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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 GAMCO Investors, Inc. (the "Sub-Advisor").
WHEREAS American Skandia Trust (the "Trust") is a Massachusetts business trust organized with one or more series
of shares, and is registered as an investment company under the Investment Company Act of 1940 (the "ICA"); and
WHEREAS the trustees of the Trust (the "Trustees") have engaged the Investment Manager to act as investment
manager for the AST Gabelli Small-Cap Value 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 restrictions of the Portfolio as set forth in
the Prospectus and Statement of Additional Information of the Trust and in accordance with the Trust's
Declaration of Trust and By-Laws. Representatives of Sub-Advisor will be available as reasonably requested 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 supplements thereto, and any Proxy Statement relating to the approval of this Agreement, as filed
with the Securities and Exchange Commission and represents and warrants that information relating directly or
indirectly to the Sub-Advisor, supplied or to be supplied by Sub-Advisor for inclusion or incorporation by
reference in such Registration Statement or Proxy Statement, contained or contains no untrue statement of any
material fact and did not or 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 ICA, and under the laws of all jurisdictions in
which the conduct of its business hereunder requires such registration.
The Investment Manager represents that it reviewed the Registration Statement of the Trust, including
any amendments or supplements thereto and any Proxy Statement relating to the approval of this Agreement, as
filed with the Securities and Exchange Commission and represents and warrants that with respect to disclosure
about the manager or information relating directly or indirectly to the Investment Manager, 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 Investment Manager further represents and warrants that it is
an investment adviser registered under the ICA 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 and use its reasonable
efforts to enable the Portfolio to conform to the requirements of the ICA and subchapter M (including Section
851(b)(1), (2) and (3)) of the Internal Revenue Code, applicable to the Portfolio, and the regulations
promulgated thereunder. Sub-Advisor shall comply with and use its reasonable efforts to enable the Portfolio to
conform to the requirements of (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 services, 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 non-public information regarding such companies that is available to Investment
Manager or the Trust, or which, in the sole opinion of the Investment Manager, it believes such
non-public information would be deemed to be available to Investment Manager and/or the Trust.
The Investment Manager will furnish the Sub-Advisor from time to time with copies, properly certified or
otherwise authenticated, of all amendments of or supplements to the foregoing, if any. Such amendments or
supplements as to items (a) through (f) above will be provided within 30 days of the time such materials became
available to the Investment Manager. Such amendments or supplements as to item (g) above will be provided not
later than the end of the business day next following the date such amendments or supplements become known to the
Investment Manager.
3. Delivery of Documents to the Investment Manager. The Sub-Advisor has furnished the Investment Manager
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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 year-end 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 material 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
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securities for the Portfolio, broker-dealer selection, and negotiation of its brokerage commission rates.
Sub-Advisor shall determine the securities to be purchased or sold by the Portfolio pursuant to its
determinations with or through such persons, brokers or dealers, in conformity with the policy with respect to
brokerage as set forth in the Trust's Prospectus and Statement of Additional Information, or as the Board of
Trustees may determine from time to time. Generally, Sub-Advisor's primary consideration in placing Portfolio
securities transactions with broker-dealers for execution is to obtain and maintain the availability of best
execution at the best net price and in the most effective manner possible. The Sub-Advisor may consider sale of
the shares of the Portfolio, as well as recommendations of the Investment Manager, subject to the requirements of
best net price and most favorable execution.
Consistent with this policy, the Sub-Advisor will take the following into consideration: the best net
price available; the reliability, integrity and financial condition of the broker-dealer; the size of and
difficulty in executing the order; and the value of the expected contribution of the broker-dealer to the
investment performance of the Portfolio on a continuing basis. Accordingly, the cost of the brokerage
commissions to the Portfolio may be greater than that available from other brokers if the difference is
reasonably justified by other aspects of the portfolio execution services offered. Subject to such policies and
procedures as the Board of Trustees of the Trust may determine, the Sub-Advisor shall have discretion to effect
investment transactions for the Portfolio through broker-dealers (including, to the extent permissible under
applicable law, broker-dealers affiliated with the Sub-Advisor) qualified to obtain best execution of such
transactions who provide brokerage and/or research services, as such services are defined in section 28(e) of the
Securities Exchange Act of 1934, as amended, and to cause the Portfolio to pay any such broker-dealer an amount
of commission for effecting a portfolio investment transaction in excess of the amount of commission another
broker-dealer would have charged for effecting that transaction, if the Sub-Advisor determines in good faith that
such amount of commission was reasonable in relation to the value of the research services provided by such
broker, viewed in terms of either that particular transaction or the Sub-Advisor's ongoing responsibilities with
respect to the Portfolio. The Sub-Advisor is further authorized to allocate the orders placed by it on behalf of
the Portfolio to such broker-dealers who also provide research or statistical material, or other services to the
Portfolio or the Sub-Advisor. Such allocation shall be in such amounts and proportions as the Sub-Advisor shall
determine and the Sub-Advisor will report on said allocations to the Investment Manager regularly as requested by
the Investment Manager and, in any event, at least once each calendar year if no specific request is made,
indicating the brokers to whom such allocations have been made and the basis therefor.
6. Reports by Sub-Advisor. The Sub-Advisor shall furnish the Investment Manager monthly, quarterly and
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annual reports concerning transactions and performance of the Portfolio, including information required in the
Trust's Registration Statement, in such form as may be mutually agreed, to review the Portfolio and discuss the
management of it. The Sub-Advisor shall permit the financial statements, books and records with respect to the
Portfolio to be inspected and audited by the Trust, the Investment Manager or their agents at all reasonable
times during normal business hours. The Sub-Advisor shall immediately notify and forward to 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 an annual rate
equal to the following percentages of the combined average daily net assets of the Portfolio and the series of
American Skandia Advisor Funds, Inc. that is managed by the Sub-Advisor and identified by the Sub-advisor and the
Investment Manager as being similar to the Portfolio: .40% of the portion of the combined average daily net
assets not in excess of $1 billion; plus .30% of the portion in excess of $1 billion.
