<PAGE> 1
SCHEDULE 14C INFORMATION
Information Statement Pursuant to Section 14(c)
of the Securities Exchange Act of 1934
(Amendment No. )
Check the appropriate box:
[x] Preliminary Information Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14c-5(d)(2))
[ ] Definitive Information Statement
American Odyssey Funds, Inc.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement if other than Registrant)
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[x] No fee required.
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1) Title of Each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (Set forth the
amount on which the filing fee is calculated and state how
it was determined):
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
<PAGE> 2
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by
registration statement number, or the Form or Schedule and the date
of its filing.
1) Amount Previously Paid:
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2) Form, Schedule or Registration Statement No.:
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4) Date Filed:
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<PAGE> 3
AMERICAN ODYSSEY FUNDS, INC.
NOTICE OF NEW SUBADVISORY AGREEMENTS
American Odyssey Funds, Inc. ("AOF" or "we") is notifying you of new
subadvisory agreements for five of our six Funds the American Odyssey Global
High-Yield Bond Fund, the American Odyssey International Equity Fund, the
American Odyssey Emerging Opportunities Fund, the American Odyssey Core Equity
Fund and the American Odyssey Long-Term Bond Fund (each, a "Fund," and
collectively, the "Funds"). The new subadvisory agreements, which we describe
in more detail in this Notice, fall into the following two categories:
- The Core Equity Fund has approved a new subadvisory
agreement adding Putnam Investment Management, Inc.
("Putnam") as a new subadviser for that Fund.
- AOF has recently approved new subadvisory
agreements for all of its current subadvisers.
These new agreements, which are substantially
similar to the previous agreements, were required
because the previous agreements will be
automatically terminated by a new ownership
structure for AOF's overall investment Manager,
American Odyssey Funds Management LLC (the
"Manager").
WE ARE NOT ASKING YOU TO VOTE ON THE NEW SUBADVISORY AGREEMENTS
DESCRIBED IN THIS NOTICE. (You are also receiving with this Notice a Proxy
Statement with voting instruction cards, and we are asking you to vote on the
proposals discussed in the Proxy Statement and set forth on the voting
instruction cards.) Under an order obtained from the Securities and Exchange
Commission ("SEC"), the Board of Directors is permitted to adopt, without
shareholder approval, new subadvisory agreements with advisers who are not
affiliated with the Manager. Therefore, the Board of Directors has adopted new
subadvisory agreements with our non-affiliated subadvisers. These new
subadvisory agreements are substantially similar to the current agreements. In
accordance with our SEC order, we are providing you with this Notice describing
the new agreements.
WE WILL FURNISH YOU A COPY OF OUR MOST RECENT ANNUAL REPORT DATED
DECEMBER 31, 1999, ON REQUEST AND WITHOUT CHARGE. IF YOU WISH TO OBTAIN A COPY
OF THE ANNUAL REPORT, MAIL A REQUEST TO AMERICAN ODYSSEY FUNDS MANAGEMENT LLC,
TWO TOWER CENTER, EAST BRUNSWICK, NEW JERSEY 08816, OR CALL 1-800-242-7884.
<PAGE> 4
AMERICAN ODYSSEY CORE EQUITY FUND
NEW SUBADVISORY AGREEMENT
WITH PUTNAM INVESTMENT MANAGEMENT, INC.
The Board of Directors has approved a new subadvisory agreement
to add Putnam Investment Management, Inc. ("Putnam") as a new subadviser for
the Core Equity Fund (the "Fund"). The Fund currently has one subadviser,
Equinox Capital Management, LLC ("Equinox"), and the Board of Directors has
approved a new investment subadvisory agreement to add State Street Global
Advisors ("SSgA") as another subadviser for the Fund. The subadvisory agreement
with SSgA is subject to shareholder approval and is discussed in the
accompanying Proxy Statement.
Putnam will manage the portion of the Fund allocated to it in a
"growth" investment style. Putnam will focus on stocks of companies that it
expects to have above average earnings growth. The firm uses a bottom-up
investment process that combines systematic and fundamental analysis with a
strict sell discipline. The Board of Directors agreed with the Manager's
recommendation that the Fund would benefit by diversifying the investment
approaches used to manage the Fund. The Fund's current subadviser, Equinox,
has a more "value" oriented approach. It focuses on stocks that it believes are
undervalued by the market. Over the past several years, there has been a
growing divergence in the returns of "growth" and "value" funds, and therefore
the Board determined that the overall risk profile of the Fund would likely be
reduced by adding a "growth" style manager. The Board also approved an
agreement with SSgA. Subject to shareholder approval, SSgA will manage a
portion of the Fund with the objective of matching the S&P 500 Index, providing
further diversification.
