STATEMENT OF ADDITIONAL INFORMATION
SEPTEMBER 11, 2000
(AS REVISED ON OCTOBER 31, 2000)
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AMERICAN SKANDIA ADVISOR FUNDS, INC.
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Table of Contents Page
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General Information.......................................................................................................2
Investment Programs of the Funds..........................................................................................2
ASAF Founders International Small Capitalization Fund............................................................3
ASAF AIM International Equity Fund..............................................................................10
ASAF Janus Overseas Growth Fund.................................................................................17
ASAF American Century International Growth Fund.................................................................20
ASAF Janus Small-Cap Growth Fund................................................................................24
ASAF Kemper Small-Cap Growth Fund...............................................................................28
ASAF T. Rowe Price Small Company Value Fund.....................................................................31
ASAF Janus Mid-Cap Growth Fund..................................................................................40
ASAF Neuberger Berman Mid-Cap Growth Fund.......................................................................44
ASAF Neuberger Berman Mid-Cap Value Fund........................................................................50
ASAF Alger All-Cap Growth Fund..................................................................................57
ASAF Gabelli All-Cap Value Fund.................................................................................60
ASAF INVESCO Technology Fund....................................................................................65
ASAF Rydex Managed OTC Fund.............................................................................................74
ASAF Alliance Growth Fund.......................................................................................77
ASAF Marsico Capital Growth Fund................................................................................82
ASAF Janus Capital Growth Fund..................................................................................84
ASAF Sanford Bernstein Managed Index 500 Fund...................................................................87
ASAF Alliance Growth and Income Fund............................................................................90
ASAF MFS Growth with Income Fund................................................................................92
ASAF INVESCO Equity Income Fund................................................................................102
ASAF American Century Strategic Balanced Fund..................................................................103
ASAF Federated High Yield Bond Fund............................................................................108
ASAF PIMCO Total Return Bond Fund..............................................................................111
ASAF JPM Money Market Fund.....................................................................................124
Fundamental Investment Restrictions.....................................................................................125
Certain Risk Factors and Investment Methods.............................................................................127
Additional Performance Information......................................................................................143
Management of the Company...............................................................................................148
Additional Information on the "Master Feeder" Fund Structure............................................................151
Investment Advisory & Administration Services.......................................................................152
Fund Expenses...........................................................................................................163
Distribution Arrangements...............................................................................................164
Determination of Net Asset Value........................................................................................168
Additional Information on the Purchase and Redemption of Shares.........................................................169
Portfolio Transactions..................................................................................................170
Additional Tax Considerations...........................................................................................173
Capital Stock of the Company & Principal Holders of Securities......................................................176
Other Information.......................................................................................................179
Financial Statements....................................................................................................180
Appendix................................................................................................................B-1
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This Statement of Additional Information ("SAI") is not a prospectus and should be read in conjunction with the Company's
current Prospectus, dated September 11, 2000. A copy of the Company's Prospectus may be obtained by writing to "American
Skandia Advisor Funds, Inc." at P.O. Box 8012, Boston, Massachusetts 02266-8012 or by calling 1-800-SKANDIA.
GENERAL INFORMATION
American Skandia Advisor Funds, Inc. (the "Company") is an open-end management investment company comprised of
twenty-five diversified investment portfolios (each a "Fund" and together the "Funds"). The Company was established as a
Maryland corporation on March 5, 1997, and had no business history prior to the Fund's commencement of operations on July
28, 1997. Five of the Funds -- ASAF American Century International Growth Fund (formerly, the ASAF T. Rowe Price
International Equity Fund), ASAF Janus Capital Growth Fund, ASAF INVESCO Equity Income Fund, ASAF Total Return Bond Fund
and ASAF JPM Money Market Fund (each a "Feeder Fund" and together the "Feeder Funds") -- invest all of their investable
assets in a corresponding portfolio (each a "Portfolio" and together the "Portfolios") of American Skandia Master Trust
(the "Trust"), an open-end management investment company comprised of five diversified investment portfolios. Each
Portfolio of the Trust invests in securities in accordance with an investment objective, investment policies and
limitations identical to those of its corresponding Feeder Fund. This "master/feeder" fund structure differs from that
of the other Funds of the Company and many other investment companies which directly invest and manage their own
portfolio of securities. Those Funds of the Company which currently are not organized under a "master/feeder" fund
structure (the "Non-Feeder Funds") retain the right to invest their assets in a corresponding Portfolio of the Trust in
the future. For additional information regarding the "master/feeder" fund structure, see the Company's Prospectus under
"Special Information on the 'Master Feeder' Fund Structure" and this SAI under "Additional Information on the `Master
Feeder' Fund Structure."
American Skandia Investment Services, Incorporated ("ASISI" or the "Investment Manager") acts as the investment
manager for both the Non-Feeder Funds and the Portfolios. Currently, ASISI engages the following sub-advisors
("Sub-advisor(s)") for the investment management of each Non-Feeder Fund and Portfolio: (a) ASAF Founders International
Small Capitalization Fund: Founders Asset Management LLC; (b) ASAF AIM International Equity Fund: A I M Capital
Management, Inc.; (c) ASAF Janus Overseas Growth Fund: Janus Capital Corporation; (d) ASMT American Century International
Growth Portfolio (formerly, the ASMT T. Rowe Price International Equity Portfolio); American Century Investment
Management, Inc. (e) ASAF Janus Small-Cap Growth Fund: Janus Capital Corporation; (f) ASAF Kemper Small-Cap Growth Fund:
Scudder Kemper Investments, Inc. (g) ASAF T. Rowe Price Small Company Value Fund: T. Rowe Price Associates, Inc.; (h)
ASAF Janus Mid-Cap Growth Fund: Janus Capital Corporation; (i) ASAF Neuberger Berman Mid-Cap Growth Fund: Neuberger
Berman Management Inc.; (j) ASAF Neuberger Berman Mid-Cap Value Fund: Neuberger Berman Management Inc.; (k) ASAF Alger
All-Cap Growth Fund: Fred Alger Management, Inc.; (l) ASAF Gabelli All-Cap Value Fund: GAMCO Investors, Inc.; (m) ASAF
INVESCO Technology Fund: INVESCO Funds Group, Inc.; (n) ASAF Rydex Managed OTC Fund: Rydex Global Advisors; (o) ASAF Alliance
Growth Fund (formerly, the ASAF Oppenheimer Large-Cap Growth Fund); Alliance Capital Management L.P.; (p) ASAF Marsico
Capital Growth Fund: Marsico Capital Management, LLC.; (q) ASMT Janus Capital Growth Portfolio: Janus Capital
Corporation; (r) ASAF Sanford Bernstein Managed Index 500 Fund (formerly, ASAF Bankers Trust Managed Index 500 Fund):
Sanford C. Bernstein & Co.; (s) ASAF Alliance Growth & Income Fund (formerly, ASAF Lord Abbett Growth and Income Fund):
Alliance Capital Management L.P.; (t) ASAF MFS Growth with Income Fund: Massachusetts Financial Services Company; (u)
ASMT INVESCO Equity Income Portfolio: INVESCO Funds Group, Inc.; (v) ASAF American Century Strategic Balanced Fund:
American Century Investment Management, Inc.; (w) ASAF Federated High Yield Bond Fund: Federated Investment Counseling;
(x) ASMT PIMCO Total Return Bond Portfolio: Pacific Investment Management Company; and (y) ASMT JPM Money Market
Portfolio: J.P. Morgan Investment Management Inc.
INVESTMENT PROGRAMS OF THE FUNDS
The following information supplements, and should be read in conjunction with, the discussion in the Prospectus
of the investment objective and policies of each Fund and Portfolio. The investment objective of each Fund or Portfolio
and supplemental information regarding its investment policies are described below separately for each Fund or Portfolio.
The investment objective and, unless otherwise specified, the investment policies and limitations of each Fund
and Portfolio are not "fundamental" policies and may be changed by the Directors of the Company or the Trustees of the
Trust, where applicable, without shareholder approval. Those investment policies specifically labeled as "fundamental,"
including those described in the "Fundamental Investment Restrictions" section of this SAI, may not be changed without
shareholder approval. Fundamental investment policies of a Fund or Portfolio may be changed only with the approval of at
least the lesser of (1) 67% or more of the total units of beneficial interest ("shares") of the Fund or Portfolio
represented at a meeting at which more than 50% of the outstanding shares of the Fund or Portfolio are represented, or
(2) a majority of the outstanding shares of the Fund or Portfolio.
.........Notwithstanding any other investment policy of a Fund, each Fund may invest all of its investable assets (cash,
securities, and receivables relating to securities) in an open-end management investment company having substantially the
same investment objective, policies and limitations as the Fund. Those Funds which currently invest all of their
investable assets in such a manner, the Feeder Funds, seek to meet their respective investment objectives by investing
all of their investable assets in a corresponding Portfolio of the Trust, which in turn invests directly in a portfolio
of securities in accordance with the investment objective, policies and limitations of its Feeder Fund. The investment
objective, policies and limitations of each Feeder Fund are otherwise identical to those of its corresponding Portfolio.
As such, the following discussion of the Feeder Funds, including references to the Directors of the Company, apply
equally to the Funds' corresponding Portfolios and the Trustees of the Trust, respectively.
ASAF Founders International Small Capitalization Fund:
Investment Objective: The investment objective of the Fund is to seek capital growth.
Investment Policies:
Options On Stock Indices and Stocks. An option is a right to buy or sell a security at a specified price within
a limited period of time. The Fund may write ("sell") covered call options on any or all of its portfolio securities.
In addition, the Fund may purchase options on securities. The Fund may also purchase put and call options on stock
indices.
The Fund may write ("sell") options on any or all of its portfolio securities and at such time and from time to
time as the Sub-advisor shall determine to be appropriate. No specified percentage of the Fund's assets is invested in
securities with respect to which options may be written. The extent of the Fund's option writing activities will vary
from time to time depending upon the Sub-advisor's evaluation of market, economic and monetary conditions.
When the Fund purchases a security with respect to which it intends to write an option, it is likely that the
option will be written concurrently with or shortly after purchase. The Fund will write an option on a particular
security only if the Sub-advisor believes that a liquid secondary market will exist on an exchange for options of the
same series, which will permit the Fund to enter into a closing purchase transaction and close out its position. If the
Fund desires to sell a particular security on which it has written an option, it will effect a closing purchase
transaction prior to or concurrently with the sale of the security.
The Fund may enter into closing purchase transactions to reduce the percentage of its assets against which
options are written, to realize a profit on a previously written option, or to enable it to write another option on the
underlying security with either a different exercise price or expiration time or both.
Options written by the Fund will normally have expiration dates between three and nine months from the date
written. The exercise prices of options may be below, equal to or above the current market values of the underlying
securities at the times the options are written. From time to time for tax and other reasons, the Fund may purchase an
underlying security for delivery in accordance with an exercise notice assigned to it, rather than delivering such
security from its portfolio.
A stock index measures the movement of a certain group of stocks by assigning relative values to the stocks
included in the index. The Fund purchases put options on stock indices to protect the portfolio against decline in
value. The Fund purchases call options on stock indices to establish a position in equities as a temporary substitute
for purchasing individual stocks that then may be acquired over the option period in a manner designed to minimize
adverse price movements. Purchasing put and call options on stock indices also permits greater time for evaluation of
investment alternatives. When the Sub-advisor believes that the trend of stock prices may be downward, particularly for
a short period of time, the purchase of put options on stock indices may eliminate the need to sell less liquid stocks
and possibly repurchase them later. The purpose of these transactions is not to generate gain, but to "hedge" against
possible loss. Therefore, successful hedging activity will not produce net gain to the Fund. Any gain in the price of a
call option is likely to be offset by higher prices the Fund must pay in rising markets, as cash reserves are invested.
In declining markets, any increase in the price of a put option is likely to be offset by lower prices of stocks owned by
the Fund.
The Fund may purchase only those put and call options that are listed on a domestic exchange or quoted on the
automatic quotation system of the National Association of Securities Dealers, Inc. ("NASDAQ"). Options traded on stock
exchanges are either broadly based, such as the Standard & Poor's 500 Stock Index and 100 Stock Index, or involve stocks
in a designated industry or group of industries. The Fund may utilize either broadly based or market segment indices in
seeking a better correlation between the indices and the Fund.
Transactions in options are subject to limitations, established by each of the exchanges upon which options are
traded, governing the maximum number of options which may be written or held by a single investor or group of investors
acting in concert, regardless of whether the options are held in one or more accounts. Thus, the number of options the
Fund may hold may be affected by options held by other advisory clients of the Sub-advisor. As of the date of this SAI,
the Sub-advisor believes that these limitations will not affect the purchase of stock index options by the Fund.
One risk of holding a put or a call option is that if the option is not sold or exercised prior to its
expiration, it becomes worthless. However, this risk is limited to the premium paid by the Fund. Other risks of
purchasing options include the possibility that a liquid secondary market may not exist at a time when the Fund may wish
to close out an option position. It is also possible that trading in options on stock indices might be halted at a time
when the securities markets generally were to remain open. In cases where the market value of an issue supporting a
covered call option exceeds the strike price plus the premium on the call, the Fund will lose the right to appreciation
of the stock for the duration of the option. For an additional discussion of options on stock indices and stocks and
certain risks involved therein, see this SAI and the Company's Prospectus under "Certain Risk Factors and Investment
Methods."
Futures Contracts. The Fund may enter into futures contracts (or options thereon) for hedging purposes. U.S.
futures contracts are traded on exchanges which have been designated "contract markets" by the Commodity Futures Trading
Commission (the "CFTC") and must be executed through a futures commission merchant (an "FCM") or brokerage firm which is
a member of the relevant contract market. Although futures contracts by their terms call for the delivery or acquisition
of the underlying commodities or a cash payment based on the value of the underlying commodities, in most cases the
contractual obligation is offset before the delivery date of the contract by buying, in the case of a contractual
obligation to sell, or selling, in the case of a contractual obligation to buy, an identical futures contract on a
commodities exchange. Such a transaction cancels the obligation to make or take delivery of the commodities.
The acquisition or sale of a futures contract could occur, for example, if the Fund held or considered purchasing
equity securities and sought to protect itself from fluctuations in prices without buying or selling those securities.
For example, if prices were expected to decrease, the Fund could sell equity index futures contracts, thereby hoping to
offset a potential decline in the value of equity securities in the portfolio by a corresponding increase in the value of
the futures contract position held by the Fund and thereby prevent the Fund's net asset value from declining as much as
it otherwise would have. The Fund also could protect against potential price declines by selling portfolio securities
and investing in money market instruments. However, since the futures market is more liquid than the cash market, the
use of futures contracts as an investment technique would allow the Fund to maintain a defensive position without having
to sell portfolio securities.
Similarly, when prices of equity securities are expected to increase, futures contracts could be bought to
attempt to hedge against the possibility of having to buy equity securities at higher prices. This technique is
sometimes known as an anticipatory hedge. Since the fluctuations in the value of futures contracts should be similar to
those of equity securities, the Fund could take advantage of the potential rise in the value of equity securities without
buying them until the market had stabilized. At that time, the futures contracts could be liquidated and the Fund could
buy equity securities on the cash market.
The Fund may also enter into interest rate and foreign currency futures contracts. Interest rate futures
contracts currently are traded on a variety of fixed-income securities, including long-term U.S. Treasury Bonds, Treasury
Notes, Government National Mortgage Association modified pass-through mortgage-backed securities, U.S. Treasury Bills,
bank certificates of deposit and commercial paper. Foreign currency futures contracts currently are traded on the
British pound, Canadian dollar, Japanese yen, Swiss franc, West German mark and on Eurodollar deposits.
The Fund will not, as to any positions, whether long, short or a combination thereof, enter into futures and
options thereon for which the aggregate initial margins and premiums exceed 5% of the fair market value of its total
assets after taking into account unrealized profits and losses on options entered into. In the case of an option that is
"in-the-money," the in-the-money amount may be excluded in computing such 5%. In general a call option on a future is
"in-the-money" if the value of the future exceeds the exercise ("strike") price of the call; a put option on a future is
"in-the-money" if the value of the future which is the subject of the put is exceeded by the strike price of the put.
The Fund may use futures and options thereon solely for bona fide hedging or for other non-speculative purposes. As to
long positions which are used as part of the Fund's strategies and are incidental to its activities in the underlying
cash market, the "underlying commodity value" of the Fund's futures and options thereon must not exceed the sum of (i)
cash set aside in an identifiable manner, or short-term U.S. debt obligations or other dollar-denominated high-quality,
short-term money instruments so set aside, plus sums deposited on margin; (ii) cash proceeds from existing investments
due in 30 days; and (iii) accrued profits held at the futures commission merchant. The "underlying commodity value" of a
future is computed by multiplying the size of the future by the daily settlement price of the future. For an option on a
future, that value is the underlying commodity value of the future underlying the option.
Unlike the situation in which the Fund purchases or sells a security, no price is paid or received by the Fund
upon the purchase or sale of a futures contract. Instead, the Fund is required to deposit in a segregated asset account
an amount of cash or qualifying securities (currently U.S. Treasury bills), currently in a minimum amount of $15,000.
This is called "initial margin." Such initial margin is in the nature of a performance bond or good faith deposit on the
contract. However, since losses on open contracts are required to be reflected in cash in the form of variation margin
payments, the Fund may be required to make additional payments during the term of a contract to its broker. Such
payments would be required, for example, where, during the term of an interest rate futures contract purchased by the
Fund, there was a general increase in interest rates, thereby making the Fund's securities less valuable. In all
instances involving the purchase of financial futures contracts by the Fund, an amount of cash together with such other
securities as permitted by applicable regulatory authorities to be utilized for such purpose, at least equal to the
market value of the future contracts, will be deposited in a segregated account with the Fund's custodian to
collateralize the position. At any time prior to the expiration of a futures contract, the Fund may elect to close its
position by taking an opposite position which will operate to terminate the Fund's position in the futures contract.
Because futures contracts are generally settled within a day from the date they are closed out, compared with a
settlement period of three business days for most types of securities, the futures markets can provide superior liquidity
to the securities markets. Nevertheless, there is no assurance a liquid secondary market will exist for any particular
futures contract at any particular time. In addition, futures exchanges may establish daily price fluctuation limits for
futures contracts and may halt trading if a contract's price moves upward or downward more than the limit in a given
day. On volatile trading days when the price fluctuation limit is reached, it would be impossible for the Fund to enter
into new positions or close out existing positions. If the secondary market for a futures contract were not liquid
because of price fluctuation limits or otherwise, the Fund would not promptly be able to liquidate unfavorable futures
positions and potentially could be required to continue to hold a futures position until the delivery date, regardless of
changes in its value. As a result, the Fund's access to other assets held to cover its futures positions also could be
impaired. For an additional discussion of futures contracts and certain risks involved therein, see this SAI and the
Company's Prospectus under "Certain Risk Factors and Investment Methods."
Options on Futures Contracts. The Fund may purchase put and call options on futures contracts. An option on a
futures contract provides the holder with the right to enter into a "long" position in the underlying futures contract,
in the case of a call option, or a "short" position in the underlying futures contract, in the case of a put option, at a
fixed exercise price to a stated expiration date. Upon exercise of the option by the holder, a contract market clearing
house establishes a corresponding short position for the writer of the option, in the case of a call option, or a
corresponding long position, in the case of a put option. In the event that an option is exercised, the parties will be
subject to all the risks associated with the trading of futures contracts, such as payment of variation margin deposits.
A position in an option on a futures contract may be terminated by the purchaser or seller prior to expiration by
effecting a closing purchase or sale transaction, subject to the availability of a liquid secondary market, which is the
purchase or sale of an option of the same series (i.e., the same exercise price and expiration date) as the option
previously purchased or sold. The difference between the premiums paid and received represents the trader's profit or
loss on the transaction.
An option, whether based on a futures contract, a stock index or a security, becomes worthless to the holder when
it expires. Upon exercise of an option, the exchange or contract market clearing house assigns exercise notices on a
random basis to those of its members which have written options of the same series and with the same expiration date. A
brokerage firm receiving such notices then assigns them on a random basis to those of its customers which have written
options of the same series and expiration date. A writer therefore has no control over whether an option will be
exercised against it, nor over the time of such exercise.
The purchase of a call option on a futures contract is similar in some respects to the purchase of a call option
on an individual security. See "Options on Foreign Currencies" below. Depending on the pricing of the option compared
to either the price of the futures contract upon which it is based or the price of the underlying instrument, ownership
of the option may or may not be less risky than ownership of the futures contract or the underlying instrument. As with
the purchase of futures contracts, when the Fund is not fully invested it could buy a call option on a futures contract
to hedge against a market advance. The purchase of a put option on a futures contract is similar in some respects to the
purchase of protective put options on portfolio securities. For example, the Fund would be able to buy a put option on a
futures contract to hedge the Fund against the risk of falling prices. For an additional discussion of options on
futures contracts and certain risks involved therein, see this SAI and the Company's Prospectus under "Certain Risks
Factors and Investment Methods."
Options on Foreign Currencies. The Fund may buy and sell options on foreign currencies for hedging purposes in a
manner similar to that in which futures on foreign currencies would be utilized. For example, a decline in the U.S.
dollar value of a foreign currency in which portfolio securities are denominated would reduce the U.S. dollar value of
such securities, even if their value in the foreign currency remained constant. In order to protect against such
diminutions in the value of portfolio securities, the Fund could buy put options on the foreign currency. If the value
of the currency declines, the Fund would have the right to sell such currency for a fixed amount in U.S. dollars and
would thereby offset, in whole or in part, the adverse effect on the Fund which otherwise would have resulted.
Conversely, when a rise is projected in the U.S. dollar value of a currency in which securities to be acquired are
denominated, thereby increasing the cost of such securities, the Fund could buy call options thereon. The purchase of
such options could offset, at least partially, the effects of the adverse movements in exchange rates.
Options on foreign currencies traded on national securities exchanges are within the jurisdiction of the
Securities and Exchange Commission (the "SEC"), as are other securities traded on such exchanges. As a result, many of
the protections provided to traders on organized exchanges will be available with respect to such transactions. In
particular, all foreign currency option positions entered into on a national securities exchange are cleared and
guaranteed by the Options Clearing Corporation ("OCC"), thereby reducing the risk of counterparty default. Further, a
liquid secondary market in options traded on a national securities exchange may be more readily available than in the
over-the-counter market, potentially permitting the Fund to liquidate open positions at a profit prior to exercise or
expiration, or to limit losses in the event of adverse market movements.
The purchase and sale of exchange-traded foreign currency options, however, is subject to the risks of the
availability of a liquid secondary market described above, as well as the risks regarding adverse market movements,
margining of options written, the nature of the foreign currency market, possible intervention by governmental
authorities, and the effects of other political and economic events. In addition, exchange-traded options on foreign
currencies involve certain risks not presented by the over-the-counter market. For example, exercise and settlement of
such options must be made exclusively through the OCC, which has established banking relationships in applicable foreign
countries for this purpose. As a result, the OCC may, if it determines that foreign governmental restrictions or taxes
would prevent the orderly settlement of foreign currency option exercises, or would result in undue burdens on the OCC or
its clearing member, impose special procedures on exercise and settlement, such as technical changes in the mechanics of
delivery of currency, the fixing of dollar settlement prices, or prohibitions on exercise.
Risk Factors of Investing in Futures and Options. The successful use of the investment practices described above
with respect to futures contracts, options on futures contracts, and options on securities indices, securities, and
foreign currencies draws upon skills and experience which are different from those needed to select the other instruments
in which the Fund invests. Should interest or exchange rates or the prices of securities or financial indices move in an
unexpected manner, the Fund may not achieve the desired benefits of futures and options or may realize losses and thus be
in a worse position than if such strategies had not been used. Unlike many exchange-traded futures contracts and options
on futures contracts, there are no daily price fluctuation limits with respect to options on currencies and negotiated or
over-the-counter instruments, and adverse market movements could therefore continue to an unlimited extent over a period
of time. In addition, the correlation between movements in the price of the securities and currencies hedged or used for
cover will not be perfect and could produce unanticipated losses.
The Fund's ability to dispose of its positions in the foregoing instruments will depend on the availability of
liquid markets in the instruments. Markets in a number of the instruments are relatively new and still developing and it
is impossible to predict the amount of trading interest that may exist in those instruments in the future. Particular
risks exist with respect to the use of each of the foregoing instruments and could result in such adverse consequences to
the Fund as the possible loss of the entire premium paid for an option bought by the Fund and the possible need to defer
closing out positions in certain instruments to avoid adverse tax consequences. As a result, no assurance can be given
that the Fund will be able to use those instruments effectively for the purposes set forth above.
In addition, options on U.S. Government securities, futures contracts, options on futures contracts, forward
contracts and options on foreign currencies may be traded on foreign exchanges and over-the-counter in foreign
countries. Such transactions are subject to the risk of governmental actions affecting trading in or the prices of
foreign currencies or securities. The value of such positions also could be affected adversely by (i) other complex
foreign political and economic factors, (ii) lesser availability than in the United States of data on which to make
trading decisions, (iii) delays in the Fund's ability to act upon economic events occurring in foreign markets during
nonbusiness hours in the United States, (iv) the imposition of different exercise and settlement terms and procedures and
margin requirements than in the United States, and (v) low trading volume. For an additional discussion of certain risks
involved in investing in futures and options, see this SAI and the Company's Prospectus under "Certain Risk Factors and
Investment Methods."
Foreign Securities. Investments in foreign countries involve certain risks which are not typically associated
with U.S. investments. For a discussion of certain risks involved in foreign investing, see this SAI and the Company's
Prospectus under "Certain Risk Factors and Investment Methods."
Forward Contracts for Purchase or Sale of Foreign Currencies. The Fund generally conducts its foreign currency
exchange transactions on a spot (i.e., cash) basis at the spot rate prevailing in the foreign exchange currency market.
When the Fund purchases or sells a security denominated in a foreign currency, it may enter into a forward foreign
currency contract ("forward contract") for the purchase or sale, for a fixed amount of dollars, of the amount of foreign
currency involved in the underlying security transaction. A forward contract involves an obligation to purchase or sell
a specific currency at a future date, which may be any fixed number of days from the date of the contract agreed upon by
the parties, at a price set at the time of the contract. The Fund generally will not enter into forward contracts with a
term greater than one year. In this manner, the Fund may obtain protection against a possible loss resulting from an
adverse change in the relationship between the U.S. dollar and the foreign currency during the period between the date
the security is purchased or sold and the date upon which payment is made or received. Although such contracts tend to
minimize the risk of loss due to the decline in the value of the hedged currency, at the same time they tend to limit any
potential gain which might result should the value of such currency increase. The Fund will not speculate in forward
contracts.
Forward contracts are traded in the interbank market conducted directly between currency traders (usually large
commercial banks) and their customers. Generally a forward contract has no deposit requirement, and no commissions are
charged at any stage for trades. Although foreign exchange dealers do not charge a fee for conversion, they do realize a
profit based on the difference between the prices at which they buy and sell various currencies. When the Sub-advisor
believes that the currency of a particular foreign country may suffer a substantial decline against the U.S. dollar (or
sometimes against another currency), the Fund may enter into a forward contract to sell, for a fixed dollar or other
currency amount, foreign currency approximating the value of some or all of the Fund's securities denominated in that
currency. In addition, the Fund may engage in "proxy-hedging," i.e., entering into forward contracts to sell a different
foreign currency than the one in which the underlying investments are denominated with the expectation that the value of
the hedged currency will correlate with the value of the underlying currency. The Fund will not enter into forward
contracts or maintain a net exposure to such contracts where the fulfillment of the contracts would require the Fund to
deliver an amount of foreign currency or a proxy currency in excess of the value of its portfolio securities or other
assets denominated in the currency being hedged. Forward contracts may, from time to time, be considered illiquid, in
which case they would be subject to the Fund's limitation on investing in illiquid securities.
At the consummation of a forward contract for delivery by the Fund of a foreign currency, the Fund may either
make delivery of the foreign currency or terminate its contractual obligation to deliver the foreign currency by
purchasing an offsetting contract obligating it to purchase, at the same maturity date, the same amount of the foreign
currency. If the Fund chooses to make delivery of the foreign currency, it may be required to obtain such currency
through the sale of portfolio securities denominated in such currency or through conversion of other Fund assets into
such currency.
Dealings in forward contracts by the Fund will be limited to the transactions described above. Of course, the
Fund is not required to enter into such transactions with regard to its foreign currency-denominated securities and will
not do so unless deemed appropriate by the Sub-advisor. It also should be realized that this method of protecting the
value of the Fund's securities against a decline in the value of a currency does not eliminate fluctuations in the
underlying prices of the securities. It simply establishes a rate of exchange which can be achieved at some future point
in time. Additionally, although such contracts tend to minimize the risk of loss due to the decline in the value of the
hedged currency, at the same time they tend to limit any potential gain which might result should the value of such
currency increase. For an additional discussion of forward foreign currency contracts and certain risks involved
therein, see this SAI and the Company's Prospectus under "Certain Risk Factors and Investment Methods."
Illiquid Securities. As discussed in the Company's Prospectus, the Fund may invest up to 15% of the value of its
net assets, measured at the time of investment, in investments which are not readily marketable. Restricted securities
are securities that may not be resold to the public without registration under the Securities Act of 1933 (the "1933
Act"). Restricted securities (other than Rule 144A securities deemed to be liquid, discussed below) and securities
which, due to their market or the nature of the security, have no readily available markets for their disposition are
considered to be not readily marketable or "illiquid." These limitations on resale and marketability may have the effect
of preventing the Fund from disposing of such a security at the time desired or at a reasonable price. In addition, in
order to resell a restricted security, the Fund might have to bear the expense and incur the delays associated with
effecting registration. In purchasing illiquid securities, the Fund does not intend to engage in underwriting
activities, except to the extent the Fund may be deemed to be a statutory underwriter under the Securities Act in
purchasing or selling such securities. Illiquid securities will be purchased for investment purposes only and not for
the purpose of exercising control or management of other companies. For an additional discussion of illiquid or
restricted securities and certain risks involved therein, see the Company's Prospectus under "Certain Risk Factors and
Investment Methods."
The Directors of the Company have promulgated guidelines with respect to illiquid securities.
Rule 144A Securities. In recent years, a large institutional market has developed for certain securities that
are not registered under the 1933 Act. Institutional investors generally will not seek to sell these instruments to the
general public, but instead will often depend on an efficient institutional market in which such unregistered securities
can readily be resold or on an issuer's ability to honor a demand for repayment. Therefore, the fact that there are
contractual or legal restrictions on resale to the general public or certain institutions is not dispositive of the
liquidity of such investments.
Rule 144A under the 1933 Act establishes a "safe harbor" from the registration requirements of the 1933 Act for
resales of certain securities to qualified institutional buyers. The Fund may invest in Rule 144A securities which, as
disclosed in the Company's Prospectus, are restricted securities which may or may not be readily marketable. Rule 144A
securities are readily marketable if institutional markets for the securities develop pursuant to Rule 144A which provide
both readily ascertainable values for the securities and the ability to liquidate the securities when liquidation is
deemed necessary or advisable. However, an insufficient number of qualified institutional buyers interested in
purchasing a Rule 144A security held by the Fund could affect adversely the marketability of the security. In such an
instance, the Fund might be unable to dispose of the security promptly or at reasonable prices.
The Sub-advisor will determine that a liquid market exists for securities eligible for resale pursuant to Rule
144A under the 1933 Act, or any successor to such rule, and that such securities are not subject to the Fund's
limitations on investing in securities that are not readily marketable. The Sub-advisor will consider the following
factors, among others, in making this determination: (1) the unregistered nature of a Rule 144A security; (2) the
frequency of trades and quotes for the security; (3) the number of dealers willing to purchase or sell the security and
the number of additional potential purchasers; (4) dealer undertakings to make a market in the security; and (5) the
nature of the security and the nature of market place trades (e.g., the time needed to dispose of the security, the
method of soliciting offers and the mechanics of transfers).
Lower-Rated or Unrated Fixed-Income Securities. The Fund may invest up to 5% of its total assets in fixed-income
securities which are unrated or are rated below investment grade either at the time of purchase or as a result of
reduction in rating after purchase. (This limitation does not apply to convertible securities and preferred stocks.)
Investments in lower-rated or unrated securities are generally considered to be of high risk. These debt securities,
commonly referred to as junk bonds, are generally subject to two kinds of risk, credit risk and market risk. Credit risk
relates to the ability of the issuer to meet interest or principal payments, or both, as they come due. The ratings
given a security by Moody's Investors Service, Inc. ("Moody's") and Standard & Poor's ("S&P") provide a generally useful
guide as to such credit risk. For a description of securities ratings, see the Appendix to this SAI. The lower the
rating given a security by a rating service, the greater the credit risk such rating service perceives to exist with
respect to the security. Increasing the amount of the Fund's assets invested in unrated or lower grade securities, while
intended to increase the yield produced by those assets, will also increase the risk to which those assets are subject.
Market risk relates to the fact that the market values of debt securities in which the Fund invests generally
will be affected by changes in the level of interest rates. An increase in interest rates will tend to reduce the market
values of such securities, whereas a decline in interest rates will tend to increase their values. Medium and
lower-rated securities (Baa or BBB and lower) and non-rated securities of comparable quality tend to be subject to wider
fluctuations in yields and market values than higher rated securities and may have speculative characteristics. In order
to decrease the risk in investing in debt securities, in no event will the Fund ever invest in a debt security rated
below B by Moody's or by S&P. Of course, relying in part on ratings assigned by credit agencies in making investments
will not protect the Fund from the risk that the securities in which they invest will decline in value, since credit
ratings represent evaluations of the safety of principal, dividend, and interest payments on debt securities, and not the
market values of such securities, and such ratings may not be changed on a timely basis to reflect subsequent events.
Because investment in medium and lower-rated securities involves greater credit risk, achievement of the Fund's
investment objective may be more dependent on the Sub-advisor's own credit analysis than is the case for funds that do
not invest in such securities. In addition, the share price and yield of the Fund may fluctuate more than in the case of
funds investing in higher quality, shorter term securities. Moreover, a significant economic downturn or major increase
in interest rates may result in issuers of lower-rated securities experiencing increased financial stress, which would
adversely affect their ability to service their principal, dividend, and interest obligations, meet projected business
goals, and obtain additional financing. In this regard, it should be noted that while the market for high yield debt
securities has been in existence for many years and from time to time has experienced economic downturns in recent years,
this market has involved a significant increase in the use of high yield debt securities to fund highly leveraged
corporate acquisitions and restructurings. Past experience may not, therefore, provide an accurate indication of future
performance of the high yield debt securities market, particularly during periods of economic recession. Furthermore,
expenses incurred in recovering an investment in a defaulted security may adversely affect the Fund's net asset value.
Finally, while the Sub-advisor attempts to limit purchases of medium and lower-rated securities to securities having an
established secondary market, the secondary market for such securities may be less liquid than the market for higher
quality securities. The reduced liquidity of the secondary market for such securities may adversely affect the market
price of, and ability of the Fund to value, particular securities at certain times, thereby making it difficult to make
specific valuation determinations. The Fund does not invest in any medium and lower-rated securities which present
special tax consequences, such as zero-coupon bonds or pay-in-kind bonds. For an additional discussion of certain risks
involved in lower-rated securities, see this SAI and the Company's Prospectus under "Certain Risk Factors and Investment
Methods."
The Sub-advisor seeks to reduce the overall risks associated with the Fund's investments through diversification
and consideration of factors affecting the value of securities it considers relevant. No assurance can be given,
however, regarding the degree of success that will be achieved in this regard or that the Fund will achieve its
investment objective.
Repurchase Agreements. Subject to guidelines promulgated by the Directors of the Company, the Fund may enter
into repurchase agreements with respect to money market instruments eligible for investment by the Fund with member banks
of the Federal Reserve system, registered broker-dealers, and registered government securities dealers. A repurchase
agreement may be considered a loan collateralized by securities. Repurchase agreements maturing in more than seven days
are considered illiquid and will be subject to the Fund's limitation with respect to illiquid securities.
The Fund has not adopted any limits on the amounts of its total assets that may be invested in repurchase
agreements which mature in less than seven days. The Fund may invest up to 15% of the market value of its net assets,
measured at the time of purchase, in securities which are not readily marketable, including repurchase agreements
maturing in more than seven days. For an additional discussion of repurchase agreements and certain risks involved
therein, see the Company's Prospectus under "Certain Risk Factors and Investment Methods."
Convertible Securities. The Fund may buy securities convertible into common stock if, for example, the
Sub-advisor believes that a company's convertible securities are undervalued in the market. Convertible securities
eligible for purchase include convertible bonds, convertible preferred stocks, and warrants. A warrant is an instrument
issued by a corporation which gives the holder the right to subscribe to a specific amount of the corporation's capital
stock at a set price for a specified period of time. Warrants do not represent ownership of the securities, but only the
right to buy the securities. The prices of warrants do not necessarily move parallel to the prices of underlying
securities. Warrants may be considered speculative in that they have no voting rights, pay no dividends, and have no
rights with respect to the assets of a corporation issuing them. Warrant positions will not be used to increase the
leverage of the Fund; consequently, warrant positions are generally accompanied by cash positions equivalent to the
required exercise amount.
Temporary Defensive Investments. Up to 100% of the assets of the Fund may be invested temporarily in U.S.
government obligations, commercial paper, bank obligations, repurchase agreements, negotiable U.S. dollar-denominated
obligations of domestic and foreign branches of U.S. depository institutions, U.S. branches of foreign depository
institutions, and foreign depository institutions, in cash, or in other cash equivalents, if the Sub-advisor determines
it to be appropriate for purposes of enhancing liquidity or preserving capital in light of prevailing market or economic
conditions. U.S. government obligations include Treasury bills, notes and bonds, and issues of United States agencies,
authorities and instrumentalities. Some government obligations, such as Government National Mortgage Association
pass-through certificates, are supported by the full faith and credit of the United States Treasury. Other obligations,
such as securities of the Federal Home Loan Banks, are supported by the right of the issuer to borrow from the United
States Treasury; and others, such as bonds issued by Federal National Mortgage Association (a private corporation), are
supported only by the credit of the agency, authority or instrumentality. The Fund also may invest in obligations issued
by the International Bank for Reconstruction and Development (IBRD or "World Bank"). For more information on
mortgage-related securities, see this SAI and the Company's Prospectus under "Certain Risk Factors and Investment
Methods."
Investment Policies Which May Be Changed Without Shareholder Approval. The following limitations are not
"fundamental" restrictions and may be changed by the Directors of the Company without shareholder approval. The Fund
will not:
1........Invest more than 15% of the market value of its net assets in securities which are not readily
marketable, including repurchase agreements maturing in over seven days;
2........Purchase securities of other investment companies except in compliance with the Investment Company Act
of 1940;
3........Purchase any securities on margin except to obtain such short-term credits as may be necessary for the
clearance of transactions (and, provided that margin payments and other deposits in connection with transactions in
options, futures and forward contracts shall not be deemed to constitute purchasing securities on margin); or
4........Sell securities short.
In addition, in periods of uncertain market and economic conditions, as determined by the Sub-advisor, the Fund
may depart from its basic investment objective and assume a defensive position with up to 100% of its assets temporarily
invested in high quality corporate bonds or notes and government issues, or held in cash.
If a percentage restriction is adhered to at the time of investment, a later increase or decrease in percentage
beyond the specified limit that results from a change in values or net assets will not be considered a violation.
ASAF AIM INTERNATIONAL EQUITY FUND:
Investment Objective: The investment objective of the Fund is to seek long-term capital growth by investing in a
diversified portfolio of international equity securities the issuers of which are considered by the Sub-advisor to have
strong earnings momentum.
Investment Policies:
In managing the Fund, the Sub-advisor seeks to apply to the Fund the same investment strategy that it applies to
several of its other managed portfolios that have similar investment objectives but that invest primarily in United
States equities markets. The Fund will utilize to the extent practicable a fully managed investment policy providing for
the selection of securities which meet certain quantitative standards determined by the Sub-advisor. The Sub-advisor
reviews carefully the earnings history and prospects for growth of each company considered for investment by the Fund.
It is anticipated that common stocks will be the principal form of investment of the Fund. The Fund is primarily
comprised of securities of two basic categories of companies: (a) "core" companies, which the Sub-advisor considers to
have experienced above-average and consistent long-term growth in earnings and to have excellent prospects for
outstanding future growth, and (b) "earnings acceleration" companies, which the Sub-advisor believes are currently
enjoying a dramatic increase in earnings.
If a particular foreign company meets the quantitative standards determined by the Sub-advisor, its securities
may be acquired by the Fund regardless of the location of the company or the percentage of the Fund's investments in the
company's country or region. However, the Sub-advisor will also consider other factors in making investment decisions
for the Fund, including such factors as the prospects for relative economic growth among countries or regions, economic
and political conditions, currency exchange fluctuations, tax considerations and the liquidity of a particular security.
The Sub-advisor recognizes that often there is less public information about foreign companies than is available
in reports supplied by domestic companies, that foreign companies are not subject to uniform accounting and financial
reporting standards, and that there may be greater delays experienced by the Fund in receiving financial information
supplied by foreign companies than comparable information supplied by domestic companies. In addition, the value of the
Fund's investments that are denominated in a foreign currency may be affected by changes in currency exchange rates. For
these and other reasons, the Sub-advisor from time to time may encounter greater difficulty applying its disciplined
stock selection strategy to an international equity investment portfolio than to a portfolio of domestic equity
securities.
Any income realized by the Fund will be incidental and will not be an important criterion in the selection of
portfolio securities.
Under normal market conditions the Fund will invest at least 70% of its total assets in marketable equity
securities, including common stock, preferred stock, and other securities having the characteristics of stock (such as an
equity or ownership interest in a company) of foreign companies that are listed on a recognized foreign securities
exchange or traded on a foreign over-the-counter market. The Fund may also satisfy the foregoing requirement in part by
investing in the securities of foreign issuers in the form of ADRs, EDRs, or other securities representing underlying
securities of foreign issuers. The Fund may also invest up to 20% of its total assets in securities exchangeable for or
convertible into equity securities of foreign companies that are listed on a recognized foreign securities exchange or
traded in a foreign over-the-counter market.
Under normal market conditions, the Fund intends to invest in a diversified portfolio that includes companies
located in at least four countries outside of the United States. The Fund will emphasize investment in foreign companies
in the developed countries of Western Europe (such as Germany, France, Switzerland, the Netherlands and the United
Kingdom) and the Pacific Basin (such as Japan, Hong Kong and Australia), but the Portfolio may also invest in the
securities of companies located in developing countries (such as Turkey, Malaysia and Mexico) in various regions of the
world. The risks of investment in the equity markets of developing countries are described in more detail immediately
below and in this Statement under "Certain Risk Factors and Investment Methods."
Real Estate Investment Trusts ("REITs"). The Fund may invest in equity and/or debt securities issued by REITs.
Such investments will not exceed 5% of the total assets of the Fund.
REITs are trusts that sell equity or debt securities to investors and use the proceeds to invest in real estate
or interests therein. A REIT may focus on particular types of projects, such as apartment complexes, or geographic
regions, such as the Southeastern United States, or both.
To the extent that the Fund invests in REITs, it could conceivably own real estate directly as a result of a
default on the securities it owns. The Fund, therefore, may be subject to certain risks associated with the direct
ownership of real estate, including difficulties in valuing and trading real estate, declines in the value of real
estate, environmental liability risks, risks related to general and local economic conditions, adverse change in the
climate for real estate, increases in property taxes and operating expenses, changes in zoning laws, casualty or
condemnation losses, limitations on rents, changes in neighborhood values, the appeal of properties to tenants, and
increases in interest rates.
In addition to the risks described above, equity REITs may be affected by any changes in the value of the
underlying property owned by the trusts, while mortgage REITs may be affected by the quality of any credit extended.
Equity and mortgage REITs are dependent upon management skill, and are generally not diversified and therefore are
subject to the risk of financing single or a limited number of projects. Such trusts are also subject to heavy cash flow
dependency, defaults by borrowers, self-liquidation, and the possibility that the REIT will fail to maintain its
exemption from the 1940 Act. Changes in interest rates may also affect the value of debt securities of REITs held by the
Fund. By investing in REITs indirectly through the Fund, a shareholder will bear not only his/her proportionate share of
the expenses of the Fund, but also, indirectly, similar expenses of the REITs.
Repurchase Agreements and Reverse Repurchase Agreements. The Fund may enter into repurchase agreements and
reverse repurchase agreements. A repurchase agreement is collateralized by the security acquired by the Fund and the
value of the acquired security is marked to market daily in order to minimize the Fund's risk. Repurchase agreements
usually are for short periods, such as one or two days, but may be entered into for longer periods of time. Repurchase
agreements will be secured by U.S. Treasury securities, U.S. Government agency securities (including, but not limited to
those which have been stripped of their interest payments and mortgage-backed securities) and commercial paper. In the
event of bankruptcy or other default of a seller of a repurchase agreement, the Fund may experience losses, including
possible reduced levels of income and lack of access to income during this period.
.The Fund may employ reverse repurchase agreements (i) for temporary emergency purposes, such as to meet
unanticipated net redemptions so as to avoid liquidating other portfolio securities during unfavorable market conditions;
(ii) to cover short-term cash requirements resulting from the timing of trade settlements; or (iii) to take advantage of
market situations where the interest income to be earned from the from the investment of the proceeds of the transaction
is greater than the interest expense of the transaction. The Fund may enter into reverse repurchase agreements in
amounts not exceeding 10% of the value of its total assets. Reverse repurchase agreements involve the risk that the
market value of securities retained by the Fund in lieu of liquidation may decline below the repurchase price of the
securities sold by the Fund that it is obligated to repurchase. This risk could cause a reduction in the net asset value
of the Fund's shares.
Additional information about repurchase and reverse repurchase agreements and their risks are included in the
Trust's Prospectus under "Certain Risk Factors and Investment Methods."
Lending of Portfolio Securities. While securities are being lent, the Fund will continue to receive the
equivalent of the interest or dividends paid by the issuer on the securities, as well as interest on the investment of
the collateral or a fee from the borrower. The Fund has the right to call its loans and obtain the securities on three
business days' notice or, in connection with securities trading on foreign markets, within such longer period of time
that coincides with the normal settlement period for purchases and sales of such securities in such foreign markets. The
risks in lending portfolio securities, as with other extensions of secured credit, consist of possible delay in receiving
additional collateral or in the recovery of the securities or possible loss of rights in the collateral should the
borrower fail financially. Additional information about the lending of portfolio securities is included in this
Statement and the Trust's Prospectus under "Certain Risk Factors and Investment Methods."
Borrowings. The Fund may borrow money to a limited extent from banks for temporary or emergency purposes subject
to the limitations under the 1940 Act. In addition, the Fund does not intend to engage in leverage; therefore,
consistent with current interpretations of the SEC, the Fund will not purchase additional securities while borrowings
from banks exceed 5% of the Fund's total assets. Additional information about borrowing is included in the Trust's
Prospectus under "Certain Risk Factors and Investment Methods."
Securities Issued on a When-Issued or Delayed-Delivery Basis. The Fund may purchase securities on a
"when-issued" basis, that is, delivery of and payment for the securities is not fixed at the date of purchase, but is set
after the securities are issued (normally within forty-five days after the date of the transaction). The Fund also may
purchase or sell securities on a delayed-delivery basis. The payment obligation and the interest rate that will be
received on the delayed delivery-securities are fixed at the time the buyer enters into the commitment. If the Fund
purchases a when-issued security or enters into a delayed-delivery agreement, the Fund's custodian bank will segregate
cash or other liquid assets in an amount at least equal to the when-issued commitment or delayed-delivery agreement
commitment. Additional information about when-issued and delayed-delivery transactions and their risks is included in
this Statement and in the Trust's Prospectus under "Certain Risk Factors and Investment Methods."
Short Sales "Against the Box." As described in the Trust's Prospectus, the Fund may from time to time make short
sales against the box. To secure its obligation to deliver the securities sold short, the Fund will deposit in escrow in
a separate account with its custodian an equal amount of the securities sold short or securities convertible into or
exchangeable for such securities. Because the Fund ordinarily will want to continue to receive interest and dividend
payments on securities in its portfolio that are convertible into the securities sold short, the Fund will normally close
out a short position covered by convertible securities by purchasing and delivering an equal amount of the securities
sold short, rather than by delivering the convertible securities that it already holds.
The Fund will make a short sale, as a hedge, when it believes that the price of a security may decline, causing a
decline in the value of a security owned by the Fund or a security convertible into or exchangeable for such security.
In such case, any future losses in the Fund's long position should be reduced by a gain in the short position.
Conversely, any gain in the long position should be reduced by a loss in the short position. The extent to which such
gains or losses are reduced will depend upon the amount of the security sold short relative to the amount the Fund owns,
either directly or indirectly, and, in the case where the Fund owns convertible securities, changes in the conversion
premium. In determining the number of shares to be sold short against the Fund's position in a convertible security, the
anticipated fluctuation in the conversion premium is considered. The Fund may also make short sales to generate
additional income from the investment of the cash proceeds of short sales. In no event may more than 10% of the value of
the Fund's total assets be deposited or pledged as collateral for short sales at any time.
Rule 144A Securities. The Fund may purchase privately placed securities that are eligible for resale pursuant to
Rule 144A under the Securities Act of 1933 (the "1933 Act"). This Rule permits certain qualified institutional buyers,
such as the Fund, to trade in securities that have not been registered under the 1933 Act. The Sub-advisor, under
guidelines adopted by the Company's Board of Directors, will consider whether securities purchased under Rule 144A are
illiquid and thus subject to the Fund's restriction of investing no more than 15% of its net assets in illiquid
securities. The determination of whether a Rule 144A security is liquid is a question of fact. In making this
determination, the Sub-advisor will consider the trading markets for the specific security taking into account the
unregistered nature of a Rule 144A security. In addition, the Sub-advisor will consider, as it deems appropriate under
the circumstances, the (i) frequency of trades and quotes, (ii) number of dealers and potential purchasers, (iii) dealer
undertakings to make a market, and (iv) nature of the security and of marketplace trades (for example, the time needed to
dispose of the security, the method of soliciting offers and the mechanics of transfer). The liquidity of Rule 144A
securities will also be monitored by the Sub-advisor and, if as a result of changed conditions, it is determined that a
Rule 144A security is no longer liquid, the Fund's holdings of illiquid securities will be reviewed to determine what, if
any, action is required to assure that the Fund does not invest more than 15% of its net assets in illiquid securities.
Additional information about illiquid and Rule 144A securities is included in the Trust's Prospectus under "Certain Risk
Factors and Investment Methods."
Foreign Securities. The Fund normally invests primarily in foreign securities, including American Depositary
Receipts ("ADRs") and European Depositary Receipts ("EDRs"). Generally, ADRs, in registered form, are designed for use
in the United States securities markets, and EDRs, in bearer form, are designed for use in European securities markets.
ADRs and EDRs may be listed on stock exchanges, or traded in OTC markets in the United States or Europe, as the case may
be. ADRs, like other securities traded in the United States, will be subject to negotiated commission rates.
To the extent the Fund invests in securities denominated in foreign currencies, the Fund bears the risk of
changes in the exchange rates between U.S. currency and the foreign currency, as well as the availability and status of
foreign securities markets. The Fund's investments in securities denominated in foreign currencies generally will be
marketable equity securities (including common and preferred stock, depositary receipts for stock and fixed income or
equity securities exchangeable for or convertible into stock) of foreign companies that generally are listed on a
recognized foreign securities exchange or traded in a foreign over-the-counter market. The Fund may also invest in
foreign securities listed on recognized U.S. securities exchanges or traded in the U.S. over-the-counter market.
Investments by the Fund in foreign securities, whether denominated in U.S. currencies or foreign currencies, may
entail risks that are greater than those associated with domestic investments. The risks of investing in foreign
securities are discussed in detail in this Statement and the Trust's Prospectus under "Certain Risk Factors and
Investment Methods." Investment by the Fund in ADRs, EDRs and similar securities also may entail some or all or these
risks. The Sub-advisor seeks to mitigate the risks associated with foreign investment through diversification and active
professional management.
Developing Countries. A developing country or emerging market country can be considered to be a country
that is in the initial stages of its industrialization cycle. Currently, emerging markets generally include every
country in the world other than the developed European countries (primarily in Western Europe), the United States,
Canada, Japan, Australia, New Zealand, Hong Kong and Singapore. The characteristics of markets can change over time.
Currently, the Sub-advisor believes that investing in many emerging markets is not desirable or feasible because of the
lack of adequate custody arrangements for the Fund's assets, overly burdensome repatriation and similar restrictions, the
lack of organized and liquid securities markets, unacceptable political risks or other reasons. As desirable
opportunities to invest in securities in emerging markets develop, the Fund may expand and further broaden the group of
emerging markets in which it invests.
Many of the risks relating to foreign securities generally will be greater for emerging markets than for
developed countries. Many emerging markets have experienced substantial rates of inflation for many years. Inflation
and rapid fluctuations in inflation rates have had and may continue to have very negative effects on the economies and
securities markets for certain developing markets. Economies in emerging markets generally are heavily dependent upon
international trade and accordingly, have been and may continue to be affected adversely by trade barriers, exchange
controls, managed adjustments in relative currency values and other protectionist measures imposed or negotiated by the
countries with which they trade. These economies also have been and may continue to be affected adversely by economic
conditions in the countries with which they trade. There also may be a lower level of securities market monitoring and
regulation of developing markets and the activities of investors in such markets, and enforcement of existing regulations
has been extremely limited. The possibility of revolution and the dependence on foreign economic assistance may be
greater in these countries than in developed countries.
In addition, brokerage commissions, custodial services and other costs relating to investment in foreign markets
are often higher than the costs of investing in the United States; this is particularly true with respect to emerging
markets. Such markets have different settlement and clearance procedures. In certain markets there have been times when
settlements have been unable to keep pace with the volume of securities transactions, making it difficult to conduct such
transactions. Such settlement problems may cause emerging market securities to be illiquid. The inability of the Fund
to make intended securities purchases due to settlement problems could cause the Fund to miss attractive investment
opportunities. Inability to dispose of a portfolio security caused by settlement problems could result in losses to the
Fund due to subsequent declines in value of the portfolio security or, if the Fund has entered into a contract to sell
the security, could result in liability to the purchaser. Certain emerging markets may lack clearing facilities
equivalent to those in developed countries. Accordingly, settlements can pose additional risks in such markets and
ultimately can expose the Fund to the risk of losses resulting from its inability to recover from a counterparty.
The risk also exists that an emergency situation may arise in one or more emerging markets as a result of which
trading of securities may cease or may be substantially curtailed and prices for the Fund's portfolio securities in such
markets may not be readily available. The Fund's portfolio securities in the affected markets will be valued at fair
value determined in good faith by or under the direction of the Company's Board of Directors.
Portfolio Turnover. Any particular security will be sold, and the proceeds reinvested, whenever such action is
deemed prudent from the viewpoint of the Fund's investment objective, regardless of the holding period of that security.
Additional information about portfolio turnover is included in this Statement under "Portfolio Transactions" and the
Trust's Prospectus under "Portfolio Turnover."
Options, Futures and Currency Strategies. The Fund may use forward contracts, futures contracts, options on
securities, options on indices, options on currencies, and options on futures contracts to attempt to hedge against the
overall level of investment and currency risk normally associated with the Fund's investments. These instruments are
often referred to as "derivatives," which may be defined as financial instruments whose performance is derived, at least
in part, from the performance of another asset (such as a security, currency or an index of securities).
General Risks of Options, Futures and Currency Strategies. The use by the Fund of options, futures contracts and
forward currency contracts involves special considerations and risks. For example, there might be imperfect correlation,
or even no correlation, between the price movements or an instrument (such as an option contract) and the price movements
of the investments being hedged. In these circumstances, if a "protective put" is used to hedge a potential decline in a
security and the security does decline in price, the put option's increased value may not completely offset the loss in
the underlying security. Such a lack of correlation might occur due to factors unrelated to the value of the investments
being hedged, such as changing interest rates, market liquidity, and speculative or other pressures on the markets in
which the hedging instrument is traded.
The Fund will not enter into a hedging transaction if the Sub-advisor determines that the cost of hedging will
exceed the potential benefit to the Fund.
Additional information on these instruments is included in this SAI and the Company's Prospectus under "Certain
Risk Factors and Investment Methods." Certain risks pertaining to particular strategies are described in the sections
that follow.
Cover. Transactions using forward contracts, futures contracts and options (other than options
purchased by a Fund) expose the Fund to an obligation to another party. A Fund will not enter into any such transactions
unless it owns either (1) an offsetting ("covered") position in securities, currencies, or other options, forward
contracts or futures contracts or (2) cash or liquid assets with a value sufficient at all times to cover its potential
obligations not covered as provided in (1) above. The Fund will comply with SEC guidelines regarding cover for these
instruments and, if the guidelines so require, set aside cash or liquid securities.
Assets used as cover cannot be sold while the position in the corresponding forward contract, futures contract or
option is open, unless they are replaced with other appropriate assets. If a large portion of a Fund's assets is used
for cover or otherwise set aside, it could affect portfolio management or the Fund's ability to meet redemption requests
or other current obligations.
Writing Call Options. The Fund may write (sell) covered call options on securities, futures contracts,
forward contracts, indices and currencies. Writing call options can serve as a limited hedge because declines in the
value of the hedged investment would be offset to the extent of the premium received for writing the option.
Writing Put Options. The Fund may write (sell) put options on securities, futures contracts, forward
contracts, indices and currencies. The Fund would write a put option at an exercise price that, reduced by the premium
received on the option, reflects the lower price it is willing to pay for the underlying security, contract or currency.
The risk in such a transaction would be that the market price of the underlying security, contract or currency would
decline below the exercise price less the premium received.
Purchasing Put Options. The Fund may purchase put options on securities, futures contracts, forward
contracts, indices and currencies. The Fund may enter into closing sale transactions with respect to such options,
exercise such option or permit such option to expire.
The Fund may also purchase put options on underlying securities, contracts or currencies against which it has
written other put options. For example, where the Fund has written a put option on an underlying security, rather than
entering a closing transaction of the written option, it may purchase a put option with a different strike price and/or
expiration date that would eliminate some or all of the risk associated with the written put. Used in combinations,
these strategies are commonly referred to as "put spreads." Likewise, the Fund may write call options on underlying
securities, contracts or currencies against which it has purchased protective put options. This strategy is commonly
referred to as a "collar."
Purchasing Call Options. The Fund may purchase covered call options on securities, futures contracts,
forward contracts, indices and currencies. The Fund may enter into closing sale transactions with respect to such
options, exercise such options or permit such options to expire.
The Fund may also purchase call options on underlying securities, contracts or currencies against which it has
written other call options. For example, where the Fund has written a call option on an underlying security, rather than
entering a closing transaction of the written option, it may purchase a call option with a different strike price and/or
expiration date that would eliminate some or all of the risk associated with the written call. Used in combinations,
these strategies are commonly referred to as "call spreads."
Options may be either listed on an exchange or traded in over-the-counter ("OTC") markets. Listed options are
third-party contracts (i.e., performance of the obligations of the purchaser and seller is guaranteed by the exchange or
clearing corporation) and have standardized strike prices and expiration dates. OTC options are two-party contracts with
negotiated strike prices and expiration dates. The Fund will not purchase an OTC option unless it believes that daily
valuations for such options are readily obtainable. OTC options differ from exchange-traded options in that OTC options
are transacted with dealers directly and not through a clearing corporation (which would guarantee performance).
Consequently, there is a risk of non-performance by the dealer. Since no exchange is involved, OTC options are valued on
the basis of an average of the last bid prices obtained from dealers, unless a quotation from only one dealer is
available, in which case only that dealer's price will be used.
Index Options. The risks of investment in index options may be greater than options on securities.
Because index options are settled in cash, when the Fund writes a call on an index it cannot provide in advance for its
potential settlement obligations by acquiring and holding the underlying securities. The Fund can offset some of the
risk of writing a call index option position by holding a diversified portfolio of securities similar to those on which
the underlying index is based. However, the Fund cannot, as a practical matter, acquire and hold a portfolio containing
exactly the same securities as underlie the index and, as a result, bears a risk that the value of the securities held
will not be perfectly correlated with the value of the index.
Limitations on Options. The Fund will not write options it, immediately after such sale, the aggregate
value of securities or obligations underlying the outstanding options exceeds 20% of the Fund's total assets. The Fund
will not purchase options if, at the time of the investment, the aggregate premiums paid for the options will exceed 5%
of the Fund's total assets.
Interest Rate, Currency and Stock Index Futures Contracts. The Fund may enter into interest rate,
currency or stock index futures contracts (collectively, "Futures" or "Futures Contracts") and options on Futures as a
hedge against changes in prevailing levels of interest rates, currency exchange rates or stock price levels,
respectively, in order to establish more definitely the effective return on securities or currencies held or intended to
be acquired by it. The Fund's hedging may include sales of Futures as an offset against the effect of expected increases
in interest rates, and decreases in currency exchange rates and stock prices, and purchase of Futures as an offset
against the effect of expected declines in interest rates, and increases in currency exchange rates or stock prices.
A Futures Contract is a two party agreement to buy or sell a specified amount of a specified security or currency
(or deliver a cash settlement price, in the case of an index future) for a specified price at a designated date, time and
place. A stock index future provides for the delivery, at a designated date, time and place, of an amount of cash equal
to a specified dollar amount times the difference between the stock index value at the close of trading on the contract
and the price agreed upon in the Futures Contract; no physical delivery of stocks comprising the index is made.
The Fund will only enter into Futures Contracts that are traded on futures exchanges and are standardized as to
maturity date and underlying financial instrument. Futures exchanges and trading thereon in the United States are
regulated under the Commodity Exchange Act and by the CFTC.
The Fund's Futures transactions will be entered into for hedging purposes only; that is, Futures will be sold to
protect against a decline in the price of securities or currencies that the Fund owns, or Futures will be purchased to
protect the Fund against an increase in the price of securities or currencies it has committed to purchase or expects to
purchase.
If the Fund were unable to liquidate a Future or an option on Futures position due to the absence of a liquid
secondary market or the imposition of price limits, it could incur substantial losses. The Fund would continue to be
subject to market risk with respect to the position. In addition, except in the case of purchased options, the Fund
might be required to maintain the position being hedged by the Future or option or to maintain cash or securities in a
segregated account.
Additional information on Futures, options on Futures, and their risks is included in this SAI and the Company's
Prospectus under "Certain Risk Factors and Investment Methods."
Forward Contracts. A forward contract is an obligation, usually arranged with a commercial bank or
other currency dealer, to purchase or sell a currency against another currency at a future date and price as agreed upon
by the parties. The Fund either may accept or make delivery of the currency at the maturity of the forward contract.
The Fund may also, if its contra party agrees prior to maturity, enter into a closing transaction involving the purchase
or sale of an offsetting contract. Forward contracts are traded over-the-counter, and not on organized commodities or
securities exchanges. As a result, it may be more difficult to value such contracts, and it may be difficult to enter
into closing transactions.
The cost to the Fund of engaging in forward contracts varies with factors such as the currencies involved, the
length of the contract period and the market conditions then prevailing. Because forward contracts are usually entered
into on a principal basis, no fees or commissions are involved. The use of forward contracts does not eliminate
fluctuations in the prices of the underlying securities the Fund owns or intends to acquire, but it does establish a rate
of exchange in advance.
Additional information on forward contracts and their risks is included in this SAI and the Company's Prospectus
under "Certain Risk Factors and Investment Methods."
Other Investment Companies. The Fund may invest in other investment companies to the extent permitted by the
1940 Act and rules and regulations thereunder, and, if applicable, exemptive orders granted by the SEC.
Investment Policy Which May Be Changed Without Shareholder Approval. The following limitation is applicable to
the ASAF AIM International Equity Fund. This limitation is not a "fundamental" restriction, and may be changed by the
Directors without shareholder approval. The Fund will not:
1. Make investments for the purpose of gaining control of a company's management.
ASAF JANUS OVERSEAS GROWTH FUND:
Investment Objective: The investment objective of the ASAF Janus Overseas Growth Fund is to seek long-term growth of
capital.
Investment Policies:
Futures, Options and Other Derivative Instruments. The Fund may enter into futures contracts on securities,
financial indices, and foreign currencies and options on such contracts, and may invest in options on securities,
financial indices and foreign currencies, forward contracts and swaps. The Fund will not enter into any futures
contracts or options on futures contracts if the aggregate amount of the Fund's commitments under outstanding futures
contracts positions and options on futures contracts written by the Fund would exceed the market value of the total
assets of the Fund (i.e., no leveraging). The Fund may invest in forward currency contracts with stated values of up to
the value of the Fund's assets.
The Fund may buy or write options in privately negotiated transactions on the types of securities and indices
based on the types of securities in which the Fund is permitted to invest directly. The Fund will effect such
transactions only with investment dealers and other financial institutions (such as commercial banks or savings and loan
institutions) deemed creditworthy by the Sub-advisor, and only pursuant to procedures adopted by the Sub-advisor for
monitoring the creditworthiness of those entities. To the extent that an option bought or written by the Fund in a
negotiated transaction is illiquid, the value of an option bought or the amount of the Fund's obligations under an option
written by the Fund, as the case may be, will be subject to the Fund's limitation on illiquid investments. In the case
of illiquid options, it may not be possible for the Fund to effect an offsetting transaction at a time when the
Sub-advisor believes it would be advantageous for the Fund to do so. For a description of these strategies and
instruments and certain risks involved therein, see this SAI and the Company's Prospectus under "Certain Risk Factors and
Investment Methods."
Eurodollar Instruments. The Fund may make investments in Eurodollar instruments. Eurodollar instruments are U.S.
dollar-denominated futures contracts or options thereon which are linked to the London Interbank Offered Rate ("LIBOR"),
although foreign currency-denominated instruments are available from time to time. Eurodollar futures contracts enable
purchasers to obtain a fixed rate for the lending of funds and sellers to obtain a fixed rate for borrowings. The Fund
might use Eurodollar futures contracts and options thereon to hedge against changes in LIBOR, to which many interest rate
swaps and fixed-income instruments are linked.
Swaps and Swap-Related Products. The Fund may enter into interest rate swaps, caps and floors on either an
asset-based or liability-based basis, depending upon whether it is hedging its assets or its liabilities, and will
usually enter into interest rate swaps on a net basis (i.e., the two payment streams are netted out, with the Fund
receiving or paying, as the case may be, only the net amount of the two payments). The net amount of the excess, if any,
of the Fund's obligations over its entitlement with respect to each interest rate swap will be calculated on a daily
basis and an amount of cash or other liquid assets having an aggregate net asset value at least equal to the accrued
excess will be maintained in a segregated account by the custodian of the Fund. If the Fund enters into an interest rate
swap on other than a net basis, it would maintain a segregated account in the full amount accrued on a daily basis of its
obligations with respect to the swap. The Fund will not enter into any interest rate swap, cap or floor transaction
unless the unsecured senior debt or the claims-paying ability of the other party thereto is rated in one of the three
highest rating categories of at least one nationally recognized statistical rating organization at the time of entering
into such transaction. The Sub-advisor will monitor the creditworthiness of all counterparties on an ongoing basis. If
there is a default by the other party to such a transaction, the Fund will have contractual remedies pursuant to the
agreements related to the transaction.
The swap market has grown substantially in recent years with a large number of banks and investment banking firms
acting both as principals and as agents utilizing standardized swap documentation. The Sub-advisor has determined that,
as a result, the swap market has become relatively liquid. Caps and floors are more recent innovations for which
standardized documentation has not yet been developed and, accordingly, they are less liquid than swaps. To the extent
the Fund sells (i.e., writes) caps and floors, it will segregate cash or other liquid assets having an aggregate net
asset value at least equal to the full amount, accrued on a daily basis, of its obligations with respect to any caps or
floors.
There is no limit on the amount of interest rate swap transactions that may be entered into by the Fund. These
transactions may in some instances involve the delivery of securities or other underlying assets by the Fund or its
counterparty to collateralize obligations under the swap. Under the documentation currently used in those markets, the
risk of loss with respect to interest rate swaps is limited to the net amount of the payments that the Fund is
contractually obligated to make. If the other party to an interest rate swap that is not collateralized defaults, the
Fund would risk the loss of the net amount of the payments that it contractually is entitled to receive. The Fund may buy
and sell (i.e., write) caps and floors without limitation, subject to the segregation requirement described above. For
an additional discussion of these strategies, see this SAI under "Certain Risk Factors and Investment Methods."
