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AMERICAN SKANDIA TRUST
SUB-ADVISORY AGREEMENT
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THIS AGREEMENT is between American Skandia Investment Services, Incorporated and Prudential Investments LLC
(the "Investment Manager") and Pacific Investment Management Company LLC (the "Sub-Advisor"), a Limited
Liability Company.
WHEREAS American Skandia Trust (the "Trust") is a Massachusetts business trust organized with one or more
series of shares, and is registered as an investment company under the Investment Company Act of 1940 (the
"ICA"); and
WHEREAS the trustees of the Trust (the "Trustees") have engaged the Investment Manager to act as Investment
Manager for the AST PIMCO Total Return Bond Portfolio (the "Portfolio") under the terms of a management
agreement, dated May 1, 2003, with the Trust (the "Management Agreement"); and
WHEREAS the Investment Manager has engaged the Sub-Advisor and the Trustees have approved the engagement of the
Sub-Advisor to provide investment advice and other investment services set forth below;
NOW, THEREFORE the Investment Manager and the Sub-Advisor agree as follows:
1. Investment Services The Sub-Advisor will furnish the Investment Manager with investment advisory
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services in connection with a continuous investment program for the Portfolio which is to be managed in
accordance with the investment objective, investment policies and actions of the Portfolio as set forth in the
Prospectus and Statement of Additional Information of the Trust and in accordance with the Trust's Declaration
of Trust and By-laws. Officers, directors, and employees of Sub-Advisor will be available to consult with
Investment Manager and the Trust, their officers, employees and Trustees concerning the business of the Trust.
Investment Manager will promptly furnish Sub-Advisor with any amendments to such documents. Such amendments
will not be effective with respect to the Sub-Advisor until receipt thereof.
Subject to the supervision and control of the Investment Manager, which is in turn subject to the
supervision and control of the Trust's Board of Trustees, the Sub-Advisor, will in its discretion determine and
select the securities to be purchased for and sold from the Portfolio from time to time and will place orders
with and give instructions to brokers, dealers and others for all such transactions and cause such transactions
to be executed. The Portfolio will be maintained by a custodian bank (the "Custodian") and the Investment
Manager will authorize the Custodian to honor orders and instructions by employees of the Sub-Advisor
authorized by the Investment Manager to settle transactions in respect of the Portfolio. No assets may be
withdrawn from the Portfolio other than for settlement of transactions on behalf of the Portfolio except upon
the written authorization of appropriate officers of the Trust who shall have been certified as such by proper
authorities of the Trust prior to the withdrawal.
The Sub-Advisor will obtain and evaluate pertinent information about significant developments and
economic, statistical and financial data, domestic, foreign or otherwise, whether affecting the economy
generally or the Portfolio, and concerning the individual issuers whose securities are included in the
Portfolio or the activities in which they engage, or with respect to securities which the Sub-Advisor considers
desirable for inclusion in the Portfolio.
The Sub-Advisor represents that it reviewed the Registration Statement of the Trust, including any
amendments or supplement thereto, and any Proxy Statement relating to the approval of this Agreement as filed
with the Securities and Exchange Commission and represents and warrants that with respect to disclosure about
the Sub-Advisor or information relating directly or indirectly to the Sub-Advisor, such Registration Statement
or Proxy Statement contains, as of the date hereof, no untrue statement of any material fact and does not omit
any statement of material fact which was required to be stated therein or necessary to make the statements
contained therein not misleading. The Sub-Advisor further represents and warrants that it is an investment
advisor registered under the Investment Advisers Act of 1940, as amended, and under the laws of all
jurisdictions in which the conduct of its business hereunder requires such registration.
Sub-Advisor shall use its best judgment, effort, and advice in rendering services under this Agreement.
In furnishing the services under this Agreement, the Sub-Advisor will comply with the requirements of
the ICA and subchapters L and M (including, respectively, Section 817(h) and Section 851(b)(1), (2), (3) and
(4) of the Internal Revenue Code, applicable to the Portfolio, and the regulations promulgated thereunder.
Sub-Advisor shall comply with (i) other applicable provisions of state or federal law; (ii) the provision of
the Declaration of Trust and By-laws of the Trust; (iii) policies and determinations of the Trust and
Investment Manager, (iv) the fundamental policies and investment restrictions of the Trust, as set out in the
Trust's registration statement under the ICA, or as amended by the Trust's shareholders; (v) the Prospectus
and Statement of Additional Information of the Trust; and (vi) investment guidelines or other instructions
received in writing from Investment Manager. Sub-Advisor shall supervise and monitor the investment program
of the Portfolio.