The Manager and its consultant, BARRA RogersCasey, conducted a
search for a growth subadviser for the Fund. The Manager and BARRA RogersCasey
reviewed information about many advisers, and selected three advisers for more
detailed review. After meeting with and further reviewing information about
those three advisers, the Manager determined to propose to the Board that
Putnam be retained as a subadviser for the Fund.
After negotiations, the Manager and Putnam agreed to present to
the Board a proposed fee of 0.45% of net assets managed by Putnam. Although
that fee is higher than the current fee for Equinox, the Manager determined
that it was appropriate, primarily because of changes in the market for fund
advisers since Equinox was retained in 1993. Furthermore, the Manager and BARRA
RogersCasey believe that the fee is within the range of fees charged by similar
advisers for similar services and that the fee is reasonable. More information
about the fee is set
<PAGE> 5
forth below.
The Board of Directors approved the subadvisory agreement with
Putnam after concluding that it is in the best interests of contract owners
investing in the Fund. More information about the Board's considerations is set
forth below.
PUTNAM
Putnam is wholly owned by Putnam Investments, Inc., One Post
Office Square, Boston, MA 02109, that is, in turn, except for a minority
interest owned by employees, wholly owned by Marsh & McLennan Companies, Inc.,
which has executive offices at 1166 Avenue of the Americas, New York, NY 10036.
Marsh & McLennan Companies, Inc. and its operating subsidiaries are professional
services firms with insurance and reinsurance brokering, consulting and
investment management businesses.
The directors of Putnam are George Putnam, Lawrence J. Lasser,
and Gordon H. Silver. Mr. Lasser is the principal executive officer of Putnam.
The principal occupations of Messrs. Putnam, Lasser, and Silver are as officers
and directors of Putnam and certain of its corporate affiliates. The business
address of the directors and officers of Putnam is One Post Office Square,
Boston, MA 02109.
Putnam provides advice for the following registered investment
company with a large U.S. capitalization growth objective:
<TABLE>
<CAPTION>
NAME OF REGISTERED SIZE AS OF 12/31/99 ADVISORY FEE RATE
INVESTMENT COMPANY ------------------- -----------------
------------------
<S> <C> <C>
Putnam Growth $5.34 billion 0.70% for first $500
Oppprtunities Fund * million assets, plus
0.60% for next $500
million in assets,
plus 0.55% for next
$500 million in
assets, plus 0.50%
for assets over
billion $1.5
</TABLE>
* Because Putnam provides services to this Fund in
addition to portfolio management, such as fund
accounting, Putnam does not believe that these fees are
directly comparable to those of the American Odyssey
Core Equity Fund.
FEES
The investment management agreement between AOF and the Manager
sets a maximum subadviser fee rate for each of the Funds.
<PAGE> 6
Your approval would be required before we could enter into a subadvisory
agreement with a higher fee. The maximum subadvisory fee rate for the Core
Equity Fund is 0.45%. Set forth below are the fee rates for Equinox, Putnam and
SSgA:
<TABLE>
<CAPTION>
EQUINOX
-------
<S> <C>
First $100 million in Assets 0.35%
Assets over $100 million 0.30%
</TABLE>
<TABLE>
<CAPTION>
PUTNAM
------
<S> <C>
All Assets 0.45%
</TABLE>
<TABLE>
<CAPTION>
SSgA*
----
<S> <C>
First $50 million in Assets 0.05%
Next $50 million in Assets 0.04%
Assets over $100 million 0.03%
</TABLE>
* Minimum SSgA fee of $50,000 on an annualized basis
DIFFERENCES BETWEEN CURRENT AGREEMENT WITH EQUINOX AND THE PROPOSED AGREEMENT
WITH PUTNAM
Other than fees, the subadvisory agreements with Equinox and
Putnam are substantially the same. Other material provisions, such as duties,
indemnification and termination, are essentially the same. (Of course, there
are differences in the names and addresses of the parties, the effective dates
and terms of the agreements and other minor differences.) Appendix A includes
additional information about the provisions of the subadvisory agreements, and
Appendix B includes the subadvisory agreement form itself, with notations of
variations among the subadvisers.
BOARD CONSIDERATION
On February 8, 2000, the full AOF Board of Directors, including
all directors who are not "interested persons" of AOF as that term is defined
in the federal securities laws ("independent directors"), met in person to
discuss the proposed subadvisory agreement with Putnam. The Board received a
variety of information about Putnam, including information about the firm's
ownership and key personnel, the firm's investment experience, investment
philosophy and process, and past performance in managing other growth funds and
accounts. The Board also received information about fees and expenses of growth
funds generally.
<PAGE> 7
After presentations by the Manager, the Manager's consultant,
BARRA RogersCasey, and Putnam, the Board unanimously voted to approve the
proposed subadvisory agreement with Putnam. The Board determined that the
proposed agreement was in the best interests of contract owners investing in
the Fund. In making that determination, the Board considered a variety of
factors, including those discussed below.
