File No. 333-108370
As filed on October 29, 2003
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM N-14
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 |X|
Pre-Effective Amendment No. 1
Post-Effective Amendment No. |_|
(Check appropriate box or boxes)
American Skandia Advisor Funds
(Exact Name of Registrant as Specified in Charter)
(203) 926-1888
(Area Code and Telephone Number)
One Corporate Drive
Shelton, CT 06484
Address of Principal Executive Offices:
(Number, Street, City, State, Zip Code)
Edward P. Macdonald, Esq.
Assistant Secretary, American Skandia Advisor Funds
One Corporate Drive
Shelton, CT 06484
Name and Address of Agent for Service:
(Number and Street) (City) (State) (Zip Code)
Copies to:
Robert K. Fulton, Esquire
Stradley, Ronon, Stevens & Young, LLP
2600 One Commerce Square
Philadelphia, PA 19103-7098
Approximate Date of Proposed Public Offering: As soon as
practicable after this Registration Statement becomes effective
under the Securities Act of 1933, as amended.
Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective
date until the registrant shall file a further amendment which specifically states that this Registration Statement shall
thereafter become effective in accordance with the provisions of Section 8(a) of the Securities Act of 1933 or until the
Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may
determine.
Title of the securities being registered: Shares of common stock of the ASAF Sanford Bernstein Managed Index 500
Fund of American Skandia Advisor Funds. No filing fee is due because Registrant is relying on Section 24(f) of the
Investment Company Act of 1940, as amended.
AMERICAN SKANDIA ADVISOR FUNDS, INC.
ASAF ALLIANCE/BERNSTEIN GROWTH + VALUE FUND
One Corporate Drive
P.O. Box 883
Shelton, Connecticut 06484
IMPORTANT PROXY MATERIALS
PLEASE VOTE NOW
Dear Shareholder: October 10, 2003
I am writing to ask you to vote on an important proposal whereby the assets of the ASAF Alliance/Bernstein Growth + Value
Fund (the "Growth + Value Fund") would be acquired by the ASAF Sanford Bernstein Managed Index 500 Fund (the "Managed
Index Fund" and together with the Growth + Value Fund, the "Funds"). The proposed acquisition is referred to as a
merger. The Funds are each a series of American Skandia Advisor Funds, Inc. ("ASAF"). A shareholder meeting for the
Growth + Value Fund is scheduled for November 21, 2003. Only shareholders of the Growth + Value Fund will vote on the
acquisition of the Growth + Value Fund's assets by the Managed Index Fund.
This package contains information about the proposal and includes materials you will need to vote. The Board of Directors
of ASAF has reviewed the proposal and recommended that it be presented to shareholders of the Growth + Value Fund for
their consideration. Although the Directors have determined that the proposal is in the best interests of shareholders,
the final decision is up to you.
If approved, the proposed merger would give you the opportunity to participate in a larger fund with similar investment
policies. In addition, shareholders are expected to realize a reduction in both the net and gross annual operating
expenses paid on their investment in the combined fund. The accompanying proxy statement and prospectus includes a
detailed description of the proposal. Please read the enclosed materials carefully and cast your vote. Remember, your
vote is extremely important, no matter how large or small your holdings. By voting now, you can help avoid additional
costs that would be incurred with follow-up letters and calls.
To vote, you may use any of the following methods:
o By Mail. Please complete, date and sign your proxy card before mailing it in the enclosed postage paid envelope. Votes
must be received prior to November 21, 2003.
o By Internet. Have your proxy card available. Go to the web site indicated on your proxy card. Enter your 12-digit
control number from your proxy card. Follow the instructions found on the web site. Votes must be entered prior to 4
p.m. on November 20, 2003.
o By Telephone. Have your proxy card available. Call the toll-free number on your proxy card. Enter your 12-digit
control number from your proxy card. Follow the instructions given. Votes must be entered prior to 4 p.m. on November
20, 2003.
If you have any questions before you vote, please call us at 1-800-SKANDIA. We are glad to help you understand the
proposal and assist you in voting. Thank you for your participation.
/s/Judy Rice
Judy A. Rice
President
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AMERICAN SKANDIA ADVISOR FUNDS, INC.
ASAF ALLIANCE/BERNSTEIN GROWTH + VALUE FUND
One Corporate Drive
P.O. Box 883
Shelton, Connecticut 06484
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
To our Shareholders:
Notice is hereby given that a Special Meeting of Shareholders (the Meeting) of the ASAF Alliance/Bernstein Growth + Value
Fund (the "Growth + Value Fund") will be held at 100 Mulberry Street, Gateway Center Three, 14th Floor, Newark, New
Jersey 07102, on November 21, 2003, at 11:00 a.m. Eastern Standard Time, for the following purposes:
1. For shareholders of the Growth + Value Fund, to approve or disapprove a Plan of Reorganization under which the Growth
+ Value Fund will transfer all of its assets to, and all of its liabilities will be assumed by, the ASAF Sanford
Bernstein Managed Index 500 Fund (the "Managed Index Fund"). In connection with this proposed transfer, each whole and
fractional share of each class of the Growth + Value Fund shall be exchanged for whole and fractional shares of equal net
asset value of the same class of the Managed Index Fund and outstanding shares of the Growth + Value Fund will be
cancelled.
2. To transact such other business as may properly come before the Meeting or any adjournments of the Meeting.
The Board of Directors of American Skandia Advisor Funds, Inc., on behalf of the Growth + Value Fund, has fixed the close
of business on September 19, 2003 as the record date for the determination of the shareholders of the Growth + Value
Fund, as applicable, entitled to notice of, and to vote at, the Meeting and any adjournments of the Meeting.
/s/Edward Macdonald
Edward P. Macdonald
Assistant Secretary
Dated: October 10, 2003
prospectus/proxy statement
TABLE OF CONTENTS
Page
Cover Page................................................................................................. Cover
SUMMARY............................................................................................................................2
The Proposal....................................................................................................................2
Shareholder voting..............................................................................................................2
COMPARISONS OF IMPORTANT FEATURES OF THE FUNDS.....................................................................................2
The investment objectives and policies of the Funds.............................................................................2
Diversification.................................................................................................................3
Borrowing, Issuing Senior Securities and Pledging Assets........................................................................3
Lending.........................................................................................................................3
Illiquid Securities.............................................................................................................3
Temporary Defensive Investments.................................................................................................3
Derivative Strategies...........................................................................................................4
Investment Restrictions.........................................................................................................4
Federal Income Tax Considerations...............................................................................................4
Risks of investing in the Funds.................................................................................................4
Management of the Company and the Funds.........................................................................................4
Fee Arrangements................................................................................................................5
Distribution Plan...............................................................................................................6
Valuation.......................................................................................................................6
Purchases, Redemptions, Exchanges and Distributions.............................................................................6
Fees and expenses...............................................................................................................7
Expense Examples...............................................................................................................10
Performance....................................................................................................................12
REASONS FOR THE TRANSACTION.......................................................................................................14
INFORMATION ABOUT THE TRANSACTION.................................................................................................14
Closing of the Transaction.....................................................................................................14
Expenses of the Transaction....................................................................................................15
Tax Consequences of the Transaction............................................................................................15
Characteristics of the Managed Index Fund shares...............................................................................16
Capitalization of the Funds and Capitalization after the Transaction...........................................................16
VOTING INFORMATION................................................................................................................17
How to vote....................................................................................................................18
Solicitation of voting instructions............................................................................................18
ADDITIONAL INFORMATION ABOUT THE COMPANY AND THE FUNDS............................................................................18
PRINCIPAL HOLDERS OF SHARES.......................................................................................................19
EXHIBITS TO PROSPECTUS/PROXY STATEMENT............................................................................................20
EXHIBIT A.......................................................................................................................1
Plan of Reorganization.......................................................................................................1
EXHIBIT B.......................................................................................................................1
Prospectus dated MARCH 1, 2003...............................................................................................1
EXHIBIT C.......................................................................................................................2
ANNUAL REPORT dated OCTOBER 31, 2002.........................................................................................2
EXHIBIT D.......................................................................................................................3
SUPPLEMENTS DATED MAY 16, 2003, AUGUST 1, 2003, SEPTEMBER 16, 2003 AND OCTOBER 2, 2003.......................................3
AMERICAN SKANDIA ADVISOR FUNDS, INC.
One Corporate Drive
P.O. Box 883
Shelton, Connecticut 06484
PROSPECTUS/PROXY STATEMENT
Dated October 10, 2003
Acquisition of the Assets of the ASAF Alliance/Bernstein Growth + Value Fund
By and in exchange for shares of the ASAF Sanford Bernstein Managed Index 500 Fund
This Prospectus/Proxy Statement is furnished in connection with a Special Meeting (the "Meeting") of shareholders
the ASAF Alliance/Bernstein Growth + Value Fund (the "Growth + Value Fund") of American Skandia Advisor Funds, Inc. (the
"Company") called by the Company to approve or disapprove a Plan of Reorganization (the "Plan"). If shareholders of the
Growth + Value Fund vote to approve the Plan, you will receive shares of the ASAF Sanford Bernstein Managed Index 500
Fund (the "Managed Index Fund" and, together with the Growth + Value Fund, the "Funds") of the Company equal in value to
your investment in shares of the Growth + Value Fund as provided in the Plan and described at greater length below. The
Growth + Value Fund will then be liquidated and dissolved.
The Meeting will be held at 100 Mulberry Street, Gateway Center Three, 14th Floor, Newark, New Jersey 07102 on
November 21, 2003 at 11:00 a.m. Eastern Standard Time. The Board of Directors of the Company is soliciting these proxies
on behalf of the Growth + Value Fund. This Prospectus/Proxy Statement will first be sent to shareholders on or about
October 20, 2003.
The investment objective of the Managed Index Fund is to outperform the Standard & Poor's 500 Composite Stock
Price Index while the investment objective of the Growth + Value Fund is to seek capital growth. However, both Funds
invest primarily in large-cap growth and large-cap value equity securities.
This Prospectus/Proxy Statement gives the information about the proposed reorganization and issuance of shares of
the Managed Index Fund that you should know before investing. You should retain it for future reference. Additional
information about the Managed Index Fund and the proposed reorganization has been filed with the Securities and Exchange
Commission ("SEC") and can be found in the following documents:
|_| The Prospectus for the Funds dated March 1, 2003 is enclosed with and considered a part of this Prospectus/Proxy
Statement.
|_| A Statement of Additional Information (SAI) relating to this Prospectus/Proxy Statement dated March 1, 2003 has
been filed with the SEC and is incorporated by reference into this Prospectus/Proxy Statement.
You may request a free copy of the SAI relating to this Prospectus/Proxy Statement or other documents related to
the Company without charge by calling 1-800-752-6342 or by writing to the Company at the above address.
The SEC has not approved or disapproved these securities or passed upon the adequacy of this Prospectus/Proxy
Statement. Any representation to the contrary is a criminal offense.
Mutual fund shares are not deposits or obligations of, or guaranteed or endorsed by, any bank, and are not
insured by the Federal Deposit Insurance Corporation or any other U.S. government agency. Mutual fund shares involve
investment risks, including the possible loss of principal.
SUMMARY
This is only a summary of certain information contained in this Prospectus/Proxy Statement. You should read the
more complete information in the rest of this Prospectus/Proxy Statement, including the Plan (attached as Exhibit A) and
the Prospectus for the Funds (enclosed as Exhibit B).
The Proposal
You are being asked to consider and approve a Plan of Reorganization that will have the effect of combining the
Growth + Value Fund and the Managed Index Fund of the Company into a single Fund. If shareholders of the Growth + Value
Fund vote to approve the Plan, the assets of the Growth + Value Fund will be transferred to the Managed Index Fund in
exchange for a then equal value of shares of the Managed Index Fund. Shareholders will have their shares of the Growth +
Value Fund exchanged for the Managed Index Fund shares of equal dollar value based upon the values of the shares at the
time the Growth + Value Fund assets are transferred to the Managed Index Fund. The Growth + Value Fund will be
liquidated and dissolved. The proposed reorganization is referred to in this Prospectus/Proxy Statement as the
"Transaction." As a result of the Transaction, you will cease to be a shareholder of the Growth + Value Fund and will
become a shareholder of the Managed Index Fund.
For the reasons set forth in the "Reasons for the Transaction" section, the Board of Directors of the Company has
determined that the Transaction is in the best interests of the shareholders of the Growth + Value Fund and the Managed
Index Fund, and also concluded that no dilution in value would result to the shareholders of either Fund as a result of
the Transaction.
The Board of Directors of the Company, on behalf of both the Growth + Value Fund and the Managed Index Fund, has approved
the Plan and unanimously recommends that you vote to approve the Plan.
Shareholder voting
Shareholders who own shares of the Growth + Value Fund at the close of business on September 19, 2003 (the
"Record Date") will be entitled to vote at the Meeting, and will be entitled to one vote for each full share and a
fractional vote for each fractional share that they hold. The affirmative vote of the holders of a majority of the total
number of shares of capital stock of the Growth + Value Fund outstanding and entitled to vote is necessary to approve the
Transaction.
Please vote your shares as soon as you receive this Prospectus/Proxy Statement. You may vote by completing and
signing the enclosed ballot (the "proxy card") or over the Internet or by phone. If you vote by any of these methods,
your votes will be officially cast at the Meeting by persons appointed as proxies.
You can revoke or change your voting instructions at any time until the vote is taken at the Meeting. For more
details about shareholder voting, see the "Voting Information" section of this Prospectus/Proxy Statement.
COMPARISONS OF IMPORTANT FEATURES OF THE FUNDS
The investment objectives and policies of the Funds
This section describes the investment policies of the Growth + Value Fund and the Managed Index Fund and the
differences between them. For a complete description of the investment policies and risks of the Managed Index Fund, you
should read the Prospectus for the Funds that is enclosed with this Prospectus/Proxy Statement.
The investment objectives of the Funds are comparable. The investment objective of the Growth + Value Fund is
capital growth and the investment objective of the Managed Index Fund is to outperform the S&P 500 Index. Both Funds
invest primarily in equity securities of large-cap growth and large-cap value companies. Both Funds invest primarily in
companies in the financial, health care and information technology sectors.
The Growth + Value Fund will invest primarily in common stocks of large U.S. companies included in the Russell
1000(R)Index (the "Russell 1000"). The Russell 1000 is a market capitalization-weighted index that measures the
performance of the 1,000 largest U.S. companies. As of September 30, 2002, the average market capitalization of the
companies in the Russell 1000 Index was approximately $8.6 billion. Normally, about 60-85 companies will be represented
in the Fund, with 25-35 companies primarily from the Russell 1000 Growth Index (the "Growth Index") constituting
approximately 50% of the Fund's net assets, and 35-50 companies primarily from the Russell 1000(R)Value Index (the "Value
Index") constituting the remainder of the Fund's net assets. Daily cash flows (that is, purchases and reinvested
distributions) and outflows (that is, redemptions and expense items) will be divided between the two portfolio segments
for purposes of maintaining the targeted allocation between growth and value stocks (the "Target Allocation"). Normally,
while it is not expected that the allocation of assets between portfolio segments will deviate more than 10% from the
Target Allocation, it is possible that this deviation may be higher. Factors such as market fluctuation, economic
conditions, corporate transactions and declaration of dividends may result in deviations from the Target Allocation. In
the event the allocation of assets to the portfolio segments differs by more than 10% from the Target Allocation (e.g.,
60% of the Fund's net assets invested in growth stocks and 40% of the Fund's net assets invested in value stocks), the
Fund's sub-advisors will rebalance each portfolio segment's assets in order to maintain the Target Allocation.
The Managed Index Fund will invest, under normal circumstances, at least 80% of its total assets in the
securities included in the Standard & Poor's 500 Composite Stock Price Index (the "S&P 500"). The Fund seeks to
outperform the S&P 500 through stock selection resulting in different weightings of common stocks relative to the index.
The S&P 500 is an index of 500 common stocks, most of which trade on the New York Stock Exchange Inc. (the "NYSE"). In
seeking to outperform the S&P 500, the Fund's sub-advisor starts with a portfolio of stocks representative of the
holdings of the index. It then uses a set of fundamental, quantitative criteria that are designed to indicate whether a
particular stock will predictably perform better or worse than the S&P 500. Based on these criteria, the Fund's
sub-advisor determines whether the Fund should over-weight, under-weight or hold a neutral position in the stock relative
to the proportion of the S&P 500 that the stock represents. In addition, the Sub-advisor may determine based on the
quantitative criteria that (1) certain S&P 500 stocks should not be held by the Fund in any amount, and (2) certain
equity securities that are not included in the S&P 500 should be held by the Fund. The Fund may invest up to 15% of its
total assets in equity securities not included in the S&P 500. While the Fund attempts to outperform the S&P 500, it is
not expected that any out-performance will be substantial. The Fund also may under-perform the S&P 500 over short or
extended periods.
Diversification
Both Funds are diversified funds. This means that, with respect to 75% of the value of each Fund's total assets,
each Fund invests in cash, cash items, obligations of the U.S. Government, its agencies or instrumentalities, securities
of other investment companies and "other securities." The "other securities" are subject to the requirement that not more
than 5% of total assets of the Fund will be invested in the securities of a single issuer and that the Fund will not hold
more than 10% of any single issuer's outstanding voting securities.
The Funds may not purchase the securities of any issuer if, as a result, a Fund would fail to be a diversified
company within the meaning of the Investment Company Act of 1940, as amended ("Investment Company Act") and the rules and
regulations promulgated thereunder.
Borrowing, Issuing Senior Securities and Pledging Assets
Neither Fund may issue senior securities, borrow money or pledge assets except as permitted under the Investment
Company Act, the rules and regulations promulgated thereunder, or under any exemptive order, SEC release, no-action
letter or similar relief or interpretations.
Lending
Both Funds may lend assets to brokers, dealers and financial institutions. Both Funds may make loans, including
through loans of assets of the Fund, repurchase agreements, trade claims, loan participations or similar investments, as
permitted by the Investment Company Act. For purposes of this limitation and consistent with the Fund's investment
objective, the acquisition of bonds, debentures, other debt securities or instruments, or participations or other
interests therein and investments in government obligations, commercial paper, certificates of deposit, bankers'
acceptances or instruments similar to any of the foregoing will not be considered the making of a loan.
Illiquid Securities
Both Funds may invest in illiquid securities, including those without a readily available market and repurchase
agreements with maturities longer than seven days. Each Fund may hold up to 5% of its net assets in illiquid securities.