Nothing in this Agreement shall be implied to prevent the Investment Manager from engaging other
Sub-advisors to provide investment advice and other services in relation to portfolios of the Trust for which
Sub-Advisor does not provide such or to prevent Investment Manager from providing such services itself in
relation to such portfolios. The Sub-Advisor and the Investment Manager understand and agree that if the
Investment Manager manages the Portfolio in a "manager-of-managers" style, the Investment Manager will, among
other things, (i) continually evaluate the performance of the Sub-Advisor through quantitative and qualitative
analysis and consultations with the Sub-Advisor, (ii) periodically make recommendations to the Trust's Board
as to whether the contract with one or more sub-advisors should be renewed, modified or terminated, and (iii)
periodically report to the Trust's Board regarding the results of its evaluation and monitoring functions.
The Sub-Advisor recognizes that its services may be terminated or modified pursuant to this process.
The Sub-Advisor acknowledges that the Investment Manager and the Trust intend to rely on Rules 17a-10
and 10f-3 under the ICA, to the extent applicable, and the Sub-Advisor hereby agrees that it shall not consult
with any other Sub-Advisor to the Portfolio or the Trust with respect to transactions in securities for the
Portfolio's portfolio or any other transactions of Portfolio assets. The Sub-Advisor further acknowledges
that it shall not consult with any other sub-advisor of the Portfolio that is a principal underwriter or an
affiliated person of a principal underwriter with respect to transactions in securities for the Portfolio's
portfolio or any other transactions of Portfolio assets, and that its investment advisory responsibilities as
set forth in this Agreement are limited to such discrete portion of the Portfolio's portfolio as determined by
the Investment Manager.
2. Delivery of Documents to Sub-Advisor. The Investment Manager has furnished the Sub-Advisor with copies
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of each of the following documents:
(a) The Declaration of Trust of the Trust as in effect on the date hereof,
(b) The By-laws of the Trust in effect on the date hereof,
(c) The resolutions of the Trustees approving the engagement of the Sub-Advisor as
Sub-Advisor to the Investment Manager and approving the form of this agreement;
(d), The resolutions of the Trustees selecting the Investment Manager as Investment Manager
to the Trust and approving the form of the Investment Manager's Management Agreement with the Trust;
(e) The Investment Manager's Management Agreement with the Trust;
(f) The Code of Ethics of the Trust and of the Investment Manager as currently in effect;
and
(g) A list of companies the securities of which are not to be bought or sold for the
Portfolio because of nonpublic information regarding such companies that is available to Investment Manager or
the Trust, or which, in the sole opinion of the Investment Manager, it believes such non-public information
would be deemed to be available to Investment Manager and/or the Trust.
The Investment Manager will furnish the Sub-Advisor from time to time with copies, properly.
certified or otherwise authenticated of all amendments of or supplements to the foregoing, if any. Such
amendments or supplements as to items (a) through (f) above will be provided within 30 days of the time such
materials became available to the Investment Manager. Such amendments or supplements as to item (g) above
will be provided not later than the end of the business day next following the date such amendments or
supplements become known to the Investment Manager.
3. Delivery of Documents to the Investment Manager. The Sub-Advisor has furnished the Investment Manager
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with copies of each of the following documents:
(a) The Sub-Advisor's Form ADV as filed with the Securities and Exchange Commission;
(b) The Sub-Advisor's most recent balance sheet;
(c) Separate lists of persons who the Sub-Advisor wishes to have authorized to give
written and/or oral instructions to Custodians of Trust assets for the Portfolio;
(d) The Code of Ethics of the Sub-Advisor as currently in effect.
The Sub-Advisor will furnish the Investment Manager from time to time with copies, properly certified or
otherwise authenticated, of all amendments of or supplements to the foregoing, if any. Such amendments or
supplements as to items (a) through (d) above will be provided within 30 days of the time such materials
became available to the Sub-Advisor.
4. Investment Advisory Facilities. The Sub-Advisor, at its expense, will furnish all necessary investment
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facilities, including salaries of personnel required for it to execute its duties faithfully.