Diversification. As noted above, the Manager recommended to the
Board that the Fund diversify the investment styles of the Fund by adding a
subadviser to manage a portion of the Fund with a "growth" approach. BARRA
RogersCasey provided the Board with materials analyzing the effect of adding a
growth component on overall risk of the Fund compared with the S&P 500 Index.
Nature and Quality of Putnam's Services. The Board considered
Putnam's personnel, investment approach and experience. Putnam has 60 years of
experience in managing assets and currently manages over $392 billion in retail
and institutional assets (as of 12/31/99). The firm has nearly 300 investment
and research professionals, and it has substantial experience in U.S. growth
equity investing.
Putnam's Historical Performance. The Board considered materials
showing the investment performance of Putnam's U.S. growth equity strategy
which, since inception in August 1996, has performed favorably compared with
the S&P 500 Index and the Russell 1000 Growth Index.
Fees. The Board considered the proposed fees. The Board compared
the proposed Putnam fees with information provided by BARRA RogersCasey about
fees charged by other growth advisers to mutual funds or other clients. The
Board agreed with the conclusion of the Manager and BARRA RogersCasey that the
proposed fee is within the range of fees charged by similar advisers for
similar services and that the fee is reasonable.
ADDITIONAL FEE INFORMATION
A. 1999 Fee Information
The following table summarizes the expenses of the Fund during
1999. It follows the format used in the prospectus. Expenses are expressed as a
percentage of average net assets during the year. These tables and examples do
not include any expenses charged under any variable contract, such as sales
charges or mortality and expense risk charges.
<PAGE> 8
<TABLE>
<CAPTION>
Core
Equity
Fund
------
<S> <C>
SHAREHOLDER TRANSACTION EXPENSES
Sales Load on Purchases .............................................. None
Sales Load on Reinvested Dividends ................................... None
Deferred Sales Load Imposed on Redemption ............................ None
Exchange Fees ........................................................ None
ANNUAL FUND OPERATING EXPENSES
(As a percentage of average net assets)
Advisory Fees ........................................................ 0.__%
12b-1 Fees ........................................................... None
Other Expenses ....................................................... 0.__%
TOTAL FUND OPERATING EXPENSES ........................................ 0.__%
</TABLE>
The following example shows the total expenses that would be payable
if a shareholder redeemed his or her shares after having held them for one,
three, five, and ten year periods respectively. The example is based on the 1999
expenses listed in the table above. Actual expenses may be greater or less than
shown. The example assumes a 5% annual rate of return pursuant to requirements
of the Securities and Exchange Commission. This hypothetical rate of return is
not intended to be representative of past or future performance.
<TABLE>
<CAPTION>
Core
Equity
Fund
------
<S> <C>
EXAMPLE
A shareholder would pay the following expenses
on a $1,000 investment, assuming (1) 5%
annual return and (2) redemption at end of
each time period:
1 year ................................... $___
3 years .................................. $___
5 years .................................. $___
10 years .................................. $___
</TABLE>
<PAGE> 9
B. Pro Forma Fee Information
The following table shows an estimate of what 1999 expenses would
have been if Putnam had served as a subadviser for the Fund under the
subadvisory agreement, in addition to Equinox and SSgA. This reflects both the
Putnam fees, which are higher than the Equinox fees, and the SSgA fees, which
are lower than the Equinox fees. Because the subadvisers have different fees,
overall fees will vary depending on the allocation of assets between the
subadvisers. The chart below assumes that during 1999 the Fund's assets were
equally divided among the subadvisers. As in the first table, expenses are
expressed as a percentage of average net assets during the year. In addition,
these tables and examples do not include any expenses charged under any variable
contract, such as sales charges or mortality and expense risk charges.
<TABLE>
<CAPTION>
Core
Equity
Fund
------
<S> <C>
SHAREHOLDER TRANSACTION EXPENSES
Sales Load on Purchases .............................................. None
Sales Load on Reinvested Dividends ................................... None
Deferred Sales Load Imposed on Redemption ............................ None
Exchange Fees ........................................................ None
</TABLE>
<PAGE> 10
<TABLE>
<CAPTION>
Core
Equity
Fund
------
<S> <C>
ANNUAL FUND OPERATING EXPENSES
(As a percentage of average net assets)
Advisory Fees ........................................................ 0.__%
12b-1 Fees ........................................................... None
Other Expenses ....................................................... 0.__%
TOTAL FUND OPERATING EXPENSES ........................................ 0.__%
</TABLE>
The following example shows the total expenses that would be payable
if a shareholder redeemed his or her shares after having held them for one,
three, five, and ten year periods respectively. The example is based on the pro
forma 1999 expenses listed in the above table. Actual expenses may be greater or
less than shown. The example assumes a 5% annual rate of return pursuant to
requirements of the Securities and Exchange Commission. This hypothetical rate
of return is not intended to be representative of past or future performance.
