafter
Real Estate .45% on first $100 million $ 33,075*
.40% on next $400 million
.35% thereafter
GSAM Asset Allocation .40% on first $50 million $ 1,088,896
.30% on next $100 million
.25% on next $100 million
.20% thereafter
GSAM International Global Bond .40% on first $50 million $ 281,015
.30% on next $100 million
.25% on next $100 million
.20% thereafter
MSAM Worldwide High Income .65% on first $350 million $ 595,193
.60% thereafter
International Diversified .65% on first $350 million $ 1,382,736
Equities .60% thereafter
</TABLE>
27
<PAGE>
<TABLE>
<CAPTION>
FEE (AS A PERCENTAGE FISCAL YEAR END
SUBADVISER PORTFOLIO OF DAILY NET ASSETS) NOVEMBER 30, 1997
- ----------------------- --------------------------- ----------------------------------- -----------------
<S> <C> <C> <C>
Federated Corporate Bond .30% on first $25 million $ 128,651
.25% on next $25 million
.20% on next $100 million
.15% thereafter
Federated Value .55% on first $20 million $ 146,523
.35% on next $30 million
.25% on next $100 million
.20% on next $350 million
.15% thereafter
Utility .55% on first $20 million $ 73,542
.35% on next $30 million
.25% on next $100 million
.20% on next $350 million
.15% thereafter
Putnam International Growth and .65% on first $150 million $ 81,451*
Income .55% on next $150 million
.45% thereafter
Emerging Markets 1.00% on first $150 million $ 79,549*
.95% on next $150 million
.85% thereafter
Putnam Growth .50% on first $150 million $ 618,584
.45% on next $150 million
.35% thereafter
</TABLE>
- ------------------------
* For the period 6/2/97 (commencement of operations) through 11/30/97.
Under the terms of the Subadvisory Agreements, generally, the Subadvisers,
and their respective affiliated or controlling persons, will not be liable for
any acts or omissions connected with the services rendered under the respective
agreements, except where the act or omission results from willful misfeasance,
bad faith, gross negligence or reckless disregard of their duties and
obligations thereunder.
If approved by the Shareholders, each New Subadvisory Agreement will
continue in effect for a period of two years from the Closing, and from year to
year thereafter as to each applicable Portfolio for so long as such renewal is
specifically approved at least annually by (i) the Board of Trustees, or by the
vote of a majority (as defined in the 1940 Act) of the outstanding voting
securities of each applicable Portfolio, and (ii) the vote of a majority of
Trustees who are not parties to the New Subadvisory Agreement or interested
persons (as defined in the 1940 Act) of any such party, cast in person, at a
meeting called for the purpose of voting on such approval. The New Subadvisory
Agreements provide that they will terminate in the event of an assignment (as
defined in the 1940 Act) or upon termination of the New Advisory Agreement of
the respective Portfolio. The New Subadvisory Agreements may be terminated by
the Trust, the Adviser or the respective Subadviser upon the specified written
notice contained in the Agreement.
Certain information concerning the Existing Subadvisory Agreements,
including the date of the most recent approval by shareholders and Trustees, is
set forth in Exhibit K.
28
<PAGE>
THE BOARD OF TRUSTEES UNANIMOUSLY RECOMMENDS THAT
SHAREHOLDERS VOTE "FOR" PROPOSAL NO. 3
If Proposal No. 3 is not approved by the shareholders of any applicable
Portfolio and the transactions contemplated by the Merger Agreement are
otherwise consummated, the Trustees will determine the appropriate actions to be
taken with respect to such applicable Portfolio's subadvisory arrangements at
that time.
------------------------
APPROVAL OR DISAPPROVAL OF (a) AN AMENDMENT TO THE
INVESTMENT ADVISORY AND MANAGEMENT AGREEMENT BETWEEN
THE TRUST AND THE
ADVISER AND (b) AN AMENDMENT TO THE SUBADVISORY
AGREEMENT BETWEEN THE ADVISER AND ALLIANCE
(ALLIANCE GROWTH PORTFOLIO ONLY)
PROPOSAL NO. 4
The Board of Trustees of the Trust is submitting for approval by the
shareholders of the Alliance Growth Portfolio (a) an amendment to the investment
advisory and management agreement between the Trust, on behalf of the Alliance
Growth Portfolio, and the Adviser to revise the breakpoints in the fee payable
by the Portfolio (the "Alliance Fee Amendment"), and (b) an amendment to the
Subadvisory Agreement between the Adviser and Alliance (the "Alliance
Subadvisory Agreement") to revise the breakpoints in the fee payable by the
Adviser to Alliance (the "Alliance Subadvisory Fee Amendment" and together with
the Alliance Fee Amendment, the "Alliance Amendments"). A copy of the Alliance
Amendments are annexed as Exhibit L hereto. If approved by shareholders of the
Alliance Growth Portfolio, the Alliance Amendments will take effect as soon as
practicable thereafter. If the effective date of the Alliance Amendments occurs
prior to the Closing of the Merger, the Alliance Amendments will amend the
Existing Advisory and Subadvisory Agreements with respect to the Alliance Growth
Portfolio. Subject to approval of the New Advisory and Subadvisory Agreements by
Alliance Growth Portfolio shareholders in connection with the Merger, the
Alliance Amendments will also amend the New Agreements. The Alliance Amendments
are part of the same Proposal and will not be voted on separately by
shareholders of the Alliance Growth Portfolio.
As part of SAAMCo's oversight responsibilities pursuant to the Advisory
Agreements, SAAMCo evaluates a Portfolio's performance in comparison to similar
mutual funds and other market information, and oversees the continued
performance of the Subadviser. At the October 15, 1998 Board meeting, the Board,
including the Disinterested Trustees, unanimously approved a subadvisory fee
increase for Alliance with respect to the Alliance Growth Portfolio, and a
corresponding increase in the advisory fee payable to SAAMCo so that the amount
of advisory fee retained by SAAMCo would not be reduced to fund the Alliance
increase. In determining to approve the Alliance Amendments, the Trustees
considered the historical performance record of the Alliance Growth Portfolio,
the rates generally charged by Alliance for its advisory services, the high
quality of investment subadvisory services rendered by Alliance, and the
importance of retaining a successful Subadviser. The Trustees also considered
that Alliance had requested such a fee increase and that the fee increase
reflects the rate agreed upon in arm's length bargaining between the Adviser and
Alliance. The Trustees also considered that the benefits of the increase will
inure solely to Alliance and not to SAAMCo.
RECOMMENDATION OF THE BOARD OF TRUSTEES
Based upon the considerations set forth above, the Board of Trustees,
including all of the Disinterested Trustees, unanimously determined that it was
necessary and in the best interests of the Alliance
29
<PAGE>
Growth Portfolio and its shareholders to approve the Alliance Amendments, and to
recommend approval of the Alliance Amendments by shareholders.
PROPOSED AND CURRENT ADVISORY AND SUBADVISORY FEES
The following chart contains the proposed advisory fee to be payable by the
Alliance Growth Portfolio to the Adviser pursuant to the Alliance Fee Amendment
and the proposed subadvisory fee to be payable by the Adviser to Alliance
pursuant to the Alliance Subadvisory Fee Amendment. In addition, the chart
contains the fees payable under the investment advisory and management agreement
and the Alliance Subadvisory Agreement as currently in effect. Fees are
expressed as annual percentage rates of the average net assets of the Portfolio.
As can be seen, the maximum fee rate payable to the Adviser or Alliance pursuant
to the Alliance Amendments is not proposed to change. Rather, the proposed
changes are the elimination of the last two breakpoints in each fee.
<TABLE>
<CAPTION>
PROPOSED ADVISORY FEE TO THE ADVISER CURRENT ADVISORY FEE TO THE ADVISER
- ---------------------------------------------- ----------------------------------------------
<S> <C>
.70% on first $50 million .70% on first $50 million
.65% on next $100 million .65% on next $100 million
.60% thereafter .60% on next $150 million
.55% on next $200 million
.50% thereafter
</TABLE>
<TABLE>
<CAPTION>
PROPOSED SUBADVISORY FEE TO ALLIANCE CURRENT SUBADVISORY FEE TO ALLIANCE
- ---------------------------------------------- ----------------------------------------------
<S> <C>
.35% on first $50 million .35% on first $50 million
.30% on next $100 million .30% on next $100 million
.25% thereafter .25% on next $150 million
.20% on next $200 million
.15% thereafter
</TABLE>
The following chart contains the Portfolio's current fees and expenses borne
directly or indirectly by shareholders as compared to the costs and expenses on
a pro forma basis that would be borne directly or indirectly by shareholders
taking into account the Alliance Amendments. The following Examples assume
reinvestment of all dividends and distributions and utilize a 5% annual rate of
return as mandated by SEC rules. THE EXAMPLES SHOULD NOT BE CONSIDERED A
REPRESENTATION OF PAST OR FUTURE EXPENSES OR ANNUAL RATES OF RETURN, AND ACTUAL
EXPENSES OR ANNUAL RATES OF RETURN MAY BE MORE OR LESS THAN THOSE ASSUMED FOR
PURPOSES OF THE EXAMPLES.
PRO FORMA FEE TABLE FOR ALLIANCE GROWTH PORTFOLIO
<TABLE>
<CAPTION>
CURRENT FEES PRO FORMA FEES
------------ --------------
<S> <C> <C>
ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from
fund assets).................................................
Management Fees..............................................
Other Expenses...............................................
Total Annual Fund Operating Expenses.........................
</TABLE>
EXAMPLE
THIS EXAMPLE IS INTENDED TO HELP YOU COMPARE THE COST OF INVESTING IN THE
FUND WITH THE COST OF INVESTING IN OTHER MUTUAL FUNDS.
THE EXAMPLE ASSUMES THAT YOU INVEST $10,000 IN THE FUND FOR THE TIME PERIODS
INDICATED AND THEN REDEEM ALL OF YOUR SHARES AT THE END OF THOSE PERIODS. THE
EXAMPLE ALSO ASSUMES THAT YOUR INVESTMENT HAS A
30
<PAGE>
5% RETURN EACH YEAR AND THAT THE FUND'S OPERATING EXPENSES REMAIN THE SAME.
ALTHOUGH YOUR ACTUAL COSTS MAY BE HIGHER OR LOWER, BASED ON THESE ASSUMPTIONS
YOUR COSTS WOULD BE:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
CURRENT...................................... $ $ $ $
PRO FORMA.................................... $ $ $ $
</TABLE>
The foregoing table does not reflect separate accounts expenses, including
sales load.
For the fiscal year ended November 30, 1997, the Alliance Growth Portfolio
paid SAAMCo an advisory fee of $3,145,937 (an effective annual fee rate of
.59%), of which $1,280,957 was paid to Alliance (an effective annual fee rate of
.24%). Had the rates pursuant to the Alliance Amendments been in effect during
the fiscal year ended November 30, 1997, the Alliance Growth Portfolio would
have paid SAAMCo an advisory fee of $3,297,109 (an effective annual fee rate of
.62%), of which $1,432,129 would have been paid to the subadviser (an effective
annual fee rate of .27%). These amounts represent increases of $151,172 and
$151,172, or approximately 5% and 12%, respectively, over such fees actually
paid. The entire fee increase would have been paid to Alliance; accordingly, the
Adviser will not benefit from the change in fee rates.
Alliance is described under Proposal No. 3 under "Information About the
Subadvisers--Alliance Capital Management, L.P." Alliance is the investment
adviser to other investment companies having a similar objective to the Alliance
Growth Portfolio as indicated in Exhibit D.
THE BOARD OF TRUSTEES UNANIMOUSLY RECOMMENDS THAT
SHAREHOLDERS VOTE "FOR" PROPOSAL NO. 4
If this Proposal No. 4 is not approved, neither of the Alliance Amendments
will take effect.
------------------------
APPROVAL OR DISAPPROVAL OF (a) A NEW INVESTMENT ADVISORY AND
MANAGEMENT AGREEMENT BETWEEN THE TRUST AND SAAMCO WITH
RESPECT TO EACH OF GROWTH/PHOENIX INVESTMENT COUNSEL AND
BALANCED/PHOENIX INVESTMENT COUNSEL PORTFOLIOS AND (b) A NEW
SUBADVISORY AGREEMENT BETWEEN THE ADVISER AND MFS
PROPOSAL NO. 5
The Board of Trustees of the Trust is submitting for approval by the
shareholders of each of the Phoenix Growth and Phoenix Balanced Portfolios (a) a
new investment advisory and management agreement between the Trust, on behalf of
each respective Portfolio, and the Adviser ("New MFS Advisory Agreement") and
(b) a new subadvisory agreement between the Adviser and MFS (the "MFS
Subadvisory Agreement"). If this Proposal No. 5 is approved by shareholders, MFS
would serve as each Portfolio's Subadviser in place of Phoenix. The New MFS
Advisory Agreement is being submitted to shareholders for two reasons. First, as
discussed under Proposal No. 2, each Existing Advisory Agreement between SAAMCo
and the Trust, including the Existing Advisory Agreements relating to the
Phoenix Growth and Phoenix Balanced Portfolios, will terminate upon the Closing
of the Merger between SunAmerica and AIG. Thus, the New MFS Advisory Agreement
is being submitted for shareholder approval to ensure that the Portfolios
receive uninterrupted management and advisory services after the Closing.
Second, the New MFS Advisory Agreement is being submitted for shareholder
approval in order to revise the breakpoints in the advisory fee payable by the
applicable Portfolio pursuant to the Existing Advisory Agreement (the "Advisory
Fee Amendment"). The form of the New MFS Advisory Agreement (including the
Advisory Fee Amendment) is annexed as Exhibit A hereto. The form of MFS
Subadvisory Agreement for each Portfolio is annexed as Exhibit M hereto. If this
Proposal is approved by shareholders of a Portfolio, the Advisory
31
<PAGE>
Fee Amendment and the MFS Subadvisory Agreement will take effect, for that
Portfolio, as of December 30, 1998 (the "MFS Effective Date"), and MFS will
become Subadviser as of such date in place of Phoenix, whether the MFS Effective
Date occurs prior to or after the Closing of the Merger. If the MFS Effective
Date is prior to the Closing, shareholder approval of this Proposal shall
constitute approval of the New MFS Advisory Agreement and the MFS Subadvisory
Agreement (the "MFS Agreements") both with respect to the period prior to the
Closing as well as following any deemed termination as a result of the Closing
of the Merger after their effective date.
If the Closing of the Merger occurs prior to the MFS Effective Date and
shareholder approval of the MFS Agreements has not yet been obtained, subject to
receipt of the Exemptive Order described under Proposal No. 2, SAAMCo will
continue to provide management services to each of the Phoenix Growth and
Phoenix Balanced Portfolios, with its advisory fees being paid into escrow.
During such interim period, advisory fees would be payable at the rates
currently in effect under the Existing Advisory Agreement. In addition, SAAMCo
will enter into a subadvisory agreement with MFS that is substantially similar
in all material respects, other than the subadviser, to the Existing Subadvisory
Agreement between SAAMCo and Phoenix, including the same fee rate that is
currently in effect between SAAMCo and Phoenix (the "Interim Agreement").
Shareholder approval of this Proposal will be deemed to ratify the Interim
Agreement for the period from Closing until shareholder approval. As indicated
in Proposal No. 2, there can be no assurance that the SEC will grant the
Exemptive Order.
The proposed MFS Agreements with respect to each Portfolio are part of the
same Proposal with respect to such Portfolio and will not be voted on separately
by shareholders of such Portfolio.
APPROVAL OF MFS AGREEMENTS
At a meeting held on October 15, 1998, the Trustees, including all of the
Disinterested Trustees, unanimously approved the MFS Agreements. The Trustees
considered the factors described under Proposal No. 2--"Approval of the New
Advisory Agreements," as modified by factors specific to the Phoenix Growth and
Phoenix Balanced Portfolios and described in this section. The Trustees
considered that as part of SAAMCo's oversight responsibilities pursuant to the
Existing Advisory Agreement, SAAMCo, (i) evaluates each Portfolio's performance
in comparison to similar mutual funds and other market information, (ii)
conducts searches for a replacement Subadviser for each Portfolio when deemed
necessary, (iii) selects, subject to the review and approval of the Trustees, a
Subadviser that has distinguished itself by superior performance and (iv)
oversees the continued performance of the Subadviser. Recently, SAAMCo
determined, based in part on the performance of the Phoenix Growth and Phoenix
Balanced Portfolios in comparison to similar funds, that it was in the best
interest of the shareholders to replace the Subadviser for the Phoenix Growth
and Phoenix Balanced Portfolios. As a result of discussions with Phoenix, the
current Subadviser for each Portfolio, Phoenix has agreed to tender its
resignation as the Subadviser to the Phoenix Growth and Phoenix Balanced
Portfolios concurrent with MFS commencing its responsibilities as the successor
Subadviser.
At the October 15, 1998 Board meeting, the Board, including all of the
Disinterested Trustees, unanimously approved the new MFS Subadvisory Agreements
pursuant to each of which MFS would serve as each Portfolio's Subadviser in
place of Phoenix. Except for an increase in the fees payable by the Adviser to
MFS thereunder as described below, the material terms of each MFS Subadvisory
Agreement are substantially similar to those of the respective Subadvisory
Agreement with Phoenix (each a "Phoenix Subadvisory Agreement"). The subadvisory
fees payable to MFS reflect the rate agreed upon in arm's length bargaining
between the Adviser and MFS. In addition, because of the higher fee payable by
the Adviser to MFS pursuant to each MFS Subadvisory Agreement, the Board,
including all of the Disinterested Trustees, unanimously approved amendments to
the investment advisory and management agreement between the Trust and the
Adviser pursuant to which the Adviser will receive increased fees payable by
each Portfolio to the Adviser. The Adviser, however, will not retain any of the
increase in fees; rather, all increases in fees will be directed to MFS.
32
<PAGE>
In selecting MFS as subadviser, the Trustees reviewed, among other things,
MFS's historical performance record in managing similar investment companies and
other client accounts, its name recognition in the investment community, its
financial condition, and its overall commitment to the investment advisory
business. MFS is America's oldest mutual fund organization and, with its
predecessor organizations, has a history of money management dating from 1924.
MFS is an indirect, wholly owned subsidiary of Sun Life Assurance Company of
Canada ("Sun Life"). As of August 31, 1998, MFS managed approximately $51.0
billion in assets in equity securities and $20.6 billion in assets in
fixed-income securities. The Trustees also took into account MFS's normal fee
schedule, and that the fee rate reflected in each of the MFS Subadvisory
Agreements reflects the rate agreed upon in arm's length bargaining between the
Adviser and MFS.
The Trustees approved the Advisory Fee Amendments to minimize the reduction
in the amount of the advisory fee retained by the Adviser with respect to each
Portfolio. Under the original arrangement with Phoenix, for the fiscal year
ended November 30, 1997, SAAMCo retained a fee at the annual rate of .35% of
average net assets of each of the Phoenix Growth Portfolio and Phoenix Balanced
Portfolio. The Trustees considered that if the Adviser's rates were not adjusted
pursuant to each Advisory Fee Amendment, under the MFS Subadvisory Agreement, at
the current asset levels, the Adviser's advisory fee would be reduced to .24% of
average net assets in the case of the Phoenix Growth Portfolio and .295% of
average net assets in the case of the Phoenix Balanced Portfolio. Accordingly,
the Board approved each Advisory Fee Amendment to minimize the reduction in the
Adviser's advisory fee if MFS is retained as subadviser pursuant to the MFS
Subadvisory Agreements.
At the meeting held on October 15, 1998, the Board also discussed the
Adviser's proposal that the investment objective of the Phoenix Growth Portfolio
be changed. The investment objective of the Portfolio is not a fundamental
policy and may be changed by vote of the Board of Trustees without shareholder
approval. The current investment objective of the Phoenix Growth Portfolio is
long-term growth of capital. On the recommendation of the Adviser, the Board
approved a change in the Portfolio's investment objective to reasonable current
income and long-term growth of capital and income. In conjunction with such
change in investment objective, the Board of Trustees approved a change in the
name of the Phoenix Growth Portfolio to the "MFS Conservative Growth Portfolio."
Representatives of SAAMCo informed the Board that MFS proposes to manage the
Phoenix Growth Portfolio in a manner similar to a retail mutual fund currently
managed by MFS. The Trustees considered the historical performance results of
that mutual fund, and believe that the change will benefit shareholders. Of
course, past performance is no assurance of future results.
The Trustees at the October 15, 1998 meeting also approved a change in the
name of Phoenix Balanced Portfolio to "MFS Total Return Portfolio." The Board
did not change the investment objective of that Portfolio. Its investment
objective remains reasonable income, long-term capital growth and conservation
of capital.
At the October 15, 1998 meeting, SAAMCo informed the Board that each of the
Life Companies had agreed that if MFS were approved as the new subadviser to the
Phoenix Growth and Phoenix Balanced Portfolios, contract holders that have
allocated all or a portion of their contract values to these Portfolios would be
entitled to one additional free transfer among Portfolios under their contracts.
RECOMMENDATION OF THE BOARD OF TRUSTEES
Based upon the considerations set forth above, the Board of Trustees,
including all of the Disinterested Trustees, unanimously determined that it was
necessary and in the best interests of the Phoenix Growth and Phoenix Balanced
Portfolios and their respective shareholders to approve the MFS Agreements and
to recommend approval thereof by shareholders.
33
<PAGE>
INFORMATION ABOUT THE ADVISER AND NEW MFS ADVISORY AGREEMENT
SAAMCo is described in the section under Proposal No. 2 - "Information About
the Adviser." The New MFS Advisory Agreement is the same as the New Advisory
Agreements which are discussed under Proposal No. 2 - "Information About New
Advisory Agreements." Proposed advisory fees are discussed below under "Proposed
and Current Advisory and Subadvisory Fees."
BROKERAGE COMMISSIONS
Information about brokerage commissions paid by the Portfolios is set forth
under Proposal No. 2 - "Brokerage Commissions."
INFORMATION ABOUT MFS
MASSACHUSETTS FINANCIAL SERVICES COMPANY. MFS, a Massachusetts corporation,
is America's oldest mutual fund organization. MFS and its predecessor
organizations have a history of money management dating from 1924 and founded
the first mutual fund in the United States, Massachusetts Investors Trust. Net
assets under the management of the MFS organization were approximately $78.1
billion on behalf of approximately 3.4 million investor accounts as of August
31, 1998. MFS is a subsidiary of Sun Life Assurance Company of Canada (U.S.)
Financial Services Holdings, Inc., which in turn is a wholly owned subsidiary of
Sun Life Assurance Company of Canada. The principal office of MFS is located at
500 Boylston Street, Boston, Massachusetts, 02116. MFS is the investment adviser
to other investment companies having similar investment objectives to the MFS
Conservative Growth and MFS Total Return Portfolios as indicated in Exhibit O.
The names, positions with MFS and principal occupations of the persons who
are its principal executive officers and its directors are as shown below.
Unless otherwise indicated, the business address of each such person is 500
Boylston Street, Boston, Massachusetts, 02116 .
<TABLE>
<CAPTION>
NAME AND ADDRESS POSITION WITH MFS AND PRINCIPAL OCCUPATION
- ----------------------------- -----------------------------------------------------------------------------------
<S> <C>
Jeffrey L. Shames Chairman, Chief Executive Officer and Director
John W. Ballen President, Chief Investment Officer and Director
Thomas J. Cashman President of MFS Institutional Advisors, Inc., MFS Institutional Investment
Management Subsidiary, and Director
Joseph Dello Russo Chief Financial Officer, Executive Vice President of MFS and Director
Kevin R. Parke Chief Equity Officer, Director of Equity Research and an Executive Vice President
of MFS and Director.
Arnold D. Scott Secretary, Senior Executive Vice President of MFS and Director
William W. Scott President of MFS Fund Distributors, Inc. the distributor of MFS Funds and Director
John D. McNeil Chairman of Sun Life and Director
150 King Street West
Toronto, Canada M5H1J9
Donald A. Stewart President of Sun Life and Director
150 King Street West
Toronto, Canada M5H1J9
</TABLE>
34
<PAGE>
INFORMATION ABOUT MFS SUBADVISORY AGREEMENTS
As stated above, the form of MFS Subadvisory Agreement is annexed to this
Proxy Statement as Exhibit M. Under the MFS Subadvisory Agreement, which is
substantially similar to the Phoenix Subadvisory Agreement, except for an
increase in the fees payable by SAAMCo to MFS as described below, MFS will
manage the investment and reinvestment of the assets of each of the Phoenix
Growth and Phoenix Balanced Portfolios, subject to the oversight and review of
SAAMCo. MFS will determine in its discretion the securities to be purchased or
sold, provide SAAMCo with records concerning its activities which SAAMCo or the
Trust is required to maintain, and render regular reports to SAAMCo and to
officers and Trustees of the Trust concerning its discharge of the foregoing
responsibilities. MFS is independent of SAAMCo and will discharge its
responsibilities subject to the policies of the Trustees and the oversight and
supervision of SAAMCo, which pays MFS fees.
Under the terms of the MFS Subadvisory Agreement, MFS and its respective
affiliated or controlling persons, will not be liable for any acts or omissions
connected with the services rendered under the agreement, except where the act
or omission results from willful misfeasance, bad faith, gross negligence or
reckless disregard of its duties and obligations thereunder.
If approved by the shareholders, the MFS Subadvisory Agreement will continue
in effect for a period of two years from the MFS Effective Date, and from year
to year thereafter as to each of Phoenix Growth and Phoenix Balanced for so long
as such renewal is specifically approved at least annually by (i) the Board of
Trustees, or by the vote of a majority (as defined in the 1940 Act) of the
outstanding voting securities of each applicable Portfolio, and (ii) the vote of
a majority of Trustees who are not parties to the MFS Subadvisory Agreement or
interested persons (as defined in the 1940 Act) of any such party, cast in
person, at a meeting called for the purpose of voting on such approval. The MFS
Subadvisory Agreement provides that it will terminate in the event of an
assignment (as defined in the 1940 Act) or upon termination of the New MFS
Advisory Agreement of the respective Portfolio. The New Subadvisory Agreement
may be terminated by the Trust, the Adviser or MFS upon the specified written
notice contained in the New Subadvisory Agreement.
PROPOSED AND CURRENT ADVISORY AND SUBADVISORY FEES
Except with respect to the fees payable thereunder, the MFS Agreements are
substantially similar to the Existing Advisory and Subadvisory Agreements as
discussed in Proposal Nos. 2 and 3. The following charts contain the proposed
advisory fee to be payable by each Portfolio to the Adviser pursuant to the New
MFS Advisory Agreement and the proposed subadvisory fee to be payable by the
Adviser to MFS under each proposed MFS Subadvisory Agreement. In addition, the
chart contains the fees payable under the Existing Advisory Agreement and the
respective Phoenix Subadvisory Agreement as currently in effect. Fees are
expressed as annual percentage rates of the average net assets of each
Portfolio. As can be seen, the maximum fee rate payable to the Adviser by each
Portfolio pursuant to the Advisory Fee Amendment is not proposed to change. The
proposed changes in the Advisory Fee Amendment are in the breakpoints. The
subadvisory fee rate that will be payable to MFS is higher than that paid to
Phoenix.