5. Execution of Portfolio Transactions Sub-Advisor is responsible for decisions to buy and sell securities
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for the Portfolio, broker-dealer selection, and negotiation of its brokerage commission rates. Sub-Advisor
shall determine the securities to be purchased or sold by the Portfolio pursuant to its determinations with or
through such persons, brokers or dealers, in conformity with the policy with respect to brokerage as set forth
in the Trust's Prospectus and Statement of Additional Information, or as the Board of Trustees may determine
from time to time. Generally, Sub-Advisors primary consideration in placing Portfolio securities transactions
with broker-dealers for execution is to obtain and maintain the availability of best execution at the best net
price and in the most effective manner possible. The Sub-Advisor may consider sale of shares of the
Portfolio, as well as recommendations of the Investment Manager, subject to the requirements of best net price
and most favorable execution.
Consistent with this policy, the Sub-Advisor will take the following into consideration: the best net
price available, the reliability, integrity and financial condition of the broker-dealer the size of and
difficulty in executing the order, and the value of the expected contribution of the broker-dealer to the
investment performance of the Portfolio on a continual basis. Accordingly, the cost of the brokerage
commissions to the Portfolio may be greater than that available from other brokers if the difference is
reasonably justified by other aspects of the portfolio execution services offered. Subject to such policies
and procedures as the Board of Trustees of the Trust may determine, the Sub-Advisor shall not be deemed to
have acted unlawfully or to have breached any duty solely by reason of its having caused the Portfolio to pay
a broker dealer that provides such services to the Sub-Advisor for the Portfolio's use an amount of commission
for effecting a portfolio investment transaction in excess of the amount of commission another broker-dealer
would have charged for effecting that on, if the Sub-Advisor determines in good faith that such amount of
commission was reasonable in relation to the value of the research services provided by such broker, viewed in
terms of either that particular transaction or the Sub-Advisors ongoing responsibilities with respect to the
Portfolio. The Sub-Advisor is further authorized to allocate the orders placed by it on behalf of the
Portfolio to such broker-dealers who also provide research or statistical material, or other services to the
Portfolio or the Sub-Advisor. Such allocation shall be in such amounts and proposals as the Sub-Advisor shall
determine and the Sub-Advisor will report on said allocations to the Investment Manager as requested by the
Investment Manager and, in any event, at least once each calendar year if no specific request is made,
indicating the brokers to whom such allocations have been made and the basis therefor.
6. Reports by Sub-Advisor. The Sub-Advisor shall furnish the Investment Manager monthly, quarterly and
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annual reports concerning transactions and performance of the Portfolio, including information required in the
Trust's Registration, in such form as may be mutually agreed, to review the Portfolio and discuss the
management of it. The Sub-Advisor shall permit the financial statements, books and with respect to the
Portfolio to be inspected and audited by the Trust, the Investment Manager or their agents at all reasonable
times during normal business hours. The Sub-Advisor shall immediately notify and forward to both Investment
Manager and legal counsel for the Trust any legal process served upon it on behalf of the Investment Manager
or the Trust The Sub-Advisor shall promptly notify the Investment Manager of any changes in any information
required to be disclosed in the Trust's Registration Statement
7. Compensation of Sub-Advisor. The amount of the compensation to the Sub-Advisor is computed at an annual
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rate. The fee is payable monthly in arrears, based on the average daily net assets of the Portfolio for each
month, at the annual rates shown below.
For all services rendered, the Investment Manager will calculate and pay the Sub-Advisor at the annual
rate of: .30 of 1% of' the portion of the net assets of the Portfolio not in excess of $150 million; and .25
of 1% of the portion over $150 million.
In computing the fee to be paid to the Sub-Advisor, the net asset value of the Portfolio shall be valued
as set forth in the then current registration statement of the Trust. If this agreement is terminated, the
payment shall be prorated to the date of termination.
Investment Manager and Sub-Advisor shall not be considered as partners or participants in a joint
venture. Sub-Advisor will pay its own owners for the services to be provided pursuant to this Agreement and
will not be obligated to pay any expenses of Investment Manager of the Trust. Except as otherwise provided
herein, Investment Manager and the Trust will not be obligated to pay any expenses of Sub-Advisor.
8. Confidential Treatment It is understood that any information or recommendation supplied by the
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Sub-Advisor in connection with the performance of its obligations hereunder is to be regarded as confidential
and for use only by the Investment Manager, the Trust or such persons the Investment Manager may designate in
connection with the Portfolio. It is also understood that any information supplied to Sub-Advisor in
connection with the performance of its obligations hereunder, particularly, but not limited to, any list of
securities which, on a temporary basis, may not be bought or sold for the Portfolio, is to be regarded as
confidential and for use only by the Sub-Advisor in connection with its obligation to provide investment
advice and other services to the Portfolio.