Temporary Defensive Investments
Although each Fund normally invest assets according to its investment strategy, there are times when a Fund may
temporarily invest up to 100% of its assets in money market instruments in response to adverse market, economic or
political conditions.
For more information about the risks and restrictions associated with these policies, see the Funds' Prospectus,
and for a more detailed discussion of the Funds' investments, see the Statements of Additional Information, all of which
are incorporated into this Proxy Statement by reference.
Derivative Strategies
Both Funds may use derivative strategies to try to improve the Fund's returns or hedging techniques to try to
protect its assets. Derivatives, such as futures, options, foreign currency forward contracts, options on futures and
swaps, involve costs and can be volatile. With derivatives, the Fund's sub-advisor is trying to predict whether the
underlying investment-- a security, market index, currency, interest rate or some other asset, rate or index-- will go up
or down at some future date. Each Fund may use derivatives to try to reduce risk or to increase return, taking into
account the Fund's overall investment objective. The Funds cannot guarantee these derivative strategies will work, that
the instruments necessary to implement these strategies will be available or that the Funds will not lose money.
Investment Restrictions
Each of the Funds has substantially identical fundamental investment restrictions. These fundamental restrictions
limit a Fund's ability to: (i) issue senior securities; (ii) borrow money; (iii) underwrite securities; (iv) purchase or
sell real estate; (v) purchase or sell physical commodities; (vi) make loans (except for certain securities lending
transactions); and (vii) concentrate its investments by investing more than 25% of the value of the Fund's assets in
securities of issuers having their principal business activities in the same industry. A Fund may not change a
fundamental investment restriction without the prior approval of its shareholders.
Federal Income Tax Considerations
Each Fund is treated as a separate entity for federal income tax purposes. Each Fund has qualified and elected
or intends to qualify and elect to be treated as a "regulated investment company" under Subchapter M of the Internal
Revenue Code of 1986, as amended (the "Code"), and intends to continue to so qualify in the future. As a regulated
investment company, a Fund must, among other things, (a) derive at least 90% of its gross income from dividends,
interest, payments with respect to loans of stock and securities, gains from the sale or other disposition of stock,
securities or foreign currency and other income (including but not limited to gains from options, futures, and forward
contracts) derived with respect to its business of investing in such stock, securities or foreign currency; and (b)
diversify its holdings so that, at the end of each quarter of its taxable year, (i) at least 50% of the value of the
Fund's total assets is represented by cash, cash items, U.S. Government securities, securities of other regulated
investment companies, and other securities limited, in respect of any one issuer, to an amount not greater than 5% of the
Fund's total assets, and 10% of the outstanding voting securities of such issuer, and (ii) not more than 25% of the value
of its total assets is invested in the securities of any one issuer (other than U.S. Government securities or securities
of other regulated investment companies). As a regulated investment company, a Fund (as opposed to its shareholders)
will not be subject to federal income taxes on the net investment income and capital gain that it distributes to its
shareholders, provided that at least 90% of its net investment income and realized net short-term capital gain in excess
of net long-term capital loss for the taxable year is distributed in accordance with the Code's timing requirements
The Transaction may entail various tax consequences which are discussed under the caption "Tax Consequences of
the Transaction."
Risks of investing in the Funds
Like all investments, an investment in either Fund involves risk. There is no assurance that either of the Funds
will meet its investment objective. As with any fund investing primarily in equity securities, the value of the
securities held by a Fund may decline. Stocks can decline for many reasons, including reasons related to the particular
company, the industry of which it is a part, or the securities markets generally. These declines may be substantial.
The risk to which a capital growth fund is subject depends in part on the size of the companies in which the
particular fund invests. Securities of smaller companies tend to be subject to more abrupt and erratic price movements
than securities of larger companies, in part because they may have limited product lines, market or financial resources.
Because the Growth + Value Fund and Managed Index Fund invest primarily in large-capitalization companies, the Funds
should be less prone to such abrupt and erratic price movements. Moreover, value stocks are believed to be selling at
prices lower than what they are actually worth, while growth stocks are those of companies that are expected to grow at
above-average rates. A fund investing primarily in growth stocks will tend to be subject to more risk than a value fund,
although this will not always be the case.
Management of the Company and the Funds
American Skandia Investment Services, Inc. ("ASISI"), One Corporate Drive, Shelton, Connecticut, and Prudential
Investments LLC ("PI"), Gateway Center Three, 100 Mulberry Street, Newark, New Jersey, serve as co-managers (each an
"Investment Manager" and together the "Investment Managers") pursuant to an investment management agreement with the
Company on behalf of each Fund (the "Management Agreement"). Under the Management Agreement, PI, as co-manager, will
provide supervision and oversight of ASISI's investment management responsibilities with respect to the Company.
Pursuant to the Management Agreement, the Investment Managers will jointly administer each Fund's business affairs and
supervise each Fund's investments. Subject to approval by the Board of Directors, the Investment Managers may select and
employ one or more sub-advisors for a Fund, who will have primary responsibility for determining what investments the
Fund will purchase, retain and sell. Also subject to the approval of the Board of Directors, the Investment Managers may
reallocate a Fund's assets among sub-advisors including (to the extent legally permissible) affiliated sub-advisors,
consistent with a Fund's investment objectives.
The Company has obtained an exemption from the SEC that permits an Investment Manager to change sub-advisors for
a Fund and to enter into new sub-advisory agreements, without obtaining shareholder approval of the changes. Any such
sub-advisor change would continue to be subject to approval by the Board of Directors of the Company. This exemption
(which is similar to exemptions granted to other investment companies that are operated in a similar manner as the
Company) is intended to facilitate the efficient supervision and management of the sub-advisors by the Investment
Managers and the Directors of the Company.
The Investment Managers currently engage the following sub-advisors to manage the investments of each Fund in
accordance with the Fund's investment objective, policies and limitations and any investment guidelines established by
the Investment Managers. Each sub-advisor is responsible, subject to the supervision and control of the Investment
Managers, for the purchase, retention and sale of securities in the Fund's investment portfolio under its management.
Alliance Capital Management, L.P. ("Alliance"), 1345 Avenue of the Americas, New York, NY 10105, serves as
sub-advisor for the portion of the Growth + Value Fund invested in growth stocks. Alliance is a leading global
investment adviser supervising client accounts with assets as of December 31, 2002 totaling more than $386 billion. Day
to day investment decisions for the growth portion of the ASAF Alliance/Bernstein Growth +Value Fund are made by Syed
Hasnain, Stephanie Simon and Dan Nordby. Ms. Simon and Mr. Nordby have managed the Fund since the Fund commenced
operations, and Mr. Hasnain has been managing the Fund since May 2003. Seth J. Masters, Chief Investment Officer for
Style Blend Services, has overall responsibility for rebalancing and administration of the growth and value components of
the Fund. Mr. Hasnain is Senior Vice President, U. S. Large Cap Portfolio Manager and a member of the Global Large Cap
Growth Equity Team. He has been associated with Alliance since 1995. Ms. Simon is Senior Vice President and Large Cap
Portfolio Manager and joined ACMC in 1998 after serving as Chief Investment Officer for Sargent Management Company from
1996 to 1998. Mr. Norby, Senior Vice President, has been with Alliance since 1996. Mr. Masters has been with Alliance
and, prior to that, Sanford C. Bernstein & Co. LLC, since 1991 and is the chairman of the firm's US and Global Style
Blend Investment Policy Groups and a member of the Bernstein Global, International and Emerging Markets Value Investment
Policy Group.
Sanford C. Bernstein & Co., LLC ("Bernstein"), 767 Fifth Avenue, New York, New York 10153, serves as sub-advisor
for the Managed Index Fund and for the portion of the Growth + Value Fund invested in value stocks as well as the
sub-advisor for the Managed Index Fund. Bernstein is an indirect wholly-owned subsidiary of Alliance Capital Management,
L.P. ("Alliance") and management of the Funds is conducted by Bernstein with the investment management assistance of the
Bernstein Investment Research and Management unit (the "Bernstein Unit") of Alliance. The Bernstein Unit services the
former investment research and management business of Sanford C. Bernstein & Co., Inc., a registered investment advisor
and broker/dealer acquired by Alliance in October 2000 that managed value-oriented investment portfolios since 1967.
Day-to-day investment management decisions for the value portion of the ASAF Alliance/Bernstein Growth + Value
Fund are made by Ranji H. Nagaswami, CFA and Marilyn Goldstein Fedak. Ms. Nagaswami has managed the Funds since May 2003
and is a senior portfolio manager and a member of the U.S. Value Equity Investment Policy Group and the Risk Investment
Policy Group. Ms. Nagaswami has been with Alliance since 1999. From 1986 until 1999, she was at UBS Brinson and its
predecessor organizations, where she progressed from quantitative analyst to managing director to co-head of U.S. fixed
income. Ms. Fedak has managed the Funds since they commenced operations and has been an Executive Vice President and
Chief Investment Officer- U.S. Value Equities of Alliance since October 2000 and prior to that Chief Investment Officer
and Chairman of the U.S. Equity Investment Policy Group at Sanford C. Bernstein & Co, Inc. since 1993.
Day-to-day investment management decisions for the Managed Index Fund are made by Bernstein's Investment Policy
Group for Structured Equities, which is chaired by Steven Pisarkiewicz. Mr. Pisarkiewicz joined Bernstein in 1989 and
assumed his current position as Chief Investment Officer for Structured Equity Services in 1998. Mr. Pisarkiewicz and
the Investment Policy Group for Structured Equities have managed the Fund since Bernstein became the Fund's sub-advisor
in May, 2000.
Fee Arrangements
The Funds have comparable fee arrangements. Under the Management Agreement with respect to the Growth + Value
Fund, the Fund is obligated to pay ASISI an annual investment management fee equal to 1.00% of its average daily net
assets. Similarly, under the Management Agreement with respect to the Managed Index Fund, the Fund is obligated to pay
ASISI an annual investment management fee equal to 0.80% of its average daily net assets. During the calendar year ended
December 31, 2002, the Growth + Value Fund paid $128,852 in investment management fees to ASISI. If the fee rate
applicable to the Managed Index Fund had been in effect during such period, the Growth + Value Fund would have paid
$103,082 in investment management fees to ASISI. Because the Investment Management fee rates currently paid to ASISI by
the Growth + Value Fund are greater than the fee rates paid by the Managed Index Fund, former shareholders of the Growth
+ Value Fund will pay a lesser investment advisory fee rate after becoming shareholders of the Managed Index Fund upon
completion of the Transaction.
The Investment Manager has voluntarily agreed until March 1, 2004 to reimburse each Fund for its respective
operating expenses, exclusive of taxes, interest, brokerage commissions, distribution fees and extraordinary expenses,
but inclusive of the management fee, which in the aggregate exceed specified percentages of a Fund's average net assets
as follows: Growth + Value Fund, 1.35% and Managed Index Fund, 1.00%. The Investment Manager may terminate the above
voluntary agreements at any time after March 1, 2004. Voluntary payments of Fund expenses by the Investment Manager may
be made subject to reimbursement by the Fund, at the Investment Manager's discretion, within the two year period
following such payment to the extent permissible under applicable law and provided that the Fund is able to effect such
reimbursement and remain in compliance with applicable expense limitations.
ASISI pays Alliance and Bernstein a sub-advisory fee for sub-advisory services for the Growth + Value Fund and
the Managed Index Fund, respectively. ASISI pays these sub-advisory fees at no additional costs to the Funds. Under the
current sub-advisory agreement for the Growth + Value Fund, ASISI pays Alliance an annual sub-advisory fee equal to 0.40%
of the growth portion of the Fund's average daily net assets, and pays Bernstein an annual sub-advisory fee equal to
0.40% of the value portion of the Fund's daily net assets. Under the sub-advisory agreement for the Managed Index Fund,
ASISI pays Bernstein an annual sub-advisory fee equal to 0.40% of the average daily net assets of the Managed Index Fund
up to $10 million, 0.30% of the net assets greater than $10 million up to $30 million, 0.20% of the net assets greater
than $30 million up to $100 million, and 0.10% of the net assets greater than $100 million.
Distribution Plan
The Company adopted a Distribution and Service Plan (commonly known as a "12b-1 Plan") for each class of shares
to compensate the Funds' distributor for its services and costs in distributing shares and servicing shareholder
accounts. Under the Distribution and Service Plan for Class A shares, each Fund pays the distributor 0.50% of the Fund's
average daily net assets attributable to Class A shares. Under the Plans for Class B, X and C shares, each Fund pays the
distributor 1.00% of the Fund's average daily net assets attributable to the relevant Class of shares. Because these
fees are paid out of the Funds' assets on an ongoing basis, these fees may, over time, increase the cost of an investment
in the Fund and may be more costly than other types of sales charges. The distributor uses distribution and service fees
received under each 12b-1 Plan to compensate qualified dealers for services provided in connection with the sale of
shares and the maintenance of shareholder accounts. The distributor's rights to distribution and service fees received
under the Class B 12b-1 Plan and the Class X 12b-1 Plan have been assigned to third parties.
Valuation
The net asset value ("NAV") per share is determined for each class of shares for each Fund as of the time of the
close of the NYSE (which is normally 4:00 p.m. Eastern Time) on each business day by dividing the value of the Fund's
total assets attributable to a class, less any liabilities, by the number of total shares of that class outstanding. In
general, the assets of each Fund are valued on the basis of market quotations. However, in certain circumstances where
market quotations are not readily available or where market quotations for a particular security or asset are believed to
be incorrect, securities and other assets are valued by methods that are believed to accurately reflect their fair value.
Purchases, Redemptions, Exchanges and Distributions
The purchase policies for each Fund are identical. The offering price is the NAV plus any initial sales charge
that applies. Class A shares are sold at NAV plus an initial sales charge that varies depending on the amount of your
investment. Class B shares are sold at NAV per share without an initial sales charge. However, if Class B shares are
redeemed within seven years of their purchase, a contingent deferred sales charge ("CDSC") will be deducted from the
redemption proceeds. Class C shares are sold at NAV per share plus an initial sales charge of 1% of the offering price.
If Class C shares are redeemed within 12 months of the first business day of calendar month of their purchase, a CDSC of
1.0% will be deducted from the redemption proceeds. Class X shares are sold at NAV per share without an initial sales
charge. In addition, investors purchasing Class X shares will receive, as a bonus, additional shares having a value
equal to 2.50% of the amount invested. Although Class X shares are sold without an initial sales charge, if Class X
shares are redeemed within 8 years of their purchase, a CDSC will be deducted from the redemption proceeds. Refer to the
Funds' Prospectus for more information regarding how to purchase shares.
The redemption policies for each Fund are identical. Your shares will be sold at the next NAV determined after
your order to sell is received, less any applicable CDSC imposed. Refer to the Funds' Prospectus for more information
regarding how to sell shares.
Shares of each Fund may be exchanged for shares of the same class of other Funds at NAV per share at the time of
exchange. Exchanges of shares involve a redemption of the shares of the Fund you own and a purchase of shares of another
Fund. Shares are normally redeemed and purchased in the exchange transaction on the business day on which the Transfer
Agent receives an exchange request that is in proper form, if the request is received by the close of the NYSE that day.
Each Fund will distribute substantially all of its income and capital gains to shareholder each year. Each Fund
will declare dividends, if any, annually.
Fees and expenses
The following table describes the fees and expenses that shareholders may pay if they hold shares of the Funds,
as well as the projected fees and expenses of the Managed Index Fund after the Transaction.
Class A Shares
Managed Index Fund
Growth + Value Managed Index After Transaction
Fund Class A Fund Class A Class A
Shareholder Fees
(fees paid directly from your investment)
Maximum Sales Charge (Load)
on Purchases (as % of offering price) 5.75% 5.75% 5.75%
Maximum Contingent Deferred Sales Charge (Load)
(as % of original purchase price) None1 None1 None1
Redemption Fee................................. None2 None2 None2
Exchange Fee................................... None None None
Annual Fund Operating Expenses
(expenses that are deducted from Fund assets)
Management Fees............................ 1.00% 0.80% 0.80%
Estimated Distribution (12b-1) Fees........ 0.50% 0.50% 0.50%
Other Expenses............................. 2.15% 0.56% 0.61%
Advisory Fee Waivers and Expense Reimbursement (1.80)% (0.36)% (0.41)%
Total Annual Fund Operating Expenses....... 1.85% 1.50% 1.50%
Class B Shares
Managed Index Fund
Growth + Value Managed Index After Transaction
Fund Class B Fund Class B Class B
Shareholder Fees
(fees paid directly from your investment)
Maximum Sales Charge (Load)
on Purchases (as % of offering price) None None None
Maximum Contingent Deferred Sales Charge (Load)
(as % of original purchase price) 6.00%3 6.00%3 6.00%3
Redemption Fee................................. None2 None2 None2
Exchange Fee................................... None None None
Annual Fund Operating Expenses
(expenses that are deducted from Fund assets)
Management Fees............................ 1.00% 0.80% 0.80%
Estimated Distribution (12b-1) Fees........ 1.00% 1.00% 1.00%
Other Expenses............................. 2.15% 0.56% 0.61%
Advisory Fee Waivers and Expense Reimbursement (1.80)% (0.36)% (0.41)%
Total Annual Fund Operating Expenses....... 2.35% 2.00% 2.00%
Class C Shares
Managed Index Fund
Growth + Value Managed Index After Transaction
Fund Class C Fund Class C Class C
Shareholder Fees
(fees paid directly from your investment)
Maximum Sales Charge (Load)
on Purchases (as % of offering price) 1.00% 1.00% 1.00%
Maximum Contingent Deferred Sales Charge (Load)
(as % of original purchase price) 1.00%3 1.00%3 1.00%3
Redemption Fee................................. None2 None2 None2
Exchange Fee................................... None None None
Annual Fund Operating Expenses
(expenses that are deducted from Fund assets)
Management Fees............................ 1.00% 0.80% 0.80%
Estimated Distribution (12b-1) Fees........ 1.00% 1.00% 1.00%
Other Expenses............................. 2.15% 0.56% 0.61%
Advisory Fee Waivers and Expense Reimbursement (1.80)% (0.36)% (0.41)%
Total Annual Fund Operating Expenses....... 2.35% 2.00% 2.00%
Class X Shares
Managed Index Fund
Growth + Value Managed Index After Transaction
Fund Class X Fund Class X Class X
Shareholder Fees
(fees paid directly from your investment)
Maximum Sales Charge (Load)
on Purchases (as % of offering price) None None
Maximum Contingent Deferred Sales Charge (Load)
(as % of original purchase price) 6.00%3 6.00%3 6.00%3
Redemption Fee................................. None2 None2 None2
Exchange Fee................................... None None None
Annual Fund Operating Expenses
(expenses that are deducted from Fund assets)
Management Fees............................ 1.00% 0.80% 0.80%
Estimated Distribution (12b-1) Fees........ 1.00% 1.00% 1.00%
Other Expenses............................. 2.15% 0.56% 0.61%
Advisory Fee Waivers and Expense Reimbursement (1.80)% (0.36)% (0.41)%
Total Annual Fund Operating Expenses....... 2.35% 2.00% 2.00%
1. Under certain circumstances, purchases of Class A shares not subject to an initial sales charge (load) will be
subject to a contingent deferred sales charge (load) ("CDSC") if redeemed within 12 months of the calendar month of
purchase. For an additional discussion of the Class A CDSC, see this Prospectus under "How to Buy Shares."