Illiquid Investments. Subject to guidelines promulgated by the Directors of the Company, the Fund may invest up
to 15% of its net assets in illiquid investments (i.e., securities that are not readily marketable). The Sub-advisor
will make liquidity determinations with respect to the Fund's securities, including Rule 144A Securities and commercial
paper. Under the guidelines established by the Directors, the Sub-advisor will consider, among others, the following
factors in determining whether a Rule 144A Security is liquid: 1) the frequency of trades and quoted prices for the
obligation; 2) the number of dealers willing to purchase or sell the security and the number of other potential
purchasers; 3) the willingness of dealers to undertake to make a market in the security; and 4) the nature of the
security and the nature of marketplace trades, including the time needed to dispose of the security, the method of
soliciting offers and the mechanics of the transfer. In the case of commercial paper, the Sub-advisor will consider,
among other factors, whether the paper is traded flat or in default as to principal and interest and any ratings of the
paper by an NRSRO.
Investment Company Securities. From time to time, the Fund may invest in securities of other investment
companies, subject to the provisions of Section 12(d)(1) of the 1940 Act. The Fund may invest in securities of money
market funds managed by the Sub-advisor subject to the terms of an exemptive order obtained by the Sub-advisor and the
funds that are advised or sub-advised by the Sub-advisor. Under such order, the Fund will limit its aggregate investment
in a money market fund managed by the Sub-advisor to the greater of (i) 5% of its total assets or (ii) $2.5 million,
although the Company's Board of Directors may increase this limit up to 25% of the Company's total assets.
Zero-Coupon, Pay-In-Kind and Step Coupon Securities. The Fund may invest up to 10% of its assets in zero-coupon,
pay-in-kind and step coupon securities. For a discussion of zero-coupon debt securities and the risks involved therein,
see this SAI under "Certain Risk Factors and Investment Methods."
Pass-Through Securities. The Fund may invest in various types of pass-through securities, such as
mortgage-backed securities, asset-backed securities and participation interests. A pass-through security is a share or
certificate of interest in a pool of debt obligations that have been repackaged by an intermediary, such as a bank or
broker-dealer. The purchaser of a pass-through security receives an undivided interest in the underlying pool of
securities. The issuers of the underlying securities make interest and principal payments to the intermediary which are
passed through to purchasers, such as the Fund. For an additional discussion of pass-through securities and certain
risks involved therein, see this SAI and the Company's Prospectus under "Certain Risk Factors and Investment Methods."
Depositary Receipts. The Fund may invest in sponsored and unsponsored American Depositary Receipts ("ADRs"),
which are receipts issued by an American bank or trust company evidencing ownership of underlying securities issued by a
foreign issuer. ADRs, in registered form, are designed for use in U.S. securities markets. Unsponsored ADRs may be
created without the participation of the foreign issuer. Holders of these ADRs generally bear all the costs of the ADR
facility, whereas foreign issuers typically bear certain costs in a sponsored ADR. The bank or trust company depositary
of an unsponsored ADR may be under no obligation to distribute shareholder communications received from the foreign
issuer or to pass through voting rights. The Fund may also invest in European Depositary Receipts ("EDRs"), receipts
issued by a European financial institution evidencing an arrangement similar to that of ADRs, Global Depositary Receipts
("GDRs") and in other similar instruments representing securities of foreign companies. EDRs, in bearer form, are designed
for use in European securities markets. GDRs are securities convertible into equity securities of foreign issuers.
Reverse Repurchase Agreements. The Fund may enter into reverse repurchase agreements. The Fund will enter into
such agreements only to provide cash to satisfy unusually heavy redemption requests and for other temporary or emergency
purposes, rather than to obtain cash to make additional investments. Pursuant to an exemptive order granted by the SEC,
the Fund and other funds advised or sub-advised by the Sub-advisor may invest in repurchase agreements and other money
market instruments through a joint trading account. For a discussion of reverse repurchase agreements and the risks
involved therein, see the Company's Prospectus under "Certain Risk Factors and Investment Methods."
Other Income-Producing Securities. Other types of income producing securities that the Fund may purchase
include, but are not limited to, the following types of securities:
Variable and Floating Rate Obligations. These types of securities are relatively long-term instruments
that often carry demand features permitting the holder to demand payment of principal at any time or at specified
intervals prior to maturity.
Standby Commitments. These instruments, which are similar to a put, give the Fund the option to obligate
a broker, dealer or bank to repurchase a security held by that Fund at a specified price.
Tender Option Bonds. Tender option bonds are relatively long-term bonds that are coupled with the
agreement of a third party (such as a broker, dealer or bank) to grant the holders of such securities the option to
tender the securities to the institution at periodic intervals.
Inverse Floaters. Inverse floaters are debt instruments whose interest bears an inverse relationship to
the interest rate on another security. The Fund will not invest more than 5% of its assets in inverse floaters. The Fund
will purchase standby commitments, tender option bonds and instruments with demand features primarily for the purpose of
increasing the liquidity of the Fund.
Investment Policies Which May be Changed Without Shareholder Approval. The following limitations are not
"fundamental" restrictions and may be changed by the Directors of the Company without shareholder approval:
1. The Fund will not (i) enter into any futures contracts and related options for purposes other than bona
fide hedging transactions within the meaning of CFTC regulations if the aggregate initial margin and premiums required to
establish positions in futures contracts and related options that do not fall within the definition of bona fide hedging
transactions will exceed 5% of the fair market value of the Fund's net assets, after taking into account unrealized
profits and unrealized losses on any such contracts it has entered into; and (ii) enter into any futures contracts if the
aggregate amount of the Fund's commitments under outstanding futures contracts positions would exceed the market value of
its total assets.
2. The Fund does not currently intend to sell securities short, unless it owns or has the right to obtain
securities equivalent in kind and amount to the securities sold short without the payment of any additional consideration
therefor, and provided that transactions in futures, options, swaps and forward contracts are not deemed to constitute
selling securities short.
3. The Fund does not currently intend to purchase securities on margin, except that the Fund may obtain
such short-term credits as are necessary for the clearance of transactions, and provided that margin payments and other
deposits in connection with transactions in futures, options, swaps and forward contracts shall not be deemed to
constitute purchasing securities on margin.
4. The Fund does not currently intend to purchase securities of other investment companies, except in
compliance with the 1940 Act or the conditions of any order of exemption from the SEC regarding the purchase of
securities of money market funds managed by the Sub-advisor or its affiliates.
5. The Fund may not mortgage or pledge any securities owned or held by the Fund in amounts that exceed, in
the aggregate, 15% of the Fund's net asset value, provided that this limitation does not apply to reverse repurchase
agreements, deposits of assets to margin, guarantee positions in futures, options, swaps or forward contracts, or the
segregation of assets in connection with such contracts.
6. The Fund does not currently intend to purchase any security or enter into a repurchase agreement if, as
a result, more than 15% of its net assets would be invested in repurchase agreements not entitling the holder to payment
of principal and interest within seven days and in securities that are illiquid by virtue of legal or contractual
restrictions on resale or the absence of a readily available market. The Directors of the Company, or the Sub-advisor
acting pursuant to authority delegated by the Directors of the Company, may determine that a readily available market
exists for securities eligible for resale pursuant to Rule 144A under the Securities Act of 1933 ("Rule 144A
Securities"), or any successor to such rule, and Section 4(2) commercial paper. Accordingly, such securities may not be
subject to the foregoing limitation.
7. The Fund may not invest in companies for the purpose of exercising control of management.
ASAF AMERICAN CENTURY INTERNATIONAL GROWTH FUND:
Investment Objective: The investment objective of the Fund is to seek capital growth.
Investment Policies:
In general, within the restrictions outlined herein, the Fund has broad powers with respect to investing funds or
holding them uninvested. Investments are varied according to what is judged advantageous under changing economic
conditions. It will be the Sub-advisor's policy to retain maximum flexibility in management without restrictive
provisions as to the proportion of one or another class of securities that may be held, subject to the investment
restrictions described below. It is the Sub-advisor's intention that the Fund will generally consist of common stocks.
However, the Sub-advisor may invest the assets of the Fund in varying amounts in other instruments and in senior
securities, such as bonds, debentures, preferred stocks and convertible issues, when such a course is deemed appropriate
in order to attempt to attain its financial objective.
Forward Currency Exchange Contracts. The Fund conducts its foreign currency exchange transactions either on a
spot (i.e., cash) basis at the spot rate prevailing in the foreign currency exchange market, or through entering into
forward currency exchange contracts to purchase or sell foreign currencies.
The Fund expects to use forward contracts under two circumstances: (1) when the Sub-advisor wishes to "lock in"
the U.S. dollar price of a security when the Fund is purchasing or selling a security denominated in a foreign currency,
the Fund would be able to enter into a forward contract to do so ("transaction hedging"); (2) when the Sub-advisor
believes that the currency of a particular foreign country may suffer a substantial decline against the U.S. dollar, the
Fund would be able to enter into a forward contract to sell foreign currency for a fixed U.S. dollar amount approximating
the value of some or all of the Fund's securities either denominated in, or whose value is tied to, such foreign currency
("portfolio hedging"). It's anticipated that the Fund will enter into portfolio hedges much less frequently than
transaction hedges.
As to transaction hedging, when the Fund enters into a trade for the purchase or sale of a security denominated
in a foreign currency, it may be desirable to establish (lock in) the U.S. dollar cost or proceeds. By entering into
forward contracts in U.S. dollars for the purchase or sale of a foreign currency involved in an underlying security
transaction, the Fund will be able to protect itself against a possible loss between trade and settlement dates resulting
from the adverse change in the relationship between the U.S. dollar and the subject foreign currency.
Under portfolio hedging, when the Sub-advisor believes that the currency of a particular country may suffer a
substantial decline relative to the U.S. dollar, the Fund could enter into a forward contract to sell for a fixed dollar
amount the amount in foreign currencies approximating the value of some or all of its portfolio securities either
denominated in, or whose value is tied to, such foreign currency. The Fund will place cash or high-grade liquid
securities in a separate account with its custodian in an amount sufficient to cover its obligation under the contract
entered into under the second circumstance. If the value of the securities placed in the separate account declines,
additional cash or securities will be placed in the account on a daily basis so that the value of the account equals the
amount of the Fund's commitments with respect to such contracts. At any given time, no more than 10% of the Fund's
assets will be committed to a segregated account in connection with portfolio hedging transactions.
The precise matching of forward contracts in the amounts and values of securities involved would not generally be
possible since the future values of such foreign currencies will change as a consequence of market movements in the
values of those securities between the date the forward contract is entered into and the date it matures. Predicting
short-term currency market movements is extremely difficult, and the successful execution of short-term hedging strategy
is highly uncertain. Normally, consideration of the prospect for currency parities will be incorporated into the
long-term investment decisions made with respect to overall diversification strategies. However, the Sub-advisor
believes that it is important to have flexibility to enter into such forward contracts when it determines that the Fund's
best interests may be served.
Generally, the Fund will not enter into a forward contract with a term of greater than one year. At the maturity
of the forward contract, the Fund may either sell the portfolio security and make delivery of the foreign currency, or it
may retain the security and terminate the obligation to deliver the foreign currency by purchasing an "offsetting"
forward contract with the same currency trader obligating the Fund to purchase, on the same maturity date, the same
amount of the foreign currency.
It is impossible to forecast with absolute precision the market value of portfolio securities at the expiration
of the forward contract. Accordingly, it may be necessary for the Fund to purchase additional foreign currency on the
spot market (and bear the expense of such purchase) if the market value of the security is less than the amount of
foreign currency the Fund is obligated to deliver and if a decision is made to sell the security and make delivery of the
foreign currency the Fund is obligated to deliver. For an additional discussion of forward currency exchange contracts
and the risks involved therein, see this Statement and the Trust's Prospectus under "Certain Risk Factors and Investment
Methods."
Derivative Securities. To the extent permitted by its investment objectives and policies discussed elsewhere
herein, the Fund may invest in securities that are commonly referred to as "derivative" securities. Certain derivative
securities are more accurately described as "index/structured" securities. Index/structured securities are derivative
securities whose value or performance is linked to other equity securities (such as depositary receipts), currencies,
interest rates, indices or other financial indicators ("reference indices").
Some "derivatives," such as mortgage-backed and other asset-backed securities, are in many respects like any
other investment, although they may be more volatile or less liquid than more traditional debt securities.
The Fund may not invest in a derivative security unless the reference index or the instrument to which it relates
is an eligible investment for the Fund. For example, a security whose underlying value is linked to the price of oil
would not be a permissible investment because the Fund may not invest in oil and gas leases or futures.
The return on a derivative security may increase or decrease, depending upon changes in the reference index or
instrument to which it relates.
There is a range of risks associated with derivative investments, including:
o the risk that the underlying security, interest rate, market index or other financial asset will not move in the
direction the portfolio manager anticipates;
o the possibility that there may be no liquid secondary market, or the possibility that price fluctuation limits
may be imposed by the exchange, either of which may make it difficult or impossible to close out a position when
desired; and
o the risk that the counterparty will fail to perform its obligations.
The Sub-advisor will report to the Investment Manager on activity in derivative securities, and the Investment Manager
will report to the Company's Board of Directors as necessary. For additional information on derivatives and their risks,
see the Company's Prospectus under "Certain Risk Factors and Investment Methods."
Futures and Options. The Fund may enter into futures contracts, options or options on futures contracts. The
Fund may not, however, enter into a futures transaction for speculative purposes. Generally, futures transactions will
be used to:
o protect against a decline in market value of the Fund's securities (taking a short futures position), or
o protect against the risk of an increase in market value for securities in which the Fund generally invests at a
time when the Fund is not fully-invested (taking a long futures position), or
o provide a temporary substitute for the purchase of an individual security that may be purchased in an orderly
fashion.
Some futures and options strategies, such as selling futures, buying puts and writing calls, hedge the Fund's investments
against price fluctuations. Other strategies, such as buying futures, writing puts and buying calls, tend to increase
market exposure.
Although other techniques may be used to control the Fund's exposure to market fluctuations, the use of futures
contracts may be a more effective means of hedging this exposure. While the Fund will pay brokerage commissions in
connection with opening and closing out futures positions, these costs are lower than the transaction costs incurred in
the purchase and sale of the underlying securities.
The Fund may engage in futures and options transactions based on securities indices that are consistent with the
Fund's investment objectives. Examples of indices that may be used include the Bond Buyer Index of Municipal Bonds for
fixed income funds, or the S&P 500 Index for equity funds. The Fund also may engage in futures and options transactions
based on specific securities, such as U.S. Treasury bonds or notes. Futures contracts are traded on national futures
exchanges. Futures exchanges and trading are regulated under the Commodity Exchange Act by the CFTC, a U.S. government
agency.
Unlike when the Fund purchases or sells a bond, no price is paid or received by the Fund upon the purchase or
sale of the future. Initially, the Fund will be required to deposit an amount of cash or securities equal to a varying
specified percentage of the contract amount. This amount is known as initial margin. The margin deposit is intended to
assure completion of the contract (delivery or acceptance of the underlying security) if it is not terminated prior to
the specified delivery date. Minimum initial margin requirements are established by the futures exchanges and may be
revised. In addition, brokers may establish margin deposit requirements that are higher than the exchange minimums.
Cash held in the margin account is not income producing. Subsequent payments, called variation margin, to and from the
broker, will be made on a daily basis as the price of the underlying debt securities or index fluctuates, making the
future more or less valuable, a process known as marking the contract to market.
Futures and options prices can be volatile, and trading in these markets involves certain risks, which are
described in more detail in this SAI and the Company's Prospectus under "Certain Risk Factors and Investment Methods."
The Sub-advisor will seek to minimize these risks by limiting the contracts entered into on behalf of the Fund to those
traded on national futures exchanges and for which there appears to be a liquid secondary market.
Options on Futures. By purchasing an option on a futures contract, the Fund obtains the right, but not the
obligation, to sell the futures contract (a put option) or to buy the contract (a call option) at a fixed strike price.
The Fund can terminate its position in a put option by allowing it to expire or by exercising the option. If the option
is exercised, the Fund completes the sale of the underlying instrument at the strike price. Purchasing an option on a
futures contract does not require the Fund to make margin payments unless the option is exercised.
Although they do not currently intend to do so, the Fund may write (or sell) call options that obligate it to
sell (or deliver) the option's underlying instrument upon exercise of the option. While the receipt of option premiums
would mitigate the effects of price declines, the Fund would give up some ability to participate in a price increase on
the underlying instrument. If the Fund were to engage in options transactions, it would own the futures contract at the
time a call were written and would keep the contract open until the obligation to deliver it pursuant to the call expired.
Investments in Companies with Limited Operating History. The Fund may invest in the securities of issuers with
limiting operating history. The Sub-advisor considers an issuer to have a limited operating history if that issuer has a
record of less than three years of continuous operation.
Investments in securities of issuers with limited operating history may involve greater risks than investments in
securities of more mature issuers. By their nature, such issuers present limited operating history and financial
information upon which the manager may base its investment decision on behalf of the Fund. In addition, financial and
other information regarding such issuers, when available, may be incomplete or inaccurate.
The Fund will not invest more than 5% of its total assets in the securities of issuers with less than a
three-year operating history. The Sub-advisor will consider periods of capital formation, incubation, consolidation, and
research and development in determining whether a particular issuer has a record of three years of continuous operation.
Repurchase Agreements. Subject to guidelines promulgated by the Board of Directors of the Company, the Fund may
invest in repurchase agreements. The Fund will limit repurchase agreement transactions to securities issued by the U.S.
government, its agencies and instrumentalities.
Short Sales. The Fund may engage in short sales if, at the time of the short sale, the Fund owns or has the
right to acquire an equal amount of the security being sold short at no additional cost.
In a short sale, the seller does not immediately deliver the securities sold and is said to have a short position
in those securities until delivery occurs. To make delivery to the purchaser, the executing broker borrows the
securities being sold short on behalf of the seller. While the short position is maintained, the seller collateralizes
its obligation to deliver the securities sold short in an amount equal to the proceeds of the short sale plus an
additional margin amount established by the Board of Governors of the Federal Reserve. If the Fund engages in a short
sale the collateral account will be maintained by the Fund's custodian. While the short sale is open the Fund will
maintain in a segregated custodial account an amount of securities convertible into or exchangeable for such equivalent
securities at no additional cost. These securities would constitute the Fund's long position.
If the Fund sells short securities that it owns, any future gains or losses in the Fund's long position should be
reduced by a gain or loss in the short position. The extent to which such gains or losses are reduced would depend upon
the amount of the security sold short relative to the amount the Fund owns. There will be certain additional transaction
costs associated with short sales, but the Fund will endeavor to offset these costs with income from the investment of
the cash proceeds of short sales.
Sovereign Debt Obligations. The Fund may purchase sovereign debt instruments issued or guaranteed by foreign
governments or their agencies, including debt of emerging market countries. Sovereign debt may be in the form of
conventional securities or other types of debt instruments such as loans or loan participations. Sovereign debt of
developing countries may involve a high degree of risk and may present a risk of default or renegotiation or rescheduling
of debt payments.
Portfolio Turnover. The Sub-advisor will purchase and sell securities without regard to the length of time the
security has been held and, accordingly, it can be expected that the rate of portfolio turnover may be substantial.
The Sub-advisor intends to purchase a given security whenever the Sub-advisor believes it will contribute to the
stated objective of the Fund, even if the same security has only recently been sold. The Fund will sell a given
security, no matter for how long or for how short a period it has been held, and no matter whether the sale is at a gain
or at a loss, if the Sub-advisor believes that such security is not fulfilling its purpose, either because, among other
things, it did not live up to the Sub-advisor's expectations, or because it may be replaced with another security holding
greater promise, or because it has reached its optimum potential, or because of a change in the circumstances of a
particular company or industry or in general economic conditions, or because of some combination of such reasons.
When a general decline in security prices is anticipated, the Fund may decrease or eliminate entirely its equity
position and increase its cash position, and when a rise in price levels is anticipated, the Fund may increase its equity
position and decrease its cash position. However, it should be expected that the Fund will, under most circumstances, be
essentially fully invested in equity securities.
Since investment decisions are based on the anticipated contribution of the security in question to the Fund's
objectives, the rate of portfolio turnover is irrelevant when the Sub-advisor believes a change is in order to achieve
those objectives, and the Fund's annual portfolio turnover rate cannot be anticipated and may be comparatively high.
Since the Sub-advisor does not take portfolio turnover rate into account in making investment decisions, (1) the
Sub-advisor has no intention of accomplishing any particular rate of portfolio turnover, whether high or low, and (2) the
portfolio turnover rates should not be considered as a representation of the rates that will be attained in the future.
Investment Policies Which May Be Changed Without Shareholder Approval. The following limitations are applicable
to the ASAF American Century International Growth Fund. These limitations are not "fundamental" restrictions and may be
changed by the Directors without shareholder approval. The Fund will not:
1. Invest more than 15% of its assets in illiquid investments;
2. Invest in the securities of other investment companies except in compliance with the 1940 Act;
3. Buy securities on margin or sell short (unless it owns or by virtue of its ownership of other securities
has the right to obtain securities equivalent in kind and amount to the securities sold); however, the Fund may make
margin deposits in connection with the use of any financial instrument or any transaction in securities permitted under
its investment policies;
4. Invest in oil, gas or other mineral leases;
5. Invest for control or for management.
ASAF JANUS SMALL-CAP GROWTH FUND:
Investment Objective: As stated in the Prospectus, the Fund's investment objective is capital appreciation. Realization
of income is not a significant investment consideration and any income realized on the Fund's investments therefore will
be incidental to the Fund's objective.
Investment Policies:
Illiquid Investments. The Fund may invest up to 15% of its net assets in illiquid investments (i.e., securities
that are not readily marketable). The Directors have authorized the Sub-advisor to make liquidity determinations with
respect to certain securities, including Rule 144A Securities and commercial paper purchased by the Fund. Under the
guidelines established by the Directors, the Sub-advisor will consider, among other factors: 1) the frequency of trades
and quoted prices for the obligation; 2) the number of dealers willing to purchase or sell the security and the number of
other potential purchasers; 3) the willingness of dealers to undertake to make a market in the security; 4) the nature of
the security and the nature of marketplace trades, including the time needed to dispose of the security, the method of
soliciting offers and the mechanics of the transfer; and 5) any rating of the security by a Nationally Recognized
Statistical Rating Organization ("NRSRO"). In the case of commercial paper, the Sub-advisor will also determine that the
paper is not traded flat or in default as to principal and interest. A foreign security that may be freely traded on or
through the facilities of an offshore exchange or other established offshore securities market is not considered an
illiquid security.
Investment Company Securities. From time to time, the Fund may invest in securities of other investment
companies, subject to the provisions of Section 12(d)(1) of the 1940 Act. The Fund may invest in securities of money
market funds managed by the Sub-advisor subject to the terms of an exemptive order obtained by the Sub-advisor and the
funds that are advised or sub-advised by the Sub-advisor. Under such order, the Fund will limit its aggregate investment
in a money market fund managed by the Sub-advisor to the greater of (i) 5% of its total assets or (ii) $2.5 million,
although the Company's Board of Directors may increase this limit up to 25% of the Company's total assets.
Depositary Receipts. The Fund may invest in sponsored and unsponsored American Depositary Receipts ("ADRs"),
which are described in the Company's Prospectus under "Certain Risk Factors and Investment Methods." Holders of
unsponsored ADRs generally bear all the costs of the ADR facility, whereas foreign issuers typically bear certain costs
in a sponsored ADR. The bank or trust company depositary of an unsponsored ADR may be under no obligation to distribute
shareholder communications received from the foreign issuer or to pass through voting rights. The Fund may also invest
in European Depositary Receipts ("EDRs"), Global Depositary Receipts ("GDRs") and in other similar instruments
representing securities of foreign companies.
Income-Producing Securities. Types of income producing securities that the Fund may purchase include, but are
not limited to, (i) variable and floating rate obligations, which are securities having interest rates that are adjusted
periodically according to a specified formula, usually with reference to some interest rate index or market interest
rate, (ii) standby commitments, which are instruments similar to puts that give the holder the option to obligate a
broker, dealer or bank to repurchase a security at a specified price, and (iii) tender option bonds, which are securities
that are coupled with the option to tender the securities to a bank, broker-dealer or other financial institution at
periodic intervals and receive the face value of the bond. The Fund will purchase standby commitments, tender option
bonds and instruments with demand features primarily for the purpose of increasing the liquidity of its portfolio. The
Fund may also invest in inverse floaters, which are debt instruments the interest on which varies in an inverse
relationship to the interest rate on another security. For example, certain inverse floaters pay interest at a rate that
varies inversely to prevailing short-term interest rates. Some inverse floaters have an interest rate reset mechanism
that multiplies the effects of changes in an underlying index. Such a mechanism may increase fluctuations in the
security's market value. The Fund will not invest more than 5% of its assets in inverse floaters.
High-Yield/High-Risk Securities. The Fund intends to invest less than 35% of its net assets in debt securities
that are rated below investment grade (e.g., securities rated BB or lower by Standard & Poor's Ratings Services
("Standard & Poor's") or Ba or lower by Moody's Investors Service, Inc. ("Moody's")). Lower rated securities involve a
higher degree of credit risk, which is the risk that the issuer will not make interest or principal payments when due.
In the event of an unanticipated default, the Fund would experience a reduction in its income, and could expect a decline
in the market value of the securities so affected.
The Fund may also invest in unrated debt securities of foreign and domestic issuers. Unrated debt, while not
necessarily of lower quality than rated securities, may not have as broad a market. Sovereign debt of foreign
governments is generally rated by country. Because these ratings do not take into account individual factors relevant to
each issue and may not be updated regularly, the Sub-advisor may treat such securities as unrated debt. Because of the
size and perceived demand of the issue, among other factors, certain municipalities may not incur the costs of obtaining
a rating. The Sub-advisor will analyze the creditworthiness of the issuer, as well as any financial institution or other
party responsible for payments on the security, in determining whether to purchase unrated municipal bonds. Unrated debt
securities will be included in the 35% limit unless the portfolio managers deem such securities to be the equivalent of
investment grade securities.
The Fund may purchase defaulted securities subject to the above limits, but only when the Sub-advisor believes,
based upon its analysis of the financial condition, results of operations and economic outlook of an issuer, that there
is potential for resumption of income payments and that the securities offer an unusual opportunity for capital
appreciation. Notwithstanding the Sub-advisor's belief as to the resumption of income, however, the purchase of any
security on which payment of interest or dividends is suspended involves a high degree of risk. Such risk includes,
among other things, the following:
Financial and Market Risks. Investments in securities that are in default involve a high degree of
financial and market risks that can result in substantial or, at times, even total losses. Issuers of defaulted
securities may have substantial capital needs and may become involved in bankruptcy or reorganization proceedings. Among
the problems involved in investments in such issuers is the fact that it may be difficult to obtain information about
their condition. The market prices of securities of such issuers also are subject to abrupt and erratic movements and
above average price volatility, and the spread between the bid and asked prices of such securities may be greater than
normally expected.
Disposition of Portfolio Securities. Although the Fund generally will purchase securities for which the
Sub-advisor expects an active market to be maintained, defaulted securities may be less actively traded than other
securities and it may be difficult to dispose of substantial holdings of such securities at prevailing market prices.
The Fund will limit holdings of any such securities to amounts that the Sub-advisor believes could be readily sold, and
holdings of such securities would, in any event, be limited so as not to limit the Fund's ability to readily dispose of
securities to meet redemptions.
Other. Defaulted securities require active monitoring and may, at times, require participation in
bankruptcy or receivership proceedings on behalf of the Fund.
Repurchase and Reverse Repurchase Agreements. The Fund may enter into repurchase agreements. While it is not
possible to eliminate all risks from repurchase agreement transactions, the Fund will limit repurchase agreements to
those parties whose creditworthiness has been reviewed and found satisfactory by the Sub-advisor under guidelines
established by the Board of Directors of the Company.
The Fund may use reverse repurchase agreements to provide cash to satisfy unusually heavy redemption requests or
for other temporary or emergency purposes without the necessity of selling portfolio securities or to earn additional
income on portfolio securities, such as Treasury bills or notes. The Fund will enter into reverse repurchase agreements
only with parties that the Sub-advisor deems creditworthy. Using reverse repurchase agreements to earn additional income
involves the risk that the interest earned on the invested proceeds is less than the expense of the reverse repurchase
agreement transaction. This technique may also have a leveraging effect on the Fund, although the requirement for the
Fund to segregate assets in the amount of the reverse repurchase agreement minimizes this effect. Pursuant to an
exemptive order granted by the SEC, the Fund and other funds advised or sub-advised by the Sub-advisor may invest in
repurchase agreements and other money market instruments through a joint trading account.
For an additional discussion of repurchase agreements and reverse repurchase agreements and their risks, see the
Company's Prospectus under "Certain Risk Factors and Investment Methods."
Futures, Options and Forward Contracts. The Fund may enter into futures contracts on securities, financial
indices, and foreign currencies and options on such contracts, and may invest in options on securities, financial
indices, and foreign currencies, and forward contracts. The Fund will not enter into any futures contracts or options on
futures contracts if the aggregate amount of the Fund's commitments under outstanding futures contract positions and
options on futures contracts written by the Fund would exceed the market value of the Fund's total assets. The Fund may
invest in forward currency contracts with stated values of up to the value of the Fund's assets.
The Fund may buy or write options in privately negotiated transactions on the types of securities, and on indices
based on the types of securities, in which the Fund is permitted to invest directly. The Fund will effect such
transactions only with investment dealers and other financial institutions (such as commercial banks or savings and loan
institutions) deemed creditworthy by the Sub-advisor pursuant to procedures adopted by the Sub-advisor for monitoring the
creditworthiness of those entities. To the extent that an option purchased or written by the Fund in a negotiated
transaction is illiquid, the value of the option purchased or the amount of the Fund's obligations under an option it has
written, as the case may be, will be subject to the Fund's limitation on illiquid investments. In the case of illiquid
options, it may not be possible for the Fund to effect an offsetting transaction when the Sub-advisor believes it would
be advantageous for the Fund to do so. For a description of these strategies and instruments and certain of their risks,
see this SAI and the Company's Prospectus under "Certain Risk Factors and Investment Methods."
Eurodollar Instruments. The Fund may make investments in Eurodollar instruments. Eurodollar instruments are U.S.
dollar-denominated futures contracts or options thereon that are linked to the London Interbank Offered Rate ("LIBOR"),
although foreign currency-denominated instruments are available from time to time. Eurodollar futures contracts enable
purchasers to obtain a fixed rate for the lending of funds and sellers to obtain a fixed rate for borrowings. The Fund
might use Eurodollar futures contracts and options thereon to hedge against changes in LIBOR, to which many interest rate
swaps and fixed-income instruments are linked.
Swaps and Swap-Related Products. The Fund may enter into interest rate swaps, caps and floors on either an
asset-based or liability-based basis, depending upon whether it is hedging its assets or its liabilities, and will
usually enter into interest rate swaps on a net basis (i.e., the two payment streams are netted out, with the Fund
receiving or paying, as the case may be, only the net amount of the two payments). The net amount of the excess, if any,
of the Fund's obligations over its entitlement with respect to each interest rate swap will be calculated on a daily
basis and an amount of cash or other liquid assets having an aggregate net asset value at least equal to the accrued
excess will be maintained in a segregated account by the Fund's custodian. If the Fund enters into an interest rate swap
on other than a net basis, it would maintain a segregated account in the full amount accrued on a daily basis of its
obligations with respect to the swap. The Fund will not enter into any interest rate swap, cap or floor transaction
unless the unsecured senior debt or the claims-paying ability of the other party thereto is rated in one of the three
highest rating categories of at least one NRSRO at the time of entering into such transaction. The Sub-advisor will
monitor the creditworthiness of all counterparties on an ongoing basis. If there is a default by the other party to such
a transaction, the Fund will have contractual remedies pursuant to the agreements related to the transaction.
The swap market has grown substantially in recent years, with a large number of banks and investment banking
firms acting both as principals and as agents utilizing standardized swap documentation. The Sub-advisor has determined
that, as a result, the swap market has become relatively liquid. Caps and floors are more recent innovations for which
standardized documentation has not yet been developed and, accordingly, are less liquid than swaps. To the extent the
Fund sells (i.e., writes) caps and floors, it will segregate cash or other liquid assets having an aggregate net asset
value at least equal to the full amount, accrued on a daily basis, of its obligations with respect to any caps or floors.
There is no limit on the amount of interest rate swap transactions that may be entered into by the Fund. These
transactions may in some instances involve the delivery of securities or other underlying assets by the Fund or its
counterparty to collateralize obligations under the swap. The Fund bears the risk of loss of any payments it is
contractually obligated to make in connection with interest rate swaps. In addition, if the other party to an interest
rate swap that is not collateralized defaults, the Fund would risk the loss of the payments that it contractually is
entitled to receive. The Fund may buy and sell (i.e., write) caps and floors without limitation, subject to the
segregation requirement described above.
Investment Policies Which May Be Changed Without Shareholder Approval. The following limitations are applicable
to the ASAF Janus Small-Cap Growth Fund. These limitations are not "fundamental" restrictions, and may be changed by the
Directors without shareholder approval.
1. The Fund does not currently intend to sell securities short, unless it owns or has the right to obtain
securities equivalent in kind and amount to the securities sold short without the payment of any additional consideration
therefor, and provided that transactions in futures, options, swaps and forward contracts are not deemed to constitute
selling securities short.
2. The Fund does not currently intend to purchase securities on margin, except that the Fund may obtain
such short-term credits as are necessary for the clearance of transactions, and provided that margin payments and other
deposits in connection with transactions in futures, options, swaps and forward contracts shall not be deemed to
constitute purchasing securities on margin.
3. The Fund does not currently intend to purchase any security or enter into a repurchase agreement if, as
a result, more than 15% of its net assets would be invested in repurchase agreements not entitling the holder to payment
of principal and interest within seven days and in securities that are illiquid by virtue of legal or contractual
restrictions on resale or the absence of a readily available market. The Directors, or the Fund's Sub-advisor acting
pursuant to authority delegated by the Directors, may determine that a readily available market exists for securities
eligible for resale pursuant to Rule 144A under the Securities Act of 1933 ("Rule 144A Securities"), or any successor to
such rule, Section 4(2) commercial paper and municipal lease obligations. Accordingly, such securities may not be
subject to the foregoing limitation.
4. The Fund may not invest in companies for the purpose of exercising control of management.
ASAF Kemper Small-Cap Growth Fund:
Investment Objective: The investment objective of the Fund is to seek maximum appreciation of investors' capital from a
portfolio primarily of growth stocks of smaller companies.
Investment Policies:
Options. The Fund may write (sell) call options on securities as long as it owns the underlying securities
subject to the option, or an option to purchase the same underlying securities having an exercise price equal to or less
than the exercise price of the option, or will establish and maintain with the Fund's custodian for the term of the
option a segregated account consisting of cash or other liquid securities ("eligible securities") to the extent required
by applicable regulation in connection with the optioned securities. The Fund may write put options provided that, so
long as the Fund is obligated as the writer of the option, the Fund owns an option to sell the underlying securities
subject to the option having an exercise price equal to or greater than the exercise price of the option, or it deposits
and maintains with the custodian in a segregated account eligible securities having a value equal to or greater than the
exercise price of the option. The premium received for writing an option will reflect, among other things, the current
market price of the underlying security, the relationship of the exercise price to such market price, the price
volatility of the underlying security, the option period, supply and demand and interest rates. The Fund may write or
purchase spread options, which are options for which the exercise price may be a fixed dollar spread or yield spread
between the security underlying the option and another security that is used as a benchmark. The exercise price of an
option may be below, equal to or above the current market value of the underlying security at the time the option is
written. The Fund may write (sell) call and put options on up to 25% of net assets and may purchase put and call options
provided that no more than 5% of its net assets may be invested in premiums on such options.
If a secured put option expires unexercised, the writer realizes a gain from the amount of the premium, plus the
interest income on the securities in the segregated account. If the secured put writer has to buy the underlying
security because of the exercise of the put option, the secured put writer incurs an unrealized loss to the extent that
the current market value of the underlying security is less than the exercise price of the put option. However, this
would be offset in whole or in part by gain from the premium received and any interest income earned on the securities in
the segregated account.
For an additional discussion of investing in options and the risks involved therein, see this Statement and the
Company's Prospectus under "Certain Risk Factors and Investment Methods."
Over-the-Counter Options. The Fund may deal in over-the-counter traded options ("OTC options"). Unlike
exchange-traded options, OTC options are transacted directly with dealers and not with a clearing corporation. Since
there is no exchange, pricing is normally done by reference to information from market makers, which information is
carefully monitored by the Sub-advisor and verified in appropriate cases. In writing OTC options, the Fund receives the
premium in advance from the dealer. OTC options are available for a greater variety of securities or other assets, and
for a wider range of expiration dates and exercise prices, than exchange-traded options.
The staff of the SEC takes the position that purchased OTC options and the assets used as "cover" for written OTC
options are illiquid securities. Accordingly, the Fund will only engage in OTC options transactions with dealers that
have been specifically approved by the Sub-advisor. The Sub-advisor believes that the approved dealers should be able to
enter into closing transactions if necessary and, therefore, present minimal credit risks to the Fund. The Sub-advisor
will monitor the creditworthiness of the approved dealers on an on-going basis. The Fund currently will not engage in
OTC options transactions if the amount invested by the Fund in OTC options, plus a "liquidity charge" related to OTC
options written by the Fund, plus the amount invested by the Fund in other illiquid securities, would exceed 15% of the
Fund's net assets. The "liquidity charge" referred to above is computed as described below.
The Fund anticipates entering into agreements with dealers to which the Fund sells OTC options. Under these
agreements the Fund would have the absolute right to repurchase the OTC options from the dealer at any time at a price no
greater than a price established under the agreements (the "Repurchase Price"). The "liquidity charge" referred to above
for a specific OTC option transaction will be the Repurchase Price related to the OTC option less the intrinsic value of
the OTC option. The intrinsic value of an OTC call option for such purposes will be the amount by which the current
market value of the underlying security exceeds the exercise price. In the case of an OTC put option, intrinsic value
will be the amount by which the exercise price exceeds the current market value of the underlying security. If there is
no such agreement requiring a dealer to allow the Fund to repurchase a specific OTC option written by the Fund, the
"liquidity charge" will be the current market value of the assets serving as "cover" for such OTC option.
Options on Securities Indices. The Fund, as part of its options transactions, may also use options on
securities indices in an attempt to hedge against market conditions affecting the value of securities that the Fund owns
or intends to purchase, and not for speculation. When the Fund writes an option on a securities index, it will be
required to deposit with its custodian and mark-to-market eligible securities to the extent required by applicable
regulation. Where the Fund writes a call option on a securities index at a time when the contract value exceeds the
exercise price, the Fund will also segregate and mark-to-market, until the option expires or is closed out, cash or cash
equivalents equal in value to such excess. The Fund may also purchase and sell options on indices other than securities
indices, as available, such as foreign currency indices. Because index options are settled in cash, a call writer cannot
determine the amount of its settlement obligations in advance and, unlike call writing on specific securities, cannot
cover its potential settlement obligations by acquiring and holding the underlying securities. Index options involve
risks similar to those risks relating to transactions in financial futures contracts described below.
For an additional discussion of investing in OTC options and options on securities indices, and the risks
involved therein, see this Statement and the Company's Prospectus under "Certain Risk Factors and Investment Methods."
Financial Futures Contracts and Related Options. The Fund may enter into financial futures contracts. This
investment technique is designed primarily to hedge (i.e. protect) against anticipated future changes in market
conditions or foreign exchange rates which otherwise might affect adversely the value of securities or other assets which
the Fund holds or intends to purchase. For example, when the near-term market view is bearish but the portfolio
composition is judged satisfactory for the longer term, exposure to temporary declines in the market may be reduced by
entering into futures contracts to sell securities or the cash value of an index. Conversely, where the near-term view
is bullish, but the Fund is believed to be well positioned for the longer term with a high cash position, the Fund can
hedge against market increases by entering into futures contracts to buy securities or the cash value of an index. In
either case, the use of futures contracts would tend to minimize portfolio turnover and facilitate the Portfolio's
pursuit of its investment objective. Also, if the Fund owned long-term bonds and interest rates were expected to rise,
it could sell financial futures contracts. If interest rates did increase, the value of the bonds held by the Fund would
decline, but this decline would be offset in whole or in part by an increase in the value of the Fund's futures
contracts. If, on the other hand, long-term interest rates were expected to decline, the Portfolio could hold short-term
debt securities and benefit from the income earned by holding such securities, while at the same time the Portfolio could
purchase futures contracts on long-term bonds or the cash value of a securities index. Thus, the Portfolio could take
advantage of the anticipated rise in the value of long-term bonds without actually buying them. The futures contracts
and short-term debt securities could then be liquidated and the cash proceeds used to buy long-term bonds. At the time
of delivery, in the case of a contract relating to fixed income securities, adjustments are made to recognize differences
in value arising from the delivery of securities with a different interest rate than that specified in the contract. In
some cases, securities to be delivered under a futures contract may not have been issued at the time the contract was
written.
The market prices of futures contracts may be affected by certain factors. If participants in the futures market
elect to close out their contracts through offsetting transactions rather than meet margin requirements, distortions in
the normal relationship between the assets and futures market could result. Price distortions also could result if
investors in futures contracts decide to make or take delivery of underlying securities or other assets rather than
engage in closing transactions because of the resultant reduction in the liquidity of the futures market. In addition,
because margin requirements in the futures market are less onerous than margin requirements in the cash market, increased
participation by speculators in the futures market could cause temporary price distortions. Due to the possibility of
these price distortions and because of the imperfect correlation between movements in the prices of securities or other
assets and movements in the prices of futures contracts, a correct forecast of market trends by the Sub-advisor still may
not result in a successful hedging transaction.
The Fund may purchase and write call and put options on financial futures contracts. Options on futures
contracts involve risks similar to those risks relating to transactions in financial futures contracts. The Fund will
not enter into any futures contracts or options on futures contracts if the aggregate of the contract value of the
outstanding futures contracts of the Fund and futures contracts subject to outstanding options written by the Fund would
exceed 50% of the total assets of the Fund. For an additional discussion of investing in financial futures contracts and
options on financial futures contracts and the risks involved therein, see this Statement and the Trust's Prospectus
under "Certain Risk Factors and Investment Methods."
Section 4(2) Paper. The Fund may invest in commercial paper issued by major corporations under the Securities
Act of 1933 in reliance on the exemption from registration afforded by Section 3(a)(3) thereof. Such commercial paper
may be issued only to finance current transactions and must mature in nine months or less. Such commercial paper is
traded primarily by institutional investors through investment dealers, and individual investor participation in the
commercial paper market is very limited. The Fund also may invest in commercial paper issued in reliance on the
so-called "private placement" exemption from registration afforded by Section 4(2) of the Securities Act of 1933
("Section 4(2) paper"). Section 4(2) paper is restricted as to disposition under the federal securities laws, and
generally is sold to institutional investors, such as the Fund, who agree that they are purchasing the paper for
investment and not with a view to public distribution. Any resale by the purchaser must be in an exempt transaction.
Section 4(2) paper normally is resold to other institutional investors through or with the assistance of the issuer or
investment dealers who make a market in the Section 4(2) paper, thus providing liquidity. Section 4(2) paper will be
considered illiquid, and subject to the Fund's limitation on investing in illiquid securities, unless the Sub-advisor
determines such Section 4(2) paper to be liquid under guidelines established by the Board of Directors of the Company.
Collateralized Obligations. The Fund may invest in asset-backed and mortgage-backed securities, including
interest only ("IO") and principal only ("PO") securities (collectively, "collateralized obligations"). A collateralized
obligation is a debt security issued by a corporation, trust or custodian, or by a U.S. Government agency or
instrumentality, that is collateralized by a portfolio or pool of mortgages, mortgage pass-through securities, U.S.
Government securities or other assets. Collateralized obligations, depending on their structure and the rate of
prepayments, can be volatile.
The Fund will currently invest in only those collateralized obligations that are fully collateralized and would
not materially alter the risk profile of the Fund. Fully collateralized means that the collateral will generate cash
flows sufficient to meet obligations to holders of the collateralized obligations under even the most conservative
prepayment and interest rate projections. Thus, the collateralized obligations are structured to anticipate a worst case
prepayment condition and to minimize the reinvestment rate risk for cash flows between coupon dates for the
collateralized obligations. A worst case prepayment condition generally assumes immediate prepayment of all securities
purchased at a premium and zero prepayment of all securities purchased at a discount. Reinvestment rate risk may be
minimized by assuming very conservative reinvestment rates and by other means such as by maintaining the flexibility to
increase principal distributions in a low interest rate environment. The effective credit quality of the collateralized
obligations in such instances is the credit quality of the issuer of the collateral. The requirements as to
collateralization are determined by the issuer or sponsor of the collateralized obligation in order to satisfy rating
agencies, if rated. The Fund does not currently intend to invest more than 5% of its total assets in collateralized
obligations.
Because some collateralized obligations are issued in classes with varying maturities and interest rates, the
investor may obtain greater predictability of maturity through these collateralized obligations than through direct
investments in mortgage pass-through securities. Classes with shorter maturities may have lower volatility and lower
yield while those with longer maturities may have higher volatility and higher yield. Payments of principal and interest
on the underlying collateral securities are not passed through directly to the holders of these collateralized
obligations. Rather, the payments on the underlying portfolio or pool of obligations are used to pay interest on each
class and to retire successive maturities in sequence. These relationships may in effect "strip" the interest payments
from principal payments of the underlying obligations and allow for the separate purchase of either the interest or the
principal payments, sometimes called interest only ("IO") and principal only ("PO") securities. By investing in IOs and
POs, an investor has the option to select from a pool of underlying collateral the portion of the cash flows that most
closely corresponds to the investor's forecast of interest rate movements.
Collateralized obligations are designed to be retired as the underlying obligations are repaid. In the event of
prepayment on or call of such securities, the class of collateralized obligation first to mature generally will be paid
down first. Although in most cases the issuer of collateralized obligations will not supply additional collateral in the
event of such prepayment, there generally will be sufficient collateral to secure collateralized obligations that remain
outstanding. Governmentally-issued and privately-issued IO's and PO's will be considered illiquid for purposes of the
Fund's limitation on illiquid securities unless they are determined to be liquid under guidelines established by the
Board of Directors.
In reliance on an interpretation by the SEC, the Fund's investments in certain qualifying collateralized
obligations are not subject to the limitations in the 1940 Act regarding investments by a registered investment company,
such as the Fund, in another investment company.
Inverse Floaters. The Fund may also invest in "inverse floaters." These inverse floaters are more volatile than
conventional fixed or floating rate collateralized obligations, and their yield and value will fluctuate in inverse
proportion to changes in the index upon which rate adjustments are based. As a result, the yield on an inverse floater
will generally increase when market yields (as reflected by the index) decrease and decrease when market yields increase.
The extent of the volatility of inverse floaters depends on the extent of anticipated changes in market rates of
interest. Generally, inverse floaters provide for interest rate adjustments based upon a multiple of the specified
interest index, which further increases their volatility. The degree of additional volatility will be directly
proportional to the size of the multiple used in determining interest rate adjustments. Currently, the Fund does not
intend to invest more than 5% of its net assets in inverse floaters.
For an additional discussion of investing in collateralized obligations and the risks involved therein, see this
Statement and the Trust's Prospectus under "Certain Risk Factors and Investment Methods."
Investment Policies Which May Be Changed Without Shareholder Approval. The following limitations are applicable to the
ASAF Kemper Small-Cap Growth Fund. These limitations are not "fundamental" restrictions and may be changed without
shareholder approval. The Fund will not:
1. Invest for the purpose of exercising control or management of another issuer.
2. Purchase securities of other investment companies, except in compliance with the 1940 Act.
3. Invest more than 15% of its net assets in illiquid securities.
ASAF T. Rowe Price Small Company Value Fund:
Investment Objective: The investment objective of the Fund is to provide long-term capital growth by investing primarily
in small-capitalization stocks that appear to be undervalued.
Investment Policies:
Although primarily all of the Fund's assets are invested in common stocks, the Fund may invest in convertible
securities, corporate debt securities and preferred stocks. The fixed-income securities in which the Fund may invest
include, but are not limited to, those described below. See this SAI under "Certain Risk Factors and Investment
Methods," for an additional discussion of debt obligations.
U.S. Government Obligations. Bills, notes, bonds and other debt securities issued by the U.S. Treasury. These
are direct obligations of the U.S. Government and differ mainly in the length of their maturities.
U.S. Government Agency Securities. Issued or guaranteed by U.S. Government sponsored enterprises and federal
agencies. These include securities issued by the Federal National Mortgage Association, Government National Mortgage
Association, Federal Home Loan Bank, Federal Land Banks, Farmers Home Administration, Banks for Cooperatives, Federal
Intermediate Credit Banks, Federal Financing Bank, Farm Credit Banks, the Small Business Association, and the Tennessee
Valley Authority. Some of these securities are supported by the full faith and credit of the U.S. Treasury; and the
remainder are supported only by the credit of the instrumentality, which may or may not include the right of the issuer
to borrow from the Treasury.
Bank Obligations. Certificates of deposit, bankers' acceptances, and other short-term debt obligations.
Certificates of deposit are short-term obligations of commercial banks. A bankers' acceptance is a time draft drawn on a
commercial bank by a borrower, usually in connection with international commercial transactions. Certificates of deposit
may have fixed or variable rates. The Fund may invest in U.S. banks, foreign branches of U.S. banks, U.S. branches of
foreign banks, and foreign branches of foreign banks.
Short-Term Corporate Debt Securities. Outstanding nonconvertible corporate debt securities (e.g., bonds and
debentures) which have one year or less remaining to maturity. Corporate notes may have fixed, variable, or floating
rates.
Commercial Paper. Short-term promissory notes issued by corporations primarily to finance short-term credit
needs. Certain notes may have floating or variable rates.
Foreign Government Securities. Issued or guaranteed by a foreign government, province, instrumentality,
political subdivision or similar unit thereof.
Savings and Loan Obligations. Negotiable certificates of deposit and other short-term debt obligations of
savings and loan associations.
Supranational Entities. The Fund may also invest in the securities of certain supranational entities, such as
the International Development Bank.
Lower-Rated Debt Securities. The Fund's investment program permits it to purchase below investment grade
securities, commonly referred to as "junk bonds." The Fund will not purchase a junk bond if immediately after such
purchase the Fund would have more than 5% of its total assets invested in such securities. Since investors generally
perceive that there are greater risks associated with investment in lower quality securities, the yields from such
securities normally exceed those obtainable from higher quality securities. However, the principal value of lower-rated
securities generally will fluctuate more widely than higher quality securities. Lower quality investments entail a
higher risk of default -- that is, the nonpayment of interest and principal by the issuer than higher quality
investments. Such securities are also subject to special risks, discussed below. Although the Fund seeks to reduce risk
by portfolio diversification, credit analysis, and attention to trends in the economy, industries and financial markets,
such efforts will not eliminate all risk. There can, of course, be no assurance that the Fund will achieve its
investment objective.
After purchase by the Fund, a debt security may cease to be rated or its rating may be reduced below the minimum
required for purchase by the Fund. Neither event will require a sale of such security by the Fund. However, the
Sub-advisor will consider such event in its determination of whether the Fund should continue to hold the security. To
the extent that the ratings given by Moody's or S&P may change as a result of changes in such organizations or their
rating systems, the Fund will attempt to use comparable ratings as standards for investments in accordance with the
investment policies contained in the Company's Prospectus.
Junk bonds are regarded as predominantly speculative with respect to the issuer's continuing ability to meet
principal and interest payments. Because investment in low and lower-medium quality bonds involves greater investment
risk, to the extent the Fund invests in such bonds, achievement of its investment objective will be more dependent on the
Sub-advisor's credit analysis than would be the case if the Fund was investing in higher quality bonds. For a discussion
of the special risks involved in low-rated bonds, see this SAI and the Company's Prospectus under "Certain Risk Factors
and Investment Methods."
Writing Covered Call Options. The Fund may write (sell) American or European style "covered" call options and
purchase options to close out options previously written by the Fund. In writing covered call options, the Fund expects
to generate additional premium income which should serve to enhance the Fund's total return and reduce the effect of any
price decline of the security or currency involved in the option. Covered call options will generally be written on
securities or currencies which, in the Sub-advisor's opinion, are not expected to have any major price increases or moves
in the near future but which, over the long term, are deemed to be attractive investments for the Fund.
The Fund will write only covered call options. This means that the Fund will own the security or currency
subject to the option or an option to purchase the same underlying security or currency, having an exercise price equal
to or less than the exercise price of the "covered" option, or will establish and maintain with its custodian for the
term of the option, an account consisting of cash or other liquid assets having a value equal to the fluctuating market
value of the optioned securities or currencies.
Portfolio securities or currencies on which call options may be written will be purchased solely on the basis of
investment considerations consistent with the Fund's investment objective. The writing of covered call options is a
conservative investment technique believed to involve relatively little risk (in contrast to the writing of naked or
uncovered options, which the Fund will not do), but capable of enhancing the Fund's total return. When writing a covered
call option, a fund, in return for the premium, gives up the opportunity for profit from a price increase in the
underlying security or currency above the exercise price, but conversely retains the risk of loss should the price of the
security or currency decline. Unlike one who owns securities or currencies not subject to an option, the Fund has no
control over when it may be required to sell the underlying securities or currencies, since it may be assigned an
exercise notice at any time prior to the expiration of its obligation as a writer. If a call option which the Fund has
written expires, the Fund will realize a gain in the amount of the premium; however, such gain may be offset by a decline
in the market value of the underlying security or currency during the option period. If the call option is exercised,
the Fund will realize a gain or loss from the sale of the underlying security or currency. The Fund does not consider a
security or currency covered by a call to be "pledged" as that term is used in the Fund's policy which limits the
pledging or mortgaging of its assets.
Call options written by the Fund will normally have expiration dates of less than nine months from the date
written. The exercise price of the options may be below, equal to, or above the current market values of the underlying
securities or currencies at the time the options are written. From time to time, the Fund may purchase an underlying
security or currency for delivery in accordance with an exercise notice of a call option assigned to it, rather than
delivering such security or currency from its portfolio. In such cases, additional costs may be incurred.
The premium received is the market value of an option. The premium the Fund will receive from writing a call
option will reflect, among other things, the current market price of the underlying security or currency, the
relationship of the exercise price to such market price, the historical price volatility of the underlying security or
currency, and the length of the option period. Once the decision to write a call option has been made, the Sub-advisor,
in determining whether a particular call option should be written on a particular security or currency, will consider the
reasonableness of the anticipated premium and the likelihood that a liquid secondary market will exist for those
options. The premium received by the Fund for writing covered call options will be recorded as a liability of the Fund.
This liability will be adjusted daily to the option's current market value, which will be the latest sale price at the
time at which the net asset value per share of the Fund is computed (close of the New York Stock Exchange), or, in the
absence of such sale, the latest asked price. The option will be terminated upon expiration of the option, the purchase
of an identical option in a closing transaction, or delivery of the underlying security or currency upon the exercise of
the option.
The Fund will realize a profit or loss from a closing purchase transaction if the cost of the transaction is less
or more than the premium received from the writing of the option. Because increases in the market price of a call option
will generally reflect increases in the market price of the underlying security or currency, any loss resulting from the
repurchase of a call option is likely to be offset in whole or in part by appreciation of the underlying security or
currency owned by the Fund.
The Fund will not write a covered call option if, as a result, the aggregate market value of all portfolio
securities or currencies covering call or put options exceeds 25% of the market value of the Fund's total assets. In
calculating the 25% limit, the Fund will offset, against the value of assets covering written calls and puts, the value
of purchased calls and puts on identical securities or currencies with identical maturity dates.
Writing Covered Put Options. The Fund may write American or European style covered put options and purchase
options to close out options previously written by the Fund.
The Fund would write put options only on a covered basis, which means that the Fund would maintain in a
segregated account cash, U.S. government securities or other liquid high-grade debt obligations in an amount not less
than the exercise price or the Fund will own an option to sell the underlying security or currency subject to the option
having an exercise price equal to or greater than the exercise price of the "covered" option at all times while the put
option is outstanding. (The rules of a clearing corporation currently require that such assets be deposited in escrow to
secure payment of the exercise price.) The Fund would generally write covered put options in circumstances where the
Sub-advisor wishes to purchase the underlying security or currency for the Fund at a price lower than the current market
price of the security or currency. In such event the Fund would write a put option at an exercise price which, reduced
by the premium received on the option, reflects the lower price it is willing to pay. Since the Fund would also receive
interest on debt securities or currencies maintained to cover the exercise price of the option, this technique could be
used to enhance current return during periods of market uncertainty. The risk in such a transaction would be that the
market price of the underlying security or currency would decline below the exercise price less the premiums received.
Such a decline could be substantial and result in a significant loss to the Fund. In addition, the Fund, because it does
not own the specific securities or currencies which it may be required to purchase in exercise of the put, cannot benefit
from appreciation, if any, with respect to such specific securities or currencies.
The Fund will not write a covered put option if, as a result, the aggregate market value of all portfolio
securities or currencies covering put or call options exceeds 25% of the market value of the Fund's total assets. In
calculating the 25% limit, the Fund will offset, against the value of assets covering written puts and calls, the value
of purchased puts and calls on identical securities or currencies with identical maturity dates.
Purchasing Put Options. The Fund may purchase American or European style put options. As the holder of a put
option, the Fund has the right to sell the underlying security or currency at the exercise price at any time during the
option period (American style) or at the expiration of the option (European style). The Fund may enter into closing sale
transactions with respect to such options, exercise them or permit them to expire. The Fund may purchase put options
for defensive purposes in order to protect against an anticipated decline in the value of its securities or currencies.
An example of such use of put options is provided in this SAI under "Certain Risk Factors and Investment Methods."
The premium paid by the Fund when purchasing a put option will be recorded as an asset of the Fund. This asset
will be adjusted daily to the option's current market value, which will be the latest sale price at the time at which the
net asset value per share of the Fund is computed (close of New York Stock Exchange), or, in the absence of such sale,
the latest bid price. This asset will be terminated upon expiration of the option, the selling (writing) of an identical
option in a closing transaction, or the delivery of the underlying security or currency upon the exercise of the option.
Purchasing Call Options. The Fund may purchase American or European style call options. As the holder of a call
option, the Fund has the right to purchase the underlying security or currency at the exercise price at any time during
the option period (American style) or at the expiration of the option (European style). The Fund may enter into closing
sale transactions with respect to such options, exercise them or permit them to expire. The Fund may purchase call
options for the purpose of increasing its current return or avoiding tax consequences which could reduce its current
return. The Fund may also purchase call options in order to acquire the underlying securities or currencies. Examples
of such uses of call options are provided in this SAI under "Certain Risk Factors and Investment Methods."
The Fund may also purchase call options on underlying securities or currencies it owns in order to protect
unrealized gains on call options previously written by it. A call option would be purchased for this purpose where tax
considerations make it inadvisable to realize such gains through a closing purchase transaction. Call options may also
be purchased at times to avoid realizing losses.
Dealer (Over-the-Counter) Options. The Fund may engage in transactions involving dealer options. Certain risks
are specific to dealer options. While the Fund would look to a clearing corporation to exercise exchange-traded options,
if the Fund were to purchase a dealer option, it would rely on the dealer from whom it purchased the option to perform if
the option were exercised. Failure by the dealer to do so would result in the loss of the premium paid by the Fund as
well as loss of the expected benefit of the transaction. For a discussion of dealer options, see this SAI under "Certain
Risk Factors and Investment Methods."
Futures Contracts:
Transactions in Futures. The Fund may enter into futures contracts, including stock index, interest
rate and currency futures ("futures" or "futures contracts"). The Fund may also enter into futures on commodities
related to the types of companies in which it invests, such as oil and gold futures. Otherwise the nature of such
futures and the regulatory limitations and risks to which they are subject are the same as those described below.
Stock index futures contracts may be used to attempt to hedge a portion of the Fund, as a cash
management tool, or as an efficient way for the Sub-advisor to implement either an increase or decrease in portfolio
market exposure in response to changing market conditions. The Fund may purchase or sell futures contracts with respect
to any stock index. Nevertheless, to hedge the Fund successfully, the Fund must sell futures contacts with respect to
indices or subindices whose movements will have a significant correlation with movements in the prices of the Fund's
securities.
Interest rate or currency futures contracts may be used to attempt to hedge against changes in
prevailing levels of interest rates or currency exchange rates in order to establish more definitely the effective return
on securities or currencies held or intended to be acquired by the Fund. In this regard, the Fund could sell interest
rate or currency futures as an offset against the effect of expected increases in interest rates or currency exchange
rates and purchase such futures as an offset against the effect of expected declines in interest rates or currency
exchange rates.
The Fund will enter into futures contracts which are traded on national or foreign futures exchanges,
and are standardized as to maturity date and underlying financial instrument. Futures exchanges and trading in the
United States are regulated under the Commodity Exchange Act by the CFTC. Although techniques other than the sale and
purchase of futures contracts could be used for the above-referenced purposes, futures contracts offer an effective and
relatively low cost means of implementing the Fund's objectives in these areas.
Regulatory Limitations. The Fund will engage in futures contracts and options thereon only for bona
fide hedging, yield enhancement, and risk management purposes, in each case in accordance with rules and regulations of
the CFTC.
The Fund may not purchase or sell futures contracts or related options if, with respect to positions
which do not qualify as bona fide hedging under applicable CFTC rules, the sum of the amounts of initial margin deposits
and premiums paid on those positions would exceed 5% of the net asset value of the Fund after taking into account
unrealized profits and unrealized losses on any such contracts it has entered into; provided, however, that in the case
of an option that is in-the-money at the time of purchase, the in-the-money amount may be excluded in calculating the 5%
limitation. For purposes of this policy options on futures contracts and foreign currency options traded on a
commodities exchange will be considered "related options." This policy may be modified by the Directors of the Company
without a shareholder vote and does not limit the percentage of the Fund's assets at risk to 5%.
In instances involving the purchase of futures contracts or the writing of call or put options thereon
by the Fund, an amount of cash or other liquid assets equal to the market value of the futures contracts and options
thereon (less any related margin deposits), will be identified by the Fund to cover the position, or alternative cover
(such as owning an offsetting position) will be employed. Assets used as cover cannot be sold while the position in the
corresponding option or future is open, unless they are replaced with similar assets. As a result, the commitment of a
large portion of the Fund's assets as cover could impede portfolio management or the Fund's ability to meet redemption
requests or other current obligations.
Options on Futures Contracts. The Fund may purchase and sell options on the same types of futures in which it
may invest. As an alternative to writing or purchasing call and put options on stock index futures, the Fund may write
or purchase call and put options on financial indices. Such options would be used in a manner similar to the use of
options on futures contracts. From time to time, a single order to purchase or sell futures contracts (or options
thereon) may be made on behalf of the Fund and other mutual funds or portfolios of mutual funds managed by the
Sub-advisor or Rowe Price-Fleming International, Inc. Such aggregated orders would be allocated among the Fund and such
other portfolios managed by the Sub-advisor in a fair and non-discriminatory manner. See this SAI and Company's
Prospectus under "Certain Risk Factors and Investment Methods" for a description of certain risks in options and future
contracts.
Additional Futures and Options Contracts. Although the Fund has no current intention of engaging in futures or
options transactions other than those described above, it reserves the right to do so. Such futures and options trading
might involve risks which differ from those involved in the futures and options described above.
Foreign Futures and Options. The Fund is permitted to invest in foreign futures and options. For a description
of foreign futures and options and certain risks involved therein as well as certain risks involved in foreign investing,
see this SAI and the Company's Prospectus under "Certain Risk Factors and Investment Methods."
Foreign Securities. The Fund may invest in U.S. dollar-denominated and non-U.S. dollar-denominated securities
of foreign issuers. There are special risks in foreign investing. Certain of these risks are inherent in any
international mutual fund while others relate more to the countries in which the Fund will invest. Many of the risks are
more pronounced for investments in developing or emerging countries, such as many of the countries of Southeast Asia,
Latin America, Eastern Europe and the Middle East. For an additional discussion of certain risks involved in investing
in foreign securities, see this SAI and the Company's Prospectus under "Certain Risk Factors and Investment Methods."
Foreign Currency Transactions. A forward foreign currency exchange contract involves an obligation to purchase
or sell a specific currency at a future date, which may be any fixed number of days from the date of the contract agreed
upon by the parties, at a price set at the time of the contract. These contracts are principally traded in the interbank
market conducted directly between currency traders (usually large, commercial banks) and their customers. A forward
contract generally has no deposit requirement, and no commissions are charged at any stage for trades.
The Fund may enter into forward contracts for a variety of purposes in connection with the management of the
foreign securities portion of its portfolio. The Fund's use of such contracts would include, but not be limited to, the
following: First, when the Fund enters into a contract for the purchase or sale of a security denominated in a foreign
currency, it may desire to "lock in" the U.S. dollar price of the security. Second, when the Sub-advisor believes that
one currency may experience a substantial movement against another currency, including the U.S. dollar, it may enter into
a forward contract to sell or buy the amount of the former foreign currency, approximating the value of some or all of
the Fund's securities denominated in such foreign currency. Alternatively, where appropriate, the Fund may hedge all or
part of its foreign currency exposure through the use of a basket of currencies or a proxy currency where such currency
or currencies act as an effective proxy for other currencies. In such a case, the Fund may enter into a forward contract
where the amount of the foreign currency to be sold exceeds the value of the securities denominated in such currency.
The use of this basket hedging technique may be more efficient and economical than entering into separate forward
contracts for each currency held in the Fund. The precise matching of the forward contract amounts and the value of the
securities involved will not generally be possible since the future value of such securities in foreign currencies will
change as a consequence of market movements in the value of those securities between the date the forward contract is
entered into and the date it matures. The projection of short-term currency market movement is extremely difficult, and
the successful execution of a short-term hedging strategy is highly uncertain. Under normal circumstances, consideration
of the prospect for currency parities will be incorporated into the longer term investment decisions made with regard to
overall diversification strategies. However, the Sub-advisor believes that it is important to have the flexibility to
enter into such forward contracts when it determines that the best interests of the Fund will be served.
The Fund may enter into forward contracts for any other purpose consistent with the Fund's investment objective
and policies. However, the Fund will not enter into a forward contract, or maintain exposure to any such contract(s), if
the amount of foreign currency required to be delivered thereunder would exceed the Fund's holdings of liquid assets and
currency available for cover of the forward contract(s). In determining the amount to be delivered under a contract, the
Fund may net offsetting positions.
At the maturity of a forward contract, the Fund may sell the portfolio security and make delivery of the foreign
currency, or it may retain the security and either extend the maturity of the forward contract (by "rolling" that
contract forward) or may initiate a new forward contract.
If the Fund retains the portfolio security and engages in an offsetting transaction, the Fund will incur a gain
or a loss (as described below) to the extent that there has been movement in forward contract prices. If the Fund
engages in an offsetting transaction, it may subsequently enter into a new forward contract to sell the foreign
currency. Should forward prices decline during the period between the Fund's entering into a forward contract for the
sale of a foreign currency and the date it enters into an offsetting contract for the purchase of the foreign currency,
the Fund will realize a gain to the extent the price of the currency it has agreed to sell exceeds the price of the
currency it has agreed to purchase. Should forward prices increase, the Fund will suffer a loss to the extent of the
price of the currency it has agreed to purchase exceeds the price of the currency it has agreed to sell.
The Fund's dealing in forward foreign currency exchange contracts will generally be limited to the transactions
described above. However, the Fund reserves the right to enter into forward foreign currency contracts for different
purposes and under different circumstances. Of course, the Fund is not required to enter into forward contracts with
regard to its foreign currency-denominated securities and will not do so unless deemed appropriate by the Sub-advisor.