35
<PAGE>
PHOENIX GROWTH PORTFOLIO
<TABLE>
<CAPTION>
PROPOSED ADVISORY FEE TO THE ADVISER CURRENT ADVISORY FEE TO THE ADVISER
- ---------------------------------------------- ----------------------------------------------
<S> <C>
.70% on first $600 million .70% on first $50 million
.65% on next $900 million .65% on next $100 million
.60% thereafter .60% on next $150 million
.55% on next $200 million
.50% thereafter
</TABLE>
<TABLE>
<CAPTION>
PROPOSED SUBADVISORY FEE TO MFS CURRENT SUBADVISORY FEE TO PHOENIX
- ---------------------------------------------- ----------------------------------------------
<S> <C>
.40% on first $300 million .35% on first $50 million
.375% on next $300 million .30% on next $100 million
.35% on next $300 million .25% on next $150 million
.325% on next $600 million .20% on next $200 million
.25% thereafter .15% thereafter
</TABLE>
For the fiscal year ended November 30, 1997, the Phoenix Growth Portfolio
paid SAAMCo an advisory fee of $1,299,894 (an effective annual fee rate of
.65%), of which $599,956 was paid to Phoenix (an effective annual fee rate of
.30%). Had the rates pursuant to the Advisory Fee Amendment and the MFS
Subadvisory Agreement been in effect during the fiscal year ended November 30,
1997, the Phoenix Growth Portfolio would have paid SAAMCo an advisory fee of
$1,417,002 (an effective annual fee rate of .70%), of which $809,727 would have
been paid to the Subadviser (an effective annual fee rate of .40%). These
amounts represent increases of $117,128 and $208,771, or approximately 9% and
35%, respectively, over such fees actually paid. Thus, the fee retained by the
Adviser would have decreased under the new fee arrangement, with the full effect
of the proposed fee increase benefitting the Subadviser.
PHOENIX BALANCED PORTFOLIO
<TABLE>
<CAPTION>
PROPOSED ADVISORY FEE TO THE ADVISER CURRENT ADVISORY FEE TO THE ADVISER
- ---------------------------------------------- ----------------------------------------------
<S> <C>
.70% on first $50 million .70% on first $50 million
.65% thereafter .65% on next $100 million
.60% on next $150 million
.55% on next $200 million
.50% thereafter
</TABLE>
<TABLE>
<CAPTION>
PROPOSED SUBADVISORY FEE TO MFS CURRENT SUBADVISORY FEE TO PHOENIX
- ---------------------------------------------- ----------------------------------------------
<S> <C>
.375% .35% on first $50 million
.30% on next $100 million
.25% on next $150 million
.20% on next $200 million
.15% thereafter
</TABLE>
For the fiscal year ended November 30, 1997, the Phoenix Balanced Portfolio
paid SAAMCo an advisory fee of $558,675 (an effective annual fee rate of .68%),
of which $271,312 was paid to Phoenix (an effective annual fee rate of .33%).
Had the rates pursuant to the Advisory Fee Amendment and the MFS Subadvisory
Agreement been in effect during the fiscal year ended November 30, 1997, the
Phoenix Balanced Portfolio would have paid SAAMCo an advisory fee of $558,675
(an effective annual fee rate of .68%), of which $307,890 would have been paid
to the subadviser (an effective annual fee rate of .375%). These amounts
represent increases of $0 and $36,578, or approximately 0% and 13.5%,
respectively, over
36
<PAGE>
such fees actually paid. Thus, the fee retained by the Adviser would have
decreased under the new fee arrangement, with the full effect of the proposed
fee increase benefitting the Subadviser.
THE BOARD OF TRUSTEES UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS
VOTE "FOR" PROPOSAL NO. 5
If this Proposal No. 5 is not approved by shareholders of a Portfolio,
neither of the MFS Agreements will take effect with respect to that Portfolio
and the Trustees will determine the appropriate actions to be taken with respect
to such Portfolio's advisory and subadvisory arrangements at that time.
------------------------
APPROVAL OR DISAPPROVAL OF PROPOSALS CHANGING
CERTAIN FUNDAMENTAL INVESTMENT RESTRICTIONS
PROPOSAL NO. 6(a)
PROPOSAL CHANGING THE
FUNDAMENTAL INVESTMENT RESTRICTION
WITH RESPECT TO EACH PORTFOLIO'S ABILITY TO
ENGAGE IN BORROWING TRANSACTIONS
The Board of Trustees of the Trust is submitting for approval by
shareholders of each Portfolio a proposal to amend the fundamental investment
restriction relating to borrowing transactions in order to permit each Portfolio
to borrow money from other mutual funds in the SunAmerica complex (the
"Affiliate Funds"), subject to receipt of appropriate exemptive relief from the
SEC. The Board of Trustees approved this proposal at a meeting held on October
15, 1998.
For the reasons described below, the Board of Trustees recommends that
shareholders approve the proposed amendment. Fundamental investment restrictions
may be changed only with shareholder approval.
If the proposed changes to the Portfolios' fundamental investment
restrictions are approved by shareholders at the Meeting, the Portfolios'
prospectus and statement of additional information will be revised as
appropriate to reflect the changes. This Proposal No. 6(a) will not result in a
change to the investment objective or operating procedure of any Portfolio.
PROPOSED CHANGE
Amending a portion of each Portfolio's fundamental investment restriction
relating to borrowing transactions by, in each case, adding a clause permitting
interfund borrowing (which is bolded for ease of reference) or taking out the
reference to borrowing "from a bank," as follows:
<TABLE>
<CAPTION>
CURRENT FUNDAMENTAL PROPOSED FUNDAMENTAL
PORTFOLIO INVESTMENT RESTRICTION INVESTMENT RESTRICTION
- ------------------------------------ ------------------------------------ ------------------------------------
<S> <C> <C>
The Portfolio may not: The Portfolio may not:
ALL PORTFOLIOS--OTHER THAN THE CASH Borrow money, except to the extent Borrow money, except to the extent
MANAGEMENT PORTFOLIO permitted by applicable law. permitted by applicable law OR
REGULATORY APPROVAL.
CASH MANAGEMENT PORTFOLIO Borrow money, except . . . from Borrow money, except for temporary
. . . banks for temporary purposes, purposes, . . .
. . .
</TABLE>
37
<PAGE>
Upon approval of this Proposal, portions of the existing fundamental
investment restrictions of each Portfolio relating to borrowing transactions
will be replaced with the applicable portions of the proposed fundamental
investment restrictions, each as set forth above. Those portions of the existing
fundamental investment restrictions that are not described above will not be
affected by the adoption of this Proposal.
DISCUSSION
The proposed change to each Portfolio's fundamental investment restriction
would allow each Portfolio to borrow from persons other than banks, to the
extent consistent with applicable law. The proposed changes are designed to
permit each Portfolio the greatest degree of flexibility permitted by law in
pursuing its investment program.
Current law prohibits a Portfolio from borrowing other than from banks.
Accordingly, a Portfolio may not borrow from an Affiliate Fund. If the proposed
amendments to the Portfolios' fundamental investment restrictions on borrowing
are approved by shareholders, then the Trust, on behalf of the Portfolios, may
apply to the SEC for an exemption from this prohibition on interfund borrowing.
There is, of course, no assurance that the SEC would grant such request. If the
SEC did grant the request, each Portfolio would be allowed to borrow from other
Affiliate Funds. The Adviser and the Board of Trustees believe that the ability
to engage in borrowing transactions with participating Affiliate Funds as part
of a program, referred to as the "interfund lending program," may allow a
Portfolio to obtain lower interest rates on money borrowed for temporary or
emergency purposes.
When a Portfolio is required to borrow money, under the 1940 Act it may do
so only from banks. When a Portfolio borrows money from banks, it typically pays
interest on those borrowings at a rate that is higher than rates available
contemporaneously from investments in repurchase agreements. If the proposed
amendments are approved (and an SEC exemptive order is granted), eligible
Affiliate Funds would be permitted to participate in an interfund lending
program to allow various Affiliate Funds, through a master loan agreement to
lend available cash to, and borrow from, other Affiliate Funds. Each lending
fund could lend available cash to another Affiliate Fund only when the interfund
rate was higher than repurchase agreement rates or rates on other comparable
short-term investments. Each borrowing fund could borrow through the interfund
lending program only when the interfund loan rate was lower than available bank
loan rates. Thus, each Affiliate Fund would participate in the interfund lending
program only when it would be in such fund's economic best interest to do so.
In determining to recommend the proposed amendments to shareholders for
approval, the Adviser discussed with the Board of Trustees the possible risks to
a Portfolio of participating in the interfund lending program. The Adviser has
indicated that it does not view the difference in rates available on bank
borrowings and repurchase agreements or other short-term investments as
reflecting a material difference in the quality of the risk of the transactions,
but rather as an indication of the ability of banks to earn a higher rate of
interest on loans than they pay on repurchase agreements or other short-term
investments. There is a risk that a lending fund could experience a delay in
obtaining prompt repayment of a loan and, unlike repurchase agreements, the
lending fund would not necessarily have received collateral for its loan,
although it could require that collateral be provided as a condition for making
an interfund loan. A delay in obtaining prompt payment could cause a lending
fund to miss an investment opportunity or to incur costs to borrow money to
replace the delayed payment. There is also a risk that a borrowing fund could
have a loan recalled on one day's notice and the borrowing fund might then have
to borrow from a bank at a higher interest rate if money could not be borrowed
from another Affiliate Fund. A Portfolio will participate in the interfund
lending program only if the Board of Trustees considers that the benefits to the
Portfolio of participating in the program outweigh the possible risks of such
participation.
As discussed above, in order to permit each Portfolio to engage in interfund
lending transactions, regulatory approval of the SEC is required because, among
other reasons, the transactions may be considered to be among affiliated
parties. If the proposed amendments are approved by shareholders, the
38
<PAGE>
proposed interfund lending program would be implemented only to the extent
permitted by rule or by order of the SEC and to the extent that the transactions
were otherwise consistent with the investment objectives and limitations of each
participating Affiliate Fund. As previously noted, if exemptive relief from the
SEC is not granted, no Portfolio will be able to engage in the interfund lending
program even though shareholders have approved this proposal. No prediction can
be made as to whether the SEC would grant such relief.
In this proposal, shareholders are being asked to approve an amendment to
each Portfolio's fundamental investment restriction on borrowing. Shareholders
are also being asked to vote separately on an amendment to each Portfolio's
fundamental investment restriction on lending (see Proposal No. 6(b)). If both
amendments are adopted, each Portfolio, subject to its investment objective and
policies, will be able to participate in the interfund lending program as both a
lender and a borrower. If only one of the two proposals is adopted, then such
Portfolio's participation in the interfund lending program will be confined to
either lending or borrowing, depending on which amendment is approved.
The Board of Trustees believes the proposed amendments may benefit each
Portfolio by facilitating its flexibility to explore cost-effective alternatives
to satisfy its borrowing requirements by borrowing money from other Affiliate
Funds. Implementation of interfund borrowing would be accomplished consistent
with applicable regulatory requirements, including the provisions of any order
the SEC might issue to each Portfolio and to other Affiliate Funds.
PROPOSAL NO. 6(b)
PROPOSAL CHANGING THE FUNDAMENTAL INVESTMENT
RESTRICTION WITH RESPECT TO EACH PORTFOLIO'S
ABILITY TO ENGAGE IN LENDING TRANSACTIONS
The Board of Trustees is submitting for approval by shareholders of each
Portfolio a proposal to amend the fundamental investment restriction relating to
lending transactions in order to permit each Portfolio to participate in
interfund lending transactions as described in Proposal No. 6(a). The Board of
Trustees approved this proposal at a meeting held on October 15, 1998.
For the reasons described below, the Board of Trustees recommend that
shareholders approve the proposed amendment. Fundamental investment restrictions
may be changed only with shareholder approval.
If the proposed changes to the Portfolios' fundamental investment
restrictions are approved by shareholders at the Meeting, the Portfolios'
prospectus and statement of additional information will be revised as
appropriate to reflect the changes. This Proposal No. 6(b) will not result in a
change to the investment objective or operating procedure of any Portfolio.
39
<PAGE>
PROPOSED CHANGE
Amending each Portfolio's fundamental investment restriction relating to
lending transactions by, in each case, adding a clause (which is bolded for ease
of reference) permitting interfund lending, as follows:
<TABLE>
<CAPTION>
CURRENT FUNDAMENTAL PROPOSED FUNDAMENTAL
PORTFOLIO INVESTMENT RESTRICTION INVESTMENT RESTRICTION
- ------------------------------------ ------------------------------------ ------------------------------------
<S> <C> <C>
The Portfolio may not: The Portfolio may not:
ALL PORTFOLIOS--OTHER THAN THE Make loans to others except for Make loans to others except for
CASH MANAGEMENT PORTFOLIO . . .; and (c) the lending of its . . .; (c) the lending of its
portfolio securities. portfolio securities; AND (D)
PARTICIPATING IN AN INTERFUND
LENDING PROGRAM WITH OTHER FUNDS
THAT ARE IN THE SUNAMERICA COMPLEX.
CASH MANAGEMENT PORTFOLIO Make loans to others except for the Make loans to others except: (a) for
purchase of the debt securities the purchase of the debt securities
listed above under its Investment listed above under its Investment
Policies. . . . Policies; OR (B) THROUGH
PARTICIPATION IN AN INTERFUND
LENDING PROGRAM WITH OTHER FUNDS
THAT ARE IN THE SUNAMERICA
COMPLEX. . . .
</TABLE>
Upon approval of this Proposal, the existing fundamental investment
restriction of each Portfolio relating to lending transactions will be amended
by adding the bolded portions of the proposed fundamental investment
restrictions, as set forth above. No other portions of the existing fundamental
investment restrictions will be affected by the adoption of this Proposal.
DISCUSSION
The proposed amendment to each Portfolio's fundamental investment
restriction would allow a Portfolio to participate in an interfund lending
program with other Affiliate Funds. The nature of this program and the risks
associated with each Portfolio's participation therein are set forth under
Proposal No. 6(a). Shareholders are being asked to consider, and vote
separately, on each Portfolio's participation in the interfund lending program
as a borrower and as a lender.
The Board of Trustees believes that the interfund lending program: (i) may
benefit each Portfolio by providing it with greater flexibility to engage in
lending transactions; and (ii) could facilitate a Portfolio's ability to earn a
higher return on short-term investments by allowing it to lend cash to other
Affiliate Funds. Implementation of interfund lending would be accomplished
consistent with applicable regulatory requirements, including the provisions of
any order the SEC might issue to the Trust, on behalf of the Portfolios and to
other Affiliate Funds. The Trust has not yet applied for such order and there
can be no assurance that any such order would be granted, even if applied for.
THE BOARD OF TRUSTEES UNANIMOUSLY
RECOMMENDS THAT SHAREHOLDERS VOTE "FOR"
EACH ITEM IN PROPOSAL NO. 6
If one or more of the changes contemplated by Proposal No. 6 are not
approved by the shareholders of one of the applicable Portfolios, the related
existing fundamental investment restriction(s) of that Portfolio will continue
in effect for that Portfolio. Disapproval of all or part of Proposal No. 6 by
40
<PAGE>
shareholders of one Portfolio will not affect any approvals of Proposal No. 6
that are obtained with respect to any other Portfolio.
------------------------
RATIFICATION OF SELECTION OF
INDEPENDENT ACCOUNTANTS
PROPOSAL NO. 7
Subject to ratification by the shareholders at the Meeting, the Board of
Trustees, including all of the Disinterested Trustees, at a meeting held October
15, 1998, approved the selection of PricewaterhouseCoopers LLP as the
independent accountants for each of the Portfolios for the fiscal year ending
November 30, 1999.
The firm of PricewaterhouseCoopers LLP and its predecessor entity has
extensive experience in investment company accounting and auditing and has
served as independent accountants to the Trust since its inception. The
financial statements included in the Trust's Annual Report have been examined by
PricewaterhouseCoopers LLP. It is not expected that a representative of
PricewaterhouseCoopers LLP will be present at the meeting.
PricewaterhouseCoopers LLP and its members do not have any direct or
indirect material financial interest in or connection with the Trust or the
Portfolios in any capacity other than as independent accountants.
THE BOARD OF TRUSTEES UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE "FOR"
PROPOSAL NO. 7
------------------------
OTHER MATTERS
The Trustees know of no matters to be presented at the Meeting other than
those specified in the attached Notice of Meeting. However, if any other matters
come before the Meeting, it is intended that the proxies will vote thereon in
their discretion.
GENERAL INFORMATION
SHAREHOLDER PROPOSALS AND SHAREHOLDER MEETINGS
Notwithstanding the approval or disapproval of the proposals described
above, as in the past, the Trustees do not intend to hold annual meetings of
shareholders of the Trust. If a shareholder wishes to present a proposal to be
included in the proxy statement for the next meeting of shareholders of a
Portfolio, such proposal must be received by the Trust a reasonable time before
the solicitation is to be made. The Trustees will call meetings of shareholders
of a Trust or a Portfolio as may be required under the 1940 Act (such as to
approve a new investment advisory agreement for a Portfolio) or as they may
determine in their discretion. The Trustees will call a meeting of shareholders
to elect additional Trustees if more than 50% of the Trustees were not elected
by shareholders. The Trust's By-laws require the Trustees to call a meeting of
shareholders when requested in writing to do so by shareholders holding a
majority of the outstanding shares of beneficial interest of the Trust, provided
that, pursuant to Section 16(c) of the 1940 Act, a meeting requested exclusively
for the stated purpose of removing a Trustee shall be called when requested in
writing to do so by the record holders of not less than 10% of the outstanding
shares. The costs of such meetings will be borne by the applicable Portfolio.
41
<PAGE>
REPORTS TO SHAREHOLDERS AND FINANCIAL STATEMENTS
THE TRUST WILL FURNISH, WITHOUT CHARGE, A COPY OF THE MOST RECENT ANNUAL AND
SEMI-ANNUAL REPORT TO SHAREHOLDERS OF THE TRUST TO CONTRACT OWNERS. COPIES OF
SUCH REPORTS MAY BE OBTAINED BY CONTACTING THE TRUST IN WRITING AT THE ADDRESS
ON THE COVER OF THIS PROXY STATEMENT, OR BY CALLING 1-800-445-7862.
CONTRACT OWNERS ARE REQUESTED TO FILL IN, DATE AND SIGN THE VOTING
INSTRUCTIONS CARD(S) AND RETURN THEM PROMPTLY IN THE ENCLOSED PREPAID ENVELOPE.
CONTRACT OWNERS ALSO HAVE THE OPTION TO PROVIDE VOTING INSTRUCTIONS BY TELEPHONE
OR ON THE INTERNET BY FOLLOWING THE INSTRUCTIONS ON THE INSERT ACCOMPANYING THE
VOTING INSTRUCTIONS CARD(S).
Board of Trustees,
SunAmerica Series Trust
November [ ], 1998
42
<PAGE>
EXHIBIT LIST
<TABLE>
<S> <C>
EXHIBIT A Form of New Advisory Agreement
EXHIBIT B Mutual Funds Advised by SAAMCo
EXHIBIT C-1 New Subadvisory Agreement Between SAAMCo and Alliance
EXHIBIT C-2 New Subadvisory Agreement Between SAAMCo and Davis
EXHIBIT C-3 New Subadvisory Agreement Between SAAMCo and Federated
EXHIBIT C-4 New Subadvisory Agreement Between SAAMCo and GSAM
EXHIBIT C-5 New Subadvisory Agreement Between SAAMCo and GSAM-International
EXHIBIT C-6 New Subadvisory Agreement Between SAAMCo and MSAM
EXHIBIT C-7 New Subadvisory Agreement Between SAAMCo and Putnam
EXHIBIT D Other Mutual Funds advised by Alliance with a Similar Investment Objective to
the Growth Income, Alliance Growth and Global Equities Portfolios
EXHIBIT E Other Mutual Funds advised by Davis with a Similar Investment Objective to the
Venture Value and Real Estate Portfolios
EXHIBIT F Other Mutual Funds advised by Federated with a Similar Investment Objective to
the Corporate Bond, Utility and Federated Value Portfolios
EXHIBIT G Other Mutual Funds advised by GSAM with a Similar Investment Objective to the
Asset Allocation Portfolio
EXHIBIT H Other Mutual Funds advised by GSAM-International with a Similar Investment
Objective to the Global Bond Portfolio
EXHIBIT I Other Mutual Funds advised by MSAM with a Similar Investment Objective to the
Worldwide High Income and International Diversified Equities Portfolios
EXHIBIT J Other Mutual Funds advised by Putnam with a Similar Investment Objective to
the Putnam Growth, International Growth and Income and Emerging Markets
Portfolios
EXHIBIT K Certain Information Regarding Existing Subadvisory Agreements with Respect to
the Portfolios
EXHIBIT L Alliance Amendments
EXHIBIT M Form of MFS Subadvisory Agreement
EXHIBIT N Other Mutual Funds advised by MFS with a Similar Investment Objective to the
MFS Conservative Growth and MFS Total Return Portfolios
</TABLE>
43
<PAGE>
EXHIBIT A
INVESTMENT ADVISORY AND MANAGEMENT AGREEMENT
This INVESTMENT ADVISORY AND MANAGEMENT AGREEMENT is dated as of
____________, between SUNAMERICA SERIES TRUST, a Massachusetts business trust
(the "Trust") and SUNAMERICA ASSET MANAGEMENT CORP., a Delaware corporation (the
"Adviser" or "SAAMCo").
In consideration of the mutual agreements herein made, the parties hereto
agree as follows:
1. THE TRUST'S PORTFOLIOS. The Trust is authorized to issue shares in
separate series, with each series representing interests in a separate portfolio
of securities and other assets, and currently offers shares of the series set
forth in Schedule A attached hereto (the "Portfolios"). It is recognized that
additional Portfolios may be added and certain current Portfolios may be deleted
in the future.
2. DUTIES OF THE ADVISER. The Adviser shall manage the affairs of the
Trust as set forth herein, either by taking such actions itself or by delegating
its duties to a subadviser pursuant to a written subadvisory agreement. Such
duties shall include, but not limited to, continuously providing the Trust with
investment management, including investment research, advice and supervision,
determining which securities shall be purchased or sold by each Portfolio of the
Trust and making purchases and sales of securities on behalf of each Portfolio.
The Adviser's management shall be subject to the control of the Trustees of the
Trust (the "Trustees") and in accordance with the objectives, policies and
restrictions for each such Portfolio set forth in the Trust's Registration
Statement and its current Prospectus and Statement of Additional Information, as
amended from time to time, the requirements of the Investment Company Act of
1940, as amended (the "Act") and other applicable law, as well as to the factors
affecting the Trust's status as a regulated investment company under the
Internal Revenue Code of 1986, as amended, (the "Code") and the regulations
thereunder and the status of variable contracts under the diversification
requirements set forth in Section 817(h) of the Code and the regulations
thereunder. In performing such duties, the Adviser shall (i) provide such office
space, bookkeeping, accounting, clerical, secretarial and administrative
services (exclusive of, and in addition to, any such service provided by any
others retained by the Trust or any of its Portfolios) and such executive and
other personnel as shall be necessary for the operations of each Portfolio, (ii)
be responsible for the financial and accounting records required to be
maintained by each Portfolio (including those maintained by the Trust's
custodian), and (iii) oversee the performance of services provided to each
Portfolio by others, including the custodian, transfer agent, shareholder
servicing agent and subadviser, if any. The Trust acknowledges that the Adviser
also acts as the manager of other investment companies.
With respect to the Cash Management Portfolio, the Adviser hereby accepts
the responsibilities for making the determinations required by Rule 2a-7 under
the Act to be made by the Trustees of the Trust and which are delegable by the
Trustees pursuant to paragraph (e) of such Rule, to the extent that the Trustees
may hereinafter delegate such responsibilities to the Adviser.
The Adviser may delegate certain of its duties under this Agreement with
respect to a Portfolio to a subadviser pursuant to a written agreement, subject
to the approval of the Trustees and a Portfolio's shareholders, as required by
the Act. The Adviser is solely responsible for payment of any fees or other
charges to a subadviser arising from such delegation and the Trust shall have no
liability therefor.
3. EXPENSES. The Adviser shall pay all of its expenses arising from the
performance of its obligations under this Agreement and shall pay any salaries,
fees and expenses of the Trustees and any officers of the Trust who are
employees of the Adviser. The Adviser shall not be required to pay any other
expenses of the Trust, including, but not limited to, direct charges relating to
the purchase and sale of portfolio securities, interest charges, fees and
expenses of independent attorneys and auditors, taxes and governmental fees,
cost of stock certificates and any other expenses (including clerical expenses)
of issue, sale, repurchase or redemption of shares, expenses of registering and
qualifying shares for sale, expenses of
A-1
<PAGE>
printing and distributing reports, notices and proxy materials to shareholders,
expenses of data processing and related services, shareholder recordkeeping and
shareholder account service, expenses of printing and filing reports and other
documents filed with governmental agencies, expenses of printing and
distributing prospectuses, expenses of annual and special shareholders'
meetings, fees and disbursements of transfer agents and custodians, expenses of
disbursing dividends and distributions, fees and expenses of Trustees who are
not employees of the Adviser or its affiliates, membership dues in the
Investment Company Institute, insurance premium dues in the Investment Company
Institute, insurance premiums and extraordinary expenses such as litigation
expenses.
4. COMPENSATION. (a) As compensation for services performed and the
facilities and personnel provided by the Adviser under this Agreement, the Trust
will pay to the Adviser, promptly after the end of each month for the services
rendered by the Adviser during the preceding month, the sum of the amounts set
forth in Schedule A attached hereto calculated in accordance with the average
daily net assets of the indicated Portfolio.
To the extent required by the laws of any state in which the Trust is
subject to an expense guarantee limitation, if the aggregate expenses of any
Portfolio in any fiscal year exceed the specified expense limitation ratios for
that year (calculated on a daily basis), the Adviser agrees to waive such
portion of its advisory fee in excess of the limitation, but such waiver shall
not exceed the full amount of the advisory fee for such year except as may be
elected by Adviser in its discretion. For this purpose, aggregate expenses of a
Portfolio shall include the compensation of the Adviser and all normal expenses,
fees and charges, but shall exclude interest, taxes, brokerage fees on portfolio
transactions, fees and expenses incurred in connection with the distribution of
Trust shares, and extraordinary expenses including litigation expenses. In the
event any amounts are so contributed by the Adviser to the Trust, the Trust
agrees to reimburse the Adviser for any expenses waived, provided that such
reimbursement does not result in increasing the Trust's aggregate expenses above
the aforementioned expense limitation ratios.
The Adviser's fee shall be accrued daily at 1/365th of the applicable annual
rate set forth above. For the purpose of accruing compensation, the net assets
of the Portfolio shall be that determined in the manner and on the dates set
forth in the current prospectus of the Trust and, on days on which the net
assets are not so determined, the net asset computation to be used shall be as
determined on the next day on which the net assets shall have been determined.
(b) Upon any termination of this Agreement on a day other than the last day
of the month, the fee for the period from the beginning of the month in which
termination occurs to the date of termination shall be prorated according to the
proportion which such period bears to the full month.
5. PURCHASE AND SALE OF SECURITIES. The Adviser shall purchase securities
from or though and sell securities to or through such persons, brokers or
dealers as the Adviser shall deem appropriate in order to carry out the policies
with respect to portfolio transactions as set forth in the Trust's Registration
Statement and its current Prospectus or Statement of Additional Information, as
amended from time to time, or as the Trustees may direct from time to time.
Nothing herein shall prohibit the Trustees from approving the payment by the
Trust of additional compensation to others for consulting services, supplemental
research and security and economic analysis.
6. TERM OF AGREEMENT. This Agreement shall continue in full force and
effect with respect to each Portfolio until two years from the date approved by
the Trustees of the Trust in respect of such Portfolio, and from year to year
thereafter so long as such continuance is approved at least annually (i) by the
Trustees by vote cast in person at a meeting called for the purpose of voting on
such renewal, or by the vote of a majority of the outstanding voting securities
(as defined by the Act) of such Portfolio with respect to which renewal is to be
effected, and (ii) by a majority of the non-interested Trustees by vote cast in
person at a meeting called for the purpose of voting on such renewal. Any
approval of this Agreement or the renewal thereof with respect to a Portfolio by
the vote of a majority of the outstanding voting securities of
A-2
<PAGE>
that Portfolio, or by the Trustees of the Trust which shall include a majority
of the non-interested Trustees, shall be effective to continue this Agreement
with respect to that Portfolio notwithstanding (a) that this Agreement or the
renewal thereof has not been so approved as to any other Portfolio, or (b) that
this Agreement or the renewal thereof has not been so approved by the vote of a
majority of the outstanding voting securities of the Trust as a whole.