2. A $10 fee may be imposed for wire transfers of redemption proceeds. For an additional discussion of wire
redemptions, see this Prospectus under "How to Redeem Shares."
3. If you purchase Class B or X shares, you do not pay an initial sales charge but you may pay a CDSC if you redeem some
or all of your shares before the end of the seventh (in the case of Class B shares) or eighth (in the case of Class X
shares) year after which you purchased such shares. The CDSC is 6%, 5%, 4%, 3%, 2%, 2% and 1% for redemptions of Class B
shares occurring in years one through seven, respectively. The CDSC is 6%, 5%, 4%, 4%, 3%, 2%, 2% and 1% for redemptions
of Class X shares occurring in years one through eight, respectively. No CDSC is charged after these periods. If you
purchase Class C shares, you may pay an initial sales charge of 1% and you may incur a CDSC if you redeem some or all of
your Class C shares within 12 months of the calendar month of purchase. For a discussion of the Class B, X and C CDSC,
see this Prospectus under "How to Buy Shares."
Expense Examples
Full Redemption - These examples are intended to help you compare the cost of investing in each Fund with the cost of
investing in other mutual funds, and the cost of investing in the Managed Index Fund after the Transaction. They assume
that you invest $10,000, that you receive a 5% return each year, and that the Funds' total operating expenses remain the
same. Although your actual costs may be higher or lower, based on the above assumptions your costs would be:
Class A Shares
1 Year 3 Years 5 Years 10 Years
Growth + Value Fund 752 1,471 2,210 4,147
Managed Index 500 Fund 719 1,093 1,491 2,602
Managed Index 500 Fund 719 1,103 1,511 2,648
(Projected after the Transaction)
Class B Shares
1 Year 3 Years 5 Years 10 Years
Growth + Value Fund 838 1,497 2,171 4,116
Managed Index 500 Fund 803 1,102 1,428 2,544
Managed Index 500 Fund 803 1,112 1,449 2,591
(Projected after the Transaction)
Class C Shares
1 Year 3 Years 5 Years 10 Years
Growth + Value Fund 436 1,186 2,052 4,280
Managed Index 500 Fund 401 795 1,316 2,742
Managed Index 500 Fund 401 805 1,336 2,788
(Projected after the Transaction)
Class X Shares
1 Year 3 Years 5 Years 10 Years
Growth + Value Fund 844 1,525 2,321 4,327
Managed Index 500 Fund 808 1,120 1,559 2,735
Managed Index 500 Fund 808 1,130 1,580 2,783
(Projected after the Transaction)
No Redemption - You would pay the following expenses based on the above assumptions except that you do not redeem your
shares at the end of each period:
Class A Shares
1 Year 3 Years 5 Years 10 Years
Growth + Value Fund 752 1,471 2,210 4,147
Managed Index 500 Fund 719 1,093 1,491 2,602
Managed Index 500 Fund 719 1,103 1,511 2,648
(Projected after the Transaction)
Class B Shares
1 Year 3 Years 5 Years 10 Years
Growth + Value Fund 238 1,097 1,971 4,116
Managed Index 500 Fund 203 702 1,228 2,544
Managed Index 500 Fund 203 712 1,249 2,591
(Projected after the Transaction)
Class C Shares
1 Year 3 Years 5 Years 10 Years
Growth + Value Fund 336 1,186 2,052 4,280
Managed Index 500 Fund 301 795 1,316 2,742
Managed Index 500 Fund 301 805 1,336 2,788
(Projected after the Transaction)
Class X Shares
1 Year 3 Years 5 Years 10 Years
Growth + Value Fund 244 1,125 2,021 4,327
Managed Index 500 Fund 208 720 1,259 2,735
Managed Index 500 Fund 208 730 1,280 2,783
(Projected after the Transaction)
Performance
The bar charts show the performance of the Class A shares of each Fund for each full calendar year the Fund has
been in operation. The first table below each bar chart shows each such Fund's best and worst quarters during the
periods included in the bar chart. The second table shows the average annual total returns before taxes for each Class
of each Fund for 2002 and since inception, as well as the average annual total returns after taxes on distributions and
after taxes on distributions and redemptions for Class A shares of each Fund for 2002 and since inception.
This information may help provide an indication of each Fund's risks by showing changes in performance from year
to year and by comparing the Fund's performance with that of a broad-based securities index. The average annual figures
reflect sales charges; the other figures do not, and would be lower if they did. All figures assume reinvestment of
dividends. Past performance does not necessarily indicate how a Fund will perform in the future.
-------------------------------------------------- ------------------------------------------------
Best Quarter Worst Quarter
-------------------------------------------------- ------------------------------------------------
-------------------------------------------------- ------------------------------------------------
Up 6.98% 4th Quarter 2002 Down 16.65% 3rd Quarter 2002
-------------------------------------------------- ------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
For periods ended December 31, 2002
----------------------------------- ------------- -------------------------- ------------------------
5 Years
Class A (or since inception*) 10 Years
1 Year
----------------------------------- ------------- -------------------------- ------------------------
----------------------------------- ------------- -------------------------- ------------------------
Return Before Taxes -29.49% -15.31% N/A
----------------------------------- ------------- -------------------------- ------------------------
----------------------------------- ------------- -------------------------- ------------------------
Return After Taxes on -29.49% -15.31% N/A
Distributions
----------------------------------- ------------- -------------------------- ------------------------
----------------------------------- ------------- -------------------------- ------------------------
Return After Taxes on -18.10% -12.07% N/A
Distributions and Sale of Fund
Shares
----------------------------------- ------------- -------------------------- ------------------------
----------------------------------- ------------- -------------------------- ------------------------
Class B
----------------------------------- ------------- -------------------------- ------------------------
----------------------------------- ------------- -------------------------- ------------------------
Return Before Taxes -31.48% -16.07% N/A
----------------------------------- ------------- -------------------------- ------------------------
Class C
----------------------------------- ------------- -------------------------- ------------------------
----------------------------------- ------------- -------------------------- ------------------------
Return Before Taxes -27.26% -13.44% N/A
----------------------------------- ------------- -------------------------- ------------------------
Class X
----------------------------------- ------------- -------------------------- ------------------------
----------------------------------- ------------- -------------------------- ------------------------
Return Before Taxes -29.69% -14.86% N/A
----------------------------------- ------------- -------------------------- ------------------------
Index
----------------------------------- ------------- -------------------------- ------------------------
----------------------------------- ------------- -------------------------- ------------------------
Standard & Poor's 500 Index -22.09% -15.76% N/A
----------------------------------- ------------- -------------------------- ------------------------
* Inception date: March 1, 2001.
After-tax returns are shown for Class A shares only. The after-tax returns for other Classes will
vary. After-tax returns are calculated using the historical highest individual federal marginal income
tax rates and do not reflect the impact of state and local taxes. During periods of negative NAV
performance, the after-tax returns assume the investor receives a write-off at the historical highest
individual federal marginal income rate. Actual after-tax returns depend on an investor's tax situation
and may differ from those shown, and after-tax returns are not relevant to investors who hold their Fund
shares through tax-deferred arrangements such as 401(k) plans or individual retirement accounts.
-------------------------------------------------- ------------------------------------------------
Best Quarter Worst Quarter
-------------------------------------------------- ------------------------------------------------
-------------------------------------------------- ------------------------------------------------
Up 9.18%, 4th Quarter 2001 Down 17.22%, 3rd Quarter 2002
-------------------------------------------------- ------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
For periods ended December 31, 2002
----------------------------------- ------------- -------------------------- ------------------------
5 Years
Class A (or since inception**) 10 Years
1 Year
----------------------------------- ------------- -------------------------- ------------------------
----------------------------------- ------------- -------------------------- ------------------------
Return Before Taxes -25.80% -12.57% N/A
----------------------------------- ------------- -------------------------- ------------------------
----------------------------------- ------------- -------------------------- ------------------------
Return After Taxes on -25.80% -12.37% N/A
Distributions
----------------------------------- ------------- -------------------------- ------------------------
----------------------------------- ------------- -------------------------- ------------------------
Return After Taxes on -15.84% -9.59% N/A
Distributions and Sale of Fund
Shares
----------------------------------- ------------- -------------------------- ------------------------
----------------------------------- ------------- -------------------------- ------------------------
Class B
----------------------------------- ------------- -------------------------- ------------------------
----------------------------------- ------------- -------------------------- ------------------------
Return Before Taxes -27.58% -12.58% N/A
----------------------------------- ------------- -------------------------- ------------------------
Class C
----------------------------------- ------------- -------------------------- ------------------------
----------------------------------- ------------- -------------------------- ------------------------
Return Before Taxes -23.39% -11.61% N/A
----------------------------------- ------------- -------------------------- ------------------------
Class X
----------------------------------- ------------- -------------------------- ------------------------
----------------------------------- ------------- -------------------------- ------------------------
Return Before Taxes -25.65% -12.33% N/A
----------------------------------- ------------- -------------------------- ------------------------
Index
----------------------------------- ------------- -------------------------- ------------------------
----------------------------------- ------------- -------------------------- ------------------------
Standard & Poor's 500 Index -22.09% -11.71% N/A
----------------------------------- ------------- -------------------------- ------------------------
*Prior to May 1, 2000, the ASAF Sanford Bernstein Managed Index 500 Fund was known as the ASAF
Bankers Trust Managed Index 500 Fund, and Bankers Trust Company served as Sub-advisor to the Fund.
** Inception date: November 1, 1999
After-tax returns are shown for Class A shares only. The after-tax returns for other Classes will
vary. After-tax returns are calculated using the historical highest individual federal marginal income
tax rates and do not reflect the impact of state and local taxes. During periods of negative NAV
performance, the after-tax returns assume the investor receives a write-off at the historical highest
individual federal marginal income rate. Actual after-tax returns depend on an investor's tax situation
and may differ from those shown, and after-tax returns are not relevant to investors who hold their Fund
shares through tax-deferred arrangements such as 401(k) plans or individual retirement accounts.
REASONS FOR THE TRANSACTION
The Directors, including all of the Directors who are not "interested persons" of the Company (the "Independent
Directors") have unanimously determined that the Transaction would be in the best interests of the shareholders of Growth
+ Value and the Managed Index Funds and that the interests of the shareholders of Growth + Value and the Managed Index
Funds would not be diluted as a result of the Transaction. At a meeting held on July 25, 2003, the Board considered a
number of factors that it believes benefits the shareholders of Growth + Value Fund, including the following:
o the compatibility of the Funds' investment objectives, policies and restrictions;
o the relative past and current growth in assets and investment performance of the Funds and future prospects for Managed
Index Fund;
o the relative expense ratios of the Funds and the impact of the proposed Transaction on the expense ratios;
o the anticipated tax consequences of the Transaction with respect to each Fund and its shareholders;
o the relative size of the Growth + Value Fund and the lack of growth in the assets and the number of shareholders of
Growth + Value Fund; and
o the potential benefits of the proposed Transaction to the shareholders of each Fund, including the long-term economies
of scale.
At the July 25 meeting, PI and ASISI recommended the merger to the Board. In recommending the merger, PI and
ASISI advised the Board that the Funds have comparable investment objectives, and similar policies and investment
portfolios. Moreover, the Investment Managers noted that the Funds have similar investment styles and are managed by
affiliated sub-advisory firms. The Investment Managers advised the Board that as of May 31, 2003 the Growth + Value Fund
had assets of approximately $13 million while the Managed Index Fund had assets of approximately $132 million, and the
Growth + Value Fund had a higher cost structure and higher expense ratio compared to the Managed Index Fund.
Accordingly, by merging the Funds, Growth + Value shareholders would enjoy a greater asset base and lower cost
structure. The Board considered that if the merger is approved, shareholders of Growth + Value Fund, regardless of the
class of shares they own, should realize a reduction in both the net annual operating expenses and gross annual operating
expenses (that is, without any waivers or reimbursements) paid on their investment, while the shareholders of the Managed
Index Fund would have identical net annual operating expenses and slightly higher gross annual operating expenses (.05%)
if the merger is approved, although there can be no assurance that operational savings will be realized. In addition,
the Board considered that, even though expenses would not immediately decrease for the Managed Index Fund, the
incremental assets should help to stabilize certain non-distribution related expenses. The Board was advised that the
expenses associated with the Transaction would be borne by the Investment Managers.
The Board, including a majority of the Independent Directors, unanimously concluded that the Transaction is in
the best interests of the shareholders of the Growth + Value Fund and the Managed Index Fund and that no dilution of
value would result to the shareholders of the Growth + Value Fund or the Managed Index Fund from the Transaction.
Consequently, the Board approved the Plan and recommended that shareholders of the Growth + Value Fund vote to approve
the Transaction.
For the reasons discussed above, the Board of Directors unanimously recommends that you vote For the Plan.
If shareholders of the Growth + Value Fund do not approve the Plan, the Board will consider other possible
courses of action for the Growth + Value Fund, including, among others, consolidation of the Growth + Value Fund with one
or more Funds of the Company other than the Managed Index Fund or unaffiliated funds.
INFORMATION ABOUT THE TRANSACTION
This is only a summary of the Plan. You should read the actual Plan attached as Exhibit A.
Closing of the Transaction
If shareholders of the Growth + Value Fund approve the Plan, the Transaction will take place after various
conditions are satisfied by the Company on behalf of the Growth + Value Fund and the Managed Index Fund, including the
preparation of certain documents. The Company will determine a specific date for the actual Transaction to take place.
This is called the "closing date." If the shareholders of the Growth + Value Fund do not approve the Plan, the
Transaction will not take place.
If the shareholders of the Growth + Value Fund approve the Plan, the Growth + Value Fund will deliver to the
Managed Index Fund substantially all of its assets on the closing date. As a result, shareholders of the Growth + Value
Fund will beneficially own shares of the Managed Index Fund that, as of the date of the exchange, have a value equal to
the dollar value of the assets delivered to the Managed Index Fund. The stock transfer books of the Growth + Value Fund
will be permanently closed on the closing date. Requests to transfer or redeem assets allocated to the Growth + Value
Fund may be submitted at any time before 4:00 p.m. Eastern standard time on the closing date; requests that are received
in proper form prior to that time will be effected prior to the closing.
To the extent permitted by law, the Company may amend the Plan without shareholder approval. It may also agree
to terminate and abandon the Transaction at any time before or, to the extent permitted by law, after the approval by
shareholders of the Growth + Value Fund.
Expenses of the Transaction
The expenses resulting from the Transaction will be paid by PI (or its affiliates). The Funds will not incur any
expenses associated with the Transaction. The portfolio securities of the Growth + Value Fund will be transferred
in-kind to the Managed Index Fund prior to the restructuring of the Growth + Value Fund's investment portfolio.
Accordingly, the Transaction will entail little or no expenses in connection with portfolio restructuring.
Tax Consequences of the Transaction
The Transaction is intended to qualify for U.S. federal income tax purposes as a tax-free reorganization under
the Code. It is a condition to each Fund's obligation to complete the Transaction that the Funds will have received an
opinion from Stradley Ronon Stevens & Young, LLP, counsel to the Funds, based upon representations made by Growth + Value
Fund and Managed Index Fund, and upon certain assumptions, substantially to the effect that:
1. The acquisition by Managed Index Fund of the assets of Growth + Value Fund in exchange solely for voting shares of
Managed Index Fund and the assumption by Managed Index Fund of the liabilities of Growth + Value Fund, if any, followed
by the distribution of the Managed Index Fund shares acquired by Growth + Value Fund pro rata to their shareholders, will
constitute a reorganization within the meaning of Section 368(a)(1) of the Code, and Managed Index Fund and Growth +
Value Fund each will be "a party to a reorganization" within the meaning of Section 368(b) of the Code;
2. The shareholders of Growth + Value Fund will not recognize gain or loss upon the exchange of all of their shares of
Growth + Value Fund solely for shares of Managed Index Fund, as described above and in the Plan;
3. No gain or loss will be recognized by Growth + Value Fund upon the transfer of its assets to Managed Index Fund in
exchange solely for Class A, Class B, Class C, and Class X shares of Managed Index Fund and the assumption by Managed
Index Fund of the liabilities of Growth + Value Fund, if any. In addition, no gain or loss will be recognized by Managed
Index Fund on the distribution of such shares to the shareholders of Growth + Value Fund in liquidation of Growth + Value
Fund;
4. No gain or loss will be recognized by Managed Index Fund upon the acquisition of the assets of Growth + Value Fund in
exchange solely for shares of Managed Index Fund and the assumption of the liabilities of Growth + Value Fund, if any;
5. Managed Index Fund's basis for the assets acquired from Growth + Value Fund will be the same as the basis of these
assets when held by Growth + Value Fund immediately before the transfer, and the holding period of such assets acquired
by Managed Index Fund will include the holding period of these assets when held by Growth + Value Fund;
6. Growth + Value Fund's shareholders' basis for the shares of Managed Index Fund to be received by them pursuant to the
reorganization will be the same as their basis in Growth + Value Fund shares exchanged; and
7. The holding period of Managed Index Fund shares to be received by the shareholders of Growth + Value Fund will include
the holding period of their Growth + Value Fund shares exchanged provided such Growth + Value Fund shares were held as
capital assets on the date of the exchange.
Shareholders of Growth + Value Fund should consult their tax advisers regarding the tax consequences to them of
the Transaction in light of their individual circumstances. In addition, because the foregoing discussion relates only to
the U.S. federal income tax consequences of the Transaction, shareholders also should consult their tax advisers as to
state, local and foreign tax consequences to them, if any, of the Transaction.