<TABLE>
<CAPTION>
Core
Equity
Fund
------
<S> <C>
EXAMPLE
A shareholder would pay the following expenses
on a $1,000 investment, assuming (1) 5%
annual return and (2) redemption at end of
each time period:
1 year ................................... $___
3 years .................................. $___
5 years .................................. $___
10 years .................................. $___
</TABLE>
<PAGE> 11
AMERICAN ODYSSEY GLOBAL HIGH-YIELD BOND FUND
AMERICAN ODYSSEY INTERNATIONAL EQUITY FUND
AMERICAN ODYSSEY EMERGING OPPORTUNITIES FUND
AMERICAN ODYSSEY CORE EQUITY FUND
AMERICAN ODYSSEY LONG-TERM BOND FUND
NEW SUBADVISORY AGREEMENTS
WITH CURRENT SUBADVISERS
The Board of Directors has approved new subadvisory agreements with
each of the current subadvisers of the Funds. The federal securities laws
require that the Board approve theses new agreements because of a new ownership
structure for the Manager, which we describe below, even though the new
agreements are substantially similar to the previous agreements. In particular,
the new agreements involve no change in fees, and the subadvisers' duties and
obligations will not change.
CHANGE IN OWNERSHIP STRUCTURE OF THE MANAGER
The Manager is currently an indirect wholly-owned subsidiary of
Citigroup Inc. ("Citigroup"), a publicly-owned diversified financial services
holding company. On December 8, 1999, Citigroup and State Street Corporation,
another publicly-owned diversified financial services holding company,
announced an agreement to form a new jointly owned company to be called
CitiStreet LLC ("CitiStreet"). CitiStreet will be 50% indirectly owned by
Citigroup and 50% indirectly owned by State Street Corporation. All of The
Copeland Companies, which includes the Manager, will be owned by CitiStreet.
State Street Corporation will contribute to CitiStreet certain retirement
services and benefit administration businesses. We currently expect that this
change in ownership structure will become effective on or about March 31, 2000.
It is, of course, possible that the effective date of the transaction may
change.
THE NEED FOR NEW SUBADVISORY AGREEMENTS
Because of a requirement of the federal securities laws, our
subadvisory agreements will automatically terminate when this ownership
restructuring becomes effective. Therefore, we must enter into new subadvisory
agreements to retain the services of the subadvisers.
THE CURRENT SUBADVISERS
The chart below lists the current subadvisers for the Funds.
Information about the current subadvisers is included in the Proxy Statement
for the Meeting of Persons Having Voting Rights on April 27, 2000, which is
incorporated by reference into this
<PAGE> 12
document (which means that it is legally part of this document). The Proxy
Statement is being sent to you along with this document.
<TABLE>
<CAPTION>
FUND SUBADVISER(s)
---- -------------
<S> <C>
Global High-Yield Bond Fund Credit Suisse Asset Management
International Equity Fund Bank of Ireland Asset
Management (U.S.) Limited
Emerging Opportunities Fund SG Cowen Asset Management and
Chartwell Investment Partners
Core Equity Fund Equinox Capital Management,
LLC
Long-Term Bond Fund Western Asset Management
Company
</TABLE>
DIFFERENCES BETWEEN THE PREVIOUS AGREEMENTS AND THE NEW AGREEMENTS
The new subadvisory agreements are substantially the same as the
previous agreements. The fees paid to each subadviser will remain the same.
Other material provisions in the agreements, such as duties, indemnification
and termination, are substantially the same. (Of course, there are differences
in the effective dates and terms of the agreements and other minor differences.)
Appendix A includes additional information about the provisions of the
subadvisory agreements, and Appendix B includes the new subadvisory agreement
form itself, with notations of variations among the subadvisers.
BOARD CONSIDERATION
On February 8, 2000, the full AOF Board of Directors, including all
independent directors, met in person to discuss the proposed change in the
Manager's ownership structure and the proposed new subadvisory agreements with
the current subadvisers.
After receiving a presentation from the Manager, the Board
unanimously determined that it would be in the best interests of contract
owners investing in the Funds for AOF to enter into new subadvisory agreements
so that the Funds can continue to receive the services of the subadvisers. The
Board determined that the change in the Manager's ownership structure does not
relate to or affect the subadvisers. The Board also considered that the new
agreements had the same fees and other substantive terms as the previous
agreements.