7. TERMINATION. This Agreement may be terminated at any time as to a
Portfolio, without payment of any penalty, by the Trustees or by the vote of a
majority of the outstanding voting securities (as defined in the Act) of such
Portfolio on sixty (60) days' written notice to the Adviser. Similarly, the
Adviser may terminate this Agreement without penalty on like notice to the Trust
provided, however, that this Agreement may not be terminated by the Adviser
unless another investment advisory agreement has been approved by the Trust in
accordance with the Act, or after six months' written notice, whichever is
earlier. This Agreement shall automatically terminate in the event of its
assignment (as defined in the Act).
8. REPORTS. The Adviser shall report to the Trustees, or to any committee
or officers of the Trust acting pursuant to the authority of the Trustees, at
such times and in such detail as shall be reasonable and as the Board may deem
appropriate in order to enable the Trust to determine that the investment
policies of each Portfolio are being observed and implemented and that the
obligations of the Adviser under this Agreement are being fulfilled. Any
investment program undertaken by the Adviser pursuant to this Agreement and any
other activities undertaken by the Adviser on behalf of the Trust shall at all
times be subject to any directives of the Trustees or any duly constituted
committee or officer of the Trust acting pursuant to the authority of the
Trustees.
9. RECORDS. The Trust is responsible for maintaining and preserving for
such period or periods as the Securities and Exchange Commission may prescribe
by rules and regulations, such accounts, books and other documents as constitute
the records forming the basis for all reports, including financial statements
required to be filed pursuant to the Act and for the Trust's auditor's
certification relating thereto. The Adviser hereby undertakes and agrees to
maintain in the form and for the periods required by Rule 31a-2 under the Act,
all records relating to the Portfolio's investments that are required to be
maintained pursuant to the requirements of Rule 31a-1 of the Act.
The Adviser and the Trust agree that all accounts, books and other records
maintained and preserved by each as required hereby shall be subject at any
time, and from time to time, to such reasonable periodic, special and other
examinations by the Securities and Exchange Commission, the Trust's auditors,
the Trust or any representative of the Trust, or any governmental agency or
other instrumentality having regulatory authority over the Trust. It is
expressly understood and agreed that the books and records maintained by the
Adviser on behalf of each Portfolio shall, at all times, remain the property of
the Trust.
10. LIABILITY OF ADVISER. In the absence of willful misfeasance, bad
faith, gross negligence or reckless disregard of obligations or duties
("disabling conduct") hereunder on the part of the Adviser (and its officers,
directors, agents, employees, controlling persons, shareholders and any other
person or entity affiliated with the Adviser), the Adviser shall not be subject
to liability to the Trust or to any other person for any act or omission in the
course of, or connected with, rendering services hereunder including, without
limitation, any error of judgment or mistake of law or for any loss suffered by
any of them in connection with the matters to which this Agreement relates,
except to the extent specified in Section 36(b) of the Act concerning loss
resulting from a breach of fiduciary duty with respect to the receipt of
compensation for services. Except for such disabling conduct or liability under
Section 36(b) of the Act, the Trust shall indemnify the Adviser (and its
officers, directors, agents, employees, controlling persons, shareholders and
any other person or entity affiliated with the Adviser) from any liability
arising from the Adviser's conduct under this Agreement.
Indemnification to the Adviser or any of its personnel or affiliates shall
be made when (A) a final decision on the merits rendered, by a court or other
body before whom the proceeding was brought, that the person to be indemnified
was not liable by reason of disabling conduct or, (B) in the absence of such a
A-3
<PAGE>
decision, a reasonable determination, based upon a review of the facts, that the
person to be indemnified was not liable by reason of disabling conduct, by (a)
the vote of a majority of a quorum of Trustees who are neither "interested
persons" of the Trust as defined in Section 2(a)(19) of the Act nor parties to
the proceeding ("disinterested, non-party Trustees"), or (b) an independent
legal counsel in a written opinion. The Trust may, by vote of a majority of the
disinterested, non-party Trustees, advance attorneys' fees or other expenses
incurred by officers, Trustees, investment advisers, subadvisers or principal
underwriters, in defending a proceeding upon the undertaking by or on behalf of
the person to be indemnified to repay the advance unless it is ultimately
determined that such person is entitled to indemnification. Such advance shall
be subject to at least one of the following: (i) the person to be indemnified
shall provide adequate security for his undertaking, (ii) the Trust shall be
insured against losses arising by reason of any lawful advances, or (iii) a
majority of a quorum of the disinterested, non-party Trustees, or an independent
legal counsel in a written opinion, shall determine, based on a review of
readily available facts, that there is reason to believe that the person to be
indemnified ultimately will be found entitled to indemnification.
11. MISCELLANEOUS. Anything herein to the contrary notwithstanding, this
Agreement shall not be construed to require, or to impose any duty upon either
of the parties, to do anything in violation of any applicable laws or
regulations.
The Declaration of Trust establishing the Trust, a copy of which is on file
in the office of the Secretary of the Commonwealth of Massachusetts, provides
that the name of the Trust refers to the Trustees collectively as Trustees, not
as individuals or personally; and that no Trustee, shareholder, officer,
employee or agent of the Trust shall be held to any personal liability, nor
shall resort be had to their private property for the satisfaction of any
obligation or claim or otherwise in connection with the affairs of the Trust or
any Portfolio; but that the Trust Estate shall be liable. Notice is hereby given
that nothing contained herein shall be construed to be binding upon any of the
Trustees, officers, or shareholders of the Trust individually.
IN WITNESS WHEREOF, the Trust and the Adviser have caused this Agreement to
be executed by their duly authorized officers as of the date first above
written.
SUNAMERICA SERIES TRUST
By:
--------------------------------------
SUNAMERICA ASSET MANAGEMENT CORP.
By:
--------------------------------------
A-4
<PAGE>
SCHEDULE A
<TABLE>
<CAPTION>
FEE RATE
(AS A % OF AVERAGE
FUND DAILY NET ASSET VALUE)
- -------------------------------------------------------------------------------- --------------------------------
<S> <C>
Alliance Growth Portfolio*...................................................... .70% on first $50 million
.65% on next $100 million
.60% on next $150 million
.55% on next $200 million
.50% thereafter
MFS Conservative Growth Portfolio............................................... .70% on first $600 million
.65% on next $900 million
.60% thereafter
MFS Total Return Portfolio...................................................... .70% on first $50 million
.65% thereafter
MFS Growth-Income Portfolio..................................................... .70% on first $50 million
.65% on next $100 million
.60% on next $150 million
.55% on next $200 million
.50% thereafter
Putnam Growth Portfolio......................................................... .85% on first $150 million
.80% on next $150 million
.70% thereafter
Global Equities Portfolio....................................................... .90% on first $50 million
.80% on next $100 million
.70% on next $150 million
.65% thereafter
Venture Value Portfolio......................................................... .80% on first $100 million
.75% on next $400 million
.70% thereafter
Asset Allocation Portfolio...................................................... .75% on first $50 million
.65% on next $100 million
.60% on next $100 million
.55% thereafter
Global Bond Portfolio........................................................... .75% on first $50 million
.65% on next $100 million
.60% on next $100 million
.55% thereafter
High-Yield Bond Portfolio....................................................... .70% on first $50 million
.65% on next $100 million
.60% on next $100 million
.55% thereafter
Corporate Bond Portfolio........................................................ .70% on first $50 million
.60% on next $100 million
.55% on next $100 million
.50% thereafter
</TABLE>
A-5
<PAGE>
<TABLE>
<CAPTION>
FEE RATE
(AS A % OF AVERAGE
FUND DAILY NET ASSET VALUE)
- -------------------------------------------------------------------------------- --------------------------------
<S> <C>
International Diversified Equities Portfolio.................................... 1.00% of net assets
Worldwide High Income Portfolio................................................. 1.00% of net assets
Cash Management Portfolio....................................................... .55% on first $100 million
.50% on next $200 million
.45% thereafter
Federated Value Portfolio....................................................... .75% on first $150 million
.60% on next $350 million
.50% thereafter
Utility Portfolio............................................................... .75% on first $150 million
.60% on next $350 million
.50% thereafter
Aggressive Growth Portfolio..................................................... .75% on first $100 million
.675% on next $150 million
.625% on next $250 million
.600% thereafter
SunAmerica Balanced Portfolio................................................... .70% on first $50 million
.65% on next $100 million
.60% on next $150 million
.55% on next $200 million
.50% thereafter
International Growth and Income Portfolio....................................... 1.00% on first $150 million
.90% on next $150 million
.80% thereafter
Emerging Markets Portfolio...................................................... 1.25% of net assets
Real Estate Portfolio........................................................... .80% on first $100 million
.75% on next $400 million
.70% thereafter
"Dogs" of Wall Street Portfolio................................................. .60% of net assets
</TABLE>
- ------------------------
* If shareholders approve Proposal No. 4, relating to the Alliance Growth
Portfolio, at the special meeting of shareholders held on December 30, 1998,
the Fee Rate will be .70% on first $50 million, .65% on next $100 million
and .60% thereafter.
A-6
<PAGE>
EXHIBIT B
INVESTMENT OBJECTIVES AND ADVISORY FEES
FOR FUNDS ADVISED BY SUNAMERICA ASSET MANAGEMENT CORP.
<TABLE>
<CAPTION>
NET ASSETS
(AS OF SEPTEMBER 30, ANNUAL ADVISORY FEE AS A
FUND 1998) PERCENTAGE OF NET ASSETS
- --------------------------------------------------- ------------------------ ----------------------------------
<S> <C> <C>
DOMESTIC EQUITY FUNDS
ANCHOR SERIES TRUST*
Capital Appreciation Portfolio................... $ 822,618,819 0.750% on first $100 million
0.675% on next $150 million
0.625% on next $250 million
0.600% thereafter
Growth Portfolio................................. $ 531,472,722 0.750% on first $250 million
0.675% on next $250 million
0.600% thereafter
Growth and Income Portfolio...................... $ 43,419,683 0.700% on first $100 million
0.650% on next $150 million
0.600% on next $250 million
0.575% thereafter
SEASONS SERIES TRUST*
Multi-Managed Growth Portfolio................... $ 45,882,835 0.890%
Multi-Managed Moderate Growth Portfolio.......... $ 49,135,686 0.850%
Stock Portfolio.................................. $ 62,369,024 0.850%
STYLE SELECT SERIES, INC.
Aggressive Growth Portfolio...................... $ 136,431,133+ 1.000% on first $750 million
0.950% on next $750 million
0.900% thereafter
Focus Portfolio.................................. $ 95,231,521+ 0.850%
Large-Cap Blend Portfolio........................ $ 26,602,315+ 1.000%
Large-Cap Growth Portfolio....................... $ 42,285,010+ 1.000%
Large-Cap Value Portfolio........................ $ 42,242,450+ 1.000%
Mid-Cap Growth Portfolio......................... $ 89,403,531+ 1.000% on first $750 million
0.950% on next $750 million
0.900% thereafter
Small-Cap Value Portfolio........................ $ 44,535,215+ 1.000%
Value Portfolio.................................. $ 183,288,467+ 1.000% on first $750 million
0.950% on next $750 million
0.900% thereafter
SUNAMERICA EQUITY FUNDS
SunAmerica Blue Chip Growth Fund................. $ 108,376,466 0.750% on first $350 million
0.700% on next $350 million
0.650% thereafter
SunAmerica Growth and Income Fund................ $ 136,984,018+ 0.750% on first $350 million
0.700% on next $350 million
0.650% thereafter
SunAmerica Mid-Cap Growth Fund................... $ 48,218,491 0.750% on first $350 million
0.700% on next $350 million
0.650% thereafter
</TABLE>
B-1
<PAGE>
<TABLE>
<CAPTION>
NET ASSETS
(AS OF SEPTEMBER 30, ANNUAL ADVISORY FEE AS A
FUND 1998) PERCENTAGE OF NET ASSETS
- --------------------------------------------------- ------------------------ ----------------------------------
<S> <C> <C>
SunAmerica Small-Company Growth Fund............. $ 167,744,383 0.750% on first $350 million
0.700% on next $350 million
0.650% thereafter
"Dogs" of Wall Street Fund....................... $ 56,146,950 0.350%
SUNAMERICA SERIES TRUST*
Alliance Growth Portfolio........................ $ 1,092,068,236 0.700% on first $50 million
0.650% on next $100 million
0.600% on next $150 million
0.550% on next $200 million
0.500% thereafter
Aggressive Growth Portfolio...................... $ 103,369,840 0.750% on first $100 million
0.675% on next $150 million
0.625% on next $250 million
0.600% thereafter
"Dogs" of Wall Street Portfolio.................. $ 44,171,974 0.600%
Growth-Income Portfolio.......................... $ 808,122,639 0.700% on first $50 million
0.650% on next $100 million
0.600% on next $150 million
0.550% on next $200 million
0.500% thereafter
Growth/Phoenix Investment Counsel Portfolio...... $ 218,272,854 0.350% on first $50 million
0.300% on next $100 million
0.250% on next $150 million
0.200% on next $200 million
0.150% thereafter
Putnam Growth Portfolio.......................... $ 333,221,134 0.850% on first $150 million
0.800% on next $150 million
0.700% thereafter
Venture Value Portfolio.......................... $ 1,445,244,534 0.800% on first $100 million
0.750% on next $400 million
0.700% thereafter
INTERNATIONAL AND GLOBAL EQUITY
ANCHOR SERIES TRUST*
Foreign Securities Portfolio..................... $ 27,235,989 0.900% on first $100 million
0.825% on next $150 million
0.750% on next $250 million
0.700% thereafter
STYLE SELECT SERIES, INC.
International Equity Portfolio................... $ 77,331,516+ 1.100% on first $750 million
1.050% on next $750 million
1.000% thereafter
SUNAMERICA SERIES TRUST*
Emerging Markets Portfolio....................... $ 25,161,994 1.250%
</TABLE>
B-2
<PAGE>
<TABLE>
<CAPTION>
NET ASSETS
(AS OF SEPTEMBER 30, ANNUAL ADVISORY FEE AS A
FUND 1998) PERCENTAGE OF NET ASSETS
- --------------------------------------------------- ------------------------ ----------------------------------
<S> <C> <C>
Global Equities Portfolio........................ $ 355,437,814 0.900% on first $50 million
0.800% on next $100 million
0.700% on next $150 million
0.650% thereafter
International Growth and Income Portfolio........ $ 102,653,451 1.000% on first $150 million
0.900% on next $150 million
0.800% thereafter
International Diversified Equities Portfolio..... $ 296,903,485 1.000%
DOMESTIC FIXED INCOME
ANCHOR SERIES TRUST*
Fixed Income Portfolio........................... $ 17,826,195 0.625% on first $200 million
0.575% on next $300 million
0.500% thereafter
Government and Quality Bond Portfolio............ $ 373,807,107 0.625% on first $200 million
0.575% on next $300 million
0.500% thereafter
High Yield Portfolio............................. $ 26,004,577 0.700% on first $250 million
0.575% on next $250 million
0.500% thereafter
SEASONS SERIES TRUST*
Multi-Managed Income Portfolio................... $ 32,953,853 0.770%
SUNAMERICA INCOME FUNDS
SunAmerica Diversified Income Fund............... $ 71,732,231 0.650% on first $350 million
0.600% thereafter
SunAmerica Federal Securities Fund............... $ 55,408,272 0.550% on first $25 million
0.500% on next $25 million
0.450% thereafter
SunAmerica High Income Fund...................... $ 157,285,790 0.750% on first $200 million
0.720% on next $200 million
0.550% thereafter
SunAmerica Tax Exempt Insured Fund............... $ 107,981,185 0.500% on first $350 million
0.450% thereafter
SunAmerica U.S. Government Securities Fund....... $ 284,236,480 0.750% on first $200 million
0.720% on next $200 million
0.550% thereafter
SUNAMERICA SERIES TRUST*
Corporate Bond Portfolio......................... $ 129,225,050 0.700% on first $50 million
0.600% on next $100 million
0.550% on next $100 million
0.500% thereafter
</TABLE>
B-3
<PAGE>
<TABLE>
<CAPTION>
NET ASSETS
(AS OF SEPTEMBER 30, ANNUAL ADVISORY FEE AS A
FUND 1998) PERCENTAGE OF NET ASSETS
- --------------------------------------------------- ------------------------ ----------------------------------
<S> <C> <C>
High-Yield Bond Portfolio........................ $ 258,454,534 0.700% on first $50 million
0.650% on next $100 million
0.600% on next $100 million
0.550% thereafter
INTERNATIONAL AND GLOBAL FIXED INCOME
SUNAMERICA SERIES TRUST*
Global Bond Portfolio............................ $ 128,437,423 0.750% on first $50 million
0.650% on next $100 million
0.600% on next $100 million
0.550% thereafter
Worldwide High Income Portfolio.................. $ 108,620,733 1.000%
ASSET ALLOCATION
ANCHOR SERIES TRUST*
Multi-Asset Portfolio............................ $ 134,773,617 1.000% on first $200 million
0.875% on next $300 million
0.800% thereafter
Strategic Multi-Asset Portfolio.................. $ 44,365,552 1.000% on first $200 million
0.875% on next $300 million
0.800% thereafter
SEASONS SERIES TRUST*
Asset Allocation: Diversified Growth Portfolio... $ 76,254,323 0.850%
Multi-Managed Income/Equity Portfolio............ $ 41,227,837 0.810%
SUNAMERICA EQUITY FUNDS
SunAmerica Balanced Assets Fund.................. $ 355,891,072 0.750% on first $350 million
0.700% on next $350 million
0.650% thereafter
SUNAMERICA SERIES TRUST*
Asset Allocation Portfolio....................... $ 657,318,956 0.750% on first $50 million
0.650% on next $100 million
0.600% on next $100 million
0.550% thereafter
Balanced/Phoenix Investment Counsel Portfolio.... $ 119,739,829 0.350% on first $50 million
0.300% on next $100 million
0.250% on next $150 million
0.200% on next $200 million
0.150% thereafter
Federated Value Portfolio........................ $ 119,331,542 0.750% on first $150 million
0.600% on next $350 million
0.500% thereafter
</TABLE>
B-4
<PAGE>
<TABLE>
<CAPTION>
NET ASSETS
(AS OF SEPTEMBER 30, ANNUAL ADVISORY FEE AS A
FUND 1998) PERCENTAGE OF NET ASSETS
- --------------------------------------------------- ------------------------ ----------------------------------
<S> <C> <C>
SunAmerica Balanced Portfolio.................... $ 112,033,596 0.700% on first $50 million
0.650% on next $100 million
0.600% on next $150 million
0.550% on next $200 million
0.500% thereafter
MONEY MARKET
ANCHOR SERIES TRUST*
Money Market Portfolio........................... $ 71,244,988 0.500% on first $150 million
0.475% on next $100 million
0.450% on next $250 million
0.425% thereafter
SUNAMERICA MONEY MARKET FUNDS, INC.
SunAmerica Money Market Fund..................... $ 692,803,417 0.500% on first $600 million
0.450% on next $900 million
0.400% thereafter
SUNAMERICA SERIES TRUST*
Cash Management Portfolio........................ $ 299,176,786 0.550% on first $100 million
0.500% on next $200 million
0.450% thereafter
SPECIALTY
ANCHOR SERIES TRUST*
Natural Resources Portfolio...................... $ 42,261,724 0.750%
SUNAMERICA SERIES TRUST*
Real Estate Portfolio............................ $ 56,858,074 0.800% on first $100 million
0.750% on next $400 million
0.700% thereafter
Utility Portfolio................................ $ 57,477,132 0.750% on first $150 million
0.600% on next $350 million
0.500% thereafter
</TABLE>
- ------------------------
* Funds underlie variable annuities
+ Subject to waivers and/or expense limitations
B-5
<PAGE>
EXHIBIT C-1
SUBADVISORY AGREEMENT
BETWEEN SUNAMERICA ASSET MANAGEMENT CORP.
AND
ALLIANCE CAPITAL MANAGEMENT L.P.
It is hereby agreed by and between SUNAMERICA ASSET MANAGEMENT CORP. (the
"Adviser") and ALLIANCE CAPITAL MANAGEMENT L.P. ("Subadviser") as follows:
1. DUTIES OF SUBADVISER. Adviser hereby engages the services of Subadviser
in furtherance of its Investment Advisory and Management Agreement with
SunAmerica Series Trust (the "Trust") dated as of , on
behalf of the Alliance Growth Portfolio, the Growth-Income Portfolio and the
Global Equities Portfolio (each, a "Portfolio," and collectively, the
"Portfolios"). Pursuant to this Sub-Advisory Agreement and subject to the
oversight and review of Adviser, Subadviser will manage the investment and
reinvestment of the assets of the Portfolio. In this regard, Subadviser will
determine in its discretion the securities to be purchased or sold, will provide
Adviser with records concerning its activities which Adviser or the Trust is
required to maintain, and will render regular reports to Adviser and to officers
and Trustees of the Trust concerning its discharge of the foregoing
responsibilities. Subadviser shall discharge the foregoing responsibilities
subject to the control of the officers and the Trustees of the Trust and in
compliance with such policies as the Trustees of the Trust may from time to time
establish, and in compliance with the objectives, policies, and limitations for
the Portfolios set forth in the Trust's current prospectus and statement of
additional information, and applicable laws and regulations. Subadviser accepts
such employment and agrees, at its own expense, to render the services set forth
herein and to provide the office space, furnishings, equipment and personnel
required by it to perform such services on the terms and for the compensation
provided in this Agreement.
2. PORTFOLIO TRANSACTIONS. Subadviser is authorized to select the brokers
or dealers that will execute the purchases and sales of portfolio securities and
is directed to use its best efforts to obtain the best price and execution.
Subject to policies established by the Trustees of the Trust, Subadviser may
also be authorized to effect individual securities transactions at commission
rates in excess of the minimum commission rates available, if Subadviser
determines in good faith that such amount of commission is reasonable in
relation to the value of the brokerage and research services provided by such
broker or dealer, viewed in terms of either that particular transaction or
Subadviser's overall responsibilities with respect to a Portfolio, other
portfolios of the Trust and other clients of Subadviser. The execution of such
transactions shall not be deemed to represent an unlawful act or breach of any
duty created by this Agreement or otherwise. Subadviser will promptly
communicate to Adviser and to the officers and the Trustees of the Trust such
information relating to portfolio transactions as they may reasonably request.
3. COMPENSATION OF SUBADVISER. As its compensation hereunder, the Adviser
shall pay to Subadviser promptly after the end of each month, a fee calculated
in accordance with the average daily net assets of the indicated Portfolio as
follows:
ALLIANCE GROWTH PORTFOLIO:
.35% per annum on the first $50 million;
.30% per annum on the next $100 million;
.25% per annum on the next $150 million;
.20% per annum on the next $200 million;
.15% per annum thereafter.
C-1-1
<PAGE>
GROWTH-INCOME PORTFOLIO:
.35% per annum on the first $50 million;
.30% per annum on the next $100 million;
.25% per annum on the next $150 million;
.20% per annum on the next $200 million;
.15% per annum thereafter.
GLOBAL EQUITIES PORTFOLIO:
.50% per annum on the first $50 million;
.40% per annum on the next $100 million;
.30% per annum on the next $150 million;
.25% per annum thereafter.
To the extent required by the laws of any state in which the Trust is
subject to an expense guarantee limitation, if the aggregate expenses of any
Portfolio in any fiscal year exceed the specified expense limitation ratios for
that year (calculated on a daily basis), as a result of which Adviser is
required to reduce or refund its advisory and management fee payable by a
Portfolio, Subadviser agrees to waive such portion of its subadvisory fee in the
same proportion as the fees waived by the Adviser bear to the total advisory and
management fee paid by such Portfolio. Such waiver, however, shall not exceed
the full amount of the subadvisory fee for such year except as may be elected by
Subadviser in its discretion. For this purpose, aggregate expenses of a
Portfolio shall include the compensation of Adviser and all normal expenses,
fees and charges, but shall exclude interest, taxes, brokerage fees on portfolio
transactions, fees and expenses incurred in connection with the distribution of
Trust shares, and extraordinary expenses including litigation expenses. In the
event any amounts are so contributed by Subadviser to Adviser, Adviser agrees to
reimburse Subadviser for any expenses waived, provided that Adviser has been
reimbursed by the Trust.
Subadviser's fee shall be accrued daily at 1/365th of the applicable annual
rate set forth above. For the purpose of accruing compensation, the net assets
of a Portfolio shall be that determined in the manner and on the dates set forth
in the current prospectus of the Trust and, on days on which the net assets are
not so determined, the net asset computation to be used shall be as determined
on the next day on which the net assets shall have been determined.
4. REPORTS. Adviser and Subadviser agree to furnish to each other, if
applicable, current prospectuses, statements of additional information, proxy
statements, reports of shareholders, certified copies of their financial
statements, and such other information with regard to their affairs and that of
the Trust as each may reasonably request.
5. STATUS OF SUBADVISER. The services of Subadviser to Adviser and the
Trust are not to be deemed exclusive, and Subadviser shall be free to render
similar services to others so long as its services to the Trust are not impaired
thereby. Subadviser shall be deemed to be an independent contractor and shall,
unless otherwise expressly provided or authorized, have no authority to act for
or represent the Trust in any way or otherwise be deemed an agent of the Trust.
6. CERTAIN RECORDS. Subadviser hereby undertakes and agrees to maintain,
in the form and for the period required by Rule 31a-2 under the Investment
Company Act of 1940, all records relating to the Portfolios' investments that
are required to be maintained by the Trust pursuant to the requirements of Rule
31a-1 of that Act. Any records required to be maintained and preserved pursuant
to the provisions of Rule 31a-1 and Rule 31a-2 promulgated under the Investment
Company Act of 1940 which are prepared or maintained by Subadviser on behalf of
the Trust are the property of the Trust and will be surrendered promptly to the
Trust or Adviser on request.
C-1-2
<PAGE>
Subadviser agrees that all accounts, books and other records maintained and
preserved by it as required hereby shall be subject at any time, and from time
to time, to such reasonable periodic, special and other examinations by the
Securities and Exchange Commission, the Trust's auditors, the Trust or any
representative of the Trust, the Adviser, or any governmental agency or other
instrumentality having regulatory authority over the Trust.
7. REFERENCE TO SUBADVISER. Neither the Trust nor Adviser or any affiliate
or agent thereof shall make reference to or use the name of Subadviser or any of
its affiliates in any advertising or promotional materials without the prior
approval of Subadviser, which approval shall not be unreasonably withheld.
Subadviser agrees to notify Adviser of any changes in the membership of the
general partners of Subadviser as soon as practicable prior to such change.
8. LIABILITY OF SUBADVISER. In the absence of willful misfeasance, bad
faith, gross negligence or reckless disregard of obligations or duties
("disabling conduct") hereunder on the part of Subadviser (and its officers,
directors, agents, employees, controlling persons, shareholders and any other
person or entity affiliated with Subadviser), Subadviser shall not be subject to
liability to the Adviser or to any other person for any act or omission in the
course of, or connected with, rendering services hereunder including, without
limitation, any error of judgment or mistake of law or for any loss suffered by
any of them in connection with the matters to which this Agreement relates,
except to the extent specified in Section 36(b) of the Investment Company Act of
1940 concerning loss resulting from a breach of fiduciary duty with respect to
the receipt of compensation for services.