Characteristics of the Managed Index Fund shares
Shares of the Managed Index Fund will be distributed to shareholders of the Growth + Value Fund and will have the
same legal characteristics as the shares of the Managed Index Fund with respect to such matters as voting rights,
assessibility, conversion rights, and transferability.
Capitalization of the Funds and Capitalization after the Transaction
The following table sets forth, as of April 30, 2003 the capitalization of shares of the Growth + Value Fund and
the Managed Index Fund. The table also shows the projected capitalization of the Managed Index Fund shares as adjusted
to give effect to the proposed Transaction. The capitalization of the Managed Index Fund is likely to be different when
the Transaction is consummated.
Class A
Growth + Value Managed Index Managed Index Fund
Projected after
Fund Fund Transaction
(unaudited) (unaudited) Adjustments (unaudited)
Net assets ................................ 2,972,611 27,221,595 30,194,206
Total shares outstanding .................. 359,574 3,752,407 50,441* 4,162,422
Net asset value per share.................. 8.27 7.25 7.25
Class B
Managed Index Fund
Growth + Value Managed Index Projected after
Fund Fund Transaction
(unaudited) (unaudited) Adjustments (unaudited)
Net assets ................................ 5,309,705 64,857,371 70,167,076
Total shares outstanding .................. 649,691 9,093,149 95,008* 9,837,848
Net asset value per share.................. 8.17 7.13 7.13
Class C
Managed Index Fund
Growth + Value Managed Index Projected after
Fund Fund Transaction
(unaudited) (unaudited) Adjustments (unaudited)
Net assets ................................ 2,368,121 32,321,771 34,689,892
Total shares outstanding .................. 289,733 4,531,560 42,402* 4,863,695
Net asset value per share.................. 8.17 7.13 7.13
Class X
Managed Index Fund
Growth + Value Managed Index Projected after
Fund Fund Transaction
(unaudited) (unaudited) Adjustments (unaudited)
Net assets ................................ 1,289,717 7,014,866 8,304,583
Total shares outstanding .................. 157,712 984,955 23,428* 1,166,095
Net asset value per share.................. 8.18 7.12 7.12
*Reflects the change in the Growth + Value Fund upon conversion to the Managed Index Fund.
VOTING INFORMATION
Shareholders of record of the Growth + Value Fund on the Record Date will be entitled to vote at the Meeting. On
the Record Date, there were 1,572,371 shares of the Growth + Value Fund issued and outstanding.
The presence in person or by proxy of the holders of a majority of the outstanding shares of the Fund is required
to constitute a quorum at the Meeting. Shares beneficially held by shareholders present in person or represented by
proxy at the Meeting will be counted for the purpose of calculating the votes cast on the issues before the Meeting. If
a quorum is present, the affirmative vote of the holders of a majority of the total number of shares of capital stock of
the Growth + Value Fund outstanding and entitled to vote is necessary to approve the Plan. Each shareholder will be
entitled to one vote for each full share, and a fractional vote for each fractional share of the Growth + Value Fund held
at the close of business on the Record Date.
Shares held by shareholders present in person or represented by proxy at the Meeting will be counted both for the
purposes of determining the presence of a quorum and for calculating the votes cast on the issues before the Meeting. An
abstention by a shareholder, either by proxy or by vote in person at a Meeting, has the same effect as a negative vote.
Under existing New York Stock Exchange rules, it is not expected that brokers will be permitted to vote Fund shares in
their discretion. In addition, there is only one proposal being presented for a shareholder vote. As a result, the Fund
does not anticipate any broker non-votes.
..........Shareholders having more than one account in the Fund generally will receive a single proxy statement and a
separate proxy card for each account. It is important to mark, sign, date and return all proxy cards received.
..........In the event that sufficient votes to approve the Plan are not received, the persons named as proxies may propose
one or more adjournments of the Meeting to permit further solicitation of proxies. Any such adjournment will require the
affirmative vote of a majority of those shares represented at the Meeting in person or by proxy. The persons named as
proxies will vote those proxies that they are entitled to vote FOR or AGAINST any such adjournment in their discretion.
..........The Company is not required to hold and will not ordinarily hold annual shareholders' meetings. The Board of
Directors may call special meetings of the shareholders for action by shareholder vote as required by the Investment
Company Act or the Company's Articles of Incorporation.
..........Pursuant to rules adopted by the SEC, a shareholder may include in proxy statements relating to annual and other
meetings of the shareholders of the Company certain proposals for shareholder action which he or she intends to introduce
at such special meetings; provided, among other things, that such proposal is received by the Company a reasonable time
before a solicitation of proxies is made for such meeting. Timely submission of a proposal does not necessarily mean
that the proposal will be included.
The Board of Directors intends to bring before the Meeting the matter set forth in the foregoing Notice. The
Directors do not expect any other business to be brought before the Meeting. If, however, any other matters are properly
presented to the Meeting for action, it is intended that the persons named in the enclosed proxy will vote in accordance
with their judgment. A shareholder executing and returning a proxy may revoke it at any time prior to its exercise by
written notice of such revocation to the Secretary of the Company, by execution of a subsequent proxy, or by voting in
person at the Meeting.
How to vote.
You can vote your shares in any one of four ways:
o........By mail, with the enclosed proxy card.
o In person at the Meeting.
o By phone
o Over the Internet
If you simply sign and date the proxy but give no voting instructions, your shares will be voted in favor of the
Plan and in accordance with the views of management upon any unexpected matters that come before the Meeting or
adjournment of the Meeting.
Solicitation of voting instructions.
Voting instructions will be solicited principally by mailing this Prospectus/Proxy Statement and its enclosures,
but instructions also may be solicited by telephone, facsimile, through electronic means such as e-mail, or in person by
officers or representatives of the Company. In addition, the Company has engaged Georgeson Shareholder Communications,
Inc. ("Georgeson"), a professional proxy solicitation firm, to assist in the solicitation of proxies. As the Meeting
date approaches, you may receive a phone call from a representative of Georgeson if the Company has not yet received your
vote. Georgeson may ask you for authority, by telephone, to permit Georgeson to execute your voting instructions on your
behalf.
ADDITIONAL INFORMATION ABOUT THE COMPANY AND THE FUNDS
The Growth + Value Fund and the Managed Index Fund are separate series of the Company, which is an open-end
management investment company registered with the SEC under the Investment Company Act. Each Fund is, in effect, a
separate mutual fund. Detailed information about the Company and each Fund is contained in the Prospectus for the Funds
which is enclosed with and considered a part of this Prospectus/Proxy Statement. Additional information about the
Company and each Fund is included in the Company's SAI, dated March 1, 2003, which has been filed with the SEC and is
incorporated into the SAI relating to this Prospectus/Proxy Statement.
A copy of the Company's Annual Report to Shareholders for the fiscal year ended October 31, 2002 is part of this
Prospectus/Proxy Statement. You may request a free copy of the Company's Annual Report to Shareholders for the fiscal
year ended October 31, 2002 and the Company's Semi-Annual Report to Shareholders for the period ended April 30, 2003 by
calling 1-800-752-6342 or by writing to the Company at One Corporate Drive, P.O. Box 883, Shelton, CT 06484.
The Funds file proxy materials, reports and other information with the SEC in accordance with the informational
requirements of the Securities Exchange Act of 1934 and the Investment Company Act. These materials can be inspected and
copied at: the SEC's Public Reference Room at 450 Fifth Street NW, Washington, DC 20549, and at the Regional Offices of
the SEC located in New York City at 233 Broadway, New York, NY 10279 and in Chicago at 175 W. Jackson Boulevard, Suite
900, Chicago, IL 60604. Also, copies of such material can be obtained from the SEC's Public Reference Section,
Washington, DC 20549-6009, upon payment of prescribed fees, or from the SEC's Internet address at http://www.sec.gov.
PRINCIPAL HOLDERS OF SHARES
The table below sets forth, as of the Record Date, each shareholder that beneficially owns more than 5% of any
class of the Growth + Value Fund.
- ----------------------------------------- ------------------------------------ --------------------------------- --------------
Fund and Share Class Owner Name Address Percent
Ownership
- ----------------------------------------- ------------------------------------ --------------------------------- --------------
- ----------------------------------------- ------------------------------------ --------------------------------- --------------
ASAF Alliance/Bernstein Growth + Value State Street Bank & Trust Co. 1 Green Hill Road 5.46%
Class X Cust for the Rollover IRA of Chester, NJ 07930-2729
Lynne Swanbeck
- ----------------------------------------- ------------------------------------ --------------------------------- --------------
*As defined by the Commission, a security is beneficially owned by a person if that person has or shares voting power or
investment power with respect to the security.
As of the Record Date, the officers and Directors of the Company, as a group, beneficially owned less than 1% of
the outstanding voting shares of either of the Funds.
EXHIBITS TO PROSPECTUS/PROXY STATEMENT
Exhibit
A Plan of Reorganization by American Skandia Advisor Funds, Inc. on behalf of the ASAF Alliance/Bernstein
Growth + Value Fund and the ASAF Sanford Bernstein Managed Index 500 Fund
B Prospectus for the ASAF Alliance/Bernstein Growth + Value Fund and the ASAF Sanford Bernstein Managed
Index 500 Fund of American Skandia Advisor Funds, Inc. dated March 1, 2003 (enclosed)
C ASAF Annual Report to Shareholders dated October 31, 2002 (enclosed)
D Supplements dated May 16, 2003, August 1, 2003, September 16, 2003 and October 2, 2003 to the ASAF
American Skandia Advisor Funds Inc., dated March 1, 2003 (enclosed)
EXHIBIT A
Plan of Reorganization
PLAN OF REORGANIZATION
THIS PLAN OF REORGANIZATION (the "Plan") is made as of this 25th day of July, 2003, by American Skandia Advisor
Funds, Inc. (the "Company"), a business trust organized under the laws of the State of Maryland with its principal place
of business at One Corporate Drive, Shelton, Connecticut 06484, on behalf of the ASAF Sanford Bernstein Managed Index 500
Fund (the "Acquiring Fund") and the ASAF Alliance/Bernstein Growth + Value Fund (the "Acquired Fund"), both series of the
Company. Together, the Acquiring Fund and Acquired Fund are referred to as the "Funds."
The reorganization (hereinafter referred to as the "Reorganization") will consist of (i) the acquisition by the
Acquiring Fund, of substantially all of the property, assets and goodwill of the Acquired Fund and the assumption by the
Acquiring Fund of all of the liabilities of the Acquired Fund in exchange solely for full and fractional shares of
beneficial interest, par value $0.001 each, of the Acquiring Fund ("Acquiring Fund Shares"); (ii) the distribution of
Acquiring Fund Shares to the shareholders of the Acquired Fund according to their respective interests in complete
liquidation of the Acquired Fund; and (iii) the dissolution of the Acquired Fund as soon as practicable after the closing
(as defined in Section 3, hereinafter called the "Closing"), all upon and subject to the terms and conditions of this
Plan hereinafter set forth.
In order to consummate the Plan, the following actions shall be taken by the Company on behalf of the Acquiring
Fund and the Acquired Fund:
1. Sale and Transfer of Assets, Liquidation and Dissolution of Acquired Fund.
(a) Subject to the terms and conditions of this Plan, the Company on behalf of the Acquired Fund shall
convey, transfer and deliver to the Acquiring Fund at the Closing all of the Acquired Fund's then existing assets, free
and clear of all liens, encumbrances, and claims whatsoever (other than shareholders' rights of redemption), except for
cash, bank deposits, or cash equivalent securities in an estimated amount necessary to (i) pay the costs and expenses in
carrying out this Plan (including, but not limited to, fees of counsel and accountants, and expenses of its liquidation
and dissolution contemplated hereunder). (ii) discharge its unpaid liabilities on its books at the closing date (as
defined in section 3, hereinafter the "Closing Date"), including, but not limited to, its income dividends and capital
gains distributions, if any, payable for the period prior to, and through, the Closing Date; and (iii) pay such
contingent liabilities as the Board of Directors shall reasonably deem to exist against the Acquired Fund, if any, at the
Closing Date, for which contingent and other appropriate liabilities reserves shall be established on the Acquired Fund's
books (hereinafter "Net Assets"). The Acquired Fund shall also retain any and all rights that it may have over and
against any person that may have accrued up to and including the close of business on the Closing Date.
(b) Subject to the terms and conditions of this Plan, the Company on behalf of the Acquiring Fund shall at
the Closing deliver to the Acquired Fund the number of Acquiring Fund Shares, determined by dividing the net asset value
per share of the shares of the Acquired Fund ("Acquired Fund Shares") on the Closing Date by the net asset value per
share of the Acquiring Fund Shares, and multiplying the result thereof by the number of outstanding Acquired Fund Shares
as of the close of regular trading on the New York Stock Exchange (the "NYSE") on the Closing Date. All such values
shall be determined in the manner and as of the time set forth in Section 2 hereof.
(c) Immediately following the Closing, the Acquired Fund shall distribute pro rata to its shareholders of
record as of the close of business on the Closing Date, the Acquiring Fund Shares received by the Acquired Fund pursuant
to this Section 1 and then shall terminate and dissolve. Such liquidation and distribution shall be accomplished by the
establishment of accounts on the share records of the Company relating to the Acquiring Fund and noting in such accounts
the type and amounts of Acquiring Fund Shares that former Acquired Fund shareholders are due based on their respective
holdings of the Acquired Fund as of the close of business on the Closing Date. Fractional Acquiring Fund Shares shall be
carried to the third decimal place. The Acquiring Fund shall not issue certificates representing the Acquiring Fund
shares in connection with such exchange.
2. Valuation.
(a) The value of the Acquired Fund's Net Assets to be transferred to the Acquiring Fund hereunder shall be
computed as of the close of regular trading on the NYSE on the Closing Date (the "Valuation Time") using the valuation
procedures set forth in Company's currently effective prospectus.
(b) The net asset value of a share of the Acquiring Fund shall be determined to the third decimal point as
of the Valuation Time using the valuation procedures set forth in the Company's currently effective prospectus.
(c) The net asset value of a share of the Acquired Fund shall be determined to the third decimal point as of
the Valuation Time using the valuation procedures set forth in the Company's currently effective prospectus.
3. Closing and Closing Date.
The consummation of the transactions contemplated hereby shall take place at the Closing (the "Closing"). The
date of the Closing (the "Closing Date") shall be December 12, 2003, or such earlier or later date as determined by the
Company's officers. The Closing shall take place at the principal office of the Company at 5:00 P.M. Eastern time on the
Closing Date. The Company on behalf of the Acquired Fund shall have provided for delivery as of the Closing of the
Acquired Fund's Net Assets to be transferred to the account of the Acquiring Fund at the Acquiring Fund's Custodian, The
JP Morgan Chase Bank, 4 MetroTech Center, Brooklyn, NY 11245. Also, the Company on behalf of the Acquired Fund shall
produce at the Closing a list of names and addresses of the shareholders of record of the Acquired Fund Shares and the
number of full and fractional shares owned by each such shareholder, all as of the Valuation Time, certified by its
transfer agent or by its President or Vice-President to the best of its or his or her knowledge and belief. The Company
on behalf of the Acquiring Fund shall issue and deliver a confirmation evidencing the Acquiring Fund Shares to be
credited to the Acquired Fund's account on the Closing Date to the Secretary of the Company, or shall provide evidence
satisfactory to the Acquired Fund that the Acquiring Fund Shares have been registered in an account on the books of the
Acquiring Fund in such manner as the Company on behalf of Acquired Fund may request.
4. Representations and Warranties by the Company on behalf of the Acquired Fund.
The Company makes the following representations and warranties about the Acquired Fund:
(a) The Acquired Fund is a series of the Company, a corporation organized under the laws of the State of Maryland and
validly existing and in good standing under the laws of that jurisdiction. The Company is duly registered under the
Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end, management investment company and all of the
Acquired Fund Shares sold were sold pursuant to an effective registration statement filed under the Securities Act of
1933, as amended (the "1933 Act").
(b) The Company on behalf of the Acquired Fund is authorized to issue an unlimited number of shares of beneficial
interest's acquired Fund shares, par value $0.001 each, each outstanding share of which is fully paid, non-assessable,
freely transferable and has full voting rights.
(c) The financial statements appearing in the Company's Annual Report to Shareholders for the fiscal year
ended October 31, 2002, audited by PricewaterhouseCoopers LLP, and the financial statements appearing in the Company's
Semi-Annual Report to Shareholders for the period ended April 30, 2003, fairly present the financial position of the
Acquired Fund as of such dates and the results of its operations for the periods indicated in conformity with generally
accepted accounting principles applied on a consistent basis.
(d) The Company has the necessary power and authority to conduct the Acquired Fund's business as such
business is now being conducted.
(e) The Company on behalf of the Acquired Fund is not a party to or obligated under any provision of the
Company's Amended and Restated Charter or By-laws, or any contract or any other commitment or obligation, and is not
subject to any order or decree, that would be violated by its execution of or performance under this Plan.
(f) The Acquired Fund does not have any unamortized or unpaid organizational fees or expenses.
(g) The Acquired Fund has elected to be treated as a regulated investment company (a "RIC") for federal
income tax purposes under Part I of Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code") and the
Acquired Fund has qualified as a RIC for each taxable year since its inception, and will qualify as of the Closing Date.
The consummation of the transactions contemplated by this Plan will not cause the Acquired Fund to fail to satisfy the
requirements of subchapter M of the Code.
(h) The Acquired Fund, or its agents, (i) holds a valid Form W-8BEN, Certificate of Foreign Status of
Beneficial Owner for United States Withholding (or other appropriate series of Form W-8, as the case may be), or Form
W-9, Request for Taxpayer Identification Number and Certification, for each Acquired Fund shareholder of record, which
Form W-8 or Form W-9 can be associated with reportable payments made by the Acquired Fund to such shareholder, and/or
(ii) has otherwise timely instituted the appropriate backup withholding procedures with respect to such shareholder as
provided by Section 3406 of the Code.
5. Representations and Warranties by the Company on behalf of the Acquiring Fund.
The Company makes the following representations and warranties about the Acquiring Fund:
(a) The Acquiring Fund is a series of the Company, a corporation organized under the laws of the State of
Maryland and validly existing and in good standing under the laws of that jurisdiction. The Company is duly registered
under the 1940 Act as an open-end, management investment company and all of the Acquiring Fund Shares sold have been sold
pursuant to an effective registration statement filed under the Securities Act of 1933, as amended (the "1933 Act").
(b) The Company on behalf of the Acquiring Fund is authorized to issue an unlimited number of shares of
beneficial interest's Acquiring Fund shares, par value $0.001 each, each outstanding share of which is freely paid,
non-assessable, fully transferable and has full voting rights.
