File No. 333-108368
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, INC.
(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 Alliance Growth and Income 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 DeAM LARGE-CAP 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 DeAM Large Cap Value Fund (the "Large-Cap
Value Fund") would be acquired by the ASAF Alliance Growth and Income Fund (the "Growth and Income Fund" and together with the
Large-Cap 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 Large-Cap Value Fund is scheduled for November 21, 2003.
Only shareholders of the Large-Cap Value Fund will vote on the acquisition of the Large-Cap Value Fund's assets by the Growth and
Income 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 Large-Cap 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 the 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 A. Rice
Judy A. Rice
President
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AMERICAN SKANDIA ADVISOR FUNDS, INC.
ASAF DeAM LARGE-CAP 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 Large-Cap Value Fund (the "Large-Cap 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 Large-Cap Value Fund, to approve or disapprove a Plan of Reorganization under which the Large-Cap Value
Fund will transfer all of its assets to, and all of its liabilities will be assumed by, the ASAF Alliance Growth and Income Fund
(the "Growth and Income Fund"). In connection with this proposed transfer, each whole and fractional share of each class of the
Large-Cap Value Fund shall be exchanged for whole and fractional shares of equal net asset value of the same class of the Growth
and Income Fund and outstanding shares of the Large-Cap 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 Large-Cap Value Fund, has fixed the close of
business on September 19, 2003 as the record date for the determination of the shareholders of the Large-Cap Value Fund, as
applicable, entitled to notice of, and to vote at, the Meeting and any adjournments of the Meeting.
/s/Edward P. 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.........................................................................................5
Fee Arrangements................................................................................................................5
Distribution Plan...............................................................................................................6
Valuation.......................................................................................................................6
Purchases, Redemptions, Exchanges and Distributions.............................................................................6
Fees and expenses...............................................................................................................7
Expense Examples................................................................................................................9
Performance....................................................................................................................10
REASONS FOR THE TRANSACTION.......................................................................................................12
INFORMATION ABOUT THE TRANSACTION.................................................................................................13
Closing of the Transaction.....................................................................................................13
Expenses of the Transaction....................................................................................................13
Tax Consequences of the Transaction............................................................................................13
Characteristics of the Growth and Income Fund shares...........................................................................14
Capitalization of the Funds and Capitalization after the Transaction...........................................................14
VOTING INFORMATION................................................................................................................15
How to vote....................................................................................................................16
Solicitation of voting instructions............................................................................................16
ADDITIONAL INFORMATION ABOUT THE COMPANY AND THE FUNDS............................................................................16
PRINCIPAL HOLDERS OF SHARES.......................................................................................................17
EXHIBITS TO PROSPECTUS/PROXY STATEMENT............................................................................................19
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 DeAM Large-Cap Value Fund
By and in exchange for shares of the ASAF Alliance Growth and Income Fund
This Prospectus/Proxy Statement is furnished in connection with a Special Meeting (the "Meeting") of shareholders the
ASAF DeAM Large-Cap Value Fund (the "Large-Cap 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 Large-Cap Value Fund vote to
approve the Plan, you will receive shares of the ASAF Alliance Growth and Income Fund (the "Growth and Income Fund" and, together
with the Large-Cap Value Fund, the "Funds") of the Company equal in value to your investment in shares of the Large-Cap Value Fund
as provided in the Plan and described at greater length below. The Large-Cap 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
Large-Cap Value Fund. This Prospectus/Proxy Statement will first be sent to shareholders on or about October 20, 2003.
The investment objective of the Growth and Income Fund is to seek long term capital growth and income while the
investment objective of the Large-Cap Value Fund is to seek maximum capital growth. However, both Funds will invest primarily in
large-capitalization value equity securities.
This Prospectus/Proxy Statement gives the information about the proposed reorganization and issuance of shares of the
Growth and Income Fund that you should know before investing. You should retain it for future reference. Additional information
about the Growth and Income 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 Large-Cap
Value Fund and the Growth and Income Fund of the Company into a single Fund. If shareholders of the Large-Cap Value Fund vote to
approve the Plan, the assets of the Large-Cap Value Fund will be transferred to the Growth and Income Fund in exchange for a then
equal value of shares of the Growth and Income Fund. Shareholders will have their shares of the Large-Cap Value Fund exchanged
for the Growth and Income Fund shares of equal dollar value based upon the values of the shares at the time the Large-Cap Value
Fund assets are transferred to the Growth and Income Fund. The Large-Cap 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 Large-Cap Value Fund and will become a shareholder of the Growth and Income 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 Large-Cap Value Fund and the Growth and Income
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 Large-Cap Value Fund and the Growth and Income Fund, has approved the
Plan and unanimously recommends that you vote to approve the Plan.
Shareholder voting
Shareholders who own shares of the Large-Cap 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 Large-Cap 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 Large-Cap Value Fund and the Growth and Income Fund and the
differences between them. For a complete description of the investment policies and risks of the Growth and Income 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 Large-Cap Value Fund is maximum
capital growth and the investment objective of the Growth and Income Fund is long term capital growth and income. Both Funds will
invest primarily in equity securities of large-capitalization value companies.
The Large-Cap Value Fund will invest, under normal circumstances, at least 80% of the value of its assets in large
capitalization companies. The Fund pursues its investment objective by normally investing primarily in the equity securities of
large sized companies included in the Russell 1000 Value Index. Equity securities include common stocks and securities
convertible into or exchangeable for common stocks, including warrants and rights. The Fund's sub-advisor employs an investment
strategy that seeks to maintain a portfolio of equity securities which approximates the market risk of those stocks included in
the Russell 1000 Value Index, but which outperforms the Russell 1000 Value Index through active stock selection. The Russell 1000
Value Index is a market capitalization index that measures the performance of large, established companies trading at discounts to
their fair value. As of December 31, 2002, the average market capitalization of the companies in the Russell 1000 Value Index was
approximately $7.9 billion and the median market capitalization was approximately $2.6 billion. For purposes of the Fund, the
strategy of attempting to correlate a stock portfolio's market risk with that of a particular index, in this case the Russell 1000
Value Index, while improving upon the return of the same index through active stock selection, is called a "managed alpha"
strategy. The Fund's sub-advisor considers a number of factors in determining whether to invest in a value stock, including
earnings growth rate, analysts' estimates of future earnings and industry-relative price multiples. Other factors are net income
growth versus cash flow growth as well as earnings and price momentum. In the selection of investments, long-term capital
appreciation will take precedence over short range market fluctuations. However, the Fund may occasionally make investments for
short-term capital appreciation.