9. DURATION AND TERMINATION. This Agreement shall continue in full force
and effect with respect to a Portfolio until the earlier of (a) two years from
the date this Agreement is approved by the Trustees, or (b) the first meeting of
the shareholders of such Portfolio after the date hereof. If approved at such
meeting by the affirmative vote of a majority of the outstanding voting
securities (as defined in the Investment Company Act of 1940), of the Portfolio
with respect to such Portfolio, voting separately from any other series of the
Trust, this Agreement shall continue in full force and effect with respect to
such Portfolio from year to year thereafter so long as such continuance is
specifically approved at least annually (i) by the vote of a majority of those
Trustees of the Trust who are not parties to this Agreement or interested
persons of any such party, cast in person at a meeting called for the purpose of
voting on such approval, and (ii) by the Trustees of the Trust or by vote of a
majority of the outstanding voting securities of the Portfolio voting separately
from any other series of the Trust, provided, however, that if the shareholders
fail to approve the Agreement as provided herein, Subadviser may continue to
serve hereunder in the manner and to the extent permitted by the Investment
Company Act of 1940 and rules thereunder. The foregoing requirement that
continuance of this Agreement be "specifically approved at least annually" shall
be construed in a manner consistent with the Investment Company Act of 1940 and
the rules and regulations thereunder.
This Agreement may be terminated at any time, without the payment of any
penalty by vote of a majority of the Trustees of the Trust or by a vote of a
majority of the outstanding voting securities of a Portfolio on not less than 30
days nor more than 60 days written notice to Subadviser or by Subadviser at any
time without the payment of any penalty, on 90 days written notice to Adviser
and the Trust; provided, however, that this Agreement may not be terminated by
Subadviser unless another subadvisory agreement has been approved by the Trust
in accordance with the Investment Company Act of 1940, or after six months'
written notice, whichever is earlier. This Agreement shall automatically
terminate in the event of its assignment (as defined in the Investment Company
Act of 1940). Any notice under this Agreement shall be given in writing,
addressed and delivered, or mailed postage prepaid, to the other party at any
office of such party.
As used in this Section 11, the terms "assignment," "interested persons,"
and a "vote of a majority of the outstanding voting securities" shall have the
respective meanings set forth in the Investment Company
C-1-3
<PAGE>
Act of 1940 and the rules and regulations thereunder, subject to such exemptions
as may be granted by the Securities and Exchange Commission under said Act.
This Agreement will also terminate in the event that the Investment Advisory
and Management Agreement by and between the Trust on behalf of the Portfolio and
Adviser referred to in Section 1 is terminated.
10. SEVERABILITY. If any provision of this Agreement shall be held or made
invalid by a court decision, statute, rule or otherwise, the remainder of this
Agreement shall not be affected thereby.
A copy of the Declaration of Trust of the Trust is on file with the
Secretary of the Commonwealth of Massachusetts, and notice is hereby given that
nothing contained herein shall be construed to be binding upon any of the
Trustees, officers, or shareholders of the Trust individually.
IN WITNESS WHEREOF, the parties have caused their respective duly authorized
officers to execute this Agreement on this day of , 1998.
SUNAMERICA ASSET MANAGEMENT CORP.
By:
--------------------------------------
Authorized Officer
ALLIANCE CAPITAL MANAGEMENT L.P.
By: ALLIANCE CAPITAL MANAGEMENT
CORPORATION, ITS GENERAL PARTNER
By:
--------------------------------------
Authorized Officer
C-1-4
<PAGE>
EXHIBIT C-2
SUBADVISORY AGREEMENT
This SUBADVISORY AGREEMENT is dated as of , by and between
SUNAMERICA ASSET MANAGEMENT CORP., a Delaware corporation (the "Adviser"), and
DAVIS SELECTED ADVISERS, L.P., a Colorado limited partnership (the
"Subadviser").
WITNESSETH:
WHEREAS, the Adviser and SunAmerica Series Trust, a Massachusetts business
trust (the "Trust"), have entered into an Investment Advisory and Management
Agreement dated as of , (the "Advisory Agreement") pursuant to which
the Adviser has agreed to provide investment management, advisory and
administrative services to the Trust; and
WHEREAS, the Trust is registered under the Investment Company Act of 1940,
as amended (the "Act"), as an open-end management investment company and may
issue shares of beneficial interest in separately designated portfolios
representing separate funds with their own investment objectives, policies and
purposes; and
WHEREAS, the Subadviser is engaged in the business of rendering investment
advisory services and is registered as an investment adviser under the
Investment Advisers Act of 1940, as amended; and
WHEREAS, the Adviser desires to retain the Subadviser to furnish investment
advisory services to the investment portfolio or portfolios of the Trust listed
in Schedule A hereto (the "Portfolio(s)"), and the Subadviser is willing to
furnish such services;
NOW, THEREFORE, it is hereby agreed between the parties hereto as follows:
1. DUTIES OF THE SUBADVISER. (a) The Adviser hereby engages the services
of the Subadviser in furtherance of its Investment Advisory and Management
Agreement. Pursuant to this Subadvisory Agreement and subject to the oversight
and review of the Adviser, the Subadviser will manage the investment and
reinvestment of the assets of each Portfolio listed. The Subadviser will
determine in its discretion and subject to the oversight and review of the
Adviser, the securities to be purchased or sold, will provide the Adviser with
records concerning its activities which the Adviser or the Trust is required to
maintain, and will render regular reports to the Adviser and to officers and
Trustees of the Trust concerning its discharge of the foregoing
responsibilities. The Subadviser shall discharge the foregoing responsibilities
subject to the control of the officers and the Trustees of the Trust and in
compliance with such policies as the Trustees of the Trust may from time to time
establish, and in compliance with the objectives, policies, and limitations for
the Portfolio(s) set forth in the Trust's current prospectus and statement of
additional information, and applicable laws and regulations. The Adviser shall
inform the Subadviser of any requirements of the California Insurance Code (or
other applicable insurance Code, if any) and any regulations thereunder that
operate to limit or restrict the investments the Portfolio(s) may otherwise
make, and to inform the Subadviser promptly of any changes in such requirements.
The Subadviser represents and warrants to the Adviser that each of the
Portfolios set forth in Schedule A will at all times be operated and managed (1)
in compliance with all applicable federal and state laws governing its
operations and investments; (2) so as not to jeopardize either the treatment of
the Polaris variable annuity contracts issued by Variable Separate Account (File
No. 33-47473; hereinafter "Contracts") as annuity contracts for purposes of the
Internal Revenue Code of 1986, as amended (the "Code"), or the eligibility of
the Contracts to qualify for sale to the public in any state where they may
otherwise be sold; and (3) to minimize any taxes and/or penalties payable by the
Trust or such Portfolio. Without limiting the foregoing, the Subadviser
represents and warrants (1) qualification, election and maintenance of such
election by each Portfolio to be treated as a "regulated investment company"
under subchapter M, chapter 1 of the Code, and (2) compliance with (a) the
provisions of the Act and
C-2-1
<PAGE>
rules adopted thereunder; (b) the diversification requirements specified in the
Internal Revenue Service's regulations under Section 817(h) of the Code; (c)
applicable state insurance laws; (d) applicable federal and state securities,
commodities and banking laws; and (e) the distribution requirements necessary to
avoid payment of any excise tax pursuant to Section 4982 of the Code. The
Subadviser further represents and warrants that to the extent that any
statements or omissions made in any Registration Statement for the Contracts or
shares of the Trust, or any amendment or supplement thereto, are made in
reliance upon and in conformity with information furnished by the Subadviser
expressly for use therein, such Registration Statement and any amendments or
supplements thereto will, when they become effective, conform in all material
respects to the requirements of the Securities Act of 1933 and the rules and
regulations of the Commission thereunder (the "1933 Act") and the Act and will
not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading.
The Subadviser accepts such employment and agrees, at its own expense, to
render the services set forth herein and to provide the office space,
furnishings, equipment and personnel required by it to perform such services on
the terms and for the compensation provided in this Agreement.
(b) In performing its investment advisory services, Subadviser, while
remaining ultimately responsible for management of the portion of the assets of
the Portfolio allocated to it, may delegate any of its responsibilities to one
of its affiliates, including Davis Selected Advisers--NY, Inc., its New York
affiliate.
2. PORTFOLIO TRANSACTIONS. The Subadviser is authorized to select the
brokers or dealers that will execute the purchases and sales of portfolio
securities and is directed to use its best efforts to obtain the best price and
execution. In selecting such broker or dealers, the Subadviser shall consider
all relevant factors, including price (including the applicable brokerage
commission or dealer spread), the size of the order, the nature of the market
for the security or other investment, the timing of the transaction, the
reputation, experience and financial stability of the broker or dealer involved,
the quality of the service, the difficulty of execution, the execution
capabilities and operations facilities of the firm involved, and the firm's risk
in positioning a block of securities. Subject to such policies as the Trustees
may determine and consistent with Section 28(e) of the Securities Exchange Act
of 1934, as amended, the Subadviser shall not be deemed to have acted unlawfully
or to have breached any duty created by this Agreement or otherwise solely by
reason of the Subadviser's having caused a Portfolio to pay a member of an
exchange, broker or dealer an amount of commission for effecting a securities
transaction in excess of the amount of commission another member of an exchange,
broker or dealer would have charged for effecting that transaction, if the
Subadviser determines in good faith that such amount of commission was
reasonable in relation to the value of the brokerage and research services
provided by such member of an exchange, broker or dealer viewed in terms of
either that particular transaction or the Subadviser's overall responsibilities
with respect to such Portfolio and to other clients as to which the Subadviser
exercises investment discretion. The Subadviser will promptly communicate to the
Adviser and to the officers and the Trustees of the Trust such information
relating to portfolio transactions as they may reasonably request.
3. COMPENSATION OF THE SUBADVISER. The Subadviser shall not be entitled to
receive any payment from the Trust and shall look solely and exclusively to the
Adviser for payment of all fees for the services rendered, facilities furnished
and expenses paid by it hereunder. As full compensation for the Subadviser under
this Agreement, the Adviser agrees to pay the Subadviser a fee at the annual
rates set forth in Schedule A hereto with respect to each Portfolio listed
thereon. Such fee shall be accrued daily and paid monthly as soon as practicable
after the end of each month (i.e., the applicable annual fee rate divided by 365
applied to each prior days' net assets in order to calculate the daily accrual).
For purposes of calculating the Subadviser's fee, the average daily net asset
value of a Portfolio shall be determined by taking an average of all
determinations of such net asset value during the month. If the Subadviser shall
provide its services under this Agreement for less than the whole of any month,
the foregoing compensation shall be prorated.
C-2-2
<PAGE>
The Subadviser, not the Adviser or the Trust, will pay Davis Selected
Advisers--NY, Inc., or any other affiliate the services of which are utilized
hereunder, all of such affiliate's reasonable direct and indirect costs
associated with maintenance of an office and performance of such services.
To the extent required by the laws of any state in which the Trust is
subject to an expense guarantee limitation, if the aggregate expenses of any
Portfolio in any fiscal year exceed the specified expense limitation ratios for
that year (calculated on a daily basis), as a result of which the Adviser is
required to reduce or refund its advisory and management fee payable by the
Portfolio, the Subadviser agrees to waive such portion of its subadvisory fee in
the same proportion as the fees waived by the Adviser bear to the total advisory
and management fee paid by the Portfolio. Such waiver, however, shall not exceed
the full amount of the subadvisory fee for such year except as may be elected by
the Subadviser in its discretion. For this purpose, aggregate expenses of a
Portfolio shall include the compensation of the Adviser and all normal expenses,
fees and charges, but shall exclude interest, taxes, brokerage fees on portfolio
transactions, fees and expenses incurred in connection with the distribution of
Trust shares, and extraordinary expenses including litigation expenses. In the
event any amounts are so contributed by the Subadviser to the Adviser, the
Adviser agrees to reimburse the Subadviser for any expenses waived, provided
that the Adviser has been reimbursed by the Trust.
4. REPORTS. The Adviser and the Subadviser agree to furnish to each other,
if applicable, current prospectuses, statements of additional information, proxy
statements, reports of shareholders, certified copies of their financial
statements, and such other information with regard to their affairs and that of
the Trust as each may reasonably request.
5. STATUS OF THE SUBADVISER. The services of the Subadviser to the Adviser
and the Trust are not to be deemed exclusive, and the Subadviser shall be free
to render similar services to others so long as its services to the Trust are
not impaired thereby. The Subadviser shall be deemed to be an independent
contractor and shall, unless otherwise expressly provided or authorized, have no
authority to act for or represent the Trust in any way or otherwise be deemed an
agent of the Trust.
6. CERTAIN RECORDS. The Subadviser hereby undertakes and agrees to
maintain, in the form and for the period required by Rule 31a-2 under the Act,
all records relating to the investments of the Portfolio(s) that are required to
be maintained by the Trust pursuant to the requirements of Rule 31a-1 of that
Act. Any records required to be maintained and preserved pursuant to the
provisions of Rule 31a-1 and Rule 31a-2 promulgated under the Act which are
prepared or maintained by the Subadviser on behalf of the Trust are the property
of the Trust and will be surrendered promptly to the Trust or the Adviser on
request.
The Subadviser agrees that all accounts, books and other records maintained
and preserved by it as required hereby shall be subject at any time, and from
time to time, to such reasonable periodic, special and other examinations by the
Securities and Exchange Commission, the Trust's auditors, the Trust or any
representative of the Trust, the Adviser, or any governmental agency or other
instrumentality having regulatory authority over the Trust.
7. REFERENCE TO THE SUBADVISER. Neither the Trust nor the Adviser or any
affiliate or agent thereof shall make reference to or use the name of the
Subadviser or any of its affiliates in any advertising or promotional materials
without the prior approval of the Subadviser, which approval shall not be
unreasonably withheld.
8. INDEMNIFICATION. The Adviser agrees to indemnify and hold harmless the
Subadviser and its affiliates and each of its directors and officers and each
person, if any, who controls the Subadviser within the meaning of Section 15 of
the 1933 Act against any and all losses, claims, damages, liabilities or
litigation (including legal and other expenses), to which the Subadviser or its
affiliates or such directors, officers or controlling person may become subject
under the 1933 Act, under any other statute, at common law or otherwise, which
may be based upon any wrongful act or breach of this Agreement by the Adviser;
C-2-3
<PAGE>
provided, however, that in no case is the Adviser's indemnity in favor of any
person deemed to protect such person against any liability to which such person
would otherwise be subject by reason of willful misfeasance, bad faith, or gross
negligence in the performance of his, her or its duties or by reasons of his,
her or its reckless disregard of obligations and duties under this Agreement.
The Subadviser agrees to indemnify and hold harmless the Adviser and its
affiliates and each of its directors and officers and each person, if any, who
controls the Adviser within the meaning of Section 15 of the 1933 Act against
any and all losses, claims, damages, liabilities or litigation (including legal
and other expenses), to which the Adviser or its affiliates or such directors,
officers or controlling person may become subject under the 1933 Act, under
other statutes, at common law or otherwise, which may be based upon (i) any
wrongful act or breach of this Agreement by the Subadviser, or (ii) any failure
by the Subadviser to comply with the representations and warranties set forth in
Section 1 of this Agreement; provided, however, that in no case is the
Subadviser's indemnity in favor of any person deemed to protect such other
persons against any liability to which such person would otherwise be subject by
reasons of willful misfeasance, bad faith, or gross negligence in the
performance of his, her or its duties or by reason of his, her or its reckless
disregard of obligation and duties under this Agreement.
9. TERM OF THE AGREEMENT. This Agreement shall continue in full force and
effect with respect to each Portfolio until the earlier of (a) two years from
the date this Agreement is approved by the Trustees, or (b) the first meeting of
the shareholders of the Portfolio of the Trust after the date hereof. If
approved at such meeting by the affirmative vote of a majority of the
outstanding voting securities (as defined in the Act), of the Portfolio with
respect to such Portfolio, voting separately from any other series of the Trust,
this Agreement shall continue in full force and effect with respect to such
Portfolio from year to year thereafter so long as such continuance is
specifically approved at least annually (i) by the vote of a majority of those
Trustees of the Trust who are not parties to this Agreement or interested
persons of any such party, cast in person at a meeting called for the purpose of
voting on such approval, and (ii) by the Trustees of the Trust or by vote of a
majority of the outstanding voting securities of the Portfolio voting separately
from any other series of the Trust, provided, however, that if the shareholders
fail to approve the Agreement as provided herein, the Subadviser may continue to
serve hereunder in the manner and to the extent permitted by the Act and rules
thereunder. The foregoing requirement that continuance of this Agreement be
"specifically approved at least annually" shall be construed in a manner
consistent with the Act and the rules and regulations thereunder.
With respect to each Portfolio, this Agreement may be terminated at any
time, without payment of penalty by the Portfolio or the Trust, by vote of a
majority of the Trustees, or by vote of a majority of the outstanding voting
securities (as defined in the Act) of the Portfolio, voting separately from any
other series of the Trust, or by the Adviser, on not less than 30 nor more than
60 days' written notice to the Subadviser. With respect to each Portfolio, this
Agreement may be terminated by the Subadviser at any time, without the payment
of any penalty, on 90 days' written notice to the Adviser and the Trust;
provided, however, that this Agreement may not be terminated by the Subadviser
unless another subadvisory agreement has been approved by the Trust in
accordance with the Act, or after six months' written notice, whichever is
earlier. The termination of this Agreement with respect to any Portfolio or the
addition of any Portfolio to Schedule A hereto (in the manner required by the
Act) shall not affect the continued effectiveness of this Agreement with respect
to each other Portfolio subject hereto. This Agreement shall automatically
terminate in the event of its assignment (as defined by the Act).
This Agreement will also terminate in the event that the Advisory Agreement
by and between the Trust and the Adviser is terminated.
10. SEVERABILITY. If any provision of this Agreement shall be held or made
invalid by a court decision, statute, rule or otherwise, the remainder of this
Agreement shall not be affected thereby.
11. AMENDMENTS. This Agreement may be amended by mutual consent in
writing, but the consent of the Trust must be obtained in conformity with the
requirements of the Act.
C-2-4
<PAGE>
12. GOVERNING LAW. This Agreement shall be construed in accordance with
the laws of the State of New York and the applicable provisions of the Act. To
the extent the applicable laws of the State of New York, or any of the
provisions herein, conflict with the applicable provisions of the Act, the
latter shall control.
13. PERSONAL LIABILITY. The Declaration of the Trust establishing the
Trust (the "Declaration"), is on file in the office of the Secretary of the
Commonwealth of Massachusetts, and, in accordance with that Declaration, no
Trustee, shareholder, officer, employee or agent of the Trust shall be held to
any personal liability, nor shall resort be had to their private property for
satisfaction of any obligation or claim or otherwise in connection with the
affairs of the Trust, but the "Trust Property" only shall be liable.
14. SEPARATE SERIES. Pursuant to the provisions of the Declaration, each
portfolio is a separate series of the Trust, and all debts, liabilities,
obligations and expenses of a particular portfolio shall be enforceable only
against the assets of that portfolio and not against the assets of any other
portfolio or of the Trust as a whole.
15. NOTICES. All notices shall be in writing and deemed properly given
when delivered or mailed by United States certified or registered mail, return
receipt requested, postage prepaid, addressed as follows:
Subadviser: Davis Selected Advisers, L.P.
124 E. Marcy Street
P.O. Box 1688
Santa Fe, NM 87504-1688
Attention: Kenneth C. Eich
Chief Operating Officer
Adviser: SunAmerica Asset Management Corp.
733 Third Avenue
New York, New York 10017
Attention: Robert M. Zakem
Senior Vice President
and General Counsel
with a
copy to: SunAmerica Inc.
1 SunAmerica Center
Century City
Los Angeles, California 90067-6022
Attention: Susan L. Harris
Vice President, Associate
General Counsel and
Secretary
C-2-5
<PAGE>
IN WITNESS WHEREOF, the parties have caused their respective duly authorized
officers to execute this Agreement as of the date first above written.
SUNAMERICA ASSET MANAGEMENT CORP.
By:
-----------------------------------------
Name: Peter A. Harbeck
Title: President
DAVIS SELECTED ADVISERS, L.P.
By:
-----------------------------------------
Name:
Title:
C-2-6
<PAGE>
SCHEDULE A
<TABLE>
<CAPTION>
FEE (AS PERCENTAGE OF AVERAGE
DAILY NET ASSETS OF THE
PORTFOLIO PORTFOLIO)
- ----------------------------------------------------------------------------------- -----------------------------
<S> <C>
Venture Value...................................................................... .45% on first $100 million
.40% on next $400 million
.35% thereafter
Real Estate........................................................................ .45% on first $100 million
.40% on next $400 million
.35% thereafter
</TABLE>
C-2-7
<PAGE>
EXHIBIT C-3
SUBADVISORY AGREEMENT
This SUBADVISORY AGREEMENT is dated as of by and between
SUNAMERICA ASSET MANAGEMENT CORP., a Delaware corporation (the "Adviser"), and
FEDERATED INVESTMENT COUNSELING, a Delaware business trust (the "Subadviser").
WITNESSETH:
WHEREAS, the Adviser and SunAmerica Series Trust, a Massachusetts business
trust (the "Trust"), have entered into an Investment Advisory and Management
Agreement dated as of , (the "Advisory Agreement") pursuant to which
the Adviser has agreed to provide investment management, advisory and
administrative services to the Trust; and
WHEREAS, the Trust is registered under the Investment Company Act of 1940,
as amended (the "Act"), as an open-end management investment company and may
issue shares of beneficial interest, par value $.01 per share, in separately
designated portfolios representing separate funds with their own investment
objectives, policies and purposes; and
WHEREAS, the Subadviser is engaged in the business of rendering investment
advisory services and is registered as an investment adviser under the
Investment Advisers Act of 1940, as amended; and
WHEREAS, the Adviser desires to retain the Subadviser to furnish investment
advisory services to the investment portfolio or portfolios of the Trust listed
on Schedule A attached hereto (the "Portfolio(s)"), and the Subadviser is
willing to furnish such services;
NOW, THEREFORE, it is hereby agreed between the parties hereto as follows:
1. DUTIES OF THE SUBADVISER. The Adviser hereby engages the services of
the Subadviser in furtherance of its Investment Advisory and Management
Agreement with the Trust. Pursuant to this Subadvisory Agreement and subject to
the oversight and review of the Adviser, the Subadviser will manage the
investment and reinvestment of the assets of each Portfolio listed on Schedule A
attached hereto. Subject to the oversight and review of the Adviser, the
Subadviser will determine in its discretion the securities to be purchased or
sold, and through delegated authority from the Adviser, execute such documents
as may be necessary in connection therewith; will provide the Adviser with
records concerning its activities which the Adviser or the Trust is required to
maintain; and will render regular reports to the Adviser and to officers and
Trustees of the Trust concerning its discharge of the foregoing
responsibilities. The Subadviser shall discharge the foregoing responsibilities
subject to the control of the officers and the Trustees of the Trust and in
compliance with such policies as the Trustees of the Trust may from time to time
establish, and in compliance with the objectives, policies, and limitations for
the Portfolio(s) set forth in the Trust's current prospectus and statement of
additional information.
The Subadviser represents and warrants that its management of the Portfolios
will at all times conform with: (1) the objectives, policies, and limitations
for the Portfolio(s) set forth in the Trusts current prospectus and statement of
additional information; (2) the provisions of Subchapter M of the Internal
Revenue Code of 1986, as amended (the "Code"), applicable to regulated
investment companies, including those investment companies underlying variable
annuities; (3) the provisions of the Act and rules adopted thereunder applicable
to the Portfolios; (4) the diversification requirements specified in the
Internal Revenue Service's regulations under Section 817(h) of the Code; (5)
applicable state insurance laws provided to Subadviser by Adviser in writing
(which may be satisfied through delivery to Subadviser of a copy of the Trusts
current prospectus), or as acknowledged in a written undertaking by Subadviser;
(6) applicable federal and state securities laws; and (7) the distribution
requirements necessary to avoid payment of any excise tax pursuant to Section
4982 of the Code. The Subadviser further represents and
C-3-1
<PAGE>
warrants that to the extent that any statements or omissions made in any
Registration Statement for the Contracts or shares of the Trust, or any
amendment or supplement thereto, are made in reliance upon and in conformity
with information furnished by the Subadviser expressly for use therein, such
Registration Statement and any amendments or supplements thereto will, when they
become effective, conform in all material respects to the requirements of the
Securities Act of 1933 and the rules and regulations of the Commission
thereunder (the "1933 Act") and the Act and will not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not misleading.
The Subadviser accepts such employment and agrees, at its own expense, to
render the services set forth herein and to provide the office space,
furnishings, equipment and personnel required by it to perform such services on
the terms and for the compensation provided in this Agreement.
2. REPRESENTATIONS AND WARRANTIES OF THE ADVISER. The Adviser represents
and warrants to the Subadviser that: (1) it is a corporation duly formed and
validly existing under the laws of Delaware; (2) it is duly authorized to
execute and deliver this Agreement and to perform its obligations thereunder;
and (3) it is registered with the Securities and Exchange Commission as an
investment adviser under the Investment Advisers Act of 1940, as amended.
3. PORTFOLIO TRANSACTIONS. The Subadviser is responsible for decisions to
buy or sell securities and other investments of the assets of each Portfolio,
broker-dealers and futures commission merchants selection, and negotiation of
brokerage commission and futures commission merchants rates. As a general
matter, in executing portfolio transactions, the Subadviser may employ or deal
with such broker-dealers or futures commission merchants as may, in the
Subadviser's best judgement, provide prompt and reliable execution of the
transactions at favorable prices and reasonable commission rates. In selecting
such broker-dealers or futures commission merchants, the Subadviser shall
consider all relevant factors including price (including the applicable
brokerage commission, dealer spread or futures commission merchant rate), the
size of the order, the nature of the market for the security or other
investment, the timing of the transaction, the reputation, experience and
financial stability of the broker-dealer or futures commission merchant
involved, the quality of the service, the difficulty of execution, the execution
capabilities and operational facilities of the firm involved, and, in the case
of securities, the firm's risk in positioning a block of securities. Subject to
such policies as the Trustees may determine and consistent with Section 28(e) of
the Securities Exchange Act of 1934, as amended (the "1934 Act"), the Subadviser
shall not be deemed to have acted unlawfully or to have breached any duty
created by this Agreement or otherwise solely by reason of the Subadviser's
having caused a Portfolio to pay a member of an exchange, broker or dealer an
amount of commission for effecting a securities transaction in excess of the
amount of commission another member of an exchange, broker or dealer would have
charged for effecting that transaction, if the Subadviser determines in good
faith that such amount of commission was reasonable in relation to the value of
the brokerage and research services provided by such member of an exchange,
broker or dealer viewed in terms of either that particular transaction or the
Subadviser's overall responsibilities with respect to such Portfolio and to
other clients as to which the Subadviser exercises investment discretion. In
accordance with Section 11(a) of the 1934 Act and Rule 11a2-2(T) thereunder, and
subject to any other applicable laws and regulations including Section 17(e) of
the Act and Rule 17e-1 thereunder, the Subadviser may engage its affiliates, the
Adviser and its affiliates or any other subadviser to the Trust and its
respective affiliates, as broker-dealers or futures commission merchants to
effect portfolio transactions in securities and other investments for a
Portfolio. The Subadviser will promptly communicate to the Adviser and to the
officers and the Trustees of the Trust such information relating to portfolio
transactions as they may reasonably request. To the extent consistent with
applicable law, the Subadviser may aggregate purchase or sell orders for the
Portfolios with contemporaneous purchase or sell orders of other clients of the
Subadviser or its affiliated persons. In such event, allocation of the
securities so purchased or sold, as well as the expenses incurred in the
transaction, will be made by the Subadviser in the manner the Subadviser
determines to be equitable and consistent with its and its affiliates fiduciary
obligations to the
C-3-2
<PAGE>
Portfolios and to such other clients. The Adviser hereby acknowledges that such
aggregation of orders may not result in more favorable pricing or lower
brokerage commissions in all instances.