(c) At the Closing, Acquiring Fund Shares will be eligible for offering to the public in those states of the
United States and jurisdictions in which the shares of the Acquired Fund are presently eligible for offering to the
public, and there are a sufficient number of Acquiring Fund Shares registered under the 1933 Act to permit the transfers
contemplated by this Plan to be consummated.
(d) The financial statements appearing in the Company's Annual Report to Shareholders for the fiscal year
ended October 31, 2002, audited by PricewaterhouseCoopers LLP, and the financial statements appearing in the Company's
Semi-Annual Report to Shareholders for the period ended April 30, 2003, fairly present the financial position of the
Acquired Fund as of such dates and the results of its operations for the periods indicated in conformity with generally
accepted accounting principles applied on a consistent basis.
(e) The Company has the necessary power and authority to conduct the Acquiring Fund's business as such
business is now being conducted.
(f) The Company on behalf of the Acquiring Fund is not a party to or obligated under any provision of the
Company's Amended and Restated Charter or By-laws, or any contract or any other commitment or obligation, and is not
subject to any order or decree, that would be violated by its execution of or performance under this Plan.
(g) The Acquiring Fund has to be treated as a RIC for federal income tax purposes under Part I of Subchapter
M of the Internal Revenue Code of 1986, as amended (the "Code") and the Acquiring Fund has qualified as a RIC for each
taxable year since its inception, and will qualify as of the Closing Date. The consummation of the transactions
contemplated by this Plan will not cause the Acquiring Fund to fail to satisfy the requirements of subchapter M of the
Code.
6. Representations and Warranties by the Company on behalf of the Funds.
The Company makes the following representations and warranties about the Funds:
(a) The statement of assets and liabilities to be created by the Company for each of the Funds as of the
Valuation Time for the purpose of determining the number of Acquiring Fund Shares to be issued pursuant to Section 1 of
this Plan will accurately reflect the Net Assets in the case of the Acquired Fund and the net assets in the case of the
Acquiring Fund, and outstanding shares, as of such date, in conformity with generally accepted accounting principles
applied on a consistent basis.
(b) At the Closing, the Funds will have good and marketable title to all of the securities and other assets
shown on the statement of assets and liabilities referred to in "(a)" above, free and clear of all liens or encumbrances
of any nature whatsoever, except such imperfections of title or encumbrances as do not materially detract from the value
or use of the assets subject thereto, or materially affect title thereto.
(c) Except as may be disclosed in the Company's current effective prospectus, there is no material suit,
judicial action, or legal or administrative proceeding pending or threatened against either of the Funds.
(d) There are no known actual or proposed deficiency assessments with respect to any taxes payable by either
of the Funds.
(e) The execution, delivery, and performance of this Plan have been duly authorized by all necessary action
of the Company's Board of Directors, and this Plan constitutes a valid and binding obligation enforceable in accordance
with its terms.
(f) The Company anticipates that consummation of this Plan will not cause either of the Funds to fail to
conform to the requirements of Subchapter M of the Code for Federal income taxation as a RIC at the end of each fiscal
year.
(g) The Company has the necessary power and authority to conduct the business of the Funds, as such business
is now being conducted.
7. Intentions of the Company on behalf of the Funds.
(a) The Company intends to operate each Fund's respective business as presently conducted between the date
hereof and the Closing.
(b) The Company intends that the Acquired Fund will not acquire the Acquiring Fund Shares for the purpose of
making distributions thereof to anyone other than the Acquired Fund's shareholders.
(c) The Company on behalf of the Acquired Fund intends, if this Plan is consummated, to liquidate and
dissolve the Acquired Fund.
(d) The Company intends that, by the Closing, each of the Fund's Federal and other tax returns and reports
required by law to be filed on or before such date shall have been filed, and all Federal and other taxes shown as due on
said returns shall have either been paid or adequate liability reserves shall have been provided for the payment of such
taxes.
(e) At the Closing, the Company on behalf of the Acquired Fund intends to have available a copy of the
shareholder ledger accounts, certified by the Company's transfer agent or its President or a Vice-President to the best
of its or his or her knowledge and belief, for all the shareholders of record of Acquired Fund Shares as of the Valuation
Time who are to become shareholders of the Acquiring Fund as a result of the transfer of assets that is the subject of
this Plan.
(f) The Company intends to mail to each shareholder of record of the Acquired Fund entitled to vote at the
meeting of its shareholders at which action on this Plan is to be considered, in sufficient time to comply with
requirements as to notice thereof, a Combined Proxy Statement and Prospectus that complies in all material respects with
the applicable provisions of Section 14(a) of the Securities Exchange Act of 1934, as amended, and Section 20(a) of the
1940 Act, and the rules and regulations, respectively, thereunder.
(g) The Company intends to file with the U.S. Securities and Exchange Commission a registration statement on
Form N-14 under the 1933 Act relating to the Acquiring Fund Shares issuable hereunder ("Registration Statements"), and
will use its best efforts to provide that the Registration Statement becomes effective as promptly as practicable. At
the time the Registration Statement becomes effective, it will: (i) comply in all material respects with the applicable
provisions of the 1933 Act, and the rules and regulations promulgated thereunder; and (ii) not contain any untrue
statement of material fact or omit to state a material fact required to be stated therein or necessary to make the
statements therein not misleading. At the time the Registration Statement becomes effective, at the time of the
shareholders' meeting of the Acquired Fund, and at the Closing Date, the prospectus and statement of additional
information included in the Registration Statement will not contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements therein, in the light of the circumstances under which they were
made, not misleading.
8. Conditions Precedent to be Fulfilled by Company on behalf of the Funds.
The consummation of the Plan with respect to the Acquiring Fund and the Acquired Fund shall be subject to the
following conditions:
(a) That: (i) all the representations and warranties contained herein concerning the Funds shall be true
and correct as of the Closing with the same effect as though made as of and at such date; (ii) performance of all
obligations required by this Plan to be performed by the Company on behalf of the Funds shall occur prior to the Closing;
and (iii) the Company shall execute a certificate signed by the President or a Vice President and by the Secretary or
equivalent officer to the foregoing effect.
(b) That the form of this Plan shall have been adopted and approved by the appropriate action of the Board
of Directors of the Company on behalf of the Funds.
(c) That the U.S. Securities and Exchange Commission shall not have issued an unfavorable management report
under Section 25(b) of the 1940 Act or instituted or threatened to institute any proceeding seeking to enjoin
consummation of the Plan under Section 25(c) of the 1940 Act. And, further, no other legal, administrative or other
proceeding shall have been instituted or threatened that would materially affect the financial condition of a Fund or
would prohibit the transactions contemplated hereby.
(d) That the Plan contemplated hereby shall have been adopted and approved by the appropriate action of the
shareholders of the Acquired Fund at an annual or special meeting or any adjournment thereof.
(e) That a distribution or distributions shall have been declared for each Fund, prior to the Closing Date
that, together with all previous distributions, shall have the effect of distributing to shareholders of each Fund (i)
all of its ordinary income and all of its capital gain net income, if any, for the period from the close of its last
fiscal year to the Valuation Time and (ii) any undistributed ordinary income and capital gain net income from any prior
period. Capital gain net income has the meaning assigned to such term by Section 1222(9) of the Code.
(f) That there shall be delivered to the Company on behalf of the Funds an opinion in form and substance
satisfactory to it from Messrs. Stradley Ronon Stevens & Young, LLP, counsel to the Company, to the effect that, subject
in all respects to the effects of bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance, and other
laws now or hereafter affecting generally the enforcement of creditors' rights:
(1) Acquiring Fund Shares to be issued pursuant to the terms of this Plan have been duly
authorized and, when issued and delivered as provided in this Plan, will have been validly issued and fully paid and will
be non-assessable by the Company, on behalf of the Acquiring Fund;
(2) All actions required to be taken by the Company and/or Funds to authorize and effect
the Plan contemplated hereby have been duly authorized by all necessary action on the part of the Company and the Funds;
(3) Neither the execution, delivery nor performance of this Plan by the Company violates
any provision of the Company's Amended and Restated Charter or By-laws, or the provisions of any agreement or other
instrument known to such counsel to which the Company is a party or by which the Funds are otherwise bound; this Plan is
the legal, valid and binding obligation of the Company and each Fund and is enforceable against the Company and/or each
Fund in accordance with its terms; and
(4) The Company's registration statement, of which the prospectus dated March 1, 2003
relating to each Fund (the "Prospectus") is a part, is, at the time of the signing of this Plan, effective under the 1933
Act, and, to the best knowledge of such counsel, no stop order suspending the effectiveness of such registration
statement has been issued, and no proceedings for such purpose have been instituted or are pending before or threatened
by the U.S. Securities and Exchange Commission under the 1933 Act, and nothing has come to counsel's attention that
causes it to believe that, at the time the Prospectus became effective, or at the time of the signing of this Plan, or at
the Closing, such Prospectus (except for the financial statements and other financial and statistical data included
therein, as to which counsel need not express an opinion), contained any untrue statement of a material fact or omitted
to state a material fact required to be stated therein or necessary to make the statements therein not misleading; and
such counsel knows of no legal or government proceedings required to be described in the Prospectus, or of any contract
or document of a character required to be described in the Prospectus that is not described as required.
In giving the opinions set forth above, counsel may state that it is relying on certificates of the officers of
the Company with regard to matters of fact, and certain certifications and written statements of governmental officials
with respect to the good standing of the Company.
(g) That the Company's Registration Statement with respect to the Acquiring Fund Shares to be delivered to
the Acquired Fund's shareholders in accordance with this Plan shall have become effective, and no stop order suspending
the effectiveness of the Registration Statement or any amendment or supplement thereto, shall have been issued prior to
the Closing Date or shall be in effect at Closing, and no proceedings for the issuance of such an order shall be pending
or threatened on that date.
(h) That the Acquiring Fund Shares to be delivered hereunder shall be eligible for sale by the Acquiring
Fund with each state commission or agency with which such eligibility is required in order to permit the Acquiring Fund
Shares lawfully to be delivered to each shareholder of the Acquired Fund.
(i) That, at the Closing, there shall be transferred to the Acquiring Fund aggregate Net Assets of the
Acquired Fund comprising at least 90% in fair market value of the total net assets and 70% of the fair market value of
the total gross assets recorded on the books of Acquired Fund on the Closing Date.
9. Expenses.
(a) The Company represents and warrants that there are no broker or finders' fees payable by it in
connection with the transactions provided for herein.
(b) The expenses of entering into and carrying out the provisions of this Plan shall be borne by [the Funds
on a pro rata basis in proportion to the Acquiring Fund's and Acquired Fund's net assets as of the Closing].
10. Termination; Postponement; Waiver; Order.
(a) Anything contained in this Plan to the contrary notwithstanding, this Plan may be terminated and
abandoned at any time (whether before or after approval thereof by the shareholders of an Acquired Fund) prior to the
Closing or the Closing may be postponed by the Company on behalf of a Fund by resolution of the Board of Directors, if
circumstances develop that, in the opinion of the Board, make proceeding with the Plan inadvisable.
(b) If the transactions contemplated by this Plan have not been consummated by March 1, 2004, the Plan shall
automatically terminate on that date, unless a later date is agreed to by the Company on behalf of the relevant Funds.
(c) In the event of termination of this Plan pursuant to the provisions hereof, the same shall become void
and have no further effect with respect to the Acquiring Fund or Acquired Fund, and neither the Company, the Acquiring
Fund nor the Acquired Fund, nor the directors, officers, agents or shareholders shall have any liability in respect of
this Plan.
(d) At any time prior to the Closing, any of the terms or conditions of this Plan may be waived by the party who is
entitled to the benefit thereof by action taken by the Company's Board of Directors if, in the judgment of such Board of
Directors, such action or waiver will not have a material adverse affect on the benefits intended under this Plan to its
shareholders, on behalf of whom such action is taken.
(e) The respective representations and warranties contained in Sections 4 to 6 hereof shall expire with and
be terminated by the Plan of Reorganization, and neither the Company nor any of its officers, directors, agents or
shareholders nor the Funds nor any of their shareholders shall have any liability with respect to such representations or
warranties after the Closing. This provision shall not protect any officer, director, agent or shareholder of any of the
Funds or the Company against any liability to the entity for which that officer, director, agent or shareholder so acts
or to any of the Company's shareholders to which that officer, director, agent or shareholder would otherwise be subject
by reason of willful misfeasance, bad faith, gross negligence, or reckless disregard of the duties in the conduct of such
office.
(f) If any order or orders of the U.S. Securities and Exchange Commission with respect to this Plan shall be
issued prior to the Closing and shall impose any terms or conditions that are determined by action of the Board of
Directors of the Company on behalf of the Funds to be acceptable, such terms and conditions shall be binding as if a part
of this Plan without further vote or approval of the shareholders of the Acquired Fund, unless such terms and conditions
shall result in a change in the method of computing the number of Acquiring Fund Shares to be issued to the Acquired Fund
in which event, unless such terms and conditions shall have been included in the proxy solicitation material furnished to
the shareholders of the Acquired Fund prior to the meeting at which the transactions contemplated by this Plan shall have
been approved, this Plan shall not be consummated and shall terminate unless the Company on behalf of the Acquired Fund
shall promptly call a special meeting of shareholders at which such conditions so imposed shall be submitted for approval.
11. Entire Plan and Amendments.
This Plan embodies the entire plan of the Company on behalf of the Funds and there are no agreements,
understandings, restrictions, or warranties between the parties other than those set forth herein or herein provided
for. This Plan may be amended only by the Company on behalf of a Fund in writing. Neither this Plan nor any interest
herein may be assigned without the prior written consent of the Company on behalf of the Fund corresponding to the Fund
making the assignment.
12. Notices.
Any notice, report, or demand required or permitted by any provision of this Plan shall be in writing and shall
be deemed to have been given if delivered or mailed, first class postage prepaid, addressed to the Company at One
Corporate Drive, P.O. Box 883, Shelton, CT 06484, Attention: Secretary.
13. Governing Law.
This Plan shall be governed by and carried out in accordance with the laws of the State of Maryland.
IN WITNESS WHEREOF, American Skandia Advisor Funds, Inc., on behalf ASAF Sanford Bernstein Managed Index 500 Fund
and the ASAF Alliance/Bernstein Growth + Value Fund, has executed this Plan by its duly authorized officer, all as of the
date and year first-above written.
AMERICAN SKANDIA ADVISOR FUNDS, INC.
on behalf of
ASAF Sanford Bernstein Managed Index 500 Fund
ASAF Alliance/Bernstein Growth + Value Fund
Attest: By:
_____________________________ ___________________________________________
Title:
___________________________________________
EXHIBIT B
Prospectus dated MARCH 1, 2003
The Prospectus for the ASAF Alliance/Bernstein Growth + Value Fund and the ASAF Sanford Bernstein Managed Index
500 Fund of American Skandia Advisor Funds, Inc. dated March 1, 2003, is part of this Prospectus/Proxy Statement and will
be included in the proxy solicitation mailing to shareholders. The above-referenced prospectus follows in the proxy
solicitation mailing.
EXHIBIT C
ANNUAL REPORT dated OCTOBER 31, 2002
The ASAF Annual Report to Shareholders dated October 31, 2002, is part of this Prospectus/Proxy Statement and
will be included in the proxy solicitation mailing to shareholders. The above-referenced annual report follows in the
proxy solicitation mailing.
EXHIBIT D
SUPPLEMENTS DATED MAY 16, 2003, AUGUST 1, 2003, September 16, 2003 AND OCTOBER 2, 2003
The ASAF supplements dated May 16, 2003, August 1, 2003, September 16, 2003 and October 2, 2003 are part of this
Prospectus/Proxy Statement and will be included in the proxy solicitation mailing to shareholders.
Pr2 10/03
PRIORITY MAIL
U.S. POSTAGE
PAID
PROXY
TABULATOR One Corporate Drive PO Box 883 Shelton CT 06848
PRIORITY MAIL
3 EASY WAYS TO VOTE YOUR PROXY
1. Automated Touch Tone Voting: Call toll-free 1-800-690-6903 and use the control number shown.
2. On the Internet: Go to www.proxyweb.com and use the control number shown.
3. Mail: Sign, Date and Return this proxy card using the enclosed postage paid envelope.
If you vote by Touch Tone Telephone or the Internet, do not mail this card.
CONTROL NUMBER: 999 999 999 999 99 **** ****
FUND NAME PRINTS HERE
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF AMERICAN SKANDIA ADVISOR FUNDS, INC. (THE "COMPANY") FOR USE AT THE
SPECIAL MEETING OF SHAREHOLDERS TO BE HELD AT 100 MULBERRY STREET, GATEWAY CENTER THREE, 14th FLOOR, NEWARK, NEW JERSEY
07102 ON NOVEMBER 21, 2003 AT 11:00 A.M. EASTERN STANDARD TIME.
The undersigned hereby appoints Edward P. Macdonald, Marguerite E. H. Morrison, and Grace C. Torres and each of them, with full
power of substitution, as
proxies of the undersigned to vote at the above stated Special Meeting, and all adjournments thereof, all shares of capital stock
of the Fund named above held
of record by the undersigned on the record date for the Meeting, upon the matters set forth on the reverse side of this card, and
upon any other matter which
may properly come before the Meeting, at their discretion.
Every properly signed proxy will be voted in the manner specified hereon and, in the absence of specification, will be voted FOR
the proposal.
Date:________________________
Signature (Please sign in box) Sign here exactly as name(s) appear(s) on left. Joint owners should each sign personally. If only
one signs, his or her signature will be binding. If the contract owner is a trust, custodial account or other entity, the name of
the trust or the custodial account should be entered and the trustee, custodian, etc. should sign in his or her own name,
indicating that he or she is "Trustee," "Custodian," or other applicable designation. If the contract owner is a partnership, the
partnership should be entered and the partner should sign in his or her own name, indicating that he or she is a "Partner."