It also should be realized that this method of hedging against a decline in the value of a currency does not eliminate
fluctuations in the underlying prices of the securities. It simply establishes a rate of exchange at a future date.
Additionally, although such contracts tend to minimize the risk of loss due to a decline in the value of the hedged
currency, at the same time, they tend to limit any potential gain which might result from an increase in the value of
that currency.
Although the Fund values its assets daily in terms of U.S. dollars, it does not intend to convert its holdings of
foreign currencies into U.S. dollars on a daily basis. It will do so from time to time, and investors should be aware of
the costs of currency conversion. Although foreign exchange dealers do not charge a fee for conversion, they do realize
a profit based on the difference (the "spread") between the prices at which they are buying and selling various
currencies. Thus, a dealer may offer to sell a foreign currency to the Fund at one rate, while offering a lesser rate of
exchange should the Fund desire to resell that currency to the dealer. For a discussion of certain risk factors involved
in foreign currency transactions, see this SAI and the Company's Prospectus under "Certain Risk Factors and Investment
Methods."
Federal Tax Treatment of Options, Futures Contracts and Forward Foreign Exchange Contracts. The Fund may enter
into certain option, futures, and forward foreign exchange contracts, including options and futures on currencies, which
will be treated as Section 1256 contracts or straddles.
Transactions which are considered Section 1256 contracts will be considered to have been closed at the end of the
Fund's fiscal year and any gains or losses will be recognized for tax purposes at that time. Such gains or losses from
the normal closing or settlement of such transactions will be characterized as 60% long-term capital gain (taxable at a
maximum rate of 20%) or loss and 40% short-term capital gain or loss regardless of the holding period of the instrument
(or, in the case of foreign exchange contracts, entirely as entirely as ordinary income or loss). The Fund will be
required to distribute net gains on such transactions to shareholders even though it may not have closed the transaction
and received cash to pay such distributions.
Options, futures and forward foreign exchange contracts, including options and futures on currencies, which
offset a foreign dollar denominated bond or currency position may be considered straddles for tax purposes, in which case
a loss on any position in a straddle will be subject to deferral to the extent of unrealized gain in an offsetting
position. The holding period of the securities or currencies comprising the straddle will be deemed not to begin until
the straddle is terminated. The holding period of the security offsetting an "in-the-money qualified covered call"
option on an equity security will not include the period of time the option is outstanding.
Losses on written covered calls and purchased puts on securities, excluding certain "qualified covered call"
options on equity securities, may be long-term capital loss, if the security covering the option was held for more than
twelve months prior to the writing of the option.
In order for the Fund to continue to qualify for federal income tax treatment as a regulated investment company,
at least 90% of its gross income for a taxable year must be derived from qualifying income, i.e., dividends, interest,
income derived from loans of securities, and gains from the sale of securities or currencies. Tax regulations could be
issued limiting the extent that net gain realized from option, futures or foreign forward exchange contracts on
currencies is qualifying income for purposes of the 90% requirement.
As a result of the "Taxpayer Relief Act of 1997," entering into certain options, futures contracts, or forward
contracts may be deemed a "constructive sale" of offsetting securities, which could result in a taxable gain from the
sale being distributed to shareholders. The Fund would be required to distribute any such gain even though it would not
receive proceeds from the sale at the time the option, futures or forward position is entered into.
Illiquid and Restricted Securities. If through the appreciation of illiquid securities or the depreciation of
liquid securities, the Fund should be in a position where more than 15% of the value of its net assets is invested in
illiquid assets, including restricted securities, the Fund will take appropriate steps to protect liquidity.
Notwithstanding the above, the Fund may purchase securities which, while privately placed, are eligible for
purchase and sale under Rule 144A under the Securities Act of 1933 (the "1933 Act"). This rule permits certain qualified
institutional buyers, such as the Fund, to trade in privately placed securities even though such securities are not
registered under the 1933 Act. The Sub-advisor, under the supervision of the Directors of the Company, will consider
whether securities purchased under Rule 144A are illiquid and thus subject to the Fund's restriction of investing no more
than 15% of its net assets in illiquid securities. A determination of whether a Rule 144A security is liquid or not is a
question of fact. In making this determination, the Sub-advisor will consider the trading markets for the specific
security taking into account the unregistered nature of a Rule 144A security. In addition, the Sub-advisor could
consider the (1) frequency of trades and quotes, (2) number of dealers and potential purchasers, (3) dealer undertakings
to make a market, and (4) the nature of the security and of marketplace trades (e.g., the time needed to dispose of the
security, the method of soliciting offers and the mechanics of transfer). The liquidity of Rule 144A securities would be
monitored, and if as a result of changed conditions it is determined that a Rule 144A security is no longer liquid, the
Fund's holdings of illiquid securities would be reviewed to determine what, if any, steps are required to assure that the
Fund does not invest more than 15% of its net assets in illiquid securities. Investing in Rule 144A securities could
have the effect of increasing the amount of the Fund's assets invested in illiquid securities if qualified institutional
buyers are unwilling to purchase such securities.
The Directors of the Company have promulgated guidelines with respect to illiquid securities.
Hybrid Instruments. Hybrid Instruments have been developed and combine the elements of futures contracts,
options or other financial instruments with those of debt, preferred equity or a depository instrument (hereinafter
"Hybrid Instruments). Hybrid Instruments may take a variety of forms, including, but not limited to, debt instruments
with interest or principal payments or redemption terms determined by reference to the value of a currency or commodity
or securities index at a future point in time, preferred stock with dividend rates determined by reference to the value
of a currency, or convertible securities with the conversion terms related to a particular commodity. For a discussion
of certain risks involved in investing in hybrid instruments see this SAI under "Certain Risk Factors and Investment
Methods."
Repurchase Agreements. Subject to guidelines adopted by the Directors of the Company, the Fund may enter into a
repurchase agreement through which an investor (such as the Fund) purchases a security (known as the "underlying
security") from a well-established securities dealer or a bank that is a member of the Federal Reserve System. Any such
dealer or bank will be on the Sub-advisor's approved list and have a credit rating with respect to its short-term debt of
at least A1 by Standard & Poor's Corporation, P1 by Moody's Investors Service, Inc., or the equivalent rating by the
Sub-advisor. At that time, the bank or securities dealer agrees to repurchase the underlying security at the same price,
plus specified interest. Repurchase agreements are generally for a short period of time, often less than a week.
Repurchase agreements which do not provide for payment within seven days will be treated as illiquid securities. The
Fund will only enter into repurchase agreements where (i) the underlying securities are of the type (excluding maturity
limitations) which the Fund's investment guidelines would allow it to purchase directly, (ii) the market value of the
underlying security, including interest accrued, will be at all times equal to or exceed the value of the repurchase
agreement, and (iii) payment for the underlying security is made only upon physical delivery or evidence of book- entry
transfer to the account of the custodian or a bank acting as agent. In the event of a bankruptcy or other default of a
seller of a repurchase agreement, the Fund could experience both delays in liquidating the underlying security and
losses, including: (a) possible decline in the value of the underlying security during the period while the Fund seeks to
enforce its rights thereto; (b) possible subnormal levels of income and lack of access to income during this period; and
(c) expenses of enforcing its rights.
Reverse Repurchase Agreements. Although the Fund has no current intention, in the foreseeable future, of
engaging in reverse repurchase agreements, the Fund reserves the right to do so. Reverse repurchase agreements are
ordinary repurchase agreements in which a fund is the seller of, rather than the investor in, securities, and agrees to
repurchase them at an agreed upon time and price. Use of a reverse repurchase agreement may be preferable to a regular
sale and later repurchase of the securities because it avoids certain market risks and transaction costs. A reverse
repurchase agreement may be viewed as a type of borrowing by the Fund.
Warrants. The Fund may acquire warrants. For a discussion of certain risks involved therein, see this SAI under
"Certain Risk Factor and Investment Methods."
Lending of Portfolio Securities. Securities loans are made to broker-dealers or institutional investors or other
persons, pursuant to agreements requiring that the loans be continuously secured by collateral at least equal at all
times to the value of the securities lent, marked to market on a daily basis. The collateral received will consist of
cash or U.S. government securities. While the securities are being lent, the Fund will continue to receive the
equivalent of the interest or dividends paid by the issuer on the securities, as well as interest on the investment of
the collateral or a fee from the borrower. The Fund has a right to call each loan and obtain the securities on three
business days' notice or, in connection with securities trading on foreign markets, within such longer period of time
which coincides with the normal settlement period for purchases and sales of such securities in such foreign markets.
The Fund will not have the right to vote securities while they are being lent, but it will call a loan in anticipation of
any important vote. The risks in lending portfolio securities, as with other extensions of secured credit, consist of
possible delay in receiving additional collateral or in the recovery of the securities or possible loss of rights in the
collateral should the borrower fail financially. Loans will only be made to firms deemed to be of good standing and will
not be made unless the consideration to be earned from such loans would justify the risk.
Other Lending/Borrowing. Subject to approval by the SEC, the Fund may make loans to, or borrow funds from, other
mutual funds sponsored or advised by the Sub-advisor or Rowe Price-Fleming International, Inc. The Fund has no current
intention of engaging in these practices at this time.
When-Issued Securities and Forward Commitment Contracts. The Fund may purchase securities on a "when-issued" or
delayed delivery basis and may purchase securities on a forward commitment basis. Any or all of the Fund's investments
in debt securities may be in the form of when-issueds and forwards. The price of such securities, which may be expressed
in yield terms, is fixed at the time the commitment to purchase is made, but delivery and payment take place at a later
date. Normally, the settlement date occurs within 90 days of the purchase for when-issueds, but may be substantially
longer for forwards. The Fund will cover its commitments with respect to these securities by maintaining cash and/or
other liquid assets with its custodian bank equal in value to these commitments during the time between the purchase and
the settlement. Such segregated securities either will mature or, if necessary, be sold on or before the settlement
date. For a discussion of these securities and the risks involved therein, see this SAI under "Certain Risk Factors and
Investment Methods."
Money Market Securities. The Fund will hold a certain portion of its assets in U.S. and foreign
dollar-denominated money market securities, including repurchase agreements, rated in the two highest rating categories,
maturing in one year or less.
Investment Policies Which May Be Changed Without Shareholder Approval. The following limitations are not
"fundamental" restrictions and may be changed by the Directors of the Company without shareholder approval. The Fund
will not:
1. Purchase additional securities when money borrowed exceeds 5% of its total assets;
2. Invest in companies for the purpose of exercising management or control;
3. Purchase a futures contract or an option thereon if, with respect to positions in futures or options on
futures which do not represent bona fide hedging, the aggregate initial margin and premiums on such options would exceed
5% of the Fund's net asset value;
4. Purchase illiquid securities if, as a result, more than 15% of its net assets would be invested in such
securities. Securities eligible for resale under Rule 144A of the 1933 Act may be subject to this 15% limitation;
5. Purchase securities of open-end or closed-end investment companies except in compliance with the
Investment Company Act of 1940 or the conditions of any order of exemption from the SEC regarding the purchase of
securities of money market funds managed by the Sub-advisor or its affiliates;
6. Purchase securities on margin, except (i) for use of short-term credit necessary for clearance of
purchases of portfolio securities and (ii) the Fund may make margin deposits in connection with futures contracts or
other permissible investments;
7. Mortgage, pledge, hypothecate or, in any manner, transfer any security owned by the Fund as security for
indebtedness except as may be necessary in connection with permissible borrowings or investments and then such
mortgaging, pledging or hypothecating may not exceed 33 1/3% of the Fund's total assets at the time of borrowing or
investment;
8. Invest in puts, calls, straddles, spreads, or any combination thereof, except to the extent permitted by
the Company's Prospectus and this SAI;
9. Effect short sales of securities; or
10. Invest in warrants if, as a result thereof, more than 10% of the value of the net assets of the Fund
would be invested in warrants, except that this restriction does not apply to warrants acquired as a result of the
purchase of another security. For purposes of these percentage limitations, the warrants will be valued at the lower of
cost or market.
ASAF Janus Mid-Cap Growth Fund:
Investment Objective: The investment objective of the Fund is to seek long-term growth of capital.
Investment Policies:
Illiquid Investments. The Fund may invest up to 15% of its net assets in illiquid investments (i.e., securities
that are not readily marketable). The Directors have authorized the Sub-advisor to make liquidity determinations with
respect to certain securities, including Rule 144A Securities and commercial paper purchased by the Fund. Under the
guidelines established by the Directors, the Sub-advisor will consider the following factors, among others: 1) the
frequency of trades and quoted prices for the obligation; 2) the number of dealers willing to purchase or sell the
security and the number of other potential purchasers; 3) the willingness of dealers to undertake to make a market in the
security; and 4) the nature of the security and the nature of marketplace trades, including the time needed to dispose
of the security, the method of soliciting offers and the mechanics of the transfer. In the case of commercial paper, the
Sub-advisor will also consider whether the paper is traded flat or in default as to principal and interest and any
ratings of the paper by a nationally recognized statistical rating organization ("NRSO"). A foreign security that may be
freely traded on or through the facilities of an offshore exchange or other established offshore securities market is not
deemed to be a restricted security subject to these procedures.
If illiquid securities exceed 15% of the Fund's net assets after the time of purchase the Fund will take steps to
reduce in an orderly fashion its holdings of illiquid securities.
For additional discussion of illiquid investments and their risks, see the Company's Prospectus under "Certain
Risk Factors and Investment Methods."
Foreign Securities. The Fund may invest up to 25% of its net assets in foreign securities denominated in foreign
currencies and not publicly traded in the United States. Investing in securities of foreign issuers generally involves
risks not ordinarily associated with investing in securities of domestic issuers. For a discussion of the risks involved
in foreign securities, see this SAI and the Company's Prospectus under "Certain Risk Factors and Investment Methods."
Depositary Receipts. The Fund may invest in sponsored and unsponsored American Depositary Receipts ("ADRs"),
which are described in the Company's Prospectus under "Certain Risk Factors and Investment Methods." Holders of
unsponsored ADRs generally bear all the costs of the ADR facility, whereas foreign issuers typically bear certain costs
in a sponsored ADR. The bank or trust company depositary of an unsponsored ADR may be under no obligation to distribute
shareholder communications received from the foreign issuer or to pass through voting rights. The Fund may also invest
in European Depositary Receipts ("EDRs"), Global Depositary Receipts ("GDRs") and in other similar instruments
representing securities of foreign companies.
Investment Company Securities. From time to time, the Fund may invest in securities of other investment
companies, subject to the provisions of Section 12(d)(1) of the 1940 Act. The Fund may invest in securities of money
market funds managed by the Sub-advisor in excess of the limitations of Section 12(d)(1) under the terms of an SEC
exemptive order obtained by the Sub-advisor and the funds that are advised or sub-advised by the Sub-advisor.
Municipal Obligations. The Fund may invest in municipal obligations issued by states, territories and
possessions of the United States and the District of Columbia. The value of municipal obligations can be affected by
changes in their actual or perceived credit quality. The credit quality of municipal obligations can be affected by
among other things the financial condition of the issuer or guarantor, the issuer's future borrowing plans and sources of
revenue, the economic feasibility of the revenue bond project or general borrowing purpose, political or economic
developments in the region where the security is issued, and the liquidity of the security. Because municipal securities
are generally traded over-the-counter, the liquidity of a particular issue often depends on the willingness of dealers to
make a market in the security. The liquidity of some municipal obligations may be enhanced by demand features, which
would enable the Fund to demand payment on short notice from the issuer or a financial intermediary.
Income-Producing Securities. Types of income-producing securities that the Fund may purchase include, but are
not limited to, (i) variable and floating rate obligations, which are securities having interest rates that are adjusted
periodically according to a specified formula, usually with reference to some interest rate index or market interest
rate, and (ii) tender option bonds, which are relatively long-term bonds that are coupled with the agreement of a third
party (such as a broker, dealer or bank) to grant the holders of such securities the option to tender the securities to
the institution at periodic intervals. Variable and floating rate obligations often carry demand features permitting the
holder to demand payment of principal at any time or at specified intervals prior to maturity. The Fund may also acquire
standby commitments, which are instruments similar to puts that give the holder the option to obligate a broker, dealer
or bank to repurchase a security at a specified price. The Fund will purchase standby commitments, tender option bonds
and instruments with demand features primarily for the purpose of increasing the liquidity of its portfolio. The Fund
may also invest in inverse floaters, which are debt instruments the interest on which varies in an inverse relationship
to the interest rate on another security. If movements in interest rates are incorrectly anticipated, the Fund could
lose money or its net asset value could decline by the use of inverse floaters. The Fund will not invest more than 5% of
its assets in inverse floaters. The Fund may also invest in strip bonds, which are debt securities that are stripped of
their interest (usually by a financial intermediary) after the securities are issued. The market value of these
securities generally fluctuates more in response to changes in interest rates than interest-paying securities of
comparable maturity.
Zero Coupon, Step Coupon and Pay-In-Kind Securities. The Fund may invest up to 10% of its assets in zero coupon,
pay-in-kind and step coupon securities. Zero coupon bonds are described in this SAI under "Certain Risk Factors and
Investment Methods." Step coupon bonds trade at a discount from their face value and pay coupon interest. The coupon
rate is low for an initial period and then increases to a higher coupon rate thereafter. The discount from the face
amount or par value depends on the time remaining until cash payments begin, prevailing interest rates, liquidity of the
security and the perceived credit quality of the issuer. Pay-in-kind bonds normally give the issuer an option to pay cash
at a coupon payment date or give the holder of the security a similar bond with the same coupon rate and a face value
equal to the amount of the coupon payment that would have been made.
Generally, the market prices of zero coupon, step coupon and pay-in-kind securities are more volatile than the
prices of securities that pay interest periodically and in cash and are likely to respond to changes in interest rates to
a greater degree than other types of debt securities having similar maturities and credit quality. Additionally, the
Fund may have to sell portfolio holdings so that it is able to distribute cash in order to satisfy current federal tax
law requirements to distribute income accrued, but not actually received, on zero coupon, step coupon and pay-in-kind
securities. This may cause the Fund to incur capital gains or losses on such sales, as well as reduce the assets to
which Fund expenses could be allocated and reduce the rate of return for the Fund. For additional discussion of
potential tax consequences of investing in zero coupon securities, see this SAI under "Additional Tax Considerations."
High-Yield/High-Risk Securities. The Fund may invest up to 35% of its net assets in bonds that are rated below
investment grade. The Fund may also invest in unrated debt securities of foreign and domestic issuers. Unrated debt,
while not necessarily of lower quality than rated securities, may not have as broad a market. Because of the size and
perceived demand of the issue, among other factors, certain municipalities may not incur the costs of obtaining a
rating. The Sub-advisor will analyze the creditworthiness of the issuer, as well as any financial institution or other
party responsible for payments on the security, in determining whether to purchase unrated municipal bonds. Unrated
bonds will be included in the 35% limit unless the Sub-advisor deems such securities to be the equivalent of investment
grade securities. For a description of these securities and a discussion of the risks involved therein, see this SAI and
the Company's Prospectus under "Certain Risk Factors and Investment Methods."
The Fund may purchase defaulted securities subject to the above limits, but only when the Sub-advisor believes,
based upon its analysis of the financial condition, results of operations and economic outlook of an issuer, that there
is potential for resumption of income payments and that the securities offer an unusual opportunity for capital
appreciation. Notwithstanding the Sub-advisor's belief as to the resumption of income, however, the purchase of any
security on which payment of interest or dividends is suspended involves a high degree of risk. Such risk includes,
among other things, the following:
Financial and Market Risks. Investments in securities that are in default involve a high degree of
financial and market risks that can result in substantial or, at times, even total losses. Issuers of defaulted
securities may have substantial capital needs and may become involved in bankruptcy or reorganization proceedings. Among
the problems involved in investments in such issuers is the fact that it may be difficult to obtain information about
their condition. The market prices of securities of such issuers also are subject to abrupt and erratic movements and
above average price volatility, and the spread between the bid and asked prices of such securities may be greater than
normally expected.
Disposition of Portfolio Securities. Although the Fund generally will purchase securities for which the
Sub-advisor expects an active market to be maintained, defaulted securities may be less actively traded than other
securities and it may be difficult to dispose of substantial holdings of such securities at prevailing market prices.
The Fund will limit holdings of any such securities to amounts that the Sub-advisor believes could be readily sold, and
holdings of such securities would, in any event, be limited so as not to limit the Portfolio's ability to readily dispose
of securities to meet redemptions.
Other. Defaulted securities require active monitoring and may, at times, require participation in
bankruptcy or receivership proceedings on behalf of the Fund.
Repurchase and Reverse Repurchase Agreements. The Fund may enter into repurchase agreements. While it is not
possible to eliminate all risks from repurchase agreement transactions, the Fund will limit repurchase agreements to
those parties whose creditworthiness has been reviewed and found satisfactory by the Sub-advisor.
The Fund may use reverse repurchase agreements to provide cash to satisfy unusually heavy redemption requests or
for other temporary or emergency purposes without the necessity of selling portfolio securities, or to earn additional
income on portfolio securities, such as Treasury bills or notes. The Fund will enter into reverse repurchase agreements
only with parties that the Sub-advisor deems creditworthy. Using reverse repurchase agreements to earn additional income
involves the risk that the interest earned on the invested proceeds is less than the expense of the reverse repurchase
agreement transaction. This technique may also have a leveraging effect on the Fund, although the requirement for the
Fund to segregate assets in the amount of the reverse repurchase agreement minimizes this effect.
For an additional discussion of repurchase agreements and reverse repurchase agreements and their risks, see the
Company's Prospectus under "Certain Risk Factors and Investment Methods."
Futures, Options and Forward Contracts. The Fund may enter into futures contracts on securities, financial
indices, and foreign currencies and options on such contracts, and may invest in options on securities, financial
indices, and foreign currencies, and forward contracts. The Fund will not enter into any futures contracts or options on
futures contracts if the aggregate amount of the Fund's commitments under outstanding futures contract positions and
options on futures contracts written by the Fund would exceed the market value of the Fund's total assets. The Fund may
invest in forward currency contracts with stated values of up to the value of the Fund's assets.
The Fund may buy or write options that are traded on United States and foreign securities exchanges and
over-the-counter on the types of securities, and on indices based on the types of securities, in which the Fund is
permitted to invest directly. The Fund will effect over-the-counter options transactions only with investment dealers
and other financial institutions (such as commercial banks or savings and loan institutions) deemed creditworthy by the
Sub-advisor pursuant to procedures adopted by the Sub-advisor for monitoring the creditworthiness of those entities. To
the extent that an option purchased or written by the Fund in a negotiated transaction is illiquid, the value of the
option purchased or the amount of the Fund's obligations under an option it has written, as the case may be, will be
subject to the Fund's limitation on illiquid investments. In the case of illiquid options, it may not be possible for
the Fund to effect an offsetting transaction when the Sub-advisor believes it would be advantageous for the Fund to do
so. For a description of these strategies and instruments and certain of their risks, see this SAI and the Company's
Prospectus under "Certain Risk Factors and Investment Methods."
Eurodollar Instruments. The Fund may make investments in Eurodollar instruments. Eurodollar instruments are
U.S. dollar-denominated futures contracts or options thereon that are linked to the London Interbank Offered Rate
("LIBOR"), although foreign currency-denominated instruments are available from time to time. Eurodollar futures
contracts enable purchasers to obtain a fixed rate for the lending of funds and sellers to obtain a fixed rate for
borrowings. The Fund might use Eurodollar futures contracts and options thereon to hedge against changes in LIBOR, to
which many interest rate swaps and fixed-income instruments are linked.
Swaps and Swap-Related Products. The Fund may enter into interest rate swaps, caps and floors on either an
asset-based or liability-based basis, depending upon whether it is hedging its assets or its liabilities, and will
usually enter into interest rate swaps on a net basis (i.e., the two payment streams are netted out, with the Fund
receiving or paying, as the case may be, only the net amount of the two payments). The net amount of the excess, if any,
of the Fund's obligations over its entitlement with respect to each interest rate swap will be calculated on a daily
basis and an amount of cash or other liquid assets having an aggregate net asset value at least equal to the accrued
excess will be maintained in a segregated account by the Fund's custodian. If the Fund enters into an interest rate swap
on other than a net basis, it would maintain a segregated account in the full amount accrued on a daily basis of its
obligations with respect to the swap. The Fund will not enter into any interest rate swap, cap or floor transaction
unless the unsecured senior debt or the claims-paying ability of the other party thereto is rated in one of the three
highest rating categories of at least one NRSRO at the time of entering into such transaction. The Sub-advisor will
monitor the creditworthiness of all counterparties on an ongoing basis. If there is a default by the other party to such
a transaction, the Fund will have contractual remedies pursuant to the agreements related to the transaction.
The swap market has grown substantially in recent years with a large number of banks and investment banking firms
acting both as principals and as agents utilizing standardized swap documentation. The Sub-advisor has determined that,
as a result, the swap market has become relatively liquid. Caps and floors are more recent innovations for which
standardized documentation has not yet been developed and, accordingly, are less liquid than swaps. To the extent the
Fund sells (i.e., writes) caps and floors, it will segregate cash or other liquid assets having an aggregate net asset
value at least equal to the full amount, accrued on a daily basis, of its obligations with respect to any caps or floors.
There is no limit on the amount of interest rate swap transactions that may be entered into by the Fund. These
transactions may in some instances involve the delivery of securities or other underlying assets by the Fund or its
counterparty to collateralize obligations under the swap. Under the documentation currently used in those markets, the
risk of loss with respect to interest rate swaps is limited to the net amount of the payments that the Fund is
contractually obligated to make. If the other party to an interest rate swap that is not collateralized defaults, the
Fund would risk the loss of the payments that it contractually is entitled to receive. The Fund may buy and sell (i.e.,
write) caps and floors without limitation, subject to the segregation requirement described above.
Investment Policies Which May Be Changed Without Shareholder Approval. The following limitations are applicable
to the ASAF Janus Mid-Cap Growth Fund. These limitations are not "fundamental" restrictions, and may be changed by the
Directors without shareholder approval.
1. The Fund does not currently intend to sell securities short, unless it owns or has the right to obtain
securities equivalent in kind and amount to the securities sold short without the payment of any additional consideration
therefor, and provided that transactions in futures, options, swaps and forward contracts are not deemed to constitute
selling securities short.
2. The Fund does not currently intend to purchase securities on margin, except that the Fund may obtain
such short-term credits as are necessary for the clearance of transactions, and provided that margin payments and other
deposits in connection with transactions in futures, options, swaps and forward contracts shall not be deemed to
constitute purchasing securities on margin.
3. The Fund may not mortgage or pledge any securities owned or held by the Fund in amounts that exceed, in
the aggregate, 15% of the Fund's net asset value, provided that this limitation does not apply to reverse repurchase
agreements, margin and other deposits in connection with transactions in futures, options, swaps or forward contracts, or
the segregation of assets in connection with such contracts.
4. The Fund does not currently intend to purchase any security or enter into a repurchase agreement if, as
a result, more than 15% of its net assets would be invested in repurchase agreements not entitling the holder to payment
of principal and interest within seven days and in securities that are illiquid by virtue of legal or contractual
restrictions on resale or the absence of a readily available market. The Directors, or the Fund's Sub-advisor acting
pursuant to authority delegated by the Directors, may determine that a readily available market exists for securities
eligible for resale pursuant to Rule 144A under the Securities Act of 1933 ("Rule 144A Securities"), or any successor to
such rule, Section 4(2) commercial paper and municipal lease obligations. Accordingly, such securities may not be
subject to the foregoing limitation.
5. The Fund may not invest in companies for the purpose of exercising control of management.
ASAF Neuberger Berman Mid-Cap Growth Fund:
Investment Objective: The investment objective of the Fund is to seek capital growth.
Investment Policies:
Repurchase Agreements. In a repurchase agreement, the Fund purchases securities from a Federal Reserve member
bank or a securities dealer deemed creditworthy by the Sub-advisor under procedures established by the Board of Directors
of the Company. The bank or securities dealer agrees to repurchase the securities from the Fund at a higher price on a
designated future date. Repurchase agreements generally are for a short period of time, usually less than a week.
Repurchase agreements with a maturity of more than seven business days are considered to be illiquid securities; the Fund
may not enter into such a repurchase agreement if, as a result, more than 15% of the value of its net assets would then
be invested in such repurchase agreements and other illiquid securities. The Fund will enter into a repurchase agreement
only if (1) the underlying securities are of the type (excluding maturity and duration limitations) that the Fund's
investment policies and limitations would allow it to purchase directly, (2) the market value of the underlying
securities, including accrued interest, and any other collateral for the repurchase agreement at all times equals or
exceeds the repurchase price under the agreement, and (3) payment for the underlying securities is made only upon
satisfactory evidence that the securities are being held for the Fund's account by the custodian or a bank acting as the
Fund's agent.
Securities Loans. In order to realize income, the Fund may lend portfolio securities with a value not exceeding
33-1/3% of its total assets to banks, brokerage firms, or institutional investors judged creditworthy by the
Sub-advisor. Borrowers are required continuously to secure their obligations to return securities on loan from the Fund
by depositing collateral, which will be marked to market daily, in a form determined to be satisfactory by the Directors
and equal to at least 100% of the market value of the loaned securities, which will also be marked to market daily. The
Sub-advisor believes the risk of loss on these transactions is slight because, if a borrower were to default for any
reason, the collateral should satisfy the obligation. However, as with other extensions of secured credit, loans of
portfolio securities involve some risk of loss of rights in the collateral should the borrower fail financially.
Restricted Securities and Rule 144A Securities. The Fund may invest in restricted securities, which are
securities that may not be sold to the public without an effective registration statement under the 1933 Act. Before
they are registered, such securities may be sold only in a privately negotiated transaction or pursuant to an exemption
from registration. In recognition of the increased size and liquidity of the institutional markets for unregistered
securities and the importance of institutional investors in the formation of capital, the SEC has adopted Rule 144A under
the 1933 Act, which is designed to facilitate efficient trading among institutional investors by permitting the sale of
certain unregistered securities to qualified institutional buyers. To the extent privately placed securities held by the
Fund qualify under Rule 144A, and an institutional market develops for those securities, the Fund likely will be able to
dispose of the securities without registering them under the 1933 Act. To the extent that institutional buyers become,
for a time, uninterested in purchasing these securities, investing in Rule 144A securities could have the effect of
reducing the Fund's liquidity. The Sub-advisor, acting under guidelines established by the Board of Directors of the
Company, may determine that certain securities qualified for trading under Rule 144A are liquid.
Where registration is required, the Fund may be obligated to pay all or part of the registration expenses, and a
considerable period may elapse between the decision to sell and the time the Fund may be permitted to sell a security
under an effective registration statement. If, during such a period, adverse market conditions were to develop, the Fund
might obtain a less favorable price than prevailed when it decided to sell. Restricted securities, excluding Rule 144A
securities deemed liquid by the Sub-advisor, are considered illiquid, and will be subject to the Fund's 15% limit on
investments in illiquid securities. Foreign securities that are freely tradable in their principal markets are not
considered by the Fund to be illiquid. Illiquid securities for which no market exists are priced by a method that the
Directors believe accurately reflects fair value.
Reverse Repurchase Agreements. In a reverse repurchase agreement, the Fund sells portfolio securities subject to
its agreement to repurchase the securities at a later date for a fixed price reflecting a market rate of interest; these
agreements are considered borrowings for purposes of the Fund's investment limitations and policies concerning
borrowings. There is a risk that the counterparty to a reverse repurchase agreement will be unable or unwilling to
complete the transaction as scheduled, which may result in losses to the Fund.
Covered Call Options. The Fund may write covered call options on securities it owns. Generally, the purpose of
writing those options is to reduce the effect of price fluctuations of securities held by the Fund on the Fund's net
asset value. Securities on which call options may be written by the Fund are purchased solely on the basis of investment
considerations consistent with the Fund's investment objectives.
When the Fund writes a call option, it is obligated to sell a security to a purchaser at a specified price at any
time until a certain date if the purchaser decides to exercise the option. The Fund receives a premium for writing the
call option. The Fund writes only "covered" call options on securities it owns. So long as the obligation of the writer
of the call option continues, the writer may be assigned an exercise notice, requiring it to deliver the underlying
security against payment of the exercise price. The Fund may be obligated to deliver securities underlying a call option
at less than the market price thereby giving up any additional gain on the security.
When the Fund purchases a call option, it pays a premium for the right to purchase a security from the writer at
a specified price until a specified date. A call option would be purchased by the Fund to offset a previously written
call option.
The writing of covered call options is a conservative investment technique believed to involve relatively little
risk (in contrast to the writing of "naked" or uncovered call options, which the Fund will not do), but is capable of
enhancing the Fund's total return. When writing a covered call option, the Fund, in return for the premium, gives up the
opportunity for profit from a price increase in the underlying security above the exercise price, but conversely retains
the risk of loss should the price of the security decline. If a call option that the Fund has written expires
unexercised, the Fund will realize a gain in the amount of the premium; however, that gain may be offset by a decline in
the market value of the underlying security during the option period. If the call option is exercised, the Fund will
realize a gain or loss from the sale or purchase of the underlying security.
The exercise price of an option may be below, equal to, or above the market value of the underlying security at
the time the option is written. Options normally have expiration dates between three and nine months from the date
written. The obligation under any option terminates upon expiration of the option or, at an earlier time, when the
writer offsets the option by entering into a "closing purchase transaction" to purchase an option of the same series.
Options are traded both on national securities exchanges and in the over-the-counter ("OTC") market.
Exchange-traded options are issued by a clearing organization affiliated with the exchange on which the option is listed;
the clearing organization in effect guarantees completion of every exchange-traded option. In contrast, OTC options are
contracts between the Fund and its counter-party with no clearing organization guarantee. Thus, when the Fund sells or
purchases an OTC option, it generally will be able to "close out" the option prior to its expiration only by entering
into a "closing purchase transaction" with the dealer to whom or from whom the Fund originally sold or purchased the
option. The Sub-advisor monitors the creditworthiness of dealers with which the Fund may engage in OTC options, and will
limit counterparties in such transactions to dealers with a net worth of at least $20 million as reported in their latest
financial statements. For an additional discussion of OTC options and their risks, see this SAI under "Certain Risk
Factors and Investment Methods."
The premium received (or paid) by the Fund when it writes (or purchases) an option is the amount at which the
option is currently traded on the applicable exchange, less (or plus) a commission. The premium may reflect, among other
things, the current market price of the underlying security, the relationship of the exercise price to the market price,
the historical price volatility of the underlying security, the length of the option period, the general supply of and
demand for credit, and the general interest rate environment. The premium received by the Fund for writing an option is
recorded as a liability on the Fund's statement of assets and liabilities. This liability is adjusted daily to the
option's current market value.
The Fund pays the brokerage commissions in connection with purchasing or writing options, including those used to
close out existing positions. These brokerage commissions normally are higher than those applicable to purchases and
sales of portfolio securities.
From time to time, the Fund may purchase an underlying security for delivery in accordance with an exercise
notice of a call option assigned to it, rather than delivering the security from its portfolio. In those cases,
additional brokerage commissions are incurred.
For an additional discussion of options and their risks, see this SAI and the Company's Prospectus under "Certain
Risk Factors and Investment Methods."
Foreign Securities. The Fund may invest in U.S. dollar-denominated equity and debt securities issued by foreign
issuers (including governments, quasi-governments and foreign banks) and foreign branches of U.S. banks, including
negotiable CDs and commercial paper. These investments are subject to the Fund's quality standards. While investments
in foreign securities are intended to reduce risk by providing further diversification, such investments involve
sovereign and other risks, in addition to the credit and market risks normally associated with domestic securities.
The Fund may invest in equity, debt, or other income-producing securities that are denominated in or indexed to
foreign currencies, including, but not limited to (1) common and preferred stocks, (2) convertible securities, (3)
warrants, (4) CDs, commercial paper, fixed-time deposits, and bankers' acceptances issued by foreign banks, (5)
obligations of other corporations, and (6) obligations of foreign governments, or their subdivisions, agencies, and
instrumentalities, international agencies, and supranational entities. Risks of investing in foreign currency
denominated securities include (1) nationalization, expropriation, or confiscatory taxation, (2) adverse changes in
investment or exchange control regulations (which could prevent cash from being brought back to the U.S.), and (3)
expropriation or nationalization of foreign portfolio companies. Mail service between the U.S. and foreign countries may
be slower or less reliable than within the United States, thus increasing the risk of delayed settlements of portfolio
transactions or loss of certificates for portfolio securities. For an additional discussion of the risks associated with
foreign securities, whether denominated in U.S. dollars or foreign currencies, see this SAI and the Company's Prospectus
under "Certain Risk Factors and Investment Methods."
Prices of foreign securities and exchange rates for foreign currencies may be affected by the interest rates
prevailing in other countries. The interest rates in other countries are often affected by local factors, including the
strength of the local economy, the demand for borrowing, the government's fiscal and monetary policies, and the
international balance of payments. Individual foreign economies may differ favorably or unfavorably from the U.S.
economy in such respects as gross national product, rate of inflation, capital reinvestment, resource self-sufficiency,
and balance of payments position.
Foreign markets also have different clearance and settlement procedures, and in certain markets there have been
times when settlements have been unable to keep pace with the volume of securities transactions, making it difficult to
conduct such transactions. Such delays in settlement could result in temporary periods when a portion of the assets of
the Fund is uninvested and no return is earned thereon. The inability of the Fund to make intended security purchases
due to settlement problems could cause the Fund to miss attractive investment opportunities. Inability to dispose of
portfolio securities due to settlement problems could result either in losses to the Fund due to subsequent declines in
value of the portfolio securities, or, if the Fund has entered into a contract to sell the securities, could result in
possible liability to the purchaser.
The Fund may invest in foreign corporate bonds and debentures and sovereign debt instruments issued or guaranteed
by foreign governments, their agencies or instrumentalities. Foreign debt securities are subject to risks similar to
those of other foreign securities, as well as risks similar to those of other debt securities, as discussed in this SAI
and in the Company's Prospectus under "Investment Programs of the Funds" and "Certain Risk Factors and Investment
Methods."
In order to limit the risk inherent in investing in foreign currency-denominated securities, the Fund may not
purchase any such security if after such purchase more than 10% of its total assets (taken at market value) would be
invested in such securities. Within such limitation, however, the Fund is not restricted in the amount it may invest in
securities denominated in any one foreign currency.
Foreign Currency Transactions. The Fund may engage in foreign currency exchange transactions. Foreign currency
exchange transactions will be conducted either on a spot (i.e., cash) basis at the spot rate prevailing in the foreign
----
currency exchange market, or through entering into forward contracts to purchase or sell foreign currencies ("forward
contracts"). The Fund may enter into forward contracts in order to protect against uncertainty in the level of future
foreign currency exchange rates. The Fund may also use forward contracts for non-hedging purposes.
A forward contract involves an obligation to purchase or sell a specific currency at a future date, which may be
any fixed number of days (usually less than one year) from the date of the contract agreed upon by the parties, at a
price set at the time of the contract. These contracts are traded in the interbank market conducted directly between
traders (usually large commercial banks) and their customers. A forward contract generally has no deposit requirement,
and no commissions are charged at any stage for trades. Although foreign exchange dealers do not charge a fee for
conversion, they do realize a profit based on the difference (the spread) between the price at which they are buying and
selling various currencies.
When the Fund enters into a contract for the purchase or sale of a security denominated in a foreign currency, it
may wish to "lock in" the U.S. dollar price of the security. By entering into a forward contract for the purchase or
sale, for a fixed amount of U.S. dollars, of the amount of foreign currency involved in the underlying security
transactions, the Fund will be able to protect itself against a possible loss. When the Sub-advisor believes that the
currency of a particular foreign country may suffer a substantial decline against the U.S. dollar, it may also enter into
a forward contract to sell the amount of foreign currency for a fixed amount of dollars which approximates the value of
some or all of a Fund's securities denominated in such foreign currency.
The Fund may also engage in cross-hedging by using forward contracts in one currency to hedge against
fluctuations in the value of securities denominated in a different currency, when the Sub-advisor believes that there is
a pattern of correlation between the two currencies. The Fund may also purchase and sell forward contracts for
non-hedging purposes when the Sub-advisor anticipates that the foreign currency will appreciate or depreciate in value,
but securities in that currency do not present attractive investment opportunities and are not held in the Fund's
portfolio.
When the Fund engages in forward contracts for hedging purposes, it will not enter into forward contracts to sell
currency or maintain a net exposure to such contracts if their consummation would obligate the Fund to deliver an amount
of foreign currency in excess of the value of its portfolio securities or other assets denominated in that currency. At
the consummation of the forward contract, the Fund may either make delivery of the foreign currency or terminate its
contractual obligation to deliver by purchasing an offsetting contract obligating it to purchase the same amount of such
foreign currency at the same maturity date. If the Fund chooses to make delivery of the foreign currency, it may be
required to obtain such currency through the sale of portfolio securities denominated in such currency or through
conversion of other assets into such currency. If the Fund engages in an offsetting transaction, it will incur a gain or
a loss to the extent that there has been a change in forward contract prices. Closing purchase transactions with respect
to forward contracts are usually made with the currency trader who is a party to the original forward contract.
The Fund is not required to enter into such transactions and will not do so unless deemed appropriate by the
Sub-advisor.
Using forward contracts to protect the value of the Fund's portfolio securities against a decline in the value of
a currency does not eliminate fluctuations in the underlying prices of the securities. It simply establishes a rate of
exchange which can be achieved at some future point in time. The precise projection of short-term currency market
movements is not possible, and short-term hedging provides a means of fixing the dollar value of only a portion of the
Fund's foreign assets.
While the Fund may enter forward contracts to reduce currency exchange rate risks, transactions in such contracts
involve certain other risks. Thus, while the Fund may benefit from such transactions, unanticipated changes in currency
prices may result in a poorer overall performance for the Fund than if it had not engaged in any such transactions.
Moreover, there may be imperfect correlation between the Fund's holdings of securities denominated in a particular
currency and forward contracts entered into by the Fund. Such imperfect correlation may cause the Fund to sustain losses
which will prevent it from achieving a complete hedge or expose it to risk of foreign exchange loss.
The Fund generally will not enter into a forward contract with a term of greater than one year. The Fund may
experience delays in the settlement of its foreign currency transactions.
When the Fund engages in forward contracts for the sale or purchase of currencies, the Fund will either cover its
position or establish a segregated account. The Fund will consider its position covered if it has securities in the
currency subject to the forward contract, or otherwise has the right to obtain that currency at no additional cost. In
the alternative, the Fund will place cash, fixed income, or equity securities (denominated in the foreign currency
subject to the forward contract) in a separate account. The amounts in such separate account will equal the value of the
Fund's assets which are committed to the consummation of foreign currency exchange contracts. If the value of the
securities placed in the separate account declines, the Fund will place additional cash or securities in the account on a
daily basis so that the value of the account will equal the amount of its commitments with respect to such contracts.
For an additional discussion of forward foreign currency exchange contracts and their risks, see this SAI and the
Company's Prospectus under "Certain Risk Factors and Investment Methods."
Options on Foreign Currencies. The Fund may write and purchase covered call and put options on foreign
currencies in amounts not exceeding 5% of its net assets for the purpose of protecting against declines in the U.S.
dollar value of portfolio securities or increases in the U.S. dollar cost of securities to be acquired, or to protect the
dollar equivalent of dividend, interest, or other payment on those securities. A decline in the dollar value of a
foreign currency in which portfolio securities are denominated will reduce the dollar value of such securities, even if
their value in the foreign currency remains constant. In order to protect against such decreases in the value of
portfolio securities, the Fund may purchase put options on the foreign currency. If the value of the currency declines,
the Fund will have the right to sell such currency for a fixed amount of dollars which exceeds the market value of such
currency. This would result in a gain that may offset, in whole or in part, the negative effect of currency depreciation
on the value of the Fund's securities denominated in that currency.
Conversely, if the dollar value of a currency in which securities to be acquired by the Fund are denominated
rises, thereby increasing the cost of such securities, the Fund may purchase call options on such currency. If the value
of such currency increases sufficiently, the Fund will have the right to purchase that currency for a fixed amount of
dollars which is less than the market value of that currency. Such a purchase would result in a gain that may offset, at
least partially, the effect of any currency-related increase in the price of securities the Fund intends to acquire.
As in the case of other types of options transactions, however, the benefit the Fund derives from purchasing
foreign currency options will be reduced by the amount of the premium and related transaction costs. In addition, if
currency exchange rates do not move in the direction or to the extent anticipated, the Fund could sustain losses on
transactions in foreign currency options which would deprive it of a portion or all of the benefits of advantageous
changes in such rates.
The Fund may also write options on foreign currencies for hedging purposes. For example, if the Sub-advisor
anticipates a decline in the dollar value of foreign currency denominated securities because of declining exchange rates,
it could, instead of purchasing a put option, write a call option on the relevant currency. If the expected decline
occurs, the option will most likely not be exercised, and the decrease in value of portfolio securities will be offset,
at least in part, by the amount of the premium received by the Fund.
Similarly, the Fund could write a put option on the relevant currency, instead of purchasing a call option, to
hedge against an anticipated increase in the dollar cost of securities to be acquired. If exchange rates move in the
manner projected, the put option most likely will not be exercised, and such increased cost will be offset, at least in
part, by the amount of the premium received. However, as in the case of other types of options transactions, the writing
of a foreign currency option will constitute only a partial hedge up to the amount of the premium, and only if rates move
in the expected direction.
If unanticipated exchange rate fluctuations occur, a put or call option may be exercised and the Fund could be
required to purchase or sell the underlying currency at a loss which may not be fully offset by the amount of the
premium. As a result of writing options on foreign currencies, the Fund also may be required to forego all or a portion
of the benefits which might otherwise have been obtained from favorable movements in currency exchange rates. Options on
foreign currencies may be traded on U.S. or foreign exchanges, or over-the-counter. Options on foreign currencies that
are traded on the OTC market involve liquidity and credit risks that may not be present in the case of exchange-traded
currency options.
A call option written on foreign currency by the Fund is "covered" if the Fund owns the underlying foreign
currency subject to the call, or if it has an absolute and immediate right to acquire that foreign currency without
additional cash consideration. A call option is also covered if the Fund holds a call on the same foreign currency for
the same principal amount as the call written where the exercise price of the call held is (a) equal to or less than the
exercise price of the call written or (b) greater than the exercise price of the call written if the amount of the
difference is maintained by the Fund in cash, fixed income or equity securities in a segregated account with its
custodian.
The risks of currency options are similar to the risks of other options, as discussed above and in this SAI under
"Certain Risk Factors and Investment Methods."
Cover for Options on Securities, Forward Contracts, and Options on Foreign Currencies ("Hedging Instruments").
The Fund will comply with SEC staff guidelines regarding "cover" for Hedging Instruments and, if the guidelines so
require, set aside in a segregated account with its custodian the prescribed amount of cash, fixed income, or equity
securities. Securities held in a segregated account cannot be sold while the futures, option, or forward strategy
covered by those securities is outstanding, unless they are replaced with other suitable assets. As a result,
segregation of a large percentage of the Fund's assets could impede portfolio management or the Fund's ability to meet
current obligations. The Fund may be unable promptly to dispose of assets that cover, or are segregated with respect to,
an illiquid options or forward position; this inability may result in a loss to the Fund.
Preferred Stock. The Fund may invest in preferred stock. Unlike interest payments on debt securities, dividends
on preferred stock are generally payable at the discretion of the issuer's board of directors, although preferred
shareholders may have certain rights if dividends are not paid. Shareholders may suffer a loss of value if dividends are
not paid, and generally have no legal recourse against the issuer. The market prices of preferred stocks are generally
more sensitive to changes in the issuer's creditworthiness than are the prices of debt securities.
Fixed Income Securities. The Fund may invest in money market instruments, U.S. Government or Agency securities,
and corporate bonds and debentures receiving one of the four highest ratings from Standard & Poor's Ratings Group
("S&P"), Moody's Investors Service, Inc. ("Moody's") or any other nationally recognized statistical rating organization
("NRSRO"), or, if not rated by any NRSRO, deemed comparable by the Sub-advisor to such rated securities ("Comparable
Unrated Securities"). The ratings of an NRSRO represent its opinion as to the quality of securities it undertakes to
rate. Ratings are not absolute standards of quality; consequently, securities with the same maturity, coupon, and rating
may have different yields. Although the Fund may rely on the ratings of any NRSRO, the Fund mainly refers to ratings
assigned by S&P and Moody's, which are described in Appendix A to this SAI.
Fixed income securities are subject to the risk of an issuer's inability to meet principal and interest payments
on the obligations ("credit risk") and also may be subject to price volatility due to such factors as interest rate
sensitivity, market perception of the creditworthiness of the issuer, and general market liquidity ("market risk").
Lower-rated securities are more likely to react to developments affecting market and credit risk than are more highly
rated securities, which react primarily to movements in the general level of interest rates.
Changes in economic conditions or developments regarding the individual issuer are more likely to cause price
volatility and weaken the capacity of the issuer of such securities to make principal and interest payments than is the
case for higher-grade debt securities. An economic downturn affecting the issuer may result in an increased incidence of
default. The market for lower-rated securities may be thinner and less active than for higher-rated securities. Pricing
of thinly traded securities requires greater judgment than pricing of securities for which market transactions are
regularly reported.
If the quality of any fixed income securities held by the Fund deteriorates so that they no longer would be
eligible for purchase by the Fund, the Fund will engage in an orderly disposition of the securities to the extent
necessary to ensure that the Fund's holding of such securities will not exceed 5% of its net assets.
Convertible Securities. The Fund may invest in convertible securities of any quality. A convertible security
entitles the holder to receive interest paid or accrued on debt or the dividend paid on preferred stock until the
convertible security matures or is redeemed, converted or exchanged. Before conversion, convertible securities
ordinarily provide a stream of income with generally higher yields than those of common stocks of the same or similar
issuers, but lower than the yield on non-convertible debt. Convertible securities are usually subordinated to
comparable-tier nonconvertible securities but rank senior to common stock in a corporation's capital structure. The
value of a convertible security is a function of (1) its yield in comparison with the yields of other securities of
comparable maturity and quality that do not have a conversion privilege, and (2) its worth, at market value, if converted
into the underlying common stock. Convertible debt securities are subject to the Fund's investment policies and
limitations concerning fixed-income investments.
Convertible securities are typically issued by smaller companies whose stock prices may be volatile. The price
of a convertible security often reflects such variations in the price of the underlying common stock in a way that
nonconvertible debt does not. A convertible security may be subject to redemption at the option of the issuer at a price
established in the security's governing instrument. If a convertible security held by the Fund is called for redemption,
the Fund will be required to convert it into the underlying common stock, sell it to a third party or permit the issuer
to redeem the security. Any of these actions could have an adverse effect on the Fund's ability to achieve its
investment objective.
Commercial Paper. Commercial paper is a short-term debt security issued by a corporation, bank, municipality, or
other issuer, usually for purposes such as financing current operations. The Fund may invest only in commercial paper
receiving the highest rating from S&P (A-1) or Moody's (P-1), or deemed by the Sub-advisor to be of equivalent quality.
The Fund may invest in commercial paper that cannot be resold to the public because it was issued under the
exception for private offerings in Section 4(2) of the Securities Act of 1933. While such securities normally will be
considered illiquid and subject to the Fund's 15% limitation on investments in illiquid securities, the Sub-advisor may
in certain cases determine that such paper is liquid under guidelines established by the Board of Directors.
Banking and Savings Institution Securities. The Fund may invest in banking and savings institution obligations,
which include CDs, time deposits, bankers' acceptances, and other short-term debt obligations issued by savings
institutions. CDs are receipts for funds deposited for a specified period of time at a specified rate of return; time
deposits generally are similar to CDs, but are uncertificated; and bankers' acceptances are time drafts drawn on
commercial banks by borrowers, usually in connection with international commercial transactions. The CDs, time deposits,
and bankers' acceptances in which the Fund invests typically are not covered by deposit insurance.
Investment Policies Which May be Changed Without Shareholder Approval. The following limitations are applicable
to the ASAF Neuberger Berman Mid-Cap Growth Fund. These limitations are not fundamental restrictions and can be changed
without shareholder approval.
1. The Fund may not purchase securities if outstanding borrowings, including any reverse repurchase
agreements, exceed 5% of its total assets.
2. Except for the purchase of debt securities and engaging in repurchase agreements, the Fund may not make
any loans other than securities loans.
3. The Fund may not purchase securities on margin from brokers, except that the Fund may obtain such
short-term credits as are necessary for the clearance of securities transactions. Margin payments in connection with
transactions in futures contracts and options on futures contracts shall not constitute the purchase of securities on
margin and shall not be deemed to violate the foregoing limitation.
4. The Fund may not sell securities short, unless it owns or has the right to obtain securities equivalent
in kind and amount to the securities sold without payment of additional consideration. Transactions in futures contracts
and options shall not constitute selling securities short.
5. The Fund may not purchase any security if, as a result, more than 15% of its net assets would be
invested in illiquid securities. Illiquid securities include securities that cannot be sold within seven days in the
ordinary course of business for approximately the amount at which the Fund has valued the securities, such as repurchase
agreements maturing in more than seven days.
ASAF Neuberger Berman Mid-Cap Value Fund:
Investment Objective: The investment objective of the Fund is to seek capital growth.
Investment Policies:
Repurchase Agreements. In a repurchase agreement, the Fund purchases securities from a Federal Reserve member
bank or a securities dealer deemed creditworthy by the Sub-advisor under procedures established by the Board of Directors
of the Company. The bank or securities dealer agrees to repurchase the securities from the Fund at a higher price on a
designated future date. Repurchase agreements generally are for a short period of time, usually less than a week.
Repurchase agreements with a maturity of more than seven business days are considered to be illiquid securities; the Fund
may not enter into such a repurchase agreement if, as a result, more than 15% of the value of its net assets would then
be invested in such repurchase agreements and other illiquid securities. The Fund will enter into a repurchase agreement
only if (1) the underlying securities are of the type (excluding maturity and duration limitations) that the Fund's
investment policies and limitations would allow it to purchase directly, (2) the market value of the underlying
securities, including accrued interest, and any other collateral for the repurchase agreement at all times equals or
exceeds the repurchase price under the agreement, and (3) payment for the underlying securities is made only upon
satisfactory evidence that the securities are being held for the Fund's account by the custodian or a bank acting as the
Fund's agent.
Securities Loans. In order to realize income, the Fund may lend portfolio securities with a value not exceeding
33-1/3% of its total assets to banks, brokerage firms, or institutional investors judged creditworthy by the
Sub-advisor. Borrowers are required continuously to secure their obligations to return securities on loan from the Fund
by depositing collateral, which will be marked to market daily, in a form determined to be satisfactory by the Directors
and equal to at least 100% of the market value of the loaned securities, which will also be marked to market daily. The
Sub-advisor believes the risk of loss on these transactions is slight because, if a borrower were to default for any
reason, the collateral should satisfy the obligation. However, as with other extensions of secured credit, loans of
portfolio securities involve some risk of loss of rights in the collateral should the borrower fail financially.
Restricted Securities and Rule 144A Securities. The Fund may invest in restricted securities, which are
securities that may not be sold to the public without an effective registration statement under the 1933 Act. Before
they are registered, such securities may be sold only in a privately negotiated transaction or pursuant to an exemption
from registration. In recognition of the increased size and liquidity of the institutional markets for unregistered
securities and the importance of institutional investors in the formation of capital, the SEC has adopted Rule 144A under
the 1933 Act, which is designed to facilitate efficient trading among institutional investors by permitting the sale of
certain unregistered securities to qualified institutional buyers. To the extent privately placed securities held by the
Fund qualify under Rule 144A, and an institutional market develops for those securities, the Fund likely will be able to
dispose of the securities without registering them under the 1933 Act. To the extent that institutional buyers become,
for a time, uninterested in purchasing these securities, investing in Rule 144A securities could have the effect of
reducing the Fund's liquidity. The Sub-advisor, acting under guidelines established by the Board of Directors of the
Company, may determine that certain securities qualified for trading under Rule 144A are liquid.
Where registration is required, the Fund may be obligated to pay all or part of the registration expenses, and a
considerable period may elapse between the decision to sell and the time the Fund may be permitted to sell a security
under an effective registration statement. If, during such a period, adverse market conditions were to develop, the Fund
might obtain a less favorable price than prevailed when it decided to sell. Restricted securities, excluding Rule 144A
securities deemed liquid by the Sub-advisor, are considered illiquid, and will be subject to the Fund's 15% limit on
investments in illiquid securities. Foreign securities that are freely tradable in their principal markets are not
considered by the Fund to be illiquid. Illiquid securities for which no market exists are priced by a method that the
Directors believe accurately reflects fair value.
Reverse Repurchase Agreements. In a reverse repurchase agreement, the Fund sells portfolio securities subject to
its agreement to repurchase the securities at a later date for a fixed price reflecting a market rate of interest; these
agreements are considered borrowings for purposes of the Fund's investment limitations and policies concerning
borrowings. There is a risk that the counterparty to a reverse repurchase agreement will be unable or unwilling to
complete the transaction as scheduled, which may result in losses to the Fund.
Covered Call Options. The Fund may write covered call options on securities it owns valued at up to 10% of its
net assets and may purchase call options in related closing transactions. Generally, the purpose of writing these
options is to reduce the effect of price fluctuations of securities held by the Fund on the Fund's net asset value.
Securities on which call options may be written by the Fund are purchased solely on the basis of investment
considerations consistent with the Fund's investment objectives.
When the Fund writes a call option, it is obligated to sell a security to a purchaser at a specified price at any
time until a certain date if the purchaser decides to exercise the option. The Fund receives a premium for writing the
call option. The Fund writes only "covered" call options on securities it owns. So long as the obligation of the writer
of the call option continues, the writer may be assigned an exercise notice, requiring it to deliver the underlying
security against payment of the exercise price. The Fund may be obligated to deliver securities underlying a call option
at less than the market price thereby giving up any additional gain on the security.
When the Fund purchases a call option, it pays a premium for the right to purchase a security from the writer at
a specified price until a specified date. A call option would be purchased by the Fund to offset a previously written
call option.
The writing of covered call options is a conservative investment technique believed to involve relatively little
risk (in contrast to the writing of "naked" or uncovered call options, which the Fund will not do), but is capable of
enhancing the Fund's total return. When writing a covered call option, the Fund, in return for the premium, gives up the
opportunity for profit from a price increase in the underlying security above the exercise price, but conversely retains
the risk of loss should the price of the security decline. If a call option that the Fund has written expires
unexercised, the Fund will realize a gain in the amount of the premium; however, that gain may be offset by a decline in
the market value of the underlying security during the option period. If the call option is exercised, the Fund will
realize a gain or loss from the sale or purchase of the underlying security.
The exercise price of an option may be below, equal to, or above the market value of the underlying security at
the time the option is written. Options normally have expiration dates between three and nine months from the date
written. The obligation under any option terminates upon expiration of the option or, at an earlier time, when the
writer offsets the option by entering into a "closing purchase transaction" to purchase an option of the same series.
Options are traded both on national securities exchanges and in the over-the-counter ("OTC") market.
Exchange-traded options are issued by a clearing organization affiliated with the exchange on which the option is listed;
the clearing organization in effect guarantees completion of, every exchange-traded option. In contrast, OTC options are
contracts between the Fund and its counter-party with no clearing organization guarantee. Thus, when the Fund sells or
purchases an OTC option, it generally will be able to "close out" the option prior to its expiration only by entering
into a "closing purchase transaction" with the dealer to whom or from whom the Fund originally sold or purchased the
option. The Sub-advisor monitors the creditworthiness of dealers with which the Fund may engage in OTC options, and will
limit counterparties in such transactions to dealers with a net worth of at least $20 million as reported in their latest
financial statements. For an additional discussion of OTC options and their risks, see this SAI under "Certain Risk
Factors and Investment Methods."
The premium received (or paid) by the Fund when it writes (or purchases) an option is the amount at which the
option is currently traded on the applicable exchange, less (or plus) a commission. The premium may reflect, among other
things, the current market price of the underlying security, the relationship of the exercise price to the market price,
the historical price volatility of the underlying security, the length of the option period, the general supply of and
demand for credit, and the general interest rate environment. The premium received by the Fund for writing an option is
recorded as a liability on the Fund's statement of assets and liabilities. This liability is adjusted daily to the
option's current market value.
The Fund pays the brokerage commissions in connection with purchasing or writing options, including those used to
close out existing positions. These brokerage commissions normally are higher than those applicable to purchases and
sales of portfolio securities.
For an additional discussion of options and their risks, see this SAI and the Company's Prospectus under "Certain
Risk Factors and Investment Methods."
Foreign Securities. The Fund may invest in U.S. dollar-denominated equity and debt securities issued by foreign
issuers (including governments and quasi-governments) and foreign branches of U.S. banks, including negotiable CDs and
commercial paper. These investments are subject to the Fund's quality standards. While investments in foreign
securities are intended to reduce risk by providing further diversification, such investments involve sovereign and other
risks, in addition to the credit and market risks normally associated with domestic securities.
The Fund may invest in equity, debt, or other income-producing securities that are denominated in or indexed to
foreign currencies, including, but not limited to (1) common and preferred stocks, (2) convertible securities, (3) CDs,
commercial paper, fixed-time deposits, and bankers' acceptances issued by foreign banks, (4) obligations of other
corporations, and (5) obligations of foreign governments, or their subdivisions, agencies, and instrumentalities,
international agencies, and supranational entities. Risks of investing in foreign currency denominated securities
include (1) nationalization, expropriation, or confiscatory taxation, (2) adverse changes in investment or exchange
control regulations (which could prevent cash from being brought back to the U.S.), and (3) expropriation or
nationalization of foreign portfolio companies. Mail service between the U.S. and foreign countries may be slower or
less reliable than within the United States, thus increasing the risk of delayed settlements of portfolio transactions or
loss of certificates for portfolio securities. For an additional discussion of the risks associated with foreign
securities, whether denominated in U.S. dollars or foreign currencies, see this SAI and the Company's Prospectus under
"Certain Risk Factors and Investment Methods."
Prices of foreign securities and exchange rates for foreign currencies may be affected by the interest rates
prevailing in other countries. The interest rates in other countries are often affected by local factors, including the
strength of the local economy, the demand for borrowing, the government's fiscal and monetary policies, and the
international balance of payments. Individual foreign economies may differ favorably or unfavorably from the U.S.
economy in such respects as gross national product, rate of inflation, capital reinvestment, resource self-sufficiency,
and balance of payments position.
Foreign markets also have different clearance and settlement procedures, and in certain markets there have been
times when settlements have been unable to keep pace with the volume of securities transactions, making it difficult to
conduct such transactions. Such delays in settlement could result in temporary periods when a portion of the assets of
the Fund is uninvested and no return is earned thereon. The inability of the Fund to make intended security purchases
due to settlement problems could cause the Fund to miss attractive investment opportunities. Inability to dispose of
portfolio securities due to settlement problems could result either in losses to the Fund due to subsequent declines in
value of the portfolio securities, or, if the Fund has entered into a contract to sell the securities, could result in
possible liability to the purchaser.
The Fund may invest in foreign corporate bonds and debentures and sovereign debt instruments issued or guaranteed
by foreign governments, their agencies or instrumentalities. The Fund may invest in lower-rated foreign debt securities
subject to the Fund's 15% limitation on lower-rated debt securities. Foreign debt securities are subject to risks
similar to those of other foreign securities, as well as risks similar to those of other debt securities, as discussed in
this SAI and in the Company's Prospectus under "Investment Programs of the Funds" and "Certain Risk Factors and
Investment Methods."
In order to limit the risk inherent in investing in foreign currency-denominated securities, the Fund may not
purchase any such security if after such purchase more than 10% of its total assets (taken at market value) would be
invested in such securities. Within such limitation, however, the Fund is not restricted in the amount it may invest in
securities denominated in any one foreign currency.
Foreign Currency Transactions. The Fund may engage in foreign currency exchange transactions. Foreign currency
exchange transactions will be conducted either on a spot (i.e., cash) basis at the spot rate prevailing in the foreign
----
currency exchange market, or through entering into forward contracts to purchase or sell foreign currencies ("forward
contracts"). The Fund may enter into forward contracts in order to protect against uncertainty in the level of future
foreign currency exchange rates, and only in amounts not exceeding 5% of the Fund's net assets.
A forward contract involves an obligation to purchase or sell a specific currency at a future date, which may be
any fixed number of days (usually less than one year) from the date of the contract agreed upon by the parties, at a
price set at the time of the contract. These contracts are traded in the interbank market conducted directly between
traders (usually large commercial banks) and their customers. A forward contract generally has no deposit requirement,
and no commissions are charged at any stage for trades. Although foreign exchange dealers do not charge a fee for
conversion, they do realize a profit based on the difference (the spread) between the price at which they are buying and
selling various currencies.
When the Fund enters into a contract for the purchase or sale of a security denominated in a foreign currency, it
may wish to "lock in" the U.S. dollar price of the security. By entering into a forward contract for the purchase or
sale, for a fixed amount of U.S. dollars, of the amount of foreign currency involved in the underlying security
transactions, the Fund will be able to protect itself against a possible loss. When the Sub-advisor believes that the
currency of a particular foreign country may suffer a substantial decline against the U.S. dollar, it may also enter into
a forward contract to sell the amount of foreign currency for a fixed amount of dollars which approximates the value of
some or all of a Fund's securities denominated in such foreign currency. The Fund may also engage in cross-hedging by
using forward contracts in one currency to hedge against fluctuations in the value of securities denominated in a
different currency, when the Sub-advisor believes that there is a pattern of correlation between the two currencies.
When the Fund engages in forward contracts for hedging purposes, it will not enter into forward contracts to sell
currency or maintain a net exposure to such contracts if their consummation would obligate the Fund to deliver an amount
of foreign currency in excess of the value of its portfolio securities or other assets denominated in that currency. At
the consummation of the forward contract, the Fund may either make delivery of the foreign currency or terminate its
contractual obligation to deliver by purchasing an offsetting contract obligating it to purchase the same amount of such
foreign currency at the same maturity date. If the Fund chooses to make delivery of the foreign currency, it may be
required to obtain such currency through the sale of portfolio securities denominated in such currency or through
conversion of other assets into such currency. If the Fund engages in an offsetting transaction, it will incur a gain or
a loss to the extent that there has been a change in forward contract prices. Closing purchase transactions with respect
to forward contracts are usually made with the currency trader who is a party to the original forward contract.
The Fund is not required to enter into such transactions and will not do so unless deemed appropriate by the
Sub-advisor.
Using forward contracts to protect the value of the Fund's portfolio securities against a decline in the value of
a currency does not eliminate fluctuations in the underlying prices of the securities. It simply establishes a rate of
exchange which can be achieved at some future point in time. The precise projection of short-term currency market
movements is not possible, and short-term hedging provides a means of fixing the dollar value of only a portion of the
Fund's foreign assets.
While the Fund may enter forward contracts to reduce currency exchange rate risks, transactions in such contracts
involve certain other risks. Thus, while the Fund may benefit from such transactions, unanticipated changes in currency
prices may result in a poorer overall performance for the Fund than if it had not engaged in any such transactions.
Moreover, there may be imperfect correlation between the Fund's holdings of securities denominated in a particular
currency and forward contracts entered into by the Fund. Such imperfect correlation may cause the Fund to sustain losses
which will prevent it from achieving a complete hedge or expose it to risk of foreign exchange loss.
The Fund generally will not enter into a forward contract with a term of greater than one year. The Fund may
experience delays in the settlement of its foreign currency transactions.
When the Fund engages in forward contracts for the sale or purchase of currencies, the Fund will either cover its
position or establish a segregated account. The Fund will consider its position covered if it has securities in the
currency subject to the forward contract, or otherwise has the right to obtain that currency at no additional cost. In
the alternative, the Fund will place cash, fixed income, or equity securities (denominated in the foreign currency
subject to the forward contract) in a separate account. The amounts in such separate account will equal the value of the
Fund's assets which are committed to the consummation of foreign currency exchange contracts. If the value of the
securities placed in the separate account declines, the Fund will place additional cash or securities in the account on a
daily basis so that the value of the account will equal the amount of its commitments with respect to such contracts.
