<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:
[ ] Preliminary Information Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14c-5(d)(2))
[x] 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.
[ ] Fee computed on table below per Exchange Act Rules 14c-5(g) 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 transaction
computed pursuant to Exchange Act Rule 0-11 (Set forth the
amount on which the filing fee is calculated and state how
it was determined):
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by
registration statement number, or the Form or Schedule and the date
of its filing.
1) Amount Previously Paid:
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2) Form, Schedule or Registration Statement No.:
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4) Date Filed:
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<PAGE> 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.
- The Funds have recently approved new subadvisory agreements for all of
their 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 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 forth below.
1
<PAGE> 5
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
INVESTMENT COMPANY 12/31/99 ADVISORY FEE RATE
- ------------------- -------------- -------------------------------------------
<S> <C> <C>
Putnam Growth $5.34 billion 0.70% for first $500 million assets, plus
Opportunities (as of 0.60% for next $500 million in assets, plus
Fund* 12/31/99) 0.55% for next $500 million in assets, plus
0.50% for assets over billion $1.5
Putnam Investors $13.17 billion 0.65% for first $500 million in assets,
Fund* (as of plus 0.55% for next $500 million in assets,
1/31/2000) plus 0.50% for next $500 million in assets,
plus 0.45% for next $5 billion in assets,
plus 0.425% for next $5 billion in assets,
plus 0.405% for next $5 billion in assets,
plus 0.390% for next $5 billion in assets,
plus 0.380% for next $5 billion in assets,
plus 0.370% for next $5 billion in assets,
plus 0.360% for next $5 billion in assets,
plus 0.350% for next $5 billion in assets,
plus 0.340% for amounts over $41.5 billion
</TABLE>
- ---------------
* Because Putnam provides services to these Funds 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.
2
<PAGE> 6
FEES
The investment management agreement between AOF and the Manager sets a
maximum subadviser fee rate for each of the Funds. 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>
<S> <C>
EQUINOX
First $100 million in Assets................................ 0.35%
Assets over $100 million.................................... 0.30%
PUTNAM
All Assets.................................................. 0.45%
SSGA*
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.
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<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 investors 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 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
4
<PAGE> 8
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
ANNUAL FUND OPERATING EXPENSES
(As a percentage of average net assets)
Advisory Fees............................................... 0.56%
12b-1 Fees.................................................. None
Other Expenses.............................................. 0.08%
TOTAL FUND OPERATING EXPENSES............................... 0.64%
</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
$10,000 investment, assuming (1) 5% annual return
and (2) redemption at end of each time period:
1 year..................................... $ 65.40
3 years.................................... $204.87
5 years.................................... $356.77
10 years.................................... $798.39
</TABLE>
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
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<PAGE> 9
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
ANNUAL FUND OPERATING EXPENSES
(As a percentage of average net assets)
Advisory Fees............................................... 0.53%
12b-1 Fees.................................................. None
Other Expenses.............................................. 0.08%
TOTAL FUND OPERATING EXPENSES............................... 0.61%
</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
$10,000 investment, assuming (1) 5% annual return
and (2) redemption at end of each time period:
1 year..................................... $ 62.34
3 years.................................... $195.35
5 years.................................... $340.29
10 years.................................... $762.13
</TABLE>
6
<PAGE> 10
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
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<PAGE> 11
the Meeting of Persons Having Voting Rights on April 27, 2000, which is
incorporated by reference into this 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, LLC
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 investors 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.
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<PAGE> 12
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 persons having voting rights, and have been in effect since
May 1, 1998. The Board of Directors most recently reapproved the agreements on
May 12, 1999.
A-1
<PAGE> 13
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
B-1
<PAGE> 14
stated in the Prospectus of the Fund (such Prospectus and Statement of
Additional Information as currently in effect and as amended or supplemented
from time to time, being herein called the "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
B-2
<PAGE> 15
parties further agree that brokers and futures commission 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 by
the Subadviser hereunder are not exclusive, and the
B-3
<PAGE> 16
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 LLC 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.] 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.] [CSAM, 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.]
B-4
<PAGE> 17
(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 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.
B-5
<PAGE> 18
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 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
B-6
<PAGE> 19
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 act or omission 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.
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].
B-7
<PAGE> 20
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.
B-8
<PAGE> 21
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.
<TABLE>
<S> <C> <C>
AMERICAN ODYSSEY FUNDS, INC.
- ---------------------------- By: ----------------------------
Witness
AMERICAN ODYSSEY FUNDS
MANAGEMENT LLC
- ---------------------------- By: ----------------------------
Witness
[SUBADVISER]
- ---------------------------- By: ----------------------------
Witness
</TABLE>
B-9
<PAGE> 22
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).