The Growth and Income Fund normally will invest in common stocks (and securities convertible into common stocks). The
Fund's sub-advisor will take a value-oriented approach, in that it will try to keep the Fund's assets invested in securities that
are selling at reasonable valuations in relation to their fundamental business prospects. In doing so, the Fund may forgo some
opportunities for gains when, in the judgment of the Fund's sub-advisor, they are too risky. In seeking to achieve its objective,
the Fund invests primarily in the equity securities of U.S. companies that the Fund's sub-advisor believes are undervalued. The
Fund's sub-advisor believes that, over time, stock prices (of companies in which the Fund invests) will come to reflect the
companies' intrinsic economic values. The Fund's sub-advisor uses a disciplined investment process to evaluate the companies in
its extensive research universe. Through this process, the Fund's sub-advisor seeks to identify the stocks of companies that
offer the best combination of value and potential for price appreciation.
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. Both Funds may hold up to 15% 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 and
Income Fund and the Large-Cap Value Fund will invest primarily in large-capitalization companies, the Funds should be less prone
to such abrupt and erratic price movements. In addition, 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, such as the Growth and Income Fund and the
Large-Cap 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 Growth and Income Fund. Alliance is a leading global investment adviser supervising client accounts with assets as of
December 31, 2002 totaling more than $386 billion. Paul Rissman and Frank Caruso have been primarily responsible for the
management of the Growth and Income Fund since Alliance became the Fund's sub-advisor in May 2000. Mr. Rissman has been Senior
Vice President of ACMC since 1994 and has been associated with Alliance since 1989. Mr. Caruso is a Senior Vice President of ACMC
and has been associated with Alliance since 1994.
Deutsche Asset Management, Inc. ("DAMI"), 345 Park Avenue, New York, New York 10154, serves as sub-advisor for the
Large-Cap Value Fund. DAMI was founded in 1838 as Morgan Grenfell Inc. and has provided asset management services since 1953. As
of December 31, 2002, as part of Deutsche Asset Management group ("DeAM"), DAMI managed approximately $90 billion of DeAM's $389.3
billion in assets. David Koziol and Michael Patchen are the co-portfolio managers for the Large-Cap Value Fund. They have been
involved in the management of the Large-Cap Value Fund since the Fund commenced operations. Mr. Koziol, CFA, Director and Head of
Global Quantitative Equities, joined DAMI in 2001 as Head of Global Quantitative Equity Research and International Portfolio
Manager after 6 years of experience as a Principal in the Advanced Strategies and Research Group at Barclays Global Investors,
where he developed quantitative equity fixed income and hedge fund products, and as an investment banker at Salomon Brothers. Mr.
Patchen, Vice President and Head of Global Quantitative Equity Portfolio Management, is responsible for managing a variety of
global mandates covering both traditional accounts and a market-neutral hedge fund. Mr. Patchen joined DAMI in 2000 with four
years of experience managing global quantitative mandates including hedge funds and separate accounts at AQR Capital Management
and Goldman Sachs Asset Management.
Fee Arrangements
The Funds have comparable fee arrangements. Under the Management Agreement with respect to the Large-Cap Value Fund, the
Fund is obligated to pay ASISI an annual investment management fee equal to 0.90% of its average daily net assets. Similarly,
under the Management Agreement with respect to the Growth and Income Fund, the Fund is obligated to pay ASISI an annual investment
management fee equal to 1.00% of its average daily net assets. During the calendar year ended December 31, 2002, the Large-Cap
Value Fund paid $3,692 in investment management fees to ASISI. If the fee rate applicable to the Growth and Income Fund had been
in effect during such period, the Large-Cap Value Fund would have paid $4,102 in investment management fees to ASISI. Because the
Investment Management fee rates currently paid to ASISI by the Large-Cap Value Fund are less than the fee rates paid by the Growth
and Income Fund, former shareholders of the Large-Cap Value Fund would pay a higher investment advisory fee rate after becoming
shareholders of the Growth and Income Fund upon completion of the Transaction. However, the total net annual operating expenses
(after applicable fee waivers and expense reimbursements) for each Fund are identical and would remain the same for the combined
fund if the merger is approved.
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: Large-Cap Value
Fund, 1.15% and Growth and Income Fund, 1.15%. 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 DAMI and Alliance a sub-advisory fee for sub-advisory services for the Large-Cap Value Fund and the Growth and
Income Fund, respectively. ASISI pays these sub-advisory fees at no additional costs to the Funds. Under the current
sub-advisory agreement for the Large-Cap Value Fund, ASISI pays DAMI an annual sub-advisory fee equal to the following percentages
of the combined average daily net assets of the Fund and the series of American Skandia Trust managed by DAMI and similar to the
Fund: 0.20%of the portion of the combined average daily net assets not in excess of $500 million; plus 0.15% of the portion over
$500 million but not in excess of $1 billion; plus 0.10% of the portion in excess of $1 billion. Under the sub-advisory agreement
for the Growth and Income Fund, ASISI pays Alliance an annual sub-advisory fee equal to the following percentages of the combined
average daily net assets of the Fund and the series of American Skandia Trust managed by Alliance and similar to the Fund: 0.30%
of the portion of the combined average daily net assets not in excess of $1 billion; plus .25% of the portion over $1 billion but
not in excess of $1.5 billion; plus 0.20% of the portion in excess of $1.5 billion.
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 Growth and Income Fund after the Transaction.