<PAGE> 13
APPENDIX A
ADDITIONAL INFORMATION ABOUT
SUBADVISORY AGREEMENTS
The subadvisory agreements with each of our current subadvisers are
substantially the same except for the names and addresses of the parties, the
fees, and the effective date and term during which each agreement will be
carried out. This section provides additional information about the terms of
the subadvisory agreements. Appendix B includes the form of the agreements.
Each subadviser's responsibilities for its respective Fund include:
- managing the Fund's investment operations in accord with the Fund's
investment objectives;
- consulting with the Manager to set investment strategies;
- supervising investments;
- placing orders to purchase and sell investments;
- maintaining books and records on portfolio transactions;
- providing transactional information to the Fund's custodian;
- and providing records and other information to the Manager as
necessary.
The subadvisory agreements also delineate the subadvisers' liability
for losses by the Fund or the Manager, and the obligations of the Manager
toward the subadvisers. The agreements permit the subadvisers' directors,
officers and employees to engage in other business and management.
The subadvisory agreements may be amended by mutual consent. The
subadvisory agreements may continue for more than two years only if they are
annually re-approved by our Board of Directors. The Manager, the subadvisers,
or our Board of Directors may each terminate the subadvisory agreements on 30
to 60 days' notice.
The subadvisory agreements with the current subadvisers were
approved on April 24, 1998 by shareholders, and have been in effect since May 1,
1998. The Board of Directors most recently reapproved the agreements on May 12,
1999.
<PAGE> 14
APPENDIX B
This appendix includes the form of the new subadvisory agreement for each of
the current subadvisers -- CSAM, BIAM, Western, Chartwell, SG Cowen and Equinox
- -- and for the new subadviser -- Putnam. The form below omits certain
identifying information for each of the subadvisers, and it shows in brackets
the other provisions that differ among the agreements.
INVESTMENT SUBADVISORY AGREEMENT
Agreement made as of this ___ day of ____, 2000, among American
Odyssey Funds, Inc., a Maryland corporation (the "Series Fund"), American
Odyssey Funds Management, LLC, a New Jersey limited liability company (the
"Manager"), and ____________________, a _______________ (the "Subadviser").
WHEREAS, American Odyssey Funds Management, LLC has entered into a
management agreement (the "Management Agreement") with the Series Fund, a
diversified open-end management investment company registered under the
Investment Company Act of 1940 (the "1940 Act"), pursuant to which American
Odyssey Funds Management, LLC will act as Manager of the Series Fund.
WHEREAS, the Series Fund is currently divided into six separate
series or Funds, each of which is established pursuant to a resolution of the
Board of Directors of the Series Fund, and the Series Fund may in the future
add additional Funds; and
WHEREAS, the Manager has the responsibility of evaluating,
recommending, and supervising investment advisers to each Fund and, in
connection therewith, desires to retain the Subadviser to provide investment
advisory services to the American Odyssey _________ Fund (the "Fund"), the
Series Fund has the responsibility of compensating the investment advisers to
each Fund and desires to retain the Subadviser to provide investment advisory
services to the Fund, and the Subadviser is willing to render such investment
advisory services.
NOW, THEREFORE, the parties agree as follows:
1. (a) Subject to the supervision of the Manager and of the Board of
Directors of the Series Fund, the Subadviser shall manage the
investment operations of the assets of the Fund allocated by the
Manager to the Subadviser (such assets referred to as the "Allocated
Assets"), including the purchase, retention and disposition of
portfolio investments, in accordance with the Fund's investment
objectives, policies and restrictions as stated in the Prospectus
(such Prospectus and Statement of Additional Information as
currently in effect and as amended or supplemented from time to time,
being herein called the
<PAGE> 15
"Prospectus") and subject to the following understandings:
(i) The Subadviser shall consult periodically
with the Manager and they shall agree upon the current
investment strategy for the Allocated Assets in the light
of anticipated cash flows.
(ii) The Subadviser shall provide supervision of
the Allocated Assets' investments and determine from time
to time what securities, options, futures contracts, and
other investments included in the Allocated Assets will be
purchased, retained, sold, or loaned by the Fund, and what
portion of the Allocated Assets will be invested or held
uninvested as cash.
(iii) In the performance of its duties and
obligations under this Agreement, the Subadviser shall act
in conformity with the Articles of Incorporation, By-Laws,
and Prospectus of the Series Fund and with the instructions
and directions of the Manager and of the Board of Directors
of the Series Fund and will conform to and comply with the
requirements of the 1940 Act, the Internal Revenue Code of
1986, and all other applicable federal and state laws and
regulations.