4. COMPENSATION OF THE SUBADVISER. The Subadviser shall not be entitled to
receive any payment from the Trust and shall look solely and exclusively to the
Adviser for payment of all fees for the services rendered, facilities furnished
and expenses paid by it hereunder. As full compensation for the Subadviser under
this Agreement, the Adviser agrees to pay the Subadviser a fee at the annual
rates set forth in Schedule A hereto with respect to each Portfolio listed
thereon. Such fee shall be accrued daily and paid monthly as soon as practicable
after the end of each month (i.e., the applicable annual fee rate divided by 365
applied to each prior days' net assets in order to calculate the daily accrual).
For purposes of calculating the Subadviser's fee, the average daily net asset
value of a Portfolio shall be determined by taking an average of all
determinations of such net asset value during the month. If the Subadviser shall
provide its services under this Agreement for less than the whole of any month,
the foregoing compensation shall be prorated.
5. REPORTS. The Trust, the Adviser and the Subadviser agree to furnish to
each other, if applicable, current prospectuses, statements of additional
information, proxy statements, reports of shareholders, certified copies of
their financial statements, policies and procedures relating to the management
of the Trust as adopted by the Board of Trustees, and such other information
with regard to their affairs and that of the Trust as each may reasonably
request.
6. STATUS OF THE SUBADVISER. The services of the Subadviser to the Adviser
and the Trust are not to be deemed exclusive, and the Subadviser shall be free
to render similar services to others so long as its services to the Trust are
not impaired thereby. The Subadviser shall be deemed to be an independent
contractor and shall, unless otherwise expressly provided or authorized, have no
authority to act for or represent the Trust in any way or otherwise be deemed an
agent of the Trust.
7. CERTAIN RECORDS. The Subadviser hereby undertakes and agrees to
maintain, in the form and for the period required by Rule 31a-2 under the Act,
all records relating to the investments of the Portfolio(s) that are required to
be maintained by the Trust pursuant to the requirements of Rule 31a-1 of that
Act. Any records required to be maintained and preserved pursuant to the
provisions of Rule 31a-1 and Rule 31a-2 promulgated under the Act which are
prepared or maintained by the Subadviser on behalf of the Trust are the property
of the Trust and will be surrendered promptly to the Trust or the Adviser on
request.
The Subadviser agrees that all accounts, books and other records maintained
and preserved by it as required hereby shall be subject at any time, and from
time to time, to such reasonable periodic, special and other examinations by the
Securities and Exchange Commission, the Trust's auditors, the Trust or any
representative of the Trust, the Adviser, or any governmental agency or other
instrumentality having regulatory authority over the Trust.
8. REFERENCE TO THE SUBADVISER. Neither the Trust nor the Adviser or any
affiliate or agent thereof shall make reference to or use the name of the
Subadviser or any of its affiliates in any advertising or promotional materials
without the prior written approval of the Subadviser, which approval shall not
be unreasonably withheld.
9. LIABILITY OF THE SUBADVISER. (a) In the absence of willful misfeasance,
bad faith, gross negligence or reckless disregard of obligations or duties
("disabling conduct") hereunder on the part of the Subadviser (and its officers,
directors, agents, employees, controlling persons, shareholders and any other
person or entity affiliated with the Subadviser) the Subadviser shall not be
subject to liability to the Trust or to any shareholder of the Trust for any act
or omission in the course of, or connected with, rendering services hereunder,
including without limitation, any error of judgment or mistake of law or for any
loss suffered by any of them in connection with the matters to which this
Agreement relates, except to the extent specified in Section 36(b) of the Act
concerning loss resulting from a breach of fiduciary duty with respect to the
C-3-3
<PAGE>
receipt of compensation for services. Except for such disabling conduct, the
Adviser shall indemnify the Subadviser (and its officers, directors, partners,
agents, employees, controlling persons, shareholders and any other person or
entity affiliated with the Subadviser) (collectively, the "Indemnified Parties")
from any liability arising from the Subadvisers conduct under this Agreement.
Subadviser hereby indemnifies, defends and protects Adviser and holds Adviser
harmless, from and against any and all liability arising out of Subadvisers
disabling conduct.
(b) The Subadviser agrees to indemnify and hold harmless the Adviser and its
affiliates and each of its directors and officers and each person, if any, who
controls the Adviser within the meaning of Section 15 of the 1933 Act against
any and all losses, claims, damages, liabilities or litigation (including legal
and other expenses), to which the Adviser or its affiliates or such directors,
officers or controlling person may become subject under the 1933 Act, under
other statutes, at common law or otherwise, which arise out of or result from
any breach of any representation or warranty set forth in Section 1 of this
Agreement; provided, however, that in no case is the Subadviser's indemnity in
favor of any person deemed to protect such other persons against any liability
to which such person would otherwise be subject by reasons of willful
misfeasance, bad faith, or gross negligence in the performance of his, her or
its duties or by reason of his, her or its reckless disregard of obligation and
duties under this Agreement.
(c) The Adviser is hereby expressly put on notice of the limitation of
liability as set forth in the Declaration of Trust of the Subadviser and agrees
that the obligations assumed by the Subadviser pursuant to this Agreement will
be limited in any case to the Subadviser and its assets and the Adviser shall
not seek satisfaction of any such obligations from the shareholders of the
Subadviser, the trustees of the Subadviser, officers, employees or agents of the
Subadviser, or any of them.
10. PERMISSIBLE INTERESTS. Trustees and agents of the Trust are or may be
interested in the Subadviser (or any successor thereof) as directors, partners,
officers, or shareholders, or otherwise; directors, partners, officers, agents,
and shareholders of the Subadviser are or may be interested in the Trust as
trustees, or otherwise; and the Subadviser (or any successor) is or may be
interested in the Trust in some manner.
11. TERM OF THE AGREEMENT. This Agreement shall continue in full force and
effect with respect to each Portfolio until two years from the date hereof, and
from year to year thereafter so long as such continuance is specifically
approved at least annually (i) by the vote of a majority of those Trustees of
the Trust who are not parties to this Agreement or interested persons of any
such party, cast in person at a meeting called for the purpose of voting on such
approval, and (ii) by the Trustees of the Trust or by vote of a majority of the
outstanding voting securities of the Portfolio voting separately from any other
series of the Trust.
With respect to each Portfolio, this Agreement may be terminated at any
time, without payment of a penalty by the Portfolio or the Trust, by vote of a
majority of the Trustees, or by vote of a majority of the outstanding voting
securities (as defined in the Act) of the Portfolio, voting separately from any
other series of the Trust, or by the Adviser, on not less than 30 nor more than
60 days' written notice to the Subadviser. With respect to each Portfolio, this
Agreement may be terminated by the Subadviser at any time, without the payment
of any penalty, on not less than 30 nor more than 60 days' written notice to the
Adviser and the Trust; provided, however, that this Agreement may not be
terminated by the Subadviser unless another subadvisory agreement has been
approved by the Trust in accordance with the Act, or after six months from the
date written notice is given, whichever is earlier. Notwithstanding the
requirements set forth in the immediately preceding sentence, Subadviser may
terminate this Agreement on 30 days' written notice upon the institution of
formal proceedings against the Adviser or the Trust by the NASD, the SEC, any
state securities or insurance department or any other regulatory body regarding
the Advisers obligations under this Agreement or related to the sale of the
Contracts, operation of the separate account, or sale of shares of the Trust,
provided that such formal proceedings are likely to have a material adverse
impact on the Subadviser. The termination of this Agreement with respect to any
Portfolio or the addition of any Portfolio to Schedule A hereto (in the manner
required by the Act) shall not affect the continued
C-3-4
<PAGE>
effectiveness of this Agreement with respect to each other Portfolio subject
hereto. This Agreement shall automatically terminate in the event of its
assignment (as defined by the Act).
This Agreement will also terminate in the event that the Advisory Agreement
by and between the Trust and the Adviser is terminated.
12. SEVERABILITY. If any provision of this Agreement shall be held or made
invalid by a court decision, statute, rule or otherwise, the remainder of this
Agreement shall not be affected thereby.
13. AMENDMENTS. This Agreement may be amended by mutual consent in
writing, but the consent of the Trust must be obtained in conformity with the
requirements of the Act.
14. GOVERNING LAW. This Agreement shall be construed in accordance with
the laws of the State of New York and the applicable provisions of the Act. To
the extent the applicable laws of the State of New York, or any of the
provisions herein, conflict with the applicable provisions of the Act, the
latter shall control.
15. PERSONAL LIABILITY. The Declaration of the Trust establishing the
Trust (the "Declaration"), is on file in the office of the Secretary of the
Commonwealth of Massachusetts, and, in accordance with that Declaration, no
Trustee, shareholder, officer, employee or agent of the Trust shall be held to
any personal liability, nor shall resort be had to their private property for
satisfaction of any obligation or claim or otherwise in connection with the
affairs of the Trust, but the "Trust Property" only shall be liable.
16. SEPARATE SERIES. Pursuant to the provisions of the Declaration, each
Portfolio is a separate series of the Trust, and all debts, liabilities,
obligations and expenses of a particular Portfolio shall be enforceable only
against the assets of that Portfolio and not against the assets of any other
Portfolio or of the Trust as a whole.
17. NOTICES. All notices shall be in writing and deemed properly given
when delivered or mailed by United States certified or registered mail, return
receipt requested, postage prepaid addressed as follows:
Subadviser: Federated Investment Counseling
Federated Investors Tower
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Adviser: SunAmerica Asset Management Corp.
The SunAmerica Center
733 Third Avenue, Third Floor
New York, NY 10017
Attention: Robert M. Zakem
Senior Vice President
and General Counsel
with a
copy to: SunAmerica Inc.
1 SunAmerica Center
Century City
Los Angeles, CA 90067-6022
Attention: Susan L. Harris
Senior Vice President,
General Counsel -
Corporate Affairs and Secretary
C-3-5
<PAGE>
IN WITNESS WHEREOF, the parties have caused their respective duly authorized
officers to execute this Agreement as of the date first above written.
SUNAMERICA ASSET MANAGEMENT CORP.
By: /s/
-----------------------------------------
Name: Peter A. Harbeck
Title: President
FEDERATED INVESTMENT COUNSELING
By: /s/
-----------------------------------------
Name:
Title:
C-3-6
<PAGE>
SCHEDULE A
<TABLE>
<CAPTION>
FEE (AS PERCENTAGE OF AVERAGE
DAILY NET ASSETS OF THE
PORTFOLIO(S) PORTFOLIO)
- -------------------------------------------------------------------------------- --------------------------------
<S> <C>
FEDERATED VALUE................................................................. .55% on first $20 million
.35% on next $30 million
.25% on next $100 million
.20% on next $350 million
.15% thereafter
UTILITY......................................................................... .55% on first $20 million
.35% on next $30 million
.25% on next $100 million
.20% on next $350 million
.15% thereafter
CORPORATE BOND.................................................................. .30% on first $25 million
.25% on next $25 million
.20% on next $100 million
.15% thereafter
</TABLE>
C-3-7
<PAGE>
EXHIBIT C-4
SUBADVISORY AGREEMENT
BETWEEN SUNAMERICA ASSET MANAGEMENT CORP.
AND
GOLDMAN SACHS ASSET MANAGEMENT,
A SEPARATE OPERATING DIVISION OF
GOLDMAN, SACHS & CO.
It is hereby agreed by and between SUNAMERICA ASSET MANAGEMENT CORP. (the
"Adviser") and GOLDMAN SACHS ASSET MANAGEMENT, a separate operating division of
GOLDMAN, SACHS & CO. ("Subadviser") as follows:
1. DUTIES OF SUBADVISER. Adviser hereby engages the services of Subadviser
in furtherance of its Investment Advisory and Management Agreement with
SunAmerica Series Trust (the "Trust") dated as of , on behalf of the
Asset Allocation Portfolio (the "Portfolio"). Pursuant to this Sub-Advisory
Agreement and subject to the oversight and review of Adviser, Subadviser will
manage the investment and reinvestment of the assets of the Portfolio. In this
regard, Subadviser will determine in its discretion the securities to be
purchased or sold, will provide Adviser with records concerning its activities
which Adviser or the Trust is required to maintain, and will render regular
reports to Adviser and to officers and Trustees of the Trust concerning its
discharge of the foregoing responsibilities. Subadviser shall discharge the
foregoing responsibilities subject to the control of the officers and the
Trustees of the Trust and in compliance with such policies as the Trustees of
the Trust may from time to time establish, and in compliance with the
objectives, policies, and limitations for the Portfolio set forth in the Trust's
current prospectus and statement of additional information, and applicable laws
and regulations. Adviser agrees to inform Subadviser of any and all requirements
of the California Insurance Code and regulations thereunder that operate to
limit or restrict the investments the Portfolio may otherwise make, and to
inform Subadviser promptly of any changes in such requirements. Subadviser
accepts such employment and agrees, at its own expense, to render the services
set forth herein and to provide the office space, furnishings, equipment and
personnel required by it to perform such services on the terms and for the
compensation provided in this Agreement.
2. PORTFOLIO TRANSACTIONS. Subadviser is authorized to select the brokers
or dealers that will execute the purchases and sales of portfolio securities and
is directed to use its best efforts to obtain the best price and execution.
Subject to policies established by the Trustees of the Trust, Subadviser may
also be authorized to effect individual securities transactions at commission
rates in excess of the minimum commission rates available, if Subadviser
determines in good faith that such amount of commission is reasonable in
relation to the value of the brokerage and research services provided by such
broker or dealer, viewed in terms of either that particular transaction or
Subadviser's overall responsibilities with respect to a Portfolio, other
portfolios of the Trust and other clients of Subadviser. The execution of such
transactions shall not be deemed to represent an unlawful act or breach of any
duty created by this Agreement or otherwise. Subadviser will promptly
communicate to Adviser and to the officers and the Trustees of the Trust such
information relating to portfolio transactions as they may reasonably request.
C-4-1
<PAGE>
3. COMPENSATION OF SUBADVISER. As its compensation hereunder, the Adviser
shall pay to Subadviser promptly after the end of each month, a fee calculated
in accordance with the average daily net assets of the indicated Portfolio as
follows:
ASSET ALLOCATION PORTFOLIO:
.40% PER ANNUM ON THE FIRST $50 MILLION;
.30% PER ANNUM ON THE NEXT $100 MILLION;
.25% PER ANNUM ON THE NEXT $100 MILLION;
.20% PER ANNUM THEREAFTER.
To the extent required by the laws of any state in which the Trust is
subject to an expense guarantee limitation, if the aggregate expenses of any
Portfolio in any fiscal year exceed the specified expense limitation ratios for
that year (calculated on a daily basis), as a result of which Adviser is
required to reduce or refund its advisory and management fee payable by a
Portfolio, Subadviser agrees to waive such portion of its subadvisory fee in the
same proportion as the fees waived by the Adviser bear to the total advisory and
management fee paid by such Portfolio. Such waiver, however, shall not exceed
the full amount of the subadvisory fee for such year except as may be elected by
Subadviser in its discretion. For this purpose, aggregate expenses of a
Portfolio shall include the compensation of Adviser and all normal expenses,
fees and charges, but shall exclude interest, taxes, brokerage fees on portfolio
transactions, fees and expenses incurred in connection with the distribution of
Trust shares, and extraordinary expenses including litigation expenses. In the
event any amounts are so contributed by Subadviser to Adviser, Adviser agrees to
reimburse Subadviser for any expenses waived, provided that Adviser has been
reimbursed by the Trust.
Subadviser's fee shall be accrued daily at 1/365th of the applicable annual
rate set forth above. For the purpose of accruing compensation, the net assets
of a Portfolio shall be that determined in the manner and on the dates set forth
in the current prospectus of the Trust and, on days on which the net assets are
not so determined, the net asset computation to be used shall be as determined
on the next day on which the net assets shall have been determined.
4. REPORTS. Adviser and Subadviser agree to furnish to each other, if
applicable, current prospectuses, statements of additional information, proxy
statements, reports of shareholders, certified copies of their financial
statements, and such other information with regard to their affairs and that of
the Trust as each may reasonably request.
5. STATUS OF SUBADVISER. The services of Subadviser to Adviser and the
Trust are not to be deemed exclusive, and Subadviser shall be free to render
similar services to others so long as its services to the Trust are not impaired
thereby. Subadviser shall be deemed to be an independent contractor and shall,
unless otherwise expressly provided or authorized, have no authority to act for
or represent the Trust in any way or otherwise be deemed an agent of the Trust.
6. CERTAIN RECORDS. Subadviser hereby undertakes and agrees to maintain,
in the form and for the period required by Rule 31a-2 under the Investment
Company Act of 1940, all records relating to the Portfolio's investments that
are required to be maintained by the Trust pursuant to the requirements of Rule
31a-1 of that Act. Any records required to be maintained and preserved pursuant
to the provisions of Rule 31a-1 and Rule 31a-2 promulgated under the Investment
Company Act of 1940 which are prepared or maintained by Subadviser on behalf of
the Trust are the property of the Trust and will be surrendered promptly to the
Trust or Adviser on request.
Subadviser agrees that all accounts, books and other records maintained and
preserved by it as required hereby shall be subject at any time, and from time
to time, to such reasonable periodic, special and other examinations by the
Securities and Exchange Commission, the Trust's auditors, the Trust or any
representative of the Trust, the Adviser, or any governmental agency or other
instrumentality having regulatory authority over the Trust.
C-4-2
<PAGE>
7. REFERENCE TO SUBADVISER. Neither the Trust nor Adviser or any affiliate
or agent thereof shall make reference to or use the name of Subadviser or any of
its affiliates in any advertising or promotional materials without the prior
approval of Subadviser, which approval shall not be unreasonably withheld.
Subadviser agrees to notify Adviser of any changes in the membership of the
general partners of Subadviser as soon as practicable prior to such change.
8. LIABILITY OF SUBADVISER. In the absence of willful misfeasance, bad
faith, gross negligence or reckless disregard of obligations or duties
("disabling conduct") hereunder on the part of Subadviser (and its officers,
directors, agents, partners, employees, controlling persons, shareholders and
any other person or entity affiliated with Subadviser ("associated persons")),
Subadviser and its associated persons shall not be subject to liability to the
Adviser or to any other person for any act or omission in the course of, or
connected with, rendering services hereunder (including, without limitation, as
a result of failure by Adviser, by any other affiliate of Anchor National Life
Insurance Company ("ANLIC"), or by ANLIC, to comply with this Agreement or the
requirements of Section 10506 of the California Insurance Code and regulations
duly adopted pursuant to such Section or, as a result of any error of judgment
or mistake of law or for any loss suffered by Advisor or any other person in
connection with the matters to which this Agreement relates), except to the
extent specified in Section 36(b) of the Investment Company Act of 1940
concerning loss resulting from a breach of fiduciary duty with respect to the
receipt of compensation for services.
Adviser hereby indemnifies, defends and protects Subadviser and holds
Subadviser and its associated persons harmless from and against any and all
claims, demands, actions, losses, damages, liabilities, costs, charges, counsel
fees and expenses of any nature ("Losses") arising out of (i) any inaccuracy or
omission in any prospectus, registration statement, annual report or proxy
statement or advertising or promotional material pertaining to the Portfolio
("Documents") to the extent such Document contains information not supplied to
Adviser by Subadviser for inclusion in such Document, (ii) any breach of Adviser
of any representation or agreement contained in this Subadvisory Agreement,
(iii) any failure by Adviser, by any other affiliate of ANLIC, or by ANLIC, to
comply with the requirements of Section 10506 of the California Insurance Code
and regulations duly adopted pursuant to such Section, and (iv) any action taken
or omitted to be taken by Subadviser pursuant to this Subadvisory Agreement,
except to the extent such Losses result from Subadviser's breach of this
Subadvisory Agreement or Subadviser's disabling conduct. Subadviser hereby
indemnifies, defends and protects Adviser and holds Adviser harmless from and
against any and all Losses arising out of Subadviser's disabling conduct.
9. DURATION AND TERMINATION. This Agreement shall continue in full force
and effect with respect to a Portfolio until the earlier of (a) two years from
the date this Agreement is approved by the Trustees, or (b) the first meeting of
the shareholders of such Portfolio after the date hereof. If approved at such
meeting by the affirmative vote of a majority of the outstanding voting
securities (as defined in the Investment Company Act of 1940), of the Portfolio
with respect to such Portfolio, voting separately from any other series of the
Trust, this Agreement shall continue in full force and effect with respect to
such Portfolio from year to year thereafter so long as such continuance is
specifically approved at least annually (i) by the vote of a majority of those
Trustees of the Trust who are not parties to this Agreement or interested
persons of any such party, cast in person at a meeting called for the purpose of
voting on such approval, and (ii) by the Trustees of the Trust or by vote of a
majority of the outstanding voting securities of the Portfolio voting separately
from any other series of the Trust, provided, however, that if the shareholders
fail to approve the Agreement as provided herein, Subadviser may continue to
serve hereunder in the manner and to the extent permitted by the Investment
Company Act of 1940 and rules thereunder. The foregoing requirement that
continuance of this Agreement be "specifically approved at least annually" shall
be construed in a manner consistent with the Investment Company Act of 1940 and
the rules and regulations thereunder.
This Agreement may be terminated at any time, without the payment of any
penalty by vote of a majority of the Trustees of the Trust or by a vote of a
majority of the outstanding voting securities of a
C-4-3
<PAGE>
Portfolio on not less than 30 days nor more than 60 days' written notice to
Subadviser or by Subadviser at any time without the payment of any penalty, on
90 days' written notice to Adviser and the Trust; provided, however, that this
Agreement may not be terminated by Subadviser unless another subadvisory
agreement has been approved by the Trust in accordance with the Investment
Company Act of 1940, or after six months' written notice, whichever is earlier.
This Agreement shall automatically terminate in the event of its assignment (as
defined in the Investment Company Act of 1940). Any notice under this Agreement
shall be given in writing, addressed and delivered, or mailed postage prepaid,
to the other party at any office of such party.
As used in this Section 11, the terms "assignment," "interested persons,"
and a "vote of a majority of the outstanding voting securities" shall have the
respective meanings set forth in the Investment Company Act of 1940 and the
rules and regulations thereunder, subject to such exemptions as may be granted
by the Securities and Exchange Commission under said Act.
This Agreement will also terminate in the event that the Investment Advisory
and Management Agreement by and between the Trust on behalf of the Portfolio and
Adviser referred to in Section 1 is terminated.
10. SEVERABILITY. If any provision of this Agreement shall be held or made
invalid by a court decision, statute, rule or otherwise, the remainder of this
Agreement shall not be affected thereby.
A copy of the Declaration of Trust of the Trust is on file with the
Secretary of the Commonwealth of Massachusetts, and notice is hereby given that
nothing contained herein shall be construed to be binding upon any of the
Trustees, officers, or shareholders of the Trust individually.
IN WITNESS WHEREOF, the parties have caused their respective duly authorized
officers to execute this Agreement as of .
<TABLE>
<S> <C> <C>
SUNAMERICA ASSET MANAGEMENT CORP.
By:
-----------------------------------------
Authorized Officer
GOLDMAN SACHS ASSET MANAGEMENT,
a separate operating division of
GOLDMAN, SACHS & CO.
By: GOLDMAN, SACHS & CO.
By: -----------------------------------------
Authorized Officer
</TABLE>
C-4-4
<PAGE>
EXHIBIT C-5
SUBADVISORY AGREEMENT
BETWEEN SUNAMERICA ASSET MANAGEMENT CORP.
AND
GOLDMAN SACHS ASSET MANAGEMENT INTERNATIONAL,
AN AFFILIATE OF
GOLDMAN, SACHS & CO.
It is hereby agreed by and between SUNAMERICA ASSET MANAGEMENT CORP. (the
"Adviser") and GOLDMAN SACHS ASSET MANAGEMENT INTERNATIONAL, an affiliate of
GOLDMAN, SACHS & CO. ("Subadviser") as follows:
1. DUTIES OF SUBADVISER. Adviser hereby engages the services of Subadviser
in furtherance of its Investment Advisory and Management Agreement with
SunAmerica Series Trust (the "Trust") dated as of , on behalf of the
Global Bond Portfolio (the "Portfolio"). Pursuant to this Subadvisory Agreement
and subject to the oversight and review of Adviser, Subadviser will manage the
investment and reinvestment of the assets of the Portfolio. In this regard,
Subadviser will determine in its discretion the securities to be purchased or
sold, will provide Adviser with records concerning its activities which Adviser
or the Trust is required to maintain, and will render regular reports to Adviser
and to officers and Trustees of the Trust concerning its discharge of the
foregoing responsibilities. Subadviser shall discharge the foregoing
responsibilities subject to the control of the officers and the Trustees of the
Trust and in compliance with such policies as the Trustees of the Trust may from
time to time establish, and in compliance with the objectives, policies, and
limitations for the Portfolio set forth in the Trust's current prospectus and
statement of additional information, and applicable laws and regulations.
Adviser agrees to inform Subadviser of any and all requirements of the
California Insurance Code and regulations thereunder that operate to limit or
restrict the investments the Portfolio may otherwise make, and to inform
Subadviser promptly of any changes in such requirements. Subadviser accepts such
employment and agrees, at its own expense, to render the services set forth
herein and to provide the office space, furnishings, equipment and personnel
required by it to perform such services on the terms and for the compensation
provided in this Agreement.
2. PORTFOLIO TRANSACTIONS. Subadviser is authorized to select the brokers
or dealers that will execute the purchases and sales of portfolio securities and
is directed to use its best efforts to obtain the best price and execution.
Subject to policies established by the Trustees of the Trust, Subadviser may
also be authorized to effect individual securities transactions at commission
rates in excess of the minimum commission rates available, if Subadviser
determines in good faith that such amount of commission is reasonable in
relation to the value of the brokerage and research services provided by such
broker or dealer, viewed in terms of either that particular transaction or
Subadviser's overall responsibilities with respect to the Portfolio, other
portfolios of the Trust and other clients of Subadviser. The execution of such
transactions shall not be deemed to represent an unlawful act or breach of any
duty created by this Agreement or otherwise. Subadviser will promptly
communicate to Adviser and to the officers and the Trustees of the Trust such
information relating to portfolio transactions as they may reasonably request.
C-5-1
<PAGE>
3. COMPENSATION OF SUBADVISER. As its compensation hereunder, the Adviser
shall pay to Subadviser promptly after the end of each month, a fee calculated
in accordance with the average daily net assets of the Portfolio as follows:
GLOBAL BOND PORTFOLIO:
.40% per annum on the first $50 million;
.30% per annum on the next $100 million;
.25% per annum on the next $100 million;
.20% per annum thereafter.
To the extent required by the laws of any state in which the Trust is
subject to an expense guarantee limitation, if the aggregate expenses of the
Portfolio in any fiscal year exceed the specified expense limitation ratios for
that year (calculated on a daily basis), as a result of which Adviser is
required to reduce or refund its advisory and management fee payable by the
Portfolio, Subadviser agrees to waive such portion of its subadvisory fee in the
same proportion as the fees waived by the Adviser bear to the total advisory and
management fee paid by the Portfolio. Such waiver, however, shall not exceed the
full amount of the subadvisory fee for such year except as may be elected by
Subadviser in its discretion. For this purpose, aggregate expenses of the
Portfolio shall include the compensation of Adviser and all normal expenses,
fees and charges, but shall exclude interest, taxes, brokerage fees on portfolio
transactions, fees and expenses incurred in connection with the distribution of
Trust shares, and extraordinary expenses including litigation expenses. In the
event any amounts are so contributed by Subadviser to Adviser, Adviser agrees to
reimburse Subadviser for any expenses waived, provided that Adviser has been
reimbursed by the Trust.