Class A Shares
Growth and Growth and Income Fund
Large-Cap Value Income Fund After Transaction
Fund Class A 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................................ 0.90% 1.00% 1.00%
Estimated Distribution (12b-1) Fees............ 0.50% 0.50% 0.50%
Other Expenses................................. 23.85% 0.63% 0.64%
Advisory Fee Waivers and Expense Reimbursement (23.60)% (0.48)% (0.49)%
Total Annual Fund Operating Expenses........... 1.65% 1.65% 1.65%
Class B Shares
Growth and Growth and Income Fund
Large-Cap Value Income Fund After Transaction
Fund Class B 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............................ 0.90% 1.00% 1.00%
Estimated Distribution (12b-1) Fees........ 1.00% 1.00% 1.00%
Other Expenses................................. 23.85% 0.63% 0.64%
Advisory Fee Waivers and Expense Reimbursement (23.60)% (0.48)% (0.49)%
Total Annual Fund Operating Expenses....... 2.15% 2.15% 2.15%
Class C Shares
Growth and Growth and Income Fund
Large-Cap Value Income Fund After Transaction
Fund Class C 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............................ 0.90% 1.00% 1.00%
Estimated Distribution (12b-1) Fees........ 1.00% 1.00% 1.00%
Other Expenses............................. 23.85% 0.63% 0.64%
Advisory Fee Waivers and Expense (23.60)% (0.48)% (0.49)%
Reimbursement
Total Annual Fund Operating Expenses....... 2.15% 2.15% 2.15%
Class X Shares
Growth and Growth and Income Fund
Large-Cap Value Income Fund After Transaction
Fund Class X Class X Class X
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............................ 0.90% 1.00% 1.00%
Estimated Distribution (12b-1) Fees........ 1.00% 1.00% 1.00%
Other Expenses............................. 23.85% 0.63% 0.64%
Advisory Fee Waivers and Expense Reimbursement (23.60)% (0.48)% (0.49)%
Total Annual Fund Operating Expenses....... 2.15% 2.15% 2.15%
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 Growth and Income 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
Large-Cap Value Fund 733 4,707 7,234 10,225
Growth and Income Fund 733 1,160 1,612 2,860
Growth and Income Fund 733 1,162 1,616 2,869
(Projected after the Transaction)
Class B Shares
1 Year 3 Years 5 Years 10 Years
Large-Cap Value Fund 818 4,873 7,345 10,235
Growth and Income Fund 818 1,172 1,552 2,807
Growth and Income Fund 818 1,174 1,556 2,816
(Projected after the Transaction)
Class C Shares
1 Year 3 Years 5 Years 10 Years
Large-Cap Value Fund 416 4,528 7,174 10,244
Growth and Income Fund 416 864 1,439 2,999
Growth and Income Fund 416 866 1,443 3,008
(Projected after the Transaction)
Class X Shares
1 Year 3 Years 5 Years 10 Years
Large-Cap Value Fund 824 4,985 7,624 10,503
Growth and Income Fund 824 1,191 1,686 3,001
Growth and Income Fund 824 1,193 1,690 3,011
(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
Large-Cap Value Fund 733 4,707 7,234 10,225
Growth and Income Fund 733 1,160 1,612 2,860
Growth and Income Fund 733 1,162 1,616 2,869
(Projected after the Transaction)
Class B Shares
1 Year 3 Years 5 Years 10 Years
Large-Cap Value Fund 218 4,473 7,145 10,235
Growth and Income Fund 218 772 1,352 2,807
Growth and Income Fund 218 774 1,356 2,816
(Projected after the Transaction)
Class C Shares
1 Year 3 Years 5 Years 10 Years
Large-Cap Value Fund 316 4,528 7,174 10,244
Growth and Income Fund 316 864 1,439 2,999
Growth and Income Fund 316 866 1,443 3,008
(Projected after the Transaction)
Class X Shares
1 Year 3 Years 5 Years 10 Years
Large-Cap Value Fund 224 4,585 7,324 10,503
Growth and Income Fund 224 791 1,386 3,001
Growth and Income Fund 224 793 1,390 3,011
(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.
ASAF DeAM Large-Cap Value Fund
No performance information is included for the Large-Cap Value Fund because it commenced operations after January, 2002.
ASAF ALLIANCE GROWTH AND INCOME FUND
-------------------------------------------------- ------------------------------------------------
Best Quarter Worst Quarter
-------------------------------------------------- ------------------------------------------------
-------------------------------------------------- ------------------------------------------------
Up 16.08%, 4th Quarter 1998 Down 18.67%, 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 -28.69% -0.48% N/A
----------------------------------- ------------- -------------------------- ------------------------
----------------------------------- ------------- -------------------------- ------------------------
Return After Taxes on -28.69% -0.88% N/A
Distributions
----------------------------------- ------------- -------------------------- ------------------------
----------------------------------- ------------- -------------------------- ------------------------
Return After Taxes on -17.61% -0.41% N/A
Distributions and Sale of Fund
Shares
----------------------------------- ------------- -------------------------- ------------------------
----------------------------------- ------------- -------------------------- ------------------------
Class B
----------------------------------- ------------- -------------------------- ------------------------
----------------------------------- ------------- -------------------------- ------------------------
Return Before Taxes -30.68% -0.15% N/A
----------------------------------- ------------- -------------------------- ------------------------
Class C
----------------------------------- ------------- -------------------------- ------------------------
----------------------------------- ------------- -------------------------- ------------------------
Return Before Taxes -26.39% -0.05% N/A
----------------------------------- ------------- -------------------------- ------------------------
Class X
----------------------------------- ------------- -------------------------- ------------------------
----------------------------------- ------------- -------------------------- ------------------------
Return Before Taxes -28.76% -0.14% N/A
----------------------------------- ------------- -------------------------- ------------------------
Index
----------------------------------- ------------- -------------------------- ------------------------
----------------------------------- ------------- -------------------------- ------------------------
Standard & Poor's 500 Index -22.09% -0.58% N/A
----------------------------------- ------------- -------------------------- ------------------------
*Prior to May 1, 2000, the ASAF Alliance Growth and Income Fund was known as the ASAF Lord Abbett Growth and
Income Fund, and Lord, Abbett & Co. served as Sub-advisor to the Fund.
** Inception date: December 31, 1997
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 Large-Cap Value
and the Growth and Income Funds and that the interests of the shareholders of Large-Cap Value and the Growth and Income 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 Large-Cap 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 the Growth and
Income Fund;
o the relative expense ratios of the Funds and the impact of the proposed Transaction on the expense ratios;
o the potential benefits of the proposed Transaction to the shareholders of each Fund, including the long-term economies of scale;
o the anticipated tax consequences of the Transaction with respect to each Fund and its shareholders; and
o the relative size of the Large-Cap Value Fund and the lack of growth in the assets and the number of shareholders of Large-Cap
Value Fund.