(iv) The Subadviser will place orders for the
securities, options, futures contracts, and other
investments to be purchased or sold as part of the
Allocated Assets with or through such persons, brokers,
dealers, or futures commission merchants (including but not
limited to persons affiliated with the Manager or
Subadviser) as the Subadviser may select in order to carry
out the policy with respect to brokerage set forth in the
Series Fund's Registration Statement and Prospectus or as
the Board of Directors may direct from time to time. In
providing the Fund with investment advice and management,
the Subadviser will give primary consideration to securing
the most favorable price and efficient execution. Within
the framework of this policy, the Subadviser may consider
such factors as the price of the security, the rate of the
commission, the size and difficulty of the order, the
reliability, integrity, financial condition, general
execution and operational capabilities of competing
broker-dealers and futures commission merchants, and the
brokerage and research services they provide to the
Subadviser or the Fund. The parties agree that it is
desirable for the Fund that the Subadviser have access to
supplemental investment and market research and security
and economic analysis that certain brokers or futures
commission merchants are able to provide. The parties
further agree that brokers and futures commission
<PAGE> 16
merchants that provide such research and analysis may
execute brokerage transactions at a higher cost to the Fund
than would result if orders to execute such transactions had
been placed with other brokers on the sole basis of ability
to obtain the most favorable price and efficient execution.
Therefore, notwithstanding the second sentence of this
paragraph 1(a)(iv), the Subadviser is authorized to place
orders for the purchase and sale of securities, options,
futures contracts, and other investments for the Fund with
brokers or futures commission merchants who provide the
Subadviser with such research and analysis, subject to
review by the Manager and the Series Fund's Board of
Directors from time to time with respect to the extent and
continuation of this practice. The Series Fund and the
Manager acknowledge that the services provided by such
brokers or futures commission merchants may be useful to the
Subadviser in connection with the Subadviser's services to
other clients.
When the Subadviser deems the purchase or sale of
a security, option, futures contract, or other investment
to be in the best interest of the Fund as well as other
clients of the Subadviser, the Subadviser, to the extent
permitted by applicable laws and regulations, may, but
shall be under no obligation to, aggregate the securities,
options, futures contracts, or other investments to be sold
or purchased in order to obtain the most favorable price or
lower brokerage commissions and efficient execution and to
allocate the shares purchased or sold among the Series Fund
and the Subadviser's other clients on a fair and
nondiscriminatory basis, in a manner consistent with the
Subadviser's fiduciary obligations to the Fund and to such
other clients.
(v) The Subadviser shall maintain all books and
records with respect to the portfolio transactions of the
Allocated Assets required by subparagraphs (b)(5), (6),
(7), (9), (10) and (11) and paragraph (f) of Rule 31a-1
under the 1940 Act and by Rule 17e-1(c)(2) under the 1940
Act and shall render to the Series Fund such periodic and
special reports as its Board of Directors or the Manager
may reasonably request.
(vi) The Subadviser shall provide the Series
Fund's custodian on each business day with information
relating to all transactions concerning the Allocated
Assets and shall provide the Manager with such information
upon request of the Manager.
(vii) [BIAM, Equinox: The investment management
services provided
<PAGE> 17
by the Subadviser hereunder are not exclusive, and the
Subadviser shall be free to render similar services to
others: provided, however, that the Subadviser agrees that
it shall not serve or accept retention as investment
adviser, investment manager, or similar service provider
during the term of this Agreement and, if this Agreement is
terminated by the Subadviser, for the period of one year
after the termination of this Agreement, with or for the
benefit of any investment company registered under the 1940
Act that seeks as a primary purchaser of its shares,
directly or indirectly through sales of variable contracts,
persons who are eligible to participate in an investment
advisory asset allocation program similar in nature to that
offered by the Manager's affiliated company, Copeland
Financial Services, Inc., it being understood and agreed
that the foregoing restriction shall not apply to any
services provided to the Financial Services Department, or
any other unit of The Travelers Insurance Company, it being
further understood and agreed that an investment company
with asset allocation as its own investment objective
(commonly called a balanced fund) shall not be subject to
the foregoing restriction.] [CSAM, Chartwell: The investment
management services provided by the Subadviser hereunder are
not exclusive, and the Subadviser shall be free to render
similar services to others: provided, however, that the
Subadviser agrees that it shall not serve or accept
retention as investment adviser, investment manager, or
similar service provider during the term of this Agreement
and, if this Agreement is terminated by the Subadviser, for
the period of one year after the termination of this
Agreement, with or for the benefit of any investment company
registered under the 1940 Act that meets the following
conditions: (1) at least 25% of the shares of the investment
company (or in the case of a series investment company, at
least 25% of the shares of the series of that investment
company to which the Subadviser would provide services) are
owned by one or more separate accounts that fund individual
or group variable annuity contracts, and (2) the owners of
(or, for a group variable annuity contract, the participants
in) one or more of the variable annuity contracts funded by
the investment company (or series thereof) are eligible to
participate in a fee-based investment advisory asset
allocation program associated with that variable annuity
contract; provided, however, that the foregoing restriction
shall not apply to any services provided to the Financial
Services Department, or any other unit, of The Travelers
Insurance Company.] [SG Cowen, Western, Putnam: The
investment management services provided by the Subadviser
hereunder are not exclusive, and the Subadviser shall be
free to render similar services to others.]