For an additional discussion of forward foreign currency exchange contracts and their risks, see this SAI and the
Company's Prospectus under "Certain Risk Factors and Investment Methods."
Options on Foreign Currencies. The Fund may write and purchase covered call and put options on foreign
currencies in amounts not exceeding 5% of its net assets for the purpose of protecting against declines in the U.S.
dollar value of portfolio securities or increases in the U.S. dollar cost of securities to be acquired, or to protect the
dollar equivalent of dividend, interest, or other payment on those securities. A decline in the dollar value of a
foreign currency in which portfolio securities are denominated will reduce the dollar value of such securities, even if
their value in the foreign currency remains constant. In order to protect against such decreases in the value of
portfolio securities, the Fund may purchase put options on the foreign currency. If the value of the currency declines,
the Fund will have the right to sell such currency for a fixed amount of dollars which exceeds the market value of such
currency. This would result in a gain that may offset, in whole or in part, the negative effect of currency depreciation
on the value of the Fund's securities denominated in that currency.
Conversely, if the dollar value of a currency in which securities to be acquired by the Fund are denominated
rises, thereby increasing the cost of such securities, the Fund may purchase call options on such currency. If the value
of such currency increases sufficiently, the Fund will have the right to purchase that currency for a fixed amount of
dollars which is less than the market value of that currency. Such a purchase would result in a gain that may offset, at
least partially, the effect of any currency-related increase in the price of securities the Fund intends to acquire.
As in the case of other types of options transactions, however, the benefit the Fund derives from purchasing
foreign currency options will be reduced by the amount of the premium and related transaction costs. In addition, if
currency exchange rates do not move in the direction or to the extent anticipated, the Fund could sustain losses on
transactions in foreign currency options which would deprive it of a portion or all of the benefits of advantageous
changes in such rates.
The Fund may also write options on foreign currencies for hedging purposes. For example, if the Sub-advisor
anticipates a decline in the dollar value of foreign currency denominated securities because of declining exchange rates,
it could, instead of purchasing a put option, write a call option on the relevant currency. If the expected decline
occurs, the option will most likely not be exercised, and the decrease in value of portfolio securities will be offset,
at least in part, by the amount of the premium received by the Fund.
Similarly, the Fund could write a put option on the relevant currency, instead of purchasing a call option, to
hedge against an anticipated increase in the dollar cost of securities to be acquired. If exchange rates move in the
manner projected, the put option most likely will not be exercised, and such increased cost will be offset, at least in
part, by the amount of the premium received. However, as in the case of other types of options transactions, the writing
of a foreign currency option will constitute only a partial hedge up to the amount of the premium, and only if rates move
in the expected direction.
If unanticipated exchange rate fluctuations occur, a put or call option may be exercised and the Fund could be
required to purchase or sell the underlying currency at a loss which may not be fully offset by the amount of the
premium. As a result of writing options on foreign currencies, the Fund also may be required to forego all or a portion
of the benefits which might otherwise have been obtained from favorable movements in currency exchange rates. Certain
options on foreign currencies are traded on the OTC market and involve liquidity and credit risks that may not be present
in the case of exchange-traded currency options.
A call option written on foreign currency by the Fund is "covered" if the Fund owns the underlying foreign
currency subject to the call, or if it has an absolute and immediate right to acquire that foreign currency without
additional cash consideration. A call option is also covered if the Fund holds a call on the same foreign currency for
the same principal amount as the call written where the exercise price of the call held is (a) equal to or less than the
exercise price of the call written or (b) greater than the exercise price of the call written if the amount of the
difference is maintained by the Fund in cash, fixed income or equity securities in a segregated account with its
custodian.
The risks of currency options are similar to the risks of other options, as discussed above and in this SAI under
"Certain Risk Factors and Investment Methods."
Cover for Options on Securities, Forward Contracts, and Options on Foreign Currencies ("Hedging Instruments").
The Fund will comply with SEC staff guidelines regarding "cover" for Hedging Instruments and, if the guidelines so
require, set aside in a segregated account with its custodian the prescribed amount of cash, fixed income, or equity
securities. Securities held in a segregated account cannot be sold while the futures, option, or forward strategy
covered by those securities is outstanding, unless they are replaced with other suitable assets. As a result,
segregation of a large percentage of the Fund's assets could impede portfolio management or the Fund's ability to meet
current obligations. The Fund may be unable promptly to dispose of assets that cover, or are segregated with respect to,
an illiquid options or forward position; this inability may result in a loss to the Fund.
Preferred Stock. The Fund may invest in preferred stock. Unlike interest payments on debt securities, dividends
on preferred stock are generally payable at the discretion of the issuer's board of directors, although preferred
shareholders may have certain rights if dividends are not paid. Shareholders may suffer a loss of value if dividends are
not paid, and generally have no legal recourse against the issuer. The market prices of preferred stocks are generally
more sensitive to changes in the issuer's creditworthiness than are the prices of debt securities.
Fixed Income Securities. The Fund may invest in money market instruments, U.S. Government or Agency securities,
and corporate bonds and debentures receiving one of the four highest ratings from Standard & Poor's Ratings Group
("S&P"), Moody's Investors Service, Inc. ("Moody's") or any other nationally recognized statistical rating organization
("NRSRO"), or, if not rated by any NRSRO, deemed comparable by the Sub-advisor to such rated securities ("Comparable
Unrated Securities"). In addition, the Fund may invest up to 15% of its net assets, measured at the time of investment,
in corporate debt securities rated below investment grade or Comparable Unrated Securities. The ratings of an NRSRO
represent its opinion as to the quality of securities it undertakes to rate. Ratings are not absolute standards of
quality; consequently, securities with the same maturity, coupon, and rating may have different yields. Although the
Fund may rely on the ratings of any NRSRO, the Fund mainly refers to ratings assigned by S&P and Moody's, which are
described in Appendix A to this SAI.
Fixed income securities are subject to the risk of an issuer's inability to meet principal and interest payments
on the obligations ("credit risk") and also may be subject to price volatility due to such factors as interest rate
sensitivity, market perception of the creditworthiness of the issuer, and general market liquidity ("market risk").
Lower-rated securities are more likely to react to developments affecting market and credit risk than are more highly
rated securities, which react primarily to movements in the general level of interest rates.
Changes in economic conditions or developments regarding the individual issuer are more likely to cause price
volatility and weaken the capacity of the issuer of such securities to make principal and interest payments than is the
case for higher-grade debt securities. An economic downturn affecting the issuer may result in an increased incidence of
default. The market for lower-rated securities may be thinner and less active than for higher-rated securities. Pricing
of thinly traded securities requires greater judgment than pricing of securities for which market transactions are
regularly reported.
Convertible Securities. The Fund may invest in convertible securities. A convertible security entitles the
holder to receive interest paid or accrued on debt or the dividend paid on preferred stock until the convertible security
matures or is redeemed, converted or exchanged. Before conversion, convertible securities ordinarily provide a stream of
income with generally higher yields than those of common stocks of the same or similar issuers, but lower than the yield
on non-convertible debt. Convertible securities are usually subordinated to comparable-tier nonconvertible securities
but rank senior to common stock in a corporation's capital structure. The value of a convertible security is a function
of (1) its yield in comparison with the yields of other securities of comparable maturity and quality that do not have a
conversion privilege, and (2) its worth, at market value, if converted into the underlying common stock. Convertible
debt securities are subject to the Fund's investment policies and limitations concerning fixed-income investments.
Convertible securities are typically issued by smaller companies whose stock prices may be volatile. The price
of a convertible security often reflects such variations in the price of the underlying common stock in a way that
nonconvertible debt does not. A convertible security may be subject to redemption at the option of the issuer at a price
established in the security's governing instrument. If a convertible security held by the Fund is called for redemption,
the Fund will be required to convert it into the underlying common stock, sell it to a third party or permit the issuer
to redeem the security. Any of these actions could have an adverse effect on the Fund's ability to achieve its
investment objective.
Commercial Paper. Commercial paper is a short-term debt security issued by a corporation, bank, municipality, or
other issuer, usually for purposes such as financing current operations. The Fund may invest only in commercial paper
receiving the highest rating from S&P (A-1) or Moody's (P-1), or deemed by the Sub-advisor to be of equivalent quality.
The Fund may invest in commercial paper that cannot be resold to the public because it was issued under the
exception for private offerings in Section 4(2) of the Securities Act of 1933. While such securities normally will be
considered illiquid and subject to the Fund's 15% limitation on investments in illiquid securities, the Sub-advisor may
in certain cases determine that such paper is liquid under guidelines established by the Board of Directors.
Zero Coupon Securities. The Fund may invest up to 5% of its net assets in zero coupon securities, which are
debt obligations that do not entitle the holder to any periodic payment of interest prior to maturity or specify a future
date when the securities begin paying current interest. Rather, they are issued and traded at a discount from their face
amount or par value, which discount varies depending on prevailing interest rates, the time remaining until cash payments
begin, the liquidity of the security, and the perceived credit quality of the issuer.
The market prices of zero coupon securities generally are more volatile than the prices of securities that pay
interest periodically and are likely to respond to changes in interest rates to a greater degree than do other types of
debt securities having similar maturities and credit quality. For a discussion of potential tax consequences of
investing in zero coupon securities, see this SAI under "Additional Tax Considerations."
Investment Policies Which May be Changed Without Shareholder Approval. The following limitations are applicable
to the ASAF Neuberger Berman Mid-Cap Value Fund. These limitations are not fundamental restrictions, and can be changed
without shareholder approval.
1. The Fund may not purchase securities if outstanding borrowings, including any reverse repurchase
agreements, exceed 5% of its total assets.
2. Except for the purchase of debt securities and engaging in repurchase agreements, the Fund may not make
any loans other than securities loans.
3. The Fund may not purchase securities on margin from brokers, except that the Fund may obtain such
short-term credits as are necessary for the clearance of securities transactions. Margin payments in connection with
transactions in futures contracts and options on futures contracts shall not constitute the purchase of securities on
margin and shall not be deemed to violate the foregoing limitation.
4. The Fund may not sell securities short, unless it owns or has the right to obtain securities equivalent
in kind and amount to the securities sold without payment of additional consideration. Transactions in futures contracts
and options shall not constitute selling securities short.
5. The Fund may not purchase any security if, as a result, more than 15% of its net assets would be
invested in illiquid securities. Illiquid securities include securities that cannot be sold within seven days in the
ordinary course of business for approximately the amount at which the Fund has valued the securities, such as repurchase
agreements maturing in more than seven days.
6. The Fund may not invest more than 10% of the value of its total assets in securities of foreign issuers,
provided that this limitation shall not apply to foreign securities denominated in U.S. dollars.
ASAF Alger All-Cap Growth Fund:
Investment Objective: The investment objective of the Fund is to seek long-term capital growth.
Investment Policies:
Cash Position. In order to afford the Fund the flexibility to take advantage of new opportunities for
investments in accordance with its investment objective or to meet redemptions, it may, under normal circumstances, hold
up to 15% of its total assets in money market instruments including, but not limited to, certificates of deposit, time
deposits and bankers' acceptances issued by domestic bank and thrift institutions, U.S. Government securities, commercial
paper and repurchase agreements. In addition, when the Sub-advisor's analysis of economic and technical market factors
suggests that common stock prices will decline sufficiently so that a temporary defensive position is deemed advisable,
the Fund may invest in cash, commercial paper, high-grade bonds or cash equivalents, all without limitation.
U.S. Government Obligations. Obligations, bills, notes, bonds, and other debt securities issued by the U.S.
Treasury are direct obligations of the U.S. Government and differ mainly in the length of their maturities.
Short-term Corporate Debt Securities. These are outstanding nonconvertible corporate debt securities (e.g.,
bonds and debentures) which have one year or less remaining to maturity. Corporate debt securities may have fixed,
variable, or floating rates. For additional discussion on Short-term Corporate Debt Securities see this SAI under
"Certain Risk Factors and Investment Methods."
Commercial Paper. These are short-term promissory notes issued by corporations primarily to finance short-term
credit needs.
Repurchase Agreements. Under the terms of a repurchase agreement, the Fund would acquire a high quality money
market instrument for a relatively short period (usually not more than one week) subject to an obligation of the seller
to repurchase, and the Fund to resell, the instrument at an agreed price (including accrued interest) and time, thereby
determining the yield during the Fund's holding period. Repurchase agreements may be viewed as loans by the Fund
collateralized by the underlying instrument. This arrangement results in a fixed rate of return that is not subject to
market fluctuations during the Fund's holding period and not necessarily related to the rate of return on the underlying
instrument. The value of the sold securities, including accrued interest, will be at least equal at all times to the
total amount of the repurchase obligation, including interest. For additional information about repurchase agreements
and their risks, see the Company's Prospectus under "Certain Risk Factors and Investment Methods."
Small Capitalization and Related Investments. Certain companies in which the Fund will invest may still be in
the developmental stage. Investing in smaller, newer issuers generally involves greater risk than investing in larger,
more established issuers. Such companies may have limited product lines, markets or financial resources and may lack
management depth. Their securities may have limited marketability and may be subject to more abrupt or erratic price
movements than securities of larger, more established companies or the market averages in general. The Fund also may
invest in older companies that appear to be entering a new stage of growth progress owing to factors such as management
changes or development of new technology, products or markets, or companies providing products or services with a high
unit volume growth rate. These companies may be subject to many of the same risks as small-cap companies.
Convertible Securities, Warrants, and Rights. The Fund may invest in securities convertible into or
exchangeable for equity securities, including warrants and rights. A warrant is a type of security that entitles the
holder to buy a proportionate amount of common stock at a specified price, usually higher than the market price at the
time of issuance, for a period of years or to perpetuity. In contrast, rights, which also represent the right to buy
common shares, normally have a subscription price lower than the current market value of the common stock and a life of
two to four weeks. Warrants may be freely transferable and may be traded on the major securities exchanges. For
additional discussion about Convertible Securities, Warrants, and Rights and their risks, see this SAI under "Certain
Risk Factors and Investment Methods."
Portfolio Depositary Receipts. To the extent otherwise consistent with applicable law, the Fund may invest up to
5% of its total assets in Portfolio Depositary Receipts, which are exchange-traded shares issued by investment companies,
typically unit investment trusts, holding portfolios of common stocks designed to replicate and, therefore, track the
performance of various broadly-based securities indices or sectors of such indices. For example, the Fund may invest in
Standard & Poor's Depositary Receipts(R)(SPDRs), issued by a unit investment trust whose portfolio tracks the S&P 500
Composite Stock Price Index, or Standard & Poor's MidCap 400 Depositary Receipts(R)(MidCap SPDRs), which are similarly
linked to the S&P MidCap 400 Index.
Illiquid and Restricted Securities. The Fund will not invest more than 15% of its net assets in "illiquid"
securities, which include restricted securities, securities for which there is not a readily available market and
repurchase agreements with maturities of greater than seven (7) days; however, restricted securities that are determined
to be liquid in the manner described below are not subject to this limitation.
The Fund may invest in restricted securities governed by Rule 144A under the Securities Act of 1933. In adopting
Rule 144A, the SEC specifically stated that the restricted securities traded under Rule 144A may be treated as liquid for
purposes of investment limitations if the Board of Directors (or the Fund's Sub-advisor acting subject to the Board's
supervision) determines that the securities are in fact liquid. The Board has delegated its responsibility to the
Sub-advisor to determine the liquidity of each restricted security purchased pursuant to the Rule, subject to the Board's
oversight and review. Examples of factors that will be taken into account in evaluating the liquidity of a Rule 144A
security, both with respect to the initial purchase and on an ongoing basis, will include, among others: (1) the
frequency of trades and quotes for the security, (2) the number of dealers willing to purchase or sell the security and
the number of other potential purchasers, (3) dealer undertakings to make a market in the security, and (4) the nature of
the security and the nature of the marketplace trades (e.g., the time needed to dispose of the security, the method of
soliciting offers, and the mechanics of transfer). If institutional trading in the restricted securities were to decline
to limited levels, the liquidity of the Fund could be adversely affected.
Lending of Portfolio Securities. By lending its securities, the Fund can increase its income by continuing to
receive interest or dividends on the loaned securities as well as by either investing the cash collateral or by earning
income in the form of interest paid by the borrower when U.S. Government securities are used as collateral. The Fund
will adhere to the following conditions whenever its securities are loaned: (a) the Fund must receive at least 100
percent cash collateral or equivalent securities from the borrower, (b) the borrower must increase this collateral
whenever the market value of the loaned securities including accrued interest exceeds the value of the collateral, (c)
the Fund must receive reasonable interest on the loan, as well as any dividends, interest or other distributions on the
loaned securities and any increase in market value, (d) the Fund may pay only reasonable custodian fees in connection
with the loan. The Fund will not lend securities to the Investment Manager, the Sub-advisor or their affiliates. For
additional information on the lending of portfolio securities and its risks see this SAI and the Company's Prospectus
under "Certain Risk Factors and Investment Methods."
Options. The Fund may purchase put and call options and write (sell) put and covered call options on securities
and securities indices to increase gain or to hedge against the risk of unfavorable price movements although, as in the
past, it does not currently intend to rely on these strategies extensively, if at all. The Fund will purchase or write
options only if such options are exchange-traded or traded on an automated quotation system of a national securities
association.
The Fund will only sell call options that are "covered." A call option written by the Fund on a security is
"covered" if the Fund owns the underlying security covered by the call or has an absolute and immediate right to acquire
that security without additional cash consideration (or for additional cash consideration held in a segregated account)
upon conversion or exchange of other securities held in its portfolio. A call option is also covered if the Fund holds a
call on the same security as the call written where the exercise price of the call held is (a) equal to or less than the
exercise price of the call written or (b) greater than the exercise price of the call written if the difference is
maintained by the Fund in cash or other liquid assets in a segregated account. If the Fund writes a put option, the Fund
will segregate cash or other liquid assets with a value equal to the exercise price, or else hold a put on the same
security as the put written where the exercise price of the put held is equal to or greater than the exercise price of
the put written.
Although the Fund will generally not purchase or write options that appear to lack an active secondary market,
there is no assurance that a liquid secondary market on an exchange will exist for any particular option. In such event
it might not be possible to effect closing transactions in particular options, so that the Fund would have to exercise
its option in order to realize any profit and would incur brokerage commissions upon the exercise of the options. If the
Fund, as a covered call option writer, is unable to effect a closing purchase transaction in a secondary market, it will
not be able to sell the underlying security until the option expires, until it delivers the underlying security upon
exercise, or until it otherwise covers the position.
In addition to options on securities, the Fund may also purchase and sell call and put options on securities
indices. The Fund may offset its position in stock index options prior to expiration by entering into a closing
transaction on an exchange or it may let the option expire unexercised. The Fund will not purchase these options unless
the Sub-advisor is satisfied with the development, depth and liquidity of the market and the Sub-advisor believes the
options can be closed out.
The Fund will not purchase options if, as a result, the aggregate cost of all outstanding options exceeds 10% of
the Fund's total assets. No more than 5% of the Fund's total assets will be committed to options transactions entered
into for non-hedging (speculative) purposes.
Stock Index Futures and Options on Stock Index Futures. Futures are generally bought and sold on the commodities
exchanges where they are listed. A stock index future obligates the seller to deliver (and the purchaser to take) an
amount of cash equal to a specific dollar amount times the difference between the value of a specific stock index at the
close of the last trading day of the contract and the price at which the agreement is made. No physical delivery of the
underlying stocks in the index is made.
While incidental to its securities activities, the Fund may purchase index futures as a substitute for a
comparable market position in the underlying securities. Securities index futures might be sold to protect against a
general decline in the value of securities of the type that comprise the index. Put options on futures might be
purchased to protect against declines in the market values of securities occasioned by a decline in stock prices.
In an effort to compensate for the imperfect correlation of movements in the price of the securities being hedged
and movements in the price of the stock index futures, the Fund may buy or sell stock index futures contracts in a
greater or lesser dollar amount than the dollar amount of the securities being hedged if the historical volatility of the
stock index futures has been less or greater than that of the securities. Such "over hedging" or "under hedging" may
adversely affect the Fund's net investment results if market movements are not as anticipated when the hedge is
established.
The Fund will sell options on stock index futures contracts only as part of closing transactions to terminate
options positions it has purchased. No assurance can be given that such closing transactions can be effected.
The Fund's use, if any, of stock index futures and options thereon will in all cases be consistent with
applicable regulatory requirements and in particular the rules and regulations of the CFTC and will be entered into only
for bona fide hedging, risk management or other portfolio management purposes. If the Fund exercises an option on a
futures contract it will be obligated to post initial margin (and potential subsequent variation margin) for the
resulting futures position just as it would for any position. In order to cover its potential obligations if the Fund
enters into futures contracts or options thereon, the Fund will maintain a segregated account which will contain only
liquid assets in an amount equal to the total market value of such futures contracts less the amount of initial margin on
deposit for such contracts.
For additional information about futures contracts and related options, see this SAI and the Company's Prospectus
under "Certain Risk Factors and Investment Methods."
Borrowing. The Fund may borrow from banks for temporary or emergency purposes. If asset coverage for such
borrowings should decline below the required 300% as a result of market fluctuations or other reasons, the Fund may be
required to sell some of its portfolio holdings to reduce the debt and restore the 300% asset coverage, even though it
may be disadvantageous from an investment standpoint to sell securities at that time. Additional information about
borrowings and its risks is included in the Company's Prospectus under "Certain Risk Factors and Investment Methods."
Investment Policies Which May Be Changed Without Shareholder Approval. The following limitations are applicable
to the ASAF Alger All-Cap Growth Fund. These limitations are not "fundamental" restrictions and may be changed by the
Directors without shareholder approval. The Fund will not:
1. Purchase securities on margin, except (i) for use of short-term credit necessary for clearance of purchases of
portfolio securities and (ii) the Fund may take margin deposits in connection with futures contracts or other permissible
investments;
2. Mortgage, pledge, hypothecate or, in any manner, transfer any security owned by the Fund as security for
indebtedness except as may be necessary in connection with permissible borrowings or investments and then such
mortgaging, pledging or hypothecating may not exceed 33 1/3% of the Fund's total assets at the time of borrowing or
investment;
3. Invest in oil, gas or mineral leases.
4. Purchase securities of open-end or closed-end investment companies except in compliance with the 1940 Act.
5. The Fund may not invest more than 15% of the assets of the Fund (taken at the time of the investments) in
"illiquid securities," illiquid securities being defined to include securities subject to legal or contractual
restrictions on resale (which may include private placements, but other than Rule 144A securities deemed liquid by the
Board of Directors or under guidelines adopted by the Board of Directors), repurchase agreements maturing in more than
seven days, certain options traded over the counter that the Fund has purchased, securities being used to cover options a
Fund has written, securities for which market quotations are not readily available, or other securities which legally or
in the Sub-advisor's option may be deemed illiquid.
ASAF GABELLI ALL-CAP VALUE FUND
Investment Objective: The investment objective of the Fund is to seek capital growth.
Investment Policies:
Convertible Securities. The Fund may invest in convertible securities when it appears to the Fund's Sub-advisor
that it may not be prudent to be fully invested in common stocks. In evaluating a convertible security, the Sub-advisor
places primary emphasis on the attractiveness of the underlying common stock and the potential for capital growth through
conversion. The Fund will normally purchase only investment grade convertible debt securities having a rating of, or
equivalent to, at least "BBB" (which securities may have speculative characteristics) by Standard & Poor's Rating Service
("S&P") or, if unrated, judged by the Sub-advisor to be of comparable quality. However, the Fund may also invest up to
25% of its assets in more speculative convertible debt securities, provided such securities have a rating of, or
equivalent to, at least B by S&P.
Convertible securities may include corporate notes or preferred stock but are ordinarily a long-term debt
obligation of the issuer convertible at a stated exchange rate into common stock of the issuer. As with all debt
securities, the market value of convertible securities tends to decline as interest rates increase and, conversely, to
increase as interest rates decline. Convertible securities generally offer lower interest or dividend yields than
non-convertible securities of similar quality. However, when the market price of the common stock underlying a
convertible security exceeds the conversion price, the price of the convertible security tends to reflect the value of
the underlying common stock. As the market price of the underlying common stock declines, the convertible security tends
to trade increasingly on a yield basis, and thus may not depreciate to the same extent as the underlying common stock.
Convertible securities rank senior to common stocks in an issuer's capital structure and consequently entail less risk
than the issuer's common stock, although the extent to which such risk is reduced depends in large measure upon the
degree to which the convertible security sells above its value as a fixed income security.
In selecting convertible securities for the Fund, the Sub-advisor relies primarily on its own evaluation of the
issuer and the potential for capital growth through conversion. It does not rely on the rating of the security or sell
the security because of a change in rating absent a change in its own evaluation of the underlying common stock and the
ability of the issuer to pay principal and interest or dividends when due without disrupting its business goals.
Interest or dividend yield is a factor only to the extent it is reasonably consistent with prevailing rates for
securities of similar quality and thereby provides a support level for the market price of the security. The Fund will
purchase the convertible securities of highly leveraged issuers only when, in the judgment of the Sub-advisor, the risk
of default is outweighed by the potential for capital growth.
The issuers of debt obligations having speculative characteristics may experience difficulty in paying principal
and interest when due in the event of a downturn in the economy or unanticipated corporate developments. The market
prices of such securities may become increasingly volatile in periods of economic uncertainty. Moreover, adverse
publicity or the perceptions of investors, over which the Sub-advisor has no control and whether or not based on
fundamental analysis, may decrease the market price and liquidity of such investments. Although the Sub-advisor will
attempt to avoid exposing the Fund to such risks, there is no assurance that it will be successful or that a liquid
secondary market will continue to be available for the disposition of such securities.
Lower-rated Debt Securities. The Fund may invest up to 5% of its assets in low-rated and unrated corporate debt
securities (often referred to as "junk bonds"). Corporate debt securities that are either unrated or have a
predominantly speculative rating may present opportunities for significant long-term capital growth if the ability of the
issuer to repay principal and interest when due is underestimated by the market or the rating organizations. Because of
its perceived credit weakness, the issuer is generally required to pay a higher interest rate and/or its debt securities
may be selling at a significantly lower market price than the debt securities of other issuers. If the inherent value of
such securities is higher than was perceived and such value is eventually recognized, the market value of the securities
may appreciate significantly. The Sub-advisor believes that its research on the credit and balance sheet strength of
certain issuers may enable it to select a limited number of corporate debt securities that, in certain markets, will
better serve the objective of capital growth than alternative investments in common stocks. Of course, there can be no
assurance that the Sub-advisor will be successful. In its evaluation, the Sub-advisor will not rely exclusively on
ratings and the receipt of income from these securities is only an incidental consideration.
The ratings of Moody's Investors Service, Inc. ("Moody's") and S&P generally represent the opinions of those
organizations as to the quality of the securities that they rate. Such ratings, however, are relative and subjective,
and are not absolute standards of quality. Although the Sub-advisor uses these ratings as a criterion for the selection
of securities for the Fund, the Sub-advisor also relies on its independent analysis to evaluate potential investments for
the Fund. The Fund does not intend to purchase debt securities for which a liquid trading market does not exist, but
there can be no assurance that such a market will exist for the sale of such securities.
Additional information on lower-rated debt securities and their risks is included in this SAI and the Company's
Prospectus under "Certain Risk Factors and Investment Methods." Additional information on corporate bond ratings is
included in the Appendix to this SAI.
Borrowing. The Fund may borrow subject to certain restrictions set forth in the Company's Prospectus under
"Certain Risk Factors and Investment Methods" and in this SAI under "Fundamental Investment Restrictions." The Fund may
mortgage, pledge or hypothecate up to 20% of its assets to secure permissible borrowings. Money borrowed will be subject
to interest costs, which may or may not be recovered by appreciation if securities are purchased with the proceeds of the
borrowing.
Investments in Warrants and Rights. The Fund may invest in warrants and rights (in addition to those acquired in
units or attached to other securities), which entitle the holder to buy equity securities at a specific price for or at
the end of a specific period of time. The value of a right or warrant may decline because of a decline in the value of
the underlying security, the passage of time, changes in interest rates or in the dividend or other policies of the
issuer whose equity underlies the warrant, a change in the perception as to the future price of the underlying security,
or any combination thereof. Additional information about warrants and rights and their risks is included in this SAI and
the Company's Prospectus under "Certain Risk Factors and Investment Methods."
Investment in Small, Unseasoned Companies and Illiquid Securities. The Fund may invest in small, less well-known
companies that have operated for less than three years (including predecessors). The securities of such companies may
have a limited trading market, which may adversely affect their disposition and can result in their being priced lower
than might otherwise be the case. If other investment companies and investors who invest in such issuers trade the same
securities when the Fund attempts to dispose of its holdings, the Fund may receive lower prices than might otherwise be
obtained.
The Fund will not invest, in the aggregate, more than 15% of its net assets in illiquid securities. The
continued liquidity of any Rule 144A securities purchased by the Fund is not as well assured as that of publicly traded
securities, and accordingly, the Sub-advisor will monitor their liquidity under the guidelines adopted by the Directors
of the Company. For additional information on illiquid securities and their risks, see the Company's Prospectus under
"Certain Risk Factors and Investment Methods."
Corporate Reorganizations. In general, securities of companies engaged in reorganization transactions sell at a
premium to their historic market price immediately prior to the announcement of the tender offer or reorganization
proposal. However, the increased market price of such securities may also discount what the stated or appraised value of
the security would be if the contemplated transaction were approved or consummated. Such investments may be advantageous
when the discount significantly overstates the risk of the contingencies involved, significantly undervalues the
securities, assets or cash to be received by shareholders of the issuer as a result of the contemplated transaction, or
fails adequately to recognize the possibility that the offer or proposal may be replaced or superseded by an offer or
proposal of greater value. The evaluation of such contingencies requires unusually broad knowledge and experience on the
part of the Sub-advisor, which must appraise not only the value of the issuer and its component businesses and the assets
or securities to be received as a result of the contemplated transaction, but also the financial resources and business
motivation of the offeror as well as the dynamic of the business climate when the offer or proposal is in progress.
In making such investments, the Fund will be subject to its diversification and other investment restrictions,
including the requirement that, except with respect to 25% of its assets, not more than 5% of its assets may be invested
in the securities of any issuer (see this SAI under "Fundamental Investment Restrictions"). Because such investments are
ordinarily short term in nature, they will tend to increase the Fund's portfolio turnover rate, thereby increasing its
brokerage and other transaction expenses. The Sub-advisor intends to select investments of the type described that, in
its view, have a reasonable prospect of capital growth that is significant in relation to both the risk involved and the
potential of available alternate investments.
When-Issued, Delayed-Delivery and Forward Commitment Transactions. The Fund may enter into forward commitments
for the purchase or sale of securities, including on a "when-issued" or "delayed-delivery" basis, in excess of customary
settlement periods for the type of securities involved. In some cases, the obligations of the parties under a forward
commitment may be conditioned upon the occurrence of a subsequent event, such as approval and consummation of a merger,
corporate reorganization or debt restructuring (i.e., a when, as and if issued security). When such transactions are
negotiated, the price is fixed at the time of the commitment, with payment and delivery generally taking place a month or
more after the date of the commitment. While the Fund will only enter into a forward commitment with the intention of
actually acquiring the security, the Fund may sell the security before the settlement date if it is deemed advisable.
The Fund will segregate with its custodian cash or liquid securities in an aggregate amount at least equal to the amount
of its outstanding forward commitments. Additional information regarding when-issued, delayed-delivery and forward
commitment transactions and their risks is included in this Statement and the Company's Prospectus under "Certain Risk
Factors and Investment Methods."
Other Investment Companies. The Fund may invest up to 10% of its total assets in the securities of other
investment companies, including small business investment companies. (Not more than 5% of its total assets may be
invested in any one investment company, nor will the Fund purchase more than 3% of the securities of any other investment
company.) To the extent that the Fund invests in the securities of other investment companies, shareholders in the Fund
may be subject to duplicative management and administrative fees.
Repurchase Agreements. The Fund may enter into repurchase agreements with banks and non-bank dealers of U.S.
Government securities that are listed as reporting dealers of the Federal Reserve Bank and that furnish collateral at
least equal in value to the amount of their repurchase obligation. In a repurchase agreement, the resale price generally
exceeds the purchase price by an amount that reflects an agreed-upon market interest rate for the term of the repurchase
agreement.
Except for repurchase agreements for a period of a week or less in respect to obligations issued or guaranteed by
the U.S. Government, its agencies or instrumentalities, not more than 5% of the Fund's total assets may be invested in
repurchase agreements. In addition, the Fund will not enter into repurchase agreements of a duration of more than seven
days if, taken together with restricted securities and other securities for which there are no readily available
quotations, more than 15% of its total assets would be so invested.
Additional information on repurchase agreements and their risks is included in the Company's Prospectus under
"Certain Risk Factors and Investment Methods."
Short Sales. The Fund may, from time to time, make short sales of securities it owns or has the right to acquire
through conversion or exchange of other securities it owns (short sales "against the box"). In a short sale, the Fund
does not immediately deliver the securities sold or receive the proceeds from the sale. The Fund may make a short sale
against the box in order to hedge against market risks when it believes that the price of a security may decline,
affecting the Fund directly if it owns that security or causing a decline in the value of a security owned by the Fund
that is convertible into the security sold short.
To secure its obligations to deliver the securities sold short, the Fund will segregate assets with its custodian
in an amount at least equal to the value of the securities sold short or the securities convertible into, or exchangeable
for, the securities. The Fund may close out a short position by purchasing and delivering an equal amount of securities
sold short, rather than by delivering securities already held by the Fund, because the Fund may want to continue to
receive interest and dividend payments on securities in its portfolio that are convertible into the securities sold
short.
Options. The Fund may purchase or sell listed call or put options on securities as a means of achieving
additional return or of hedging the value of the Fund's portfolio. In addition to changes in the price of an underlying
security, other principal factors affecting the market value of a put or a call option include supply and demand,
interest rates, price volatility of the underlying security and the time remaining until the expiration date.
The Fund will only write calls options if they are covered. A call option is covered if the Fund owns the
underlying security covered by the call or has an absolute and immediate right to acquire that security without
additional cash consideration (or for additional cash consideration if cash or other liquid assets with a value equal to
such additional consideration are segregated with the Fund's custodian) upon conversion or exchange of other securities
held in its portfolio. A call option is also covered if the Fund holds a call on the same security as the call written
where the exercise price of the call held is (1) equal to or less than the exercise price of the call written or (2)
greater than the exercise price of the call written if cash or other liquid assets equal to the difference are segregated
with the custodian. If the Fund writes a put option, the Fund will segregate cash or other assets with a value equal to
the exercise price of the option, or will hold a put on the same security as the put written where the exercise price of
the put held is equal to or greater than the exercise price of the put written.
If the Fund has written an option, it may terminate its obligation by effecting a closing purchase transaction.
However, once the Fund has been assigned an exercise notice, the Fund will be unable to effect a closing purchase
transaction. Similarly, if the Fund is the holder of an option it may liquidate its position by effecting a closing sale
transaction. This is accomplished by selling an option of the same series as the option previously purchased. There can
be no assurance that either a closing purchase or sale transaction can be effected when the Fund so desires. The Fund
will realize a profit from a closing sale transaction if the price of the transaction is more than the premium paid to
purchase the option; the Fund will realize a loss from a closing sale transaction if the price of the transaction is less
than the premium paid to purchase the option.
The Fund will generally purchase or write only those options for which there appears to be an active secondary
market. If, however, there is no liquid secondary market when the Sub-advisor wishes to close out an option the Fund has
purchased, it might not be possible to effect a closing sale transaction, so that the Fund would have to exercise its
options in order to realize any profit and would incur brokerage commissions upon the exercise of call options and upon
the subsequent disposition of underlying securities for the exercise of put options. If the Fund, as a covered call
option writer, is unable to effect a closing purchase transaction in a secondary market, it will not be able to sell the
underlying security until the option expires or it delivers the underlying security upon exercise or otherwise covers the
position.
In addition to options on securities, the Fund may also purchase and sell call and put options on securities
indices. The Fund may offset its position in stock index options prior to expiration by entering into a closing
transaction on an exchange or it may let the option it has purchased expire unexercised. The Fund may write put and call
options on stock indices for the purposes of increasing its gross income, thereby partially protecting its portfolio
against declines in the value of the securities it owns or increases in the value of securities to be acquired. In
addition, the Fund may purchase put and call options on stock indices in order to hedge its investments against a decline
in value or to attempt to reduce the risk of missing a market or industry segment advance. While one purpose of writing
such options is to generate additional income for the Fund, the Fund recognizes that it may be required to deliver an
amount of cash in excess of the market value of a stock index at such time as an option written by the Fund is exercised
by the holder. Because options on securities indices require settlement in cash, the Adviser may be forced to liquidate
portfolio securities to meet settlement obligations. The Fund will not purchase options on indices unless the
Sub-advisor is satisfied with the development, depth and liquidity of the market and believes that the options can be
closed out.
Although the Sub-advisor will attempt to take appropriate measures to minimize the risks relating to the Fund's
writing of put and call options, there can be no assurance that the Fund will succeed in any option-writing program it
undertakes.
Additional information about options on securities and securities indices and their risks in included in this SAI
and the Company's Prospectus under "Certain Risk Factors and Investment Methods."
Futures Contracts and Options on Futures. The Fund may enter into futures contracts that are traded on a U.S.
exchange or board of trade. Although the Fund has no current intention of using options on futures contracts, the Fund
may at some future date enter into such options. Investments in futures contracts and related options will be made by
the Fund solely for the purpose of hedging against changes in the value of its portfolio securities or in the value of
securities it intends to purchase. Such investments will only be made if they are economically appropriate to the
reduction of risks involved in the management of the Fund. In this regard, the Fund may enter into futures contracts or
options on futures relating to securities indices or other financial instruments, including but not limited to U.S.
Government securities. Futures exchanges and trading in the United States are regulated under the Commodity Exchange Act
by the Commodity Futures Trading Commission.
Initial margin payments required in connection with futures contracts will range from approximately 1% to 10% of
the contract amount. Initial margin amounts are subject to change by the exchange or board of trade on which the
contract is traded, and brokers or members of such board of trade may charge higher amounts. At any time prior to the
expiration of a futures contract, the portfolio may elect to close the position by taking an opposite position, which
will operate to terminate the Fund's existing position in the contract. At expiration, certain futures contracts,
including stock and bond index futures, are settled on a net cash payment basis rather than by the sale and delivery of
the securities underlying the futures contracts.
The potential loss related to the purchase of an option on a futures contract is limited to the premium paid for
the option (plus transaction costs). There are no daily cash payments by the purchaser of an option on a futures
contract to reflect changes in the value of the underlying contract; however, the value of the option does change daily
and that change would be reflected in the net asset value of the Fund.
The Sub-advisor may use such instruments for the Fund depending upon market conditions prevailing at the time and
the perceived investment needs of the Fund. In the event the Fund enters into futures contracts or writes related
options, an amount of cash or other liquid assets equal to the market value of the contract will be segregated with the
Fund's custodian to collateralize the positions, thereby insuring that the use of the contract is unleveraged.
The Sub-advisor may have difficulty selling or buying futures contracts and options when it chooses. In
addition, hedging practices may not be available, may be too costly to be used effectively, or may be unable to be used
for other reasons.
Additional information about futures contracts, options on futures contracts and their risks is included in this
SAI and the Company's Prospectus under "Certain Risk Factors and Investment Methods.'
Investment Opportunities and Related Limitations. Affiliates of the Sub-advisor may, in the ordinary course of
their business, acquire for their own account or for the accounts of their advisory clients, significant (and possibly
controlling) positions in the securities of companies that may also be suitable for investment by the Fund. The
securities in which the Fund might invest may thereby be limited to some extent. For instance, many companies in the
past several years have adopted so-called "poison pill" or other defensive measures designed to discourage or prevent the
completion of non-negotiated offers for control of the company. Such defensive measures may have the effect of limiting
the shares of the company that might otherwise be acquired by the Fund if the affiliates of the Sub-advisor or their
advisory accounts have or acquire a significant position in the same securities. However, the Sub-advisor does not
believe that the investment activities of its affiliates will have a material adverse effect upon the Fund in seeking to
achieve its investment objectives. In addition, orders for the Fund generally are accorded priority of execution over
orders entered on behalf of accounts in which the Sub-advisor or its affiliates have a substantial pecuniary interest.
The Fund may invest in the securities of companies that are investment management clients of the Sub-advisor's
affiliates. In addition, portfolio companies or their officers or directors may be minority shareholders of the
Sub-advisor or its affiliates.
Investment Policies Which May be Changed Without Shareholder Approval. The following limitations are applicable
to the ASAF Gabelli All-Cap Value Fund. These limitations are not fundamental restrictions and can be changed without
shareholder approval. The Fund may not:
1. Purchase securities on margin, but it may obtain such short-term credits from banks as may be necessary
for the clearance of purchase and sales of securities;
2. Mortgage, pledge or hypothecate any of its assets except that, in connection with permissible
borrowings, not more than 20% of the assets of the Fund (not including amounts borrowed) may be used as collateral;
3. Invest in the securities of other investment companies except in compliance with the Investment Company
Act of 1940;
4. Invest, in the aggregate, more than 15% of the value of its total assets in securities for which market
quotations are not readily available, securities that are restricted for public sale, or in repurchase agreements
maturing or terminable in more than seven days;
5. Sell securities short, except that the Fund may make short sales if it owns the securities sold short or
has the right to acquire such securities through conversion or exchange of other securities it owns; or
6. Invest in companies for the purpose of exercising control.
ASAF INVESCO TECHNOLOGY FUND:
Investment Objective: The investment objective of the Fund is to seek capital growth by investing primarily in the
equity securities of companies engaged in technology-related industries.
Investment Policies:
Debt Securities. Debt securities include bonds, notes and other securities that give the holder the right to
receive fixed amounts of principal, interest, or both on a date in the future or on demand. Debt securities are often
referred to as fixed income securities, even if the rate of interest varies over the life of the security. The Fund may
also invest in stripped debt securities (i.e., interest only and principal only securities).
Although the Fund may invest in debt securities assigned lower grade ratings by S&P or Moody's, the Fund's
investments will generally be limited to debt securities rated B or higher by either S&P or Moody's. Debt securities
rated lower than B by either S&P or Moody's are usually considered to be highly speculative. The Sub-advisor will limit
the Fund's investments to debt securities that it believes are not highly speculative and that are rated at least CCC by
S&P or Caa by Moody's. The Fund expects that most emerging country debt securities in which it invests will not be rated
by U.S. rating services.
A significant economic downturn or increase in interest rates may cause issuers of debt securities to experience
increased financial problems which could adversely affect their ability to pay principal and interest, to meet projected
business goals, and to obtain additional financing. These conditions more severely impact issuers of lower-rated debt
securities. The Sub-advisor attempts to limit purchases of lower-rated securities to securities having an established
secondary market.
Although bonds in the lowest investment grade debt category (those rated BBB by S&P, Baa by Moody's or the
equivalent) are regarded as having adequate capability to pay principal and interest, they have speculative
characteristics. Adverse economic conditions or changing circumstances are more likely to lead to a weakened capacity to
make principal and interest payments than is the case for higher-rated bonds. Lower-rated bonds by Moody's (categories
Ba, B, or Caa) are of poorer quality and also have speculative characteristics. Bonds rated Caa may be in default or
there may be present elements of danger with respect to principal or interest. Lower-rated bonds by S&P (categories BB,
B, or CCC) include those that are regarded, on balance, as predominantly speculative with respect to the issuer's
capacity to pay interest and repay principal in accordance with their terms. While such bonds likely will have some
quality and protective characteristics, these are outweighed by large uncertainties or major risk exposures to adverse
conditions. Bonds having equivalent ratings from other ratings services will have characteristics similar to those of
the corresponding S&P and Moody's ratings. For a more specific description of S&P and Moody's corporate bond rating
categories, please refer to the Appendix to this SAI. Additional information about the debt securities and their risks,
including the risks of lower-rated debt securities, is included in this SAI and the Company's Prospectus under "Certain
Risk Factors and Investment Methods."
Equity and Convertible Debt Securities. As discussed in the Company's Prospectus, the Fund may invest in common,
preferred and convertible preferred stocks, and securities whose values are tied to the price of stocks, such as rights,
warrants and convertible debt securities. Additional information about these types of securities and their risks is
included in the Company's Prospectus under "Certain Risk Factors and Investment Methods."
The Fund seeks to invest in stocks that will increase in market value and may be sold for more than the Fund paid
to buy them. Market value is based upon constantly changing investor perceptions of what the company is worth compared
to other companies. Dividends are a factor in the changing market value of stocks, but many companies do not pay
dividends, or pay comparatively small dividends. As discussed in the Prospectus, the principal risk of investing in
equity securities is that their market values fluctuate constantly, often due to factors entirely outside the control of
the Fund or the company issuing the stock. At any given time, the market value of an equity security may be significantly
higher or lower than the amount paid by a Fund to acquire it.
Owners of preferred stocks are entitled to dividends payable from the corporation's earnings, which in some cases
may be "cumulative" if prior dividends on the preferred stock have not been paid. Preferred stocks may be
"participating," which means that they may be entitled to dividends in excess of the stated dividend in certain cases.
Rights and warrants are securities which entitle the holder to purchase the securities of a company (usually, its
common stock) at a specified price during a specified time period. The value of a right or warrant is affected by many
of the same factors that determine the prices of common stocks. Rights and warrants may be purchased directly or
acquired in connection with a corporate reorganization or exchange offer.
The Fund also may purchase convertible securities, including convertible debt obligations and convertible
preferred stock. A convertible security entitles the holder to exchange it for a fixed number of shares of common stock
(or other equity security), usually at a fixed price within a specified period of time. Until conversion, the owner of
convertible securities usually receives the interest paid on a convertible bond or the dividend preference of a preferred
stock.
A convertible security has an "investment value", which is a theoretical value determined by the yield it
provides in comparison with similar securities without the conversion feature. Investment value changes are based upon
prevailing interest rates and other factors. It also has a "conversion value," which is the market value the convertible
security would have if it were exchanged for the underlying equity security. Convertible securities may be purchased at
varying price levels above or below their investment values or conversion values.
Conversion value is a simple mathematical calculation that fluctuates directly with the price of the underlying
security. However, if the conversion value is substantially below investment value, the market value of the convertible
security is governed principally by its investment value. If the conversion value is near or above investment value, the
market value of the convertible security generally will rise above investment value. In such cases, the market value of
the convertible security may be higher than its conversion value, due to the combination of the convertible security's
right to interest (or dividend preference) and the possibility of capital appreciation from the conversion feature.
However, there is no assurance that any premium above investment value or conversion value will be recovered because
prices change and, as a result, the ability to achieve capital appreciation through conversion may be eliminated.
Foreign Securities. The Fund may invest in the securities of foreign companies, or companies that have their
principal business activities outside the United States, either directly or through American Depositary Receipts
("ADRs"). An ADR entitles its holder to all dividends and capital gains on the underlying foreign securities, less any
fees paid to the sponsoring bank. Foreign securities involve certain risks not associated with investment in U.S.
companies, which are described in more detail in this SAI and the Company's Prospectus under "Certain Risk Factors and
Investment Methods." In addition, foreign exchange markets for the currencies in which the foreign securities may be
traded are affected by the international balance of payments and other economic and financial conditions, speculation and
other factors, all of which are outside the control of the Fund. Generally, the Fund's foreign currency exchange
transactions will be conducted on a cash or "spot" basis at the spot rate for purchasing or selling currency in the
currency exchange markets.
Illiquid Securities. The Fund may invest in illiquid securities, including restricted securities and other
investments that are not readily marketable. The Fund may be unable to dispose of illiquid securities at a reasonable
price. In addition, in order to resell a restricted security, the Fund might have to bear the expense and incur the
delays associated with registering the securities with the SEC, and otherwise obtaining listing on a securities exchange
or in the over the counter market.
Additional information on illiquid securities and their risks is included in the Company's Prospectus under
"Certain Risk Factors and Investment Methods."
Rule 144A Securities. The Fund also may invest in securities that can be resold to institutional investors
pursuant to Rule 144A under the Securities Act of 1933 (the "1933 Act"). In recent years, a large institutional market
has developed for many Rule 144A Securities. Institutional investors generally cannot sell these securities to the
general public but instead will often depend on an efficient institutional market in which Rule 144A Securities can
readily be resold to other institutional investors, or on an issuer's ability to honor a demand for repayment.
Therefore, the fact that there are contractual or legal restrictions on resale to the general public or certain
institutions does not necessarily mean that a Rule 144A Security is illiquid. Institutional markets for Rule 144A
Securities may provide both reliable market values for Rule 144A Securities and enable the Fund to sell a Rule 144A
investment when appropriate.
Additional information on Rule 144A Securities is included in the Company's Prospectus under "Certain Risk
Factors and Investment Methods - Illiquid and Restricted Securities."
Investment Company Securities. The Fund may invest in Standard & Poor's Depository Receipts ("SPDRs") and shares
of other investment companies. SPDRs are investment companies whose portfolios mirror the compositions of specific S&P
indices, such as the S&P 500 and the S&P 400. SPDRs are traded on the American Stock Exchange. SPDR holders such as the
Fund are paid a "Dividend Equivalent Amount" that corresponds to the amount of cash dividends accruing to the securities
held by the SPDR Trust, net of certain fees and expenses. The 1940 Act limits investments in securities of other
investment companies, such as SPDR Trusts. These limitations include, among others, that, subject to certain exceptions,
no more than 10% of the Fund's total assets may be invested in securities of other investment companies and no more than
5% of its total assets may be invested in the securities of any one investment company.
Additional information on investing in other investment companies and its risks is included in the Company's
Prospectus under "Certain Risk Factors and Investment Methods."
U.S. Government Securities. The Fund may, from time to time, purchase debt securities issued by the U.S.
government. These securities include Treasury bills, notes and bonds. Treasury bills have a maturity of one year or
less, Treasury notes generally have a maturity of one to ten years, and Treasury bonds generally have maturities of more
than ten years.
U.S. government debt securities also include securities issued or guaranteed by agencies or instrumentalities of
the U.S. government. Some obligations of U.S. government agencies, such as Government National Mortgage Association
("GNMA") participation certificates, are supported by the full faith and credit of the U.S. Treasury. GNMA Certificates
are mortgage-backed securities representing part ownership of a pool of mortgage loans. These loans -- issued by lenders
such as mortgage bankers, commercial banks and savings and loan associations -- are either insured by the Federal Housing
Administration or guaranteed by the Veterans Administration. A "pool" or group of such mortgages is assembled and, after
being approved by GNMA, is offered to investors through securities dealers. Once approved by GNMA, the timely payment of
interest and principal on each mortgage is guaranteed by GNMA and backed by the full faith and credit of the U.S.
government. (For additional information on mortgage-backed securities and their risks, see this SAI and the Company's
Prospectus under "Certain Risk Factors and Investment Methods.")
Other United States government debt securities, such as securities of the Federal Home Loan Banks, are supported
by the right of the issuer to borrow from the Treasury. Others, such as bonds issued by Fannie Mae, a federally
chartered private corporation, are supported only by the credit of the corporation. In the case of securities not backed
by the full faith and credit of the United States, the Fund must look principally to the agency issuing or guaranteeing
the obligation in the event the agency or instrumentality does not meet its commitments. The Fund will invest in
securities of such instrumentalities only when its Sub-advisor is satisfied that the credit risk with respect to any such
instrumentality is comparatively minimal.
When-Issued and Delayed-Delivery Transactions. Ordinarily, the Fund buys and sells securities on an ordinary
settlement basis. That means that the buy or sell order is sent, and the Fund actually takes delivery or gives up
physical possession of the security on the "settlement date," which is three business days later. However, the Fund also
may purchase and sell securities on a when-issued or delayed-delivery basis.
When-issued or delayed-delivery transactions occur when securities are purchased or sold by the Fund and payment
and delivery take place at an agreed-upon time in the future. The Fund may engage in this practice in an effort to
secure an advantageous price and yield. However, the yield on a comparable security available when delivery actually
takes place may vary from the yield on the security at the time the when-issued or delayed-delivery transaction was
entered into.
Additional information on when-issued and delayed-delivery transactions and their risks is included in this SAI
and the Company's Prospectus under "Certain Risk Factors and Investment Methods."
Futures, Options and Other Financial Instruments.
General. As discussed in the Prospectus, the Sub-adviser may use various types of financial instruments, some of
which are derivatives, to attempt to manage the risk of the Fund's investments or, in certain circumstances, for
investment (e.g., as a substitute for investing in securities). These financial instruments include options, futures
contracts (sometimes referred to as "futures"), forward contracts, swaps, caps, floors and collars (collectively,
"Financial Instruments"). The policies in this section do not apply to other types of instruments sometimes referred to
as derivatives, such as indexed securities, and mortgage-backed and other asset-backed securities.
Hedging strategies can be broadly categorized as "short" hedges and "long" or "anticipatory" hedges. A short
hedge involves the use of a Financial Instrument in order to partially or fully offset potential variations in the value
of one or more investments held in the Fund's portfolio. A long or anticipatory hedge involves the use of a Financial
Instrument in order to partially or fully offset potential increases in the acquisition cost of one or more investments
that the Fund intends to acquire. In an anticipatory hedge transaction, the Fund does not already own a corresponding
security. Rather, it relates to a security or type of security that the Fund intends to acquire. If the Fund does not
eliminate the hedge by purchasing the security as anticipated, the effect on the Fund's portfolio generally is the same
as if a long position in the security were entered into. Financial Instruments may also be used, in certain
circumstances, for investment (e.g., as a substitute for investing in securities).
Financial Instruments on individual securities generally are used to attempt to hedge against price movements in
one or more particular securities positions that the Fund already owns or intends to acquire. Financial instruments on
indices, in contrast, generally are used to attempt to hedge all or a portion of a portfolio against price movements of
securities within a market sector in which the Fund has invested or expects to invest.
The use of Financial Instruments is subject to applicable regulations of the SEC, the several exchanges upon
which they are traded, and the CFTC. In addition, the Fund's ability to use Financial Instruments may be limited by tax
considerations. See this SAI under "Additional Tax Considerations." In addition to the instruments and strategies
described below, the Sub-advisor may use other similar or related techniques to the extent that they are consistent with
the Fund's investment objective and permitted by its investment limitations and applicable regulatory authorities.
Special Risks. Financial Instruments and their use involve special considerations and risks, certain of which
are described below.
(1) Financial Instruments may increase the volatility of the Fund. If the Sub-advisor employs a Financial
Instrument that correlates imperfectly with the Fund's investments, a loss could result, regardless of whether or not the
intent was to manage risk.
(2) There might be imperfect correlation between price movements of a Financial Instrument and price movements of
the investment(s) being hedged. For example, if the value of a Financial Instrument used in a short hedge increased by
less than the decline in value of the hedged investment(s), the hedge would not be fully successful. This might be
caused by certain kinds of trading activity that distorts the normal price relationship between the security being hedged
and the Financial Instrument.
The Fund is authorized to use options and futures contracts related to securities with issuers, maturities or
other characteristics different from the securities in which it typically invests. This involves a risk that the options
or futures position will not track the performance of the Fund's portfolio investments.
The direction of options and futures price movements can also diverge from the direction of the movements of the
prices of their underlying instruments, even if the underlying instruments match the Fund's investments well. Options
and futures prices are affected by such factors as current and anticipated short-term interest rates, changes in
volatility of the underlying instrument, and the time remaining until expiration of the contract, which may not affect
security prices the same way. Imperfect correlation may also result from differing levels of demand in the options and
futures markets and the securities markets, from structural differences in how options and futures and securities are
traded, or from imposition of daily price fluctuation limits or trading halts. The Fund may take positions in options
and futures contracts with a greater or lesser face value than the securities it wishes to hedge or intends to purchase
in order to attempt to compensate for differences in volatility between the contract and the securities, although this
may not be successful in all cases.
(3) If successful, the above-discussed hedging strategies can reduce risk of loss by wholly or partially
offsetting the negative effect of unfavorable price movements of portfolio securities. However, such strategies can also
reduce opportunity for gain by offsetting the positive effect of favorable price movements. For example, if the Fund
entered into a short hedge because the Sub-advisor projected a decline in the price of a security in the Fund's
portfolio, and the price of that security increased instead, the gain from that increase would likely be wholly or
partially offset by a decline in the value of the short position in the Financial Instrument. Moreover, if the price of
the Financial Instrument declined by more than the increase in the price of the security, the Fund could suffer a loss.
(4) As described below, the Fund is required to maintain assets as "cover," maintain segregated accounts or make
margin payments when they take positions in Financial Instruments involving obligations to third parties (i.e., Financial
Instruments other than purchased options). If the Fund is unable to close out its positions in such Financial
Instruments, it might be required to continue to maintain such assets or segregated accounts or make such payments until
the position expired.
Cover. Positions in Financial Instruments, other than purchased options, expose the Fund to an obligation to
another party. The Fund will not enter into any such transaction unless it owns (1) an offsetting ("covered") position
in securities, currencies or other options, futures contracts or forward contracts, or (2) cash or liquid assets with a
value, market-to-market daily, sufficient to cover its obligations to the extent not covered as provided in (1) above.
The Fund will comply with SEC guidelines regarding cover for these instruments and will, if the guidelines so require,
designate the prescribed amount of cash or liquid assets as segregated.
Assets used as cover or held as segregated cannot be sold while the position in the corresponding Financial
Instrument is open unless they are replaced with other appropriate assets. As a result, the commitment of a large
portion of the Fund's assets to cover or to hold as segregated could impede portfolio management or the Fund's ability to
meet redemption requests or other current obligations.
Options. The Fund may engage in certain strategies involving options to attempt to manage the risk of its
investments or, in certain circumstances, for investment (e.g., as a substitute for investing in securities).
The purchase of call options can serve as a hedge against a price rise of the underlying security or instrument
and the purchase of put options can serve as a hedge against a price decline of the underlying security or instrument.
Writing call options can serve as a limited short hedge because declines in the value of the hedged investment would be
offset to the extent of the premium received for writing the option. Writing put options can serve as a limited long or
anticipatory hedge because increases in the value of the hedged investment would be offset to the extent of the premium
received for writing the option.
The value of an option position will reflect, among other things, the current market value of the underlying
investment, the time remaining until expiration, the relationship of the exercise price to the market price of the
underlying investment, the price volatility of the underlying investment and general market and interest rate
conditions. Options that expire unexercised have no value.
The Fund may effectively terminate its right or obligation under an option by entering into a closing
transaction. For example, the Fund may terminate a position in a put or call option it had purchased by writing an
identical put or call option, which is known as a closing sale transaction. Closing transactions permit a Fund to
realize profits or limit losses on an option position prior to its exercise or expiration. If the Fund were unable to
effect a closing transaction for an option it had purchased, it would have to exercise the option to realize any profit.
Risks of Options on Securities. Options embody the possibility of large amounts of exposure, which will
result in the Fund's net asset value being more sensitive to changes in the value of the related investment. The Fund
may purchase or write both exchange-traded and OTC options. Exchange-traded options in the United States are issued by a
clearing organization affiliated with the exchange on which the option is listed that, in effect, guarantees completion
of every exchange-traded option transaction. In contrast, OTC options are contracts between a fund and its counterparty
(usually a securities dealer or a bank) with no clearing organization guarantee. Failure by the counterparty to make or
take delivery of the underlying investment upon exercise would result in the loss of any premium paid by the Fund as well
as the loss of any expected benefit from the transaction.
Options on Indices. The risks of purchasing and selling options on indices may be greater than options
on securities. Because index options are settled in cash, when the Fund writes a call on an index it cannot fulfill its
potential settlement obligations by delivering the underlying securities. The Fund can offset some of the risk of
writing a call index option by holding a diversified portfolio of securities similar to those on which the underlying
index is based. However, the Fund cannot, as a practical matter, acquire and hold a portfolio containing exactly the
same securities as underlie the index and, as a result, it bears a risk that the value of the securities held will vary
from the value of the index.
OTC Options. Unlike exchange-traded options, which are standardized with respect to the underlying
instrument, expiration date, contract size, and strike price, the terms of OTC options (options not traded on exchanges)
generally are established through negotiation with the other party to the option contract. While this type of
arrangement allows a Fund great flexibility to tailor the option to its needs, OTC options generally involve greater risk
than exchange-traded options, which are guaranteed by the clearing organization of the exchange where they are traded.
Generally, OTC foreign currency options used by the Fund are European-style options.
Additional information about options transactions and their risks is included in this SAI and the Company's
Prospectus under "Certain Risk Factors and Investment Methods."
Futures Contracts and Options on Futures Contracts. The purchase of futures or call options on futures can serve
as a long or an anticipatory hedge, and the sale of futures or the purchase of put options on futures can serve as a
short hedge. Writing call options on futures contracts can serve as a limited short hedge, using a strategy similar to
that used for writing call options on securities or indices. Similarly, writing put options on futures contracts can
serve as a limited long or anticipatory hedge.
In addition, futures strategies can be used to manage the "duration" (a measure of anticipated sensitivity to
changes in interest rates, which is sometimes related to the weighted average maturity of a portfolio) and associated
interest rate risk of the Fund's fixed-income investments. If the Sub-advisor wishes to shorten the duration of the
Fund's fixed-income investments (i.e., reduce anticipated sensitivity), the Fund may sell an appropriate debt futures
contract or a call option thereon, or purchase a put option on that futures contract. If the Sub-advisor wishes to
lengthen the duration of the Fund's fixed-income investments (i.e., increase anticipated sensitivity), the Fund may buy
an appropriate debt futures contract or a call option thereon, or sell a put option thereon.
At the inception of a futures contract, the Fund will be required to deposit "initial margin" in an amount
generally equal to 10% or less of the contract value. Unlike margin in securities transactions, initial margin on
futures contracts and written options on futures contracts does not represent a borrowing on margin, but rather is in the
nature of a performance bond or good-faith deposit that is returned to the Fund at the termination of the transaction if
all contractual obligations have been satisfied. Under certain circumstances, such as periods of high volatility, the
Fund may be required to increase the level of initial margin deposits.
If the Fund were unable to liquidate a futures contract or an option on a futures contract position due to the
absence of a liquid market or the imposition of price limits, it could incur substantial losses. The Fund would continue
to be subject to market risk with respect to the position. In addition, except in the case of purchased options, the
Fund would continue to be required to make daily variation margin payments and might be required to continue to maintain
the position being hedged by the futures contract or option or to continue to maintain cash or securities in a segregated
account.
Risks of Futures Contracts and Options Thereon. The spreads at a given time between prices in the cash
and futures markets (including the options on futures markets), due to differences in the natures of those markets, will
fluctuate based on a number of factors. For instance, the liquidity of the futures market depends on participants
entering into offsetting transactions rather than making or taking delivery. To the extent participants decide to make
or take delivery, liquidity in the futures market could be reduced, thus producing price distortion. Due to the
possibility of distortion, a hedge may not be successful. Although stock index futures contracts do not require physical
delivery, under extraordinary market conditions, liquidity of such futures contracts also could be reduced.
For additional information on futures contracts and options on futures and their risks, see this SAI and the
Company's Prospectus under "Certain Risk Factors and Investment Methods."
Index Futures. The price of index futures may move proportionately more than or less than the price of
the securities being hedged. If the price of the index futures moves proportionately less than the price of the
securities that are the subject of the hedge, the hedge will not be fully effective. Assuming the price of the
securities being hedged has moved in an unfavorable direction, as anticipated when the hedge was put into place, the Fund
would be in a better position than if it had not hedged at all, but not as good as if the price of the index futures
moved in full proportion to that of the hedged securities. If the price of the futures contract moves more than the
price of the securities, the Fund will experience either a loss or a gain on the futures contract that will not be
completely offset by movements in the price of the securities that are the subject of the hedge.
Where index futures are purchased in an anticipatory hedge, it is possible that the market may decline instead.
If the Fund then decides not to invest in the securities at that time because of concern as to possible further market
decline or for other reasons, it will realize a loss on the futures contract that is not offset by a reduction in the
price of the securities it had anticipated purchasing.
Foreign Currency Hedging Strategies -- Special Considerations. The Fund may use options and futures contracts on
foreign currencies, as mentioned previously, and forward currency contracts, as described below, to attempt to hedge
against movements in the values of the foreign currencies in which the Fund's securities are denominated or, in certain
circumstances, for investment (e.g., as a substitute for investing in securities denominated in foreign currency).
Currency hedges can protect against price movements in a security that the Fund owns or intends to acquire that are
attributable to changes in the value of the currency in which it is denominated.
The Fund may seek to hedge against price movements in a particular currency by entering into transactions using
Financial Instruments on another currency or a basket of currencies, the value of which the Sub-advisor believes will
have a high degree of positive correlation to the value of the currency being hedged. The risk that movements in the
price of the Financial Instrument will not correlate perfectly with movements in the price of the currency subject to the
hedging transaction may be increased when this strategy is used.
The value of Financial Instruments on foreign currencies depends on the value of the underlying currency relative
to the U.S. dollar. Because foreign currency transactions occurring in the interbank market might involve substantially
larger amounts than those involved in the use of such Financial Instruments by the Fund, the Fund could be disadvantaged
by having to deal in the odd-lot market (generally consisting of transactions of less than $1 million) for the underlying
foreign currencies at prices that are less favorable than for round lots.
There is no systematic reporting of last sale information for foreign currencies or any regulatory requirement
that quotations available through dealers or other market sources be firm or revised on a timely basis. Quotation
information generally is representative of very large transactions in the interbank market and thus might not reflect
odd-lot transactions where rates might be less favorable. The interbank market in foreign currencies is a global,
round-the-clock market. To the extent the U.S. options or futures markets are closed while the markets for the
underlying currencies remain open, significant price and rate movements might take place in the underlying markets that
cannot be reflected in the markets for the Financial Instruments until they reopen.
Settlement of hedging transactions involving foreign currencies might be required to take place within the
country issuing the underlying currency. Thus, the Fund might be required to accept or make delivery of the underlying
foreign currency in accordance with any U.S. or foreign regulations regarding the maintenance of foreign banking
arrangements by U.S. residents and might be required to pay any fees, taxes and charges associated with such delivery
assessed in the issuing country.
Forward Currency Contracts and Foreign Currency Deposits. The Fund may enter into forward currency contracts to
purchase or sell foreign currencies for a fixed amount of U.S. dollars or another foreign currency.
If the Fund uses forward currency contracts to hedge against a decline in the value of existing investments
denominated in foreign currency, such a hedge would tend to offset both positive and negative currency fluctuations, but
would not offset changes in security values caused by other factors. The Fund could also hedge the position by entering
into a forward currency contract to sell another currency (or a basket of currencies) expected to perform similarly to
the currency in which the Fund's existing investments are denominated. This type of hedge could offer advantages in
terms of cost, yield or efficiency, but may not hedge currency exposure as effectively as a simple hedge against U.S.
dollars. This type of hedge may result in losses if the currency used to hedge does not perform similarly to the
currency in which the hedged securities are denominated.
The cost to the Fund of engaging in forward currency contracts will vary with factors such as the currency
involved, the length of the contract period and the market conditions then prevailing. When the Fund enters into a
forward currency contract, it relies on the counterparty to make or take delivery of the underlying currency at the
maturity of the contract. Failure by the counterparty to do so would result in the loss of some or all of any expected
benefit of the transaction.
As is the case with futures contracts, purchasers and sellers of forward currency contracts can enter into
offsetting closing transactions, similar to closing transactions on futures contracts, by selling or purchasing,
respectively, an instrument identical to the instrument purchased or sold. Secondary markets generally do not exist for
forward currency contracts, with the result that closing transactions generally can be made for forward currency
contracts only by negotiating directly with the counterparty. Thus, there can be no assurance that the Fund will in fact
be able to close out a forward currency contract at a favorable price prior to maturity. In addition, in the event of
insolvency of the counterparty, the Fund might be unable to close out a forward currency contract. In either event, the
Fund would continue to be subject to market risk with respect to the position, and would continue to be required to
maintain a position in securities denominated in the foreign currency or to segregate cash or liquid assets.
Forward currency contracts may substantially change a fund's investment exposure to changes in currency exchange
rates and could result in losses to the Fund if currencies do not perform as the adviser anticipates. There is no
assurance that the Sub-advisor's use of forward currency contracts will be advantageous to the Fund or that it will hedge
at an appropriate time.