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 styles and investment policies and
restrictions. The Investment Managers advised the Board that the Large-Cap Value Fund had difficulty attracting assets, had never
reached scale and that as of May 31, 2003 had assets of only approximately $1.4 million while the Growth and Income Fund had
assets of approximately $230 million, and that the Large-Cap Value Fund had generally under-performed the Growth and Income Fund
as well as other funds in its peer group. The Investment Managers also advised the Board that by merging the Funds, shareholders
of the combined fund would enjoy a greater asset base over which expenses would be spread. It was also noted that the Large-Cap
Value Fund has a higher total cost structure and higher expense ratio (before any fee waivers or expense reimbursements) as
compared to the Growth and Income Fund, and that the total gross operating expenses of the combined fund would be significantly
lower than the current total gross operating expenses of the Large-Cap Value Fund. The Board considered that if the merger is
approved, shareholders of Large-Cap Value Fund, regardless of the class of shares they own, would have identical total net annual
operating expenses and significantly lower total gross annual operating expenses paid on their investment, while the shareholders
of the Growth and Income Fund would have identical total net annual operating expenses and very slightly increased total gross
annual operating expenses (.01%) 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 Growth and Income
Fund, the incremental assets should help to stabilize certain non-distribution related expenses. The Board was also 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 Large-Cap Value Fund and the Growth and Income Fund and that no dilution of value would
result to the shareholders of the Large-Cap Value Fund or the Growth and Income Fund from the Transaction. Consequently, the
Board approved the Plan and recommended that shareholders of the Large-Cap 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 Large-Cap Value Fund do not approve the Plan, the Board will consider other possible courses of
action for the Large-Cap Value Fund, including, among others, consolidation of the Large-Cap Value Fund with one or more Funds of
the Company other than the Growth and Income 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 Large-Cap Value Fund approve the Plan, the Transaction will take place after various conditions
are satisfied by the Company on behalf of the Large-Cap Value Fund and the Growth and Income 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 Large-Cap Value Fund do not approve the Plan, the Transaction will not take place.
If the shareholders of the Large-Cap Value Fund approve the Plan, the Large-Cap Value Fund will deliver to the Growth and
Income Fund substantially all of its assets on the closing date. As a result, shareholders of the Large-Cap Value Fund will
beneficially own shares of the Growth and Income Fund that, as of the date of the exchange, have a value equal to the dollar value
of the assets delivered to the Growth and Income Fund. The stock transfer books of the Large-Cap Value Fund will be permanently
closed on the closing date. Requests to transfer or redeem assets allocated to the Large-Cap 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 Large-Cap 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 Large-Cap Value Fund will be transferred in-kind to the
Growth and Income Fund prior to the restructuring of the Large-Cap 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 the Large-Cap Value Fund and Growth and
Income Fund, and upon certain assumptions, substantially to the effect that:
1. The acquisition by Growth and Income Fund of the assets of Large-Cap Value Fund in exchange solely for voting shares of Growth
and Income Fund and the assumption by Growth and Income Fund of the liabilities of Large-Cap Value Fund, if any, followed by the
distribution of the Growth and Income Fund shares acquired by Large-Cap Value Fund pro rata to their shareholders, will constitute
a reorganization within the meaning of Section 368(a)(1) of the Code, and Growth and Income Fund and Large-Cap Value Fund each
will be "a party to a reorganization" within the meaning of Section 368(b) of the Code;
2. The shareholders of Large-Cap Value Fund will not recognize gain or loss upon the exchange of all of their shares of Large-Cap
Value Fund solely for shares of Growth and Income Fund, as described above and in the Plan;
3. No gain or loss will be recognized by Large-Cap Value Fund upon the transfer of its assets to Growth and Income Fund in
exchange solely for Class A, Class B, Class C, and Class X shares of Growth and Income Fund and the assumption by Growth and
Income Fund of the liabilities of Large-Cap Value Fund, if any. In addition, no gain or loss will be recognized by Growth and
Income Fund on the distribution of such shares to the shareholders of Large-Cap Value Fund in liquidation of Large-Cap Value Fund;
4. No gain or loss will be recognized by Growth and Income Fund upon the acquisition of the assets of Large-Cap Value Fund in
exchange solely for shares of Growth and Income Fund and the assumption of the liabilities of Large-Cap Value Fund, if any;
5. Growth and Income Fund's basis for the assets acquired from Large-Cap Value Fund will be the same as the basis of these assets
when held by Large-Cap Value Fund immediately before the transfer, and the holding period of such assets acquired by Growth and
Income Fund will include the holding period of these assets when held by Large-Cap Value Fund;
6. Large-Cap Value Fund's shareholders' basis for the shares of Growth and Income Fund to be received by them pursuant to the
reorganization will be the same as their basis in Large-Cap Value Fund shares exchanged; and
7. The holding period of Growth and Income Fund shares to be received by the shareholders of Large-Cap Value Fund will include the
holding period of their Large-Cap Value Fund shares exchanged provided such Large-Cap Value Fund shares were held as capital
assets on the date of the exchange.
Shareholders of Large-Cap 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 Growth and Income Fund shares
Shares of the Growth and Income Fund will be distributed to shareholders of the Large-Cap Value Fund and will have the
same legal characteristics as the shares of the Growth and Income 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 Large-Cap Value Fund and the
Growth and Income Fund. The table also shows the projected capitalization of the Growth and Income Fund shares as adjusted to
give effect to the proposed Transaction. The capitalization of the Growth and Income Fund is likely to be different when the
Transaction is consummated.
Class A
Large-Cap Value Growth and Growth and Income
Fund Projected after
Fund Income Fund Transaction
(unaudited) (unaudited) Adjustments (unaudited)
Net assets................................. 201,860 47,500,447 47,702,307
Total shares outstanding................... 24,205 4,637,560 (4,492)* 4,657,273
Net asset value per share.................. 8.34 10.24 10.24
Class B
Growth and Income
Large-Cap Value Growth and Fund Projected after
Fund Income Fund Transaction
(unaudited) (unaudited) Adjustments (unaudited)
Net assets................................. 594,711 101,549,415 102,144,126
Total shares outstanding................... 71,514 10,098,525 (12,398)* 10,157,641
Net asset value per share.................. 8.32 10.06 10.06
Class C
Growth and Income
Large-Cap Value Growth and Fund Projected after
Fund Income Fund Transaction
(unaudited) (unaudited) Adjustments (unaudited)
Net assets................................. 366,796 47,699,691 48,066,487
Total shares outstanding................... 44,110 4,747,508 (7,613)* 4,784,005
Net asset value per share.................. 8.32 10.05 10.05
Class X
Growth and Income
Large-Cap Value Growth and Fund Projected after
Fund Income Fund Transaction
(unaudited) (unaudited) Adjustments (unaudited)
Net assets................................. 78,970 24,988,764 25,067,734
Total shares outstanding................... 9,511 2,488,805 (1,645)* 2,496,671
Net asset value per share.................. 8.30 10.04 10.04
*Reflects the change in shares of the Large-Cap Value Fund upon conversion to the Growth and Income Fund.
VOTING INFORMATION
Shareholders of record of the Large-Cap Value Fund on the Record Date will be entitled to vote at the Meeting. On the
Record Date, there were 176,643 shares of the Large-Cap 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 Large-Cap 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 Large-Cap 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 Large-Cap Value Fund and the Growth and Income 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 Large-Cap Value Fund.