9. Representations of the Parties. Each party to this Agreement hereby acknowledges that it is registered
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as an investment advisor under the Investment Advisers Act of 1940, it will use its reasonable best efforts to
maintain such registration, and it will promptly notify the other if it ceases to be so registered, if its
registration is suspended for any reason, or if it is notified by any regulatory organization or court of
competent jurisdiction that it should show cause why its registration should not be suspended or terminated.
10. Liability, The Sub-Advisor shall use its best efforts and good faith in the performance of its services
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hereunder. However, so long as the Sub-Advisor has acted in good faith and has used its best efforts, then in
the absence of willful misfeasance, bad faith, gross negligence or reckless disregard for its obligations
hereunder, it shall not be liable to the Trust or its shareholders or to the Investment Manager for any act or
omission resulting in any loss suffered in any portfolio of the Trust in connection with any service to be
provided herein. The Federal laws impose responsibilities under certain circumstances on persons who act in
good faith, and therefore, nothing herein shall in any way constitute a waiver of limitation of any rights
which the Trust or Investment Manager may have under applicable law.
The Investment Manager agrees that the Sub-Advisor shall not be liable for any failure to recommend
the purchase or sale of any security on behalf of the Portfolio on the basis of any information which might,
in Sub-Advisor's opinion, constitute a violation of any federal or state laws, rules or regulations.
11. Other Activities of Sub-Advisor. Investment Manager agrees that the Sub-Advisor and any of its partners
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or employees, and persons affiliated with it or with any such partner or employee may render investment
management or advisory services to other investors and institutions, and such investors and institutions may
own, purchase or sell, securities or other interests in property the same as or similar to those which are
selected for purchase, holding or sale for the Portfolio, and the Sub-Advisor shall be in all free to take
action with respect to investments in securities or other interests in property the same as or similar to
those selected for purchase, holding or sale for the Portfolio. Purchases and sales of individual securities
on behalf of the Portfolio and other portfolios of the Trust or accounts for other investors or institutions,
will be made on a basis that is equitable to all portfolios of the Trust and other accounts. Nothing in this
agreement shall impose upon the Sub-Advisor any obligation to purchase or sell or recommend for purchase or
sale, for the Portfolio any security which it, its partners, affiliates or employees may purchase or sell for
the Sub-Advisor or such partner's, affiliate's or employee's own accounts or for the account of any other
client, advisory or otherwise.
12. Continuance and Termination. This Agreement shall remain in full force and effect for one year from the
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date hereof, and is renewable annually thereafter by specific approval of the Board of Trustees of the Trust
or by vote of a majority of the outstanding voting securities of the Portfolio. Any such renewal shall be
approved by the vote of a majority of the Trustees who are not interested persons under the ICA, cast in
person at a meeting called for the purpose of voting on such renewal. This agreement may be terminated
without penalty at any time by the Investment Manager or Sub-Advisor upon 60 days written notice, and will
automatically terminate in the event of its assignment by either party to this Agreement as defined in the
ICA, or (provided Sub-Advisor has received prior written notice thereof) upon termination Of the Investment
Manager's Management Agreement with the Trust.
13. Notification. Sub-Advisor will notify the Investment Manager within a reasonable time of any change in
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the personnel of the Sub-Advisor with responsibility for making investment decisions in relation to the
Portfolio or who have been audited to give instructions to a Custodian of the Trust.
Any notice, instruction or other communication required or contemplated by this agreement shall be in
writing. All such communications shall be addressed to the recipient at the address set forth below, provided
that either party may, by notice, designate a different address for such party.