The Fund may also purchase and sell foreign currency and invest in foreign currency deposits. Currency
conversion involves dealer spreads and other costs, although commissions usually are not charged.
Additional information about forward currency contracts and other foreign currency transactions and their risks
is included in this SAI and the Company's Prospectus under "Certain Risk Factors and Investment Methods."
Combined Positions. The Fund may purchase and write options or futures in combination with each other, or in
combination with futures or forward currency contracts, to manage the risk and return characteristics of its overall
position. For example, the Fund may purchase a put option and write a call option on the same underlying instrument, in
order to construct a combined position whose risk and return characteristics are similar to selling a futures contract.
Another possible combined position would involve writing a call option at one strike price and buying a call option at a
lower price, in order to reduce the risk of the written call option in the event of a substantial price increase.
Because combined options positions involve multiple trades, they result in higher transaction costs.
Turnover. The Funds' options and futures activities may affect their turnover rates and brokerage commission
payments. The exercise of calls or puts written by the Fund, and the sale or purchase of futures contracts, may cause it
to sell or purchase related investments, thus increasing its turnover rate. Once the Fund has received an exercise
notice on an option it has written, it cannot effect a closing transaction in order to terminate its obligation under the
option and must deliver or receive the underlying securities at the exercise price. The exercise of puts purchased by
the Fund may also cause the sale of related investments, increasing turnover. Although such exercise is within the
Fund's control, holding a protective put might cause it to sell the related investments for reasons that would not exist
in the absence of the put. The Fund will pay a brokerage commission each time it buys or sells a put or call or
purchases or sells a futures contract. Such commissions may be higher than those that would apply to direct purchases or
sales.
Swaps, Caps, Floors and Collars. The Fund is authorized to enter into swaps, caps, floors and collars.
Additional information on swaps, caps and floors is included in this SAI under "Certain Risk Factors and Investment
Methods." A collar combines elements of buying a cap and selling a floor.
Investment Policies Which May be Changed Without Shareholder Approval. The following limitations are
applicable to the ASAF INVESCO Technology Fund. These limitations are not fundamental restrictions, and can be changed
without shareholder approval.
1. The Fund may not sell securities short (unless it owns or has the right to obtain securities equivalent
in kind and amount to the securities sold short) or purchase securities on margin, except that (i) this policy does not
prevent the Fund from entering into short positions in foreign currency, futures contracts, options, forward contracts,
swaps, caps, floors, collars and other financial instruments, (ii) the Fund may obtain such short-term credits as are
necessary for the clearance of transactions, and (iii) the Fund may make margin payments in connection with futures
contracts, options, forward contracts, swaps, caps, floors, collars and other financial instruments.
2. The Fund does not currently intend to purchase any security if, as a result, more than 15% of its net
assets would be invested in securities that are deemed to be illiquid because they are subject to legal or contractual
restrictions on resale or because they cannot be sold or disposed of in the ordinary course of business at approximately
the prices at which they are valued.
3. The Fund may invest in securities issued by other investment companies to the extent that such
investments are consistent with the Fund's investment objective and policies and permissible under the 1940 Act.
ASAF Rydex Managed OTC FUND:
Investment Objective: The investment objective of the Fund is to provide investment results that correspond to a
benchmark for securities that are traded in the over-the-counter market. The Fund's current benchmark is the NASDAQ 100
Index.
Investment Policies:
Borrowing. The Fund may borrow money to facilitate management of the Fund's portfolio by enabling the Fund to
meet redemption requests when the liquidation of portfolio instruments would be inconvenient or disadvantageous. Such
borrowing is not for investment purposes and will be repaid by the Fund promptly.
As required by the 1940 Act, the Fund must maintain continuous asset coverage (total assets, including assets
acquired with borrowed funds, less liabilities exclusive of borrowings) of 300% of all amounts borrowed. Maintenance of
this percentage limitation may result in the sale of portfolio securities at a time when investment considerations
otherwise indicate that it would be disadvantageous to do so.
The Fund is authorized to pledge portfolio securities as the Sub-advisor deems appropriate in connection with any
borrowings. Additional information about borrowing is included in the Company's Prospectus under "Certain Risk Factors
and Investment Methods."
Illiquid Securities. While the Fund does not anticipate doing so, the Fund may purchase illiquid securities,
including securities that are not readily marketable and securities that are not registered ("restricted securities")
under the Securities Act of 1933, as amended (the "1933 Act"). As discussed in the Company's Prospectus, the Fund will
not invest more than 15% of the Fund's net assets in illiquid securities. Under the current guidelines of the staff of
the SEC, illiquid securities also are considered to include, among other securities, purchased over-the-counter options,
certain cover for over-the-counter options, and repurchase agreements with maturities in excess of seven days. The Fund
may not be able to sell illiquid securities when the Sub-advisor considers it desirable to do so or may have to sell such
securities at a price that is lower than the price that could be obtained if the securities were more liquid. In
addition, the sale of illiquid securities also may require more time and may result in higher dealer discounts and other
selling expenses than does the sale of securities that are not illiquid. Illiquid securities also may be more difficult
to value due to the unavailability of reliable market quotations for such securities, and investment in illiquid
securities may have an adverse impact on net asset value.
Institutional markets for restricted securities have developed as a result of the promulgation of Rule 144A under
the 1933 Act, which provides a "safe harbor" from 1933 Act registration requirements for qualifying sales to
institutional investors. When Rule 144A restricted securities present an attractive investment opportunity and meet
other selection criteria, the Fund may make such investments; whether or not such securities are considered "illiquid"
will depend on the market that exists for the particular security. Subject to guidelines promulgated by the Board of
Directors of the Company, the Sub-advisor will determine and monitor the liquidity of Rule 144A securities in the Fund's
portfolio. For additional discussion of securities of illiquid and restricted securities and certain risks involved
therein, see the Company's Prospectus under "Certain Risk Factors and Investment Methods."
Other Investment Companies. The Fund may invest in other investment companies to the extent permitted by the
1940 Act and rules and regulations thereunder, and, if applicable, exemptive orders granted by the SEC. If a Fund
invests in, and, thus, is a shareholder of, another investment company, the Fund's shareholders will indirectly bear the
Fund's proportionate share of the fees and expenses paid by such other investment company, including advisory fees, in
addition to both the management fees payable directly by the Fund to the Fund's Investment Manager and the other expenses
that the Fund bears directly in connection with the Fund's own operations.
Lending of Portfolio Securities. Subject to the investment restrictions set forth below, the Fund may lend
portfolio securities to brokers, dealers, and financial institutions, provided that cash equal to at least 100% of the
market value of the securities loaned is deposited by the borrower with the Fund and is maintained each business day in a
segregated account pursuant to applicable regulations. Loans would be subject to termination by the borrower on one
day's notice. Borrowed securities must be returned when the loan is terminated. Any gain or loss in the market price of
the borrowed securities which occurs during the term of the loan inures to the Fund and the Fund's shareholders. The
Fund may pay reasonable finders, borrowers, administrative, and custodial fees in connection with a loan. For additional
discussion about this practice, see this SAI and the Company's Prospectus under "Certain Risk Factors and Investment
Methods."
Options Transactions. The Fund may engage in options transactions as set forth below. A description of and
additional information on these instruments and their risks are included in this SAI and Company's Prospectus under
"Certain Risk Factors and Investment Methods." Certain other information risks pertaining to these investment strategies
are described in the sections that follow.
Options on Securities. The Fund may buy call options and write (sell) put options on securities for
the purpose of realizing the Fund's investment objective.
Options on Security Indices. The Fund may purchase call options and write put options on stock indices
listed on national securities exchanges or traded in the over-the-counter market as an investment vehicle for the purpose
of realizing the Fund's investment objective.
When the Fund writes an option on an index, the Fund will be required to deposit and maintain with a custodian
cash or liquid securities equal in value to the aggregate exercise price of a put or call option pursuant to the
requirements and the rules of the applicable exchange. If, at the close of business on any day, the market value of the
deposited securities falls below the contract price, the Fund will deposit with the custodian cash or liquid securities
equal in value to the deficiency.
Stock Index Futures Contracts. The Fund may buy and sell stock index futures contracts and related options (with
respect to any stock index) that are traded on a recognized stock exchange or board of trade. When the Fund purchases or
sells a stock index futures contract, or sells an option thereon, the Fund "covers" its position. To cover its position,
the Fund may maintain with its custodian bank (and marked-to-market on a daily basis), a segregated account consisting of
cash or other liquid assets that, when added to any amounts deposited with a futures commission merchant as initial
margin, are equal to the market value of the futures contract. If the Fund engages in the described securities trading
practices and properly segregates assets, the segregated account will function as a practical limit on the amount of
leverage which the Fund may undertake and on the potential increase in the speculative character of the Fund's
outstanding portfolio securities. Additionally, such segregated accounts will generally assure the availability of
adequate funds to meet the obligations of the Fund arising from such investment activities.
The Fund may cover its long position in a futures contract by purchasing a put option on the same futures
contract with a strike price (i.e., an exercise price) as high or higher than the price of the futures contract. In the
alternative, if the strike price of the put is less than the price of the futures contract, the Fund will maintain in a
segregated account cash or other liquid assets equal in value to the difference between the strike price of the put and
the price of the futures contract. The Fund may also cover its long position in a futures contract by taking a short
position in the instruments underlying the futures contract, or by taking positions in instruments with prices which are
expected to move relatively consistently with the futures contract. A Fund may "cover" a short position in a futures
contract by owning the instruments underlying the contract (or, in the case of an index futures contract, a portfolio the
value of which is expected to fluctuate in a substantially similar manner to the index on which the futures contract is
based), or by taking positions in instruments with prices which are expected to move relatively consistently with the
futures contract. The Fund may also cover its short position in a futures contract by holding a call option permitting
the Fund to purchase the same futures contract at a price no higher than the price of the contract written by the Fund
(or at a higher price if the difference is maintained in liquid assets with the Fund's custodian).
The Fund may cover its sale of a call option on a futures contract by taking a long position in the underlying
futures contract at a price less than or equal to the strike price of the call option. In the alternative, if the long
position in the underlying futures contracts is established at a price greater than the strike price of the written
(sold) call, the Fund will maintain in a segregated account cash or other liquid assets equal in value to the difference
between the strike price of the call and the price of the futures contract. The Fund may also cover its sale of a call
option by taking positions in instruments with prices which are expected to move relatively consistently with the call
option. The Fund may cover its sale of a put option on a futures contract by taking a short position in the underlying
futures contract at a price greater than or equal to the strike price of the put option, or, if the short position in the
underlying futures contract is established at a price less than the strike price of the written put, the Fund will
maintain in a segregated account cash or other liquid assets equal in value to the difference between the strike price of
the put and the price of the futures contract. The Fund may also cover its sale of a put option by taking positions in
instruments with prices which are expected to move relatively consistently with the put option. Additional information
on Futures and their risks is included in this SAI and the Company's Prospectus under "Certain Risk Factors and
Investment Methods."
Portfolio Turnover. The Fund's portfolio turnover rate to a great extent will depend on the purchase,
redemption, and exchange activity of the Fund, it is very difficult to estimate what the Fund's actual turnover rate will
be in the future. However, the Sub-advisor anticipates that the portfolio turnover may equal or exceed 100%. For an
additional discussion of portfolio turnover, see this SAI under "Portfolio Transactions" and the Company's Prospectus
under "Portfolio Turnover."
Repurchase Agreements. The Fund may enter into repurchase agreements with financial institutions. The Fund
follows certain procedures designed to minimize the risks inherent in such agreements. These procedures include
effecting repurchase transactions only with large, well-capitalized and well-established financial institutions whose
condition will be continually monitored by the Sub-advisor. In addition, the value of the collateral underlying the
repurchase agreement will always be at least equal to the repurchase price, including any accrued interest earned on the
repurchase agreement. In the event of a default or bankruptcy by a selling financial institution, the Fund will seek to
liquidate such collateral. The investments of the Fund in repurchase agreements may be substantial at times when, in the
view of the Sub-advisor, liquidity or other considerations so warrant. For additional discussion of repurchase
agreements and the risks involved therein, see the Company's Prospectus under "Certain Risk Factors and Investment
Methods."
Short Sales Against the Box. The Fund may engage in short sales "against the box". The Fund may make a short
sale when the Fund wants to sell the security the Fund owns at a current attractive price, in order to hedge or limit the
exposure of the Fund's position. For further information about this practice, please refer to the Company's Prospectus
under "Certain Risk Factors and Investment Methods."
Tracking Error. Although the Fund does not expect that the returns over a year will deviate adversely from its
benchmark by more than ten percent, several factors may affect its ability to achieve this correlation. Among these
are: (1) Fund expenses, including brokerage (which may be increased by high portfolio turnover); (2) less than all of
the securities in the benchmark being held by the Fund and securities not included in the benchmark being held by the
Fund; (3) an imperfect correlation between the performance of instruments held by the Fund, such as futures contracts and
options, and the performance of the underlying securities in the cash market; (4) bid-ask spreads (the effect of which
may be increased by portfolio turnover); (5) the Fund holds instruments traded in a market that has become illiquid or
disrupted; (6) Fund share prices being rounded to the nearest cent; (7) changes to the benchmark index that are not
disseminated in advance; or (8) the need to conform the Fund's portfolio holdings to comply with investment restrictions
or policies or regulatory or tax law requirements.
U.S. Government Securities. The Fund may invest in U.S. Government Securities. Securities issued or guaranteed
by the U.S. Government or its agencies or instrumentalities include U.S. Treasury securities, which are backed by the
full faith and credit of the U.S. Treasury and which differ only in their interest rates, maturities, and times of
issuance. U.S. Treasury bills have initial maturities of one year or less; U.S. Treasury notes have initial maturities
of one to ten years; and U.S. Treasury bonds generally have initial maturities of greater than ten years. Certain U.S.
Government Securities are issued or guaranteed by agencies or instrumentalities of the U.S. Government including, but not
limited to, Fannie Mae, the Government National Mortgage Association, the Small Business Administration, the Federal Farm
Credit Administration, the Federal Home Loan Banks, Banks for Cooperatives (including the Central Bank for Cooperatives),
the Federal Land Banks, the Federal Intermediate Credit Banks, the Tennessee Valley Authority, the Export-Import Bank of
the United States, the Commodity Credit Corporation, the Federal Financing Bank, the Student Loan Marketing Association,
and the National Credit Union Administration.
Some obligations issued or guaranteed by U.S. Government agencies and instrumentalities, including, for example,
Government National Mortgage Association pass-through certificates, are supported by the full faith and credit of the
U.S. Treasury. Other obligations issued by or guaranteed by Federal agencies, such as those securities issued by Fannie
Mae, are supported by the discretionary authority of the U.S. Government to purchase certain obligations of the Federal
agency, while other obligations issued by or guaranteed by Federal agencies, such as those of the Federal Home Loan
Banks, are supported by the right of the issuer to borrow from the U.S. Treasury. While the U.S. Government provides
financial support to such U.S. Government-sponsored Federal agencies, no assurance can be given that the U.S. Government
will always do so, because the U.S. Government is not so obligated by law. U.S. Treasury notes and bonds typically pay
coupon interest semi-annually and repay the principal at maturity.
When-Issued and Delayed-Delivery Securities. The Fund may purchase securities on a when-issued or
delayed-delivery basis (i.e., delivery and payment can take place between a month and 120 days after the date of the
transaction). At the time the Fund makes the commitment to purchase securities on a when-issued or delayed-delivery
basis, the Fund will record the transaction and thereafter reflect the value of the securities each day in determining
the Fund's net asset value. The Fund will not purchase securities on a when-issued or delayed-delivery basis if, as a
result, more than 15% of the Fund's net assets would be so invested. At the time of delivery of the securities, the
value of the securities may be more or less than the purchase price. The Fund will also establish a segregated account
with the Fund's custodian bank in which the Fund will maintain cash or liquid securities equal to or greater in value
than the Fund's purchase commitments for such when-issued or delayed-delivery securities. The Sub-advisor does not
believe that the Fund's net asset value or income will be adversely affected by the Fund's purchase of securities on a
when-issued or delayed-delivery basis. For more information about when-issued securities, please see this SAI and the
Company's Prospectus under "Certain Risk Factors and Investment Methods."
Investment Policies Which May Be Changed Without Shareholder Approval. The following limitations are not
"fundamental" restrictions and may be changed by the Directors of the Company without shareholder approval. The Fund will
not:
1. Invest in warrants.
2. Invest in real estate limited partnerships.
3. Invest in mineral leases.
4. Pledge, mortgage, or hypothecate the Fund's assets, except to the extent necessary to secure permitted
borrowings and to the extent related to the deposit of assets in escrow in connection with (i) the writing of covered put
and call options, (ii) the purchase of securities on a forward-commitment or delayed-delivery basis, and (iii) collateral
and initial or variation margin arrangements with respect to currency transactions, options, futures contracts, including
those relating to indices, and options on futures contracts or indices.
5. Make short sales of portfolio securities or purchase any portfolio securities on margin, except for such
short-term credits as are necessary for the clearance of transactions. The deposit or payment by the Fund of initial or
variation margin in connection with futures or options transactions is not considered to be a securities purchase on
margin. The Fund may engage in short sales if, at the time of the short sale, the Fund owns or has the right to acquire
an equal amount of the security being sold at no additional cost ("selling against the box").
ASAF ALLIANCE GROWTH FUND:
Investment Objective: The Fund's investment objective is to seek long-term growth of capital by investing predominantly
in the equity securities (common stocks, securities convertible into common stocks and rights and warrants to subscribe
for or purchase common stocks) of a limited number of large, carefully selected, high-quality U.S. companies that, in the
judgment of the Fund's Sub-advisor, are likely to achieve superior earnings growth.
Investment Policies:
The Sub-advisor's research staff generally follows a primary research universe of approximately 500 companies
that are considered by the Sub-advisor to have strong management, superior industry positions, excellent balance sheets
and the ability to demonstrate superior earnings growth. As one of the largest multi-national investment firms, the
Sub-advisor has access to considerable information concerning all of the companies followed, an in-depth understanding of
the products, services, markets and competition of these companies and a good knowledge of the managements of most of the
companies in its research universe.
The Sub-advisor's analysts prepare their own earnings estimates and financial models for each company followed.
While each analyst has responsibility for following companies in one or more identified sectors and/or industries, the
lateral structure of the Sub-advisor's research organization and constant communication among the analysts result in
decision-making based on the relative attractiveness of stocks among industry sectors. The focus during this process is
on the early recognition of change on the premise that value is created through the dynamics of changing company,
industry and economic fundamentals. Research emphasis is placed on the identification of companies whose substantially
above average prospective earnings growth is not fully reflected in current market valuations.
The Sub-advisor continually reviews its primary research universe of approximately 600 companies to maintain a
list of favored securities, the "Alliance 100," considered by the Sub-advisor to have the most clearly superior earnings
potential and valuation attraction. The Sub-advisor's concentration on a limited universe of companies allows it to
devote its extensive resources to constant intensive research of these companies. Companies are constantly added to and
deleted from the Alliance 100 as their fundamentals and valuations change. The Sub-advisor's Large Cap Growth Group, in
turn, further refines, on a weekly basis, the selection process for the Fund with each portfolio manager in the Group
selecting 25 such companies that appear to the manager most attractive at current prices. These individual ratings are
then aggregated and ranked to produce a composite list of the 25 most highly regarded stocks, the "Favored 25."
Approximately 70% of the Fund's net assets will usually be invested in the Favored 25 with the balance of the Fund's
investment portfolio consisting principally of other stocks in the Alliance 100. Fund emphasis upon particular
industries or sectors is a by-product of the stock selection process rather than the result of assigned targets or ranges.
The Sub-advisor expects the average weighted market capitalization of companies represented in the Fund (i.e.,
the number of a company's shares outstanding multiplied by the price per share) to normally be in the range of or exceed
the average weighted market capitalization of companies comprising the Standard & Poor's 500 Composite Stock Price Index,
a widely recognized unmanaged index of market activity based upon the aggregate performance of a selected portfolio of
publicly traded stocks, including monthly adjustments to reflect the reinvestment of dividends and distributions.
Investments will be made upon their potential for capital appreciation.
Convertible Securities. The Fund may invest in convertible securities, which are convertible at a stated
exchange rate into common stock. Prior to their conversion, convertible securities have the same general characteristics
as non-convertible debt securities, as they provide a stable stream of income with generally higher yields than those of
equity securities of the same or similar issuers. As with all debt securities, the market value of convertible
securities tends to decline as interest rates increase and, conversely, to increase as interest rates decline.
Convertible securities generally offer lower interest or dividend yields than non-convertible debt securities of similar
quality. However, when the market price of the common stock underlying a convertible security increases, the price of
the convertible security increasingly reflects the value of the underlying common stock and may rise accordingly. As the
market price of the underlying common stock declines, the convertible security tends to trade increasingly on a yield
basis, and thus may not depreciate to the same extent as the underlying common stock. Convertible securities rank senior
to common stocks on an issuer's capital structure. They are consequently of higher quality and entail less risk than the
issuer's common stock, although the extent to which such risk is reduced depends in large measure upon the degree to
which the convertible security sells above its value as a fixed income security. The Fund may invest up to 20% of its
net assets in the convertible securities of companies whose common stocks are eligible for purchase by the Fund under the
investment policies described above. Additional information about convertible securities is included in the Company's
Prospectus under "Certain Risk Factors and Investment Methods."
Rights and Warrants. The Fund may invest up to 5% of its net assets in rights or warrants, but will do so only
if the equity securities themselves are deemed appropriate by the Sub-advisor for inclusion in the Fund. Rights and
warrants may be more speculative than certain other types of investments in that they do not entitle a holder to
dividends or voting rights with respect to the securities which may be purchased nor do they represent any rights in the
assets of the issuing company. Also, the value of a right or warrant does not necessarily change with the value of the
underlying securities. Additional information about warrants is included in the Trust's Prospectus under "Certain Risk
Factors and Investment Methods."
Foreign Securities. The Fund may invest up to 15% of the value of its total assets in securities of foreign
issuers whose common stocks are eligible for purchase by the Fund under the investment policies described above.
Additional information about foreign securities and their risks is included in this Statement and the Trust's Prospectus
under "Certain Risk Factors and Investment Methods."
Illiquid Securities. The Fund will not maintain more than 15% of its net assets in illiquid securities. For
this purpose, illiquid securities include, among others, direct placements or other securities that are subject to legal
or contractual restrictions on resale or for which there is no readily available market (e.g., trading in the security is
suspended or, in the case of unlisted securities, market makers do not exist or will not entertain bids or offers).
Historically, illiquid securities have included securities subject to contractual or legal restrictions on resale
because they have not been registered under the Securities Act of 1933, as amended (the "Securities Act") and securities
that are otherwise not readily marketable. Securities that have not been registered under the Securities Act are
referred to as private placements or restricted securities and are purchased directly from the issuer or in the secondary
market. Mutual funds do not typically hold a significant amount of these restricted or other illiquid securities because
of the potential for delays on resale and uncertainty in valuation. A mutual fund might have to register such restricted
securities in order to dispose of them, resulting in additional expense and delay. Adverse market conditions could
impede such a public offering of securities.
The Fund may invest up to 5% of its net assets (taken at market value) in restricted securities (excluding Rule
144A securities) issued under Section 4(2) of the Securities Act, which exempts from registration "transactions by an
issuer not involving any public offering." Section 4(2) instruments are restricted in the sense that they can only be
resold through the issuing dealers to institutional investors and in private transactions; they cannot be resold to the
general public without registration.
In recent years, however, a large institutional market has developed for certain securities that are not
registered under the Securities Act, including foreign securities. Institutional investors depend on an efficient
institutional market in which the unregistered security can be readily resold or on an issuer's ability to honor a demand
for repayment. The fact that there are contractual or legal restrictions on resale to the general public or to certain
institutions may not be indicative of the liquidity of such investments.
Rule 144A under the Securities Act allows such a broader institutional trading market for securities otherwise
subject to restriction on resale to the general public. Rule 144A has produced enhanced liquidity for many restricted
securities, and market liquidity for such securities may continue to expand as a result of this regulation and the
consequent existence of the PORTAL System, which is an automated system for the trading, clearance and settlement of
unregistered securities of domestic and foreign issuers sponsored by the National Association of Securities Dealers, Inc.
The Fund's Sub-advisor, acting under guidelines adopted by the Trust's Board of Directors, will monitor the
liquidity of restricted securities in the Fund that are eligible for resale pursuant to Rule 144A. In reaching liquidity
decisions, the Sub-advisor will consider, among others, the following factors: (1) the frequency of trades and quotes
for the security; (2) the number of dealers making quotations to purchase or sell the security; (3) the number of other
potential purchasers of the security; (4) the number of dealers undertaking to make a market in the security; and (5) the
nature of the security (including its unregistered nature) and the nature of the marketplace for the security (e.g., the
time needed to dispose of the security, the method of soliciting offers and the mechanics of the transfer.
Options and Futures:
While the Fund does not anticipate utilizing them on a regular basis, the Fund may from time to time may engage
in options and futures transactions as described below. Additional information about option, futures and their risks is
included in this Statement and the Trust's Prospectus under "Certain Risk Factors and Investment Methods."
Options on Securities. The Fund may write exchange-traded call options on common stocks, and may purchase and
sell exchange-traded call and put options on common stocks written by others or combinations thereof. The Fund will not
write put options.
Generally, the opportunity for profit from the writing of options is higher, and consequently the risks are
greater, when the stocks involved are lower priced or volatile, or both. While an option that has been written is in
force, the maximum profit that may be derived from the optioned stock is the premium less brokerage commissions and
fees. The Fund will not write a call unless the Fund at all times during the option period owns either (a) the optioned
securities or has an absolute and immediate right to acquire that security without additional cash consideration (or for
additional cash consideration held in a segregated account by its custodian) upon conversion or exchange of other
securities held in its portfolio or (b) a call option on the same security and in the same principal amount as the call
written where the exercise price of the call held (i) is equal to or less than the exercise price of the call written or
(ii) is greater than the exercise price of the call written if the difference is maintained by the Fund in liquid assets
in a segregated account with its Custodian.
Premiums received by the Fund in connection with writing call options will vary widely. Commissions, stock
transfer taxes and other expenses of the Fund must be deducted from such premium receipts. Calls written by the Fund
will ordinarily be sold either on a national securities exchange or through put and call dealers, most, if not all, of
whom are members of a national securities exchange on which options are traded, and will be endorsed or guaranteed by a
member of a national securities exchange or qualified broker-dealer, which may be Donaldson, Lufkin & Jenrette Securities
Corporation, an affiliate of the Sub-advisor. The endorsing or guaranteeing firm requires that the option writer (in
this case the Fund) maintain a margin account containing either corresponding stock or other equity as required by the
endorsing or guaranteeing firm.
The Fund will not sell a call option written by it if, as a result of the sale, the aggregate of the Fund's
portfolio securities subject to outstanding call options (valued at the lower of the option price or market value of such
securities) would exceed 15% of the Fund's total assets.
The Fund may purchase or write options on securities of the types in which it is permitted to invest in privately
negotiated (i.e., over-the-counter) transactions. The Sub-advisor has adopted procedures for monitoring the
creditworthiness of financial institutions with which over-the-counter options transactions are effected.
In buying a call, the Fund would be in a position to realize a gain if, during the option period, the price of
the shares increased by an amount in excess of the premium paid and commissions payable on exercise. It would realize a
loss if the price of the security declined or remained the same or did not increase during the period by more than the
amount of the premium and commissions payable on exercise. In buying a put, the Fund would realize a loss if the price
of the security increased or remained the same or did not decrease during that period by more than the amount of the
premium and commissions payable on exercise. In addition, the Fund could realize a gain or loss on such options by
selling them.
The aggregate cost of all outstanding options purchased and held by the Fund, including options on market indices
as described below, will at no time exceed 10% of the Fund's total assets.
Options on Market Indices. The Fund may purchase and sell exchange-traded index options. Through the purchase
of listed index options, the portfolio could achieve many of the same objectives as through the use of options on
individual securities. Price movements in the Fund's securities probably will not correlate perfectly with movements in
the level of the index and, therefore, the Fund would bear a risk of loss on index options purchased by it if favorable
price movements of the hedged portfolio securities do not equal or exceed losses on the options or if adverse price
movements of the hedged portfolio securities are greater than gains realized from the options.
Stock Index Futures. The Fund may purchase and sell stock index futures contracts. A stock index futures
contract is a bilateral agreement pursuant to which two parties agree to take or make delivery of an amount of liquid
assets equal to a specified dollar amount multiplied by the difference between the stock index value at the close of the
last trading day of the contract and the price at which the futures contract is originally struck. No physical delivery
of the underlying stocks in the index is made. The Fund will not purchase or sell options on stock index futures
contracts.
The Fund may not purchase or sell a stock index future if, immediately thereafter, more than 30% of its total
assets would be hedged by stock index futures. The Fund may not purchase or sell a stock index future if, immediately
thereafter, the sum of the amount of margin deposits on the Fund's existing futures positions would exceed 5% of the
market value of the Fund's total assets.
Currently, stock index futures contracts can be purchased or sold with respect to the Standard & Poor's 500 Stock
Index on the Chicago Mercantile Exchange, the New York Stock Exchange Composite Index on the New York Futures Exchange
and the Value Line Stock Index on the Kansas City Board of Trade. The Sub-advisor does not believe that differences in
composition of the three indices will create any differences in the price movements of the stock index futures contracts
in relation to the movements in such indices. However, such differences in the indices may result in differences in
correlation of the futures contracts with movements in the value of the securities being hedged. The Fund reserves the
right to purchase or sell stock index futures contracts that may be created in the future.
The nature of initial margin in futures transactions is different from that of margin in security transactions in
that futures contract margin does not involve the borrowing of funds to finance transactions. Rather, the initial margin
is in the nature of a performance bond or good faith deposit on the contract which is returned to the Fund upon
termination of the futures contract, assuming all contractual obligations have been satisfied.
There are several risks in connection with the use of stock index futures by the Fund as a hedging device. One
risk arises because of the imperfect correlation between movements in the price of the stock index futures and movements
in the price of the securities which are the subject of the hedge. The price of the stock index futures may move more
than or less than the price of the securities being hedged. If the price of the stock index futures moves less than the
price of the securities which are the subject of the hedge, the hedge will not be fully effective but, if the price of
the securities being hedged has moved in an unfavorable direction, the Fund would be in a better position than if it had
not hedged at all. If the price of the securities being hedged has moved in a favorable direction, this advantage will
be partially offset by the loss on the index future. If the price of the future moves more than the price of the stock,
the Fund will experience either a loss or gain on the future which will not be completely offset by movements in the
price of the securities which are the subject of the hedge. To compensate for the imperfect correlation of movements in
the price of securities being hedged and movements in the price of the stock index futures, the Fund may buy or sell
stock index futures contracts in a greater dollar amount than the dollar amount of securities being hedged if the
volatility over a particular time period of the prices of such securities has been greater than the volatility over such
time period for the index, or if otherwise deemed to be appropriate by the Sub-advisor. Conversely, the Fund may buy or
sell fewer stock index futures contracts if the volatility over a particular time period of the prices of the securities
being hedged is less than the volatility over such time period of the stock index, or if otherwise deemed to be
appropriate by the Sub-advisor.
Where futures are purchased to hedge against a possible increase in the price of stock before the Fund is able to
invest its cash (or cash equivalents) in stocks (or options) in an orderly fashion, it is possible that the market may
decline instead. If the Sub-advisor then concludes not to invest in stock or options at that time because of concern as
to possible further market decline or for other reasons, the Fund will realize a loss on the futures contract that is not
offset by a reduction in the price of securities purchased.
The Fund's Sub-advisor intends to purchase and sell futures contracts on the stock index for which it can obtain
the best price with due consideration to liquidity.
Portfolio Turnover. The Fund's investment policies as described above are based on the Sub-advisor's assessment
of fundamentals in the context of changing market valuations. Therefore, they may under some conditions involve frequent
purchases and sales of shares of a particular issuer as well as the replacement of securities. The Sub-advisor expects
that more of its portfolio turnover will be attributable to increases and decreases in the size of particular portfolio
positions rather than to the complete elimination of a particular issuer's securities from the Fund. For more information
on portfolio turnover, see this SAI and the Company's Prospectus under "Portfolio Turnover."
Investment Policies Which May Be Changed Without Shareholder Approval. The following limitations are applicable
to the ASAF Alliance Growth Fund. These limitations are not "fundamental" restrictions and may be changed without
shareholder approval. The Fund will not:
1. Invest in companies for the purpose of exercising control;
2. Purchase the securities of any other investment company or investment trust, except in compliance with
the 1940 Act;
3. Invest in interests in oil, gas or other mineral exploration or development programs, except that it may
purchase and sell securities of companies that deal in oil, gas or other mineral exploration or development programs;
4. Make short sales of securities or purchase securities on margin except for such short-term credits as
may be necessary for the clearance of transactions;
5. Purchase illiquid securities if immediately after such investment more than 15% of the Fund's net assets
(taken at market value) would be so invested;
Whenever any investment restriction states a maximum percentage of the Fund's assets which may be invested in any
security or other asset, it is intended that such percentage be determined immediately after and as a result of the
Fund's acquisition of such securities or other assets. Accordingly, any later increase or decrease in percentage beyond
the specified limitation resulting from changes in values or net assets will not be considered a violation of any such
maximum.
ASAF Marsico Capital Growth Fund:
Investment Objective: The investment objective of the Fund is to seek capital growth. Realization of income is not an
investment objective and any income realized on the Fund's investments, therefore, will be incidental to the Fund's
objective.
Investment Policies:
Futures, Options and Other Derivative Instruments. The Fund may enter into futures contracts on securities,
financial indices, and foreign currencies and options on such contracts, and may invest in options on securities,
financial indices and foreign currencies and forward contracts. The Fund will not use futures contracts and options for
leveraging purposes. The Fund will not enter into any futures contracts or options on futures contracts if the aggregate
amount of the Fund's commitments under outstanding futures contract positions and options on futures contracts written by
the Fund would exceed the market value of the total assets of the Fund. The Fund may invest in forward currency
contracts with stated values of up to the value of the Fund's assets.
The Fund may buy or write options in privately negotiated transactions on the types of securities and on indices
based on the types of securities in which the Fund is permitted to invest directly. The Fund will effect such
transactions only with investment dealers and other financial institutions (such as commercial banks or savings and loan
institutions) deemed creditworthy by the Sub-advisor, and only pursuant to procedures adopted by the Sub-advisor for
monitoring the creditworthiness of those entities. To the extent that an option bought or written by the Fund in a
negotiated transaction is illiquid, the value of an option bought or the amount of the Fund's obligations under an option
written by the Fund, as the case may be, will be subject to the Fund's limitation on illiquid investments. In the case
of illiquid options, it may not be possible for the Fund to effect an offsetting transaction at a time when the
Sub-advisor believes it would be advantageous for the Fund to do so. For a description of these strategies and
instruments and certain risks involved therein, see this SAI and the Company's Prospectus under "Certain Risk Factors and
Investment Methods."
Interest Rate Swaps and Purchasing and Selling Interest Rate Caps and Floors. In addition to the strategies
noted above, the Fund, in order to attempt to protect the value of its investments from interest rate or currency
exchange rate fluctuations, may enter into interest rate swaps and may buy or sell interest rate caps and floors. The
Fund expects to enter into these transactions primarily to preserve a return or spread on a particular investment or
portion of its investments. The Fund also may enter into these transactions to protect against any increase in the price
of securities the Fund may consider buying at a later date. The Fund does not intend to use these transactions as
speculative investments. Interest rate swaps involve the exchange by the Fund with another party of their respective
commitments to pay or receive interest, e.g., an exchange of floating rate payments for fixed rate payments. The
exchange commitments can involve payments to be made in the same currency or in different currencies. The purchase of an
interest rate cap entitles the purchaser, to the extent that a specified index exceeds a predetermined interest rate, to
receive payments of interest on a contractually based principal amount from the party selling the interest rate cap. The
purchase of an interest rate floor entitles the purchaser, to the extent that a specified index falls below a
predetermined interest rate, to receive payments of interest on a contractually based principal amount from the party
selling the interest rate floor.
The Fund may enter into interest rate swaps, caps and floors on either an asset-based or liability-based basis,
depending upon whether it is hedging its assets or its liabilities, and will usually enter into interest rate swaps on a
net basis, i.e., the two payment streams are netted out, with the Fund receiving or paying, as the case may be, only the
net amount of the two payments. The net amount of the excess, if any, of the Fund's obligations over its entitlements
with respect to each interest rate swap will be calculated on a daily basis and an amount of cash or other liquid assets
having an aggregate net asset value at least equal to the accrued excess will be maintained in a segregated account by
the Fund's custodian. If the Fund enters into an interest rate swap on other than a net basis, the Fund would maintain a
segregated account in the full amount accrued on a daily basis of the Fund's obligations with respect to the swap. The
Fund will not enter into any interest rate swap, cap or floor transaction unless the unsecured senior debt or the
claims-paying ability of the other party thereto is rated in one of the three highest rating categories of at least one
nationally recognized statistical rating organization at the time of entering into such transaction. The Sub-advisor
will monitor the creditworthiness of all counterparties on an ongoing basis. If there is a default by the other party to
such a transaction, the Fund will have contractual remedies pursuant to the agreements related to the transaction.
The swap market has grown substantially in recent years with a large number of banks and investment banking firms
acting both as principals and as agents utilizing standardized swap documentation. The Sub-advisor has determined that,
as a result, the swap market has become relatively liquid. Caps and floors are more recent innovations for which
standardized documentation has not yet been developed and, accordingly, they are less liquid than swaps. To the extent
the Fund sells (i.e., writes) caps and floors, it will maintain in a segregated account cash or other liquid assets
having an aggregate net asset value at least equal to the full amount, accrued on a daily basis, of the Fund's
obligations with respect to any caps or floors.
There is no limit on the amount of interest rate swap transactions that may be entered into by the Fund. These
transactions may in some instances involve the delivery of securities or other underlying assets by the Fund or its
counterparty to collateralize obligations under the swap. Under the documentation currently used in those markets, the
risk of loss with respect to interest rate swaps is limited to the net amount of the payments that the Fund is
contractually obligated to make. If the other party to an interest rate swap that is not collateralized defaults, the
Fund would risk the loss of the net amount of the payments that the Fund contractually is entitled to receive. The Fund
may buy and sell (i.e., write) caps and floors without limitation, subject to the segregated account requirement
described above. For an additional discussion of these strategies, see this SAI under "Certain Risk Factors and
Investment Methods."
Repurchase Agreements and Reverse Repurchase Agreements. Subject to guidelines promulgated by the Board of
Directors of the Company, the Fund may enter into repurchase agreements. The Fund may also enter into reverse repurchase
agreements. For a description of these investment techniques, see the Company's Prospectus under "Certain Risk Factors
and Investment Methods."
High-Yield/High-Risk Securities. High-yield/high-risk securities (or "junk" bonds) are debt securities rated
below investment grade by the primary rating agencies such as Standard & Poor's Rating Services ("Standard & Poor's") and
Moody's Investors Service, Inc. ("Moody's"). The Fund will not invest more than 5% of its total assets in
high-yield/high risk and mortgage- and asset-backed securities.
The value of lower quality securities generally is more dependent on the ability of the issuer to meet interest
and principal payments (i.e. credit risk) than is the case for higher quality securities. Conversely, the value of
higher quality securities may be more sensitive to interest rate movements than lower quality securities. The Fund will
not purchase debt securities rated below "CCC-" by Standard & Poor's or "Caa" by Moody's. The Fund may also purchase
unrated bonds of foreign and domestic issuers. For an additional discussion of high-yield/high-risk and mortgage- and
asset-backed securities, see this SAI and the Company's Prospectus under "Certain Risk Factors and Investment Methods."
Zero Coupon, Pay-in-Kind, and Step Coupon Bonds. The Fund may purchase zero coupon, pay-in-kind, and step coupon
bonds. Zero coupon bonds are debt securities that do not pay periodic interest, but are issued at a discount from their
face value. The discount approximates the total amount of interest the security will accrue from the date of issuance to
maturity. Pay-in-kind bonds normally give the issuer the option to pay cash at a coupon payment date or give the holder
of the security a similar bond with the same coupon rate and a face value equal to the amount of the coupon payment that
would have been made. Step coupon bonds begin to pay coupon interest, or pay an increased rate of interest, at some time
after they are issued. The discount at which step coupon bonds trade depends on the time remaining until cash payments
begin, prevailing interest rates, the liquidity of the security and the perceived credit quality of the issuer. The
market value of zero coupon, pay-in-kind and step coupon bonds generally will fluctuate more in response to changes in
interest rates than will conventional interest-paying securities with comparable maturities. For an additional
discussion of zero coupon securities, see this SAI under "Certain Risk Factors and Investment Methods."
Investment Policies Which May Be Changed Without Shareholder Approval. The following limitations are applicable
to the ASAF Marsico Capital Growth Fund. These limitations are not "fundamental" restrictions, and may be changed by the
Directors without shareholder approval.
1. The Fund does not currently intend to sell securities short, unless it owns or has the right to obtain
securities equivalent in kind and amount to the securities sold short without the payment of any additional consideration
therefor, and provided that transactions in futures, options, swaps and forward contracts are not deemed to constitute
selling securities short.
2. The Fund does not currently intend to purchase securities on margin, except that the Fund may obtain
such short-term credits as are necessary for the clearance of transactions, and provided that margin payments and other
deposits in connection with transactions in futures, options, swaps and forward contracts shall not be deemed to
constitute purchasing securities on margin.
3. The Fund may not mortgage or pledge any securities owned or held by the Fund in amounts that exceed, in
the aggregate, 15% of the Fund's net asset value, provided that this limitation does not apply to (i) reverse repurchase
agreements; (ii) deposits of assets on margin; (iii) guaranteed positions in futures, options, swaps or forward
contracts; or (iv) the segregation of assets in connection with such contracts.
4. The Fund does not currently intend to purchase any securities or enter into a repurchase agreement if,
as a result, more than 15% of its net assets would be invested in repurchase agreements not entitling the holder to
payment of principal and interest within seven days and in securities that are illiquid by virtue of legal or contractual
restrictions on resale or the absence of a readily available market. The Directors of the Company, or the Sub-advisor
acting pursuant to authority delegated by the Directors, may determine that a readily available market exists for
securities eligible for resale pursuant to Rule 144A under the Securities Act of 1933, as amended, or any successor to
such rule, and Section 4(2) commercial paper. Accordingly, such securities may not be subject to the foregoing
limitation.
5. The Fund may not invest in companies for the purpose of exercising control or management.
ASAF Janus CAPITAL Growth Fund:
Investment Objective: The investment objective of the Fund is to seek growth of capital. Realization of income is not a
significant investment consideration and any income realized on the Fund's investments, therefore, will be incidental to
the Fund's objective.
Investment Policies:
Corporate Bonds and Debentures. The Fund may purchase corporate bonds and debentures, including bonds rated
below investment grade. The Fund will not invest more than 35% of its net assets in bonds rated below investment grade
by the primary rating agencies. For a discussion of lower rated securities, see this SAI and the Company's Prospectus
under "Certain Risk Factors and Investment Methods."
Futures, Options and Other Derivative Instruments. The Fund may enter into futures contracts on securities,
financial indices, and foreign currencies and options on such contracts, and may invest in options on securities,
financial indices and foreign currencies, forward contracts and swaps. The Fund will not enter into any futures
contracts or options on futures contracts if the aggregate amount of the Fund's commitments under outstanding futures
contract positions and options on futures contracts written by the Fund would exceed the market value of the total assets
of the Fund (i.e., no leveraging). The Fund may invest in forward currency contracts with stated values of up to the
value of the Fund's assets.
The Fund may buy or write options in privately negotiated transactions on the types of securities and indices
based on the types of securities in which the Fund is permitted to invest directly. The Fund will effect such
transactions only with investment dealers and other financial institutions (such as commercial banks or savings and loan
institutions) deemed creditworthy by the Sub-advisor, and only pursuant to procedures adopted by the Sub-advisor for
monitoring the creditworthiness of those entities. To the extent that an option bought or written by the Fund in a
negotiated transaction is illiquid, the value of an option bought or the amount of the Fund's obligations under an option
written by the Fund, as the case may be, will be subject to the Fund's limitation on illiquid investments. In the case
of illiquid options, it may not be possible for the Fund to effect an offsetting transaction at a time when the
Sub-advisor believes it would be advantageous for the Fund to do so. For a description of these strategies and
instruments and certain risks involved therein, see this SAI and the Company's Prospectus under "Certain Risk Factors and
Investment Methods."
Interest Rate Swaps and Purchasing and Selling Interest Rate Caps and Floors. In addition to the strategies
noted above, the Fund, in order to attempt to protect the value of its investments from interest rate or currency
exchange rate fluctuations, may enter into interest rate swaps and may buy or sell interest rate caps and floors. The
Fund expects to enter into these transactions primarily to preserve a return or spread on a particular investment or
portion of its investments. The Fund also may enter into these transactions to protect against any increase in the price
of securities the Fund may consider buying at a later date. The Fund does not intend to use these transactions as a
speculative investments. Interest rate swaps involve the exchange by the Fund with another party of their respective
commitments to pay or receive interest, e.g., an exchange of floating rate payments for fixed rate payments. The
exchange commitments can involve payments to be made in the same currency or in different currencies. The purchase of an
interest rate cap entitles the purchaser, to the extent that a specified index exceeds a predetermined interest rate, to
receive payments of interest on a contractually based principal amount from the party selling the interest rate cap. The
purchase of an interest rate floor entitles the purchaser, to the extent that a specified index falls below a
predetermined interest rate, to receive payments of interest on a contractually based principal amount from the party
selling the interest rate floor.
The Fund may enter into interest rate swaps, caps and floors on either an asset-based or liability-based basis,
depending upon whether it is hedging its assets or its liabilities, and will usually enter into interest rate swaps on a
net basis, i.e., the two payment streams are netted out, with the Fund receiving or paying, as the case may be, only the
net amount of the two payments. The net amount of the excess, if any, of the Fund's obligations over its entitlements
with respect to each interest rate swap will be calculated on a daily basis and an amount of cash or other liquid assets
having an aggregate net asset value at least equal to the accrued excess will be maintained in a segregated account by
the Fund's custodian. If the Fund enters into an interest rate swap on other than a net basis, the Fund would maintain a
segregated account in the full amount accrued on a daily basis of the Fund's obligations with respect to the swap. The
Fund will not enter into any interest rate swap, cap or floor transaction unless the unsecured senior debt or the
claims-paying ability of the other party thereto is rated in one of the three highest rating categories of at least one
nationally recognized statistical rating organization at the time of entering into such transaction. The Sub-advisor
will monitor the creditworthiness of all counterparties on an ongoing basis. If there is a default by the other party to
such a transaction, the Fund will have contractual remedies pursuant to the agreements related to the transaction.
The swap market has grown substantially in recent years with a large number of banks and investment banking firms
acting both as principals and as agents utilizing standardized swap documentation. The Sub-advisor has determined that,
as a result, the swap market has become relatively liquid. Caps and floors are more recent innovations for which
standardized documentation has not yet been developed and, accordingly, they are less liquid than swaps. To the extent
the Fund sells (i.e., writes) caps and floors, it will maintain in a segregated account cash or other liquid assets
having an aggregate net asset value at least equal to the full amount, accrued on a daily basis, of the Fund's
obligations with respect to any caps or floors.
There is no limit on the amount of interest rate swap transactions that may be entered into by the Fund. These
transactions may in some instances involve the delivery of securities or other underlying assets by the Fund or its
counterparty to collateralize obligations under the swap. Under the documentation currently used in those markets, the
risk of loss with respect to interest rate swaps is limited to the net amount of the payments that the Fund is
contractually obligated to make. If the other party to an interest rate swap that is not collateralized defaults, the
Fund would risk the loss of the net amount of the payments that the Fund contractually is entitled to receive. The Fund
may buy and sell (i.e., write) caps and floors without limitation, subject to the segregated account requirement
described above. For an additional discussion of these strategies, see this SAI under "Certain Risk Factors and
Investment Methods."
Investment Company Securities. From time to time, the Fund may invest in securities of other investment
companies, subject to the provisions of Section 12(d)(1) of the 1940 Act. The Fund may invest in securities of money
market funds managed by the Sub-advisor subject to the terms of an exemptive order obtained by the Sub-advisor and the
funds that are advised or sub-advised by the Sub-advisor. Under such order, the Fund will limit its aggregate investment
in a money market fund managed by the Sub-advisor to the greater of (i) 5% of its total assets or (ii) $2.5 million,
although the Company's Board of Directors may increase this limit up to 25% of the Company's total assets.
Repurchase Agreements and Reverse Repurchase Agreements. Subject to guidelines promulgated by the Directors of
the Company, the Fund may enter into repurchase agreements. The Fund may also enter into reverse repurchase agreements.
Pursuant to an exemptive order granted by the SEC, the Fund and other funds advised or sub-advised by the Sub-Advisor may
invest in repurchase agreements and other money market instruments through a joint trading account. For a description of
these investment techniques, see the Company's Prospectus under "Certain Risk Factors and Investment Methods."
Other Income-Producing Securities. Other types of income producing securities that the Fund may purchase
include, but are not limited to, the following types of securities:
Variable and Floating Rate Obligations. These types of securities are relatively long-term instruments
that often carry demand features permitting the holder to demand payment of principal at any time or at specified
intervals prior to maturity.
Standby Commitments. These instruments, which are similar to a put, give the Fund the option to obligate
a broker, dealer or bank to repurchase a security held by that Fund at a specified price.
Tender Option Bonds. Tender option bonds are relatively long-term bonds that are coupled with the
agreement of a third party (such as a broker, dealer or bank) to grant the holders of such securities the option to
tender the securities to the institution at periodic intervals.
Inverse Floaters. Inverse floaters are debt instruments whose interest bears an inverse relationship to
the interest rate on another security. The Fund will not invest more than 5% of its assets in inverse floaters. The Fund
will purchase standby commitments, tender option bonds and instruments with demand features primarily for the purpose of
increasing the liquidity of the Fund.
Investment Policies Which May Be Changed Without Shareholder Approval. The following limitations are not
"fundamental" investment restrictions and may be changed by the Directors of the Company without shareholder approval.
The Fund will not:
1. Purchase a security if as a result, more than 15% of its net assets in the aggregate, at market value,
would be invested in securities which cannot be readily resold because of legal or contractual restrictions on resale or
for which there is no readily available market, or repurchase agreements maturing in more than seven days or securities
used as a cover for written over-the-counter options, if any. The Directors of the Company, the Investment Manager or
the Sub-advisor acting pursuant to authority delegated by the Directors, may determine that a readily available market
exists for securities eligible for resale pursuant to Rule 144A under the Securities Act of 1933, or any successor to
such rule, and therefore that such securities are not subject to the foregoing limitation;
2. Enter into any futures contracts or options on futures contracts for purposes other than bona fide
hedging transactions (as defined by the CFTC) if as a result the sum of the initial margin deposits and premium required
to establish positions in futures contracts and related options that do not fall within the definition of bona fide
hedging transactions would exceed 5% of the fair market value of the Fund's net assets;
3. Enter into any futures contracts if the aggregate amount of the Fund's commitments under outstanding
futures contracts positions of the Fund would exceed the market value of the total assets of the Fund;
4. Sell securities short, unless it owns or has the right to obtain securities equivalent in kind and
amount to the securities sold short, and provided that transactions in options, swaps and forward futures contracts are
not deemed to constitute selling securities short;
5. Mortgage or pledge any securities owned or held by the Fund in amounts that exceed, in the aggregate,
15% of the Fund's net asset value, provided that this limitation does not apply to reverse repurchase agreements or in
the case of assets deposited to margin or guarantee positions in futures, options, swaps or forward contracts or placed
in a segregated account in connection with such contracts;
6. Invest in companies for the purpose of exercising management or control;
7. Purchase securities of open-end or closed-end investment companies except in compliance with the
Investment Company Act of 1940 or the conditions of any order of exemption from the SEC regarding the purchase of
securities of money market funds managed by the Sub-advisor or its affiliates; or
8. Purchase securities on margin, except (i) for use of short-term credit necessary for clearance of
purchases of portfolio securities and (ii) the Fund may make margin deposits in connection with futures contracts or
other permissible investments.
ASAF SANFORD BERNSTEIN MANAGED INDEX 500 FUND:
Investment Objective: The investment objective of the ASAF Sanford Bernstein Managed Index 500 Fund (formerly, the ASAF
Bankers Trust Managed Index 500 Fund) is to outperform the Standard & Poor's 500 Composite Stock Price Index (the "S&P
500(R)") through stock selection resulting in different weightings of common stocks relative to the index.
Investment Policies:
As a diversified fund, no more than 5% of the assets of the Fund may be invested in the securities of one issuer
(other than U.S. Government Securities), except that up to 25% of the Fund's assets may be invested without regard to
this limitation. The Fund will not invest more than 25% of its assets in the securities of issuers in any one industry.
In the unlikely event that the S&P 500 should concentrate to an extent greater than that amount, the Fund's ability to
achieve its objective may be impaired.
About the S&P 500. The Fund is not sponsored, endorsed, sold or promoted by Standard & Poor's, a division of The
McGraw-Hill Companies, Inc. ("S&P"). S&P makes no representation or warranty, express or implied, to the shareholders of
the Fund or any member of the public regarding the advisability of investing in securities generally or in the Fund
particularly or the ability of the S&P 500 to track general stock market performance. S&P's only relationship to the
Investment Manager or the Sub-advisor is a license provided to the Investment Manager of certain trademarks and trade
names of S&P and of the S&P 500 which is determined, composed and calculated by S&P without regard to Investment Manager,
Sub-advisor or the Fund. S&P has no obligation to take the needs of the Investment Manager, Sub-advisor or the
shareholders of the Fund into consideration in determining, composing or calculating the S&P 500. S&P is not responsible
for and has not participated in the determination of the prices and amount of Fund's shares or the timing of the issuance
or sale of the Fund's shares, or in the determination or calculation of the Fund's net asset value. S&P has no
obligation or liability in connection with the administration, marketing or trading of the Fund.
S&P does not guarantee the accuracy and/or the completeness of the S&P 500 or any data included therein and shall
have no liability for any errors, omissions, or interruptions therein. S&P makes no warranty, express or implied, as to
the results to be obtained by the Fund, shareholders of the Fund, or any other person or entity from the use of the S&P
500 or any data included therein. S&P makes no express or implied warranties and expressly disclaims all warranties of
merchantability or fitness for a particular purpose or use with respect to the S&P 500 or any data included therein.
Without limiting any of the foregoing, in no event shall S&P have any liability for any special, punitive, indirect or
consequential damages (including lost profits), even if notified of the possibility of such damages.
Short-Term Instruments. When the Fund experiences large cash inflows or anticipates substantial redemption
requests, the Fund may hold short-term investments for a limited time pending the purchase of equity securities. The
Fund's short-term instruments may consist of: (i) short-term obligations issued or guaranteed by the U.S. government or
any of its agencies or instrumentalities or by any of the states; (ii) other short-term debt securities rated AA or
higher by S&P or Aa or higher by Moody's or, if unrated, of comparable quality in the opinion of the Sub-advisor; (iii)
commercial paper; (iv) bank obligations, including negotiable certificates of deposit, time deposits and bankers'
acceptances; and (v) repurchase agreements. At the time the Fund invests in commercial paper, bank obligations or
repurchase agreements, the issuer or the issuer's parent must have outstanding debt rated AA or higher by S&P or Aa or
higher by Moody's or outstanding commercial paper or bank obligations rated A-1 by S&P or Prime-1 by Moody's; or, if no
such ratings are available, the instrument must be of comparable quality in the opinion of the Sub-advisor.
Certificates of Deposit and Bankers' Acceptances. Certificates of deposit are receipts issued by a depository
institution in exchange for the deposit of funds. The issuer agrees to pay the amount deposited plus interest to the
bearer of the receipt on the date specified on the certificate. The certificate usually can be traded in the secondary
market prior to maturity. Bankers' acceptances typically arise from short-term credit arrangements designed to enable
businesses to obtain funds to finance commercial transactions. Generally, an acceptance is a time draft drawn on a bank
by an exporter or an importer to obtain a stated amount of funds to pay for specific merchandise. The draft is then
"accepted" by a bank that, in effect, unconditionally guarantees to pay the face value of the instrument on its maturity
date. The acceptance may then be held by the accepting bank as an asset or it may be sold in the secondary market at the
going rate of discount for a specific maturity. Although maturities for acceptances can be as long as 270 days, most
acceptances have maturities of six months or less.
Commercial Paper. Commercial paper consists of short-term (usually from 1 to 270 days) unsecured promissory
notes issued by corporations in order to finance their current operations. A variable amount master demand note (which
is a type of commercial paper) represents a direct borrowing arrangement involving periodically fluctuating rates of
interest under a letter agreement between a commercial paper issuer and an institutional lender pursuant to which the
lender may determine to invest varying amounts.
U.S. Government Obligations. The Fund may invest in obligations issued or guaranteed by U.S. Government agencies
or instrumentalities. These obligations may or may not be backed by the "full faith and credit" of the United States.
In the case of securities not backed by the full faith and credit of the United States, the Fund must look principally to
the federal agency issuing or guaranteeing the obligation for ultimate repayment, and may not be able to assert a claim
against the United States itself in the event the agency or instrumentality does not meet its commitments. Government
securities in which the Fund may invest that are not backed by the full faith and credit of the United States include,
but are not limited to, obligations of the Tennessee Valley Authority, the Federal Home Loan Mortgage Corporation and the
U.S. Postal Service, each of which has the right to borrow from the U.S. Treasury to meet its obligations, and
obligations of the Federal Farm Credit System and the Federal Home Loan Banks, both of whose obligations may be satisfied
only by the individual credit of the issuing agency. Securities that are backed by the full faith and credit of the
United States include obligations of the Government National Mortgage Association, the Farmers Home Administration, and
the Export-Import Bank.
Equity Investments. The Fund may invest in equity securities listed on any domestic securities exchange or
traded in the over-the-counter market. They may or may not pay dividends or carry voting rights. Common stock occupies
the most junior position in a company's capital structure.
Warrants. Warrants entitle the holder to buy common stock from the issuer at a specific price (the strike price)
for a specific period of time. The strike price of warrants sometimes is much lower than the current market price of the
underlying securities, yet warrants are subject to similar price fluctuations. As a result, warrants may be more
volatile investments than the underlying securities.
Warrants do not entitle the holder to dividends or voting rights with respect to the underlying securities and do
not represent any rights in the assets of the issuing company. Also, the value of the warrant does not necessarily
change with the value of the underlying securities.
Convertible Securities. Convertible securities may be debt securities or preferred stocks that may be converted
into common stock or that carry the right to purchase common stock. Convertible securities entitle the holder to
exchange the securities for a specified number of shares of common stock, usually of the same company, at specified
prices within a certain period of time.
The terms of any convertible security determine its ranking in a company's capital structure. In the case of
subordinated convertible debentures, the holders' claims on assets and earnings are subordinated to the claims of other
creditors, and are senior to the claims of preferred and common shareholders. In the case of convertible preferred
stock, the holders' claims on assets and earnings are subordinated to the claims of all creditors and are senior to the
claims of common shareholders.
Futures Contracts and Options on Futures Contracts.
Futures Contracts. The Fund may enter into securities index futures contracts. U.S. futures contracts have been
designed by exchanges which have been designated "contracts markets" by the CFTC, and must be executed through a futures
commission merchant, or brokerage firm, which is a member of the relevant contract market. Futures contracts trade on a
number of exchange markets, and, through their clearing corporations, the exchanges guarantee performance of the
contracts as between the clearing members of the exchange. These investments will be made by the Fund solely for hedging
purposes. In this regard, the Fund may enter into futures contracts or options on futures related to the S&P 500.
At the same time a futures contract is purchased or sold, the Fund must allocate cash or securities as a deposit
payment ("initial margin"). It is expected that the initial margin would be approximately 1 1/2% to 5% of a contract's
face value. Daily thereafter, the futures contract is valued and the payment of "variation margin" may be required,
because each day the Fund will provide or receive cash that reflects any decline or increase in the contract's value.
Although futures contracts by their terms call for the actual delivery or acquisition of securities, in most
cases the contractual obligation is fulfilled before the date of the contract without having to make or take delivery of
the securities. The offsetting of a contractual obligation is accomplished by buying (or selling, as the case may be) on
a commodities exchange an identical futures contract calling for delivery in the same month. Such a transaction, which
is effected through a member of an exchange, cancels the obligation to make or take delivery of the securities. Because
transactions in the futures market are made, offset or fulfilled through a clearinghouse associated with the exchange on
which the contracts are traded, the Fund will incur brokerage fees when it purchases or sells futures contracts. The
liquidity of the futures market depends on participants entering into offsetting transactions rather than making or
taking delivery. To the extent participants decide to make or take delivery, liquidity in the futures market could be
reduced, thus producing distortion.
In addition, futures contracts entail other risks. Nonetheless, the Sub-advisor believes that use of such
contracts in certain circumstances will benefit the Fund. For an additional discussion of futures contracts and the
risks involved therein, see this SAI and the Company's Prospectus under "Certain Risk Factors and Investment Methods."
Options on Futures Contracts. The Fund may use stock index futures on a continual basis to "equitize" cash so
that the Fund may maintain 100% equity exposure. The Fund will not enter into any futures contracts or options on
futures contracts if immediately thereafter the amount of margin deposits on all the futures contracts of the Portfolio
and premiums paid on outstanding options on futures contracts owned by the Portfolio (other than those entered into for
bona fide hedging purposes) would exceed 5% of the market value of the total assets of the Portfolio.
A futures option gives the holder, in return for the premium paid, the right to buy (call) from or sell (put) to
the writer of the option a futures contract at a specified price at any time during the period of the option. Upon
exercise, the writer of the option is obligated to pay the difference between the cash value of the futures contract and
the exercise price. Like the buyer or seller of a futures contract, the holder, or writer, of an option has the right to
terminate its position prior to the scheduled expiration of the option by selling or purchasing an option of the same
series, at which time the person entering into the closing transaction will realize a gain or loss. The Fund will be
required to deposit initial margin and variation margin with respect to put and call options on futures contracts written
by it pursuant to brokers' requirements similar to those described above. Net option premiums received will be included
as initial margin deposits. In anticipation of an increase in securities prices, the Fund may purchase call options on
futures contracts as a substitute for the purchase of futures contracts to hedge against a possible increase in the price
of securities that the Fund intends to purchase. Similarly, if the value of the securities held by the Portfolio is
expected to decline, the Fund might purchase put options or sell call options on futures contracts rather than sell
futures contracts.
Investments in futures options involve some of the same considerations that are involved in connection with
investments in futures contracts (for example, the existence of a liquid secondary market). In addition, the purchase or
sale of an option also entails the risk that changes in the value of the underlying futures contract will not correspond
to changes in the value of the option purchased. Depending on the pricing of the option compared to either the futures
contract upon which it is based, or upon the price of the securities being hedged, an option may or may not be less risky
than ownership of the futures contract or such securities. In general, the market prices of options can be expected to
be more volatile than the market prices on the underlying futures contract. Compared to the purchase or sale of futures
contracts, however, the purchase of call or put options on futures contracts may frequently involve less potential risk
to the Fund because the maximum amount at risk is the premium paid for the options (plus transaction costs). The writing
of an option on a futures contact involves risks similar to those risks relating to the sale of futures contracts.
Options on Securities Indices. The Fund may purchase and write (sell) call and put options on securities
indices. Such options give the holder the right to receive a cash settlement during the term of the option based upon
the difference between the exercise price and the value of the index.
Options on securities indices entail certain risks. The absence of a liquid secondary market to close out
options positions on securities indices may occur, although the Portfolio generally will only purchase or write such an
option if the Sub-advisor believes the option can be closed out.
Use of options on securities indices also entails the risk that trading in such options may be interrupted if
trading in certain securities included in the index is interrupted. The Fund will not purchase such options unless the
Sub-advisor believes the market is sufficiently developed such that the risk of trading in such options is no greater
than the risk of trading in options on securities.
For an additional discussion of options and the risks involved therein, see this SAI and the Company's Prospectus
under "Certain Risk Factors and Investment Methods."
Investment Policies Which May Be Changed Without Shareholder Approval. The following limitations are not
"fundamental" restrictions and may be changed by the Directors of the Company without shareholder approval. The Fund will
not:
1. Purchase any security or evidence of interest therein on margin, except that such short-term credit as
may be necessary for the clearance of purchases and sales of securities may be obtained and except that deposits of
initial deposit and variation margin may be made in connection with the purchase, ownership, holding or sale of futures;
2. Invest for the purpose of exercising control or management;
3. Purchase securities of other investment companies except in compliance with the 1940 Act; or
4. Invest more than 15% of the Portfolio's net assets (taken at the greater of cost or market value) in
securities that are illiquid or not readily marketable, not including Rule 144A securities and commercial paper that is
sold under section 4(2) of the 1933 Act that have been determined to be liquid under procedures established by the Board
of Directors.
ASAF ALLIANCE GROWTH AND INCOME FUND:
Investment Objective: The investment objective of the Fund is to seek capital growth and income through investments
primarily in dividend-paying common stocks of good quality.
Investment Policies:
It is the policy of the Fund to seek to balance the objectives of reasonable current income and reasonable
opportunity for capital growth through investments primarily in dividend-paying common stocks of good quality. However,
it may invest whenever the economic outlook is unfavorable for common stock investments in other types of securities,
such as bonds, convertible bonds, preferred stocks, and convertible preferred stocks.
Purchases and sales of portfolio securities are made at such times and in such amounts as deemed advisable in
light of market, economic and other conditions, irrespective of the degree of portfolio turnover. The Fund engages
primarily in holding securities for investment and not for trading purposes.
Covered Call Options. Subject to market conditions, the Fund may try to realize income by writing covered call
option contracts provided that the option is listed on a domestic securities exchange. The Sub-advisor believes that the
premiums the Fund will receive for writing options can increase the Fund's income without subjecting it to substantial
risks.
A security on which an option has been written will be held in escrow by the Fund's custodian until the option
expires, is exercised, or a closing purchase transaction is made. The Fund will purchase call options only to close out
a position in an option written by it. When a security is sold from the Fund against which a call option has been
written, the Fund will effect a closing purchase transaction so as to close out any existing call option on that
security.
The premium received by the Fund upon writing a call option will increase the Fund's assets, and a corresponding
liability will be recorded and subsequently adjusted from day to day to the current value of the option written. For
example, if the current value of the option exceeds the premium received, the excess would be an unrealized loss and,
conversely, if the premium exceeds the current value, such excess would be an unrealized gain. The current value of the
option will be the last sales price on the principal exchange on which the option is traded or, in the absence of any
transactions, the mean between the closing bid and asked price.
Except as stated above, the Fund will not purchase or sell puts or calls or combinations thereof.
Additional information on covered call options and their risks is included in this Statement and the Trust's
Prospectus under "Certain Risk Factors and Investment Methods."
Stock Index Futures. The Fund may purchase and sell stock index futures contracts. A stock index futures
contract is a bilateral agreement pursuant to which two parties agree to take or make delivery of an amount of liquid
assets equal to a specified dollar amount multiplied by the difference between the stock index value at the close of the
last trading day of the contract and the price at which the futures contract is originally struck. No physical delivery
of the underlying stocks in the index is made. The Fund will not purchase or sell options on stock index futures
contracts.
The Fund may not purchase or sell a stock index future if, immediately thereafter, more than 30% of its total
assets would be hedged by stock index futures. The Fund may not purchase or sell a stock index future if, immediately
thereafter, the sum of the amount of margin deposits on the Fund's existing futures positions would exceed 5% of the
market value of the Fund's total assets.