Subadviser's fee shall be accrued daily at 1/365th of the applicable annual
rate set forth above. For the purpose of accruing compensation, the net assets
of the Portfolio shall be that determined in the manner and on the dates set
forth in the current prospectus of the Trust and, on days on which the net
assets are not so determined, the net asset computation to be used shall be as
determined on the next day on which the net assets shall have been determined.
4. REPORTS. Adviser and Subadviser agree to furnish to each other, if
applicable, current prospectuses, statements of additional information, proxy
statements, reports of shareholders, certified copies of their financial
statements, and such other information with regard to their affairs and that of
the Trust as each may reasonably request.
5. STATUS OF SUBADVISER. The services of Subadviser to Adviser and the
Trust are not to be deemed exclusive, and Subadviser shall be free to render
similar services to others so long as its services to the Trust are not impaired
thereby. Subadviser shall be deemed to be an independent contractor and shall,
unless otherwise expressly provided or authorized, have no authority to act for
or represent the Trust in any way or otherwise be deemed an agent of the Trust.
6. CERTAIN RECORDS. Subadviser hereby undertakes and agrees to maintain,
in the form and for the period required by Rule 31a-2 under the Investment
Company Act of 1940, all records relating to the Portfolio's investments that
are required to be maintained by the Trust pursuant to the requirements of Rule
31a-1 of that Act. Any records required to be maintained and preserved pursuant
to the provisions of Rule 31a-1 and Rule 31a-2 promulgated under the Investment
Company Act of 1940 which are prepared or maintained by Subadviser on behalf of
the Trust are the property of the Trust and will be surrendered promptly to the
Trust or Adviser on request.
Subadviser agrees that all accounts, books and other records maintained and
preserved by it as required hereby shall be subject at any time, and from time
to time, to such reasonable periodic, special and other examinations by the
Securities and Exchange Commission, the Trust's auditors, the Trust or any
C-5-2
<PAGE>
representative of the Trust, the Adviser, or any governmental agency or other
instrumentality having regulatory authority over the Trust.
7. REFERENCE TO SUBADVISER. Neither the Trust nor Adviser or any affiliate
or agent thereof shall make reference to or use the name of Subadviser or any of
its affiliates in any advertising or promotional materials without the prior
approval of Subadviser, which approval shall not be unreasonably withheld.
8. LIABILITY OF SUBADVISER. In the absence of willful misfeasance, bad
faith, gross negligence or reckless disregard of obligations or duties
("disabling conduct") hereunder on the part of Subadviser (and its officers,
directors, agents, partners, employees, controlling persons, shareholders and
any other person or entity affiliated with Subadviser ("associated persons")),
Subadviser and its associated persons shall not be subject to liability to the
Adviser or to any other person for any act or omission in the course of, or
connected with, rendering services hereunder (including, without limitation, as
a result of failure by Adviser, by any other affiliate of Anchor National Life
Insurance Company ("ANLIC"), or by ANLIC, to comply with this Agreement or the
requirements of Section 10506 of the California Insurance Code and regulations
duly adopted pursuant to such Section or, as a result of any error of judgment
or mistake of law or for any loss suffered by Advisor or any other person in
connection with the matters to which this Agreement relates), except to the
extent specified in Section 36(b) of the Investment Company Act of 1940
concerning loss resulting from a breach of fiduciary duty with respect to the
receipt of compensation for services.
Adviser hereby indemnifies, defends and protects Subadviser and holds
Subadviser and its associated persons harmless from and against any and all
claims, demands, actions, losses, damages, liabilities, costs, charges, counsel
fees and expenses of any nature ("Losses") arising out of (i) any inaccuracy or
omission in any prospectus, registration statement, annual report or proxy
statement or advertising or promotional material pertaining to the Portfolio
("Documents") to the extent such Document contains information not supplied to
Adviser by Subadviser for inclusion in such Document, (ii) any breach of Adviser
of any representation or agreement contained in this Subadvisory Agreement,
(iii) any failure by Adviser, by any other affiliate of ANLIC, or by ANLIC, to
comply with the requirements of Section 10506 of the California Insurance Code
and regulations duly adopted pursuant to such Section, and (iv) any action taken
or omitted to be taken by Subadviser pursuant to this Subadvisory Agreement,
except to the extent such Losses result from Subadviser's breach of this
Subadvisory Agreement or Subadviser's disabling conduct. Subadviser hereby
indemnifies, defends and protects Adviser and holds Adviser harmless from and
against any and all Losses arising out of Subadviser's disabling conduct.
9. DURATION AND TERMINATION. This Agreement shall continue in full force
and effect with respect to the Portfolio until the earlier of (a) two years from
the date this Agreement is approved by the Trustees, or (b) the first meeting of
the shareholders of the Portfolio after the date hereof. If approved at such
meeting by the affirmative vote of a majority of the outstanding voting
securities (as defined in the Investment Company Act of 1940), of the Portfolio
with respect to the Portfolio, voting separately from any other series of the
Trust, this Agreement shall continue in full force and effect with respect to
such Portfolio from year to year thereafter so long as such continuance is
specifically approved at least annually (i) by the vote of a majority of those
Trustees of the Trust who are not parties to this Agreement or interested
persons of any such party, cast in person at a meeting called for the purpose of
voting on such approval, and (ii) by the Trustees of the Trust or by vote of a
majority of the outstanding voting securities of the Portfolio voting separately
from any other series of the Trust, provided, however, that if the shareholders
fail to approve the Agreement as provided herein, Subadviser may continue to
serve hereunder in the manner and to the extent permitted by the Investment
Company Act of 1940 and rules thereunder. The foregoing requirement that
continuance of this Agreement be "specifically approved at least annually" shall
be construed in a manner consistent with the Investment Company Act of 1940 and
the rules and regulations thereunder.
This Agreement may be terminated at any time, without the payment of any
penalty by vote of a majority of the Trustees of the Trust or by a vote of a
majority of the outstanding voting securities of the
C-5-3
<PAGE>
Portfolio on not less than 30 days nor more than 60 days written notice to
Subadviser or by Subadviser at any time without the payment of any penalty, on
90 days written notice to Adviser and the Trust; provided, however, that this
Agreement may not be terminated by Subadviser unless another subadvisory
agreement has been approved by the Trust in accordance with the Investment
Company Act of 1940, or after six months' written notice, whichever is earlier.
This Agreement shall automatically terminate in the event of its assignment (as
defined in the Investment Company Act of 1940). Any notice under this Agreement
shall be given in writing, addressed and delivered, or mailed postage prepaid,
to the other party at any office of such party.
As used in this Section 11, the terms "assignment," "interested persons,"
and a "vote of a majority of the outstanding voting securities" shall have the
respective meanings set forth in the Investment Company Act of 1940 and the
rules and regulations thereunder, subject to such exemptions as may be granted
by the Securities and Exchange Commission under said Act.
This Agreement will also terminate in the event that the Investment Advisory
and Management Agreement by and between the Trust on behalf of the Portfolio and
Adviser referred to in Section 1 is terminated.
10. SEVERABILITY. If any provision of this Agreement shall be held or made
invalid by a court decision, statute, rule or otherwise, the remainder of this
Agreement shall not be affected thereby.
A copy of the Declaration of Trust of the Trust is on file with the
Secretary of the Commonwealth of Massachusetts, and notice is hereby given that
nothing contained herein shall be construed to be binding upon any of the
Trustees, officers, or shareholders of the Trust individually.
IN WITNESS WHEREOF, the parties have caused their respective duly authorized
officers to execute this Agreement as of .
SUNAMERICA ASSET MANAGEMENT CORP.
By: _____________________________________________
Authorized Officer
GOLDMAN SACHS ASSET MANAGEMENT INTERNATIONAL,
an affiliate of
GOLDMAN, SACHS & CO.
By: _____________________________________________
Authorized Officer
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<PAGE>
EXHIBIT C-6
SUBADVISORY AGREEMENT
This SUBADVISORY AGREEMENT is dated as of by and between SUNAMERICA
ASSET MANAGEMENT CORP., a Delaware corporation (the "Adviser"), and MORGAN
STANLEY ASSET MANAGEMENT INC., a Delaware corporation (the "Subadviser").
WITNESSETH:
WHEREAS, the Adviser and SunAmerica Series Trust, a Massachusetts business
trust (the "Trust"), have entered into an Investment Advisory and Management
Agreement dated as of , (the "Advisory Agreement") pursuant to which the
Adviser has agreed to provide investment management, advisory and administrative
services to the Trust; and
WHEREAS, the Trust is registered under the Investment Company Act of 1940,
as amended (the "Act"), as an open-end management investment company and may
issue shares of beneficial interest in separately designated portfolios
representing separate funds with their own investment objectives, policies and
purposes; and
WHEREAS, the Subadviser is engaged in the business of rendering investment
advisory services and is registered as an investment adviser under the
Investment Advisers Act of 1940, as amended; and
WHEREAS, the Adviser desires to retain the Subadviser to furnish investment
advisory services to the investment portfolio or portfolios of the Trust listed
in Schedule A hereto (the "Portfolio(s)"), and the Subadviser is willing to
furnish such services;
NOW, THEREFORE, it is hereby agreed between the parties hereto as follows:
1. DUTIES OF THE SUBADVISER. The Adviser hereby engages the services of
the Subadviser in furtherance of its Investment Advisory and Management
Agreement. Pursuant to this Subadvisory Agreement and subject to the oversight
and review of the Adviser, the Subadviser will manage the investment and
reinvestment of the assets of each Portfolio listed. The Subadviser will
determine in its discretion and subject to the oversight and review of the
Adviser, the securities to be purchased or sold, will provide the Adviser with
records concerning its activities which the Adviser or the Trust is required to
maintain, and will render regular reports to the Adviser and to officers and
Trustees of the Trust concerning its discharge of the foregoing
responsibilities. The Subadviser shall discharge the foregoing responsibilities
subject to the control of the officers and the Trustees of the Trust and in
compliance with such policies as the Trustees of the Trust may from time to time
establish, and in compliance with the objectives, policies, and limitations for
the Portfolio(s) set forth in the Trust's current prospectus and statement of
additional information, and applicable laws and regulations.
The Subadviser represents and warrants to the Adviser that each of the
Portfolios set forth in Schedule A will at all times be operated and managed (1)
in compliance with all applicable federal and state laws; (2) so as not to
jeopardize either the treatment of the Polaris variable annuity contracts issued
by Variable Separate Account (File No. 33-47473; hereinafter "Contracts") as
annuity contracts for purposes of the Internal Revenue Code of 1986, as amended
(the "Code"), or the eligibility of the Contracts to qualify for sale to the
public in any state where they may otherwise be sold; and (3) to minimize any
taxes and/or penalties payable by the Trust or such Portfolio. Without
limitation, the Subadviser represents and warrants the Portfolios (1)
qualification, election and maintenance of such election by each Portfolio to be
treated as a "regulated investment company" under subchapter M, chapter 1 of the
Code, and (2) compliance with (a) the provisions of the Act and rules adopted
thereunder; (b) the diversification requirements specified in the Internal
Revenue Service's regulations under Section 817(h) of the Code; (c) applicable
state insurance laws; (d) applicable federal and state securities, commodities
and banking laws; and (e) the distribution requirements necessary to avoid
payment of any
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<PAGE>
excise tax pursuant to Section 4982 of the Code. The Subadviser further
represents and warrants that to the extent that any statements or omissions made
in any Registration Statement for the Contracts or shares of the Trust, or any
amendment or supplement thereto, are made in reliance upon and in conformity
with information furnished by the Subadviser expressly for use therein, such
Registration Statement and any amendments or supplements thereto will, when they
become effective, conform in all material respects to the requirements of the
Securities Act of 1933 and the rules and regulations of the Commission
thereunder (the "1933 Act") and the Act and will not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not misleading.
The Subadviser accepts such employment and agrees, at its own expense, to
render the services set forth herein and to provide the office space,
furnishings, equipment and personnel required by it to perform such services on
the terms and for the compensation provided in this Agreement.
2. PORTFOLIO TRANSACTIONS. The Subadviser is authorized to select the
brokers or dealers that will execute the purchases and sales of portfolio
securities and is directed to use its best efforts to obtain the best price and
execution. In selecting such broker or dealers, the Subadviser shall consider
all relevant factors, including price (including the applicable brokerage
commission or dealer spread), the size of the order, the nature of the market
for the security or other investment, the timing of the transaction, the
reputation, experience and financial stability of the broker or dealer involved,
the quality of the service, the difficulty of execution, the execution
capabilities and operations facilities of the firm involved, and the firm's risk
in positioning a block of securities. Subject to such policies as the Trustees
may determine and consistent with Section 28(e) of the Securities Exchange Act
of 1934, as amended, the Subadviser shall not be deemed to have acted unlawfully
or to have breached any duty created by this Agreement or otherwise solely by
reason of the Subadviser's having caused a Portfolio to pay a member of an
exchange, broker or dealer an amount of commission for effecting a securities
transaction in excess of the amount of commission another member of an exchange,
broker or dealer would have charged for effecting that transaction, if the
Subadviser determines in good faith that such amount of commission was
reasonable in relation to the value of the brokerage and research services
provided by such member of an exchange, broker or dealer viewed in terms of
either that particular transaction or the Subadviser's overall responsibilities
with respect to such Portfolio and to other clients as to which the Subadviser
exercises investment discretion. The Subadviser will promptly communicate to the
Adviser and to the officers and the Trustees of the Trust such information
relating to portfolio transactions as they may reasonably request.
3. COMPENSATION OF THE SUBADVISER. The Subadviser shall not be entitled to
receive any payment from the Trust and shall look solely and exclusively to the
Adviser for payment of all fees for the services rendered, facilities furnished
and expenses paid by it hereunder. As full compensation for the Subadviser under
this Agreement, the Adviser agrees to pay the Subadviser a fee at the annual
rates set forth in Schedule A hereto with respect to each Portfolio listed
thereon. Such fee shall be accrued daily and paid monthly as soon as practicable
after the end of each month (i.e., the applicable annual fee rate divided by 365
applied to each prior days' net assets in order to calculate the daily accrual).
For purposes of calculating the Subadviser's fee, the average daily net asset
value of a Portfolio shall be determined by taking an average of all
determinations of such net asset value during the month. If the Subadviser shall
provide its services under this Agreement for less than the whole of any month,
the foregoing compensation shall be prorated.
4. REPORTS. The Adviser and the Subadviser agree to furnish to each other,
if applicable, current prospectuses, statements of additional information, proxy
statements, reports of shareholders, certified copies of their financial
statements, and such other information with regard to their affairs and that of
the Trust as each may reasonably request.
5. STATUS OF THE SUBADVISER. The services of the Subadviser to the Adviser
and the Trust are not to be deemed exclusive, and the Subadviser shall be free
to render similar services to others so long as its services to the Trust are
not impaired thereby. The Subadviser shall be deemed to be an independent
C-6-2
<PAGE>
contractor and shall, unless otherwise expressly provided or authorized, have no
authority to act for or represent the Trust in any way or otherwise be deemed an
agent of the Trust.
6. CERTAIN RECORDS. The Subadviser hereby undertakes and agrees to
maintain, in the form and for the period required by Rule 31a-2 under the Act,
all records relating to the investments of the Portfolio(s) that are required to
be maintained by the Trust pursuant to the requirements of Rule 31a-1 of that
Act. Any records required to be maintained and preserved pursuant to the
provisions of Rule 31a-1 and Rule 31a-2 promulgated under the Act which are
prepared or maintained by the Subadviser on behalf of the Trust are the property
of the Trust and will be surrendered promptly to the Trust or the Adviser on
request.
The Subadviser agrees that all accounts, books and other records maintained
and preserved by it as required hereby shall be subject at any time, and from
time to time, to such reasonable periodic, special and other examinations by the
Securities and Exchange Commission, the Trust's auditors, the Trust or any
representative of the Trust, the Adviser, or any governmental agency or other
instrumentality having regulatory authority over the Trust.
7. REFERENCE TO THE SUBADVISER. Neither the Trust nor the Adviser or any
affiliate or agent thereof shall make reference to or use the name of the
Subadviser or any of its affiliates in any advertising or promotional materials
without the prior approval of the Subadviser, which approval shall not be
unreasonably withheld.
8. INDEMNIFICATION. The Adviser agrees to indemnify and hold harmless the
Subadviser and its affiliates and each of its directors and officers and each
person, if any, who controls the Subadviser within the meaning of Section 15 of
the 1933 Act against any and all losses, claims, damages, liabilities or
litigation (including legal and other expenses), to which the Subadviser or its
affiliates or such directors, officers or controlling person may become subject
under the 1933 Act, under any other statute, at common law or otherwise, which
may be based upon any wrongful act or breach of this Agreement by the Adviser;
provided, however, that in no case is the Adviser's indemnity in favor of any
person deemed to protect such person against any liability to which such person
would otherwise be subject by reason of willful misfeasance, bad faith, or gross
negligence in the performance of his, her or its duties or by reasons of his,
her or its reckless disregard of obligations and duties under this Agreement.
The Subadviser agrees to indemnify and hold harmless the Adviser and its
affiliates and each of its directors and officers and each person, if any, who
controls the Adviser within the meaning of Section 15 of the 1933 Act against
any and all losses, claims, damages, liabilities or litigation (including legal
and other expenses), to which the Adviser or its affiliates or such directors,
officers or controlling person may become subject under the 1933 Act, under
other statutes, at common law or otherwise, which may be based upon (i) any
wrongful act or breach of this Agreement by the Subadviser, or (ii) any failure
by the Subadviser to comply with the representations and warranties set forth in
Section 1 of this Agreement; provided, however, that in no case is the
Subadviser's indemnity in favor of any person deemed to protect such other
persons against any liability to which such person would otherwise be subject by
reasons of willful misfeasance, bad faith, or gross negligence in the
performance of his, her or its duties or by reason of his, her or its reckless
disregard of obligation and duties under this Agreement.
9. TERM OF THE AGREEMENT. This Agreement shall continue in full force and
effect with respect to each Portfolio until the earlier of (a) two years from
the date this Agreement is approved by the Trustees, or (b) the first meeting of
the shareholders of the Portfolio of the Trust after the date hereof. If
approved at such meeting by the affirmative vote of a majority of the
outstanding voting securities (as defined in the Act), of the Portfolio with
respect to such Portfolio, voting separately from any other series of the Trust,
this Agreement shall continue in full force and effect with respect to such
Portfolio from year to year thereafter so long as such continuance is
specifically approved at least annually (i) by the vote of a majority of those
Trustees of the Trust who are not parties to this Agreement or interested
persons of any such party, cast in person at a meeting called for the purpose of
voting on such approval, and (ii) by the Trustees
C-6-3
<PAGE>
of the Trust or by vote of a majority of the outstanding voting securities of
the Portfolio voting separately from any other series of the Trust, provided,
however, that if the shareholders fail to approve the Agreement as provided
herein, the Subadviser may continue to serve hereunder in the manner and to the
extent permitted by the Act and rules thereunder. The foregoing requirement that
continuance of this Agreement be "specifically approved at least annually" shall
be construed in a manner consistent with the Act and the rules and regulations
thereunder.
With respect to each Portfolio, this Agreement may be terminated at any
time, without payment of penalty by the Portfolio or the Trust, by vote of a
majority of the Trustees, or by vote of a majority of the outstanding voting
securities (as defined in the Act) of the Portfolio, voting separately from any
other series of the Trust, or by the Adviser, on not less than 30 nor more than
60 days' written notice to the Subadviser. With respect to each Portfolio, this
Agreement may be terminated by the Subadviser at any time, without the payment
of any penalty, on 90 days' written notice to the Adviser and the Trust;
provided, however, that this Agreement may not be terminated by the Subadviser
unless another subadvisory agreement has been approved by the Trust in
accordance with the Act, or after six months' written notice, whichever is
earlier. The termination of this Agreement with respect to any Portfolio or the
addition of any Portfolio to Schedule A hereto (in the manner required by the
Act) shall not affect the continued effectiveness of this Agreement with respect
to each other Portfolio subject hereto. This Agreement shall automatically
terminate in the event of its assignment (as defined by the Act).
This Agreement will also terminate in the event that the Advisory Agreement
by and between the Trust and the Adviser is terminated.
10. SEVERABILITY. If any provision of this Agreement shall be held or made
invalid by a court decision, statute, rule or otherwise, the remainder of this
Agreement shall not be affected thereby.
11. AMENDMENTS. This Agreement may be amended by mutual consent in
writing, but the consent of the Trust must be obtained in conformity the
requirements of the Act.
12. GOVERNING LAW. This Agreement shall be construed in accordance with
the laws of the State of New York and the applicable provisions of the Act. To
the extent the applicable laws of the State of New York, or any of the
provisions herein, conflict with the applicable provisions of the Act, the
latter shall control.
13. PERSONAL LIABILITY. The Declaration of the Trust establishing the
Trust (the "Declaration"), is on file in the office of the Secretary of the
Commonwealth of Massachusetts, and, in accordance with that Declaration, no
Trustee, shareholder, officer, employee or agent of the Trust shall be held to
any personal liability, nor shall resort be had to their private property for
satisfaction of any obligation or claim or otherwise in connection with the
affairs of the Trust, but the "Trust Property" only shall be liable.
14. SEPARATE SERIES. Pursuant to the provisions of the Declaration, each
portfolio is a separate series of the Trust, and all debts, liabilities,
obligations and expenses of a particular portfolio shall be enforceable only
against the assets of that portfolio and not against the assets of any other
portfolio or of the Trust as a whole.
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<PAGE>
15. NOTICES. All notices shall be in writing and deemed properly given
when delivered or mailed by United States certified or registered mail, return
receipt requested, postage prepaid, addressed as follows:
Subadviser: Morgan Stanley Asset Management,
Inc.
1221 Avenue of the Americas
New York, New York 10020
Attention: General Counsel
Adviser: SunAmerica Asset Management Corp.
733 Third Avenue
New York, New York 10017
Attn: Robert M. Zakem
Senior Vice President
General Counsel
with a SunAmerica Inc.
copy to: 1 SunAmerica Center
Century City
Los Angeles, California 90067-6022
Attention: Susan L. Harris
Vice President, Associate
General Counsel and
Secretary
IN WITNESS WHEREOF, the parties have caused their respective duly authorized
officers to execute this Agreement as of the date first above written.
SUNAMERICA ASSET MANAGEMENT CORP.
By:
-----------------------------------------
Name: Peter A. Harbeck
Title: Executive Vice President
MORGAN STANLEY ASSET MANAGEMENT INC.
By:
-----------------------------------------
Harold J. Schaaff
Secretary and General Counsel
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SCHEDULE A
<TABLE>
<CAPTION>
FEE (AS A
PERCENTAGE OF
AVERAGE DAILY NET
ASSETS OF THE
PORTFOLIO PORTFOLIO)
- ------------------------------------------------------- -----------------
<S> <C>
International Diversified Equities..................... .65% on first $350 million
.60% thereafter
Worldwide High Income.................................. .65% on first $350 million
.60% thereafter
</TABLE>
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EXHIBIT C-7
SUBADVISORY AGREEMENT
This SUBADVISORY AGREEMENT is dated as of , by and between
SUNAMERICA ASSET MANAGEMENT CORP., a Delaware corporation (the "Adviser"), and
PUTNAM INVESTMENT MANAGEMENT, INC., a Massachusetts corporation (the
"Subadviser").
WITNESSETH:
WHEREAS, the Adviser and SunAmerica Series Trust, a Massachusetts business
trust (the "Trust"), have entered into an Investment Advisory and Management
Agreement dated as of , (the "Advisory Agreement"), pursuant to which
the Adviser has agreed to provide investment management, advisory and
administrative services to the Trust; and
WHEREAS, the Trust is registered under the Investment Company Act of 1940,
as amended (the "Act"), as an open-end management investment company and may
issue shares of beneficial interest, no par value per share, in separately
designated portfolios representing separate funds with their own investment
objectives, policies and purposes; and
WHEREAS, the Subadviser is engaged in the business of rendering investment
advisory services and is registered as an investment adviser under the
Investment Advisers Act of 1940, as amended; and
WHEREAS, the Adviser desires to retain the Subadviser to furnish investment
advisory services to the investment portfolio or portfolios of the Trust listed
on Schedule A attached hereto (the "Portfolio(s)"), and the Subadviser is
willing to furnish such services;
NOW, THEREFORE, it is hereby agreed between the parties hereto as follows:
1. DUTIES OF THE SUBADVISER. The Adviser hereby engages the services of
the Subadviser in furtherance of its Investment Advisory and Management
Agreement with the Trust. Pursuant to this Subadvisory Agreement and subject to
the oversight and review of the Adviser, the Subadviser will manage the
investment and reinvestment of the assets of each Portfolio listed on Schedule A
attached hereto. The Subadviser will determine in its discretion and subject to
the oversight and review of the Adviser, the securities to be purchased or sold,
will provide the Adviser with records concerning its activities which the
Adviser or the Trust is required to maintain, and will render regular reports to
the Adviser and to officers and Trustees of the Trust concerning its discharge
of the foregoing responsibilities. The Subadviser shall discharge the foregoing
responsibilities subject to the control of the officers and the Trustees of the
Trust and in compliance with such policies as the Trustees of the Trust may from
time to time establish as delivered in writing to the Subadviser, and in
compliance with (a) the objectives, policies, and limitations for the
Portfolio(s) set forth in the Trust's current prospectus and statement of
additional information as delivered to the Subadviser, and (b) applicable laws
and regulations.
The Subadviser agrees that it will operate and manage the Portfolio set
forth in Schedule A (1) in compliance with all applicable federal and state laws
governing the Subadviser's management of the Portfolio and investments; and (2)
so as not to jeopardize either the treatment of the SunAmerica Series Trust
variable annuity contracts issued by Variable Separate Account and FS Variable
Separate Account (File Nos. 33-47473 and 33-85014, respectively; hereinafter
"Contracts") as annuity contracts for purposes of the Internal Revenue Code of
1986, as amended (the "Code"). Without limiting the foregoing, the Subadviser
agrees to manage the Portfolio in compliance with (a) the provisions of the Act
and rules adopted thereunder; (b) the diversification requirements specified in
the Internal Revenue Service's regulations under Section 817(h) of the Code; (c)
applicable state insurance laws; and (d) applicable federal and state
securities, commodities and banking laws; provided that Adviser shall provide
Subadviser with written direction as to the requirements of applicable state
insurance laws and applicable federal and state banking laws. For purposes of
the preceding sentence, disclosure in the Trust's prospectus and/or
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<PAGE>
statement of additional information of applicable state insurance laws and
regulations and applicable federal and state banking laws and regulations shall
constitute "written direction" thereof. The Adviser acknowledges and agrees that
the Subadviser's compliance with its obligations under this Agreement will be
based, in part, on information supplied by the Adviser, or an agent thereof, as
to each Portfolio, including but not limited to, portfolio security lot level
realized and unrealized gain/loss allocation. The Adviser agrees that all such
information will be supplied on a timely basis. The Subadviser further
represents and warrants that to the extent that any statements or omissions made
in any Registration Statement for the Contracts or shares of the Trust, or any
amendment or supplement thereto, are made in reliance upon and in conformity
with information furnished by the Subadviser expressly for use therein, such
Registration Statement and any amendments or supplements thereto will, when they
become effective, conform in all material respects to the requirements of the
Securities Act of 1933 and the rules and regulations of the Commission
thereunder (the "1933 Act") and the Act and will not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not misleading.