AS Mergers-R
X Please fill in one of the boxes as shown using black or blue ink or number 2 pencil. PLEASE DO NOT USE FINE POINT PENS.0
FOR AGAINST ABSTAIN
1. TO APPROVE A PLAN OF REORGANIZATION OF THE COMPANY ON BEHALF OF THE ASAF
ALLIANCE/BERNSTEIN GROWTH + VALUE FUND AND THE ASAF SANFORD BERNSTEIN
MANAGED INDEX 500 FUND OF THE COMPANY, THAT PROVIDES FOR THE ACQUISITION OF
SUBSTANTIALLY ALL OF THE ASSETS OF THE ASAF ALLIANCE/BERNSTEIN GROWTH +
VALUE FUND IN EXCHANGE FOR SHARES OF ASAF SANFORD BERNSTEIN MANAGED INDEX
500 FUND, THE DISTRIBUTION OF SUCH SHARES TO THE SHAREHOLDERS OF THE ASAF
ALLIANCE/BERNSTEIN GROWTH + VALUE FUND, AND THE LIQUIDATION AND DISSOLUTION
OF ASAF ALLIANCE/BERNSTEIN GROWTH + VALUE FUND.
0 0 0
PLEASE SIGN ON REVERSE SIDE
AB G+V
STATEMENT OF ADDITIONAL INFORMATION
FOR
AMERICAN SKANDIA ADVISOR FUNDS, INC.
Dated October 10, 2003
Acquisition of the Assets of
the ASAF Alliance/Bernstein Growth + Value Fund,
a series of American Skandia Advisor Funds, Inc.
By and in exchange for shares of the
the ASAF Sanford Bernstein Managed Index 500 Fund,
also a series of American Skandia Advisor Funds, Inc.
This Statement of Additional Information (SAI) relates specifically to the proposed delivery of substantially all
of the assets of the ASAF Alliance/Bernstein Growth + Value Fund for shares of the ASAF Sanford Bernstein Managed Index
500 Fund.
This SAI consists of this Cover Page and the following documents. Each of these documents is enclosed with and
is legally considered to be a part of this SAI:
1. American Skandia Advisor Fund Inc.'s Statement of Additional Information dated March 1, 2003.
2. Pro Forma Transaction Financial Statements.
This SAI is not a Prospectus; you should read this SAI in conjunction with the Prospectus/Proxy Statement dated
October 10, 2003, relating to the above-referenced transaction. You can request a copy of the Prospectus/Proxy Statement
by calling 1-800-752-6342 or by writing to the American Skandia Advisor Funds, Inc. at One Corporate Drive, P.O. Box 883,
Shelton, CT 06484.
Attachments to SAI (page 1 of 2)
The American Skandia Advisor Funds, Inc. Statement of Additional Information dated March 1, 2003 is part of this
SAI and will be provided to all shareholders requesting this SAI. For purposes of this EDGAR filing, the
above-referenced SAI is incorporated herein by reference to the Company's SAI filed under Rule 497(j) on May 16, 2003.
Attachments to SAI (page 2 of 2)
The following are pro forma financial statements that were prepared to indicate the anticipated financial
information for the combined fund following the completion of the reorganization. They consist of a Pro Forma Combining
Statement of Assets and Liabilities; a Pro Forma Combining Statement of Operations; notes relating to the combining
Statements; and a Combined Pro Forma Schedule of Investments.
PRO FORMA SCHEDULE OF INVESTMENTS
ASAF ALLIANCE/BERNSTEIN GROWTH + VALUE/ASAF SANFORD BERNSTEIN MANAGED INDEX 500
APRIL 30, 2003 (UNAUDITED)
ASAF ASAF ASAF ASAF ASAF ASAF
ALLIANCE/BERNSTEIN SANFORD BERNSTEIN SANFORD BERNSTEIN ALLIANCE/BERNSTEIN SANFORD BERNSTEIN SANFORD BERNSTEIN
COMMON STOCK GROWTH + VALUE MANAGED INDEX 500 MANAGED INDEX 500 GROWTH + VALUE MANAGED INDEX 500 MANAGED INDEX 500
SHARES SHARES PRO FORMA COMBINED VALUE ($) VALUE ($) PRO FORMA COMBINED
Advertising Donnelley, (R.R.) & Sons Co. - 12,800 12,800 - 258,048 258,048
Aerospace Boeing Co. - 14,100 14,100 - 384,648 384,648
Goodrich Corp. - 15,300 15,300 - 215,271 215,271
Northrop Grumman Corp. - 2,000 2,000 - 175,900 175,900
Raytheon Co. - 10,700 10,700 - 320,251 320,251
United Technologies Corp. - 5,400 5,400 - 333,774 333,774
Airlines JetBlue Airways Corp. - 8,000 8,000 - 251,440 251,440
Automobile Manufacturers General Motors Corp. - 10,600 10,600 - 382,130 382,130
PACCAR, Inc. - 4,500 4,500 - 262,845 262,845
Automotive Parts Dana Corp. - 17,000 17,000 - 157,930 157,930
Genuine Parts Co. 4,200 3,586 7,786 134,274 114,644 248,918
Visteon Corp. - 30,600 30,600 - 214,506 214,506
Beverages Anheuser-Busch Companies, Inc. 1,300 19,300 20,600 64,844 962,684 1,027,528
Coca-Cola Co. - 15,200 15,200 - 614,080 614,080
Coca-Cola Enterprises, Inc. - 16,000 16,000 - 311,840 311,840
PepsiCo, Inc. - 4,600 4,600 - 199,088 199,088
Building Materials American Standard Companies, Inc. - 5,000 5,000 - 355,950 355,950
Masco Corp. - 23,000 23,000 - 484,610 484,610
The Sherwin-Williams Co. - 17,300 17,300 - 482,324 482,324
Business Services Deluxe Corp. - 2,500 2,500 - 110,025 110,025
First Data Corp. - 22,000 22,000 - 863,060 863,060
Fiserv, Inc. - 14,000 14,000 - 412,160 412,160
Cable Television Comcast Corp. Cl-A - 20,833 20,833 - 664,781 664,781
Comcast Corp. Special Cl-A 9,700 28,000 37,700 291,582 841,680 1,133,262
Cox Communications, Inc. Cl-A - 10,500 10,500 - 347,550 347,550
Chemicals Ashland, Inc. - 6,000 6,000 - 177,900 177,900
Dow Chemical Co. 6,375 25,800 32,175 208,080 842,112 1,050,192
DuPont, (E.I.) de Nemours & Co. 5,625 14,100 19,725 239,231 599,673 838,904
Eastman Chemical Co. 1,100 - 1,100 33,583 - 33,583
FMC Corp. - 8,900 8,900 - 161,268 161,268
PPG Industries, Inc. - 6,300 6,300 - 305,613 305,613
Praxair, Inc. - 2,200 2,200 - 127,776 127,776
Rohm & Haas Co. - 4,000 4,000 - 132,440 132,440
Clothing & Apparel VF Corp. 1,500 5,812 7,312 59,010 228,644 287,654
Computer Hardware Dell Computer Corp. 4,200 62,600 66,800 121,422 1,809,766 1,931,188
Hewlett-Packard Co. 15,325 - 15,325 249,798 - 249,798
Hewlett-Packard Co. - 81,900 81,900 - 1,334,970 1,334,970
International Business Machines Corp. - 23,000 23,000 - 1,952,700 1,952,700
Computer Services & Software Affiliated Computer Services, Inc. Cl-A - 6,800 6,800 - 324,360 324,360
Cisco Systems, Inc. 4,300 154,400 158,700 64,672 2,322,176 2,386,848
Microsoft Corp. 13,900 191,600 205,500 355,423 4,899,212 5,254,635
Oracle Corp. - 60,000 60,000 - 712,800 712,800
Symantec Corp. - 8,800 8,800 - 386,760 386,760
Unisys Corp. - 22,000 22,000 - 228,800 228,800
Veritas Software Corp. - 18,600 18,600 - 409,386 409,386
Conglomerates 3M Co. - 3,000 3,000 - 378,120 378,120
Altria Group, Inc. 1,950 62,200 64,150 59,982 1,913,272 1,973,254
Cendant Corp. - 11,500 11,500 - 164,220 164,220
Honeywell International, Inc. - 6,000 6,000 - 141,600 141,600
Textron, Inc. - 3,000 3,000 - 88,470 88,470
Tyco International Ltd. - 15,000 15,000 - 234,000 234,000
Construction Pulte Corp. - 1,900 1,900 - 110,181 110,181
Consumer Products & Services Avon Products, Inc. - 16,500 16,500 - 959,805 959,805
Colgate-Palmolive Co. - 14,600 14,600 - 834,682 834,682
Fortune Brands, Inc. - 3,800 3,800 - 183,920 183,920
Johnson & Johnson Co. 3,100 52,275 55,375 174,716 2,946,219 3,120,935
Procter & Gamble Co. 700 21,400 22,100 62,895 1,922,790 1,985,685
Whirlpool Corp. - 10,100 10,100 - 540,249 540,249
Electronic Components & Equipment Consolidated Edison, Inc. - 12,600 12,600 - 489,762 489,762
Cooper Industries Ltd. Cl-A 2,000 9,900 11,900 74,200 367,290 441,490
Eastman Kodak Co.§ - 9,100 9,100 - 272,181 272,181
Emerson Electric Co. - 7,700 7,700 - 390,390 390,390
General Electric Co. 9,200 161,200 170,400 270,940 4,747,340 5,018,280
Linear Technology Corp. - 3,800 3,800 - 130,986 130,986
Rockwell Automation, Inc. - 10,500 10,500 - 239,400 239,400
Sanmina-SCI Corp. - 65,000 65,000 - 312,000 312,000
Solectron Corp. 15,600 - 15,600 49,764 - 49,764
Entertainment & Leisure AOL Time Warner, Inc. - 35,300 35,300 - 482,904 482,904
Carnival Corp. - 8,000 8,000 - 220,720 220,720
Disney, (Walt) Co. - 30,800 30,800 - 574,728 574,728
Harley-Davidson, Inc. - 11,500 11,500 - 511,060 511,060
Viacom, Inc. Cl-B 7,400 11,100 18,500 321,234 481,851 803,085
Environmental Services Waste Management, Inc. - 7,600 7,600 - 165,072 165,072
Farming & Agriculture Monsanto Co. - 3,104 3,104 - 54,010 54,010
Financial - Bank & Trust AmSouth Bancorp - 21,000 21,000 - 442,050 442,050
Bank of America Corp. 3,100 29,700 32,800 229,555 2,199,284 2,428,839
Bank One Corp. - 22,600 22,600 - 814,730 814,730
Charter One Financial, Inc. - 9,591 9,591 - 278,619 278,619
FleetBoston Financial Corp. 6,125 18,600 24,725 162,435 493,272 655,707
Huntington Bancshares, Inc. - 5,000 5,000 - 97,300 97,300
National City Corp. 4,100 24,200 28,300 122,836 725,032 847,868
PNC Financial Services Group, Inc. - 10,000 10,000 - 439,000 439,000
Regions Financial Corp. 3,550 - 3,550 119,671 - 119,671
U.S. Bancorp - 38,806 38,806 - 859,553 859,553
Wachovia Corp. 5,300 32,300 37,600 202,513 1,234,183 1,436,696
Wells Fargo & Co. - 20,700 20,700 - 998,982 998,982
Financial Services American Express Co. - 2,200 2,200 - 83,292 83,292
Capital One Financial Corp. - 14,000 14,000 - 586,180 586,180
Citigroup, Inc. 10,000 91,633 101,633 392,499 3,596,595 3,989,094
Countrywide Financial Corp. - 2,000 2,000 - 135,200 135,200
Fannie Mae 2,325 19,800 22,125 168,307 1,433,322 1,601,629
Freddie Mac 6,175 26,400 32,575 357,533 1,528,560 1,886,093
Golden West Financial Corp. 1,900 - 1,900 143,298 - 143,298
Goldman Sachs Group, Inc. 2,500 8,000 10,500 189,750 607,200 796,950
J.P. Morgan Chase & Co. - 5,570 5,570 - 163,480 163,480
KeyCorp - 25,000 25,000 - 602,750 602,750
Lehman Brothers Holdings, Inc. 3,100 6,800 9,900 195,207 428,196 623,403
MBIA, Inc. - 1,350 1,350 - 60,345 60,345
MBNA Corp. 16,500 52,950 69,450 311,850 1,000,755 1,312,605
Morgan Stanley Dean Witter & Co. - 15,800 15,800 - 707,050 707,050
Union Planters Corp. - 3,600 3,600 - 102,744 102,744
Washington Mutual, Inc. 7,537 22,950 30,487 297,712 906,525 1,204,237
Food Albertson's, Inc. - 2,500 2,500 - 49,650 49,650
Archer Daniels Midland Co. - 27,138 27,138 - 300,689 300,689
ConAgra Foods, Inc. - 22,769 22,769 - 478,149 478,149
Heinz, (H.J.) Co. - 12,700 12,700 - 379,476 379,476
Kroger Co. - 10,900 10,900 - 155,870 155,870
Safeway, Inc. 6,300 - 6,300 104,706 - 104,706
Sara Lee Corp. - 20,100 20,100 - 337,278 337,278
SUPERVALU, Inc. - 7,400 7,400 - 121,878 121,878
Healthcare Services Cardinal Health, Inc. 3,600 15,100 18,700 199,008 834,728 1,033,736
HCA, Inc. - 8,500 8,500 - 272,850 272,850
Health Management Associates, Inc. Cl-A - 36,000 36,000 - 614,160 614,160
Humana, Inc. - 23,300 23,300 - 257,465 257,465
Tenet Healthcare Corp. - 7,500 7,500 - 111,300 111,300
UnitedHealth Group, Inc. 3,300 13,000 16,300 304,029 1,197,690 1,501,719
WellPoint Health Networks, Inc. - 7,400 7,400 - 561,956 561,956
Industrial Products Crane Co. - 9,500 9,500 - 185,535 185,535
Insurance ACE Ltd. - 16,000 16,000 - 529,280 529,280
Aetna, Inc. 2,400 - 2,400 119,520 - 119,520
Allstate Corp. - 9,700 9,700 - 366,563 366,563
American International Group, Inc. 4,500 49,494 53,994 260,774 2,868,178 3,128,952
AON Corp. - 8,600 8,600 - 190,576 190,576
Chubb Corp. 4,675 5,900 10,575 247,261 312,051 559,312
CIGNA Corp. - 7,300 7,300 - 381,790 381,790
MetLife, Inc. 4,600 19,700 24,300 132,158 565,981 698,139
St. Paul Companies, Inc. - 11,971 11,971 - 411,084 411,084
Torchmark Corp. 1,650 9,500 11,150 63,938 368,125 432,063
Travelers Property Casualty Corp. Cl-A - 3,958 3,958 - 64,238 64,238
Travelers Property Casualty Corp. CL-B - 8,133 8,133 - 132,161 132,161
XL Capital Ltd. Cl-A - 5,000 5,000 - 411,500 411,500
Internet Services eBay, Inc. - 8,000 8,000 - 742,160 742,160
Machinery & Equipment Caterpillar, Inc. - 6,500 6,500 - 341,900 341,900
Cummins, Inc. - 3,800 3,800 - 103,018 103,018
Eaton Corp. - 7,000 7,000 - 574,490 574,490
Medical Supplies & Equipment Abbott Laboratories - 15,000 15,000 - 609,450 609,450
Amgen, Inc. 4,700 32,700 37,400 288,157 2,004,837 2,292,994
Becton Dickinson & Co. - 2,000 2,000 - 70,800 70,800
Medtronic, Inc. 2,400 31,400 33,800 114,576 1,499,036 1,613,612
St. Jude Medical, Inc. - 2,200 2,200 - 115,412 115,412
Metals & Mining Alcan, Inc. - 7,100 7,100 - 208,314 208,314
United States Steel Corp. - 18,000 18,000 - 257,760 257,760
Office Equipment Office Depot, Inc. - 7,400 7,400 - 93,684 93,684
Pitney Bowes, Inc. - 8,100 8,100 - 284,391 284,391
Oil & Gas ChevronTexaco Corp. - 13,847 13,847 - 869,730 869,730
ConocoPhillips 5,426 15,620 21,046 272,928 785,686 1,058,614
Exxon Mobil Corp. - 98,700 98,700 - 3,474,240 3,474,240
Halliburton Co. - 11,000 11,000 - 235,510 235,510
Kerr-McGee Corp. - 2,800 2,800 - 117,908 117,908
Marathon Oil Corp. - 19,900 19,900 - 453,123 453,123
Occidental Petroleum Corp. 3,900 11,183 15,083 116,415 333,813 450,228
Transocean, Inc. - 5,000 5,000 - 95,250 95,250
Valero Energy Corp. 1,400 - 1,400 51,450 - 51,450
Paper & Forest Products Georgia-Pacific Corp. 4,700 16,000 20,700 72,568 247,040 319,608
MeadWestvaco Corp. 5,200 11,283 16,483 122,668 266,166 388,834
Smurfit-Stone Container Corp. 4,500 - 4,500 63,315 - 63,315
Pharmaceuticals Allergan, Inc. - 3,500 3,500 - 245,875 245,875
Bristol-Meyers Squibb Co. - 18,400 18,400 - 469,936 469,936
Cephalon, Inc. - 8,000 8,000 - 326,720 326,720
Gilead Sciences, Inc. - 8,900 8,900 - 410,646 410,646
Lilly, (Eli) & Co. - 7,300 7,300 - 465,886 465,886
Merck & Co., Inc. - 25,100 25,100 - 1,460,318 1,460,318
Pfizer, Inc. 15,800 149,880 165,680 485,850 4,608,810 5,094,660
Schering-Plough Corp. - 9,100 9,100 - 164,710 164,710
Wyeth - 26,700 26,700 - 1,162,251 1,162,251
Printing & Publishing Gannett Co., Inc. - 9,200 9,200 - 696,624 696,624
Railroads Burlington Northern Santa Fe Corp. 6,850 8,200 15,050 192,896 230,912 423,808
CSX Corp. 3,700 8,000 11,700 118,326 255,840 374,166
Norfolk Southern Corp. 5,600 26,700 32,300 118,776 566,307 685,083
Union Pacific Corp. - 1,200 1,200 - 71,424 71,424
Real Estate Equity Office Properties Trust [REIT] - 22,000 22,000 - 571,340 571,340
Equity Residential Properties Trust [REIT] - 9,000 9,000 - 233,190 233,190
Restaurants Yum! Brands, Inc. - 4,400 4,400 - 108,680 108,680
Retail & Merchandising Bed Bath & Beyond, Inc. - 17,500 17,500 - 691,425 691,425
Federated Department Stores, Inc. 3,550 5,225 8,775 108,701 159,990 268,691
Home Depot, Inc. - 5,400 5,400 - 151,902 151,902
Kohl's Corp. 6,400 12,000 18,400 363,520 681,600 1,045,120
Lowe's Companies, Inc. 4,400 26,600 31,000 193,116 1,167,474 1,360,590
May Department Stores Co. 5,800 13,874 19,674 125,396 299,956 425,352
Nordstrom, Inc. - 6,200 6,200 - 107,446 107,446
Sears, Roebuck & Co. 2,900 22,100 25,000 82,186 626,314 708,500
Tiffany & Co. - 12,000 12,000 - 332,880 332,880
Walgreen Co. 5,800 35,100 40,900 178,988 1,083,186 1,262,174
Wal-Mart Stores, Inc. 4,400 86,700 91,100 247,808 4,882,943 5,130,751
Semiconductors Advanced Micro Devices, Inc. - 24,000 24,000 - 178,560 178,560
Altera Corp. - 18,000 18,000 - 284,580 284,580
Applied Materials, Inc. - 41,000 41,000 - 598,600 598,600
Intel Corp. 12,100 114,100 126,200 222,640 2,099,440 2,322,080
Maxim Integrated Products, Inc. - 13,100 13,100 - 514,699 514,699
Micron Technology, Inc. - 8,000 8,000 - 68,000 68,000
Seagate Technology, Inc. Rights - 3,400 3,400 - - -
Telecommunications AT &T Corp. - 31,880 31,880 - 543,554 543,554
BellSouth Corp. 3,400 23,000 26,400 86,666 586,270 672,936
Corning, Inc. 12,163 63,096 75,259 65,923 341,980 407,903
EchoStar Communications Corp. Cl-A - 9,000 9,000 - 269,640 269,640
Lucent Technologies, Inc. - 160,000 160,000 - 288,000 288,000
Motorola, Inc. - 11,000 11,000 - 87,010 87,010
Nextel Communications, Inc. Cl-A - 43,000 43,000 - 635,970 635,970
Nokia Corp. Cl-A [ADR] 12,700 15,000 27,700 210,439 248,550 458,989
QUALCOMM, Inc. - 15,700 15,700 - 500,673 500,673
Qwest Communications International, Inc. 34,200 81,592 115,792 128,934 307,602 436,536
SBC Communications, Inc. - 42,900 42,900 - 1,002,144 1,002,144
Sprint Corp. 7,000 30,000 37,000 80,570 345,300 425,870
Tellabs, Inc. 12,400 - 12,400 76,632 - 76,632
Verizon Communications, Inc. - 36,372 36,372 - 1,359,586 1,359,586
Transportation United Parcel Service, Inc. Cl-B - 8,100 8,100 - 503,172 503,172
Utilities Allegheny Energy, Inc. - 12,000 12,000 - 99,600 99,600