Currently, stock index futures contracts can be purchased or sold with respect to the Standard & Poor's 500 Stock
Index on the Chicago Mercantile Exchange, the New York Stock Exchange Composite Index on the New York Futures Exchange
and the Value Line Stock Index on the Kansas City Board of Trade. The Sub-advisor does not believe that differences in
composition of the three indices will create any differences in the price movements of the stock index futures contracts
in relation to the movements in such indices. However, such differences in the indices may result in differences in
correlation of the futures contracts with movements in the value of the securities being hedged. The Fund reserves the
right to purchase or sell stock index futures contracts that may be created in the future.
The nature of initial margin in futures transactions is different from that of margin in security transactions in
that futures contract margin does not involve the borrowing of funds to finance transactions. Rather, the initial margin
is in the nature of a performance bond or good faith deposit on the contract which is returned to the Fund upon
termination of the futures contract, assuming all contractual obligations have been satisfied.
There are several risks in connection with the use of stock index futures by the Fund as a hedging device. One
risk arises because of the imperfect correlation between movements in the price of the stock index futures and movements
in the price of the securities which are the subject of the hedge. The price of the stock index futures may move more
than or less than the price of the securities being hedged. If the price of the stock index futures moves less than the
price of the securities which are the subject of the hedge, the hedge will not be fully effective but, if the price of
the securities being hedged has moved in an unfavorable direction, the Fund would be in a better position than if it had
not hedged at all. If the price of the securities being hedged has moved in a favorable direction, this advantage will
be partially offset by the loss on the index future. If the price of the future moves more than the price of the stock,
the Fund will experience either a loss or gain on the future which will not be completely offset by movements in the
price of the securities which are the subject of the hedge. To compensate for the imperfect correlation of movements in
the price of securities being hedged and movements in the price of the stock index futures, the Fund may buy or sell
stock index futures contracts in a greater dollar amount than the dollar amount of securities being hedged if the
volatility over a particular time period of the prices of such securities has been greater than the volatility over such
time period for the index, or if otherwise deemed to be appropriate by the Sub-advisor. Conversely, the Fund may buy or
sell fewer stock index futures contracts if the volatility over a particular time period of the prices of the securities
being hedged is less than the volatility over such time period of the stock index, or if otherwise deemed to be
appropriate by the Sub-advisor.
Where futures are purchased to hedge against a possible increase in the price of stock before the Fund is able to
invest its cash (or cash equivalents) in stocks (or options) in an orderly fashion, it is possible that the market may
decline instead. If the Fund then concludes not to invest in stock or options at that time because of concern as to
possible further market decline or for other reasons, the Fund will realize a loss on the futures contract that is not
offset by a reduction in the price of securities purchased.
The Fund's Sub-advisor intends to purchase and sell futures contracts on the stock index for which it can obtain
the best price with due consideration to liquidity.
For additional information regarding futures contracts and their risks, see this Statement and the Trust's
Prospectus under "Certain Risk Factors and Investment Methods."
Foreign Securities. The Fund may invest in foreign securities, but will not make any such investments unless
such securities are listed on a national securities exchange. The purchase of foreign securities entails certain
political and economic risks, and accordingly, the Fund has restricted its investments in securities in this category to
issues of high quality. Evidences of ownership of foreign securities may be held outside of the U.S., and the Fund may
be subject to the risks associated with the holding of such property overseas. Additional information on foreign
securities and their risks is included in this Statement and the Trust's Prospectus under "Certain Risk Factors and
Investment Methods."
Securities Ratings. The ratings of debt securities by S&P, Moody's, Duff & Phelps and Fitch are a generally
accepted barometer of credit risk. They are, however, subject to certain limitations from an investor's standpoint. The
rating of an issuer is heavily weighted by past developments and does not necessarily reflect probable future
conditions. There is frequently a lag between the time a rating is assigned and the time it is updated. In addition,
there may be varying degrees of difference in credit risk of securities within each rating category.
A detailed description of the debt security ratings assigned by Moody's and S&P is included in Appendix B to this
Statement.
Investment Policies Which May Be Changed Without Shareholder Approval. The following limitations are applicable
to the ASAF Alliance Growth and Income Fund. These limitations are not "fundamental restrictions and may be changed by
the Directors without shareholder approval. The Fund may not:
1. Purchase the securities of any other investment company except in compliance with the 1940 Act; and
2. Sell securities short.
ASAF MFS GROWTH WITH INCOME FUND:
Investment Objective: The investment objective of the Fund is to seek to provide reasonable current income and long-term
capital growth and income.
Investment Policies:
Corporate Debt Securities. The Fund may invest in debt securities, such as convertible and non-convertible
bonds, notes and debentures, issued by corporations, limited partnerships and similar entities.
Variable and Floating Rate Obligations. The Fund may invest in floating or variable rate securities.
Investments in variable or floating rate securities normally will involve industrial development or revenue bonds which
provide that the rate of interest is set as a specific percentage of a designated base rate, such as rates on Treasury
Bonds or Bills or the prime rate at a major commercial bank, and that a bondholder can demand payment of the obligations
on behalf of the Fund on short notice at par plus accrued interest, which amount may be more or less than the amount of
the bondholder paid for them. The maturity of floating or variable rate obligations (including participation interests
therein) is deemed to be the longer of (i) the notice period required before the Fund is entitled to receive payment of
the obligation upon demand or (ii) the period remaining until the obligation's next interest rate adjustment. If not
redeemed by the Fund through the demand feature, the obligations mature on a specified date, which may range up to thirty
years from the date of issuance.
Zero Coupon Bonds, Deferred Interest Bonds and PIK Bonds. The Fund may invest in zero coupon bonds, deferred
bonds and bonds on which the interest is payable in kind ("PIK bonds"). Zero coupon and deferred interest bonds are debt
obligations, which are issued at a significant discount from face value. The discount approximates the total amount of
interest the bonds will accrue and compound over the period until maturity or the first interest payment date at a rate
of interest reflecting the market rate of the security at the time of issuance. While zero coupon bonds do not require
the periodic payment of interest, deferred interest bonds do provide for a period of delay before the regular payment of
interest begins. PIK bonds are debt obligations, which provide that the issuer may, at its option, pay interest on such
bonds in cash or in the form of additional debt obligations. Such investments benefit the issuer by mitigating its need
for cash to meet debt service, but also require a higher rate of return to attract investors who are willing to defer
receipt of such cash. Such investments may experience greater volatility in market value than debt obligations, which
make regular payments of interest. The Fund will accrue income on such investments for tax and accounting purposes,
which are distributable to shareholders and which, because no cash is received at the time of accrual, may require the
liquidation of other portfolio securities to satisfy the Fund's distribution obligations.
Equity Securities. The Fund may invest in all types of equity securities, including the following: common
stocks, preferred stocks and preference stocks; securities such as bonds, warrants or rights that are convertible into
stocks; and depository receipts for those securities. These securities may be listed on securities exchanges, traded in
various over-the-counter markets or have no organized market.
Foreign Securities. The Fund may invest in dollar-denominated and non-dollar denominated foreign securities.
Investing in securities of foreign issuers generally involves risks not ordinarily associated with investing in
securities of domestic issuers. For a discussion of the risks involved in foreign securities, see this SAI and the
Company's Prospectus under "Certain Risk Factors and Investment Methods."
Depository Receipts. The Fund may invest in American Depository Receipts ("ADRs"), Global Depository Receipts
("GDRs") and other types of depository receipts. ADRs are certificates by a U.S. depository (usually a bank) and
represent a specified quantity of shares of an underlying non-U.S. stock on deposit with a custodian bank as
collateral. GDRs and other types of depository receipts are typically issued by foreign banks or trust companies and
evidence ownership of underlying securities issued by either a foreign or a U.S. company. Generally, ADRs are in
registered form and are designed for use in U.S. securities markets and GDRs are in bearer form and are designed for use
in foreign securities markets. For the purposes of the Fund's policy to invest a certain percentage of its assets in
foreign securities, the investments of the Fund in ADRs, GDRs and other types of depository receipts are deemed to be
investments in the underlying securities.
ADRs may be sponsored or unsponsored. A sponsored ADR is issued by a depository which has an exclusive
relationship with the issuer of the underlying security. An unsponsored ADR may be issued by any number of U.S.
depositories. Under the terms of most sponsored arrangements, depositories agree to distribute notices of shareholder
meetings and voting instructions, and to provide shareholder communications and other information to the ADR holders at
the request of the issuer of the deposited securities. The depository of an unsponsored ADR, on the other hand, is under
no obligation to distribute shareholder communications received from the issuer of the deposited securities or to pass
through voting rights to ADR holders in respect of the deposited securities. The Fund may invest in either type of ADR.
Although the U.S. investor holds a substitute receipt of ownership rather than direct stock certificates, the use of the
depository receipts in the United Sates can reduce costs and delays as well as potential currency exchange and other
difficulties. The Fund may purchase securities in local markets and direct delivery of these shares to the local
depositary of an ADR agent bank in the foreign country. Simultaneously, the ADR agents create a certificate which settles
at the Fund's custodian in five days. The Fund may also execute trades on the U.S. markets using existing ADRs. A
foreign issuer of the security underlying an ADR is generally not subject to the same reporting requirements in the
United States as a domestic issuer. Accordingly, information available to a U.S. investor will be limited to the
information the foreign issuer is required to disclose in its country and the market value of an ADR may not reflect
undisclosed material information concerning the issuer of the underlying security. ADRs may also be subject to exchange
rate risks if the underlying foreign securities are denominated in a foreign currency.
Emerging Markets. The Fund may invest in securities of government, government-related, supranational and
corporate issuers located in emerging markets. Such investments entail significant risks as described below.
Company Debt. Governments of many emerging market countries have exercised and continue to exercise substantial
influence over many aspects of the private sector through the ownership or control of many companies, including some of
the largest in any given country. As a result, government actions in the future could have a significant effect on
economic conditions in emerging markets, which in turn, may adversely affect companies in the private sector, general
market conditions and prices and yields of certain of the securities in the Fund's portfolio. Expropriation,
confiscatory taxation, nationalization, political, economic or social instability or other similar developments have
occurred frequently over the history of certain emerging markets and could adversely affect the Fund's assets should
these conditions recur.
Foreign currencies. Some emerging market countries may have managed currencies, which are not free floating
against the U.S. dollar. In addition, there is risk that certain emerging market countries may restrict the free
conversion of their currencies into other currencies. Further, certain emerging market currencies may not be
internationally traded. Certain of these currencies have experienced a steep devaluation relative to the U.S. dollar.
Any devaluations in the currencies in which a Fund's portfolio securities are denominated may have a detrimental impact
on the Fund's et asset value.
Inflation. Many emerging markets have experienced substantial, and in some periods extremely high, rates of
inflation for many years. Inflation and rapid fluctuations in inflation rates have had and may continue to have adverse
effects on the economies and securities markets of certain emerging market countries. In an attempt to control
inflation, wage and price controls have been imposed in certain countries. Of these countries, some, in recent years,
have begun to control inflation through prudent economic policies.
Liquidity; Trading Volume; Regulatory Oversight. The securities markets of emerging market countries are
substantially smaller, less developed, less liquid and more volatile than the major securities markets in the U.S.
Disclosure and regulatory standards are in many respects less stringent than U.S. standards. Furthermore , there is a
lower level of monitoring and regulation of the markets and the activities of investors in such markets.
The limited size of many emerging market securities markets and limited trading volume in the securities of
emerging market issuers compared to volume of trading in the securities of U.S. issuers could cause prices to be erratic
for reasons apart from factors that affect the soundness and competitiveness of the securities issuers. For example,
limited market size may cause prices to be unduly influenced by traders who control large positions. Adverse publicity
and investors' perceptions, whether or not based on in-depth fundamental analysis, may decrease the value and liquidity
of portfolio securities.
The risk also exists that an emergency situation may arise in one or more emerging markets, as a result of which
trading of securities may cease or may be substantially curtailed and prices for the Fund's securities in such markets
may not be readily available. The Fund may suspend redemption of its shares for any period during which an emergency
exists, as determined by the SEC. If market prices are not readily available, the Fund's securities in the affected
markets will be valued at fair value determined in good faith by or under the direction of the Board of Directors.
Withholding. Income from securities held by the Fund could be reduced by a withholding tax on the source or
other taxes imposed by the emerging market countries in which the Fund makes its investments. The Fund's net asset value
may also be affected by changes in the rates or methods of taxation applicable to the Fund or to entities in which the
Fund has invested. The Sub-advisor will consider the cost of any taxes in determining whether to acquire any particular
investments, but can provide no assurance that the taxes will not be subject to change.
Forward Contracts. The Fund may enter into contracts for the purchase or sale of a specific currency at a future
date at a price at the time the contract is entered into (a "Forward Contract"), for hedging purposes (e.g., to protect
its current or intended investments from fluctuations in currency exchange rates) as well as for non-hedging purposes).
The Fund does not presently intend to hold Forward Contracts entered into until maturity, at which time it would
be required to deliver or accept delivery of the underlying currency, but will seek in most instances to close out
positions in such Contracts by entering into offsetting transactions, which will serve to fix the Fund's profit or loss
based upon the value of the Contracts at the time the offsetting transactions is executed.
The Fund will also enter into transactions in Forward Contracts for other than hedging purposes, which presents
greater profit potential but also involves increased risk. For example, the Fund may purchase a given foreign currency
through a Forward Contract if, in the judgement of the Sub-advisor, the value of such currency is expected to rise
relative to the U.S. dollar. Conversely, the Fund may sell the currency through a Forward Contract if the Sub-advisor
believes that its value will decline relative to the dollar.
For an additional discussion of Forward Contracts see this SAI and the Company Prospectus under "Certain Risk
Factors and Investment Methods."
Futures Contracts. The Fund may purchase and sell futures contracts ("Future Contracts") on stock indices,
foreign currencies, interest rates or interest-rate related instruments, indices of foreign currencies or commodities.
The Fund also may purchase and sell Futures Contracts on foreign or domestic fixed income securities or indices of such
securities including municipal bond indices and any other indices of foreign or domestic fixed income securities that may
become available for trading. Such investment strategies will be used for hedging purposes and for non-hedging purposes,
subject to applicable law.
Futures Contracts differ from options in that they are bilateral agreements, with both the purchaser and the
seller equally obligated to complete the transaction. Futures Contracts call for settlement only on the expiration date
and cannot be exercised at any other time during their term.
Purchases or sales of stock index futures contracts are used to attempt to protect the Fund's current or intended
stock investments from broad fluctuations in stock prices. For example, the Fund may sell stock index futures contracts
in anticipations of or during market decline to attempt to offset the decrease in market value of the Fund's securities
portfolio that might otherwise result. If such decline occurs, the loss in value of portfolio securities may be offset,
in whole or in part, by gains on the futures position. When the Fund is not fully invested in the securities market and
anticipates a significant market advance, it may purchase stock index futures in order to gain rapid market exposure that
may, in part or entirely, offset increases in the cost of securities that the Fund intends to purchase. As such
purchases are made, the corresponding positions in stock index futures contracts will be closed out. In a substantial
majority of these transactions, the Fund will purchase such securities upon termination of the futures position, but
under unusual market conditions, a long futures position may be terminated without a related purchase of securities.
The Fund may purchase and sell foreign currency futures contracts for hedging purposes, to attempt to protect its
current or intended investments from fluctuations in currency exchange rates. Such fluctuations could reduce the dollar
value of portfolio securities denominated in foreign currencies, or increase the dollar cost of foreign-denominated
securities, or increase the dollar cost of foreign-denominated securities to be acquired, even if the value of such
securities in the currencies in which they are denominated remains constant. The Fund may sell futures contracts on a
foreign currency, for example, where it holds securities denominated in such currency and it anticipates a decline in the
value of such currency relative to the dollar. In the event such decline occurs, the resulting adverse effect on the
value of foreign-denominated securities may be offset, in whole or in part, by gains on the futures contracts.
Conversely, the Fund could protect against a rise in the dollar cost of foreign-denominated securities to be
acquired by purchasing futures contracts on the relevant security, which could offset, in whole or in part, the increased
cost of such securities resulting from the rise in the dollar value of the underlying currencies. Where the Fund
purchases futures contracts under such circumstances, however, and the prices of securities to be acquired instead
decline, the Fund will sustain losses on its futures position which could reduce or eliminate the benefits of the reduced
cost of portfolio securities to be acquired.
For further information on Futures Contracts, see this SAI under "Certain Risk Factors and Investment Methods."
Investment in Other Investment Companies. The Fund may invest other investment companies, including both
open-end and closed-end companies. Investments in closed-end investment companies may involve the payment of substantial
premiums above the value of such investment companies' portfolio securities.
Options. The Fund may invest in the following types of options, which involves the risks described below under
the caption "Special Risk Factors."
Options on Foreign Currencies. The Fund may purchase and write options on foreign currencies for hedging and
non-hedging purposes in a manner similar to that in which Futures Contracts on foreign currencies, or Forward Contracts,
will be utilized. For example, where a rise in the dollar value of a currency in which securities to be acquired are
denominated is projected, thereby increasing the cost of such securities, the Fund may purchase call options thereon.
The purchase of such options could offset, at least partially, the effect of the adverse movements in exchange rates.
Similarly, instead of purchasing a call option to hedge against an anticipated increase in the dollar cost of
securities to be acquired, the Fund could write a put option on the relevant currency which, if rates move in the manner
projected, will expire unexercised and allow the Fund to hedge such increased cost up to the amount of the premium.
Foreign currency options written by the Fund will generally be covered in a manner similar to the covering of other types
of options.
Options on Futures Contracts. The Fund may also purchase and write options to buy or sell those Futures
Contracts in which it may invest as described above under "Futures Contracts." Such investment strategies will be used
for hedging purposes and for non-hedging purposes, subject to applicable law.
Options on Futures Contracts that are written or purchased by the Fund on U.S. Exchanges are traded on the same
contract market as the underlying Futures Contract, an, like Futures Contracts, are subject to the regulation by the CFTC
and the performance guarantee of the exchange clearinghouse. In addition, Options on Futures Contracts may be traded on
foreign exchanges. The Fund may cover the writing of call Options on Futures Contracts (a) through purchases of the
underlying Futures Contract, (b) through ownership of the instrument, or instruments included in the index, underlying
the Futures Contract, or (c) through the holding of a call on the same Futures Contract and in the same principal amount
as the call written where the exercise price of the call held (I) is equal to or less than the exercise price of the call
written or (ii) is greater than the exercise price of the call written if the Fund owns liquid and unencumbered assets
equal to the difference. The Fund may cover the writing of put Options on Futures Contracts (a) through sales of the
underlying Futures Contract, (b) through the ownership of liquid and unencumbered assets equal to the value of the
security or index underlying the Futures Contract, or (c) through the holding of a put on the same Futures Contract and
in the same principal amount as the put written where the exercise price of the put held (i) is equal to or greater than
the exercise price of the put written if where the exercise price of the put held (ii) is less than the exercise price of
the put written of the Fund owns liquid and unencumbered assets equal to the difference. Put and call Options on Futures
Contracts may also be covered in such other manner as may be in accordance with the rules of the exchange on which the
option is traded and applicable laws and regulations. Upon the exercise of a call Option on a Futures Contract written
by the Fund, the Fund will be required to sell the underlying Futures Contract which, if the Fund has covered its
obligation through the purchase of such Contract, will serve to liquidate its futures position. Similarly, where a put
Option on a Futures Contract written by the Fund is exercised, the Fund will be required to purchase the underlying
Futures Contract which, if the Fund has covered its obligation through the sale of such Contract, will close out its
futures position.
Depending on the degree of correlation between changes in the value of its portfolio securities and the changes
in the value of its futures positions, the Fund's losses from existing Options on Futures Contracts may to some extent be
reduced or increased by changes in the value of portfolio securities.
Options on Securities. The Fund may write (sell) covered put and call options, and purchase put and call
options, on securities.
A call option written by the Fund is "covered" if the Fund owns the security underlying the call or has an
absolute and immediate right to acquire that security without additional cash consideration (or for additional cash
consideration if the Fund owns liquid and unencumbered assets equal to the amount of cash consideration) upon conversion
or exchange of other securities held in its portfolio. A call option is also covered if the Fund holds a call on the
same security and in the same principal amount as the call written where the exercise price of the call held (a) is equal
to or less than the exercise price of the call written or (b) is greater than the exercise price of the call written if
the Fund owns liquid and unencumbered assets equal to the difference. If the portfolio writes a put option it must
segregate liquid and unencumbered assets with a value equal to the exercise price, or else holds a put on the same
security and in the same principal amount as the put written where the exercise price of the put held is equal to or
greater than the exercise price of the put written or where the exercise price of the put held is less than the exercise
price of the put written if the Fund owns liquid and unencumbered assets equal to the difference. Put and call options
written by the Fund may also be covered in such other manner as may be in accordance with the requirements of the
exchange on which, or the counterparty with which, the option is traded, and applicable laws and regulations.
Effecting a closing transaction in the case of a written call option will permit the Fund to write another call
option on the underlying security with either a different exercise price or expiration date or both, or in the case of a
written put option will permit the Fund to write another put option to the extent that the Fund owns liquid and
unencumbered assets. Such transactions permit the Fund to generate additional premium income, which will partially
offset declines in the value of portfolio securities or increases in the cost of securities to be acquired. Also,
effecting a closing transaction will permit the cash or proceeds from the concurrent sale of any securities subject to
the option to be used for other investments of the Fund, provided that another option on such security is not written.
If the Fund desires to sell a particular security from its portfolio on which it has written a call option, it will
effect a closing transaction in connection with the option prior to or concurrent with the sale of the security.
The Fund may write options in connection with buy-and-write transactions; that is, the Fund may purchase a
security and then write a call option against that security. The exercise price of the call option the Fund determines
to write will depend upon the expected price movement of the underlying security. The exercise price of a call option
may be below ("in-the-money"), equal to ("at-the-money") or above ("out-of-the-money") the current value of the
underlying security at the time the option is written. Buy-and-write transactions using in-the-money call options may be
used when it is expected that the price of the underlying security will decline moderately during the option period.
Buy-and-write transactions using out-of-the-money call options may be used when it is expected that the premiums received
from writing the call option plus the appreciation in the market price of the underlying security up to the exercise
price will be greater than the appreciation in the price of the underlying security alone. If the call options are
exercised in such transactions, the Fund's' maximum gain will be the premium received by it for writing the option,
adjusted upwards or downwards by the difference between the Fund's' purchase price of the security and the exercise
price, less related transaction costs. If the options are not exercised and the price of the underlying security
declines, the amount of such decline will be offset in part, or entirely, by the premium received.
The writing of covered put options is similar in terms of risk/return characteristics to buy-and-write
transactions. If the market price or the underlying security rises or otherwise is above the exercise price, the put
option will expire worthless and the Fund's' gain will be limited to the premium received, less related transaction
costs. If the market price of the underlying security declines or otherwise is below the exercise price, the Fund may
elect to close the position or retain the option until it is exercised, at which time the Fund will be required to take
delivery of the security at the exercise price; the Fund' return will be the premium received from the put option minus
the amount by which the market price of the security is below the exercise price, which could result in a loss.
Out-of-the-money, at-the-money and in-the-money put options may be used by the Fund in the same market environments that
call options are used in equivalent buy-and-write transactions.
The Fund may also write combinations of put and call options on the same security, known as "straddles" with the
same exercise price and expiration date. By writing a straddle, the Fund undertakes a simultaneous obligation to sell
and purchase the same security in the event that one of the options is exercised. If the price of the security
subsequently rises sufficiently above the exercise price to cover the amount of the premium and transaction costs, the
call will likely be exercised and the Fund will be required to sell the underlying security at a below market price.
This loss may be offset, however, in whole or in part, by the premiums received on the writing of the two options.
Conversely, if the price of the security declines by a sufficient amount, the put will likely be exercised. The writing
of straddles will likely be effective, therefore, only where the price of the security remains stable and neither the
call nor the put is exercised. In those instances where one of the options is exercised, the loss on the purchase or
sale of the underlying security may exceed the amount of the premiums received.
The writing of options on securities will not be undertaken by the Fund solely for hedging purposes, and could
involve certain risks which are not present in the case of hedging transactions. Moreover, even where options are
written for hedging purposes, such transactions constitute only a partial hedge against declines in the value of
portfolio securities or against increases in the value of securities to be acquired, up to the amount of the premium.
The Fund may also purchase options for hedging purposes or to increase its return.
The Fund may also purchase call options to hedge against an increase in the price of securities that the Fund
anticipates purchasing in the future. If such increase occurs, the call option will permit the Fund to purchase the
securities at the exercise price, or to close out the options at a profit.
Options on Stock Indices. The Fund may write (sell) covered call and put options and purchase call and put
options on stock indices. The Fund may cover written call options on stock indices by owning securities whose price
changes, in the opinion of the Sub-advisor, are expected to be similar to those of the underlying index, or by having an
absolute and immediate right to acquire such securities without additional cash consideration (or for additional cash
consideration if the Fund owns liquid and unencumbered assets equal to the amount of cash consideration) upon conversion
or exchange of other securities in its portfolio. The Fund may also cover call options on stock indices by holding a
call on the same index and in the same principal amount as the call written where the exercise price of the call held (a)
is equal to or less than the exercise price of the call written or (b) is greater than the exercise price of the call
written if the Fund own liquid and unencumbered assets equal to the difference. If the Portfolio writes put options on
stock indices, it must segregate liquid and unencumbered assets with a value equal to the exercise price, or hold a put
on the same stock index and in the same principal amount as the put written where the exercise price of the put held (a)
is equal to or greater than the exercise price of the put written or (b) is less than the exercise price of the put
written if the Fund owns liquid and unencumbered assets equal to the difference. Put and call options on stock indices
may also be covered in such other manner as may be in accordance with the rules of the exchange on which, or the
counterparty with which, the option is traded and applicable laws and regulations.
The purchase of call options on stock indices may be used by the Fund to attempt to reduce the risk of missing a
broad market advance, or an advance in an industry or market segment, at a time when the Fund holds uninvested cash or
short-term debt securities awaiting investment. When purchasing call options for this purpose, the Fund will also bear
the risk of losing all or a portion of the premium paid it the value of the index does not rise. The purchase of call
options on stock indices when the Fund is substantially fully invested is a form of leverage, up to the amount of the
premium and related transaction costs, and involves risks of loss and of increased volatility similar to those involved
in purchasing calls on securities the Fund owns.
The index underlying a stock index option may be a "broad-based" index, such as the Standard & Poor's 500 Index
or the New York Stock Exchange Composite Index, the changes in value of which ordinarily will reflect movements in the
stock market in general. In contrast, certain options may be based on narrower market indices, such as the Standard &
Poor's 100 Index, or on indices of securities of particular industry groups, such as those of oil and gas or technology
companies. A stock index assigns relative values to the stocks included in the index and the index fluctuates with
changes in the market values of the stocks so included. The composition of the index is changed periodically.
For an additional discussion of options, see this SAI under "Certain Risk Factors and Investment Methods."
Special Risk Factors.
Risk of Imperfect Correlation of Hedging Instruments with the Fund's Portfolio. The use of derivatives for
"cross hedging" purposes (such as a transaction in a Forward Contract on one currency to hedge exposure to a different
currency) may involve greater correlation risks. Consequently, the Fund bears the risk that the price of the portfolio
securities being hedged will not move in the same amount or direction as the underlying index or obligation.
It should be noted that stock index futures contracts or options based upon a narrower index of securities, such
as those of a particular industry group, may present greater risk than options or futures based on a broad market index.
This is due to the fact that a narrower index is more susceptible to rapid and extreme fluctuations as a result of
changes in the value of a small number of securities. Nevertheless, where the Fund enters into transactions in options
or futures on narrowly-based indices for hedging purposes, movements in the value of the index should, if the hedge is
successful, correlate closely with the portion of the Fund' portfolio or the intended acquisitions being hedged.
The trading of derivatives for hedging purposes entails the additional risk of imperfect correlation between
movements in the price of the derivative and the price of the underlying index or obligation. The anticipated spread
between the prices may be distorted due to the difference in the nature of the markets such as differences in margin
requirements, the liquidity of such markets and the participation of speculators in the derivatives markets. In this
regard, trading by speculators in derivatives has in the past occasionally resulted in market distortions, which may be
difficult or impossible to predict, particularly near the expiration of such instruments.
The trading of Options on Futures Contracts also entails the risk that changes in the value of the underlying
Futures Contracts will not be fully reflected in the value of the option. The risk of imperfect correlation, however,
generally tends to diminish as the maturity date of the Futures Contract or expiration date of the option approaches.
Further, with respect to options on securities, options on stock indices, options on currencies and Options on
Futures Contracts, the Fund is subject to the risk of market movements between the time that the option is exercised and
the time of performance thereunder. This could increase the extent of any loss suffered by the Fund in connection with
such transactions.
In writing a covered call option on a security, index or futures contract, the Fund also incurs the risk that
changes in the value of the instruments used to cover the position will not correlate closely with changes in the value
of the option or underlying index or instrument. For example, where the Fund covers a call option written on a stock
index through segregation of securities, such securities may not match the composition of the index, and the Fund may not
be fully covered. As a result, the Fund could be subject to risk of loss in the event of adverse market movements.
Risks of Non-Hedging Transactions. The Fund may enter transactions in derivatives for non-hedging purposes as
well as hedging purposes. Non-hedging transactions in such instruments involve greater risks and may result in losses
which may not be offset by increases in the value of portfolio securities or declines in the cost of securities to be
acquired. Nevertheless, the method of covering an option employed by the Fund may not fully protect it against risk of
loss and, in any event, the Fund could suffer losses on the option position which might not be offset by corresponding
portfolio gains. The Fund may also enter into futures, Forward Contracts for non-hedging purposes. For example, the
Fund may enter into such a transaction as an alternative to purchasing or selling the underlying instrument or to obtain
desired exposure to an index or market. In such instances, the Fund will be exposed to the same economic risks incurred
in purchasing or selling the underlying instrument or instruments. However, transactions in futures, Forward Contracts
may be leveraged, which could expose the Fund to greater risk of loss than such purchases or sales. Entering into
transactions in derivatives for other than hedging purposes, therefore, could expose the Fund to significant risk of loss
if the prices, rates or values of the underlying instruments or indices do not move in the direction or to the extent
anticipated.
With respect to the writing of straddles on securities, the Fund incurs the risk that the price of the underlying
security will not remain stable, that one of the options written will be exercised and that the resulting loss will not
be offset by the amount of the premiums received. Such transactions, therefore, create an opportunity for increased
return by providing the Fund with two simultaneous premiums on the same security, but involve additional risk, since the
Fund may have an option exercised against it regardless of whether the price of the security increases or decreases.
Risk of a Potential Lack of a Liquid Secondary Market. Prior to exercise or expiration, a futures or option
position can only be terminated by entering into a closing purchase or sale transaction. In that event, it may not be
possible to close out a position held by the Fund, and the Fund could be required to purchase or sell the instrument
underlying an option, make or receive a cash settlement or meet ongoing variation margin requirements. Under such
circumstances, if the Fund has insufficient cash available to meet margin requirements, it will be necessary to liquidate
portfolio securities or other assets at a time when it is disadvantageous to do so. The inability to close out options
and futures positions, therefore, could have an adverse impact on the Fund' ability effectively to hedge its portfolio,
and could result in trading losses.
The trading of Futures Contracts and options is also subject to the risk of trading halts, suspensions, exchange
or clearinghouse equipment failures, government intervention, insolvency of a brokerage firm or clearinghouse or other
disruptions of normal trading activity, which could at times make it difficult or impossible to liquidate existing
positions or to recover excess variation margin payments.
Potential Bankruptcy of a Clearinghouse or Broker. When the Fund enters into transactions in exchange-traded
futures or options, it is exposed to the risk of the potential bankruptcy of the relevant exchange clearinghouse or the
broker through which the Fund has effected the transaction. In that event, the Fund might not be able to recover amounts
deposited as margin, or amounts owed to the Fund in connection with its transactions, for an indefinite period of time,
and could sustain losses of a portion or all of such amounts. Moreover, the performance guarantee of an exchange
clearinghouse generally extends only to its members and the Fund could sustain losses, notwithstanding such guarantee, in
the event of the bankruptcy of its broker.
Trading and Position Limits. The exchanges on which futures and options are traded may impose limitations
governing the maximum number of positions on the same side of the market and involving the same underlying instrument
which may be held by a single investor, whether acting alone or in concert with others (regardless of whether such
contracts are held on the same or different exchanges or held or written in one or more accounts or through one or more
brokers.) Further, the CFTC and the various contract markets have established limits referred to as "speculative
position limits" on the maximum net long or net short position which any person may hold or control in a particular
futures or option contract. An exchange may order the liquidation of positions found to be in violation of these limits
and it may impose other sanctions or restrictions. The Adviser does not believe that these trading and position limits
will have any adverse impact on the strategies for hedging the portfolios of the Fund.
Risks of Options on Futures Contracts. The amount of risk the Fund assumes when it purchases an Option on a
Futures Contract is the premium paid for the option, plus related transaction costs. In order to profit from an option
purchased, however, it may be necessary to exercise the option and to liquidate the underlying Futures Contract, subject
to the risks of the availability of a liquid offset market described herein. The writer of an Option on a Futures
Contract is subject to the risks of commodity futures trading, including the requirement of initial and variation margin
payments, as well as the additional risk that movements in the price of the option may not correlate with movements in
the price of the underlying security, index, currency or Futures Contract.
Risks of Transactions in Foreign Currencies and Over-the-Counter Derivatives and Other Transactions Not Conducted
on U.S. Exchanges. Transactions in Forward Contracts on foreign currencies, as well as futures and options on foreign
currencies and transactions executed on foreign exchanges, are subject to all of the correlation, liquidity and other
risks outlined above. In addition, however, such transactions are subject to the risk of governmental actions affecting
trading in or the prices of currencies underlying such contracts, which could restrict or eliminate trading and could
have a substantial adverse effect on the value of positions held by the Fund. Further, the value of such positions could
be adversely affected by a number of other complex political and economic factors applicable to the countries issuing the
underlying currencies.
Further, unlike trading in most other types of instruments, there is no systematic reporting of last sale
information with respect to the foreign currencies underlying contracts thereon. As a result, the available information
on which trading systems will be based may not be as complete as the comparable data on which the Fund makes investment
and trading decisions in connection with other transactions. Moreover, because the foreign currency market is a global,
24-hour market, events could occur in that market which will not be reflected in the forward, futures or options market
until the following day, thereby making it more difficult for the Fund to respond to such events in a timely manner.
Settlements of exercises of over-the-counter Forward Contracts or foreign currency options generally must occur
within the country issuing the underlying currency, which in turn requires traders to accept or make delivery of such
currencies in conformity with any U.S. or foreign restrictions and regulations regarding the maintenance of foreign
banking relationships, fees, taxes or other charges.
Unlike transactions entered into by the Fund in Futures Contracts and exchange-traded options, on foreign
currencies, Forward Contracts, over-the-counter options on securities, swaps and other over-the-counter derivatives are
not traded on contract markets regulated by the CFTC or (with the exception of certain foreign currency options) the
SEC. To the contrary, such instruments are traded through financial institutions acting as market-makers, although
foreign currency options are also traded on certain national securities exchanges, such as the Philadelphia Stock
Exchange and the Chicago Board Options Exchange, subject to SEC regulation. In an over-the-counter trading environment,
many of the protections afforded to exchange participants will not be available. For example, there are no daily price
fluctuation limits, and adverse market movements could therefore continue to an unlimited extent over a period of time.
Although the purchaser of an option cannot lose more than the amount of the premium plus related transaction costs, this
entire amount could be lost. Moreover, the option writer and a trader of Forward Contracts could lose amounts
substantially in excess of their initial investments, due to the margin and collateral requirements associated with such
positions.
In addition, over-the-counter transactions can only be entered into with a financial institution willing to take
the opposite side, as principal, of the Fund's position unless the institution acts as broker and is able to find another
counterparty willing to enter into the transaction with the Fund. Where no such counterparty is available, it will not
be possible to enter into a desired transaction.
Further, over-the-counter transactions are not subject to the guarantee of an exchange clearinghouse, and the
Fund will therefore be subject to the risk of default by, or the bankruptcy of, the financial institution serving as its
counterparty. One or more of such institutions also may decide to discontinue their role as market-makers in a
particular currency or security, thereby restricting the Fund's ability to enter into desired hedging transactions.
Options on securities, options on stock indices, Futures Contracts, Options on Futures Contracts and options on
foreign currencies may be traded on exchanges located in foreign countries. Such transactions may not be conducted in
the same manner as those entered into on U.S. exchanges, and may be subject to different margin, exercise, settlement or
expiration procedures. As a result, many of the risks of over-the-counter trading may be present in connection with such
transactions.
Options on foreign currencies traded on national securities exchanges are within the jurisdiction of the SEC, as
are other securities traded on such exchanges. As a result, many of the protections provided to traders on organized
exchanges will be available with respect to such transactions. In particular, all foreign currency option positions
entered into on a national securities exchange are cleared and guaranteed by the Options Clearing Corporation (the
"OCC"), thereby reducing the risk of counterparty default.
The purchase and sale of exchange-traded foreign currency options, is subject to the risks regarding adverse
market movements, margining of options written, the nature of the foreign currency market, possible intervention by
governmental authorities and the effects of other political and economic events. In addition, exchange-traded options on
foreign currencies involve certain risks not presented by the over-the-counter market. For example, exercise and
settlement of such options must be made exclusively through the OCC, which has established banking relationships in
applicable foreign countries for this purpose. As a result, the OCC may, if it determines that foreign governmental
restrictions or taxes would prevent the orderly settlement of foreign currency option exercises, or would result in undue
burdens on the OCC or its clearing member, impose special procedures on exercise and settlement, such as technical
changes in the mechanics of delivery of currency, the fixing of dollar settlement prices or prohibitions on exercise.
Repurchase Agreements. The Fund may enter into repurchase agreements with sellers who are member firms (or a
subsidiary thereof) of the New York Stock Exchange or members of the Federal Reserve System or recognized primary U.S.
Government securities dealers which the Sub-advisor has determined to be creditworthy. The securities that the Fund
purchases and holds through its agent are U.S. Government securities. The repurchase price may be higher than the
purchase price, the difference being income to the Fund, or the purchase price may be the same, with interest at a
standard rate due to the Fund together with the repurchase price on repurchase. In either case, the income to the Fund
is unrelated to the interest rate on the Government securities.
The Fund only enters into repurchase agreements after the Sub-advisor has determined that the seller is
creditworthy, and the Sub-advisor monitors that seller's creditworthiness on an ongoing basis. Moreover, under such
agreements, the value of the securities (which are marked to market every business day) is required to be greater than
the repurchase price, and the Fund has the right to make margin calls at any time if the value of the securities falls
below the agreed upon amount of collateral.
For an additional discussion of repurchase agreements, see the Company Prospectus under "Certain Risk Factors and
Investment Methods."
Restricted Securities. The Fund may purchase securities that are not registered under the Securities Act of 1933
("restricted securities"), including those that can be offered and sold to "qualified institutional buyers" under Rule
144A under the 1933 Act ("Rule 144A securities") and commercial paper issued under Section 4(2) of the 1933 Act ("4(2)
paper"). The Board of Directors has delegated to the Sub-advisor the daily function of determining and monitoring the
liquidity of Rule 144A securities and Section 4(2) paper. The Board, however, retains oversight of the liquidity and
availability of information. Subject the Fund's limitation on investments in illiquid investments, the Fund may also
invest in restricted securities that may not be sold under Rule 144A, which presents certain risks. In addition, the Fund
might have to sell these securities at less than fair value. Market quotations for these securities will be less readily
available. Therefore, judgment may at times play a greater role in valuing these securities than in the case of
unrestricted securities. Additional information about restricted securities and their risks is included in the Company's
prospectus under "Certain Risk factors and Investment Methods."
Short Sales Against The Box. The Fund may make short sales "against the box." If the Fund enters into a short
sales against the box, it is required to segregate securities equivalent in kind and amount to the securities sold short
(or securities convertible or exchangeable into such securities) and is required to hold such securities while the short
sale is outstanding. The Fund will incur transaction costs, including interest, in connection with opening, maintaining,
and closing short sales against the box. For further information about this practice, please refer to the Company's
Prospectus under "Certain Risk Factors and Investment Methods."
Short Term Instruments. The Fund may hold cash and invest in cash equivalents, such as short-term U.S.
Government Securities, commercial paper and bank instruments.
Temporary Defensive Positions. During periods of unusual market conditions when the Sub-advisor believes that
investing for temporary defensive purposes is appropriate, or in order to meet anticipated redemption requests, a large
portion or all of the assets of the Fund may be invested in cash (including foreign currency) or cash equivalents,
including, but not limited to, obligations of banks (including certificates of deposit, bankers acceptances, time
deposits and repurchase agreements), commercial paper, short-term notes, U.S. Government securities and related
repurchase agreements.
Warrants. The Fund may invest in warrants. The strike price of warrants typically is much lower than the current
market price of the underlying securities, yet they are subject to similar price fluctuations, in absolute terms. As a
result, warrants may be more volatile investments than the underlying securities and may offer greater potential for
capital appreciation as well as capital loss. Additional information regarding warrants is included in this SAI and the
Company's Prospectus under "Certain Risk factors and Investment Methods."
"When-Issued" Securities. The Fund may purchase securities on a "when-issued," "forward commitment," or "delayed
delivery" basis. The commitment to purchase a security for which payment will be made on a future date may be deemed a
separate security. While awaiting delivery of securities purchased on such basis, the Fund will identify liquid and
unencumbered assets equal to its forward delivery commitment. For more information about when-issued securities, please
see this SAI under "Certain Risk Factors and Investment Methods."
ASAF invesco Equity Income Fund:
Investment Objective: The investment objective of the Fund is to seek high current income and capital growth while
following sound investment practices.
Investment Policies:
The Fund will pursue its objective by investing its assets in securities that are expected to produce high levels
of income and consistent, stable returns.
In pursuing its investment objective, the Fund normally invests at least 65% of its total assets in dividend
paying common and preferred stocks. Up to 30% of the Fund's assets may be invested in equity securities that do not pay
regular dividends. The remaining assets are invested in other income producing securities, such as corporate bonds.
Sometimes warrants are acquired when offered with income-producing securities, but the warrants are disposed of at the
first favorable opportunity. Acquiring warrants involves a risk that the Fund will lose the premium it pays to acquire
warrants if the Fund does not exercise a warrant before it expires. The major portion of the investment portfolio
normally consists of common stocks, convertible bonds and debentures, and preferred stocks; however, there may also be
substantial holdings of debt securities, including non-investment grade and unrated debt securities.
Debt Securities. The debt securities in which the Fund invests are generally subject to two kinds of risk,
credit risk and market risk. The ratings given a debt security by Moody's and Standard & Poor's ("S&P") provide a
generally useful guide as to such credit risk. The lower the rating given a debt security by such rating service, the
greater the credit risk such rating service perceives to exist with respect to such security. Increasing the amount of
Fund assets invested in unrated or lower grade (Ba or less by Moody's, BB or less by S&P) debt securities, while
intended to increase the yield produced by the Fund's debt securities, will also increase the credit risk to which those
debt securities are subject.
Lower-rated debt securities and non-rated securities of comparable quality tend to be subject to wider
fluctuations in yields and market values than higher rated debt securities and may have speculative characteristics.
Although the Fund may invest in debt securities assigned lower grade ratings by S&P or Moody's, the Fund's investments
have generally been limited to debt securities rated B or higher by either S&P or Moody's. Debt securities rated lower
than B by either S&P or Moody's may be highly speculative. The Sub-advisor intends to limit such portfolio investments
to debt securities which are not believed by the Sub-advisor to be highly speculative and which are rated at least CCC or
Caa, respectively, by S&P or Moody's. In addition, a significant economic downturn or major increase in interest rates
may well result in issuers of lower-rated debt securities experiencing increased financial stress which would adversely
affect their ability to service their principal and interest obligations, to meet projected business goals, and to obtain
additional financing. While the Sub-advisor attempts to limit purchases of lower-rated debt securities to securities
having an established retail secondary market, the market for such securities may not be as liquid as the market for
higher rated debt securities. For an additional discussion of certain risks involved in lower-rated or unrated
securities, see this SAI and the Company's Prospectus under "Certain Risk Factors and Investment Methods."
Repurchase Agreements. As discussed in the Company's Prospectus, the Fund may enter into repurchase agreements
with respect to debt instruments eligible for investment by the Fund, with member banks of the Federal Reserve System,
registered broker-dealers, and registered government securities dealers. A repurchase agreement may be considered a loan
collateralized by securities. The resale price reflects an agreed upon interest rate effective for the period the
instrument is held by the Fund and is unrelated to the interest rate on the underlying instrument. In these
transactions, the securities acquired by the Fund (including accrued interest earned thereon) must have a total value in
excess of the value of the repurchase agreement, and are held by the Fund's Custodian Bank until repurchased. For an
additional discussion of repurchase agreements and certain risks involved therein, see this SAI under "Certain Risk
Factors and Investment Methods."
The Directors of the Company have promulgated guidelines with respect to repurchase agreements.
Lending Portfolio Securities. The Fund may lend its securities to qualified brokers, dealers, banks, or other
financial institutions. While voting rights may pass with the loaned securities, if a material event (e.g., proposed
merger, sale of assets, or liquidation) is to occur affecting an investment on loan, the loan must be called and the
securities voted. Loans of securities made by the Fund will comply with all other applicable regulatory requirements,
including the rules of the New York Stock Exchange and the requirements of the Investment Company Act of 1940 and the
Rules of the SEC thereunder.
Investment Policies Which May Be Changed Without Shareholder Approval. The following limitations are not
"fundamental" restrictions and may be changed by the Directors of the Company without shareholder approval. The Fund
will not:
1. Invest in companies for the purpose of exercising management or control;
2. Purchase securities of open-end or closed-end investment companies except in compliance with the
Investment Company Act of 1940;
3. Purchase securities on margin, except (i) for use of short-term credit necessary for clearance of
purchases of portfolio securities and (ii) the Fund may make margin deposits in connection with futures contracts or
other permissible investments;
4. Effect short sales of securities; or
5. Purchase any security or enter into a repurchase agreement, if as a result, more than 15% of its net
assets would be invested in repurchase agreements not entitling the holder to payment of principal and interest within
seven days and in securities that are illiquid by virtue of legal or contractual restrictions on resale or the absence of
a readily available market. The Directors of the Company, or the Investment Manager or the Sub-advisor acting pursuant
to authority delegated by the Directors, may determine that a readily available market exists for securities eligible for
resale pursuant to Rule 144A under the Securities Act of 1933, or any successor to that rule, and therefore that such
securities are not subject to the foregoing limitation.
asaf american century Strategic Balanced Fund:
Investment Objective: The investment objective of the Fund is to seek capital growth and current income.
Investment Policies:
In general, within the restrictions outlined herein, the Sub-advisor has broad powers with respect to investing
funds or holding them uninvested. Investments are varied according to what is judged advantageous under changing
economic conditions. It will be the policy of the Sub-advisor to retain maximum flexibility in management without
restrictive provisions as to the proportion of one or another class of securities that may be held subject to the
investment restrictions described below. However, the Sub-advisor may invest the assets of the Fund in varying amounts
in other instruments and in senior securities, such as bonds, debentures, preferred stocks and convertible issues, when
such a course is deemed appropriate in order to attempt to attain its financial objectives. Senior securities that, in
the opinion of the Sub-advisor, are high-grade issues may also be purchased for defensive purposes.
The above statement of investment policy gives the Sub-advisor authority to invest in securities other than
common stocks and traditional debt and convertible issues. The Sub-advisor may invest in master limited partnerships
(other than real estate partnerships) and royalty trusts which are traded on domestic stock exchanges when such
investments are deemed appropriate for the attainment of the Fund's investment objectives.
The Sub-advisor will invest approximately 60% of the Fund in common stocks and the balance in fixed income
securities. Common stock investments are described above. The fixed income assets will be invested primarily in
investment grade securities. The Fund may invest up to 10% of its fixed income assets in high yield securities. There
are no credit or maturity restrictions on the fixed income securities in which the high yield portion of the Fund may be
invested. The Fund may invest in securities of the United States government and its agencies and instrumentalities,
corporate, sovereign government, municipal, mortgage-backed, and other asset-backed securities. For purposes of
determining the weighted average maturity of the fixed income portion of the Fund, the Sub-advisor will use weighted
average life as the measure of maturity for all mortgage-backed and asset-backed securities. It can be expected that the
Sub-advisor will invest from time to time in bonds and preferred stock convertible into common stock.
Forward Currency Exchange Contracts. The Fund conducts its foreign currency exchange transactions either on a
spot (i.e., cash) basis at the spot rate prevailing in the foreign currency exchange market, or through entering into
forward foreign currency exchange contracts to purchase or sell foreign currencies.
The Fund expects to use forward contracts under two circumstances: (1) when the Sub-advisor wishes to "lock in"
the U.S. dollar price of a security when the Fund is purchasing or selling a security denominated in a foreign currency,
the Fund would be able to enter into a forward contract to do so ("transaction hedging"); (2) when the Sub-advisor
believes that the currency of a particular foreign country may suffer a substantial decline against the U.S. dollar, the
Fund would be able to enter into a forward contract to sell foreign currency for a fixed U.S. dollar amount approximating
the value of some or all of the Fund's securities either denominated in, or whose value is tied to, such foreign currency
("portfolio hedging"). It is anticipated that the Fund will enter into portfolio hedges much less frequently than
transaction hedges.
As to transactional hedging, when the Fund enters into a trade for the purchase or sale of a security denominated
in a foreign currency, it may be desirable to establish (lock in) the U.S. dollar cost or proceeds. By entering into
forward contracts in U.S. dollars for the purchase or sale of a foreign currency involved in an underlying security
transaction, the Fund will be able to protect itself against a possible loss between trade and settlement dates resulting
from the adverse change in the relationship between the U.S. dollar at the subject foreign currency.
Under portfolio hedging, when the Sub-advisor believes that the currency of a particular country may suffer a
substantial decline relative to the U.S. dollar, the Fund could enter into a foreign contract to sell for a fixed dollar
amount the amount in foreign currencies approximating the value of some or all of its portfolio securities either
denominated in, or whose value is tied to, such foreign currency. The Fund will place cash or high-grade liquid
securities in a separate account with its custodian in an amount sufficient to cover its obligation under the contract.
If the value of the securities placed in the separate account declines, additional cash or securities will be placed in
the account on a daily basis so that the value of the account equals the amount of the Fund's commitments with respect to
such contracts. At any given time, no more than 10% of the Fund's assets will be committed to a segregated account in
connection with portfolio hedging transactions.
The precise matching of forward contracts in the amounts and values of securities involved would not generally be
possible since the future values of such foreign currencies will change as a consequence of market movements in the
values of those securities between the date the forward contract is entered into and the date it matures. Predicting
short-term currency market movements is extremely difficult, and the successful execution of short-term hedging strategy
is highly uncertain. The Sub-advisor does not intend to enter into such contracts on a regular basis. Normally,
consideration of the prospect for currency parities will be incorporated into the long-term investment decisions made
with respect to overall diversification strategies. However, the Sub-advisor believes that it is important to have
flexibility to enter into such forward contracts when it determines that the Fund 's best interests may be served.
Generally, the Fund will not enter into a forward contract with a term of greater than one year. At the maturity
of the forward contract, the Fund may either sell the portfolio security and make delivery of the foreign currency, or it
may retain the security and terminate the obligation to deliver the foreign currency by purchasing an "offsetting"
forward contract with the same currency trader obligating the Fund to purchase, on the same maturity date, the same
amount of the foreign currency.
It is impossible to forecast with absolute precision the market value of the Fund's securities at the expiration
of the forward contract. Accordingly, it may be necessary for the Fund to purchase additional foreign currency on the
spot market (and bear the expense of such purchase) if the market value of the security is less than the amount of
foreign currency the Fund is obligated to deliver and if a decision is made to sell the security and make delivery of the
foreign currency the Fund is obligated to deliver. For an additional discussion of forward currency exchange contracts
and certain risks involved therein, see this SAI and the Company's Prospectus under "Certain Risk Factors and Investment
Methods."
Derivative Securities. To the extent permitted by its investment objectives and policies discussed elsewhere
herein, the Fund may invest in securities that are commonly referred to as "derivative" securities. Certain derivative
securities are more accurately described as "index/structured" securities. Index/structured securities are derivative
securities whose value or performance is linked to other equity securities (such as depositary receipts), currencies,
interest rates, indices or other financial indicators ("reference indices").
Some "derivatives," such as mortgage-backed and other asset-backed securities, are in many respects like any
other investment, although they may be more volatile or less liquid than more traditional debt securities.
The Fund may not invest in a derivative security unless the reference index or the instrument to which it relates
is an eligible investment for the Fund. For example, a security whose underlying value is linked to the price of oil
would not be a permissible investment because the Fund may not invest in oil and gas leases or futures.
The return on a derivative security may increase or decrease, depending upon changes in the reference index or
instrument to which it relates.
There is a range of risks associated with derivative investments, including:
o the risk that the underlying security, interest rate, market index or other financial asset will not move in the
direction the portfolio manager anticipates;
o the possibility that there may be no liquid secondary market, or the possibility that price fluctuation limits
may be imposed by the exchange, either of which may make it difficult or impossible to close out a position when
desired; and
o the risk that the counterparty will fail to perform its obligations.
The Sub-advisor will report to the Investment Manager on activity in derivative securities, and the Investment Manager
will report to the Trust's Board of Directors as necessary. For additional information on derivatives and their risks,
see the Trust's Prospectus under "Certain Risk Factors and Investment Methods."
Futures and Options. The Fund may enter into futures contracts, options or options on futures contracts. The
Fund may not, however, enter into a futures transaction for speculative purposes. Generally, futures transactions will
be used to:
o protect against a decline in market value of the Fund's securities (taking a short futures position), or
o protect against the risk of an increase in market value for securities in which the Fund generally invests at a
time
when the Fund is not fully-invested (taking a long futures position), or
o provide a temporary substitute for the purchase of an individual security that may be purchased in an orderly
fashion.
Some futures and options strategies, such as selling futures, buying puts and writing calls, hedge the Fund's
investments against price fluctuations. Other strategies, such as buying futures, writing puts and buying calls, tend to
increase market exposure.
Although other techniques may be used to control the Fund's exposure to market fluctuations, the use of futures
contracts may be a more effective means of hedging this exposure. While the Fund will pay brokerage commissions in
connection with opening and closing out futures positions, these costs are lower than the transaction costs incurred in
the purchase and sale of the underlying securities.
The Fund may engage in futures and options transactions based on securities indices that are consistent with the
Fund's investment objectives. Examples of indices that may be used include the Bond Buyer Index of Municipal Bonds for
fixed income funds, or the S&P 500 Index for equity funds. The Fund also may engage in futures and options transactions
based on specific securities, such as U.S. Treasury bonds or notes. Futures contracts are traded on national futures
exchanges. Futures exchanges and trading are regulated under the Commodity Exchange Act by the CFTC, a U.S. government
agency.
Unlike when the Fund purchases or sells a bond, no price is paid or received by the Fund upon the purchase or
sale of the future. Initially, the Fund will be required to deposit an amount of cash or securities equal to a varying
specified percentage of the contract amount. This amount is known as initial margin. The margin deposit is intended to
assure completion of the contract (delivery or acceptance of the underlying security) if it is not terminated prior to
the specified delivery date. Minimum initial margin requirements are established by the futures exchanges and may be
revised. In addition, brokers may establish margin deposit requirements that are higher than the exchange minimums.
Cash held in the margin account is not income producing. Subsequent payments, called variation margin, to and from the
broker, will be made on a daily basis as the price of the underlying debt securities or index fluctuates, making the
future more or less valuable, a process known as marking the contract to market.
Futures and options prices can be volatile, and trading in these markets involves certain risks, which are
described in more detail in this Statement and the Trust's Prospectus under "Certain Risk Factors and Investment
Methods." The Sub-advisor will seek to minimize these risks by limiting the contracts entered into on behalf of the Fund
to those traded on national futures exchanges and for which there appears to be a liquid secondary market.
Options on Futures. By purchasing an option on a futures contract, the Fund obtains the right, but not the
obligation, to sell the futures contract (a put option) or to buy the contract (a call option) at a fixed strike price.
The Fund can terminate its position in a put option by allowing it to expire or by exercising the option. If the option
is exercised, the Fund completes the sale of the underlying instrument at the strike price. Purchasing an option on a
futures contract does not require the Fund to make margin payments unless the option is exercised.
Although they do not currently intend to do so, the Fund may write (or sell) call options that obligate it to
sell (or deliver) the option's underlying instrument upon exercise of the option. While the receipt of option premiums
would mitigate the effects of price declines, the Fund would give up some ability to participate in a price increase on
the underlying instrument. If the Fund were to engage in options transactions, it would own the futures contract at the
time a call were written and would keep the contract open until the obligation to deliver it pursuant to the call expired.
Portfolio Securities Lending. In order to realize additional income, the Fund may lend its portfolio securities
to persons not affiliated with it and who are deemed to be creditworthy by the Sub-advisor. Such loans must be secured
continuously by cash collateral maintained on a current basis in an amount at least equal to the market value of the
securities loaned, or by irrevocable letters of credit. During the existence of the loan, the Fund must continue to
receive the equivalent of the interest and dividends paid by the issuer on the securities loaned and interest on the
investment of the collateral. The Fund must have the right to call the loan and obtain the securities loaned at any time
on three days' notice, including the right to call the loan to enable the Fund to vote the securities. Such loans may
not exceed one-third of the Fund's total assets taken at market. Interest on loaned securities may not exceed 10% of the
annual gross income of the Fund (without offset for realized capital gains).
Investments in Companies with Limited Operating History. The Fund may invest in the securities of issuers with
limiting operating history. The Sub-advisor considers an issuer to have a limited operating history if that issuer has a
record of less than three years of continuous operation.
Investments in securities of issuers with limited operating history may involve greater risks than investments in
securities of more mature issuers. By their nature, such issuers present limited operating history and financial
information upon which the manager may base its investment decision on behalf of the Fund. In addition, financial and
other information regarding such issuers, when available, may be incomplete or inaccurate.
The Fund will not invest more than 5% of its total assets in the securities of issuers with less than a
three-year operating history. The Sub-advisor will consider periods of capital formation, incubation, consolidation, and
research and development in determining whether a particular issuer has a record of three years of continuous operation.
Short Sales. The Fund may engage in short sales if, at the time of the short sale, the Fund owns or has the
right to acquire an equal amount of the security being sold short at no additional cost.
In a short sale, the seller does not immediately deliver the securities sold and is said to have a short position
in those securities until delivery occurs. To make delivery to the purchaser, the executing broker borrows the
securities being sold short on behalf of the seller. While the short position is maintained, the seller collateralizes
its obligation to deliver the securities sold short in an amount equal to the proceeds of the short sale plus an
additional margin amount established by the Board of Governors of the Federal Reserve. If the Fund engages in a short
sale, the collateral account will be maintained by the Fund's custodian. While the short sale is open, the Fund will
maintain in a segregated custodial account an amount of securities convertible into, or exchangeable for, such equivalent
securities at no additional cost. These securities would constitute the Fund's long position.
When the Fund makes a short sale as described above, any future losses in the Fund's long position should be
reduced by a gain in the short position. The extent to which such gains or losses are reduced would depend upon the
amount of the security sold short relative to the amount the Fund owns. There will be certain additional transaction
costs associated with short sales, but the Fund will endeavor to offset these costs with income from the investment of
the cash proceeds of short sales.
Portfolio Turnover. The Sub-advisor will purchase and sell securities without regard to the length of time the
security has been held and, accordingly, it can be expected that the rate of portfolio turnover may be substantial.
The Sub-advisor intends to purchase a given security whenever the Sub-advisor believes it will contribute to the
stated objective of the Fund, even if the same security has only recently been sold. The Fund will sell a given
security, no matter for how long or for how short a period it has been held, and no matter whether the sale is at a gain
or at a loss, if the Sub-advisor believes that it is not fulfilling its purpose, either because, among other things, it
did not live up to the Sub-advisor's expectations, or because it may be replaced with another security holding greater
promise, or because it has reached its optimum potential, or because of a change in the circumstances of a particular
company or industry or in general economic conditions, or because of some combination of such reasons.
When a general decline in security prices is anticipated, the equity portion of the Fund may decrease or
eliminate entirely its equity position and increase its cash position, and when a rise in price levels is anticipated, it
may increase its equity position and decrease its cash position. However, it should be expected that the Fund will,
under most circumstances, be essentially fully invested in equity securities.
Since investment decisions are based on the anticipated contribution of the security in question to the Fund's
objectives, the rate of portfolio turnover is irrelevant when the Sub-advisor believes a change is in order to achieve
those objectives, and the Fund's annual portfolio turnover rate cannot be anticipated and may be comparatively high.
Since the Sub-advisor does not take portfolio turnover rate into account in making investment decisions, (1) the
Sub-advisor has no intention of accomplishing any particular rate of portfolio turnover, whether high or low, and (2) the
portfolio turnover rates in the past should not be considered as a representation of the rates which will be attained in
the future. For an additional discussion of portfolio turnover, see this SAI under "Portfolio Transactions" and the
Company's Prospectus under "Portfolio Turnover."
Collateralized Mortgage Obligations. The Fund may buy collateralized mortgage obligations ("CMOs"). The Fund may
buy CMOs that are: (i) collateralized by pools of mortgages in which payment of principal and interest of each mortgage
is guaranteed by an agency or instrumentality of the U.S. government; (ii) collateralized by pools of mortgages in which
payment of principal and interest are guaranteed by the issuer, and the guarantee is collateralized by U.S. government
securities; or (iii) securities in which the proceeds of the issue are invested in mortgage securities and payments of
principal and interest are supported by the credit of an agency or instrumentality of the U.S. government. For a
discussion of CMOs and the risks involved therein, see the Company's Prospectus under "Certain Risk Factors and
Investment Methods."
Repurchase Agreements. The Fund may enter into repurchase agreements. The Fund will limit repurchase agreement
transactions to securities issued by the U.S. government, its agencies and instrumentalities. For a further discussion
of repurchase agreements and the risks involved therein, see the Company's Prospectus under "Certain Risk Factors and
Investment Methods."
Investment Policies Which May Be Changed Without Shareholder Approval. The following limitations are not
"fundamental" restrictions and may be changed by the Directors of the Company without shareholder approval. The Fund
will not:
1. Invest more than 15% of its assets in illiquid investments; or
2. Buy securities on margin or sell short (unless it owns, or by virtue of its ownership of, other
securities has the right to obtain securities equivalent in kind and amount to the securities sold); however, the Fund
may make margin deposits in connection with the use of any financial instrument or any transaction in securities
permitted under its investment policies;
3. Invest for control or for management; or
4. Invest in the securities of other investment companies except in compliance with the Investment Company
Act of 1940. Duplicate fees may result from such purchases.
asaf federated High Yield Bond Fund:
Investment Objective: The investment objective of the Fund is to seek high current income by investing primarily in
fixed income securities. The fixed income securities in which the Fund intends to invest are lower-rated corporate debt
obligations.
Investment Policies:
Corporate Debt Securities. The Fund invests primarily in corporate debt securities. The corporate debt
obligations in which the Fund intends to invest are expected to be lower-rated. For a discussion of the special risks
associated with lower-rated securities, see the Company's Prospectus and this SAI under "Certain Risk Factors and
Investment Methods." Corporate debt obligations in which the Fund invests may bear fixed, floating, floating and
contingent, or increasing rates of interest. They may involve equity features such as conversion or exchange rights,
warrants for the acquisition of common stock of the same or a different issuer, participations based on revenues, sales
or profits, or the purchase of common stock in a unit transaction (where corporate debt securities and common stock are
offered as a unit).
U.S. Government Obligations. The types of U.S. government obligations in which the Fund may invest include, but
are not limited to, direct obligations of the U.S. Treasury (such as U.S. Treasury bills, notes, and bonds) and
obligations issued or guaranteed by U.S. government agencies or instrumentalities (such as the Federal Home Loan Banks,
Federal National Mortgage Association, Government National Mortgage Association, Federal Farm Credit Banks, Tennessee
Valley Authority, Export-Import Bank of the United States, Commodity Credit Corporation, Federal Financing Bank, Student
Loan Marketing Association, Federal Home Loan Mortgage Corporation, or National Credit Union Administration). These
securities may be backed by: the full faith and credit of the U.S. Treasury; the issuer's right to borrow from the U.S.
Treasury; the discretionary authority of the U.S. government to purchase certain obligations of agencies or
instrumentalities; or the credit of the agency or instrumentality issuing the obligations. For an additional discussion
of the types of U.S. government obligations in which the Fund may invest, see the Company's Prospectus under "Investment
Programs of the Funds."
Time and Savings Deposits and Bankers' Acceptances. The Fund may enter into time and savings deposits (including
certificates of deposit) and may purchase bankers' acceptances. The Fund may enter into time and savings deposits
(including certificates of deposit) in commercial or savings banks whose deposits are insured by the Bank Insurance Fund
("BIF"), or the Savings Association Insurance Fund ("SAIF"), including certificates of deposit issued by and other time
deposits in foreign branches of BIF-insured banks. The Fund may also purchase bankers' acceptances issued by a
BIF-insured bank, or issued by the bank's Edge Act subsidiary and guaranteed by the bank, with remaining maturities of
nine months or less. The total acceptances of any bank held by the Fund cannot exceed 0.25 of 1% of such bank's total
deposits according to the bank's last published statement of condition preceding the date of acceptance; and general
obligations of any state, territory, or possession of the United States, or their political subdivisions, so long as they
are either (1) rated in one of the four highest grades by nationally recognized statistical rating organizations or (2)
issued by a public housing agency and backed by the full faith and credit of the United States.
Restricted Securities. The Fund expects that any restricted securities would be acquired either from
institutional investors who originally acquired the securities in private placements or directly from the issuers of the
securities in private placements. Restricted securities are generally subject to legal or contractual delays on resale.
Restricted securities and securities that are not readily marketable may sell at a discount from the price they would
bring if freely marketable. For a discussion of illiquid and restricted securities and certain risks involved therein,
see the Company's Prospectus under "Certain Risk Factors and Investment Methods."
The Directors of the Company have promulgated guidelines with respect to illiquid securities.
When-Issued and Delayed Delivery Transactions. The Fund may purchase fixed-income securities on a when-issued or
delayed delivery basis. The Fund may engage in when-issued and delayed delivery transactions only for the purpose of
acquiring portfolio securities consistent with the Fund's investment objective and policies, not for investment
leverage. These transactions are arrangements in which the Fund purchases securities with payment and delivery scheduled
for a future time. Settlement dates may be a month or more after entering into these transactions, and the market values
of the securities purchased may vary from the purchase prices. These transactions are made to secure what is considered
to be an advantageous price and yield for the Fund.
No fees or other expenses, other than normal transaction costs, are incurred. However, liquid assets of the Fund
sufficient to make payment for the securities to be purchased are segregated at the trade date. These securities are
marked to market daily and will maintain until the transaction is settled. For an additional discussion of when-issued
securities and certain risks involved therein, see this SAI under "Certain Risk Factors and Investment Methods."
Repurchase Agreements. The Fund will require its custodian to take possession of the securities subject to
repurchase agreements, and these securities will be marked to market daily. To the extent that the original seller does
not repurchase the securities from the Fund, the Fund could receive less than the repurchase price on any sale of such
securities. In the event that such a defaulting seller filed for bankruptcy or became insolvent, disposition of such
securities by the Fund might be delayed pending court action. The Fund believes that under the regular procedures
normally in effect for custody of the Fund's portfolio securities subject to repurchase agreements, a court of competent
jurisdiction would rule in favor of the Fund and allow retention or disposition of such securities. The Fund will only
enter into repurchase agreements with banks and other recognized financial institutions such as broker/dealers which are
deemed by the Sub-advisor to be creditworthy, pursuant to guidelines established by the Directors of the Company. For an
additional discussion of repurchase agreements and certain risks involved therein, see the Company's Prospectus under
"Certain Risk Factors and Investment Methods."