- ----------------------------------------- ------------------------------------ ------------------------------- ---------------
Fund and Share Class Owner Name Address Percent
Ownership
- ----------------------------------------- ------------------------------------ ------------------------------- ---------------
- ----------------------------------------- ------------------------------------ ------------------------------- ---------------
ASAF DeAM Large-Cap Value Fund Robert W. Baird & Co. Inc. 777 East Wisconsin Avenue 5.57%
Class A A/C 3563-3322 Milwaukee, WI 53202-5300
- ----------------------------------------- ------------------------------------ ------------------------------- ---------------
- ----------------------------------------- ------------------------------------ ------------------------------- ---------------
State Street Bank & Trust Co 1802 Mildred Ave 5.31%
Cust for the Rollover IRA of Marquette, WI 49855-2554
Beverly E. Hill
- ----------------------------------------- ------------------------------------ ------------------------------- ---------------
- ----------------------------------------- ------------------------------------ ------------------------------- ---------------
NFSC FEBO # L27-955477 1341 Sharon Lane 6.38%
NFS/FMTC ROLLIRA FBO Jane C. Cheboygan, MI 49721-8910
Bonscour
- ----------------------------------------- ------------------------------------ ------------------------------- ---------------
- ----------------------------------------- ------------------------------------ ------------------------------- ---------------
State Street Bank & Trust Co 5708 Venoy Road 5.39%
Cust for the IRA of Saginaw, MI 48604
FBO Larry O Orndorff
- ----------------------------------------- ------------------------------------ ------------------------------- ---------------
- ----------------------------------------- ------------------------------------ ------------------------------- ---------------
ASAF DeAM Large-Cap Value Fund Francine L. Ross 57 Scott Drive 6.81%
Class B Troy, NY 12180-9539
- ----------------------------------------- ------------------------------------ ------------------------------- ---------------
- ----------------------------------------- ------------------------------------ ------------------------------- ---------------
Richard S. & Bertha E. Moore TTEE 34530 Hoksey Church Rd 11.19%
Richard S. & Bertha E Moore Laurel, DE 19956
Revocable Trust UA DTD 01/30/2001
- ----------------------------------------- ------------------------------------ ------------------------------- ---------------
- ----------------------------------------- ------------------------------------ ------------------------------- ---------------
ASAF DeAM Large-Cap Value Fund State Street Bank & Trust Co Box 3030 NY 2 8.39%
Class C Cust for the IRA of Cropseyville, NY 12052-2819
Leland J. Armsby, Jr
- ----------------------------------------- ------------------------------------ ------------------------------- ---------------
- ----------------------------------------- ------------------------------------ ------------------------------- ---------------
Tecla M. Hutek TTEE 7833 E Nopal Ave 7.67%
Tecla M. Hutek Living Trust Mesa, AZ 85208-6919
UA DTD 01/16/1997
- ----------------------------------------- ------------------------------------ ------------------------------- ---------------
- ----------------------------------------- ------------------------------------ ------------------------------- ---------------
PFPC FBO American Skandia 211 Gulph Rd 29.17%
Attn: PFPC Brokerage Services King of Prussia, PA
19406-3101
- ----------------------------------------- ------------------------------------ ------------------------------- ---------------
- ----------------------------------------- ------------------------------------ ------------------------------- ---------------
ASAF DeAM Large-Cap Value Fund State Street Bank Simple IRA 53 Iroquois Avenue 7.45%
Class X Boss Glass Company NDFI SIM-IRA Lincoln Park, NJ 07035-2324
Bruce Hernsdorf
- ----------------------------------------- ------------------------------------ ------------------------------- ---------------
- ----------------------------------------- ------------------------------------ ------------------------------- ---------------
State Street Bank & Trust Co 25 Bloch Ter 7.24%
Cust for the IRA of John M. Dehoney Lake Oswego, OR 97035-1407
- ----------------------------------------- ------------------------------------ ------------------------------- ---------------
- ----------------------------------------- ------------------------------------ ------------------------------- ---------------
State Street Bank & Trust Co 17450 SE Royer Rd 5.96%
Cust for the IRA of Carole C. Clackamas, OR 97015-8843
Crowley
- ----------------------------------------- ------------------------------------ ------------------------------- ---------------
- ----------------------------------------- ------------------------------------ ------------------------------- ---------------
State Street Bank & Trust Co 1671 Heritage Drive 7.34%
Cust for the IRA of Pahrump, NV 89048-8011
Darlene D. Hamrick
- ----------------------------------------- ------------------------------------ ------------------------------- ---------------
- ----------------------------------------- ------------------------------------ ------------------------------- ---------------
State Street Bank & Trust Co 1375 Apple Lane 12.40%
Cust for the IRA of East Meadow, NY 11554-2702
Matthew V. Decillis
- ----------------------------------------- ------------------------------------ ------------------------------- ---------------
- ----------------------------------------- ------------------------------------ ------------------------------- ---------------
State Street Bank & Trust Co 6 Lord Joes Lndg 9.41%
Cust for the IRA of Northport, NY 11768-1570
Pamela A. Ellis
- ----------------------------------------- ------------------------------------ ------------------------------- ---------------
- ----------------------------------------- ------------------------------------ ------------------------------- ---------------
State Street Bank Simple IRA 45309 Mill Cove Harbor Road 6.82%
Waldorf Marble Inc NDFI SIM-IRA California, MD 20619-3592
Carleen R. Downs
- ----------------------------------------- ------------------------------------ ------------------------------- ---------------
*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 Large-Cap
Value Fund and the ASAF Sanford Bernstein Growth and Income 500 Fund
B Prospectus for the ASAF Alliance/Bernstein Large-Cap Value Fund and the ASAF Sanford Bernstein Growth and Income
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)
A-3
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 Alliance Growth and Income Fund (the "Acquiring Fund") and
the ASAF DeAM Large-Cap 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 Alliance Growth and Income Fund and the ASAF
DeAM Large-Cap 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 Alliance Growth and Income Fund
ASAF DeAM Large-Cap Value Fund
Attest: By:
_____________________________ ___________________________________________
Title:
___________________________________________
EXHIBIT B
Prospectus dated MARCH 1, 2003
The Prospectus for the ASAF Alliance/Bernstein Large-Cap Value Fund and the ASAF Sanford Bernstein Growth and Income 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.
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.
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.