(viii) Absent specific instructions to the
contrary provided to it by the Manager, and subject to the
Subadviser's receipt of all necessary voting materials, the
Subadviser shall vote all proxies with respect to
investments of the allocated assets in accordance with the
Subadviser's proxy voting policy as most recently provided
to the Manager.
(b) Services to be furnished by the Subadviser under this
Agreement may be
<PAGE> 18
furnished through the medium of any directors,
officers, or employees of the Subadviser or its affiliates.
(c) The Subadviser shall keep the books and records with
respect to the Allocated Assets required to be maintained by the
Subadviser pursuant to paragraph 1(a)(v) hereof and shall timely
furnish to the Manager or the Series Fund's custodian all information
relating to the Subadviser's services hereunder needed to keep the
other books and records of the Fund required by Rules 17e-1(c)(2) and
31a-1 under the 1940 Act. The Subadviser agrees that all records
which it maintains for the Fund are the property of the Fund and the
Subadviser will surrender promptly to the Fund any of such records
upon the Fund's request, provided however that the Subadviser may
retain a copy of such records. The Subadviser further agrees to
preserve for the periods prescribed by Rules 17e-1(c)(2) and 31a-2
under the 1940 Act any such records as are required to be maintained
by it pursuant to paragraph 1(a)(v) hereof.
(d) The Subadviser agrees to maintain procedures adequate
to ensure its compliance with the 1940 Act, the Investment Advisers
Act of 1940 (the "Advisers Act"), and other applicable state and
federal laws and regulations.
(e) The Subadviser shall furnish to the Manager, upon the
Manager's reasonable request, copies of all records prepared in
connection with (i) the performance of this Agreement and (ii) the
maintenance of compliance procedures pursuant to paragraph 1(d)
hereof.
(f) The Subadviser agrees to provide upon reasonable
request of the Manager or the Series Fund, information regarding the
Subadviser, including but not limited to background information about
the Subadviser and its personnel and performance data, for use in
connection with efforts to promote the Series Fund and the sale of
its shares.
2. The Manager shall continue to have responsibility for all
services to be provided to the Fund pursuant to the Management Agreement and
shall oversee and review the Subadviser's performance of its duties under this
Agreement.
3. [CSAM : The Series Fund shall pay the Subadviser, for the
services provided and the expenses assumed pursuant to this Subadvisory
Agreement, a fee at an annual rate of 0.425% of the average daily Net Allocated
Assets.] [BIAM : The Series Fund shall pay the Subadviser, for the services
provided and the expenses assumed pursuant to this Subadvisory Agreement, a fee
at an annual rate of 0.45% of the average daily Net Allocated Assets up to and
including $50 million, plus a fee at an annual rate of 0.40% of the average
daily Net Allocated Assets over $50 million and up to and including $100
million, plus a fee at an annual rate of 0.30% of the average daily Net
Allocated Assets over $100 million.] [Western : The Series Fund shall pay the
Subadviser, for the services provided and the expenses assumed pursuant to this
Subadvisory Agreement, a fee at an annual rate of 0.25% of the average daily Net
Allocated Assets up to and including $250 million, plus a fee at an annual rate
of 0.15% of the average daily Net Allocated
<PAGE> 19
Assets over $250 million.] [Chartwell : The Series Fund shall pay the
Subadviser, for the services provided and the expenses assumed pursuant to this
Subadvisory Agreement, a fee at an annual rate of 0.70% of the average daily Net
Allocated Assets up to and including $50 million, plus a fee at an annual rate
of 0.50% of the average daily Net Allocated Assets over $50 million and up to
and including $100 million, plus a fee at an annual rate of 0.40% of the average
daily Net Allocated Assets over $100 million.] [SG Cowen: The Series Fund shall
pay the Subadviser, for the services provided and the expenses assumed pursuant
to this Subadvisory Agreement, a fee at an annual rate of 0.50% of the average
daily Net Allocated Assets up to and including $50 million, plus a fee at an
annual rate of 0.45% of the average daily Net Allocated Assets over $50 million
and up to and including $100 million, plus a fee at an annual rate of 0.40% of
the average daily Net Allocated Assets over $100 million.] [Equinox : The Series
Fund shall pay the Subadviser, for the services provided and the expenses
assumed pursuant to this Subadvisory Agreement, a fee at an annual rate of 0.35%
of the average daily Net Allocated Assets up to and including $100 million, plus
a fee at an annual rate of 0.30% of the average daily Net Allocated Assets over
$100 million.] [Putnam : The Series Fund shall pay the Subadviser, for the
services provided and the expenses assumed pursuant to this Subadvisory
Agreement, a fee at an annual rate of 0.45% of the average daily Net Allocated
Assets.] The term "Net Allocated Assets" means the Allocated Assets less related
liabilities as determined by the Manager or its designee. This fee will be
computed daily and paid monthly.