The Subadviser accepts such employment and agrees, at its own expense, to
render the services set forth herein and to provide the office space,
furnishings, equipment and personnel required by it to perform such services on
the terms and for the compensation provided in this Agreement. The Subadviser
shall not have any responsibility for the administrative affairs of the
Portfolio, including any responsibility for the calculation of the net asset
value of the Portfolio's shares or shareholder accounting services; PROVIDED,
HOWEVER, that the Subadviser shall, as requested from time to time by the
Adviser, assist the Adviser in obtaining pricing information relating to the
Portfolio's investment securities.
2. PORTFOLIO TRANSACTIONS. The Subadviser is responsible for decisions to
buy or sell securities and other investments of the assets of each Portfolio,
broker-dealers and futures commission merchants' selection, and negotiation of
brokerage commission and futures commission merchants' rates. As a general
matter, in executing portfolio transactions, the Subadviser may employ or deal
with such broker-dealers or futures commission merchants as may, in the
Subadviser's best judgement, provide prompt and reliable execution of the
transactions at favorable prices and reasonable commission rates. In selecting
such broker-dealers or futures commission merchants, the Subadviser shall
consider all relevant factors including price (including the applicable
brokerage commission, dealer spread or futures commission merchant rate), the
size of the order, the nature of the market for the security or other
investment, the timing of the transaction, the reputation, experience and
financial stability of the broker-dealer or futures commission merchant
involved, the quality of the service, the difficulty of execution, the execution
capabilities and operational facilities of the firm involved, and, in the case
of securities, the firm's risk in positioning a block of securities. Subject to
such policies as the Trustees may determine and consistent with Section 28(e) of
the Securities Exchange Act of 1934, as amended (the "1934 Act"), the Subadviser
shall not be deemed to have acted unlawfully or to have breached any duty
created by this Agreement or otherwise solely by reason of the Subadviser's
having caused a Portfolio to pay a member of an exchange, broker or dealer an
amount of commission for effecting a securities transaction in excess of the
amount of commission another member of an exchange, broker or dealer would have
charged for effecting that transaction, if the Subadviser determines in good
faith that such amount of commission was reasonable in relation to the value of
the brokerage and research services provided by such member of an exchange,
broker or dealer viewed in terms of either that particular transaction or the
Subadviser's overall responsibilities with respect to such Portfolio and to
other clients as to which the Subadviser exercises investment discretion. In
accordance with Section 11(a) of the 1934 Act and Rule 11a2-2(T) thereunder, and
subject to any other applicable laws and regulations including Section 17(e) of
the Act and Rule 17e-1 thereunder, the Subadviser may engage its affiliates, the
Adviser and its affiliates or any other subadviser to the Trust and its
respective affiliates, as broker-dealers or futures commission merchants to
effect portfolio transactions in securities and other investments for a
Portfolio. The Subadviser will promptly communicate to the Adviser and to the
officers and the Trustees of the Trust such information relating to portfolio
transactions as they may reasonably request. To the extent consistent with
applicable law, the Subadviser may aggregate
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<PAGE>
purchase or sell orders for the Portfolio with contemporaneous purchase or sell
orders of other clients of the Subadviser or its affiliated persons. In such
event, allocation of the securities so purchased or sold, as well as the
expenses incurred in the transaction, will be made by the Subadviser in the
manner the Subadviser determines to be equitable and consistent with its and its
affiliates' fiduciary obligations to the Portfolio and to such other clients.
The Adviser hereby acknowledges that such aggregation of orders may not result
in more favorable pricing or lower brokerage commissions in all instances.
3. COMPENSATION OF THE SUBADVISER. The Subadviser shall not be entitled to
receive any payment from the Trust and shall look solely and exclusively to the
Adviser for payment of all fees for the services rendered, facilities furnished
and expenses paid by it hereunder. As full compensation for the Subadviser under
this Agreement, the Adviser agrees to pay the Subadviser a fee at the annual
rates set forth in Schedule A hereto with respect to each Portfolio listed
thereon. Such fee shall be accrued daily and paid monthly as soon as practicable
after the end of each month (i.e., the applicable annual fee rate divided by 365
applied to each prior day's net assets in order to calculate the daily accrual).
For purposes of calculating the Subadviser's fee, the average daily net asset
value of a Portfolio shall be determined by taking an average of all
determinations of such net asset value during the month. If the Subadviser shall
provide its services under this Agreement for less than the whole of any month,
the foregoing compensation shall be prorated.
4. OTHER SERVICES. At the request of the Trust or the Adviser, the
Subadviser in its discretion may make available to the Trust, office facilities,
equipment, personnel and other services. Such office facilities, equipment,
personnel and services shall be provided for or rendered by the Subadviser and
billed to the Trust or the Adviser at the Subadviser's cost.
5. REPORTS. The Trust, the Adviser and the Subadviser agree to furnish to
each other, if applicable, current prospectuses, statements of additional
information, proxy statements, reports of shareholders, certified copies of
their financial statements, and such other information with regard to their
affairs and that of the Trust as each may reasonably request.
6. STATUS OF THE SUBADVISER. The services of the Subadviser to the Adviser
and the Trust are not to be deemed exclusive, and the Subadviser shall be free
to render similar services to others so long as its services to the Trust are
not impaired thereby. The Subadviser shall be deemed to be an independent
contractor and shall, unless otherwise expressly provided or authorized, have no
authority to act for or represent the Trust in any way or otherwise be deemed an
agent of the Trust.
7. CERTAIN RECORDS. While the Subadviser is not being engaged to serve as
the Trust's official record keeper, the Subadviser nevertheless hereby
undertakes and agrees to maintain, in the form and for the period required by
Section 204 of the Advisers Act and Rule 204-2 thereunder, all records relating
to the investments of the Portfolio(s) that are required to be maintained by the
Subadviser pursuant to the requirements of Rule 204-2 under the Advisers Act.
The Subadviser will also, in connection with the purchase and sale of securities
for each Portfolio, arrange for the transmission to the custodian for the Trust
on a daily basis, such confirmation, trade tickets, and other documents and
information, that identify securities to be purchased or sold on behalf of the
Portfolio, as may be reasonably necessary to enable the custodian to perform its
administrative and recordkeeping responsibilities with respect to the Portfolio.
The Subadviser agrees that all accounts, books and other records maintained
and preserved by it as required hereby shall be subject at any time, and from
time to time, to such reasonable periodic, special and other examinations by the
Securities and Exchange Commission, the Trust's auditors, the Trust or any
representative of the Trust, the Adviser, or any governmental agency or other
instrumentality having regulatory authority over the Trust.
8. REFERENCE TO THE SUBADVISER. The Adviser covenants as follows:
(a) The Adviser will (and will cause its affiliates (including the Trust)
(each an "Affiliate") to) use the name "Putnam Investment Management," "Putnam
Investments," "Putnam" or any derivation thereof
C-7-3
<PAGE>
only for so long as this Agreement remains in effect. At such times as this
Agreement is no longer in effect, the Adviser will, and will cause each
Affiliate to, cease using any such name or any other name indicating that any
Portfolio is advised by or otherwise connected to the Subadviser.
(b) It will not, and will cause its Affiliates to not, refer to the
Subadviser or any Affiliate in any sales literature or promotional material
except with the prior approval of the Subadviser. In the case of materials, such
as the portfolio's prospectus, required by law to be prepared, such approval
shall not be unreasonably withheld.
(c) It will permit the Portfolios to be used as a funding vehicle only for
insurance contracts issued by SunAmerica Inc. or any of its affiliates.
(d) It will not (and will cause its Affiliates to not) engage in marketing
programs (written or otherwise) directed toward Putnam Capital Manager Annuity
Contract ("PCM") which directly solicit transfers from PCM to the Adviser's
products or those of its Affiliates. For purposes of the foregoing, general
marketing efforts by SunAmerica Inc. and its affiliates shall not constitute a
direct solicitation of PCM contract holders. The Adviser will not (and will
cause its Affiliates to not) create or use marketing materials which provide
direct comparisons between PCM and the Adviser's products or those of any of its
Affiliates. The Adviser, in connection with any exchange program, will not (and
will cause its Affiliates to not) reimburse voluntarily, or enter into any
contract or policy after the date hereof providing for the reimbursement of, any
deferred sales charges to encourage the transfer of assets from PCM to the
Adviser's products or those of any Affiliate. For purposes hereof, the term
"Affiliate" shall not be construed to include agents of SunAmerica Inc. or
affiliates thereof, who are not employees of such entities.
9. LIABILITY OF THE SUBADVISER. (a) In the absence of willful misfeasance,
bad faith, gross negligence or reckless disregard of obligations or duties
("disabling conduct") hereunder on the part of the Subadviser (and its officers,
directors, agents, employees, controlling persons, shareholders and any other
person or entity affiliated with the Subadviser) the Subadviser shall not be
subject to liability to the Trust, any shareholder of the Trust or the Adviser
for any act or omission in the course of, or connected with, rendering services
hereunder, including without limitation, any error of judgment or mistake of law
or for any loss suffered by any of them in connection with the matters to which
this Agreement relates. Except for such disabling conduct, the Adviser shall
indemnify the Subadviser (and its officers, directors, partners, agents,
employees, controlling persons, shareholders and any other person or entity
affiliated with the Subadviser) (collectively, the "Indemnified Parties") from
any liability arising from the Subadviser's conduct under this Agreement.
(b) The Subadviser agrees to indemnify and hold harmless the Adviser and its
affiliates and each of its directors and officers and each person, if any, who
controls the Adviser within the meaning of Section 15 of the 1933 Act against
any and all losses, claims, damages, liabilities or litigation (including
reasonable legal and other expenses), to which the Adviser or its affiliates or
such directors, officers or controlling persons may become subject under the
1933 Act, under other statutes, at common law or otherwise, which may be based
upon (i) any wrongful act or material breach of this Agreement by the Subadviser
resulting from Subadviser's disabling conduct, or (ii) any untrue statement of a
material fact in the Trust's registration statement or omission to state a
material fact required to be stated therein or necessary to make the statement
therein not misleading, if such statement or omission was made in reliance on
information furnished by the Subadviser to use in such registration statement,
provided, however, that in no case is the Subadviser's indemnity in favor of any
person deemed to protect such other persons against any liability to which such
person would otherwise be subject by reasons of willful misfeasance, bad faith,
or gross negligence in the performance of his, her or its duties or by reason of
his, her or its reckless disregard of obligation and duties under this
Agreement.
10. PERMISSIBLE INTERESTS. Trustees and agents of the Trust are or may be
interested in the Subadviser (or any successor thereof) as directors, partners,
officers, or shareholders, or otherwise; directors, partners,
C-7-4
<PAGE>
officers, agents, and shareholders of the Subadviser are or may be interested in
the Trust as trustees, or otherwise; and the Subadviser (or any successor) is or
may be interested in the Trust in some manner.
11. TERM OF THE AGREEMENT. This Agreement shall continue in full force and
effect with respect to each Portfolio until the earlier of (a) two years from
the date this Agreement is approved by the Trustees, or (b) the first meeting of
the shareholders of the Portfolio of the Trust after the date hereof. If
approved at such meeting by the affirmative vote of a majority of the
outstanding voting securities (as defined in the Act), of the Portfolio with
respect to such Portfolio, voting separately from any other series of the Trust,
this Agreement shall continue in full force and effect with respect to such
Portfolio from year to year thereafter so long as such continuance is
specifically approved at least annually (i) by the vote of a majority of those
Trustees of the Trust who are not parties to this Agreement or interested
persons of any such party, cast in person at a meeting called for the purpose of
voting on such approval, and (ii) by the Trustees of the Trust or by vote of a
majority of the outstanding voting securities of the Portfolio voting separately
from any other series of the Trust, provided, however, that if the shareholders
fail to approve the Agreement as provided herein, the Subadviser may continue to
serve hereunder in the manner and to the extent permitted by the Act and rules
thereunder. The foregoing requirement that continuance of this Agreement be
"specifically approved at least annually" shall be construed in a manner
consistent with the Act and the rules and regulations thereunder.
With respect to each Portfolio, this Agreement may be terminated at any
time, without payment of a penalty by the Portfolio or the Trust, by vote of a
majority of the Trustees, or by vote of a majority of the outstanding voting
securities (as defined in the Act) of the Portfolio, voting separately from any
other series of the Trust, or by the Adviser, on not less than 30 nor more than
60 days' written notice to the Subadviser. With respect to each Portfolio, this
Agreement may be terminated by the Subadviser at any time, without the payment
of any penalty, on 60 days' written notice to the Adviser and the Trust. The
termination of this Agreement with respect to any Portfolio or the addition of
any Portfolio to Schedule A hereto (in the manner required by the Act) shall not
affect the continued effectiveness of this Agreement with respect to each other
Portfolio subject hereto. This Agreement shall automatically terminate in the
event of its assignment (as defined by the Act).
This Agreement will also terminate in the event that the Advisory Agreement
by and between the Trust and the Adviser is terminated.
12. SEVERABILITY. If any provision of this Agreement shall be held or made
invalid by a court decision, statute, rule or otherwise, the remainder of this
Agreement shall not be affected thereby.
13. AMENDMENTS. This Agreement may be amended by mutual consent in
writing, but the consent of the Trust must be obtained in conformity with the
requirements of the Act.
14. GOVERNING LAW. This Agreement shall be construed in accordance with
the laws of the State of New York and the applicable provisions of the Act. To
the extent the applicable laws of the State of New York, or any of the
provisions herein, conflict with the applicable provisions of the Act, the
latter shall control.
15. PERSONAL LIABILITY. The Declaration of the Trust establishing the
Trust (the "Declaration"), is on file in the office of the Secretary of the
Commonwealth of Massachusetts, and, in accordance with that Declaration, no
Trustee, shareholder, officer, employee or agent of the Trust shall be held to
any personal liability, nor shall resort be had to their private property for
satisfaction of any obligation or claim or otherwise in connection with the
affairs of the Trust, but the "Trust Property" only shall be liable.
16. SEPARATE SERIES. Pursuant to the provisions of the Declaration, each
Portfolio is a separate series of the Trust, and all debts, liabilities,
obligations and expenses of a particular Portfolio shall be enforceable only
against the assets of that Portfolio and not against the assets of any other
Portfolio or of the Trust as a whole.
C-7-5
<PAGE>
17. NOTICES. All notices shall be in writing and deemed properly given
when delivered or mailed by United States certified or registered mail, return
receipt requested, postage prepaid, addressed as follows:
Subadviser: Putnam Investment Management, Inc.
One Post Office Square
Boston, MA 02109
Attention: General Counsel
Adviser: SunAmerica Asset Management Corp.
The SunAmerica Center
733 Third Avenue, Third Floor
New York, NY 10017
Attention: Robert M. Zakem
Senior Vice President and
General Counsel
with a
copy to: SunAmerica Inc.
1 SunAmerica Center
Century City
Los Angeles, CA 90067-6022
Attention: Susan L. Harris
Senior Vice President,
General Counsel-
Corporate Affairs
and Secretary
IN WITNESS WHEREOF, the parties have caused their respective duly authorized
officers to execute this Agreement as of the date first above written.
SUNAMERICA ASSET MANAGEMENT CORP.
By:
--------------------------------------
Name: Peter A. Harbeck
Title: President
PUTNAM INVESTMENT MANAGEMENT, INC.
By:
--------------------------------------
Name:
Title:
C-7-6
<PAGE>
SCHEDULE A
<TABLE>
<CAPTION>
FEE
(AS PERCENTAGE OF
AVERAGE DAILY NET ASSETS OF
PORTFOLIO(S) THE PORTFOLIO)
- --------------------------------------------------------------------------------- -------------------------------
<S> <C>
Putnam Growth.................................................................... .50% on first $150 million
.45% on next $150 million
.35% thereafter
International Growth and Income.................................................. .65% on first $150 million
.55% on next $150 million
.45% thereafter
Emerging Markets................................................................. 1.00% on first $150 million
.95% on next $150 million
.85% thereafter
</TABLE>
C-7-7
<PAGE>
EXHIBIT D
OTHER MUTUAL FUNDS ADVISED BY ALLIANCE WITH A SIMILAR INVESTMENT OBJECTIVE TO
THE ALLIANCE GROWTH, GROWTH-INCOME AND GLOBAL EQUITIES PORTFOLIOS
<TABLE>
<CAPTION>
NET ASSETS OF OTHER
FUND
(IN MILLIONS) AVERAGE NET
OTHER FUND ON JUNE 30, 1998 ANNUAL FEE RATE ASSET LEVEL
- --------------------------------------------------- ------------------- ----------------------- ----------------
<S> <C> <C> <C>
Alliance Premier Growth--Class A $ 933.9 1.000% $249.0 million
(advisory fee)
1.570%
(total expense ratio)
</TABLE>
- ------------------------
Alliance does not manage any mutual funds with similar investment objectives to
the Growth-Income or Global Equities Portfolios.
D-1
<PAGE>
EXHIBIT E
OTHER MUTUAL FUNDS ADVISED BY DAVIS WITH A SIMILAR INVESTMENT OBJECTIVE
TO THE VENTURE VALUE PORTFOLIO
<TABLE>
<CAPTION>
NET ASSETS OF ANNUAL
OTHER FUND FEE RATE
(IN MILLIONS) -------------------------- AVERAGE NET
OTHER FUND ON , 1997 MANAGEMENT TOTAL ASSET LEVEL
- ------------------------------------------------------- ------------- --------------- --------- ----------------
<S> <C> <C> <C> <C>
Davis New York Venture Fund............................ $ 7,940 0.57% 0.89% $ 5,784 million
Selected American Shares............................... $ 2,218 0.50% 1.00% $ 1,851 million
</TABLE>
E-1
<PAGE>
OTHER MUTUAL FUNDS ADVISED BY DAVIS WITH A SIMILAR INVESTMENT OBJECTIVE
TO THE REAL ESTATE PORTFOLIO
<TABLE>
<CAPTION>
NET ASSETS
OF
OTHER FUND ANNUAL
(IN FEE RATE
MILLIONS) ------------------------ AVERAGE NET
OTHER FUND ON , 1997 MANAGEMENT TOTAL ASSET LEVEL
- ------------------------------------------------------------ ------------ ------------- --------- --------------
<S> <C> <C> <C> <C>
Davis Real Estate Fund...................................... $299 0.75% 1.08% $172 million
</TABLE>
E-2
<PAGE>
EXHIBIT F
OTHER MUTUAL FUNDS ADVISED BY FEDERATED WITH A SIMILAR INVESTMENT OBJECTIVE
TO THE CORPORATE BOND PORTFOLIO
<TABLE>
<CAPTION>
NET ASSETS OF OTHER
FUND (IN MILLIONS) ANNUAL
OTHER FUND ON JUNE 30, 1998 FEE RATE
- ------------------------------------------------------------------------ ------------------- -------------------
<S> <C> <C>
Federated Bond Fund..................................................... $ 858.3 0.75% of average
daily net assets*
</TABLE>
- ------------------------
* Federated Bond Fund currently voluntarily waives 0.15% of advisory fee.
F-1
<PAGE>
OTHER MUTUAL FUNDS ADVISED BY FEDERATED WITH A SIMILAR INVESTMENT OBJECTIVE
TO THE UTILITY PORTFOLIO
<TABLE>
<CAPTION>
NET ASSETS OF
OTHER FUND (IN
MILLIONS) ANNUAL
OTHER FUND ON JUNE 30, 1998 FEE RATE
- ------------------------------------------------------------------------ ------------------ -------------------
<S> <C> <C>
Federated Utility Fund, Inc............................................. $1,585 0.75% of average
daily net assets*
Federated Utility Fund II............................................... $125.5 0.75% of average
daily net assets**
</TABLE>
- ------------------------
* Federated Utility Fund, Inc. voluntarily waives 0.12% of advisory fee.
** Federated Utility Fund II voluntarily waives 0.27% of advisory fee.
F-2
<PAGE>
OTHER MUTUAL FUNDS ADVISED BY FEDERATED WITH A SIMILAR INVESTMENT OBJECTIVE
TO THE FEDERATED VALUE PORTFOLIO
<TABLE>
<CAPTION>
NET ASSETS OF OTHER
FUND (IN MILLIONS) ANNUAL
OTHER FUND ON JUNE 30, 1998 FEE RATE
- -------------------------------------------------------------- ------------------- ------------------------------
<S> <C> <C>
Federated American Leaders Fund, Inc.......................... $ 3,145 0.55% of average daily net
assets + 4.50% of the annual
gross income (excluding
capital gains or losses)*
Federated Stock Trust......................................... $ 1,515 0.75% of the first $500
million in average daily net
assets; 0.675% of the second
$500 million ADNA; 0.60% of
the third $500 million ADNA;
0.525% of the fourth $500
million of ADNA; 0.40% over $2
billion ADNA
Federated American Leaders Fund II............................ $ 395.9 0.75% of average daily net
assets**
Travelers Federated Stock Portfolio........................... $26.6 0.625% of average daily net
assets***
Ohio National Blue Chip Portfolio............................. $2.2 0.90% of average daily net
assets
</TABLE>
- ------------------------
* Federated American Leaders Funds, Inc. currently voluntarily charges 0.64%
advisory fee.
** Federated American Leaders Fund II currently voluntarily waives 0.09% of
advisory fee.
*** Travelers Federated Stock Portfolio currently voluntarily waives 0.21% of
advisory fee.
F-3
<PAGE>
EXHIBIT G
OTHER MUTUAL FUNDS ADVISED BY GSAM WITH A SIMILAR INVESTMENT OBJECTIVE
TO THE ASSET ALLOCATION PORTFOLIO
<TABLE>
<CAPTION>
NET ASSETS OF OTHER
FUND (IN MILLIONS) ANNUAL FEE AVERAGE NET ASSET
OTHER FUND ON , 1997 RATE LEVEL
- ----------------------------------------------------------- ------------------- ----------- ----------------------
<S> <C> <C> <C>
Goldman Sachs Balanced Fund................................ $ 237.1 0.65% $ 187.4 million
</TABLE>
G-1
<PAGE>
EXHIBIT H
OTHER MUTUAL FUNDS ADVISED BY GSAM-INTERNATIONAL WITH A SIMILAR INVESTMENT
OBJECTIVE TO THE GLOBAL BOND PORTFOLIO
<TABLE>
<CAPTION>
NET ASSETS OF OTHER
FUND (IN MILLIONS) ANNUAL FEE AVERAGE NET ASSET
OTHER FUND ON , 1997 RATE LEVEL
- ----------------------------------------------------------- ------------------- ----------- ----------------------
<S> <C> <C> <C>
Goldman Sachs Global Income Fund........................... $ 218.5 0.90%* $ 194.0 million
Protective Life Global Income Fund......................... $ 59.7 0.40% $ 52.6 million
</TABLE>
- ------------------------
* Subject to waivers and/or expense limitations waived to 0.65% as of September
1, 1998.
H-1
<PAGE>
EXHIBIT I
OTHER MUTUAL FUNDS ADVISED BY MSAM WITH A SIMILAR INVESTMENT OBJECTIVE
TO THE WORLDWIDE HIGH INCOME PORTFOLIO
<TABLE>
<CAPTION>
NET ASSETS OF OTHER
FUND (IN MILLIONS) ANNUAL
OTHER FUND ON , 1997 FEE RATE
- ------------------------------------------------------------------- ------------------- -------------------------
<S> <C> <C>
Morgan Stanley Global Opportunity Bond Fund, Inc................... $ 54.2 1.00% of average weekly
net assets
Van Kampen Worldwide High Income Fund.............................. $ 298.1 .75% of the average daily
net assets
</TABLE>
I-1
<PAGE>
OTHER MUTUAL FUNDS ADVISED BY MSAM WITH A SIMILAR INVESTMENT OBJECTIVE
TO THE INTERNATIONAL DIVERSIFIED EQUITIES PORTFOLIO
<TABLE>
<CAPTION>
NET ASSETS OF OTHER
FUND (IN MILLIONS) ANNUAL
OTHER FUND ON , 1997 FEE RATE
- ------------------------------------------------------------------------ ------------------- -------------------
<S> <C> <C>
Morgan Stanley Institutional Fund--Active International Allocation...... $ 256.7 .65% of average
daily net assets*
Van Kampen Global Equity Allocation Fund................................ $ 596.0 1.00% of average
daily net assets*
</TABLE>
- ------------------------
* Subject to waivers and/or expense limitations
I-2
<PAGE>
EXHIBIT J
OTHER MUTUAL FUNDS ADVISED BY PUTNAM WITH A SIMILAR INVESTMENT OBJECTIVE
TO THE PUTNAM GROWTH PORTFOLIO
<TABLE>
<CAPTION>
NET ASSETS
OF OTHER FUND
(IN MILLIONS) ANNUAL
OTHER FUND ON , 1997 FEE RATE
- ------------------------------------------------------------------ ------------- ------------------------------
<S> <C> <C>
Putnam Growth Opportunities Fund ................................. $537 .70% on first $500 million
.60% on next $500 million
.55% on next $500 million
.50% thereafter*
Putnam Investors Fund ............................................ $3,940 .65% on first $500 million
.55% on next $500 million
.50% on next $500 million
.45% thereafter*
Putnam Vista Fund ................................................ $4,213 .65% on first $500 million
.55% on next $500 million
.50% on next $500 million
.45% thereafter*
Putnam Variable Trust VT Investors Fund .......................... $81 .65% on first $500 million
.55% on next $500 million
.50% on next $500 million
.45% thereafter*
Putnam Variable Trust VT Vista Fund .............................. $220 .65% on first $500 million
.55% on next $500 million
.50% on next $500 million
.45% thereafter*
Allmerica Investment Trust--Select Growth Fund ................... $578 .50% on first $50 million
.45% on next $100 million
.35% on next $100 million
.30% on next $100 million
.25% thereafter
EQ Advisors Trust--EQ Putnam Investors ........................... $93 .50% on first $150 million
Growth Portfolio .45% on next $150 million
.35% thereafter
JNL Series Trust--JNL/Putnam Growth Portfolio .................... $133 .50% on first $150 million
.45% on next $150 million
.35% thereafter
</TABLE>
- ------------------------
* Subject to waivers and/or expense limitations
J-1
<PAGE>
OTHER MUTUAL FUNDS ADVISED BY PUTNAM WITH A SIMILAR INVESTMENT OBJECTIVE
TO THE INTERNATIONAL GROWTH AND INCOME PORTFOLIO
<TABLE>
<CAPTION>
NET ASSETS
OF OTHER FUND
(IN MILLIONS) ANNUAL
OTHER FUND ON , 1997 FEE RATE
- ------------------------------------------------------------------ ------------- ------------------------------
<S> <C> <C>
Putnam Global Growth and Income Fund ............................. $39 .80% on first $500 million
.70% on next $500 million
.65% on next $500 million
.60% thereafter*
Putnam International Growth and Income Fund ...................... $748 .80% on first $500 million
.70% on next $500 million
.65% on next $500 million
.60% thereafter*
Putnam Variable Trust--VT International .......................... $263 .80% on first $500 million
Growth and Income .70% on next $500 million
.65% on next $500 million
.60% thereafter*
</TABLE>
- ------------------------
* Subject to waivers and/or expense limitations
J-2
<PAGE>
OTHER MUTUAL FUNDS ADVISED BY PUTNAM WITH A SIMILAR INVESTMENT OBJECTIVE
TO THE EMERGING MARKETS PORTFOLIO
<TABLE>
<CAPTION>
NET ASSETS
OF OTHER FUND
(IN MILLIONS) ANNUAL
OTHER FUND ON , 1997 FEE RATE
- ------------------------------------------------------------------ --------------- -------------------------------
<S> <C> <C>
Putnam Emerging Markets Fund ..................................... $ 53 1.20% on first $500 million
1.10% on next $500 million
1.05% on next $500 million
1.00% thereafter*
The GCT Trust Emerging Market Series ............................. $ 22 1.00% on first $150 million
.95% on next $150 million
.85% thereafter
</TABLE>
- ------------------------
* Putnam does not consider the rates for these funds to be directly comparable
since Putnam provides them a full range of administrative services in addition
to portfolio management.