NOTES
Pr4 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
DeAM LARGE-CAP VALUE FUND AND THE ASAF ALLIANCE GROWTH AND INCOME FUND OF
THE COMPANY, THAT PROVIDES FOR THE ACQUISITION OF SUBSTANTIALLY ALL OF THE
ASSETS OF THE ASAF DeAM LARGE-CAP VALUE FUND IN EXCHANGE FOR SHARES OF ASAF
ALLIANCE GROWTH AND INCOME FUND, THE DISTRIBUTION OF SUCH SHARES TO THE
SHAREHOLDERS OF THE ASAF DeAM LARGE-CAP VALUE FUND, AND THE LIQUIDATION AND
DISSOLUTION OF ASAF DeAM LARGE-CAP VALUE FUND.
0 0 0
PLEASE SIGN ON REVERSE SIDE
DeAM LC
STATEMENT OF ADDITIONAL INFORMATION
FOR
AMERICAN SKANDIA ADVISOR FUNDS, INC.
Dated October 10, 2003
Acquisition of the Assets of
the ASAF DeAM Large-Cap Value Fund,
a series of American Skandia Advisor Funds, Inc.
By and in exchange for shares of the
the ASAF Alliance Growth and Income 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 DeAM Large-Cap Value Fund for shares of the ASAF Alliance Growth and Income 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 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 DEAM LARGE-CAP VALUE/ASAF ALLIANCE GROWTH AND INCOME
APRIL 30, 2003 (UNAUDITED)
COMMON STOCK ASAF DEAM ASAF ALLIANCE ASAF ALLIANCE ASAF DEAM ASAF ALLIANCE ASAF ALLIANCE
LARGE-CAP VALUE GROWTH & INCOME GROWTH & INCOME LARGE-CAP VALUE GROWTH & INCOME GROWTH & INCOME
SHARES SHARES PRO FORMA COMBINED VALUE ($) VALUE ($) PRO FORMA COMBINED
Aerospace Goodrich Corp. - 100,000 100,000 - 1,407,000 1,407,000
United Technologies Corp. - 60,000 60,000 - 3,708,600 3,708,600
Beverages Anheuser-Busch Companies, Inc. - 80,000 80,000 - 3,990,400 3,990,400
Building Materials American Standard Companies, Inc. - 25,000 25,000 - 1,779,750 1,779,750
Business Services First Data Corp. - 115,000 115,000 - 4,511,450 4,511,450
Cable Television Comcast Corp. Cl-A - 200,000 200,000 - 6,382,000 6,382,000
Comcast Corp. Special Cl-A - 55,000 55,000 - 1,653,300 1,653,300
Cox Communications, Inc. Cl-A - 50,000 50,000 - 1,655,000 1,655,000
Chemicals DuPont, (E.I.) de Nemours & Co. - 45,000 45,000 - 1,913,850 1,913,850
Lyondell Chemical Co. - 115,000 115,000 - 1,673,250 1,673,250
Computer Hardware Hewlett-Packard Co. - 100,000 100,000 - 1,630,000 1,630,000
Computer Services & Software Affiliated Computer Services, Inc. Cl-A - 6,400 6,400 - 305,280 305,280
Veritas Software Corp. - 200,000 200,000 - 4,402,000 4,402,000
Conglomerates Altria Group, Inc. - 110,000 110,000 - 3,383,600 3,383,600
Johnson Controls, Inc. - 22,500 22,500 - 1,850,400 1,850,400
Consumer Products & Services Avon Products, Inc. - 50,000 50,000 - 2,908,500 2,908,500
Loews Corp. - Carolina Group - 81,300 81,300 - 1,494,294 1,494,294
Electronic Components & Equipment Sanmina-SCI Corp. - 300,000 300,000 - 1,440,000 1,440,000
Solectron Corp. - 118,100 118,100 - 376,739 376,739
Entertainment & Leisure AOL Time Warner, Inc. - 125,000 125,000 - 1,710,000 1,710,000
Carnival Corp. - 70,000 70,000 - 1,931,300 1,931,300
Harley-Davidson, Inc. - 45,000 45,000 - 1,999,800 1,999,800
Viacom, Inc. Cl-B - 125,000 125,000 - 5,426,250 5,426,250
Financial - Bank & Trust Bank of America Corp. - 60,000 60,000 - 4,443,000 4,443,000
Bank One Corp. - 235,000 235,000 - 8,471,750 8,471,750
Financial Services Citigroup, Inc. - 250,000 250,000 - 9,812,500 9,812,500
Fannie Mae - 85,000 85,000 - 6,153,150 6,153,150
Freddie Mac - 22,500 22,500 - 1,302,750 1,302,750
J.P. Morgan Chase & Co. - 325,000 325,000 - 9,538,750 9,538,750
MBNA Corp. - 215,000 215,000 - 4,063,500 4,063,500
Merrill Lynch & Co., Inc. - 100,000 100,000 - 4,105,000 4,105,000
Morgan Stanley Dean Witter & Co. - 100,000 100,000 - 4,475,000 4,475,000
Food Kroger Co. - 51,000 51,000 - 729,300 729,300
Healthcare Services Cardinal Health, Inc. - 25,000 25,000 - 1,382,000 1,382,000
HCA, Inc. - 155,000 155,000 - 4,975,500 4,975,500
Tenet Healthcare Corp. - 90,000 90,000 - 1,335,600 1,335,600
WellPoint Health Networks, Inc. - 52,200 52,200 - 3,964,068 3,964,068
Insurance ACE Ltd. - 150,000 150,000 - 4,962,000 4,962,000
American International Group, Inc. - 160,000 160,000 - 9,272,000 9,272,000
MetLife, Inc. - 75,000 75,000 - 2,154,750 2,154,750
PMI Group, Inc. - 70,000 70,000 - 2,157,400 2,157,400
Internet Services Juniper Networks, Inc. - 600,000 600,000 - 6,132,000 6,132,000
Medical Supplies & Equipment Applera Corp. - Applied Biosytems Group - 100,000 100,000 - 1,753,000 1,753,000
Metals & Mining Alcoa, Inc. - 35,000 35,000 - 802,550 802,550
Oil & Gas BP PLC [ADR] - 93,500 93,500 - 3,603,490 3,603,490
ChevronTexaco Corp. - 52,500 52,500 - 3,297,525 3,297,525
ConocoPhillips - 140,000 140,000 - 7,042,000 7,042,000
Exxon Mobil Corp. - 100,000 100,000 - 3,520,000 3,520,000
Kerr-McGee Corp. - 100,000 100,000 - 4,211,000 4,211,000
Occidental Petroleum Corp. - 60,000 60,000 - 1,791,000 1,791,000
Pharmaceuticals Pfizer, Inc. - 250,000 250,000 - 7,687,500 7,687,500