4. The Subadviser shall not be liable for any loss suffered by the
Series Fund or the Manager as a result of any negligent act or error of
judgment of the Subadviser in connection with the matters to which this
Agreement relates, except a loss resulting from a breach of fiduciary duty with
respect to the receipt of compensation for services (in which case any award of
damages shall be limited to the period and the amount set forth in Section
36(b)(3) of the 1940 Act) or loss resulting from willful misfeasance, bad faith
or gross negligence on the Subadviser's part in the performance of its duties
or from its reckless disregard of its obligations and duties under this
Agreement. The Series Fund shall indemnify the Subadviser and hold it harmless
from all loss, cost, damage and expense, including reasonable expenses for
legal counsel, incurred by the Subadviser resulting from actions from which it
is relieved of responsibility by this paragraph. The Subadviser shall indemnify
the Series Fund and the Manager and hold them harmless from all loss, cost,
damage and expense, including reasonable expenses for legal counsel, incurred
by the Series Fund and the Manager resulting from actions from which the
Subadviser is not relieved of responsibility by this paragraph.
5. This Agreement shall continue in effect for a period of more than
two years from the date hereof only so long as such continuance is specifically
approved at least annually in conformity with the requirements of the 1940 Act;
provided, however, that this Agreement may be terminated by the Fund at any
time, without the payment of any penalty, by the Board of Directors of the
Series Fund or by vote of a majority of the outstanding voting securities (as
defined in the 1940 Act) of the Fund, or by the Manager or the Subadviser at
any time, without the payment of any penalty, on not more than 60 days' nor
less than 30 days' written notice to the other party. This Agreement shall
terminate automatically in the event of its assignment (as defined in the 1940
Act) or upon the termination of the Management Agreement.
<PAGE> 20
6. Nothing in this Agreement shall limit or restrict the right of
any of the Subadviser's directors, officers, or employees to engage in any
other business or to devote his or her time and attention in part to the
management or other aspects of any business, whether of a similar or dissimilar
nature, nor limit the Subadviser's right to engage in any other business or to
render services of any kind to any other corporation, firm, individual, or
association [BIAM, Equinox, CSAM, Chartwell: except as described in Paragraph
1(a)(vii) above].
7. During the term of this Agreement, the Manager agrees to furnish
the Subadviser at its principal office all prospectuses, proxy statements,
reports to shareholders, sales literature or other material prepared for
distribution to shareholders of the Fund or the public, which refer to the
Subadviser in any way, prior to use thereof and not to use material if the
Subadviser reasonably objects in writing five business days (or such other time
as may be mutually agreed) after receipt thereof. Such materials may be
furnished to the Subadviser hereunder by first class mail, overnight delivery
service, facsimile transmission equipment, or hand delivery.
8. This Agreement may be amended by mutual consent, but the consent
of the Series Fund must be obtained in conformity with the requirements of the
1940 Act.
9. Except as otherwise specifically provided in this Agreement, any
notice or other communication required to be given pursuant to this Agreement
shall be deemed duly given if delivered or mailed by certified or registered
mail, return receipt requested and postage prepaid, (1) to the American Odyssey
Funds, Inc. at Two Tower Center, East Brunswick, New Jersey 08816, Attention:
President; (2) to American Odyssey Funds Management, LLC at Two Tower Center,
East Brunswick, New Jersey 08816, Attention: Secretary; or (3) to
_________________, at ____________________________________, Attention:
_________.
10. This Agreement shall be governed by the laws of the State of New
Jersey.
11. This Agreement may be executed in two or more counterparts,
which taken together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this instrument
to be executed by their officers designated below as of the day and year first
above written.
AMERICAN ODYSSEY FUNDS, INC.
___________________________ By: ____________________________
Witness
AMERICAN ODYSSEY FUNDS
MANAGEMENT, LLC
<PAGE> 21
____________________________ By: ____________________________
Witness
[SUBADVISER]
____________________________ By: ____________________________
Witness
<PAGE> 22
[BACK COVER]
AMERICAN ODYSSEY FUNDS, INC.
NOTICE OF NEW SUBADVISORY AGREEMENTS
The Accompanying Proxy Statement for the Meeting of Persons Having Voting
Rights on April 27, 2000, is incorporated by reference into this document
(which means that it is legally part of this document).