J-3
<PAGE>
EXHIBIT M
FORM OF
SUBADVISORY AGREEMENT
This SUBADVISORY AGREEMENT is dated as of , by and between
SUNAMERICA ASSET MANAGEMENT CORP., a Delaware corporation (the "Adviser"), and
MASSACHUSETTS FINANCIAL SERVICES COMPANY, a Delaware corporation (the
"Subadviser").
WITNESSETH:
WHEREAS, the Adviser and SunAmerica Series Trust, a Massachusetts business
trust (the "Trust"), have entered into an Investment Advisory and Management
Agreement dated as of , (the "Advisory Agreement"), pursuant to
which the Adviser has agreed to provide investment management, advisory and
administrative services to the Trust; and
WHEREAS, the Trust is registered under the Investment Company Act of 1940,
as amended (the "Act"), as an open-end management investment company and may
issue shares of beneficial interest, par value $.01 per share, in separately
designated portfolios representing separate funds with their own investment
objectives, policies and purposes; and
WHEREAS, the Subadviser is engaged in the business of rendering investment
advisory services and is registered as an investment adviser under the
Investment Advisers Act of 1940, as amended; and
WHEREAS, the Adviser desires to retain the Subadviser to furnish investment
advisory services to the investment portfolio or portfolios of the Trust listed
on Schedule A attached hereto (the "Portfolio(s)"), and the Subadviser is
willing to furnish such services;
NOW, THEREFORE, it is hereby agreed between the parties hereto as follows:
1. DUTIES OF THE SUBADVISER. The Adviser hereby engages the services of
the Subadviser in furtherance of its Investment Advisory and Management
Agreement with the Trust. Pursuant to this Subadvisory Agreement and subject to
the oversight and review of the Adviser, the Subadviser will manage the
investment and reinvestment of the assets of each Portfolio listed on Schedule A
attached hereto. The Subadviser will determine in its discretion and subject to
the oversight and review of the Adviser, the securities to be purchased or sold,
will provide the Adviser with records concerning its activities which the
Adviser or the Trust is required to maintain, and will render regular reports to
the Adviser and to officers and Trustees of the Trust concerning its discharge
of the foregoing responsibilities. The Subadviser shall discharge the foregoing
responsibilities subject to the control of the officers and the Trustees of the
Trust and in compliance with such policies as the Trustees of the Trust may from
time to time establish, and in compliance with (a) the objectives, policies, and
limitations for the Portfolio(s) set forth in the Trust's current prospectus and
statement of additional information, and (b) applicable laws and regulations.
The Subadviser represents and warrants to the Adviser that each of the
Portfolios set forth in Schedule A will at all times be operated and managed (1)
in compliance with all applicable federal and state laws governing its
operations and investments; (2) so as not to jeopardize either the treatment of
the variable annuity contracts issued by a SunAmerica life insurance company
(hereinafter "Contracts") as annuity contracts for purposes of the Internal
Revenue Code of 1986, as amended (the "Code"), or the eligibility of the
Contracts to qualify for sale to the public in any state where they may
otherwise be sold; and (3) to minimize any taxes and/or penalties payable by the
Trust or such Portfolio. Without limiting the foregoing, the Subadviser
represents and warrants (1) qualification, election and maintenance of such
election by each Portfolio to be treated as a "regulated investment company"
under subchapter M, chapter 1 of the Code, and (2) compliance with (a) the
provisions of the Act and rules adopted thereunder; (b) the diversification
requirements specified in the Internal Revenue Service's regulations under
Section 817(h) of the Code; (c) applicable state insurance laws; (d) applicable
federal and state securities, commodities and banking laws; and (e) the
distribution requirements necessary to avoid payment of any excise tax pursuant
to Section 4982 of the Code. The Subadviser further represents and warrants that
to
M-1
<PAGE>
the extent that any statements or omissions made in any Registration Statement
for the Contracts or shares of the Trust, or any amendment or supplement
thereto, are made in reliance upon and in conformity with information furnished
by the Subadviser expressly for use therein, such Registration Statement and any
amendments or supplements thereto will, when they become effective, conform in
all material respects to the requirements of the Securities Act of 1933 and the
rules and regulations of the Commission thereunder (the "1933 Act") and the Act
and will not contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make the
statements therein not misleading.
The Subadviser accepts such employment and agrees, at its own expense, to
render the services set forth herein and to provide the office space,
furnishings, equipment and personnel required by it to perform such services on
the terms and for the compensation provided in this Agreement.
2. PORTFOLIO TRANSACTIONS. The Subadviser is responsible for decisions to
buy or sell securities and other investments of the assets of each Portfolio,
broker-dealers and futures commission merchants' selection, and negotiation of
brokerage commission and futures commission merchants' rates. As a general
matter, in executing portfolio transactions, the Subadviser may employ or deal
with such broker-dealers or futures commission merchants as may, in the
Subadviser's best judgement, provide prompt and reliable execution of the
transactions at favorable prices and reasonable commission rates. In selecting
such broker-dealers or futures commission merchants, the Subadviser shall
consider all relevant factors including price (including the applicable
brokerage commission, dealer spread or futures commission merchant rate), the
size of the order, the nature of the market for the security or other
investment, the timing of the transaction, the reputation, experience and
financial stability of the broker-dealer or futures commission merchant
involved, the quality of the service, the difficulty of execution, the execution
capabilities and operational facilities of the firm involved, and, in the case
of securities, the firm's risk in positioning a block of securities. Subject to
such policies as the Trustees may determine and consistent with Section 28(e) of
the Securities Exchange Act of 1934, as amended (the "1934 Act"), the Subadviser
shall not be deemed to have acted unlawfully or to have breached any duty
created by this Agreement or otherwise solely by reason of the Subadviser's
having caused a Portfolio to pay a member of an exchange, broker or dealer an
amount of commission for effecting a securities transaction in excess of the
amount of commission another member of an exchange, broker or dealer would have
charged for effecting that transaction, if the Subadviser determines in good
faith that such amount of commission was reasonable in relation to the value of
the brokerage and research services provided by such member of an exchange,
broker or dealer viewed in terms of either that particular transaction or the
Subadviser's overall responsibilities with respect to such Portfolio and to
other clients as to which the Subadviser exercises investment discretion. In
accordance with Section 11(a) of the 1934 Act and Rule 11a2-2(T) thereunder, and
subject to any other applicable laws and regulations including Section 17(e) of
the Act and Rule 17e-1 thereunder, the Subadviser may engage its affiliates, the
Adviser and its affiliates or any other subadviser to the Trust and its
respective affiliates, as broker-dealers or futures commission merchants to
effect portfolio transactions in securities and other investments for a
Portfolio. The Subadviser will promptly communicate to the Adviser and to the
officers and the Trustees of the Trust such information relating to portfolio
transactions as they may reasonably request.
3. COMPENSATION OF THE SUBADVISER. The Subadviser shall not be entitled to
receive any payment from the Trust and shall look solely and exclusively to the
Adviser for payment of all fees for the services rendered, facilities furnished
and expenses paid by it hereunder. As full compensation for the Subadviser under
this Agreement, the Adviser agrees to pay the Subadviser a fee at the annual
rates set forth in Schedule A hereto with respect to each Portfolio listed
thereon. Such fee shall be accrued daily and paid monthly as soon as practicable
after the end of each month (i.e., the applicable annual fee rate divided by 365
applied to each prior day's net assets in order to calculate the daily accrual).
For purposes of calculating the Subadviser's fee, the average daily net asset
value of a Portfolio shall be determined by taking an average of all
determinations of such net asset value during the month. If the Subadviser shall
provide its services under this Agreement for less than the whole of any month,
the foregoing compensation shall be prorated.
M-2
<PAGE>
4. OTHER SERVICES. At the request of the Trust or the Adviser, the
Subadviser in its discretion may make available to the Trust, office facilities,
equipment, personnel and other services. Such office facilities, equipment,
personnel and services shall be provided for or rendered by the Subadviser and
billed to the Trust or the Adviser at the Subadviser's cost.
5. REPORTS. The Trust, the Adviser and the Subadviser agree to furnish to
each other, if applicable, current prospectuses, statements of additional
information, proxy statements, reports of shareholders, certified copies of
their financial statements, and such other information with regard to their
affairs and that of the Trust as each may reasonably request.
6. STATUS OF THE SUBADVISER. The services of the Subadviser to the Adviser
and the Trust are not to be deemed exclusive, and the Subadviser shall be free
to render similar services to others so long as its services to the Trust are
not impaired thereby. The Subadviser shall be deemed to be an independent
contractor and shall, unless otherwise expressly provided or authorized, have no
authority to act for or represent the Trust in any way or otherwise be deemed an
agent of the Trust.
7. CERTAIN RECORDS. The Subadviser hereby undertakes and agrees to
maintain, in the form and for the period required by Rule 31a-2 under the Act,
all records relating to the investments of the Portfolio(s) that are required to
be maintained by the Trust pursuant to the requirements of Rule 31a-1 of that
Act. Any records required to be maintained and preserved pursuant to the
provisions of Rule 31a-1 and Rule 31a-2 promulgated under the Act which are
prepared or maintained by the Subadviser on behalf of the Trust are the property
of the Trust and will be surrendered promptly to the Trust or the Adviser on
request.
The Subadviser agrees that all accounts, books and other records maintained
and preserved by it as required hereby shall be subject at any time, and from
time to time, to such reasonable periodic, special and other examinations by the
Securities and Exchange Commission, the Trust's auditors, the Trust or any
representative of the Trust, the Adviser, or any governmental agency or other
instrumentality having regulatory authority over the Trust.
8. REFERENCE TO THE SUBADVISER. Neither the Trust nor the Adviser or any
affiliate or agent thereof shall make reference to or use the name of the
Subadviser or any of its affiliates in any advertising or promotional materials
without the prior approval of the Subadviser, which approval shall not be
unreasonably withheld.
9. LIABILITY OF THE SUBADVISER. (a) In the absence of willful misfeasance,
bad faith, gross negligence or reckless disregard of obligations or duties
("disabling conduct") hereunder on the part of the Subadviser (and its officers,
directors, agents, employees, controlling persons, shareholders and any other
person or entity affiliated with the Subadviser) the Subadviser shall not be
subject to liability to the Trust or to any shareholder of the Trust for any act
or omission in the course of, or connected with, rendering services hereunder,
including without limitation, any error of judgment or mistake of law or for any
loss suffered by any of them in connection with the matters to which this
Agreement relates, except to the extent specified in Section 36(b) of the Act
concerning loss resulting from a breach of fiduciary duty with respect to the
receipt of compensation for services. Except for such disabling conduct, the
Adviser shall indemnify the Subadviser (and its officers, directors, partners,
agents, employees, controlling persons, shareholders and any other person or
entity affiliated with the Subadviser) (collectively, the "Indemnified Parties")
from any liability arising from the Subadviser's conduct under this Agreement.
Subadviser hereby indemnifies, defends and protects Adviser and holds Adviser
harmless, from and against any and all liability arising out of Subadviser's
disabling conduct.
(b) The Subadviser agrees to indemnify and hold harmless the Adviser and its
affiliates and each of its directors and officers and each person, if any, who
controls the Adviser within the meaning of Section 15 of the 1933 Act against
any and all losses, claims, damages, liabilities or litigation (including legal
and other expenses), to which the Adviser or its affiliates or such directors,
officers or controlling person may become subject under the 1933 Act, under
other statutes, at common law or otherwise, which may be based upon (i) any
wrongful act or breach of this Agreement by the Subadviser, or (ii) any failure
by the
M-3
<PAGE>
Subadviser to comply with the representations and warranties set forth in
Section 1 of this Agreement; provided, however, that in no case is the
Subadviser's indemnity in favor of any person deemed to protect such other
persons against any liability to which such person would otherwise be subject by
reasons of willful misfeasance, bad faith, or gross negligence in the
performance of his, her or its duties or by reason of his, her or its reckless
disregard of obligation and duties under this Agreement.
10. PERMISSIBLE INTERESTS. Trustees and agents of the Trust are or may be
interested in the Subadviser (or any successor thereof) as directors, partners,
officers, or shareholders, or otherwise; directors, partners, officers, agents,
and shareholders of the Subadviser are or may be interested in the Trust as
trustees, or otherwise; and the Subadviser (or any successor) is or may be
interested in the Trust in some manner.
11. TERM OF THE AGREEMENT. This Agreement shall continue in full force and
effect with respect to each Portfolio until two years from the date hereof, and
from year to year thereafter so long as such continuance is specifically
approved at least annually (i) by the vote of a majority of those Trustees of
the Trust who are not parties to this Agreement or interested persons of any
such party, cast in person at a meeting called for the purpose of voting on such
approval, and (ii) by the Trustees of the Trust or by vote of a majority of the
outstanding voting securities of the Portfolio voting separately from any other
series of the Trust.
With respect to each Portfolio, this Agreement may be terminated at any
time, without payment of a penalty by the Portfolio or the Trust, by vote of a
majority of the Trustees, or by vote of a majority of the outstanding voting
securities (as defined in the Act) of the Portfolio, voting separately from any
other series of the Trust, or by the Adviser, on not less than 30 nor more than
60 days' written notice to the Subadviser. With respect to each Portfolio, this
Agreement may be terminated by the Subadviser at any time, without the payment
of any penalty, on 90 days' written notice to the Adviser and the Trust;
provided, however, that this Agreement may not be terminated by the Subadviser
unless another subadvisory agreement has been approved by the Trust in
accordance with the Act, or after six months' written notice, whichever is
earlier. The termination of this Agreement with respect to any Portfolio or the
addition of any Portfolio to Schedule A hereto (in the manner required by the
Act) shall not affect the continued effectiveness of this Agreement with respect
to each other Portfolio subject hereto. This Agreement shall automatically
terminate in the event of its assignment (as defined by the Act).
This Agreement will also terminate in the event that the Advisory Agreement
by and between the Trust and the Adviser is terminated.
12. SEVERABILITY. If any provision of this Agreement shall be held or made
invalid by a court decision, statute, rule or otherwise, the remainder of this
Agreement shall not be affected thereby.
13. AMENDMENTS. This Agreement may be amended by mutual consent in
writing, but the consent of the Trust must be obtained in conformity with the
requirements of the Act.
14. GOVERNING LAW. This Agreement shall be construed in accordance with
the laws of the State of New York and the applicable provisions of the Act. To
the extent the applicable laws of the State of New York, or any of the
provisions herein, conflict with the applicable provisions of the Act, the
latter shall control.
15. PERSONAL LIABILITY. The Declaration of the Trust establishing the
Trust (the "Declaration"), is on file in the office of the Secretary of the
Commonwealth of Massachusetts, and, in accordance with that Declaration, no
Trustee, shareholder, officer, employee or agent of the Trust shall be held to
any personal liability, nor shall resort be had to their private property for
satisfaction of any obligation or claim or otherwise in connection with the
affairs of the Trust, but the "Trust Property" only shall be liable.
16. SEPARATE SERIES. Pursuant to the provisions of the Declaration, each
Portfolio is a separate series of the Trust, and all debts, liabilities,
obligations and expenses of a particular Portfolio shall be enforceable only
against the assets of that Portfolio and not against the assets of any other
Portfolio or of the Trust as a whole.
M-4
<PAGE>
17. NOTICES. All notices shall be in writing and deemed properly given
when delivered or mailed by United States certified or registered mail, return
receipt requested, postage prepaid, addressed as follows:
Subadviser: Massachusetts Financial Services
Company
500 Boylston Street
Boston, Massachusetts 02116
Attention: [NAME]
Adviser: SunAmerica Asset Management Corp.
The SunAmerica Center
733 Third Avenue, Third Floor
New York, NY 10017
Attention: Robert M. Zakem
Senior Vice President and
General Counsel
with a
copy to: SunAmerica Inc.
1 SunAmerica Center
Century City
Los Angeles, CA 90067-6022
Attention: Susan L. Harris
Senior Vice President,
General Counsel-
Corporate Affairs
and Secretary
IN WITNESS WHEREOF, the parties have caused their respective duly authorized
officers to execute this Agreement as of the date first above written.
SUNAMERICA ASSET MANAGEMENT CORP.
By: ______________________________________
Name: Peter A. Harbeck
Title: President
MASSACHUSETTS FINANCIAL SERVICES COMPANY
By:_______________________________________
Name:
Title:
M-5
<PAGE>
SCHEDULE A-1
(EFFECTIVE FEES UNTIL SHAREHOLDER APPROVAL OF THE MFS FEE AMENDMENT)
<TABLE>
<CAPTION>
FEE
(AS A PERCENTAGE OF
AVERAGE DAILY NET ASSETS
PORTFOLIO(S) OF THE PORTFOLIO)
- ------------------------------------------------------- -------------------------
<S> <C>
MFS Total Return....................................... .35% on first $50 million
.30% on next $100 million
.25% on next $150 million
.20% on next $200 million
.15% thereafter
MFS Conservative Growth................................ .35% on first $50 million
.30% on next $100 million
.25% on next $150 million
.20% on next $200 million
.15% thereafter
</TABLE>
M-6
<PAGE>
SCHEDULE A-2
(EFFECTIVE FEES UPON SHAREHOLDER APPROVAL OF THE MFS FEE AMENDMENT)
<TABLE>
<CAPTION>
FEE
(AS A PERCENTAGE OF
AVERAGE DAILY NET ASSETS
PORTFOLIO(S) OF THE PORTFOLIO)
- ------------------------------------------------------- ------------------------------
<S> <C>
MFS Conservative Growth................................ 0.40% on first $300 million
0.375% on next $300 million
0.35% on next $300 million
0.325% on next $600 million
0.25% thereafter
MFS Total Return....................................... 0.375%
</TABLE>
M-7
<PAGE>
EXHIBIT N
OTHER MUTUAL FUNDS ADVISED BY MFS WITH A SIMILAR INVESTMENT OBJECTIVE
TO THE MFS CONSERVATIVE GROWTH PORTFOLIO
<TABLE>
<CAPTION>
NET ASSETS
OF OTHER FUND
(IN MILLIONS)
ON OCTOBER 2, ANNUAL AVERAGE NET
OTHER FUND 1998 FEE RATE ASSET LEVEL
- ---------------------------------------- ----------------- ------------------------------- -------------------
<S> <C> <C> <C>
Conservative Growth Series ............. 1,481.1 0.55% $ 1,447,998,332.49
MFS Union Standard Equity Fund 90.4 0.65% $ 85,910,516.55
MFS Research Growth .................... 148.5 0.65% of first $500 million $ 149,467,504.61
& Income Fund 0.55% thereafter
MFS Equity Income Fund.................. 36.9 0.60% $ 34,598,196.20
Research Growth & Income Series 28.5 0.75% $ 17,155,477.97
Equity Income Series ................... 3.7 0.75% $ 1,919,667.39
MFS Growth with Income Series . 164.1 0.75% $ 116,499,455.49
</TABLE>
N-1
<PAGE>
OTHER MUTUAL FUNDS ADVISED BY MFS WITH A SIMILAR INVESTMENT OBJECTIVE
TO THE MFS TOTAL RETURN PORTFOLIO
<TABLE>
<CAPTION>
NET ASSETS
OF OTHER FUND
(IN MILLIONS)
ON OCTOBER 2, ANNUAL AVERAGE NET
OTHER FUND 1998 FEE RATE ASSET LEVEL
- ---------------------------------- ----------------- ------------------------------------ -------------------
<S> <C> <C> <C>
MFS Total Return Fund ............ 5,842.7 0.250% on first $200 million $ 5,588,498,215.68
0.212% thereafter
MFS Variable Insurance ........... 140.3 0.75% $ 109,168,152.62
Total Return Series
MFS Sun/Life Series Trust/ ....... 1,813.5 0.75% on first $300 million $ 1,836,346,070.69
Total Return Series 0.675% in excess of $300 million but
less than $1 billion
0.600% thereafter
</TABLE>
N-2
<PAGE>
<TABLE>
<CAPTION>
<S><C>
PRELIMINARY COPY
INDICATE YOUR VOTE BY FILLING IN THE APPROPRIATE BOXES IN THIS MANNER / / USING BLUE OR BLACK INK OR DARK PENCIL.
PLEASE DO NOT USE RED INK
- ------------------------------------------------------------------------------------------------------------------------------------
THIS VOTING INSTRUCTION, IF PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED BY THE CONTRACT HOLDER. IF NO DIRECTION IS
MADE, THIS PROXY WILL BE VOTED FOR ALL PROPOSALS, PLEASE REFER TO THE PROXY STATEMENT FOR A DISCUSSION OF THE PROPOSALS.
---
FOR WITHHOLD
ALL AUTHORITY
1. Election of Trustees. / / / /
James K. Hunt, Monica C. Lozanto, Allan L. Sher,
William M. Wardlaw
TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, PRINT
THAT NOMINEE'S NAME ON THE LINE BELOW.
-----------------------------------------------------------------
FOR AGAINST ABSTAIN
2. To approve a new investment advisory and management agreement / / / / / /
between SunAmerica Series Trust (the "Trust") on behalf of each
separate investment portfolio thereof, and SunAmerica Asset
Management Corp. ("SAAMCo"), the terms of which are identical in
all material respects to the existing advisory agreement. (All
Portfolios except the Balanced/Phoenix Investment Counsel and
Growth/Phoenix Investment Counsel Portfolios).
3. To approve a new subadvisory agreement, the terms of which are
identical in all material respects to the existing subadvisory
agreement between:
(a). SAAMCo and Alliance Capital Management L.P. / / / / / /
("Alliance") (Global Equities, Alliance Growth and Growth
Income Portfolios only);
(b). SAAMCo and Davis Selected Advisers, L.P. (Venture Value / / / / / /
and Real Estate Portfolios only);
(c). SAAMCo and Federated Investment Counseling (Corporate / / / / / /
Bond, Federated Value and Utility Portfolios only);
(d). SAAMCo and Goldman Sachs Asset Management (Asset / / / / / /
Allocation Portfolio only);
1
<PAGE>
<CAPTION>
<S><C>
FOR AGAINST ABSTAIN
(e). SAAMCo and Goldman Sachs Asset Management - / / / / / /
International (Global Bond Portfolio only);
(f). SAAMCo and Morgan Stanley Asset Management Inc. / / / / / /
(International Diversified Equities and Worldwide High
Income Portfolios only); and
(g). SAAMCo and Putnam Investment Management, Inc. (Putnam / / / / / /
Growth, International Growth and Income and Emerging Market
Portfolios only).
4. To approve (a) an amendment to the investment advisory and / / / / / /
management agreement between the Trust and SAAMCo in order to
revise the breakpoints in the fees the Alliance Growth Portfolio
pays to SAAMCo and (b) an amendment to the subadvisory agreement
between SAAMCo and Alliance in order to revise the breakpoints in
the subadvisory fee SAAMCo pays to Alliance. (Alliance Growth
Portfolio only).
5. To approve (a) a new investment advisory and management / / / / / /
agreement between the Trust and SAAMCo the terms of which are
identical in all material respects to the existing investment
advisory and management agreement with SAAMCo except with respect
to revised breakpoints in the advisory fees of the Growth/Phoenix
Investment Counsel and Balanced/Phoenix Investment Counsel
Portfolios pays to SAAMCo, and (b) to approve a new subadvisory
agreement between SAAMCo and Massachusetts Financial Services
Company, the proposed new subadviser for each of the Growth/Phoenix
Investment Counsel and Balanced/Phoenix Investment Counsel
Portfolios (Growth/Phoenix Investment Counsel and Balanced/Phoenix
Investment Counsel Portfolios only).
6. To approve changing the fundamental investment restriction
relating to:
(a) the ability to engage in borrowing transactions; and / / / / / /
(b) the ability to engage in lending transactions. / / / / / /
7. To ratify the selection of independent accountants. / / / / / /
8. To transact such other business as may properly come before
the Meeting or any adjournments thereof.
2
<PAGE>
<CAPTION>
<S><C>
PLEASE MARK YOUR VOTING INSTRUCTIONS CARD, DATE AND SIGN IT WHERE INDICATED, AND RETURN IT PROMPTLY IN THE ACCOMPANYING ENVELOPE
WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES. VOTING INSTRUCTIONS MUST BE RECEIVED BY DECEMBER 29, 1998 TO BE VOTED FOR
THE MEETING TO BE HELD ON DECEMBER 30, 1998.
ANCHOR NATIONAL LIFE INSURANCE COMPANY
THESE VOTING INSTRUCTIONS ARE SOLICITED BY ANCHOR NATIONAL LIFE INSURANCE COMPANY IN CONNECTION WITH A SOLICITATION OF PROXIES BY
THE TRUSTEES OF THE SUNAMERICA SERIES TRUST. A VOTING INSTRUCTIONS CARD IS PROVIDED FOR THE PORTFOLIOS IN WHICH YOUR CONTRACT
VALUES WERE INVESTED AS OF OCTOBER 30, 1998.
The undersigned hereby instructs Anchor National Life Insurance Company to vote the shares of the Trust attributable to his or her
variable annuity contract at the Special Meeting of Shareholders to be held at the Trust's offices, The SunAmerica Center, 733 Third
Avenue, New York, New York 10017 at [ .m.], Eastern Standard Time, December 30, 1998, and any adjournments thereof, as
indicated on the reverse side.
3
<PAGE>
<CAPTION>
<S><C>
PLEASE SIGN IN BOX BELOW
If a contract is held jointly, each contract owner should sign. If only one signs, his or her signature will be binding. If the
contract owner is a corporation, the President or a Vice President should sign in his or her own name, indicating title. If the
contract owner is a partnership, a partner should sign in his or her own name, indicating that he or she is a partner.
--------------------------------------------------------------------------------------------
Dated:
--------------------------------------------------------------------------------------------
Signature(s) Title(s), if applicable
4
<PAGE>
<CAPTION>
<S><C>
PLEASE MARK YOUR VOTING INSTRUCTIONS CARD, DATE AND SIGN IT WHERE INDICATED, AND RETURN IT PROMPTLY IN THE ACCOMPANYING ENVELOPE
WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES. VOTING INSTRUCTIONS MUST BE RECEIVED BY DECEMBER 29, 1998 TO BE VOTED FOR
THE MEETING TO BE HELD ON DECEMBER 30, 1998.
FIRST SUNAMERICA LIFE INSURANCE COMPANY
THESE VOTING INSTRUCTIONS ARE SOLICITED BY FIRST SUNAMERICA LIFE INSURANCE COMPANY IN CONNECTION WITH A SOLICITATION OF PROXIES BY
THE TRUSTEES OF THE SUNAMERICA SERIES TRUST. A VOTING INSTRUCTIONS CARD IS PROVIDED FOR THE PORTFOLIOS IN WHICH YOUR CONTRACT
VALUES WERE INVESTED AS OF OCTOBER 30, 1998.
The undersigned hereby instructs First SunAmerica Life Insurance Company to vote the shares of the Trust attributable to his or her
variable annuity contract at the Special Meeting of Shareholders to be held at the Trust's offices, The Sun America Center, 733
Third Avenue, New York, New York 10517 at [ m.], Eastern Standard Time, December 30, 1998, and any adjournments thereof,
as indicated on the reverse side.
5
<PAGE>
<CAPTION>
<S><C>
PLEASE SIGN IN BOX BELOW
If a contract is held jointly, each contract owner should sign. If only one signs, his or her signature will be binding. If the
contract owner is a corporation, the President or a Vice President should sign in his or her own name, indicating title. If the
contract owner is a partnership, a partner should sign in his or her own name, indicating that he or she is a partner.
--------------------------------------------------------------------------------------------
Dated:
--------------------------------------------------------------------------------------------
Signature(s) Title(s), if applicable
6
</TABLE>