In computing the fee to be paid to the Sub-Advisor, the net asset value of the Portfolio shall be valued
as set forth in the then current registration statement of the Trust. If this agreement is terminated, the
payment shall be prorated to the date of termination.
Investment Manager and Sub-Advisor shall not be considered as partners or participants in a joint
venture. Sub-Advisor will pay its own expenses for the services to be provided pursuant to this Agreement and
will not be obligated to pay any expenses of Investment Manager or the Trust. Except as otherwise provided
herein, Investment Manager and the Trust will not be obligated to pay any expenses of Sub-Advisor.
8. Confidential Treatment. It is understood that any information or recommendation supplied by the
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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.
The Investment Manager hereby represents that it has provided to the Sub-Advisor a true, correct and
complete copy of the Registration Statement of the Trust as in effect on the date of this Agreement, including
any amendments and supplements thereto, and agrees to provide to Sub-Advisor true, correct and complete copies of
any amendments and supplements thereto subsequent to the date of this Agreement.
The Sub-Advisor represents, and the Investment Manager hereby agrees, that the word "Gabelli" is the
property of the Sub-Advisor for copyright and other purposes. The Investment Manager further agrees that the
word "Gabelli" in the name of the Fund is derived from the name of Xxxxx X. Xxxxxxx and such name may freely be
used by the Sub-Advisor for other investment companies, entities or products. The Investment Manager further
agrees that, in the event that the Sub-Advisor shall cease to provide sub-advisory services to the Portfolio
under this Agreement or any successor agreement, the Investment Manager shall use its best efforts to cause the
Trust to change the name of the Portfolio to one that does not include the word "Gabelli." Sub-Advisor
acknowledges and agrees that it will not use any designation comprised in whole or in part of the names "American
Skandia Trust" or "American Skandia Investment Services, Incorporated" on its own behalf, or in relation to any
investment company for which Sub-Advisor or its successors and any subsidiary or affiliate thereof acts as
investment adviser, without the express written permission of the Trust and the Investment Manager, respectively,
except that Sub-Advisor may state that it acts as a sub-advisor to the Trust and the Investment Manager.
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 respects free to take action
with respect to investments in securities or other interests in property the same as or similar to those selected
for purchase, holding or sale for the Portfolio. Purchases and sales of individual securities on behalf of the
Portfolio and other portfolios of the Trust or accounts for other investors or institutions will be made on a
basis that is equitable to all portfolios of the Trust and other accounts. Nothing in this agreement shall
impose upon the Sub-Advisor any obligation to purchase or sell or recommend for purchase or sale, for the
Portfolio any security which it, its partners, affiliates or employees may purchase or sell for the Sub-Advisor
or such partner's, affiliate's or employee's own accounts or for the account of any other client, advisory or
otherwise.
12. Continuance and Termination. This Agreement shall remain in full force and effect for one year from the
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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 authorized to give instructions to a Custodian of the Trust.
Any notice, instruction or other communication required or contemplated by this agreement shall be in
writing. All such communications shall be addressed to the recipient at the address set forth below, provided
that either party may, by notice, designate a different address for such party.
Investment Manager: American Skandia Investment Services, Incorporated
Gateway Center Three
000 Xxxxxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxx
Executive Vice President
Sub-Advisor: GAMCO Investors, Inc.
Xxx Xxxxxxxxx Xxxxxx
Xxx, Xxx Xxxx 00000-0000
Attention: Xxxxxxx X. Xxxxxxxx
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 information relating directly or
indirectly to the Sub-Advisor supplied or to be supplied by Sub-Advisor for inclusion or incorporation by
reference 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, 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 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 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 Advisers Act, under any other statute, at common law or otherwise, arising out of Investment Manager's
responsibilities as investment manager of the Portfolio (1) to the extent of and as a result of the willful
misconduct, bad faith, or gross negligence by Investment Manager, any of Investment Manager's employees or
representatives or any affiliate of or any person acting on behalf of Investment Manager, or (2) as a result of
any untrue statement or alleged untrue statement of a material fact contained in a prospectus or statement of
additional information covering the Portfolio or the Trust or any amendment thereof or any supplement thereto or
the omission or alleged omission to state therein 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 information relating directly or indirectly to the Sub-Advisor supplied or to be supplied by
Sub-Advisor for inclusion or incorporation by reference in such prospectus or statement of additional
information; provided, however, that in no case is Investment Manager's indemnity in favor of Sub-Advisor or any
affiliated person or controlling person of Sub-Advisor deemed to protect such person against any liability to
which any such person would otherwise be subject by reason of willful misconduct, bad faith or gross negligence
in the performance of its duties or by reason of its reckless disregard of its obligations and duties under this
Agreement.
15. Warranty. The Investment Manager represents and warrants that (i) the appointment of the Sub-Advisor by
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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 Trust's governing documents and other applicable laws.
The Sub-Advisor represents and warrants that it is authorized to perform the services contemplated to be
performed hereunder.
16. Amendment. This Agreement may be amended by mutual written consent of the parties, subject to the
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provisions of the ICA.
17. 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-ADVISOR:
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Xxxxxx X. Xxxxx
Executive Vice President
Date: _________________________ Date: __________________________
Attest: _________________________ Attest: __________________________