Lending Portfolio Securities. In order to generate additional income, the Fund may lend its securities to
brokers/dealers, banks, or other institutional borrowers of securities. The Fund will only enter into loan arrangements
with broker/dealers, banks, or other institutions that have been determined to be creditworthy. The collateral received
when the Fund lends portfolio securities must be valued daily and, should the market value of the loaned securities
increase, the borrower must furnish additional collateral to the Fund. During the time portfolio securities are on loan,
the borrower pays the Fund any dividends or interest paid on such securities. Loans are subject to termination at the
option of the Fund or the borrower. The Fund may pay reasonable administrative and custodial fees in connection with a
loan and may pay a negotiated portion of the interest earned on the cash or cash equivalent collateral to the borrower or
placing broker. The Fund does not have the right to vote securities on loan, but would terminate the loan and regain the
right to vote if that were considered important with respect to the investment.
Reverse Repurchase Agreements. The Fund may also enter into reverse repurchase agreements. When effecting
reverse repurchase agreements, liquid assets of the Fund, in a dollar amount sufficient to make payment for the
obligations to be purchased, are segregated at the trade date. These securities are marked to market daily and are
maintained until the transaction is settled. During the period any reverse repurchase agreements are outstanding, but
only to the extent necessary to ensure completion of the reverse repurchase agreements, the Fund will restrict the
purchase of portfolio instruments to money market instruments maturing on or before the expiration date of the reverse
repurchase agreements. For a discussion of reverse repurchase agreements and certain risks involved therein, see the
Company's Prospectus under "Certain Risk Factors and Investment Methods."
Portfolio Turnover. The Fund may experience greater portfolio turnover than would be expected with a portfolio
of higher-rated securities. For an additional discussion of portfolio turnover, see this SAI under "Portfolio
Transactions" and the Company's Prospectus under "Portfolio Turnover."
Adverse Legislation. In 1989, legislation was enacted that required federally insured savings and loan
associations to divest their holdings of lower-rated bonds by 1994. This legislation also created the Resolution Trust
Corporation (the "RTC"), which disposed of a substantial portion of lower-rated bonds held by failed savings and loan
associations. The reduction of the number of institutions empowered to purchase and hold lower-rated bonds, and the
divestiture of bonds by these institutions and the RTC, have had an adverse impact on the overall liquidity of the market
for such bonds. Federal and state legislatures and regulators have and may continue to propose new laws and regulations
designed to limit the number or type of institutions that may purchase lower-rated bonds, reduce the tax benefits to
issuers of such bonds, or otherwise adversely impact the liquidity of such bonds. The Fund cannot predict the likelihood
that any of these proposals will be adopted, or their potential impact on the liquidity of lower-rated bonds.
Foreign Securities. For a discussion of certain risks involved with investing in foreign securities, including
currency risks, see this SAI and the Company's Prospectus under "Certain Risk Factors and Investment Methods."
Investment Policies Which May Be Changed Without Shareholder Approval. The following limitations are not
"fundamental" restriction and may be changed by the Directors of the Company without shareholder approval. The Fund will
not:
1. Invest more than 15% of the value of its net assets in securities that are not readily marketable,
including repurchase agreements providing for settlement in more than seven days after notice. The Directors of the
Company, or the Investment Manager or the Sub-advisor acting pursuant to authority delegated by the Directors, may
determine that a readily available market exists for certain securities eligible for resale pursuant to Rule 144A under
the Securities Act of 1933, or any successor to such rule, and therefore that such securities are not subject to the
foregoing limitation;
2. Purchase securities of open-end or closed-end investment companies except in compliance with the
Investment Company Act of 1940;
3. Purchase any securities on margin but may obtain such short-term credits as may be necessary for the
clearance of transactions;
4. Invest more than 10% of the value of its total assets in foreign securities which are not publicly
traded in the United States;
5. Make short sales of securities or maintain short positions, unless: during the time the short position
is open, it owns an equal amount of the securities sold or securities readily and freely convertible into or
exchangeable, without payment of additional consideration, for securities of the same issue as, and equal in amount to,
the securities sold short; and not more than 10% of the Fund's net assets (taken at current value) is held as collateral
for such sales at any one time; or
6. Purchase securities of a company for the purpose of exercising control or management. However, the Fund
may invest in up to 10% of the voting securities of any one issuer and may exercise its voting powers consistent with the
best interests of the Fund. From time to time, the Fund, together with other investment companies advised by
subsidiaries or affiliates of the Sub-advisor, may together buy and hold substantial amounts of a company's voting
stock. All such stock may be voted together. In some such cases, the Fund and the other investment companies might
collectively be considered to be in control of the company in which they have invested. In some cases, directors,
agents, employees, officers, or others affiliated with or acting for the Fund, the Sub-advisor, or affiliated companies
might possibly become directors of companies in which the Fund holds stock.
asaf PIMCO Total Return Bond Fund:
Investment Objective: The investment objective of the Fund is to seek to maximize total return, consistent with
preservation of capital. The Sub-advisor will seek to employ prudent investment management techniques, especially in
light of the broad range of investment instruments in which the Fund may invest.
Investment Policies:
Borrowing. The Fund may borrow for temporary administrative purposes. This borrowing may be unsecured. The
Investment Company Act of 1940 requires the Fund to maintain continuous asset coverage (that is, total assets including
borrowings, less liabilities exclusive of borrowings) of 300% of the amount borrowed. If the 300% asset coverage should
decline as a result of market fluctuations or other reasons, the Fund may be required to sell some of its holdings within
three days to reduce the debt and restore the 300% asset coverage, even though it may be disadvantageous from an
investment standpoint to sell securities at that time. Borrowing will tend to exaggerate the effect on net asset value
of any increase or decrease in the market value of the Fund. Money borrowed will be subject to interest costs which may
or may not be recovered by appreciation of the securities purchased. The Fund also may be required to maintain minimum
average balances in connection with such borrowing or to pay a commitment or other fee to maintain a line of credit;
either of these requirements would increase the cost of borrowing over the stated interest rate.
In addition to the above, the Fund may enter into reverse repurchase agreements and mortgage dollar rolls. A
reverse repurchase agreement involves the sale of a portfolio-eligible security by the Fund, coupled with its agreement
to repurchase the instrument at a specified time and price. In a "dollar roll" transaction the Fund sells a
mortgage-related security (such as a GNMA security) to a dealer and simultaneously agrees to repurchase a similar
security (but not the same security) in the future at a pre-determined price. A "dollar roll" can be viewed, like a
reverse repurchase agreement, as a collateralized borrowing in which the Fund pledges a mortgage-related security to a
dealer to obtain cash. Unlike in the case of reverse repurchase agreements, the dealer with which the Fund enters into a
dollar roll transaction is not obligated to return the same securities as those originally sold by the Fund, but only
securities which are "substantially identical." To be considered "substantially identical," the securities returned to
the Fund generally must: (1) be collateralized by the same types of underlying mortgages; (2) be issued by the same
agency and be part of the same program; (3) have a similar original stated maturity; (4) have identical net coupon rates;
(5) have similar maturity: (4) have identical net coupon rates; (5) have similar market yields (and therefore price); and
(6) satisfy "good delivery" requirements, meaning that the aggregate principal amounts of the securities delivered and
received back must be within 2.5% of the initial amount delivered. The Fund's obligations under a dollar roll agreement
must be covered by segregating cash or other liquid assets equal in value to the securities subject to repurchase by the
Fund.
Both dollar roll and reverse repurchase agreements will be subject to the Fund's limitations on borrowings, which
will restrict the aggregate of such transactions (plus any other borrowings) to 33 1/3% of the Fund's total assets.
Furthermore, because dollar roll transactions may be for terms ranging between one and six months, dollar roll
transactions may be deemed "illiquid" and subject to the Fund's overall limitations on investments in illiquid securities.
Corporate Debt Securities. The Fund's investments in U.S. dollar- or foreign currency-denominated corporate debt
securities of domestic or foreign issuers are limited to corporate debt securities (corporate bonds, debentures, notes
and other similar corporate debt instruments, including convertible securities) which meet the minimum ratings criteria
set forth for the Fund, or, if unrated, are in the Sub-advisor's opinion comparable in quality to corporate debt
securities in which the Fund may invest. In the event that ratings services assign different ratings to the same
security, the Sub-advisor will determine which rating it believes best reflects the security's quality and risk at that
time, which may be the higher of the several assigned ratings. The rate of return or return of principal on some debt
obligations may be linked or indexed to the level of exchange rates between the U.S. dollar and a foreign currency or
currencies.
Among the corporate bonds in which the Fund may invest are convertible securities. A convertible security is a
bond, debenture, note, or other security that entitles the holder to acquire common stock or other equity securities of
the same or a different issuer. A convertible security generally entitles the holder to receive interest paid or accrued
until the convertible security matures or is redeemed, converted or exchanged. Before conversion, convertible securities
have characteristics similar to nonconvertible debt securities. Convertible securities rank senior to common stock in a
corporation's capital structure and, therefore, generally entail less risk than the corporation's common stock, although
the extent to which such risk is reduced depends in large measure upon the degree to which the convertible security sells
above its value as a fixed-income security.
A convertible security may be subject to redemption at the option of the issuer at a predetermined price. If a
convertible security held by the Fund is called for redemption, the Fund will be required to permit the issuer to redeem
the security and convert it to underlying common stock, or will sell the convertible security to a third party. The Fund
generally would invest in convertible securities for their favorable price characteristics and total return potential and
would normally not exercise an option to convert.
Investments in securities rated below investment grade that are eligible for purchase by the Fund (i.e., rated B
or better by Moody's or S&P) are described as "speculative" by both Moody's and S&P. Investment in lower-rated corporate
debt securities ("high yield securities") generally provides greater income and increased opportunity for capital
appreciation than investments in higher quality securities, but they also typically entail greater price volatility and
principal and income risk. These high yield securities are regarded as high risk and predominantly speculative with
respect to the issuer's continuing ability to meet principal and interest payments. The market for these securities is
relatively new, and many of the outstanding high yield securities have not endured a major business recession. A
long-term track record on default rates, such as that for investment grade corporate bonds, does not exist for this
market. Analysis of the creditworthiness of issuers of debt securities that are high yield may be more complex than for
issuers of higher quality debt securities.
High yield, high risk securities may be more susceptible to real or perceived adverse economic and competitive
industry conditions than investment grade securities. The price of high yield securities have been found to be less
sensitive to interest-rate adverse economic downturns or individual corporate developments. A projection of an economic
downturn or of a period of rising interest rates, for example, could cause a decline in high yield security prices
because the advent of a recession could lessen the ability of a highly leveraged company to make principal and interest
payments on its debt securities. If an issuer of high yield securities defaults, in addition to risking payment of all
or a portion of interest and principal, the Fund may incur additional expenses to seek recovery. In the case of high
yield securities structured as zero-coupon or pay-in-kind securities, their market prices are affected to a greater
extent by interest rate changes, and therefore tend to be more volatile than securities which pay interest periodically
and in cash.
The secondary market on which high yield, high risk securities are traded may be less liquid than the market for
higher grade securities. Less liquidity in the secondary trading market could adversely affect the price at which the
Fund could sell a high yield security, and could adversely affect the daily net asset value of the shares. Adverse
publicity and investor perceptions, whether or not based on fundamental analysis, may decrease the values and liquidity
of high yield securities especially in a thinly-traded market. When secondary markets for high yield securities are less
liquid than the market for higher grade securities, it may be more difficult to value the securities because such
valuation may require more research, and elements of judgment may play a greater role in the valuation because there is
less reliable, objective data available. The Sub-advisor seeks to minimize the risks of investing in all securities
through diversification, in-depth credit analysis and attention to current developments in interest rates and market
conditions. For an additional discussion of certain risks involved in lower-rated debt securities, see this SAI and the
Company's Prospectus under "Certain Risk Factors and Investment Objectives."
Participation on Creditors Committees. The Fund may from time to time participate on committees formed by
creditors to negotiate with the management of financially troubled issuers of securities held by the Fund. Such
participation may subject the Fund to expenses such as legal fees and may make the Fund an "insider" of the issuer for
purposes of the federal securities laws, and therefore may restrict the Fund's ability to trade in or acquire additional
positions in a particular security when it might otherwise desire to do so. Participation by the Fund on such committees
also may expose the Fund to potential liabilities under the federal bankruptcy laws or other laws governing the rights of
creditors and debtors. The Fund will participate on such committees only when the Sub-advisor believes that such
participation is necessary or desirable to enforce the Fund's rights as a creditor or to protect the value of securities
held by the Fund.
Mortgage-Related Securities. The Fund may invest in mortgage-backed securities. Mortgage-related securities are
interests in pools of mortgage loans made to residential home buyers, including mortgage loans made by savings and loan
institutions, mortgage bankers, commercial banks and others. Pools of mortgage loans are assembled as securities for
sale to investors by various governmental, government-related and private organizations (see "Mortgage Pass-Through
Securities"). The Fund may also invest in debt securities which are secured with collateral consisting of
mortgage-related securities (see "Collateralized Mortgage Obligations"), and in other types of mortgage-related
securities.
Interests in pools of mortgage-related securities differ from other forms of debt securities, which normally
provide for periodic payment of interest in fixed amounts with principal payments at maturity or specified call dates.
Instead, these securities provide a monthly payment which consists of both interest and principal payments. In effect,
these payments are a "pass-through" of the monthly payments made by the individual borrowers on their residential or
commercial mortgage loans, net of any fees paid to the issuer or guarantor of such securities. Additional payments are
caused by repayments of principal resulting from the sale of the underlying property, refinancing or foreclosure, net of
fees or costs which may be incurred. Some mortgage-related securities (such as securities issued by the Government
National Mortgage Association) are described as "modified pass-through." These securities entitle the holder to receive
all interest and principal payments owned on the mortgage pool, net of certain fees, at the scheduled payment dates
regardless of whether or not the mortgagor actually makes the payment.
The principal governmental guarantor of mortgage-related securities is the Government National Mortgage
Association ("GNMA"). GNMA is a wholly owned United States Government corporation within the Department of Housing and
Urban Development. GNMA is authorized to guarantee, with the full faith and credit of the United States Government, the
timely payment of principal and interest on securities issued by institutions approved by GNMA (such as savings and loan
institutions, commercial banks and mortgage bankers) and backed by pools of FHA-insured or VA-guaranteed mortgages.
Government-related guarantors (i.e., not backed by the full faith and credit of the United States Government)
include the Federal National Mortgage Association ("FNMA") and the Federal Home Loan Mortgage Corporation ("FHLMC").
FNMA is a government-sponsored corporation owned entirely by private stockholders. It is subject to general regulation
by the Secretary of Housing and Urban Development. FNMA purchases conventional (i.e., not insured or guaranteed by any
government agency) residential mortgages from a list of approved seller/servicers which include state and federally
chartered savings and loan associations, mutual savings banks, commercial banks and credit unions and mortgage bankers.
Pass-though securities issued by FNMA are guaranteed as to timely payment of principal and interest by FNMA but are not
backed by the full faith and credit of the United States Government.
FHLMC was created by Congress in 1970 for the purpose of increasing the availability of mortgage credit for
residential housing. It is a government-sponsored corporation formerly owned by the twelve Federal Home Loan Banks and
now owned entirely by private stockholders. FHLMC issues Participation Certificates ("PC's") which represent interests
in conventional mortgages from FHLMC's national portfolio. FHLMC guarantees the timely payment of interest and ultimate
collection of principal, but PCs are not backed by the full faith and credit of the United States Government.
Commercial banks, savings and loan institutions, private mortgage insurance companies, mortgage bankers and other
secondary market issuers also create pass-though pools of conventional residential mortgage loans. Such issuers may, in
addition, be the originators and/or servicers of the underlying mortgage loans as well as the guarantors of the
mortgage-related securities. Pools created by such nongovernmental issuers generally offer a higher rate of interest
than government and government-related pools because there are no direct or indirect government or agency guarantees of
payments in the former pools. However, timely payment of interest and principal of these pools may be supported by
various forms of insurance or guarantees, including individual loan, title, pool and hazard insurance and letters of
credit. The insurance and guarantees are issued by governmental entities, private insurers and the mortgage poolers.
Such insurance and guarantees and the creditworthiness of the issuers thereof will be considered in determining whether a
mortgage-related security meets the Company's and the Trust's investment quality standards. There can be no assurance
that the private insurers or guarantors can meet their obligations under the insurance policies or guarantee
arrangements. The Fund may buy mortgage-related securities without insurance or guarantees if, through an examination of
the loan experience and practices of the originator/servicers and poolers, the Sub-advisor determines that the securities
meet the Company's and the Trust's quality standards. Although the market for such securities is becoming increasingly
liquid, securities issued by certain private organizations may not be readily marketable. The Fund will not purchase
mortgage-related securities or any other assets which in the Sub-advisor's opinion are illiquid if, as a result, more
than 15% of the value of the Fund's total assets will be illiquid.
Mortgage-backed securities that are issued or guaranteed by the U.S. Government, its agencies or
instrumentalities, are not subject to the Fund's industry concentration restrictions, set forth in this SAI under
"Fundamental Investment Restrictions," by virtue of the exclusion from that test available to all U.S. Government
securities. In the case of privately issued mortgage-related securities, the Fund takes the position that
mortgage-related securities do not represent interests in any particular "industry" or group of industries. The assets
underlying such securities may be represented by a portfolio of first lien residential mortgages (including both whole
mortgage loans and mortgage participation interests) or portfolios of mortgage pass-through securities issued or
guaranteed by GNMA, FNMA or FHLMC. Mortgage loans underlying a mortgage-related security may in turn be insured or
guaranteed by the Federal Housing Administration or the Department of Veterans Affairs. In the case of private issue
mortgage-related securities whose underlying assets are neither U.S. Government securities nor U.S. Government-insured
mortgages, to the extent that real properties securing such assets may be located in the same geographical region, the
security may be subject to a greater risk of default that other comparable securities in the event of adverse economic,
political or business developments that may affect such region and ultimately, the ability of residential homeowners to
make payments of principal and interest on the underlying mortgages.
Collateralized Mortgage Obligations (CMOs). A CMO is a hybrid between a mortgage-backed bond and a
mortgage pass-through security. Similar to a bond, interest and prepaid principal is paid, in most cases, semiannually.
CMOs may be collateralized by whole mortgage loans, but are more typically collateralized by portfolios of mortgage
pass-through securities guaranteed by GNMA, FHLMC, or FNMA, and their income streams.
CMOs are structured into multiple classes, each bearing a different stated maturity. Actual maturity
and average life will depend upon the prepayment experience of the collateral. CMOs provide for a modified form of call
protection through a de facto breakdown of the underlying pool of mortgages according to how quickly the loans are
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repaid. Monthly payment of principal received from the pool of underlying mortgages, including prepayments, is first
returned to investors holding the shortest maturity class. Investors holding the longer maturity classes receive
principal only after the first class has been retired. An investor is partially guarded against a sooner than desired
return or principal because of the sequential payments.
In a typical CMO transaction, a corporation ("issuer") issues multiple series (e.g., A, B, C, Z) of the
CMO bonds ("Bonds"). Proceeds of the Bond offering are used to purchase mortgages or mortgage pass-through certificates
("Collateral"). The Collateral is pledged to a third party trustee as security for the Bonds. Principal and interest
payments from the Collateral are used to pay principal on the Bonds in the order A, B, C, Z. The Series A, B, and C
Bonds all bear current interest. Interest on the Series Z Bond is accrued and added to principal and a like amount is
paid as principal on the Series A, B, or C Bond currently being paid off. When the Series A, B, and C Bonds are paid in
full, interest and principal on the Series Z Bond begins to be paid currently. With some CMOs, the issuer serves as a
conduit to allow loan originators (primarily builders or savings and loan associations) to borrow against their loan
portfolios.
FHLMC Collateralized Mortgage Obligations. FHLMC CMOs are debt obligations of FHLMC issued in multiple
classes having different maturity dates which are secured by the pledge of a pool of conventional mortgage loans
purchased by FHLMC. Unlike FHLMC PCs, payments of principal and interest on the CMOs are made semiannually, as opposed
to monthly. The amount of principal payable on each semiannual payment date is determined in accordance with FHLMC's
mandatory sinking fund schedule, which, in turn, is equal to approximately 100% of FHA prepayment experience applied to
the mortgage collateral pool. All sinking fund payments in the CMOs are allocated to the retirement of the individual
classes of bonds in the order of their stated maturities. Payment of principal on the mortgage loans in the collateral
pool in excess of the amount of FHLMC's minimum sinking fund obligation for any payment date are paid to the holders of
the CMOs as additional sinking fund payments. Because of the "pass-through" nature of all principal payments received on
the collateral pool in excess of FHLMC's minimum sinking fund requirement, the rate at which principal of the CMOs is
actually repaid is likely to be such that each class of bonds will be retired in advance of its scheduled maturity date.
If collection of principal (including prepayments) on the mortgage loans during any semiannual payment
period is not sufficient to meet FHLMC's minimum sinking fund obligation on the next sinking fund payment date, FHLMC
agrees to make up the deficiency from its general funds.
Criteria for the mortgage loans in the pool backing the FHLMC CMOs are identical to those of FHLMC PCs.
FHLMC has the right to substitute collateral in the event of delinquencies and/or defaults. For an additional discussion
of mortgage-backed securities and certain risks involved therein, see this SAI and the Company's Prospectus under
"Certain Risk Factors and Investment Methods."
Other Mortgage-Related Securities. Other mortgage-related securities include securities other than
those described above that directly or indirectly represent a participation in, or are secured by and payable from,
mortgage loans on real property, including CMO residuals or stripped mortgage-backed securities. Other mortgage-related
securities may be equity or debt securities issued by agencies or instrumentalities of the U.S. Government or by private
originators of, or investors in, mortgage loans, including savings and loan associations, homebuilders, mortgage banks,
commercial banks, investment banks, partnerships, trusts and special purpose entities of the foregoing.
CMO Residuals. CMO residuals are derivative mortgage securities issued by agencies or instrumentalities
of the U.S. Government or by private originators of, or investors in, mortgage loans, including savings and loan
associations, homebuilders, mortgage banks, commercial banks, investment banks and special purpose entities of the
foregoing.
The cash flow generated by the mortgage assets underlying a series of CMOs is applied first to make
required payments of principal and interest on the CMOs and second to pay the related administrative expenses of the
issuer. The residual in a CMO structure generally represents the interest in any excess cash flow remaining after making
the foregoing payments. Each payment of such excess cash flow to a holder of the related CMO residual represents income
and/or a return of capital. The amount of residual cash flow resulting from a CMO will depend on, among other things,
the characteristics of the mortgage assets, the coupon rate of each class of CMO, prevailing interest rates, the amount
of administrative expenses and the prepayment experience on the mortgage assets. In particular, the yield to maturity on
CMO residuals is extremely sensitive to prepayments on the related underlying mortgage assets, in the same manner as an
interest-only ("IO") class of stripped mortgage-backed securities. See "Other Mortgage-Related Securities -- Stripped
Mortgage-Backed Securities." In addition, if a series of a CMO includes a class that bears interest at an adjustable
rate, the yield to maturity on the related CMO residual will also be extremely sensitive to changes in the level of the
index upon which interest rate adjustments are based. As described below with respect to stripped mortgage-backed
securities, in certain circumstances the Fund may fail to recoup fully its initial investment in a CMO residual.
CMO residuals are generally purchased and sold by institutional investors through several investment
banking firms acting as brokers or dealers. The CMO residual market has only very recently developed and CMO residuals
currently may not have the liquidity of other more established securities trading in other markets. Transactions in CMO
residuals are generally completed only after careful review of the characteristics of the securities in question. In
addition, CMO residuals may or, pursuant to an exemption therefrom, may not have been registered under the Securities Act
of 1933, as amended. CMO residuals, whether or not registered under such Act, may be subject to certain restrictions on
transferability, and may be deemed "illiquid" and subject to the Fund's limitations on investment in illiquid securities.
Stripped Mortgage-Backed Securities. Stripped mortgage-backed securities ("SMBS") are derivative
multi-class mortgage securities. SMBS may be issued by agencies or instrumentalities of the U.S. Government, or by
private originators of, or investors in, mortgage loans, including savings and loan associations, mortgage banks,
commercial banks, investment banks and special purpose entities of the foregoing.
SMBS are usually structured with two classes that receive different proportions of the interest and
principal distributions on a pool of mortgage assets. A common type of SMBS will have one class receiving some of the
interest and most of the principal from the mortgage assets, which the other class will receive most of the interest and
the remainder of the principal. In the most extreme case, one class will receive all of the interest (the IO class),
while the other class will receive all of the principal (the principal-only or "PO" class). The yield to maturity on an
IO class is extremely sensitive to the rate of principal payments (including prepayments) on the related underlying
mortgage assets, and a rapid rate of principal payments may have a material adverse effect on the Fund's yield to
maturity from these securities. If the underlying mortgage assets experience greater than anticipated prepayments of
principal, the Fund may fail to fully recoup its initial investment in these securities even if the security is in one of
the highest rating categories.
Although SMBS are purchased and sold by institutional investors through several investment banking firms
acting as brokers or dealers, these securities were only recently developed. As a result, established trading markets
have not yet developed and, accordingly, these securities may be deemed "illiquid" and subject to the Fund's limitations
on investment in illiquid securities.
Other Asset-Backed Securities. Similarly, the Sub-advisor expects that other asset-backed securities
(unrelated to mortgage loans) will be offered to investors in the future. Several types of asset-backed securities may
be offered to investors, including Certificates for Automobile Receivables. For a discussion of automobile receivables,
see this SAI under "Certain Risk Factors and Investment Methods." Consistent with the Fund's investment objectives and
policies, the Sub-advisor also may invest in other types of asset-backed securities.
Foreign Securities. The Fund may invest in U.S. dollar- or foreign currency-denominated corporate debt
securities of foreign issuers (including preferred or preference stock), certain foreign bank obligations (see "Bank
Obligations") and U.S. dollar- or foreign currency-denominated obligations of foreign governments or their subdivisions,
agencies and instrumentalities, international agencies and supranational entities. The Fund may invest up to 20% of its
assets in securities denominated in foreign currencies, and may invest beyond this limit in U.S. dollar-denominated
securities of foreign issuers. The Fund may invest up to 10% of its assets in securities of issuers based in emerging
market countries. Investing in the securities of foreign issuers involves special risks and considerations not typically
associated with investing in U.S. companies. For a discussion of certain risks involved in foreign investments in
general, and the special risks of investing in developing countries, see this SAI and the Company's Prospectus under
"Certain Risk Factors and Investment Methods."
The Fund also may purchase and sell foreign currency options and foreign currency futures contracts and related
options (see ""Derivative Instruments"), and enter into forward foreign currency exchange contracts in order to protect
against uncertainty in the level of future foreign exchange rates in the purchase and sale of securities.
A forward foreign currency contract involves an obligation to purchase or sell a specific currency at a future
date, which may be any fixed number of days from the date of the contract agreed upon by the parties, at a price set at
the tine of the contract. These contracts may be bought or sold to protect the Fund against a possible loss resulting
from an adverse change in the relationship between foreign currencies and the U.S. dollar or, to increase exposure to a
particular foreign currency. Open positions in forward contracts are covered by the segregation with the Fund's
custodian of cash or liquid assets and are marked to market daily. Although such contracts are intended to minimize the
risk of loss due to a decline on the value of the hedged currencies, at the same time, they tend to limit any potential
gain which might result should the value of such currencies increase.
Brady Bonds. The Fund may invest in Brady Bonds. Brady Bonds are securities created through the exchange of
existing commercial bank loans to sovereign entities for new obligations in connection with debt restructurings under a
debt restructuring plan introduced by former U.S. Secretary of the Treasury, Nicholas F. Brady (the "Brady Plan"). Brady
Plan debt restructurings have been implemented in a number of countries, including in Argentina, Bolivia, Bulgaria, Costa
Rica, the Dominican Republic, Ecuador, Jordan, Mexico, Niger, Nigeria, the Philippines, Poland, Uruguay, and Venezuela.
In addition, Brazil has concluded a Brady-like plan. It is expected that other countries will undertake a Brady Plan in
the future.
Brady Bonds have been issued only recently, and accordingly do not have a long payment history. Brady Bonds may
be collateralized or uncollateralized, are issued in various currencies (primarily the U.S. dollar) and are actively
traded in the over-the-counter secondary market. U.S. dollar-denominated, collateralized Brady Bonds, which may be fixed
rate par bonds or floating rate discount bonds, are generally collateralized in full as to principal by U.S. Treasury
zero-coupon bonds having the same maturity as the Brady Bonds. Interest payments on these Brady Bonds generally are
collateralized on a one-year or longer rolling-forward basis by cash or securities in an amount that, in the case of
fixed rate bonds, is equal to at least one year of interest payments or, in the case of floating rate bonds, initially is
equal to at least one year's interest payments based on the applicable interest rate at that time and is adjusted at
regular intervals thereafter. Certain Brady Bonds are entitled to "value recovery payments" in certain circumstances,
which in effect constitute supplemental interest payments but generally are not collateralized. Brady Bonds are often
viewed as having three or four valuation components: (i) the collateralized repayment of principal at final maturity;
(ii) the collateralized interest payments; (iii) the uncollateralized interest payments; and (iv) any uncollateralized
repayment of principal at maturity (these uncollateralized amounts constitute the "residual risk").
Most Mexican Brady Bonds issued to date have principal repayments at final maturity fully collateralized by U.S.
Treasury zero-coupon bonds (or comparable collateral denominated in other currencies) and interest coupon payments
collateralized on an 18-month rolling-forward basis by funds held in escrow by an agent for the bondholders. A
significant portion of the Venezuelan Brady Bonds and the Argentine Brady Bonds issued to date have principal repayments
at final maturity collateralized by U.S. Treasury zero-coupon bonds (or comparable collateral denominated in other
currencies) and/or interest coupon payments collateralized on a 14-month (for Venezuela) or 12-month (for Argentina)
rolling-forward basis by securities held by the Federal Reserve Bank of New York as collateral agent.
Brady Bonds involve various risk factors including residual risk and the history of defaults with respect to
commercial bank loans by public and private entities of countries issuing Brady Bonds. There can be no assurance that
Brady Bonds in which the Fund may invest will not be subject to restructuring arrangements or to requests for new credit,
which may cause the Fund to suffer a loss of interest or principal on any of its holdings.
Bank Obligations. Bank obligations in which the Funds invest include certificates of deposit, bankers'
acceptances, and fixed time deposits. Certificates of deposit are negotiable certificates issued against funds deposited
in a commercial bank for a definite period of time and earning a specified return. Bankers' acceptances are negotiable
drafts or bills of exchange, normally drawn by an importer or exporter to pay for specific merchandise, which are
"accepted" by a bank, meaning, in effect, that the bank unconditionally agrees to pay the face value of the instrument on
maturity. Fixed time deposits are bank obligations payable at a stated maturity date and bearing interest at a fixed
rate. Fixed time deposits may be withdrawn on demand by the investor, but may be subject to early withdrawal penalties
which vary depending upon market conditions and the remaining maturity of the obligation. There are no contractual
restrictions on the right to transfer a beneficial interest in a fixed time deposit to a third party, although there is
no market for such deposits. The Fund will not invest in fixed time deposits which (1) are not subject to prepayment or
(2) provide for withdrawal penalties upon prepayment (other than overnight deposits) if, in the aggregate, more than 15%
of its assets would be invested in such deposits, repurchase agreements maturing in more than seven days and other
illiquid assets.
The Fund will limit its investments in United States bank obligations to obligations of United States bank
(including foreign branches) which have more than $1 billion in total assets at the time of investment and are member of
the Federal Reserve System, are examined by the Comptroller of the Currency or whose deposits are insured by the Federal
Deposit Insurance Corporation. The Fund also may invest in certificates of deposit of savings and loan associations
(federally or state chartered and federally insured) having total assets in excess $1 billion.
The Fund will limit its investments in foreign bank obligations to United States dollar- or foreign
currency-denominated obligations of foreign banks (including United States branches of foreign banks) which at the time
of investment (i) have more than $10 billion, or the equivalent in other currencies, in total assets; (ii) in terms of
assets are among the 75 largest foreign banks in the world; (iii) have branches or agencies (limited purpose offices
which do not offer all banking services) in the United States; and (iv) in the opinion of the Sub-advisor, are of an
investment quality comparable to obligations of United States banks in which the Fund may invest. Subject to the Fund's
limitation on concentration of no more than 25% of its assets in the securities of issuers in particular industry, there
is no limitation on the amount of the Fund's assets which may be invested in obligations of foreign banks which meet the
conditions set forth herein.
Obligations of foreign banks involve somewhat different investment risks than those affecting obligations of
United States banks, including the possibilities that their liquidity could be impaired because of future political and
economic developments, that their obligations may be less marketable than comparable obligations of United States banks,
that a foreign jurisdiction might impose withholding taxes on interest income payable on those obligations, that foreign
deposits may be seized or nationalized, that foreign governmental restrictions such as exchange controls may be adopted
which might adversely affect the payment of principal and interest on those obligations and that the selection of those
obligations may be more difficult because there may be less publicly available information concerning foreign banks or
the accounting, auditing and financial reporting standards, practices and requirements applicable to foreign banks may
differ from those applicable to United States banks. Foreign banks are not generally subject to examination by any
United States Government agency or instrumentality.
Derivative Instruments. In pursuing its individual objective, the Fund may, as described in the Company's
Prospectus, purchase and sell (write) both put options and call options on securities, securities indices, and foreign
currencies, and enter into interest rate, foreign currency and index futures contracts and purchase and sell options on
such futures contracts ("future options") for hedging purposes. The Fund also may enter into swap agreements with
respect to foreign currencies, interest rates and indices of securities. If other types of financial instruments,
including other types of options, futures contracts, or futures options are traded in the future, the Fund may also use
those instruments, provided that the Directors of the Company determine that their use is consistent with the Fund's
investment objective, and provided that their use is consistent with restrictions applicable to options and futures
contracts currently eligible for use by the Trust (i.e., that written call or put options will be "covered" or "secured"
and that futures and futures options will be used only for hedging purposes).
Options on Securities and Indices. The Fund may purchase and sell both put and call options on debt or other
securities or indices in standardized contracts traded on foreign or national securities exchanges, boards of trade, or
similar entities, or quoted on NASDAQ or on a regulated foreign over-the-counter market, and agreements sometimes called
cash puts, which may accompany the purchase of a new issue of bonds from a dealer.
The Fund will write call options and put options only if they are "covered." In the case of a call option on a
security, the option is "covered" if the Fund owns the security underlying the call or has an absolute and immediate
right to acquire that security without additional cash consideration (or, if additional cash consideration is required,
cash or cash equivalents in such amount are segregated by the Fund) upon conversion or exchange of other securities held
by the Fund. For a call option on an index, the option is covered if the Fund maintains with its custodian cash or cash
equivalents equal to the contract value. A call option is also covered if the Fund holds a call on the same security or
index as the call written where the exercise price of the call held is (i) equal to or less than the exercise price of
the call written, or (ii) greater than the exercise price of the call written, provided that cash or cash equivalents in
the amount of the difference are segregated by the Fund. A put option on a security or an index is "covered" if the Fund
segregates cash or cash equivalents equal to the exercise price. A put option is also covered if the Fund holds a put on
the same security or index as the put written where the exercise price of the put held is (i) equal to or greater than
the exercise price of the put written, or (ii) less than the exercise price of the put written, provided that cash or
cash equivalents in the amount of the difference are segregated by the Fund.
If an option written by the Fund expires, the Fund realizes a capital gain equal to the premium received at the
time the option was written. If an option purchased by the Fund expires unexercised, the Fund realizes a capital loss
equal to the premium paid.
Prior to the earlier of exercise or expiration, an option may be closed out by an offsetting purchase or sale of
an option of the same series (type, exchange, underlying security or index, exercise price, and expiration). There can
be no assurance, however, that a closing purchase or sale transaction can be effected when the Fund desires.
The Fund will realize a capital gain from a closing purchase transaction if the cost of the closing option is
less than the premium received from writing the option, or if it is more, the Fund will realize a capital loss. If the
premium received from a closing sale transaction is more than the premium paid to purchase the option, the Fund will
realize a capital gain or, if it is less, the Fund will realize a capital loss. The principal factors affecting the
market value of a put or a call option include supply and demand, interest rates, the current market price of the
underlying security or index in relation to the exercise price of the option, the volatility of the underlying security
or index, and the time remaining until the expiration date.
The premium paid for a put or call option purchased by the Fund is an asset of the Fund. The premium received
for a option written by the Fund is recorded as a deferred credit. The value of an option purchased or written is marked
to market daily and is valued at the closing price on the exchange on which it is traded or, if not traded on an exchange
or no closing price is available, at the mean between the last bid and asked prices. For a discussion of certain risks
involved in options, see this SAI and the Company's Prospectus under "Certain Risk Factors and Investment Methods."
Foreign Currency Options. The Fund may buy or sell put and call options on foreign currencies either on
exchanges or in the over-the-counter market. A put option on a foreign currency gives the purchaser of the option the
right to sell a foreign currency at the exercise price until the option expires. Currency options traded on U.S. or
other exchanges may be subject to position limits which may limit the ability of the Fund to reduce foreign currency risk
using such options. Over-the-counter options differ from traded options in that they are two-party contracts with price
and other terms negotiated between buyer and seller, and generally do not have as much market liquidity as
exchange-traded options.
Futures Contracts and Options on Futures Contracts. The Fund may use interest rate, foreign currency or index
futures contracts, as specified in the Company's Prospectus. An interest rate, foreign currency or index futures
contract provides for the future sale by one party and purchase by another party of a specified quantity of a financial
instrument, foreign currency or the cash value of an index at a specified price and time. A futures contract on an index
is an agreement pursuant to which two parties agree to take or make delivery of an amount of cash equal to the difference
between the value of the index at the close of the last trading day of the contract and the price at which the index
contract was originally written. Although the value of an index might be a function of the value of certain specified
securities, no physical delivery of these securities is made.
The Fund may purchase and write call and put futures options. Futures options possess many of the same
characteristics as options on securities and indices (discussed above). A futures option gives the holder the right, in
return for the premium paid, to assume a long position (call) or short position (put) in a futures contract at a
specified exercise price at any time during the period of the option. Upon exercise of a call option, the holder
acquires a long position in the futures contract and the writer is assigned the opposite short position. In the case of
a put option, the opposite is true.
To comply with applicable rules of the CFTC under which the Company and the Fund avoid being deemed a "commodity
pool" or a "commodity pool operator," the Fund intends generally to limit its use of futures contracts and futures
options to "bona fide hedging" transactions, as such term is defined in applicable regulations, interpretations and
practice. For example, the Fund might use futures contracts to hedge against anticipated changes in interest rates that
might adversely affect either the value of the Fund's securities or the price of the securities which the Fund intends to
purchase. The Fund's hedging activities may include sales of futures contracts as an offset against the effect or
expected increases in interest rates, and purchases of futures contracts as an offset against the effect of expected
declines in interest rates. Although other techniques could be used to reduce the Fund's exposure to interest rate
fluctuations, the Fund may be able to hedge its exposure more effectively and perhaps at a lower cost by using futures
contracts and futures options.
The Fund will only enter into futures contracts and futures options which are standardized and traded on a U.S.
or foreign exchange, board of trade, or similar entity, or quoted on an automated quotation system.
When a purchase or sale of a futures contract is made by the Fund, the Fund is required to deposit with its
custodian (or broker, if legally permitted) a specified amount of cash or U.S. Government securities ("initial margin").
The margin required for a futures contract is set by the exchange on which the contract is traded and may be modified
during the term of the contract. The initial margin is in the nature of a performance bond or good faith deposit on the
futures contract which is returned to the Fund upon termination of the contract, assuming all contractual obligations
have been satisfied. The Fund expects to earn interest income on its initial margin deposits. A futures contract held
by the Fund is valued daily at the official settlement price of the exchange on which it is traded. Each day the Fund
pays or receives cash, called "variation margin," equal to the daily change in value of the futures contract. This
process is known as "marking to market." Variation margin does not represent a borrowing or loan by the Fund but is
instead a settlement between the Fund and the broker of the amount one would owe the other if the futures contract
expired. In computing daily net asset value, the Fund will mark to market its open futures positions.
The Fund is also required to deposit and maintain margin with respect to put and call options on futures
contracts written by it. Such margin deposits will vary depending on the nature of the underlying futures contract (and
the related initial margin requirements), the current market value of the option, and other futures positions held by the
Fund.
Although some futures contracts call for making or taking delivery of the underlying securities, generally these
obligations are closed out prior to delivery by offsetting purchases or sales of matching futures contracts (same
exchange, underlying security or index, and delivery month). If an offsetting purchase price is less than the original
sale price, the Fund realizes a capital gain, or if it is more, the Fund realizes a capital loss. Conversely, if an
offsetting sale price is more than the original purchase price, the Fund realizes a capital gain, or if it is less, the
Fund realizes a capital loss. The transaction costs must also be included in these calculations.
Limitations on Use of Futures and Futures Options. In general, the Funds intend to enter into positions in
futures contracts and related options only for "bona fide hedging" purposes. With respect to positions in futures and
related options that do not constitute bona fide hedging positions, the Fund will not enter into a futures contract or
futures option contract if, immediately thereafter, the aggregate initial margin deposits relating to such positions plus
premiums paid by it for open futures option positions, less the amount by which any such options are "in-the-money,"
would exceed 5% of the Fund's total assets. A call option is "in-the-money" if the value of the futures contract that is
the subject of the option exceeds the exercise price. A put option is "in-the-money" if the exercise price exceeds the
value of the futures contract that is the subject of the option.
When purchasing a futures contract, the Fund will maintain with its custodian (and mark-to-market on a daily
basis) cash or other liquid assets that, when added to the amounts deposited with a futures commission merchant as
margin, are equal to the market value of the futures contract. Alternatively, the Fund may "cover" its position by
purchasing a put option on the same futures contract with a strike price as high or higher than the price of the contract
held by the Fund.
When selling a futures contract, the Fund will maintain with its custodian (and mark-to-market on a daily basis)
liquid assets that, when added to the amount deposited with a futures commission merchant as margin, are equal to the
market value of the instruments underlying the contract. Alternatively, the Fund may "cover" its position by owning the
instruments underlying the contract (or, in the case of an index futures contract, a portfolio with a volatility
substantially similar to that of the index on which the futures contract is based), or by holding a call option
permitting the Fund to purchase the same futures contract at a price no higher than the price of the contract written by
the Fund (or at a higher price if the difference is maintained in liquid assets with the Fund's custodian).
When selling a call option on a futures contract, the Fund will maintain with its custodian (and mark-to-market
on a daily basis) cash or other liquid assets that, when added to the amounts deposited with a futures commission
merchant as margin, equal the total market value of the futures contract underlying the call option. Alternatively, the
Fund may cover its position by entering into a long position in the same futures contract at a price no higher than the
strike price of the call option, by owning the instruments underlying the futures contract, or by holding a separate call
option permitting the Fund to purchase the same futures contract at a price not higher than the strike price of the call
option sold by the Fund.
When selling a put option on a futures contract, the Fund will maintain with its custodian (and mark-to market on
a daily basis) cash or other liquid assets that equal the purchase price of the futures contract, less any margin on
deposit. Alternatively, the Fund may cover the position either by entering into a short position in the same futures
contract, or by owning a separate put option permitting it to sell the same futures contract so long as the strike price
of the purchased put option is the same or higher than the strike price of the put option sold by the Fund.
Swap Agreements. The Fund may enter into interest rate, index and currency exchange rate swap agreements for
purposes of attempting to obtain a particular desired return at a lower cost to the Fund than if the Fund had invested
directly in an instrument that yielded that desired return. For a discussion of swap agreements, see the Company's
Prospectus under "Investment Programs of the Funds." The Fund's obligations under a swap agreement will be accrued daily
(offset against any amounts owing to the Fund) and any accrued but unpaid net amounts owed to a swap counterparty will be
covered by segregating cash or other liquid assets to avoid any potential leveraging of the Fund's portfolio. The Fund
will not enter into a swap agreement with any single party if the net amount owned or to be received under existing
contracts with that party would exceed 5% of the Fund's assets.
Whether the Fund's use of swap agreements will be successful in furthering its investment objective of total
return will depend on the Sub-advisor's ability correctly to predict whether certain types of investments are likely to
produce greater returns than other investments. Because they are two party contracts and because they may have terms of
longer than seven days, swap agreements may be considered to be illiquid. Moreover, the Fund bears the risk of loss of
the amount expected to be received under a swap agreement in the event of the default or bankruptcy of a swap agreement
counterparty. The Sub-advisor will cause the Fund to enter into swap agreements only with counterparties that would be
eligible for consideration as repurchase agreement counterparties under the Fund's repurchase agreement guidelines.
Certain restrictions imposed on the Funds by the Internal Revenue Code may limit the Funds' ability to use swap
agreements. The swaps market is a relatively new market and is largely unregulated. It is possible that developments in
the swaps market, including potential government regulation, could adversely affect the Fund's ability to terminate
existing swap agreements or to realize amounts to be received under such agreements.
Certain swap agreements are exempt from most provisions of the Commodity Exchange Act ("CEA") and, therefore, are
not regulated as futures or commodity option transactions under the CEA, pursuant to regulations approved by the CFTC.
To qualify for this exemption, a swap agreement must be entered into by "eligible participants." To be eligible, natural
persons and most other entities must have total assets exceeding $10 million; commodity pools and employee benefit plans
must have assets exceeding $5 million. In addition, an eligible swap transaction must meet three conditions. First, the
swap agreement may not be part of a fungible class of agreements that are standardized as to their material economic
terms. Second, the creditworthiness of parties with actual or potential obligations under the swap agreement must be a
material consideration in entering into or determining the terms of the swap agreement, including pricing, cost or credit
enhancement terms. Third, swap agreements may not be entered into and traded on or through a multilateral transaction
execution facility.
This exemption is not exclusive, and partnerships may continue to rely on existing exclusions for swaps, such as
the Policy Statement issued in July 1989 which recognized a safe harbor for swap transactions from regulation as futures
or commodity option transactions under the CEA or its regulations. The Policy Statement applies to swap transactions
settled in cash that (1) have individual tailored terms, (2) lack exchange-style offset and the use of a clearing
organization or margin system, (3) are undertaken in conjunction with a line of business, and (4) are not marketed to the
public.
Structured Notes. Structured notes are derivative debt securities, the interest rate or principal of which is
related to another economic indicator or financial market index. Indexed securities include structured notes as well as
securities other than debt securities, the interest rate or principal of which is determined by such an unrelated
indicator. Indexed securities may include a multiplier that multiplies the indexed element by a specified factor and,
therefore, the value of such securities may be very volatile. To the extent the Fund invests in these securities,
however, the Sub-advisor analyzes these securities in its overall assessment of the effective duration of the Fund's
portfolio in an effort to monitor the Fund's interest rate risk.
Foreign Currency Exchange-Related Securities. The Fund may invest in foreign currency warrants, principal
exchange rate linked securities and performance indexed paper. For a description of these instruments, see this SAI
under "Certain Risk Factor and Investment Methods."
Warrants to Purchase Securities. The Fund may invest in or acquire warrants to purchase equity or fixed-income
securities. Bonds with warrants attached to purchase equity securities have many characteristics of convertible bonds
and their prices may, to some degree, reflect the performance of the underlying stock. Bonds also may be issued with
warrants attached to purchase additional fixed-income securities at the same coupon rate. A decline in interest rates
would permit the Fund to buy additional bonds at the favorable rate or to sell the warrants at a profit. If interest
rates rise, the warrants would generally expire with no value.
Hybrid Instruments. The Fund may invest up to 5% of its assets in hybrid instruments. A hybrid instrument can
combine the characteristics of securities, futures, and options. Hybrids can be used as an efficient means of pursuing a
variety of investment goals, including currency hedging, duration management, and increased total return. For an
additional discussion of hybrid instruments and certain risks involved therein, see the Company's SAI under "Certain Risk
Factors and Investment Methods."
Inverse Floaters. The Fund may also invest in inverse floating rate debt instruments ("inverse floaters"). The
interest rate on an inverse floater resets in the opposite direction from the market rate of interest to which the
inverse floater is indexed. An inverse floating rate security may exhibit greater price volatility than a fixed rate
obligation of similar credit quality. The Fund will not invest more than 5% of its net assets in any combination of
inverse floater, interest only, or principal only securities.
Loan Participations. The Fund may purchase participations in commercial loans. Such indebtedness may be secured
or unsecured. Loan participations typically represent direct participation in a loan to a corporate borrower, and
generally are offered by banks or other financial institutions or lending syndicates. When purchasing loan
participations, the Fund assumes the credit risk associated with the corporate borrower and may assume the credit risk
associated with an interposed bank or other financial intermediary. The participation interests in which the Fund
intends to invest may not be rated by any nationally recognized rating service.
A loan is often administered by an agent bank acting as agent for all holders. The agent bank administers the
terms of the loan, as specified in the loan agreement. In addition, the agent bank is normally responsible for the
collection of principal and interest payments from the corporate borrower and the apportionment of these payments to the
credit of all institutions which are parties to the loan agreement. Unless, under the terms of the loan or other
indebtedness, the Fund has direct recourse against the corporate borrower, the Fund may have to rely on the agent bank or
other financial intermediary to apply appropriate credit remedies against a corporate borrower.
A financial institution's employment as agent bank might be terminated in the event that it fails to observe a
requisite standard of care or becomes insolvent. A successor agent bank would generally be appointed to replace the
terminated agent bank, and assets held by the agent bank under the loan agreement should remain available to holders of
such indebtedness. However, if assets held by the agent bank for the benefit of the Fund were determined to be subject
to the claims of the agent bank's general creditors, the Fund might incur certain costs and delays in realizing payment
on a loan or loan participation and could suffer a loss of principal and/or interest. In situations involving other
interposed financial institutions (e.g., an insurance company or governmental agency) similar risks may arise.
Purchasers of loans and other forms of direct indebtedness depend primarily upon the creditworthiness of the
corporate borrower for payment of principal and interest. If the Fund does not receive scheduled interest or principal
payments on such indebtedness, the Fund's share price and yield could be adversely affected. Loans that are fully
secured offer the Fund more protection than an unsecured loan in the event of non-payment of scheduled interest or
principal. However, there is no assurance that the liquidation of collateral from a secured loan would satisfy the
corporate borrower's obligation, or that the collateral can be liquidated.
The Fund may invest in loan participations with credit quality comparable to that of issuers of its securities
investments. Indebtedness of companies whose creditworthiness is poor involves substantially greater risks, and may be
highly speculative. Some companies may never pay off their indebtedness, or may pay only a small fraction of the amount
owed. Consequently, when investing in indebtedness of companies with poor credit, the Fund bears a substantial risk of
losing the entire amount invested.
The Fund limits the amount of its total assets that it will invest in any one issuer or in issuers within the
same industry (see "Investment Restrictions"). For purposes of these limits, the Fund generally will treat the corporate
borrower as the "issuer" of indebtedness held by the Fund. In the case of loan participations where a bank or other
lending institution serves as a financial intermediary between the Fund and the corporate borrower, if the participation
does not shift to the Fund the direct debtor-creditor relationship with the corporate borrower, SEC interpretations
require the Fund to treat both the lending bank or other lending institution and the corporate borrower as "issuers" for
the purposes of determining whether the Fund has invested more than 5% of its total assets in a single issuer. Treating
a financial intermediary as an issuer of indebtedness may restrict the Fund's ability to invest in indebtedness related
to a single financial intermediary, or a group of intermediaries engaged in the same industry, even if the underlying
borrowers represent many different companies and industries.
Loan and other types of direct indebtedness may not be readily marketable and may be subject to restrictions on
resale. In some cases, negotiations involved in disposing of indebtedness may require weeks to complete. Consequently,
some indebtedness may be difficult or impossible to dispose of readily at what the Sub-advisor believes to be a fair
price. In addition, valuation of illiquid indebtedness involves a greater degree of judgment in determining the Fund's
net asset value than if that value were based on available market quotations, and could result in significant variations
in the Fund's daily share price. At the same time, some loan interests are traded among certain financial institutions
and accordingly may be deemed liquid. As the market for different types of indebtedness develops, the liquidity of these
instruments is expected to improve. In addition, the Fund currently intends to treat indebtedness for which there is no
readily available market as illiquid for purposes of the Fund's limitation on illiquid investments. Investments in loan
participations are considered to be debt obligations for purposes of the Company's investment restriction relating to the
lending of funds or assets by the Fund.
Investments in loans through a direct assignment of the financial institution's interests with respect to the
loan may involve additional risks to the Fund. For example, if a loan is foreclosed, the Fund could become part owner of
any collateral, and would bear the costs and liabilities associated with owning and disposing of the collateral. In
addition, it is conceivable that under emerging legal theories of lender liability, the Fund could be held liable as
co-lender. It is unclear whether loans and other forms of direct indebtedness offer securities law protections against
fraud and misrepresentation. In the absence of definitive regulatory guidance, the Fund relies on the Sub-advisor's
research in an attempt to avoid situations where fraud or misrepresentation could adversely affect the Fund.
Delayed Funding Loans and Revolving Credit Facilities. The Fund may enter into, or acquire participations in,
delayed funding loans and revolving credit facilities. Delayed funding loans and revolving credit facilities are
borrowing arrangements in which the lender agrees to make loans up to a maximum amount upon demand by the borrower during
a specified term. These commitments may have the effect of requiring the Fund to increase its investment in a company at
a time when it might not otherwise decide to do so (including at a time when the company's financial condition makes it
unlikely that such amounts will be repaid). To the extent that the Fund is committed to advance additional funds, it
will at all times segregate liquid assets, determined to be liquid by the Sub-advisor in accordance with procedures
established by the Board of Directors, in an amount sufficient to meet such commitments. The Fund may invest in delayed
funding loans and revolving credit facilities with credit quality comparable to that of issuers of its securities
investments. Delayed funding loans and revolving credit facilities may be subject to restrictions on transfer, and only
limited opportunities may exist to resell such instruments. As a result, the Fund may be unable to sell such investments
at an opportune time or may have to resell them at less than fair market value. The Fund currently intend to treat
delayed funding loans and revolving credit facilities for which there is no readily available market as illiquid for
purposes of the Fund's limitation on illiquid investments. Participation interests in revolving credit facilities will
be subject to the limitations discussed above under "Loan Participations." Delayed funding loans and revolving credit
facilities are considered to be debt obligations for purposes of the Company's investment restriction relating to the
lending of funds or assets by the Fund.
Lending Portfolio Securities. For the purpose of achieving income, the Fund may lend its portfolio securities,
provided (1) the loan is secured continuously by collateral consisting of U.S. Government securities or cash or cash
equivalents (cash, U.S. Government securities, negotiable certificates of deposit, bankers' acceptances or letters of
credit) maintained on a daily mark-to-market basis in an amount at least equal to the current market value of the
securities loaned, (2) the Fund may at any time call the loan and obtain the return of securities loaned, (3) the Fund
will receive any interest or dividends received on the loaned securities, and (4) the aggregate value of the securities
loaned will not at any time exceed one-third of the total assets of the Fund.
Investment Policies Which May Be Changed Without Shareholder Approval. The following limitations are not
"fundamental" restrictions and may be changed by the Directors of the Company without shareholder approval. The Fund
will not:
1. Invest more than 15% of the assets of the Fund (taken at market value at the time of the investment) in
"illiquid securities;" illiquid securities being defined to include securities subject to legal or contractual
restrictions on resale (which may include private placements), repurchase agreements maturing in more than seven days,
certain options traded over the counter that the Fund has purchased, securities being used to cover options the Fund has
written, securities for which market quotations are not readily available, or other securities which legally or in the
Sub-advisor's option may be deemed illiquid;
2. Purchase securities for the Fund from, or sell portfolio securities to, any of the officers and
directors or trustees of the Company, the Trust, the Investment Manager or the Sub-advisor;
3. Invest more than 5% of the assets of the Fund (taken at market value at the time of investment) in any
combination of interest only, principal only, or inverse floating rate securities;
4. Invest in companies for the purpose of exercising management or control;
5. Purchase securities of open-end or closed-end investment companies except in compliance with the
Investment Company Act of 1940;
6. Purchase securities on margin, except (i) for use of short-term credit necessary for clearance of
purchases of portfolio securities and (ii) the Fund may make margin deposits in connection with futures contracts or
other permissible investments;
7. Purchase or sell oil, gas or other mineral programs;
8. Maintain a short position, or purchase, write or sell puts, calls, straddles, spreads or combinations
thereof, except as set forth in the Company's Prospectus and this SAI for transactions in options, futures, and options
on futures transactions arising under swap agreements or other derivative instruments; or
9. Pledge, mortgage or hypothecate its assets, except as may be necessary in connection with permissible
borrowings or investments; and then such pledging, mortgaging or hypothecating may not exceed 33 1/3% of the Fund's total
assets at the time of borrowing or investment. The deposit of assets in escrow in connection with the writing of covered
put and call options and the purchase of securities on a when-issued or delayed delivery basis, collateral arrangements
with respect to initial or variation margin deposits for future contracts and commitments entered into under swap
agreements or other derivative instruments, will not be deemed to be pledges of the Portfolio's assets.
ASAF Jpm Money Market Fund:
Investment Objective: The investment objective of the Fund is to seek high current income and maintain high levels of
liquidity.
Investment Policies:
Bank Obligations. The Fund will not invest in bank obligations for which any affiliate of the Sub-advisor is the
ultimate obligor or accepting bank.
Asset-Backed Securities. The asset-backed securities in which the Fund may invest are subject to the Fund's
overall credit requirements. However, asset-backed securities, in general, are subject to certain risks. Most of these
risks are related to limited interests in applicable collateral. For example, credit card receivables are generally
unsecured and the debtors are entitled to the protection of a number of state and federal consumer credit laws, many of
which give such debtors the right to set off certain amounts on credit card debt thereby reducing the balance due.
Additionally, if the letter of credit is exhausted, holders of asset-backed securities may also experience delays in
payments or losses if the full amounts due on underlying sales contracts are not realized. Because asset-backed
securities are relatively new, the market experience in these securities is limited and the market's ability to sustain
liquidity through all phases of the market cycle has not been tested. For a discussion of asset-backed securities and
the risks involved therein see the Company's Prospectus and this SAI under "Certain Risk Factors and Investment Methods."
Synthetic Instruments. As may be permitted by current laws and regulations and if expressly permitted by the
Directors of the Company, the Fund may invest in certain synthetic instruments. Such instruments generally involve the
deposit of asset-backed securities in a trust arrangement and the issuance of certificates evidencing interests in the
trust. The certificates are generally sold in private placements in reliance on Rule 144A of the Securities Act of 1933
(without registering the certificates under such Act).
Repurchase Agreements. Subject to guidelines promulgated by the Directors of the Company, the Fund may enter
into repurchase agreements. The repurchase agreements into which the Fund may enter will usually be short, from
overnight to one week, and at no time will the Fund invest in repurchase agreements for more than thirteen months. The
securities which are subject to repurchase agreements, however, may have maturity dates in excess of thirteen months from
the effective date of the repurchase agreement. For a discussion of repurchase agreements and certain risks involved
therein, see the Company's Prospectus under "Certain Risk Factors and Investment Methods."
Reverse Repurchase Agreements. The Fund invests the proceeds of borrowings under reverse repurchase agreements.
The Fund will enter into a reverse repurchase agreement only when the interest income to be earned from the investment of
the proceeds is greater than the interest expense of the transaction. The Fund will not invest the proceeds of a reverse
repurchase agreement for a period which exceeds the duration of the reverse repurchase agreement. The Fund may not enter
into reverse repurchase agreements exceeding in the aggregate one-third of the market value of its total assets, less
liabilities other than the obligations created by reverse repurchase agreements. The Fund will establish and maintain
with its custodian a separate account with a segregated portfolio of securities in an amount at least equal to its
purchase obligations under its reverse repurchase agreements. If interest rates rise during the term of a reverse
repurchase agreement, such reverse repurchase agreement may have a negative impact on the Fund's ability to maintain a
net asset value of $1.00 per share.
Foreign Securities. The Fund may invest in U.S. dollar-denominated foreign securities. Any foreign commercial
paper must not be subject to foreign withholding tax at the time of purchase. Foreign investments may be made directly
in securities of foreign issuers or in the form of American Depositary Receipts ("ADRs") and European Depositary Receipts
("EDRs"). Generally, ADRs and EDRs are receipts issued by a bank or trust company that evidence ownership of underlying
securities issued by a foreign corporation and that are designed for use in the domestic, in the case of ADRs, or
European, in the case of EDRs, securities markets. For a discussion of depositary receipts and the risks involved in
investing in foreign securities, see the Company's Prospectus under "Certain Risk Factors and Investment Methods."
Lending Portfolio Securities. Loans will be subject to termination by the Fund in the normal settlement time,
generally three business days after notice. Borrowed securities must be returned when the loan is terminated. The Fund
may pay reasonable finders' and custodial fees in connection with a loan. In making a loan, the Fund will consider the
creditworthiness of the borrowing financial institution.
Investment Policies Which May Be Changed Without Shareholder Approval. The following limitations are not
"fundamental" restrictions and may be changed by the Directors of the Company without shareholder approval. The Fund
will not:
1. Invest in companies for the purpose of exercising management or control;
2. Purchase securities of open-end or closed-end investment companies except in compliance with the
Investment Company Act of 1940;
3. Purchase securities on margin, make short sales of securities, or maintain a short position, provided
that this restriction shall not be deemed to be applicable to the purchase or sale of when-issued securities or of
securities for delivery at a future date;
4. Acquire any illiquid securities, such as repurchase agreements with more than seven days to maturity or
fixed time deposits with a duration of over seven calendar days, if as a result thereof, more than 10% of the market
value of the Fund's total assets would be in investments which are illiquid;
5. Mortgage, pledge or hypothecate any assets, except as may be necessary in connection with permissible
borrowings or investments; and then such mortgaging, pledging or hypothecating may not exceed 33 1/3% of the Fund's total
assets at the time of borrowing or investment;
6. Purchase or sell puts, calls, straddles, spreads, or any combination thereof, except to the extent
permitted by the Company's Prospectus and this SAI; or
7. Purchase or sell interests in oil, gas or other mineral exploration or development programs.
FUNDAMENTAL INVESTMENT RESTRICTIONS
Investment Restrictions. Each Fund and Portfolio has adopted the following fundamental investment restrictions
which may not be changed without shareholder approval.
1. Senior Securities. No Fund or Portfolio may issue senior securities, except as permitted under the
------------------
Investment Company Act of 1940 (the "1940 Act").
2. Borrowing. No Fund or Portfolio may borrow money, except that a Fund or Portfolio may (i) borrow money for
---------
non-leveraging, temporary or emergency purposes, and (ii) engage in reverse repurchase agreements and make other
investments or engage in other transactions, which may involve a borrowing, in a manner consistent with the Fund or
Portfolio's investment objective and policies; provided that the combination of (i) and (ii) shall not exceed 33 1/3% of
the value of the Fund or Portfolio's assets (including the amount borrowed) less liabilities (other than borrowings) or
such other percentage permitted by law. Any borrowings which come to exceed this amount will be reduced in accordance
with applicable law. Subject to the above limitations, the Funds and Portfolios may borrow from banks or other persons
to the extent permitted by applicable law.
3. Underwriting. No Fund or Portfolio may underwrite securities issued by other persons, except to the extent
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that the Fund or Portfolio may be deemed to be an underwriter (within the meaning of the Securities Act of 1933) in
connection with the purchase and sale of portfolio securities.
4. Real Estate. No Fund or Portfolio may purchase or sell real estate unless acquired as a result of the
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ownership of securities or other instruments; provided that this restriction shall not prohibit a Fund or Portfolio from
investing in securities or other instruments backed by real estate or in securities of companies engaged in the real
estate business.
5. Commodities. No Fund or Portfolio may purchase or sell physical commodities unless acquired as a result of
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the ownership of securities or instruments; provided that this restriction shall not prohibit a Fund or Portfolio from
(i) engaging in permissible options and futures transactions and forward foreign currency contracts in accordance with
the Fund's or Portfolio's investment policies, or (ii) investing in securities of any kind.
6. Lending. No Fund or Portfolio may make loans, except that a Fund or Portfolio may (i) lend portfolio
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securities in accordance with the Fund or Portfolio's investment policies in amounts up to 33 1/3% of the total assets of
the Fund or Portfolio taken at market value, (ii) purchase money market securities and enter into repurchase agreements,
and (iii) acquire publicly distributed or privately placed debt securities and purchase debt.
7. Industry Concentration. No Fund or Portfolio other than the ASAF INVESCO Technology Fund may purchase any
-----------------------
security if, as a result, more than 25% of the value of the Fund or Portfolio's assets would be invested in the
securities of issuers having their principal business activities in the same industry; provided that this restriction
does not apply to investments in obligations issued or guaranteed by the U.S. Government or any of its agencies or
instrumentalities (or repurchase agreements with respect thereto). The ASAF INVESCO Technology Fund may invest more than
25% of the value of its assets in the securities of companies doing business in one or more industries relating to
technology.
8. Diversification. No Fund or Portfolio other than the ASAF Janus Mid-Cap Fund and the ASAF Rydex Managed OTC Fund
---------------
may, with respect to 75% of the value of its total assets, purchase the securities of any issuer (other than securities
issued or guaranteed by the U.S. Government or any of its agencies or instrumentalities) if, as a result, (i) more than
5% of the value of the Fund's or Portfolio's total assets would be invested in the securities of such issuer, or (ii)
more than 10% of the outstanding voting securities of such issuer would be held by the Fund or Portfolio. The ASAF Janus
Mid-Cap Fund and the ASAF Rydex Managed OTC Fund may not, with respect to 50% of its total assets, invest in the securities of
any one issuer (other than the U.S. Government and its agencies and instrumentalities), if immediately after and as a
result of such investment more than 5% of the total assets of the Portfolio would be invested in such issuer.
Notes to Investment Restrictions. The following notes should be read in conjunction with the above fundamental
investment restrictions. These notes are not fundamental policies and may be changed without shareholder approval.
---
o Applicable to All Funds and Portfolios: If a restriction on a Fund's or Portfolio's investments is adhered
---------------------------------------
to at the time an investment is made, a subsequent change in the percentage of Fund or Portfolio assets invested in
certain securities or other instruments, or change in average duration of the Fund's or Portfolio's investment portfolio,
resulting from changes in the value of the Fund's or Portfolio's total assets, will not be considered a violation of the
restriction; provided, however, that the asset coverage requirement applicable to borrowings shall be maintained in the
manner contemplated by applicable law.
o Applicable to All Funds and Portfolios: With respect to investment restrictions (2) and (6), a Fund or
----------------------------------------
Portfolio will not borrow or lend to any other fund unless it applies for and receives an exemptive order from the SEC,
if so required, or the SEC issues rules permitting such transactions. There is no assurance the SEC would grant any
order requested by the Fund or Portfolio or promulgate any rules allowing the transactions.
o Applicable to All Funds and Portfolios. With respect to investment restriction (6), the restriction on
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making loans is not considered to limit a Fund or Portfolio's investments in loan participations and assignments.
o Applicable Only to the ASAF Founders International Small Capitalization Fund: With respect to investment
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restriction (7), the Funds use industry classifications based, where applicable, on Baseline, Bridge Information Systems,
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Reuters, the S&P Stock Guide published by Standard & Poor's, information obtained from Bloomberg L.P. and Moody's
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International, and/or the prospectus of the issuing company. Selection of an appropriate industry classification
resource will be made by the Sub-advisor in the exercise of its reasonable discretion.
o Applicable Only to the ASAF T. Rowe Price Small Company Value Fund: With respect to investment restrictions
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(2) and (6), the Fund has no current intention of borrowing or lending to any other fund. For purposes of investment
restriction (6), the Fund will consider the acquisition of a debt security to include the execution of a note or other
evidence of an extension of credit with a term of more than nine months.
o Applicable only to the ASAF AIM International Equity Fund. With respect to investment restriction (7), the
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Fund will not consider a bank-issued guaranty or financial guaranty insurance as a separate security for purposes of
determining the percentage of the Fund's assets invested in the securities of issuers in a particular industry.