Investment Manager: American Skandia Investment Services, Incorporated
Gateway Center Three
000 Xxxxxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxx
Executive Vice President
Sub-Advisor: Pacific Investment Management Company LLC
000 Xxxxxxx Xxxxxx Xxxxx
Xxxxx 000
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
Attention: General Counsel
Trust: American Skandia Trust
Xxx Xxxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxxxxx 00000
Attention: Law Department
14. Indemnification. The Sub-Advisor agrees to indemnify and hold harmless Investment Manager, any
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affiliated person within the meaning of Section 2(a)(3) of the 1940 Act ("Affiliated Person") of Investment
Manager and each person, if any who, within the meaning of Section 15 of the Securities Act of 1933 (the "1933
Act"), controls ("controlling person") Investment Manager, against any and all losses, claims, damages,
liabilities or litigation (including reasonable legal and other expenses), to which Investment Manager or such
affiliated person or controlling person may become subject under the 1933 Act, the 1940 Act, the Investment
Advisers Act of 1940 ("Advisers Act"), under any other statute, at common law or otherwise arising out of
Sub-Advisor's responsibilities as portfolio manager of the Portfolio (1) to the extent of and as a result of
the willful misconduct, bad faith, or gross negligence by Sub-Advisor, any of Sub-Advisor's employees or
representatives or any affiliate of or any person acting on behalf of Sub-Advisor, or (2) as a result of any
untrue statement or alleged untrue statement of a material fact contained in a prospectus or statement of
additional information covering the Portfolio or the Trust or any amendment thereof or any supplement thereto
or the omission or alleged omission to state therein a material fact required to be stated therein or
necessary to make the statement therein not misleading, if such a statement or omission was made in reliance
upon written information furnished to Investment Manager, the Trust or any affiliated person of the Investment
Manager or the Trust or upon verbal information confirmed by the Sub-Advisor in writing or (3) to the extent
of, and as a result of, the failure of the Sub-Advisor to execute, or cause to be executed, Portfolio
transactions according to the standards and requirements of the 1940 Act; provided, however, that in no case
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is Sub-Advisor's indemnity in favor of Investment Manager or any affiliated person or controlling person of
Investment Manager deemed to protect such person against any liability to which any such person would
otherwise be subject by reason of willful misconduct bad faith or gross negligence in the performance of its
duties or by reason of its reckless disregard of its obligations and duties under this Agreement.
The Investment Manager agrees to indemnify and hold harmless Sub-Advisor, any affiliated person within
the meaning of Section 2(a)(3) of the 1940 Act ("Affiliated Person") of Sub-Advisor and each person, if any
who, within the meaning of Section 15 of the Securities Act of 1933 (the "1933 Act"), controls ("controlling
person") Sub-Advisor, against any and all losses, claims, damages, liabilities or litigation (including
reasonable legal and other expenses), to which Sub-Advisor or such Affiliated Person or controlling person may
become subject under the 1933 Act, the 1940 Act the Investment Adviser's Act of 1940 ('Advisees Act"), under
any other statute, at common law or otherwise, arising out of Investment Managers responsibilities as
Investment Manager of the Portfolio (1) to the extent of and as a result of the willful misconduct, bad faith,
or gross negligence by Investment Manager, any of Investment Manager's employees or representatives or any of
or any person acting on behalf of Investment Manager, or (2) as a result of any untrue statement or alleged
untrue statement of a material fact contained in a prospectus or statement of additional information covering
the Portfolio or the Trust or any amendment thereof or any supplement thereto or the omission or alleged
omission to state therein a material fact required to be stated therein or necessary to make the statement
therein not misleading, if such a statement or omission was made by the Trust other than in reliance upon
written information furnished by Sub-Advisor, or any Affiliated Person of the Sub-Advisor or other than upon
verbal information confirmed by the Sub-Advisor in writing, provided, however, that in no case is Investment
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Manager's indemnity in favor of Sub-Advisor or any affiliated person or controlling person of Sub-Advisor
deemed to protect such person against any liability to which any such person would otherwise be subject by
reason of willful misconduct, bad faith or gross negligence in the performance of its duties or by reason of
its reckless disregard of its obligations and duties under this Agreement.
15. Warranty. The Investment Manager represents and warrants that (i) the appointment of the Sub-Advisor by
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the Investment Manager has been duly authorized and (ii) it has acted and will continue to act in connection
with the transactions contemplated hereby, and the transactions contemplated hereby are, in conformity with
the Investment Company Act of 1940, the Trusts governing documents and other applicable laws.
The Sub-Advisor represents and warrants that it is authorized to perform the services contemplated to be
performed hereunder.
16. Governing Law. This agreement is made under, and shall be governed by and construed in accordance with,
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the laws of the State of Connecticut.
The effective date of this agreement is May 1, 2003.
FOR THE INVESTMENT MANAGER: FOR THE SUB-ADVISER:
___________________________________ ___________________________________
Xxxxxx X. Xxxxx
Executive Vice President
Date: ____________________________ Date: ____________________________
Attest: ____________________________ Attest: ____________________________