Ameren Corp. - 7,700 7,700 - 315,546 315,546
American Electric Power Co., Inc. 6,500 19,300 25,800 171,470 509,134 680,604
Cinergy Corp. - 8,139 8,139 - 277,865 277,865
CMS Energy Corp. - 21,500 21,500 - 133,945 133,945
Constellation Energy Group, Inc. - 12,200 12,200 - 357,216 357,216
Edison International Co. - 5,500 5,500 - 80,245 80,245
Entergy Corp. - 9,000 9,000 - 419,490 419,490
Exelon Corp. - 4,100 4,100 - 217,464 217,464
PPL Corp. 2,600 13,000 15,600 94,120 470,600 564,720
Sempra Energy 2,500 4,000 6,500 67,100 107,360 174,460
----------------------------------------------------------------------------------------------------------------------------
TOTAL COMMON STOCK 413,701 4,405,214 4,798,315 11,682,344 129,289,295 140,971,639
-----------------------------------------------------------------------------------------------------------------------------
(COST $12,876,056, $145,127,673, & $158,003,729 RESPECTIVELY)
FOREIGN STOCK
Automotive Parts Magna International, Inc. Cl-A -- (CAD) 2,100 - 2,100 123,123 - 123,123
-----------------------------------------------------------------------------------------------------------------------------
(COST $153,222, $0, & $153,222 RESPECTIVELY)
SHORT-TERM INVESTMENTS
Registered Investment Companies
Temporary Investment Cash Fund 121,794 1,089,640 1,211,434 121,794 1,089,640 1,211,434
Temporary Investment Fund 121,794 1,089,639 1,211,433 121,794 1,089,639 1,211,433
----------------------------------------------------------------------------------------------------------------------------
TOTAL SHORT-TERM INVESTMENTS 243,588 2,179,279 2,422,867 243,588 2,179,279 2,422,867
-----------------------------------------------------------------------------------------------------------------------------
(COST $243,588, $2,179,279, & $2,422,867 RESPECTIVELY)
INVESTMENT OF CASH COLLATERAL FOR SECURITIES LOANED
Certificates of Deposits
American Express Centurion 1.34% 1/27/2004 115 985 1,100 115,071 985,339 1,100,410
Bear Stearns Co., Inc. 1.37% 1/16/2004 602 1,270 1,872 602,296 1,270,072 1,872,368
Dresdner Bank 1.78% 10/6/2003 - 245 245 - 244,884 244,884
Goldman Sachs Group, Inc. 1.30% 3/8/2004 - 1,664 1,664 - 1,663,971 1,663,971
Morgan Stanley Dean Witter Corp. 1.33% 11/7/2003 792 3,220 4,012 791,931 3,219,858 4,011,789
Merrill Lynch & Co., Inc. 1.48% 5/1/2003 - 3,892 3,892 - 3,891,923 3,891,923
KBC Bank 1.26% 5/1/2003 194 1,258 1,452 194,018 1,257,849 1,451,867
Bear Stearns Co., Inc. 1.43% 1/15/2004 64 2,228 2,292 64,408 2,228,130 2,292,538
Morgan Stanley Dean Witter Corp. 1.59% 11/10/2003 191 - 191 190,501 - 190,501
National City Bank 1.48% 5/1/2003 373 - 373 372,817 - 372,817
----------------------------------------------------------------------------------------------------------------------------
2,331 14,762 17,093 2,331,042 14,762,026 17,093,068
-----------------------------------------------------------------------------------------------------------------------------
Commercial Paper
Concord Minutemen Capital 1.27% 5/15/2003 174 434 608 174,241 1,267,471 1,441,712
Enterprise Funding Corp. 1.27% 5/15/2003 - 40 40 - 39,523 39,523
Fairway Finance Corp. 1.27% 5/15/2003 290 737 1,027 290,401 737,290 1,027,691
Lexington Parker Capital Corp. 1.27% 5/22/2003 - 329 329 - 329,433 329,433
Scaldis Capital LLC 1.27% 5/15/2003 95 924 1,019 94,641 923,804 1,018,445
Sheffield Receivables Corp. 1.27% 5/20/2003 126 - 126 126,114 - 126,114
----------------------------------------------------------------------------------------------------------------------------
685 2,464 3,149 685,397 3,297,521 3,982,918
-----------------------------------------------------------------------------------------------------------------------------
Non-Registered Investment Companies
Institutional Money Market Trust 1,020 6,080 7,100 1,019,816 6,080,216 7,100,032
-----------------------------------------------------------------------------------------------------------------------------
Total Investment of Cash Collateral for Securities Loaned 4,036 23,306 27,342 4,036,255 24,139,763 28,176,018
-----------------------------------------------------------------------------------------------------------------------------
(COST $4,036,255, $24,139,763, & $28,176,018 RESPECTIVELY)
Total Investments
(COST $17,309,121, $171,446,715, & $188,755,836 RESPECTIVELY) 16,085,310 155,608,337 171,693,647
Liabilities in Excess of Other Assets (4,145,156) (24,192,734) (28,337,890)
-------------------------------------------------------------------
Net Assets $ 11,940,154 $ 131,415,603 $ 143,355,757
-------------------------------------------------------------------
Note: There are no adjustments to portfolio securities or other portfolio assets and liabilities as of the date of these pro forma financial statements.
See Notes to Pro Forma Financial Statements.
Definition of Abbreviations and Annotations
- ----------------------------------------------------------------------------------------------------------------------
The following abbreviations are used throughout the Schedules of Investments:
Security Descriptions: Countries/Currencies:
ADR-American Depositary Receipt CAD-Canada/Canadian Dollar
REIT-Real Estate Investment Trust
AMERICAN SKANDIA ADVISOR FUNDS, INC.
PRO FORMA STATEMENT OF ASSETS AND LIABILITIES
April 30, 2003
- -----------------------------------------------------------------------------------------------------------------------------------------------------------------------
ProForma
Combined
ASAF Sanford ASAF Sanford
ASAF Bernstein Bernstein
Alliance/Bernstein Managed Index Managed Index
Growth + Value 500 Adjustments 500
------------------------------------------------------ --------------
Assets
Investments in securities at value (A), Including Securities Loaned at Value (B) $ 16,085,310 $ 155,608,337 $ $ 171,693,647
Cash - 1 1
Receivable for:
Securities sold - - -
Dividends and interest 10,171 124,473 134,644
Future Variation Margin - - -
Fund shares sold 54,017 643,002 697,019
Unrealized appreciation on foreign curreny exchange contracts - - -
Receivable from Investment Manager 3,579 - 3,579
Prepaid Expenses 28,760 24,620 53,380
-------------- ------------ ------------------ ------------
Total Assets 16,181,837 156,400,433 - 172,582,270
-------------- ------------ ------------------ ------------
Liabilities
Cash overdraft - - -
Payable to Investment Manager - 28,623 28,623
Payable upon return of securities lent 4,036,255 24,139,763 28,176,018
Payable for:
Securities purchased 167,857 - 167,857
Fund shares redeemed 40 621,159 621,199
Futures Variation Margin - - -
Distribution Fees 8,217 93,869 102,086
Accrued expenses and other liabilities 29,314 101,416 130,730
------------- ------------ ------------------ ------------
Total Liabilities 4,241,683 24,984,830 - 29,226,513
-------------- ------------ ------------------ ------------
Net Assets $ 11,940,154 $ 131,415,603 - $ 143,355,757
============== ============ ================== ============
Components of Net Assets
Common stock (unlimited number of shares authorized, $.001 par
value per share) $ 1,457 $ 18,362 $ $ 19,819
Additional paid-in capital 15,148,299 175,753,055 190,901,354
Undistributed net investment income (loss) (17,329) 43,637 26,308
Accumulated net realized gain (loss) on investments (1,968,461) (28,561,074) (30,529,535)
Accumulated net unrealized appreciation (depreciation) on investments (1,223,812) (15,838,377) (17,062,189)
-------------- ------------ ------------------ ------------
Net Assets $ 11,940,154 $ 131,415,603 - $ 143,355,757
============== ============ ================== ============
(A) Investments at cost $ 17,309,121 $ 171,446,714 - $ 188,755,835
============== ============ ================== ============
(B) Securities Loaned at Value $ 3,914,412 $ 23,385,323 - 27,299,735
============== ============ ================== ============
ProForma
Combined
ASAF Sanford ASAF Sanford
ASAF Bernstein Bernstein
Alliance/Bernstein Managed Index Managed Index
Growth + Value 500 Adjustments 500
------------------------------------------------------ --------------
NET ASSET VALUE:
Class A: Net Assets 2,972,611 27,221,595 30,194,206
Shares Outstanding 359,574 3,752,407 50,441 * 4,162,422
Net Asset Value
Per Share 8.27 7.25 7.25
Class B: Net Assets 5,309,705 64,857,371 70,167,076
Shares Outstanding 649,691 9,093,149 95,008 * 9,837,848
Net Asset Value
Per Share 8.17 7.13 7.13
Class C: Net Assets 2,368,121 32,321,771 34,689,892
Shares Outstanding 289,733 4,531,560 42,402 * 4,863,695
Net Asset Value
Per Share 8.17 7.13 7.13
Class X: Net Assets 1,289,717 7,014,866 8,304,583
Shares Outstanding 157,712 984,955 23,428 * 1,166,095
Net Asset Value
Per Share 8.18 7.12 7.12
*Reflects the change in shares of Alliance/ Bernstein Growth + Value upon conversion to
Sanford Bernstein Managed Index 500.
- -----------------------------------------------------------------------------------------------------------------------------------------------------------------------
See Notes to Pro Forma Financial Statements.
AMERICAN SKANDIA ADVISOR FUNDS, INC.
PRO FORMA STATEMENT OF OPERATIONS
For the Twelve Months Ended April 30, 2003
- ---------------------------------------------------------------------------------------------------------------------------------
ProForma
Combined
ASAF Sanford ASAF Sanford
ASAF Bernstein Bernstein
Alliance/Bernstein Managed Index Managed Index
Growth + Value 500 Adjustments 500
-----------------------------------------------------------------
Investment Income
Interest $ (5,366) $ (50,940) $ (56,306)
Dividends 220,959 2,573,626 2,794,585
Security Lending 4,972 30,670 35,642
Foreign taxes withheld (685) (4,063) (4,748)
-------------- ----------- -----------
----------
Total Investment Income 219,880 2,549,293 - 2,769,173
-------------- ----------- ---------- -----------
Expenses
Advisory fees 120,166 1,042,723 (23,962)(a) 1,138,927
Shareholder servicing fees 156,289 488,187 (39,781)(b) 604,695
Administration and accounting fees 51,173 51,903 (43,483)(c) 59,593
Custodian fees 3,841 (10,340) (3,965)(d) (10,464)
Distribution Fees - Class A 14,248 137,346 151,594
Distribution Fees - Class B 54,187 633,110 687,297
Distribution Fees - Class C 24,628 328,753 353,381
Distribution Fees - Class X 12,858 66,928 79,786
Legal Fees 468 5,061 5,529
Audit Fees 2,173 12,621 (326)(e) 14,468
Directors Fees 768 8,158 8,926
Registration Fees 32,079 48,301 (29,513)(f) 50,867
Printing and Postage Expenses 9,952 107,147 (498)(g) 116,601
Pricing Fees 1,198 1,392 (1,198)(h) 1,392
Miscellaneous expenses 972 13,696 14,668
-------------- ----------- ---------- -----------
Total Expenses 485,000 2,934,986 (142,726) 3,277,260
Less: Expense Reimbursements (216,842) (465,511) 100,649 (i) (581,704)
-------------- ----------- ---------- -----------
Net Expenses 268,158 2,469,475 (42,077) 2,695,556
-------------- ----------- ---------- -----------
Net Investment Income (Loss) (48,278) 79,818 42,077 73,617
-------------- ----------- ---------- -----------
Realized and Unrealized Gain (Loss) on
Investments
Net realized gain (loss) on:
Securities (1,703,735) (16,133,315) (17,837,050)
Futures Contracts - - -
Written Options Contracts - - -
Swap Agreements - - -
Foreign currency transactions - - -
-----------
-------------- ---------- -----------
Net Realized Gain (Loss) (1,703,735) (16,133,315) (17,837,050)
-------------- ----------- ---------- -----------
Net change in unrealized appreciation (depreciation) on:
Securities (353,997) (7,678,251) (8,032,248)
Futures Contracts - - -
Written Options Contracts - - -
Swap Agreements - - -
Translation of assets and liabilities denominated - - -
in foreign currencies - - -
----------- -----------
-------------- ----------
Net change in unrealized appreciation (depreciation) (353,997) (7,678,251) (8,032,248)
-------------- ----------- ---------- -----------
----------
Net gain (loss) on investments (2,057,732) (23,811,566) (25,869,298)
-------------- ----------- ---------- -----------
Net Increase (Decrease) in Net Assets Resulting
from Operations $ (2,106,010) $ (23,731,748) 42,077 $ (25,795,681)
============== =========== ========== ===========
- ---------------------------------------------------------------------------------------------------------------------------------
(a) Reflects savings in advisory fees from the lower advisory fee rate of the acquiring Fund.
(b) Reflects savings in shareholder servicing fees from the consolidation of Fund shareholder accounts.
(c) Reflects savings in administration and accounting fees from the consolidation of Fund assets.
(d) Reflects savings in transaction-based custody fees from the consolidation of Fund assets.
(e) Reflects savings in audit fees from the elimination of the audit of one Fund.
(f) Reflects savings in state registration fees from the consolidation of Fund assets.
(g) Reflects savings in printing expense from the elimination of one Fund.
(h) Reflects savings in securities valuation fees from the consolidation of Fund assets.
(i) Reflects a reduction of total Fund operating expenses in excess of the consolidated Fund's expense limitation.
See Notes to Pro Forma Financial Statements.
Definition of Abbreviations and Annotations
- ----------------------------------------------------------------------------------------------------------------------
The following abbreviations are used throughout the Schedules of Investments:
Security Descriptions: Countries/Currencies:
ADR-American Depositary Receipt CAD-Canada/Canadian Dollar
REIT-Real Estate Investment Trust
AMERICAN SKANDIA ADVISOR FUNDS, INC.
NOTES TO PRO FORMA FINANCIAL STATEMENTS
April 30, 2003
(Unaudited)
1. ORGANIZATION
American Skandia Advisor Funds, Inc. (the "Company") is an open-end management investment company,
registered under the Investment Company Act of 1940, as amended. The Company was organized on March
5, 1997 as a Maryland Corporation. The Company operates as a series company and, at April 30, 2003,
consisted of 29 diversified and 2 non-diversified investment portfolios. The following Notes and the
accompanying financial statements pertain to the combination of ASAF Alliance/Bernstein Growth & Value and
ASAF Sanford Bernstein Managed Index 500 Fund (the "Funds"). These Notes should be read in conjunction with
the financial statements of ASAF Sanford Bernstein Managed Index 500 Fund.
2. SIGNIFICANT ACCOUNTING POLICIES
The accompanying financial statements utilize the pooling of interests accounting method to show the
combination of the two Funds. In this method, the combined Statement of Assets and Liabilities is
constructed by the addition of these statements of each Fund. ASAF Sanford Bernstein Managed Index 500 Fund will be
the surviving entity of the business combination. It is intended that the combination will result in a tax-free
reorganization of the Funds.
The following accounting policies are in conformity with generally accepted accounting principles in the
United States of America. Such policies are consistently followed by the Funds in the preparation of their
financial statements. The preparation of financial statements requires management to make estimates and
assumptions that affect the reported amounts and disclosures in the financial statements. Actual results
could differ from those estimates.
Security Valuation
Fund securities are valued at the close of trading on the New York Stock Exchange. Equity securities are
valued generally at the last reported sales price on the securities exchange on which they are primarily
traded, or at the Official Closing price on the NASDAQ National Securities Market. Securities not listed on
an exchange or securities market, or securities in which there were no transactions, are valued at the
average of the most recent bid and asked prices.