Schering-Plough Corp. - 90,000 90,000 - 1,629,000 1,629,000
Wyeth - 170,000 170,000 - 7,400,100 7,400,100
Railroads Burlington Northern Santa Fe Corp. - 85,000 85,000 - 2,393,600 2,393,600
Union Pacific Corp. - 125,000 125,000 - 7,440,000 7,440,000
Retail & Merchandising Home Depot, Inc. - 60,000 60,000 - 1,687,800 1,687,800
Semiconductors Altera Corp. - 96,000 96,000 - 1,517,760 1,517,760
Intersil Corp. Cl-A - 125,000 125,000 - 2,312,500 2,312,500
Marvell Technology Group Ltd. - 150,000 150,000 - 3,461,850 3,461,850
Telecommunications Lucent Technologies, Inc. - 500,000 500,000 - 900,000 900,000
SBC Communications, Inc. - 135,000 135,000 - 3,153,600 3,153,600
Sprint Corp. - 175,000 175,000 - 2,014,250 2,014,250
Utilities Constellation Energy Group, Inc. - 60,000 60,000 - 1,756,800 1,756,800
Edison International Co. - 115,000 115,000 - 1,677,850 1,677,850
Entergy Corp. - 30,000 30,000 - 1,398,300 1,398,300
Exelon Corp. - 25,000 25,000 - 1,326,000 1,326,000
TOTAL COMMON STOCK
------------------------------------------------------------------------------------------------------------------------------
(COST $0, $213,940,373, & $213,940,373 RESPECTIVELY) - 7,891,000 7,891,000 - 220,740,256 220,740,256
------------------------------------------------------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS
U.S. Treasury Obligations
U.S. Treasury Bills 1.13% 7/24/2003 85 - 85 84,773 - 84,773
------------------------------------------------------------------------------------------------------------------------------
(COST $84,775, $0, $84,775 RESPECTIVELY)
Registered Investment Companies
Temporary Investment Cash Fund - 176,226 176,226 - 176,226 176,226
Temporary Investment Fund - 176,225 176,225 - 176,225 176,225
------------------------------------------------------------------------------------------------------------------------------
(COST $0, $352,451, & $352,451 RESPECTIVELY) - 352,451 352,451 - 352,451 352,451
------------------------------------------------------------------------------------------------------------------------------
TOTAL SHORT-TERM INVESTMENTS
(COST $84,775, $352,451, & $437,226 RESPECTIVELY) 85 352,451 352,536 84,773 352,451 437,224
------------------------------------------------------------------------------------------------------------------------------
INVESTMENT OF CASH COLLATERAL FOR SECURITIES LOANED
Certificates of Deposits
American Express Centurion 1.34% 1/27/2004 - 2,446 2,446 - 2,445,660 2,445,660
Bear Stearns Co., Inc. 1.37% 1/16/2004 - 3,896 3,896 - 3,896,468 3,896,468
Dresdner Bank 1.78% 10/6/2003 - 2,040 2,040 - 2,040,058 2,040,058
Goldman Sachs Group, Inc. 1.30% 3/8/2004 - 1,699 1,699 - 1,698,845 1,698,845
Morgan Stanley Dean Witter Corp. 1.33% 11/7/2003 - 2,210 2,210 - 2,210,477 2,210,477
National City Bank 1.59% 11/10/2003 - 1,297 1,297 - 1,296,583 1,296,583
Merrill Lynch & Co., Inc. 1.48% 5/1/2003 - 5,936 5,936 - 5,935,799 5,935,799
KBC Bank 1.26% 5/1/2003 - 1,511 1,511 - 1,510,726 1,510,726
Bear Stearns Co., Inc. 1.43% 1/15/2004 - 2,247 2,247 - 2,246,638 2,246,638
------------------------------------------------------------------------------------------------------------------------------
- 23,282 23,282 - 23,281,254 23,281,254
------------------------------------------------------------------------------------------------------------------------------
Commercial Paper Enterprise Funding Corp. 1.27% 5/15/2003 - 2,325 2,325 - 2,324,547 2,324,547
Lexington Parker Capital Corp. 1.27% 5/22/2003 - 6 6 - 5,831 5,831
------------------------------------------------------------------------------------------------------------------------------
- 2,331 2,331 - 2,330,378 2,330,378
------------------------------------------------------------------------------------------------------------------------------
Non-Registered Investment Companies
Institutional Money Market Trust - 8,739 8,739 - 8,738,731 8,738,731
------------------------------------------------------------------------------------------------------------------------------
Total Investment of Cash Collateral for Securities Loaned
(COST $0, $34,350,363, & $34,350,363 RESPECTIVELY) - 34,352 34,352 - 34,350,363 34,350,363
------------------------------------------------------------------------------------------------------------------------------
Total Investments
(COST $84,775, $248,643,187, & 248,727,962 RESPECTIVELY) 84,773 255,443,070 255,527,843
Liabilities in Excess of Other Assets 1,157,564 (33,704,753) (32,547,189)
--------------------------------------------------------------------
Net Assets $ 1,242,337 $ 221,738,317 $ 222,980,654
====================================================================
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:
ADR-American Depositary Receipt
AMERICAN SKANDIA ADVISOR FUNDS, INC.