Debt securities are generally traded in the over-the-counter market and are valued at a price deemed best to
reflect fair value as quoted by dealers who make markets in these securities or by an independent pricing
service. Debt securities that mature in less than 60 days are valued at amortized cost (or market value 60
days prior to maturity). The amortized cost method values a security at its cost at the time of purchase and
thereafter assumes a constant amortization to maturity of any discount or premium. Amortized cost reflects
market value.
Securities for which market quotations are not readily available are valued at fair value as determined in
accordance with procedures adopted by the Board of Directors. At April 30, 2003, there were no securities
valued in accordance with such procedures.
Foreign Currency Translation
Fund securities and other assets and liabilities denominated in foreign currencies are converted each
business day into U.S. dollars based on the prevailing rates of exchange. Purchases and sales of portfolio
securities and income and expenses are converted into U.S. dollars on the respective dates of such
transactions.
Gains and losses resulting from changes in exchange rates applicable to foreign equity securities are not
reported separately from gains and losses arising from movements in securities prices.
Net realized foreign exchange gains and losses include gains and losses from sales and maturities of
foreign currency exchange contracts, gains and losses realized between the trade and settlement dates of
foreign securities transactions, and the difference between the amount of net investment income accrued
on foreign securities and the U.S. dollar amount actually received. Net unrealized foreign exchange gains
and losses include gains and losses from changes in the value of assets and liabilities other than portfolio
securities, resulting from changes in exchange rates.
Foreign Currency Exchange Contracts
A foreign currency exchange contract ("FCEC") is a commitment to purchase or sell a specified amount of a
foreign currency at a specified future date, in exchange for either a specified amount of another foreign
currency or U.S. dollars.
FCECs are valued at the forward exchange rates applicable to the underlying currencies, and changes in
market value are recorded as unrealized gains and losses until the contract settlement date.
Risks could arise from entering into FCECs if the counterparties to the contracts were unable to meet the
terms of their contracts. In addition, the use of FCECs may not only hedge against losses on securities
denominated in foreign currency, but may also reduce potential gains on securities from favorable
movements in exchange rates.
Futures Contracts and Options
A financial futures contract calls for delivery of a particular security at a specified price and future date. The
seller of the contract agrees to make delivery of the type of security called for in the contract and the buyer
agrees to take delivery at a specified future date. Such contracts require an initial margin deposit, in cash or
cash equivalents, equal to a certain percentage of the contract amount. Subsequent payments (variation
margin) are made or received by the Fund each day, depending on the daily change in the value of the
contract. Futures contracts are valued based on their quoted daily settlement prices. Fluctuations in value
are recorded as unrealized gains and losses until such time that the contracts are terminated.
An option is a right to buy or sell a particular security or derivative instruments at a specified price within a
limited period of time. The buyer of the option, in return for a premium paid to the seller, has the right to buy
(in the case of a call option) or sell (in the case of a put option) the underlying security of the contract. The
premium received in cash from writing options is recorded as an asset with an equal liability that is adjusted
to reflect the options' value. The premium received from writing options which expire is recorded as realized
gains. The premium received from writing call and put options which are exercised or closed is offset
against the proceeds or amount paid on the transaction to determine the realized gain or loss. If a put option
is exercised, the premium reduces the cost basis of the security or currency purchased. Options are valued
based on their quoted daily settlement prices.
Risks could arise from entering into futures and written options transactions from the potential inability of
counterparties to meet the terms of their contracts, the potential inability to enter into a closing transaction
because of an illiquid secondary market, and from unexpected movements in interest or exchange rates or
securities values.
Repurchase Agreements
A repurchase agreement is a commitment to purchase government securities from a seller who agrees to
repurchase the securities at an agreed-upon price and date. The excess of the resale price over the
purchase price determines the yield on the transaction. Under the terms of the agreement, the market value,
including accrued interest, of the government securities will be at least equal to their repurchase price.
Repurchase agreements are recorded at cost, which, combined with accrued interest, approximates market
value.
Repurchase agreements entail a risk of loss in the event that the seller defaults on its obligation to
repurchase the securities. In such case, the Portfolio may be delayed or prevented from exercising its right to
dispose of the securities.
Securities Loans
Each Fund may lend securities for the purpose of realizing additional income. All securities loans are
collateralized by cash or securities issued or guaranteed by the U.S. Government or its agencies. The value
of the collateral is at least equal to the market value of the securities lent. However, due to market
fluctuations, the value of the securities lent may exceed the value of the collateral. On the next business day,
the collateral is adjusted based on the prior day's market fluctuations and the current day's lending activity.
Interest income from lending activity is determined by the amount of interest earned on collateral, less any
amounts payable to the borrowers of the securities and the lending agent.
Lending securities involves certain risks, including the risk that the Fund may be delayed or prevented from
recovering the collateral if the borrower fails to return the securities.
Cash collateral received in connection with securities lending is invested in short-term investments by the
lending agent. These may include the Institutional Money Market Trust, a portfolio of money market securities
advised by BlackRock Capital Management, Inc., or directly in high-quality, short-term instruments with a
maturity date not to exceed 397 days.
Deferred Organization Expenses
The Company bears all costs in connection with its organization. All such costs are amortized on a straight-
line basis over a five-year period beginning on the date of the commencement of operations. Unamortized
organization costs of the surviving entity, if any, are carried over to the merged company. Such costs of the
acquired company, if any, are not carried over and are immediately expensed.
Investment Transactions and Investment Income
Securities transactions are accounted for on the trade date. Realized gains and losses from securities sold
are recognized on the specific identification basis. Dividend income is recorded on the ex-dividend date.
Corporate actions, including dividends, on foreign securities are recorded on the ex-dividend date or, if such
information is not available, as soon as reliable information is available from the Fund's sources. Interest
income is recorded on the accrual basis and includes the accretion of discount and amortization of premium.
Multiple Classes of Shares
Each Fund is divided into Class A, B, C, and X shares. Each class of shares is separately charged its
respective distribution and service fees. Income, and expenses that are not specific to a particular class, and
realized and unrealized gains and losses are allocated to each class based on the daily value of the shares
of each class in relation to the total value of the Fund. Dividends are declared separately for each class and
the per-share amounts reflect differences in class-specific expenses.
Each Portfolio is charged for expenses that are directly attributable to it. Common expenses of the Company
are allocated to the Funds in proportion to their net assets.
Distributions to Shareholders
Distributions to shareholders are recorded on the ex-divided date. Dividends from net investment income
and net realized gains from investments transactions, if any, are declared and paid at least annually by the
Funds.
AMERICAN SKANDIA ADVISOR FUNDS
FILE NOS. 333-108370 & 811-08085
FORM N-14
PART C
OTHER INFORMATION
ITEM 15. Indemnification
Section 2-418 of the General Corporation Law of the State of Maryland provides for indemnification of officers,
directors, employees and agents of a Maryland corporation. With respect to indemnification of the officers and directors
of the Registrant, and of other employees and agents to such extent as shall be authorized by the Board of Directors or
the By-laws of the Registrant and be permitted by law, reference is made to Article VIII, Paragraph (a)(5) of the
Registrant's Articles of Incorporation and Article V of the Registrant's By-laws, both filed herewith.
With respect to liability of the Investment Manager to Registrant or to shareholders of ASAF Sanford Bernstein
Managed Index 500 Fund under the Investment Management Agreements, reference is made to Section 13 of each form of
Investment Management Agreement filed herewith.
With respect to the Sub-Advisors' indemnification under the Sub-Advisory Agreements of the Investment Manager,
any affiliated person within the meaning of Section 2(a)(3) of the Investment Company Act of 1940, as amended (the
"ICA"), of the Investment Manager and each person, if any, who controls the Investment Manager within the meaning of
Section 15 of the 1933 Act, as amended (the "1933 Act"), reference is made to Section 14 of each form of Sub-Advisory
Agreement filed herewith.
With respect to Registrant's indemnification of American Skandia Marketing, Incorporated (the "Distributor"), its
officers and directors and any person who controls the Distributor within the meaning of Section 15 of the 1933 Act, and
the Distributor's indemnification of Registrant, its officers and directors and any person who controls Registrant, if
any, within the meaning of the 1933 Act, reference is made to Section 10 of the form of Underwriting and Distribution
Agreement filed herewith.
Insofar as indemnification for liability arising under the 1933 Act may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised
that in the opinion of the Commission such indemnification is against public policy as expressed in the 1933 Act and is,
therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment
by the Registrant or expenses incurred or paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has
been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the 1933 Act and will be governed by the final
adjudication of such issue.
Item 16. Exhibits
The following exhibits are incorporated by reference to the previously filed document indicated below, except Exhibits
12(A) and 14(A):
(1) Copies of the charter of the Registrant as now in effect;
(A) Articles of Incorporation of Registrant as filed on March 10, 1997 and Articles of Amendment of
Registrant dated November 11, 2002 previously filed with Post-Effective Amendment No. 23 to
Registration Statement filed on Form N-1A on December 26, 2002.
(2) Copies of the existing by-laws or corresponding instruments of the Registrant;
(A) By-laws of Registrant previously filed with Post-Effective Amendment No. 25 to Registration
Statement filed on Form N-1A on May 9, 2003.
(3) Copies of any voting trust agreement affecting more than five percent of any class of equity securities
of the Registrant;
Not Applicable
(4) Copies of the agreement of acquisition, reorganization, merger, liquidation and any amendments to it;
(A) The Plan of Reorganization is included in this registration statement as Exhibit A to the
Prospectus/Proxy Statement.
(5) Copies of all instruments defining the rights of holders of the securities being registered including,
where applicable, the relevant portion of the articles of incorporation or by-laws of the Registrant;
(A) Articles of Incorporation and By-laws of the Registrant filed with Post-Effective Amendment
No. 23 to Registration Statement filed on Form N-1A on December 26, 2002.
(6) Copies of all investment advisory contracts relating to the management of the assets of the Registrant;
(A) Investment Management Agreement between American Skandia Advisor Funds, Inc., and each of Prudential Investments
LLC, and American Skandia Investment Services, Inc. for the ASAF Sanford Bernstein Managed Index 500 Fund was previously
filed with Post-Effective Amendment No. 25 to Registration Statement filed on Form N-1A on May 9, 2003.
(B) Investment Management Agreement between American Skandia Advisor Funds, Inc., and each of
Prudential Investments LLC, and American Skandia Investment Services, Inc. for the ASAF
Alliance/Bernstein Growth + Value Fund was previously filed with Post-Effective Amendment No.
25 to Registration Statement filed on Form N-1A on May 9, 2003.
(C) Sub-Advisory Agreement between American Skandia Investment Services, Incorporated and
Prudential Investments LLC and Sanford C. Bernstein & Co., LLC for the ASAF Sanford Bernstein
Managed Index 500 Fund was previously filed with Post-Effective Amendment No. 25 to
Registration Statement filed on Form N-1A on May 9, 2003.
(D) Sub-Advisory Agreement between American Skandia Investment Services, Incorporated and
Prudential Investments LLC and Alliance Capital Management, L.P. for the Alliance/Bernstein
Growth + Value Fund was previously filed with Post-Effective Amendment No. 25 to Registration
Statement filed on Form N-1A on May 9, 2003.
(7) Copies of each underwriting or distribution contract between the Registrant and a principal underwriter,
and specimens or copies of all agreements between principal underwriters and dealers;
(A) Form of Sales Agreement with American Skandia Marketing, Incorporated was previously filed with
Post-Effective Amendment No. 3 to Registration Statement filed on Form N-1A on July 9, 1997.
(8) Copies of all bonus, profit sharing, pension, or other similar contracts or arrangements wholly or
partly for the benefit of trustees or officers of the Registrant in their capacity as such. Furnish a
reasonably detailed description of any plan that is not set forth in a formal document;
Not Applicable
(9) Copies of all custodian agreements and depository contracts under Section 17(f) of the 1940 Act for
securities and similar investments of the Registrant, including the schedule of remuneration;
(A) Form of Custody Agreement between Registrant and PNC Bank was previously filed with Post-Effective Amendment No.
2 to Registration Statement filed on Form N-1A on June 4, 1997.
(B) Form of Amendment to Custody Agreement between Registrant and PNC Bank was previously filed with Post-Effective
Amendment No. 3 to Registration Statement filed on Form N-1A on June 5, 1998.
(C) Form of Custody Agreement between Registrant and Morgan Stanley Trust Company was previously filed with
Post-Effective Amendment No. 2 to Registration Statement filed on Form N-1A on June 4, 1997.
(D) Form of Foreign Custody Manager Delegation Amendment between Registrant and The Chase Manhattan Bank was
previously filed with Post-Effective Amendment No. 15 to Registration Statement filed on Form
N-1A on July 16, 2001.
(E) Form of Amendment to Custody Agreement between Registrant and PFPC Trust Company filed with Post-Effective
Amendment No. 10 Registration Statement filed on Form N-1A on March 2, 2000.
(F) Form of Transfer Agency and Service Agreement between Registrant and American Skandia Fund Services, Inc was
previously filed with Post-Effective Amendment No. 17 to Registration Statement filed on Form
N-1A on October 11, 2001.
(G) Form of Sub-transfer Agency and Service Agreement between American Skandia Fund Services, Inc. and Boston
Financial Data Services, Inc was previously filed with Post-Effective Amendment No. 20 to
Registration Statement filed on Form N-1A on March 1, 2002.
(10) Copies of any plan entered into by Registrant pursuant to Rule 12b-1 under the 1940 Act and any
agreements with any person relating to implementation of the plan, and copies of any plan entered into
by Registrant pursuant to Rule 18f-3 under the 1940 Act, any agreement with any person relating to
implementation of the plan, any amendment to the plan, and a copy of the portion of the minutes of the
meeting of the Registrant's trustees describing any action taken to revoke the plan;
(A) Form of Distribution and Service Plan for Class A Shares previously filed with Post-Effective
Amendment No. 2 to Registration Statement filed on Form N-1A on June 4, 1997.
(B) Form of Distribution and Service Plan for Class B Shares previously filed with Post-Effective
Amendment No. 2 to Registration Statement filed on Form N-1A on June 4, 1997.
(C) Form of Distribution and Service Plan for Class C Shares previously filed with Post-Effective
Amendment No. 2 to Registration Statement filed on Form N-1A on June 4, 1997.
(D) Form of Distribution and Service Plan for Class X Shares previously filed with Post-Effective
Amendment No. 2 to Registration Statement filed on Form N-1A on June 4, 1997.
(E) Form of Distribution and Service Plan for New Class X Shares previously filed with
Post-Effective Amendment No. 2 to Registration Statement filed on Form N-1A on June 4, 1997.
(11) An opinion and consent of counsel as to the legality of the securities being registered, indicating
whether they will, when sold, be legally issued, fully paid and nonassessable;
(A) Opinion and consent of counsel was previously filed with Post-Effective Amendment No. 24 to
Registration Statement filed on Form N-1A on February 28, 2003.
(12) An opinion, and consent to their use, of counsel or, in lieu of an opinion, a copy of the revenue ruling
from the Internal Revenue Service, supporting the tax matters and consequences to shareholders discussed
in the prospectus;
(A) Form of Opinion and Consent of Counsel Supporting Tax Matters and Consequences to Shareholders
is filed herewith as Exhibit No. 12(A).
(13) Copies of all material contracts of the Registrant not made in the ordinary course of business which are
to be performed in whole or in part on or after the date of filing the registration statement;
(A) Form of Administration Agreement between Registrant and PFPC Inc. was previously filed with Post-Effective
Amendment No. 2 to Registration Statement filed on Form N-1A on June 4, 1997.
(B) Form of Administration Agreement between Registrant and American Skandia Investment Services, Incorporated
previously filed with Post-Effective Amendment No. 12 to Registration Statement filed on Form
N-1A on August 22, 2000.
(14) Copies of any other opinions, appraisals, or rulings, and consents to their use, relied on in preparing
the registration statement and required by Section 7 of the 1933 Act;
(A) Consent of independent auditors is filed herewith.
(15) all financial statements omitted pursuant to Items 14(a)(1);
Not Applicable
(16) Manually signed copies of any power of attorney pursuant to which the name of any person has been signed
to the registration statement; and
(A) Powers of Attorney previously filed with Post-Effective Amendment No. 25 to Registration
Statement filed on Form N-1A on May 9, 2003.
(17) Any additional exhibits which the registrant may wish to file.
Not Applicable
Item 17. Undertakings
None
SIGNATURES
----------
Pursuant to the requirements of the Securities Act of 1933 and the Investment Company Act of 1940, the Registrant, American
Skandia Advisor Funds, Inc., has duly caused this Registration Statement to be signed on its behalf by the undersigned, duly
authorized, in the City of Shelton, and State of Connecticut, on the 29th day of October, 2003.
AMERICAN SKANDIA ADVISOR FUNDS, INC.
By: /s/Edward P. Macdonald
----------------------
Edward P. Macdonald
Assistant Secretary
Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed below by the
following persons in the capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
/s/ Judy A. Rice* President & Director 10/29/03
- ----------------- ------
Judy A. Rice
/s/ David E.A. Carson* Director 10/29/03
- ---------------------- ------
David E.A. Carson
/s/ Richard G. Davy, Jr. Assistant Treasurer 10/29/03
- ------------------------ ------
Richard G. Davy, Jr.
/s/ Robert E. LaBlanc* Director 10/29/03
- ---------------------- ------
Robert E. LaBlanc
/s/ Douglas H. McCorkindale* Director 10/29/03
- ---------------------------- ------
Douglas H. McCorkindale
/s/ Stephen P. Munn* Director 10/29/03
- -------------------- ------
Stephen P. Munn
/s/Richard A. Redeker* Director 10/29/03
- ---------------------- ------
Richard A. Redeker
/s/Robin B. Smith* Director 10/29/03
- ------------------ ------
Robin B. Smith
/s/Stephen Stoneburn* Director 10/29/03
- --------------------- ------
Stephen Stoneburn
/s/ Clay t. Whitehead* Director 10/29/03
- ---------------------- ------
Clay T. Whitehead
/s/Robert F. Gunia* Director 10/29/03
- ------------------- ------
Robert F. Gunia
*By: /s/ Edward P. Macdonald
-----------------------
Edward P. Macdonald
Assistant Secretary
*Pursuant to Powers of Attorney previously filed.
AMERICAN SKANDIA ADVISOR FUNDS
REGISTRATION STATEMENT ON FORM N-14
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
(12)(A) Form of Opinion and Consent of Counsel Supporting Tax Matters and Consequences to
Shareholders
(14)(A) Consent of Auditors