PRO FORMA STATEMENT OF ASSETS AND LIABILITIES
April 30, 2003
- --------------------------------------------------------------------------------------------------------------------------------------------------------------
Pro Forma
ASAF Alliance Combined ASAF
ASAF DeAM Growth and Alliance
Large-Cap Value Income Adjustment Growth + Income
------------------------------------------------------ --------------
Assets
Investments in securities at value (A), Including Securities Loaned at Value(B)$ 84,773 $ 255,443,07$ $ 255,527,843
Cash 1,130,743 - 1,130,743
Receivable for:
Securities sold - 1,168,883 1,168,883
Dividends and interest 404 161,324 161,728
Future Variation Margin - - -
Fund shares sold 10,391 65,055 75,446
Unrealized appreciation on foreign curreny exchange contracts - - -
Receivable from Investment Manager 13,521 - 13,521
Prepaid Expenses 22,670 27,663 50,333
-------------- ---------- ------------ -----------
Total Assets 1,262,502 256,865,995 - 258,128,497
--------------- ---------- ------------ -----------
Liabilities
Cash overdraft - - -
Payable to Investment Manager - 76,766 76,766
Payable upon return of securities lent - 34,350,363 34,350,363
Payable for:
Securities purchased - 304,311 304,311
Fund shares redeemed - - -
Futures Variation Margin - 156,510 156,510
Distribution Fees 852 - 852
Accrued expenses and other liabilities 19,313 239,728 259,041
-------------- ---------- ------------ -----------
Total Liabilities 20,165 35,127,678 - 35,147,843
--------------- ---------- ------------ -----------
Net Assets $ 1,242,337 $ 221,738,317 - $ 222,980,654
=============== ========== ============ ===========
Components of Net Assets
Common stock (unlimited number of shares authorized, $.001 par
value per share) $ 149 $ 21,593 $ $ 21,742
Additional paid-in capital 1,302,413 294,915,737 296,218,150
Undistributed net investment income (loss) (7,677) (60,734) (68,411)
Accumulated net realized gain (loss) on investments (144,695) (79,938,162) (80,082,857)
Accumulated net unrealized appreciation (depreciation) on investments 92,147 6,799,883 6,892,030
--------------- ---------- ------------ -----------
Net Assets $ 1,242,337 $ 221,738,317 - $ 222,980,654
=============== ========== ============ ===========
(A) Investments at cost $ 84,775 $ 248,643,187 - $ 248,727,962
=============== ========== ============ ===========
(B) Securities Loaned at Value $ 0 $ 32,889,208 - 32,889,208
=============== ========== ============ ===========
Proforma Pro Forma
ASAF Alliance Combined ASAF
ASAF DeAM Growth and Alliance
Large-Cap Value Income Adjustment Growth + Income
------------------------------------------------------ --------------
NET ASSET VALUE:
Class A: Net Assets 201,860 47,500,447 47,702,307
Shares Outstanding 24,205 4,637,560 (4,492) * 4,657,273
Net Asset Value
Per Share 8.34 10.24 10.24
Class B: Net Assets 594,711 101,549,415 102,144,126
Shares Outstanding 71,514 10,098,525 (12,398) * 10,157,641
Net Asset Value
Per Share 8.32 10.06 10.06
Class C: Net Assets 366,796 47,699,691 48,066,487
Shares Outstanding 44,110 4,747,508 (7,613) * 4,784,005
Net Asset Value
Per Share 8.32 10.05 10.05
Class X: Net Assets 78,970 24,988,764 25,067,734
Shares Outstanding 9,511 2,488,805 (1,645) * 2,496,671
Net Asset Value
Per Share 8.30 10.04 10.04
*Reflects the change in shares of DeAM Large-Cap Value upon conversion to
Alliance Growth and Income.
- --------------------------------------------------------------------------------------------------------------------------------------------------------------
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 Pro Forma
ASAF Alliance Combined ASAF
ASAF DeAM Growth and Alliance
Large-Cap Value Income Adjustment Growth + Income
-------------------------------------------------------- -----------
Investment Income
Interest $ 6,085 $ (138,591) $ (132,506)
Dividends - 5,083,650 5,083,650
Security Lending - 45,792 45,792
Foreign taxes withheld - (25,794) (25,794)
------------- ----------- -----------
-----------------
Total Investment Income 6,085 4,965,057 - 4,971,142
------------- ----------- ----------------- -----------
Expenses
Advisory fees 7,165 2,498,693 823 (a) 2,506,681
Shareholder servicing fees 88,133 1,060,337 (58,125)(b) 1,090,345
Administration and accounting fees 36,984 169,995 (37,022)(c) 169,957
Custodian fees 4,775 8,062 (4,726)(d) 8,111
Distribution Fees - Class A 700 265,468 266,168
Distribution Fees - Class B 3,424 1,151,145 1,154,569
Distribution Fees - Class C 2,534 540,873 543,407
Distribution Fees - Class X 604 275,766 276,370
Legal Fees 26 10,020 10,046
Audit Fees 78 24,174 (12)(e) 24,240
Directors Fees 54 15,600 15,654
Registration Fees 57,566 65,476 (52,961)(f) 70,081
Printing and Postage Expenses 696 202,589 (35)(g) 203,250
Pricing Fees 1,359 3,759 (1,359)(h) 3,759
Miscellaneous expenses 196 13,774 13,970
------------- ----------- ----------------- -----------
Total Expenses 204,294 6,305,731 (153,417) 6,356,608
Less: Expense Reimbursements (187,878) (1,198,953) 153,417 (i) (1,233,414)
------------- ----------- ----------------- -----------
Net Expenses 16,416 5,106,778 - 5,123,194
------------- ----------- ----------------- -----------
Net Investment Income (Loss) (10,331) (141,721) - (152,052)
------------- ----------- ----------------- -----------
Realized and Unrealized Gain (Loss) on
Investments
Net realized gain (loss) on:
Securities (144,695) (57,765,045) (57,909,740)
Futures Contracts - - -
Written Options Contracts - - -
Swap Agreements - - -
Foreign currency transactions - - -
-----------
------------- ----------------- -----------
Net Realized Gain (Loss) (144,695) (57,765,045) (57,909,740)
------------- ----------- ----------------- -----------
Net change in unrealized appreciation (depreciation) on:
Securities (3) (88,747) (88,750)
Futures Contracts 92,150 - 92,150
Written Options Contracts - - -
Swap Agreements - - -
Translation of assets and liabilities denominated - - -
in foreign currencies - - -
----------- -----------
------------- -----------------
Net change in unrealized appreciation (depreciation) 92,147 (88,747) 3,400
------------- ----------- ----------------- -----------
-----------------
Net gain (loss) on investments (52,548) (57,853,792) (57,906,340)
------------- ----------- ----------------- -----------
Net Increase (Decrease) in Net Assets Resulting
from Operations $ (62,879) $ (57,995,513) - $ (58,058,392)
============= =========== ================= ===========
- ---------------------------------------------------------------------------------------------------------------------------------------
(a) Reflects an increase in advisory fees from the higher 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.
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 DeAM Large Cap Value Fund and the
ASAF Alliance Growth and Income Fund (the "Funds"). These Notes should be read in conjunction with
the financial statements of ASAF Alliance Growth and Income 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 Alliance Growth and Income 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
AMERICAN SKANDIA ADVISOR FUNDS
FILE NOS. 333-108368 & 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 Alliance Growth and Income
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 Alliance Growth and Income 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 DeAM Large-Cap 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 Alliance Capital Management, L.P. for the ASAF Alliance Growth and Income 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 Deutsche Asset Management, Inc. for the ASAF DeAM Large-Cap 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