CERTAIN RISK FACTORS AND INVESTMENT METHODS
Some of the investment instruments, techniques and methods which may be used by one or more of the Funds and the
risks attendant thereto are described below. Other risk factors and investment methods may be described in the Company's
Prospectus under "Investment Programs of the Funds" and "Certain Risk Factors and Investment Methods," and in this SAI
under "Investment Programs of the Funds." The risk factors and investment methods described below only apply to those
Funds or Portfolios that may invest in such securities or use such investment methods. The below references to the
investment methods used by the Feeder Funds apply equally to the Funds' corresponding Portfolios.
Debt Obligations. Yields on short, intermediate, and long-term securities are dependent on a variety of factors,
including, the general conditions of the money and bond markets, the size of a particular offering, the maturity of the
obligation, and the rating of the issue. Debt securities with longer maturities tend to produce higher yields and are
generally subject to potentially greater capital appreciation and depreciation than obligations with shorter maturities
and lower yields. The market prices of debt securities usually vary, depending upon available yields. An increase in
prevailing interest rates will generally reduce the value of debt investments, and a decline in interest rates will
generally increase the value of debt investments. The ability of a Fund to achieve its investment objective is also
dependent on the continuing ability of the issuers of the debt securities in which a Fund invests to meet their
obligations for the payment of interest and principal when due.
Special Risks Associated with Low-Rated and Comparable Unrated Securities. Low-rated and comparable unrated
securities, while generally offering higher yields than investment-grade securities with similar maturities, involve
greater risks, including the possibility of default or bankruptcy. They are regarded as predominantly speculative with
respect to the issuer's capacity to pay interest and repay principal. The special risk considerations in connection with
such investments are discussed below. See the Appendix of this SAI for a discussion of securities ratings.
Effect of Interest Rates and Economic Changes. The low-rated and comparable unrated securities market
is relatively new, and its growth paralleled a long economic expansion. As a result, it is not clear how this market may
withstand a prolonged recession or economic downturn. Such a prolonged economic downturn could severely disrupt the
market for and adversely affect the value of such securities.
All interest-bearing securities typically experience appreciation when interest rates decline and
depreciation when interest rates rise. The market values of low-rated and comparable unrated securities tend to reflect
individual corporate developments to a greater extent than do higher-rated securities, which react primarily to
fluctuations in the general level of interest rates. Low-rated and comparable unrated securities also tend to be more
sensitive to economic conditions than are higher-rated securities. During an economic downturn or a sustained period of
rising interest rates, highly leveraged issuers of low-rated and comparable unrated securities may experience financial
stress and may not have sufficient revenues to meet their payment obligations. The issuer's ability to service its debt
obligations may also be adversely affected by specific corporate developments, the issuer's inability to meet specific
projected business forecasts, or the unavailability of additional financing. The risk of loss due to default by an issuer
of low-rated and comparable unrated securities is significantly greater than issuers of higher-rated securities because
such securities are generally unsecured and are often subordinated to other creditors. Further, if the issuer of a
low-rated and comparable unrated security defaulted, a Fund might incur additional expenses to seek recovery. Periods of
economic uncertainty and changes would also generally result in increased fluctuation in the market prices of low-rated
and comparable unrated securities and thus in a Fund's net asset value.
As previously stated, the value of such a security will decrease in a rising interest rate market and
accordingly, so will a Fund's net asset value. If a Fund experiences unexpected net redemptions in such a market, it may
be forced to liquidate a portion of its portfolio securities without regard to their investment merits. Due to the
limited liquidity of some high-yield securities (discussed below), a Fund may be forced to liquidate these securities at
a substantial discount. Any such liquidation would reduce a Fund's asset base over which expenses could be allocated and
could result in a reduced rate of return for a Fund.
Payment Expectations. Low-rated and comparable unrated securities typically contain redemption, call,
or prepayment provisions which permit the issuer of securities containing such provisions to, at their discretion, redeem
the securities. During periods of falling interest rates, issuers of high-yield securities are likely to redeem or
prepay the securities and refinance them with debt securities with a lower interest rate. To the extent an issuer is
able to refinance the securities, or otherwise redeem them, a Fund may have to replace the securities with a
lower-yielding security, which would result in a lower return for a Fund.
Issuers of lower-rated securities are often highly leveraged, so that their ability to service their
debt obligations during an economic downturn or during sustained periods of rising interest rates may be impaired. Such
issuers may not have more traditional methods of financing available to them and may be unable to repay outstanding
obligations at maturity by refinancing. The risk of loss due to default in payment of interest or repayment of principal
by such issuers is significantly greater because such securities frequently are unsecured and subordinated to the prior
payment of senior indebtedness.
Credit Ratings. Credit ratings issued by credit-rating agencies attempt to evaluate the safety of
principal and interest payments of rated securities. They do not, however, evaluate the market value risk of low-rated
and comparable unrated securities and, therefore, may not fully reflect the true risks of an investment. In addition,
credit-rating agencies may or may not make timely changes in a rating to reflect changes in the economy or in the
condition of the issuer that affect the market value of the security. Consequently, credit ratings may be used only as a
preliminary indicator of investment quality. Investments in low-rated and comparable unrated securities will be more
dependent on the applicable Sub-advisor's credit analysis than would be the case with investments in investment-grade
debt securities. Such Sub-advisor may employ its own credit research and analysis, which could include a study of
existing debt, capital structure, ability to service debt and to pay dividends, the issuer's sensitivity to economic
conditions, its operating history, and the current trend of earnings. The Sub-advisors continually monitor the
investments in a Fund and evaluate whether to dispose of or to retain low-rated and comparable unrated securities whose
credit ratings or credit quality may have changed.
Liquidity and Valuation. A Fund may have difficulty disposing of certain low-rated and comparable
unrated securities because there may be a thin trading market for such securities. There is no established retail
secondary market for many of these securities. A Fund anticipates that such securities could be sold only to a limited
number of dealers or institutional investors. To the extent a secondary trading market does exist, it is generally not
as liquid as the secondary market for higher-rated securities. The lack of a liquid secondary market may have an adverse
impact on the market price of the security. As a result, a Fund's asset value and a Fund's ability to dispose of
particular securities, when necessary to meet a Fund's liquidity needs or in response to a specific economic event, may
be impacted. The lack of a liquid secondary market for certain securities may also make it more difficult for a Fund to
obtain accurate market quotations for purposes of valuing a portfolio. Market quotations are generally available on many
low-rated and comparable unrated issues only from a limited number of dealers and may not necessarily represent firm bids
of such dealers or prices for actual sales. During periods of thin trading, the spread between bid and asked prices is
likely to increase significantly. In addition, adverse publicity and investor perceptions, whether or not based on
fundamental analysis, may decrease the values and liquidity of low-rated and comparable unrated securities, especially in
a thinly-traded market.
Put and Call Options:
Writing (Selling) Call Options. A call option gives the holder (buyer) the "right to purchase" a
security or currency at a specified price (the exercise price), at expiration of the option (European style) or at any
time until a certain date (the expiration date) (American style). So long as the obligation of the writer of a call
option continues, he may be assigned an exercise notice by the broker-dealer through whom such option was sold, requiring
him to deliver the underlying security or currency against payment of the exercise price. This obligation terminates
upon the expiration of the call option, or such earlier time at which the writer effects a closing purchase transaction
by purchasing an option identical to that previously sold.
When writing a call option, a Fund, in return for the premium, gives up the opportunity for profit from
a price increase in the underlying security or currency above the exercise price, but conversely retains the risk of loss
should the price of the security or currency decline. Unlike one who owns securities or currencies not subject to an
option, a Fund has no control over when it may be required to sell the underlying securities or currencies, since it may
be assigned an exercise notice at any time prior to the expiration of its obligation as a writer. If a call option which
a Fund has written expires, the Fund will realize a gain in the amount of the premium; however, such gain may be offset
by a decline in the market value of the underlying security or currency during the option period. If the call option is
exercised, a Fund will realize a gain or loss from the sale of the underlying security or currency.
Writing (Selling) Put Options. A put option gives the purchaser of the option the right to sell, and
the writer (seller) has the obligation to buy, the underlying security or currency at the exercise price during the
option period (American style) or at the expiration of the option (European style). So long as the obligation of the
writer continues, he may be assigned an exercise notice by the broker-dealer through whom such option was sold, requiring
him to make payment of the exercise price against delivery of the underlying security or currency. The operation of put
options in other respects, including their related risks and rewards, is substantially identical to that of call options.
Premium Received from Writing Call or Put Options. A Fund will receive a premium from writing a put or
call option, which increases such Fund's return in the event the option expires unexercised or is closed out at a
profit. The amount of the premium will reflect, among other things, the relationship of the market price of the
underlying security to the exercise price of the option, the term of the option and the volatility of the market price of
the underlying security. By writing a call option, a Fund limits its opportunity to profit from any increase in the
market value of the underlying security above the exercise price of the option. By writing a put option, a Fund assumes
the risk that it may be required to purchase the underlying security for an exercise price higher than its then current
market value, resulting in a potential capital loss if the purchase price exceeds the market value plus the amount of the
premium received, unless the security subsequently appreciates in value.
Closing Transactions. A Fund may terminate an option that it has written prior to its expiration by
entering into a closing purchase transaction in which it purchases an option having the same terms as the option
written. Closing transactions may be effected in order to realize a profit on an outstanding call option, to prevent an
underlying security or currency from being called, or, to permit the sale of the underlying security or currency. A Fund
will realize a profit or loss from such transaction if the cost of such transaction is less or more than the premium
received from the writing of the option. In the case of a put option, any loss so incurred may be partially or entirely
offset by the premium received from a simultaneous or subsequent sale of a different put option. Because increases in
the market price of a call option will generally reflect increases in the market price of the underlying security, any
loss resulting from the repurchase of a call option is likely to be offset in whole or in part by unrealized appreciation
of the underlying security owned by such Fund.
Furthermore, effecting a closing transaction will permit a Fund to write another call option on the
underlying security or currency with either a different exercise price or expiration date or both. If a Fund desires to
sell a particular security or currency from its portfolio on which it has written a call option, or purchased a put
option, it will seek to effect a closing transaction prior to, or concurrently with, the sale of the security or
currency. There is, of course, no assurance that a Fund will be able to effect such closing transactions at a favorable
price. If a Fund cannot enter into such a transaction, it may be required to hold a security or currency that it might
otherwise have sold. When a Fund writes a covered call option, it runs the risk of not being able to participate in the
appreciation of the underlying securities or currencies above the exercise price, as well as the risk of being required
to hold on to securities or currencies that are depreciating in value. This could result in higher transaction costs. A
Fund will pay transaction costs in connection with the writing of options to close out previously written options. Such
transaction costs are normally higher than those applicable to purchases and sales of portfolio securities.
Purchasing Call Options. Call options may be purchased by a Fund for the purpose of acquiring the
underlying securities or currencies for its portfolio. Utilized in this fashion, the purchase of call options enables a
Fund to acquire the securities or currencies at the exercise price of the call option plus the premium paid. At times
the net cost of acquiring securities or currencies in this manner may be less than the cost of acquiring the securities
or currencies directly. This technique may also be useful to a Fund in purchasing a large block of securities or
currencies that would be more difficult to acquire by direct market purchases. So long as it holds such a call option
rather than the underlying security or currency itself, a Fund is partially protected from any unexpected decline in the
market price of the underlying security or currency and in such event could allow the call option to expire, incurring a
loss only to the extent of the premium paid for the option.
Purchasing Put Options. A Fund may purchase a put option on an underlying security or currency owned by
the Fund (a "protective put") as a defensive technique in order to protect against an anticipated decline in the value of
the security or currency. Such hedge protection is provided only during the life of the put option when the Fund, as the
holder of the put option, is able to sell the underlying security or currency at the put exercise price regardless of any
decline in the underlying security's market price or currency's exchange value. For example, a put option may be
purchased in order to protect unrealized appreciation of a security or currency where a Sub-advisor deems it desirable to
continue to hold the security or currency because of tax considerations. The premium paid for the put option and any
transaction costs would reduce any capital gain otherwise available for distribution when the security or currency is
eventually sold.
If a Fund purchases put options at a time when the Fund does not own the underlying security or
currency, the Fund seeks to benefit from a decline in the market price of the underlying security or currency. If the
put option is not sold when it has remaining value, and if the market price of the underlying security or currency
remains equal to or greater than the exercise price during the life of the put option, a Fund will lose its entire
investment in the put option. In order for the purchase of a put option to be profitable, the market price of the
underlying security or currency must decline sufficiently below the exercise price to cover the premium and transaction
costs.
Dealer Options. Exchange-traded options generally have a continuous liquid market while dealer options
have none. Consequently, a Fund will generally be able to realize the value of a dealer option it has purchased only by
exercising it or reselling it to the dealer who issued it. Similarly, when a Fund writes a dealer option, it generally
will be able to close out the option prior to its expiration only by entering into a closing purchase transaction with
the dealer to which the Fund originally wrote the option. While a Fund will seek to enter into dealer options only with
dealers who will agree to and which are expected to be capable of entering into closing transactions with the Fund, there
can be no assurance that the Fund will be able to liquidate a dealer option at a favorable price at any time prior to
expiration. Until a Fund, as a covered dealer call option writer, is able to effect a closing purchase transaction, it
will not be able to liquidate securities (or other assets) used as cover until the option expires or is exercised. In
the event of insolvency of the other party, a Fund may be unable to liquidate a dealer option. With respect to options
written by a Fund, the inability to enter into a closing transaction may result in material losses to a Fund. For
example, since a Fund must maintain a secured position with respect to any call option on a security it writes, a Fund
may not sell the assets which it has segregated to secure the position while it is obligated under the option. This
requirement may impair a Fund's ability to sell portfolio securities at a time when such sale might be advantageous.
The Staff of the SEC has taken the position that purchased dealer options and the assets used to secure
the written dealer options are illiquid securities. A Fund may treat the cover used for written OTC options as liquid if
the dealer agrees that the Fund may repurchase the OTC option it has written for a maximum price to be calculated by a
predetermined formula. In such cases, the OTC option would be considered illiquid only to the extent the maximum
repurchase price under the formula exceeds the intrinsic value of the option. To this extent, a Fund will treat dealer
options as subject to a Fund's limitation on unmarketable or illiquid securities. If the SEC changes its position on the
liquidity of dealer options, a Fund will change its treatment of such instrument accordingly.
Certain Risk Factors in Writing Call Options and in Purchasing Call and Put Options. During the option period, a
Fund, as writer of a call option has, in return for the premium received on the option, given up the opportunity for
capital appreciation above the exercise price should the market price of the underlying security increase, but has
retained the risk of loss should the price of the underlying security decline. The writer has no control over the time
when it may be required to fulfill its obligation as a writer of the option. The risk of purchasing a call or put option
is that a Fund may lose the premium it paid plus transaction costs. If a Fund does not exercise the option and is unable
to close out the position prior to expiration of the option, it will lose its entire investment.
An exchange-traded option position may be closed out only on an exchange which provides a secondary market.
There can be no assurance that a liquid secondary market will exist for a particular option at a particular time and that
a Fund can close out its position by effecting a closing transaction. If a Fund is unable to effect a closing purchase
transaction, it cannot sell the underlying security until the option expires or the option is exercised. Accordingly, a
Fund may not be able to sell the underlying security at a time when it might otherwise be advantageous to do so.
Possible reasons for the absence of a liquid secondary market include the following: (i) insufficient trading interest in
certain options; (ii) restrictions on transactions imposed by an exchange; (iii) trading halts, suspensions or other
restrictions imposed with respect to particular classes or series of options or underlying securities; (iv) inadequacy of
the facilities of an exchange or the clearing corporation to handle trading volume; and (v) a decision by one or more
exchanges to discontinue the trading of options or impose restrictions on orders. In addition, the hours of trading for
options may not conform to the hours during which the underlying securities are traded. To the extent that the options
markets close before the markets for the underlying securities, significant price and rate movements can take place in
the underlying markets that cannot be reflected in the options markets. The purchase of options is a highly specialized
activity which involves investment techniques and risks different from those associated with ordinary portfolio
securities transactions.
Each exchange has established limitations governing the maximum number of call options, whether or not covered,
which may be written by a single investor acting alone or in concert with others (regardless of whether such options are
written on the same or different exchanges or are held or written on one or more accounts or through one or more
brokers). An exchange may order the liquidation of positions found to be in violation of these limits and it may impose
other sanctions or restrictions.
Options on Stock Indices. Options on stock indices are similar to options on specific securities except that,
rather than the right to take or make delivery of the specific security at a specific price, an option on a stock index
gives the holder the right to receive, upon exercise of the option, an amount of cash if the closing level of that stock
index is greater than, in the case of a call, or less than, in the case of a put, the exercise price of the option. This
amount of cash is equal to such difference between the closing price of the index and the exercise price of the option
expressed in dollars multiplied by a specified multiple. The writer of the option is obligated, in return for the
premium received, to make delivery of this amount. Unlike options on specific securities, all settlements of options on
stock indices are in cash and gain or loss depends on general movements in the stocks included in the index rather than
price movements in particular stocks.
Risk Factors of Options on Indices. Because the value of an index option depends upon the movements in the level
of the index rather than upon movements in the price of a particular security, whether a Fund will realize a gain or a
loss on the purchase or sale of an option on an index depends upon the movements in the level of prices in the market
generally or in an industry or market segment rather than upon movements in the price of the individual security.
Accordingly, successful use of positions will depend upon a Sub-advisor's ability to predict correctly movements in the
direction of the market generally or in the direction of a particular industry. This requires different skills and
techniques than predicting changes in the prices of individual securities.
Index prices may be distorted if trading of securities included in the index is interrupted. Trading in index
options also may be interrupted in certain circumstances, such as if trading were halted in a substantial number of
securities in the index. If this occurred, a Fund would not be able to close out options which it had written or
purchased and, if restrictions on exercise were imposed, might be unable to exercise an option it purchased, which would
result in substantial losses.
Price movements in portfolio securities will not correlate perfectly with movements in the level of the index and
therefore, a Fund bears the risk that the price of the securities may not increase as much as the level of the index. In
this event, the Fund would bear a loss on the call which would not be completely offset by movements in the prices of the
securities. It is also possible that the index may rise when the value of a Fund's securities does not. If this
occurred, a Fund would experience a loss on the call which would not be offset by an increase in the value of its
securities and might also experience a loss in the market value of its securities.
Unless a Fund has other liquid assets which are sufficient to satisfy the exercise of a call on the index, the
Fund will be required to liquidate securities in order to satisfy the exercise. When a Fund has written a call on an
index, there is also the risk that the market may decline between the time the Fund has the call exercised against it, at
a price which is fixed as of the closing level of the index on the date of exercise, and the time the Fund is able to
sell securities. As with options on securities, the Sub-advisor will not learn that a call has been exercised until the
day following the exercise date, but, unlike a call on securities where a Fund would be able to deliver the underlying
security in settlement, a Fund may have to sell part of its securities in order to make settlement in cash, and the price
of such securities might decline before they could be sold.
If a Fund exercises a put option on an index which it has purchased before final determination of the closing
index value for the day, it runs the risk that the level of the underlying index may change before closing. If this
change causes the exercised option to fall "out-of-the-money," the Fund will be required to pay the difference between
the closing index value and the exercise price of the option (multiplied by the applicable multiplier) to the assigned
writer. Although a Fund may be able to minimize this risk by withholding exercise instructions until just before the
daily cutoff time or by selling rather than exercising an option when the index level is close to the exercise price, it
may not be possible to eliminate this risk entirely because the cutoff time for index options may be earlier than those
fixed for other types of options and may occur before definitive closing index values are announced.
Trading in Futures. A futures contract provides for the future sale by one party and purchase by another party
of a specified amount of a specific financial instrument (e.g., units of a stock index) at a specified price, date, time
and place designated at the time the contract is made. Brokerage fees are incurred when a futures contract is bought or
sold and margin deposits must be maintained. Entering into a contract to buy is commonly referred to as buying or
purchasing a contract or holding a long position. Entering into a contract to sell is commonly referred to as selling a
contract or holding a short position.
Unlike when a Fund purchases or sells a security, no price would be paid or received by a Fund upon the purchase
or sale of a futures contract. Upon entering into a futures contract, and to maintain a Fund's open positions in futures
contracts, a Fund would be required to deposit with its custodian in the name of the futures broker an amount of cash,
U.S. government securities, suitable money market instruments, or other liquid securities, known as "initial margin." A
margin deposit is intended to ensure a Fund's performance of the futures contract. The initial margin required for a
particular futures contract is set by the exchange on which the contract is traded, and may be significantly modified
from time to time by the exchange during the term of the contract. Futures contracts are customarily purchased and sold
on margins that may range upward from less than 5% of the value of the contract being traded.
If the price of an open futures contract changes (by increase in the case of a sale or by decrease in the case of
a purchase) so that the loss on the futures contract reaches a point at which the margin on deposit does not satisfy
margin requirements, the broker will require an increase in the margin. However, if the value of a position increases
because of favorable price changes in the futures contract so that the margin deposit exceeds the required margin, the
broker will pay the excess to a Fund.
These subsequent payments, called "variation margin," to and from the futures broker are made on a daily basis as
the price of the underlying assets fluctuate making the long and short positions in the futures contract more or less
valuable, a process known as "marking to the market." A Fund may or may not earn interest income on its margin
deposits. Although certain futures contracts, by their terms, require actual future delivery of and payment for the
underlying instruments, in practice most futures contracts are usually closed out before the delivery date. Closing out
an open futures contract purchase or sale is effected by entering into an offsetting futures contract purchase or sale,
respectively, for the same aggregate amount of the identical securities and the same delivery date. If the offsetting
purchase price is less than the original sale price, a Fund realizes a gain; if it is more, a Fund realizes a loss.
Conversely, if the offsetting sale price is more than the original purchase price, a Fund realizes a gain; if it is less,
a Fund realizes a loss. The transaction costs must also be included in these calculations. There can be no assurance,
however, that a Fund will be able to enter into an offsetting transaction with respect to a particular futures contract
at a particular time. If a Fund is not able to enter into an offsetting transaction, a Fund will continue to be required
to maintain the margin deposits on the futures contract.
A stock index futures contract is an agreement in which one party agrees to deliver to the other an amount of
cash equal to a specific amount multiplied by the difference between the value of a specific stock index at the close of
the last trading day of the contract and the price at which the agreement is made. No physical delivery of securities is
made. For example, one contract in the Financial Times Stock Exchange 100 Index future is a contract to buy 25 pounds
sterling multiplied by the level of the UK Financial Times 100 Share Index on a given future date. Settlement of a stock
index futures contract may or may not be in the underlying security. If not in the underlying security, then settlement
will be made in cash, equivalent over time to the difference between the contract price and the actual price of the
underlying asset at the time the stock index futures contract expires.
Options on futures are similar to options on underlying instruments except that options on futures give the
purchaser the right, in return for the premium paid, to assume a position in a futures contract (a long position if the
option is a call and a short position if the option is a put), rather than to purchase or sell the futures contract, at a
specified exercise price at any time during the period of the option. Upon exercise of the option, the delivery of the
futures position by the writer of the option to the holder of the option will be accompanied by the delivery of the
accumulated balance in the writer's futures margin account which represents the amount by which the market price of the
futures contract, at exercise, exceeds (in the case of a call) or is less than (in the case of a put) the exercise price
of the option on the futures contract. Alternatively, settlement may be made totally in cash. Purchasers of options who
fail to exercise their options prior to the exercise date suffer a loss of the premium paid.
The writer of an option on a futures contract is required to deposit margin pursuant to requirements similar to
those applicable to futures contracts. Upon exercise of an option on a futures contract, the delivery of the futures
position by the writer of the option to the holder of the option will be accompanied by delivery of the accumulated
balance in the writer's margin account. This amount will be equal to the amount by which the market price of the futures
contract at the time of exercise exceeds, in the case of a call, or is less than, in the case of a put, the exercise
price of the option on the futures contract.
Although financial futures contracts by their terms call for actual delivery or acceptance of securities, in most
cases the contracts are closed out before the settlement date without the making or taking of delivery. Closing out is
accomplished by effecting an offsetting transaction. A futures contract sale is closed out by effecting a futures
contract purchase for the same aggregate amount of securities and the same delivery date. If the sale price exceeds the
offsetting purchase price, the seller immediately would be paid the difference and would realize a gain. If the
offsetting purchase price exceeds the sale price, the seller would immediately pay the difference and would realize a
loss. Similarly, a futures contract purchase is closed out by effecting a futures contract sale for the same securities
and the same delivery date. If the offsetting sale price exceeds the purchase price, the purchaser would realize a gain,
whereas if the purchase price exceeds the offsetting sale price, the purchaser would realize a loss. Commissions on
financial futures contracts and related options transactions may be higher than those which would apply to purchases and
sales of securities directly.
A public market exists in interest rate futures contracts covering primarily the following financial instruments:
U.S. Treasury bonds; U.S. Treasury notes; Government National Mortgage Association ("GNMA") modified pass-through
mortgage-backed securities; three-month U.S. Treasury bills; 90-day commercial paper; bank certificates of deposit; and
Eurodollar certificates of deposit. It is expected that futures contracts trading in additional financial instruments
will be authorized. The standard contract size is generally $100,000 for futures contracts in U.S. Treasury bonds, U.S.
Treasury notes, and GNMA pass-through securities and $1,000,000 for the other designated futures contracts. A public
market exists in futures contracts covering a number of indices, including, but not limited to, the Standard & Poor's 500
Index, the Standard & Poor's 100 Index, the NASDAQ 100 Index, the Value Line Composite Index and the New York Stock
Exchange Composite Index.
Regulatory Matters Relating to Futures Contracts and Related Options. The Staff of the SEC has taken the
position that the purchase and sale of futures contracts and the writing of related options may give rise to "senior
securities" for the purposes of the restrictions contained in Section 18 of the 1940 Act on investment companies' issuing
senior securities. However, the Staff has taken the position that no senior security will be created if a Fund
segregates an amount of cash or other liquid assets at least equal to the amount of the Fund's obligation under the
futures contract or option. Each Fund will conduct its purchases and sales of any futures contracts and writing of
related options transactions in accordance with this requirement.
Certain Risks Relating to Futures Contracts and Related Options. There are special risks involved in futures
transactions.
Volatility and Leverage. The prices of futures contracts are volatile and are influenced, among other
things, by actual and anticipated changes in the market and interest rates, which in turn are affected by fiscal and
monetary policies and national and international policies and economic events.
Most United States futures exchanges limit the amount of fluctuation permitted in futures contract
prices during a single trading day. The daily limit establishes the maximum amount that the price of a futures contract
may vary either up or down from the previous day's settlement price at the end of a trading session. Once the daily
limit has been reached in a particular type of futures contract, no trades may be made on that day at a price beyond that
limit. The daily limit governs only price movement during a particular trading day and therefore does not limit potential
losses, because the limit may prevent the liquidation of unfavorable positions. Futures contract prices have
occasionally moved to the daily limit for several consecutive trading days with little or no trading, thereby preventing
prompt liquidation of futures positions and subjecting some futures traders to substantial losses.
Because of the low margin deposits required, futures trading involves an extremely high degree of
leverage. As a result, a relatively small price movement in a futures contract may result in immediate and substantial
loss, as well as gain, to the investor. For example, if at the time of purchase, 10% of the value of the futures
contract is deposited as margin, a subsequent 10% decrease in the value of the futures contract would result in a total
loss of the margin deposit, before any deduction for the transaction costs, if the account were then closed out. A 15%
decrease would result in a loss equal to 150% of the original margin deposit, if the contract were closed out. Thus, a
purchase or sale of a futures contract may result in losses in excess of the amount invested in the futures contract.
However, a Fund would presumably have sustained comparable losses if, instead of the futures contract, it had invested in
the underlying instrument and sold it after the decline. Furthermore, in the case of a futures contract purchase, in
order to be certain that a Fund has sufficient assets to satisfy its obligations under a futures contract, a Fund
earmarks to the futures contract liquid assets equal in value to the current value of the underlying instrument less the
margin deposit.
Liquidity. A Fund may elect to close some or all of its futures positions at any time prior to their
expiration. A Fund would do so to reduce exposure represented by long futures positions or increase exposure represented
by short futures positions. A Fund may close its positions by taking opposite positions which would operate to terminate
the Fund's position in the futures contracts. Final determinations of variation margin would then be made, additional
cash would be required to be paid by or released to a Fund, and such Fund would realize a loss or a gain.
Futures contracts may be closed out only on the exchange or board of trade where the contracts were
initially traded. Although a Fund may intend to purchase or sell futures contracts only on exchanges or boards of trade
where there appears to be an active market, there is no assurance that a liquid market on an exchange or board of trade
will exist for any particular contract at any particular time. In such event, it might not be possible to close a
futures contract, and in the event of adverse price movements, a Fund would continue to be required to make daily cash
payments of variation margin. However, in the event futures contracts have been used to hedge the underlying
instruments, a Fund would continue to hold the underlying instruments subject to the hedge until the futures contracts
could be terminated. In such circumstances, an increase in the price of the underlying instruments, if any, might
partially or completely offset losses on the futures contract. However, as described below, there is no guarantee that
the price of the underlying instruments will, in fact, correlate with the price movements in the futures contract and
thus provide an offset to losses on a futures contract.
Hedging Risk. A decision of whether, when, and how to hedge involves skill and judgment, and even a
well-conceived hedge may be unsuccessful to some degree because of unexpected market behavior, market or interest rate
trends. There are several risks in connection with the use by a Fund of futures contracts as a hedging device. One risk
arises because of the imperfect correlation between movements in the prices of the futures contracts and movements in the
prices of the underlying instruments which are the subject of the hedge. The Sub-advisor will, however, attempt to
reduce this risk by entering into futures contracts whose movements, in its judgment, will have a significant correlation
with movements in the prices of a Fund's underlying instruments sought to be hedged.
Successful use of futures contracts by a Fund for hedging purposes is also subject to a Sub-advisor's
ability to correctly predict movements in the direction of the market. It is possible that, when a Fund has sold futures
to hedge its portfolio against a decline in the market, the index, indices, or underlying instruments on which the
futures are written might advance and the value of the underlying instruments held in the Fund's portfolio might
decline. If this were to occur, a Fund would lose money on the futures and also would experience a decline in value in
its underlying instruments. However, while this might occur to a certain degree, the Sub-advisor may believe that over
time the value of a Fund's portfolio will tend to move in the same direction as the market indices which are intended to
correlate to the price movements of the underlying instruments sought to be hedged. It is also possible that if a Fund
were to hedge against the possibility of a decline in the market (adversely affecting the underlying instruments held in
its portfolio) and prices instead increased, the Fund would lose part or all of the benefit of increased value of those
underlying instruments that it has hedged, because it would have offsetting losses in its futures positions. In
addition, in such situations, if a Fund had insufficient cash, it might have to sell underlying instruments to meet daily
variation margin requirements. Such sales of underlying instruments might be, but would not necessarily be, at increased
prices (which would reflect the rising market). A Fund might have to sell underlying instruments at a time when it would
be disadvantageous to do so.
In addition to the possibility that there might be an imperfect correlation, or no correlation at all,
between price movements in the futures contracts and the portion of the portfolio being hedged, the price movements of
futures contracts might not correlate perfectly with price movements in the underlying instruments due to certain market
distortions. First, all participants in the futures market are subject to margin deposit and maintenance requirements.
Rather than meeting additional margin deposit requirements, investors might close futures contracts through offsetting
transactions which could distort the normal relationship between the underlying instruments and futures markets. Second,
the margin requirements in the futures market are less onerous than margin requirements in the securities markets, and as
a result the futures market might attract more speculators than the securities markets do. Increased participation by
speculators in the futures market might also cause temporary price distortions. Due to the possibility of price
distortion in the futures market and also because of the imperfect correlation between price movements in the underlying
instruments and movements in the prices of futures contracts, even a correct forecast of general market trends by the
Sub-advisor might not result in a successful hedging transaction over a very short time period.
Certain Risks of Options on Futures Contracts. A Fund may seek to close out an option position by writing or
buying an offsetting option covering the same index, underlying instruments, or contract and having the same exercise
price and expiration date. The ability to establish and close out positions on such options will be subject to the
maintenance of a liquid secondary market. Reasons for the absence of a liquid secondary market on an exchange include
the following: (i) there may be insufficient trading interest in certain options; (ii) restrictions may be imposed by an
exchange on opening transactions or closing transactions or both; (iii) trading halts, suspensions or other restrictions
may be imposed with respect to particular classes or series of options, or underlying instruments; (iv) unusual or
unforeseen circumstances may interrupt normal operations on an exchange; (v) the facilities of an exchange or a clearing
corporation may not at all times be adequate to handle current trading volume; or (vi) one or more exchanges could, for
economic or other reasons, decide or be compelled at some future date to discontinue the trading of options (or a
particular class or series of options), in which event the secondary market on that exchange (or in the class or series
of options) would cease to exist, although outstanding options on the exchange that had been issued by a clearing
corporation as a result of trades on that exchange would continue to be exercisable in accordance with their terms.
There is no assurance that higher than anticipated trading activity or other unforeseen events might not, at times,
render certain of the facilities of any of the clearing corporations inadequate, and thereby result in the institution by
an exchange of special procedures which may interfere with the timely execution of customers' orders.
Foreign Futures and Options. Participation in foreign futures and foreign options transactions involves the
execution and clearing of trades on or subject to the rules of a foreign board of trade. Neither the National Futures
Association nor any domestic exchange regulates activities of any foreign boards of trade, including the execution,
delivery and clearing of transactions, or has the power to compel enforcement of the rules of a foreign board of trade or
any applicable foreign law. This is true even if the exchange is formally linked to a domestic market so that a position
taken on the market may be liquidated by a transaction on another market. Moreover, such laws or regulations will vary
depending on the foreign country in which the foreign futures or foreign options transaction occurs. For these reasons,
customers who trade foreign futures or foreign options contracts may not be afforded certain of the protective measures
provided by the Commodity Exchange Act, the CFTC regulations and the rules of the National Futures Association and any
domestic exchange, including the right to use reparations proceedings before the CFTC and arbitration proceedings
provided by the National Futures Association or any domestic futures exchange. In particular, funds received from
customers for foreign futures or foreign options transactions may not be provided the same protections as funds received
in respect of transactions on United States futures exchanges. In addition, the price of any foreign futures or foreign
options contract and, therefore, the potential profit and loss thereon may be affected by any variance in the foreign
exchange rate between the time an order is placed and the time it is liquidated, offset or exercised.
Foreign Currency Contracts. A forward foreign currency exchange contract involves an obligation to purchase or
sell a specific currency at a future date, which may be any fixed number of days from the date of the contract agreed
upon by the parties, at a price set at the time of the contract. These contracts are principally traded in the interbank
market conducted directly between currency traders (usually large, commercial banks) and their customers. A forward
contract generally has no deposit requirement, and no commissions are charged at any stage for trades.
Depending on the applicable investment policies and restrictions applicable to a Fund, a Fund may generally enter
into forward foreign currency exchange contracts under two circumstances. First, when a Fund enters into a contract for
the purchase or sale of a security denominated in a foreign currency, it may desire to "lock in" the U.S. dollar price of
the security. By entering into a forward contract for the purchase or sale, for a fixed amount of dollars, of the amount
of foreign currency involved in the underlying security transactions, the Fund may be able to protect itself against a
possible loss resulting from an adverse change in the relationship between the U.S. dollar and the subject foreign
currency during the period between the date the security is purchased or sold and the date on which payment is made or
received.
Second, when a Sub-advisor believes that the currency of a particular foreign country may suffer or enjoy a
substantial movement against another currency, including the U.S. dollar, it may enter into a forward contract to sell or
buy the amount of the former foreign currency, approximating the value of some or all of a Fund's securities denominated
in such foreign currency. Alternatively, where appropriate, a Fund may hedge all or part of its foreign currency
exposure through the use of a basket of currencies or a proxy currency where such currencies or currency act as an
effective proxy for other currencies. In such a case, a Fund may enter into a forward contract where the amount of the
foreign currency to be sold exceeds the value of the Fund's securities denominated in such currency. The use of this
basket hedging technique may be more efficient and economical than entering into separate forward contracts for each
currency held in a Fund. The precise matching of the forward contract amounts and the value of the securities involved
will not generally be possible since the future value of such securities in foreign currencies will change as a
consequence of market movements in the value of those securities between the date the forward contract is entered into
and the date it matures. The projection of short-term currency market movement is extremely difficult, and the
successful execution of a short-term hedging strategy is highly uncertain.
As indicated above, it is impossible to forecast with absolute precision the market value of portfolio securities
at the expiration of the forward contract. Accordingly, it may be necessary for a Fund to purchase additional foreign
currency on the spot market (and bear the expense of such purchase) if the market value of the security is less than the
amount of foreign currency a Fund is obligated to deliver and if a decision is made to sell the security and make
delivery of the foreign currency. Conversely, it may be necessary to sell on the spot market some of the foreign
currency received upon the sale of the portfolio security if its market value exceeds the amount of foreign currency a
Fund is obligated to deliver. However, as noted, in order to avoid excessive transactions and transaction costs, a Fund
may use liquid assets denominated in any currency to cover the amount by which the value of a forward contract exceeds
the value of the securities to which it relates.
If a Fund retains the portfolio security and engages in an offsetting forward contract transaction, the Fund will
incur a gain or a loss (as described below) to the extent that there has been movement in forward contract prices. If
the Fund engages in an offsetting transaction, it may subsequently enter into a new forward contract to sell the foreign
currency. Should forward prices decline during the period between a Fund's entering into a forward contract for the sale
of a foreign currency and the date it enters into an offsetting contract for the purchase of the foreign currency, the
Fund will realize a gain to the extent the price of the currency it has agreed to sell exceeds the price of the currency
it has agreed to purchase. Should forward prices increase, a Fund will suffer a loss to the extent of the price of the
currency it has agreed to purchase exceeds the price of the currency it has agreed to sell.
Currency Futures Contracts and Related Options. A currency futures contract sale creates an obligation by a
Fund, as seller, to deliver the amount of currency called for in the contract at a specified future time for a special
price. A currency futures contract purchase creates an obligation by a Fund, as purchaser, to take delivery of an amount
of currency at a specified future time at a specified price. Unlike forward foreign currency exchange contracts,
currency futures contracts are standardized as to amount and delivery period and are traded on boards of trade and
commodities exchanges. Although the terms of currency futures contracts specify actual delivery or receipt, in most
instances the contracts are closed out before the settlement date without the making or taking of delivery of the
currency. Closing out of a currency futures contract is effected by entering into an offsetting purchase or sale
transaction. Unlike a currency futures contract, which requires the parties to buy and sell currency on a set date, an
option on a currency futures contract entitles its holder to decide on or before a future date whether to enter into such
a contract. If the holder decides not to enter into the contract, the premium paid for the option is fixed at the point
of sale.
Interest Rate Swaps and Interest Rate Caps and Floors. Interest rate swaps involve the exchange by the Fund with
another party of their respective commitments to pay or receive interest, e.g., an exchange of floating rate payments for
fixed rate payments. The exchange commitments can involve payments to be made in the same currency or in different
currencies. The purchase of an interest rate cap entitles the purchaser, to the extent that a specified index exceeds a
predetermined interest rate, to receive payments of interest on a contractually based principal amount from the party
selling the interest rate cap. The purchase of an interest rate floor entitles the purchaser, to the extent that a
specified index falls below a predetermined interest rate, to receive payments of interest on a contractually based
principal amount from the party selling the interest rate floor.
Hybrid Instruments:
Hybrid instruments combine the elements of futures contracts or options with those of debt, preferred equity or a
depository instrument. The risks of investing in hybrid instruments reflect a combination of the risks from investing in
securities, futures and currencies, including volatility and lack of liquidity. Reference is made to the discussion of
futures and forward contracts in this SAI for a discussion of these risks. Further, the prices of the hybrid instrument
and the related commodity or currency may not move in the same direction or at the same time. Hybrid instruments may
bear interest or pay preferred dividends at below market (or even relatively nominal) rates. In addition, because the
purchase and sale of hybrid instruments could take place in an over-the-counter market or in a private transaction
between a Fund and the seller of the hybrid instrument, the creditworthiness of the other party to the transaction would
be a risk factor which a Fund would have to consider. Hybrid instruments also may not be subject to the regulation of
the CFTC, which generally regulates the trading of commodity futures by U.S. persons, the SEC, which regulates the offer
and sale of securities by and to U.S. persons, or any other governmental regulatory authority.
Foreign Currency Exchange-Related Securities. Certain Funds may invest in foreign currency warrants, principal
exchange rate linked securities and performance indexed paper.
Foreign Currency Warrants. Foreign currency warrants are warrants which entitle the holder to receive
from their issuer an amount of cash (generally, for warrants issued in the United States, in U.S. dollars) which is
calculated pursuant to a predetermined formula and based on the exchange rate between a specified foreign currency and
the U.S. dollar as of the exercise date of the warrant. Foreign currency warrants generally are exercisable upon their
issuance and expire as of a specified date and time. Foreign currency warrants have been issued in connection with U.S.
dollar-denominated debt offerings by major corporate issuers in an attempt to reduce the foreign currency exchange risk
which, from the point of view of prospective purchasers of the securities, is inherent in the international fixed-income
marketplace. Foreign currency warrants may attempt to reduce the foreign exchange risk assumed by purchasers of a
security by, for example, providing for a supplemental payment in the event that the U.S. dollar depreciates against the
value of a major foreign currency such as the Japanese Yen. The formula used to determine the amount payable upon
exercise of a foreign currency warrant may make the warrant worthless unless the applicable foreign currency exchange
rate moves in a particular direction (e.g., unless the U.S. dollar appreciates or depreciates against the particular
foreign currency to which the warrant is linked or indexed). Foreign currency warrants are severable from the debt
obligations with which they may be offered, and may be listed on exchanges. Foreign currency warrants may be exercisable
only in certain minimum amounts, and an investor wishing to exercise warrants who possesses less than the minimum number
required for exercise may be required either to sell the warrants or to purchase additional warrants, thereby incurring
additional transaction costs. In the case of any exercise of warrants, there may be a time delay between the time a
holder of warrants gives instructions to exercise and the time the exchange rate relating to exercise is determined,
during which time the exchange rate could change significantly, thereby affecting both the market and cash settlement
values of the warrants being exercised. The expiration date of the warrants may be accelerated if the warrants should be
delisted from an exchange or if their trading should be suspended permanently, which would result in the loss of any
remaining "time value" of the warrants (i.e., the difference between the current market value and the exercise value of
the warrants), and, in the case the warrants were "out-of-the-money," in a total loss of the purchase price of the
warrants. Warrants are generally unsecured obligations of their issuers and are not standardized foreign currency
options issued by the Options Clearing Corporation ("OCC"). Unlike foreign currency options issued by OCC, the terms of
foreign exchange warrants generally will not be amended in the event of governmental or regulatory actions affecting
exchange rates or in the event of the imposition of other regulatory controls affecting the international currency
markets. The initial public offering price of foreign currency warrants is generally considerably in excess of the price
that a commercial user of foreign currencies might pay in the interbank market for a comparable option involving
significantly larger amounts of foreign currencies. Foreign currency warrants are subject to significant foreign
exchange risk, including risks arising from complex political or economic factors.
Principal Exchange Rate Linked Securities. Principal exchange rate linked securities are debt
obligations the principal on which is payable at maturity in an amount that may vary based on the exchange rate between
the U.S. dollar and a particular foreign currency at or about that time. The return on "standard" principal exchange
rate linked securities is enhanced if the foreign currency to which the security is linked appreciates against the U.S.
dollar, and is adversely affected by increases in the foreign exchange value of the U.S. dollar. "Reverse" principal
exchange rate linked securities are like the "standard" securities, except that their return is enhanced by increases in
the value of the U.S. dollar and adversely impacted by increases in the value of foreign currency. Interest payments on
the securities are generally made in U.S. dollars at rates that reflect the degree of foreign currency risk assumed or
given up by the purchaser of the notes (i.e., at relatively higher interest rates if the purchaser has assumed some of
the foreign exchange risk, or relatively lower interest rates if the issuer has assumed some of the foreign exchange
risk, based on the expectations of the current market). Principal exchange rate linked securities may in limited cases
be subject to acceleration of maturity (generally, not without the consent of the holders of the securities), which may
have an adverse impact on the value of the principal payment to be made at maturity.
Performance Indexed Paper. Performance indexed paper is U.S. dollar-denominated commercial paper the
yield of which is linked to certain foreign exchange rate movements. The yield to the investor on performance indexed
paper is established at maturity as a function of spot exchange rates between the U.S. dollar and a designated currency
as of or about that time (generally, the spot exchange rate two days prior to maturity). The yield to the investor will
be within a range stipulated at the time of purchase of the obligation, generally with a guaranteed minimum rate of
return that is below, and a potential maximum rate of return that is above, market yields on U.S. dollar-denominated
commercial paper, with both the minimum and maximum rates of return on the investment corresponding to the minimum and
maximum values of the spot exchange rate two business days prior to maturity.
Zero-Coupon Securities. Zero-coupon securities pay no cash income and are sold at substantial discounts from
their value at maturity. When held to maturity, their entire income, which consists of accretion of discount, comes from
the difference between the issue price and their value at maturity. Zero-coupon securities are subject to greater market
value fluctuations from changing interest rates than debt obligations of comparable maturities which make current
distributions of interest (cash). Zero-coupon securities which are convertible into common stock offer the opportunity
for capital appreciation as increases (or decreases) in market value of such securities closely follows the movements in
the market value of the underlying common stock. Zero-coupon convertible securities generally are expected to be less
volatile than the underlying common stocks, as they usually are issued with maturities of 15 years or less and are issued
with options and/or redemption features exercisable by the holder of the obligation entitling the holder to redeem the
obligation and receive a defined cash payment.
Zero-coupon securities include securities issued directly by the U.S. Treasury, and U.S. Treasury bonds or notes
and their unmatured interest coupons and receipts for their underlying principal ("coupons") which have been separated by
their holder, typically a custodian bank or investment brokerage firm. A holder will separate the interest coupons from
the underlying principal (the "corpus") of the U.S. Treasury security. A number of securities firms and banks have
stripped the interest coupons and receipts and then resold them in custodial receipt programs with a number of different
names, including Treasury Income Growth Receipts ("TIGRSTM") and Certificate of Accrual on Treasuries ("CATSTM"). The
underlying U.S. Treasury bonds and notes themselves are held in book-entry form at the Federal Reserve Bank or, in the
case of bearer securities (i.e., unregistered securities which are owned ostensibly by the bearer or holder thereof), in
trust on behalf of the owners thereof. Counsel to the underwriters of these certificates or other evidences of ownership
of the U.S. Treasury securities have stated that, for federal tax and securities purposes, in their opinion purchasers of
such certificates, such as a Fund, most likely will be deemed the beneficial holder of the underlying U.S. Government
securities.
The U.S. Treasury has facilitated transfers of ownership of zero-coupon securities by accounting separately for
the beneficial ownership of particular interest coupon and corpus payments on Treasury securities through the Federal
Reserve book-entry record keeping system. The Federal Reserve program as established by the Treasury Department is known
as "STRIPS" or "Separate Trading of Registered Interest and Principal of Securities." Under the STRIPS program, a Fund
will be able to have its beneficial ownership of zero-coupon securities recorded directly in the book-entry
record-keeping system in lieu of having to hold certificates or other evidences of ownership of the underlying U.S.
Treasury securities.
When U.S. Treasury obligations have been stripped of their unmatured interest coupons by the holder, the
principal or corpus is sold at a deep discount because the buyer receives only the right to receive a future fixed
payment on the security and does not receive any rights to periodic interest (cash) payments. Once stripped or
separated, the corpus and coupons may be sold separately. Typically, the coupons are sold separately or grouped with
other coupons with like maturity dates and sold bundled in such form. Purchasers of stripped obligations acquire, in
effect, discount obligations that are economically identical to the zero-coupon securities that the Treasury sells itself.
When-Issued Securities. The price of when-issued securities, which may be expressed in yield terms, is fixed at
the time the commitment to purchase is made, but delivery and payment for the when-issued securities take place at a
later date. Normally, the settlement date occurs within 90 days of the purchase. During the period between purchase and
settlement, no payment is made by a Fund to the issuer and no interest accrues to such Fund. Forward commitments involve
a risk of loss if the value of the security to be purchased declines prior to the settlement date, which risk is in
addition to the risk of decline in value of a Fund's other assets. While when-issued securities may be sold prior to the
settlement date, a Fund generally will purchase such securities with the purpose of actually acquiring them unless a sale
appears desirable for investment reasons.
Mortgage-Backed Securities. When a Fund owns a mortgage-backed security, principal and interest payments made on
the mortgages in an underlying mortgage pool are passed through to a Fund. Unscheduled prepayments of principal shorten
the securities' weighted average life and may lower their total return. (When a mortgage in the underlying mortgage pool
is prepaid, an unscheduled principal prepayment is passed through to a Fund. This principal is returned to a Fund at
par. As a result, if a mortgage security were trading at a premium, its total return would be lowered by prepayments,
and if a mortgage security were trading at a discount, its total return would be increased by prepayments.) The value of
these securities also may change because of changes in the market's perception of the creditworthiness of the federal
agency that issued them. In addition, the mortgage securities market in general may be adversely affected by changes in
governmental regulation or tax policies.
Asset-Backed Securities. Asset-backed securities directly or indirectly represent a participation interest in,
or are secured by and payable from, a stream of payments generated by particular assets such as motor vehicle or credit
card receivables. Payments of principal and interest may be guaranteed up to certain amounts and for a certain time
period by a letter of credit issued by a financial institution unaffiliated with the entities issuing the securities.
Asset-backed securities may be classified as pass-through certificates or collateralized obligations.
Pass-through certificates are asset-backed securities which represent an undivided fractional ownership interest
in an underlying pool of assets. Pass-through certificates usually provide for payments of principal and interest
received to be passed through to their holders, usually after deduction for certain costs and expenses incurred in
administering the pool. Because pass-through certificates represent an ownership interest in the underlying assets, the
holders thereof bear directly the risk of any defaults by the obligors on the underlying assets not covered by any credit
support. See "Types of Credit Support" below.
Asset-backed securities issued in the form of debt instruments, also known as collateralized obligations, are
generally issued as the debt of a special purpose entity organized solely for the purpose of owning such assets and
issuing such debt. Such assets are most often trade, credit card or automobile receivables. The assets collateralizing
such asset-backed securities are pledged to a trustee or custodian for the benefit of the holders thereof. Such issuers
generally hold no assets other than those underlying the asset-backed securities and any credit support provided. As a
result, although payments on such asset-backed securities are obligations of the issuers, in the event of defaults on the
underlying assets not covered by any credit support (see "Types of Credit Support"), the issuing entities are unlikely to
have sufficient assets to satisfy their obligations on the related asset-backed securities.
Methods of Allocating Cash Flows. While many asset-backed securities are issued with only one class of
security, many asset-backed securities are issued in more than one class, each with different payment terms. Multiple
class asset-backed securities are issued for two main reasons. First, multiple classes may be used as a method of
providing credit support. This is accomplished typically through creation of one or more classes whose right to payments
on the asset-backed security is made subordinate to the right to such payments of the remaining class or classes. See
"Types of Credit Support." Second, multiple classes may permit the issuance of securities with payment terms, interest
rates or other characteristics differing both from those of each other and from those of the underlying assets. Examples
include so-called "strips" (asset-backed securities entitling the holder to disproportionate interests with respect to
the allocation of interest and principal of the assets backing the security), and securities with a class or classes
having characteristics which mimic the characteristics of non-asset-backed securities, such as floating interest rates
(i.e., interest rates which adjust as a specified benchmark changes) or scheduled amortization of principal.
Asset-backed securities in which the payment streams on the underlying assets are allocated in a manner
different than those described above may be issued in the future. A Fund may invest in such asset-backed securities if
such investment is otherwise consistent with its investment objectives and policies and with the investment restrictions
of the Fund.
Types of Credit Support. Asset-backed securities are often backed by a pool of assets representing the
obligations of a number of different parties. To lessen the effect of failures by obligors on underlying assets to make
payments, such securities may contain elements of credit support. Such credit support falls into two classes: liquidity
protection and protection against ultimate default by an obligor on the underlying assets. Liquidity protection refers
to the provision of advances, generally by the entity administering the pool of assets, to ensure that scheduled payments
on the underlying pool are made in a timely fashion. Protection against ultimate default ensures ultimate payment of the
obligations on at least a portion of the assets in the pool. Such protection may be provided through guarantees,
insurance policies or letters of credit obtained from third parties, through various means of structuring the transaction
or through a combination of such approaches. Examples of asset-backed securities with credit support arising out of the
structure of the transaction include "senior-subordinated securities" (multiple class asset-backed securities with
certain classes subordinate to other classes as to the payment of principal thereon, with the result that defaults on the
underlying assets are borne first by the holders of the subordinated class) and asset-backed securities that have
"reserve funds" (where cash or investments, sometimes funded from a portion of the initial payments on the underlying
assets, are held in reserve against future losses) or that have been "over collateralized" (where the scheduled payments
on, or the principal amount of, the underlying assets substantially exceeds that required to make payment of the
asset-backed securities and pay any servicing or other fees). The degree of credit support provided on each issue is
based generally on historical information respecting the level of credit risk associated with such payments. Delinquency
or loss in excess of that anticipated could adversely affect the return on an investment in an asset-backed security.
Additionally, if a letter of credit is exhausted, holders of asset-backed securities may also experience delays in
payments or losses if the full amounts due on underlying sales contracts are not realized.
Automobile Receivable Securities. Asset-backed securities may be backed by receivables from motor
vehicle installment sales contracts or installment loans secured by motor vehicles ("Automobile Receivable Securities").
Since installment sales contracts for motor vehicles or installment loans related thereto ("Automobile Contracts")
typically have shorter durations and lower incidences of prepayment, Automobile Receivable Securities generally will
exhibit a shorter average life and are less susceptible to prepayment risk.
Most entities that issue Automobile Receivable Securities create an enforceable interest in their
respective Automobile Contracts only by filing a financing statement and by having the servicer of the Automobile
Contracts, which is usually the originator of the Automobile Contracts, take custody thereof. In such circumstances, if
the servicer of the Automobile Contracts were to sell the same Automobile Contracts to another party, in violation of its
obligation not to do so, there is a risk that such party could acquire an interest in the Automobile Contracts superior
to that of the holders of Automobile Receivable Securities. Also although most Automobile Contracts grant a security
interest in the motor vehicle being financed, in most states the security interest in a motor vehicle must be noted on
the certificate of title to create an enforceable security interest against competing claims of other parties. Due to
the large number of vehicles involved, however, the certificate of title to each vehicle financed, pursuant to the
Automobile Contracts underlying the Automobile Receivable Security, usually is not amended to reflect the assignment of
the seller's security interest for the benefit of the holders of the Automobile Receivable Securities. Therefore, there
is the possibility that recoveries on repossessed collateral may not, in some cases, be available to support payments on
the securities. In addition, various state and federal securities laws give the motor vehicle owner the right to assert
against the holder of the owner's Automobile Contract certain defenses such owner would have against the seller of the
motor vehicle. The assertion of such defenses could reduce payments on the Automobile Receivable Securities.
Credit Card Receivable Securities. Asset-backed securities may be backed by receivables from revolving
credit card agreements ("Credit Card Receivable Securities"). Credit balances on revolving credit card agreements
("Accounts") are generally paid down more rapidly than are Automobile Contracts. Most of the Credit Card Receivable
Securities issued publicly to date have been Pass-Through Certificates. In order to lengthen the maturity of Credit Card
Receivable Securities, most such securities provide for a fixed period during which only interest payments on the
underlying Accounts are passed through to the security holder and principal payments received on such Accounts are used
to fund the transfer to the pool of assets supporting the related Credit Card Receivable Securities of additional credit
card charges made on an Account. The initial fixed period usually may be shortened upon the occurrence of specified
events which signal a potential deterioration in the quality of the assets backing the security, such as the imposition
of a cap on interest rates. The ability of the issuer to extend the life of an issue of Credit Card Receivable
Securities thus depends upon the continued generation of additional principal amounts in the underlying accounts during
the initial period and the non-occurrence of specified events. An acceleration in cardholders' payment rates or any
other event which shortens the period during which additional credit card charges on an Account may be transferred to the
pool of assets supporting the related Credit Card Receivable Security could shorten the weighted average life and reduce
the yield of the Credit Card Receivable Security.
Credit card holders are entitled to the protection of a number of state and federal consumer credit
laws, many of which give such holder the right to set off certain amounts against balances owed on the credit card,
thereby reducing amounts paid on Accounts. In addition, unlike most other asset-backed securities, Accounts are
unsecured obligations of the cardholder.
Warrants. Warrants basically are options to purchase equity securities at a specific price valid for a specific
period of time. They do not represent ownership of the securities but only the right to buy them. Investments in
warrants are speculative in that warrants have no voting rights, pay no dividends, and have no rights with respect to the
assets of the corporation issuing them. Warrants differ from call options in that warrants are issued by the issuer of
the security which may be purchased on their exercise, whereas call options may be written or issued by anyone. The
prices of warrants do not necessarily move parallel to the prices of the underlying securities.
Certain Risks of Foreign Investing:
Currency Fluctuations. Investment in securities denominated in foreign currencies involves certain
risks. A change in the value of any such currency against the U.S. dollar will result in a corresponding change in the
U.S. dollar value of a Fund's assets denominated in that currency. Such changes will also affect a Fund's income.
Generally, when a given currency appreciates against the dollar (the dollar weakens) the value of a Fund's securities
denominated in that currency will rise. When a given currency depreciates against the dollar (the dollar strengthens),
the value of a Fund's securities denominated in that currency would be expected to decline.
Investment and Repatriation Restrictions. Foreign investment in the securities markets of certain
foreign countries is restricted or controlled in varying degrees. These restrictions may at times limit or preclude
investment in certain of such countries and may increase the cost and expenses of a Fund. Investments by foreign
investors are subject to a variety of restrictions in many developing countries. These restrictions may take the form of
prior governmental approval, limits on the amount or type of securities held by foreigners, and limits on the types of
companies in which foreigners may invest. Additional or different restrictions may be imposed at any time by these or
other countries in which a Fund invests. In addition, the repatriation of both investment income and capital from
several foreign countries is restricted and controlled under certain regulations, including in some cases the need for
certain government consents.
Market Characteristics. Foreign securities may be purchased in over-the-counter markets or on stock
exchanges located in the countries in which the respective principal offices of the issuers of the various securities are
located, if that is the best available market. Foreign stock markets are generally not as developed or efficient as, and
may be more volatile than, those in the United States. While growing in volume, they usually have substantially less
volume than U.S. markets and a Fund's securities may be less liquid and more volatile than securities of comparable U.S.
companies. Equity securities may trade at price/earnings multiples higher than comparable U.S. securities and such
levels may not be sustainable. Commissions on foreign stock exchanges, which may be fixed, may generally be higher than
negotiated commissions on U.S. exchanges, although a Fund will endeavor to achieve the most favorable net results on its
portfolio transactions. There is generally less government supervision and regulation of foreign stock exchanges,
brokers and listed companies than in the United States. Moreover, settlement practices for transactions in foreign
markets may differ from those in U.S. markets, and may include delays beyond periods customary in the United States.
Political and Economic Factors. Individual foreign economies of certain countries may differ favorably
or unfavorably from the United States' economy in such respects as growth of gross national product, rate of inflation,
capital reinvestment, resource self-sufficiency and balance of payments position. The internal politics of certain
foreign countries are not as stable as in the United States. Moreover, as the result of the prevailing political
climate, the Fund may not be able to obtain legal remedies or enforce judgements in foreign countries.
Governments in certain foreign countries continue to participate to a significant degree, through
ownership interest or regulation, in their respective economies. Action by these governments could have a significant
effect on market prices of securities and payment of dividends. The economies of many foreign countries are heavily
dependent upon international trade and are accordingly affected by protective trade barriers and economic conditions of
their trading partners. The enactment by these trading partners of protectionist trade legislation could have a
significant adverse effect upon the securities markets of such countries.
Information and Supervision. There is generally less publicly available information about foreign
companies comparable to reports and ratings that are published about companies in the United States. Foreign companies
are also generally not subject to uniform accounting, auditing and financial reporting standards, practices and
requirements comparable to those applicable to U.S. companies.
Taxes. The dividends and interest payable on certain of a Fund's foreign securities may be subject to
foreign withholding taxes, thus reducing the net amount of income available for distribution to the Fund's shareholders.
A shareholder otherwise subject to U.S. federal income taxes may, subject to certain limitations, be entitled to claim a
credit or deduction for U.S. federal income tax purposes for his or her proportionate share of such foreign taxes paid by
the Fund.
Costs. Investors should understand that the expense ratio of a Fund investing primarily in foreign
securities can be expected to be higher than investment companies investing in domestic securities since the cost of
maintaining the custody of foreign securities and the rate of advisory fees paid by a Fund are higher.
Other. With respect to certain foreign countries, especially developing and emerging ones, there is the
possibility of adverse changes in investment or exchange control regulations, expropriation or confiscatory taxation,
limitations on the removal of funds or other assets of a Fund, political or social instability, or diplomatic
developments which could affect investments by U.S. persons in those countries.
Eastern Europe. Changes occurring in Eastern Europe and Russia today could have long-term potential
consequences. As restrictions fall, this could result in rising standards of living, lower manufacturing costs, growing
consumer spending, and substantial economic growth. However, investment in the countries of Eastern Europe and Russia is
highly speculative at this time. Political and economic reforms are too recent to establish a definite trend away from
centrally-planned economies and state owned industries. In many of the countries of Eastern Europe and Russia, there is
no stock exchange or formal market for securities. Such countries may also have government exchange controls, currencies
with no recognizable market value relative to the established currencies of western market economies, little or no
experience in trading in securities, no financial reporting standards, a lack of a banking and securities infrastructure
to handle such trading, and a legal tradition which does not recognize rights in private property. In addition, these
countries may have national policies which restrict investments in companies deemed sensitive to the country's national
interest. Further, the governments in such countries may require governmental or quasi-governmental authorities to act
as custodian of a Fund's assets invested in such countries and these authorities may not qualify as a foreign custodian
under the 1940 Act and exemptive relief from such Act may be required. All of these considerations are among the factors
which could cause significant risks and uncertainties to investment in Eastern Europe and Russia.
Latin America. The political history of certain Latin American countries has been characterized by
political uncertainty, intervention by the military in civilian and economic spheres, and political corruption. Such
developments, if they were to reoccur, could reverse favorable trends toward market and economic reform, privatization
and removal of trade barriers and result in significant disruption in securities markets. Persistent levels of inflation
or in some cases, hyperinflation, have led to high interest rates, extreme measures by governments to keep inflation in
check and a generally debilitating effect on economic growth. Although inflation in many countries has lessened, there
is no guarantee it will remain at lower levels. In addition, of developing countries, a number of Latin American
countries are also among the largest debtors. There have been moratoria on, and reschedulings of, repayment with respect
to these debts. Such events can restrict the flexibility of these debtor nations in the international markets and result
in the imposition of onerous conditions on their economies.
Certain Latin American countries may have managed currencies which are maintained at artificial levels
to the U.S. dollar rather than at levels determined by the market. This type of system can lead to sudden and large
adjustments in the currency which, in turn, can have a disruptive and negative effect on foreign investors. Certain
Latin American countries also may restrict the free conversion of their currency into foreign currencies, including the
U.S. dollar. There is no significant foreign exchange market for certain currencies and it would, as a result, be
difficult for a Fund to engage in foreign currency transactions designed to protect the value of the Fund's interests in
securities denominated in such currencies.
Securities Lending:
The Company has made arrangements for the Funds to lend securities. While a Fund may earn additional income from
lending securities, such activity is incidental to the investment objective of the Fund. In addition to the compensation
payable by borrowers under securities loans, a Fund would also earn income from the investment of cash collateral for
such loans. Any cash collateral received by a Fund in connection with such loans normally will be invested in
high-quality money market securities. However, any losses resulting from the investment of cash collateral would be
borne by the lending Fund. There is no assurance that collateral for loaned securities will be sufficient to provide for
recovery of interest, dividends, or other distributions paid in respect of loaned securities and not received by a Fund
or to pay all expenses incurred by a Fund in arranging the loans or in exercising rights in the collateral in the event
that loaned securities are not returned.
ADDITIONAL PERFORMANCE INFORMATION
From time to time, a Fund's yield and total return may be included in advertisements, sales literature, or
shareholder reports. In addition, the Company may advertise the effective yield of the ASAF JPM Money Market Fund. All
figures are based upon historical earnings and are not intended to indicate future performance.
ASAF JPM MONEY MARKET FUND (the "Money Market Fund"):
In accordance with regulations prescribed by the SEC, the Company is required to compute the Money Market Fund's
current annualized yield for a seven-day period in accordance with a specified formula, which does not take into
consideration any realized or unrealized gains or losses on its portfolio securities. This current annualized yield is
computed by determining the net change (exclusive of realized gains and losses on the sale of securities and unrealized
appreciation and depreciation) in the value of a hypothetical account having a balance of one share of the Money Market
Fund at the beginning of such seven-day period, dividing such net change in account value by the value of the account at
the beginning of the period to determine the base period return and annualizing this quotient on a 365-day basis.
The SEC also permits the Company to disclose the effective yield of the Money Market Fund for the same seven-day
period, which is the Fund's yield determined on a compounded basis. The effective yield is calculated by compounding the
unannualized base period return by adding one to the base period return, raising the sum to a power equal to 365 divided
by 7, and subtracting one from the result. The effective yield will be slightly higher than the yield because of the
compounding effect of this assumed reinvestment.
The yield on amounts held in the Money Market Fund normally will fluctuate on a daily basis. Therefore, the
disclosed yield for any given past period is not an indication or representation of future yields or rates of return.
The Money Market Fund's actual yield is affected by changes in interest rates on money market securities, the average
portfolio maturity of the corresponding Portfolio in which the Money Market Fund invests, the types and quality of
portfolio securities held by such Portfolio, and the Fund's and Portfolio's operating expenses.
The current yield and effective yield calculations for each class of shares of the ASAF JPM Money Market Fund are
shown below for the seven day period ended April 30, 2000:
Class A Class B Class C Class X
Current Yield 4.16% 3.66% 3.66% 3.66%
Effective Yield 4.24% 3.72% 3.73% 3.73%
ALL OTHER FUNDS:
Standardized Average Annual Total Return Quotations. "Total return" is one of the primary methods used to
measure performance and represents the percentage change in value of a class of a Fund, or of a hypothetical investment
in a class of a Fund, over any period up to the lifetime of the class. Average annual total return quotations for Class
A, B, C and X shares are computed by finding the average annual compounded rates of return that would cause a
hypothetical investment made on the first day of a designated period to equal the ending redeemable value of such
hypothetical investment on the last day of the designated period in accordance with the following formula:
P(1+T)n = ERV
Where: P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value of the hypothetical $1,000 initial payment made at the beginning of
the designated period (or fractional portion thereof)
The computation above assumes that the maximum sales charge applicable to a class of Fund shares is deducted from
the initial $1,000 payment, and that all dividends and distributions made by a Fund are reinvested at net asset value
("NAV") during the designated period. The average annual total return quotation is determined to the nearest 1/100 of 1%.
Total return percentages for periods longer than one year will usually be accompanied by total return percentages
for each year within the period and/or by the average annual compounded total return for the period. The income and
capital components of a given return may be separated and portrayed in a variety of ways in order to illustrate their
relative significance. Performance may also be portrayed in terms of cash or investment values, without percentages.
Past performance cannot guarantee any particular future result. In determining the average annual total return
(calculated as provided above), recurring fees, if any, that are charged to all shareholder accounts are taken into
consideration. For any account fees that vary with the size of the account, the account fee used for purposes of the
above computation is assumed to be the fee that would be charged to the mean account size of a class of the Fund.
In addition, with respect to the Class X shares, a standardized return will reflect the impact of the 2.5% bonus
shares. The impact of the bonus shares on total return is particularly pronounced for shorter periods for which total
return is measured, such as one and three years. You should take this into consideration in any comparison of total
return between the Funds and other mutual funds. For a discussion of the Class X bonus shares, see the Company's
Prospectus under "How to Buy Shares."
The total return of each class of shares of each Fund that had commenced operations prior to April 30, 2000,
other than the JPM Money Market Fund, computed as of April 30, 2000, is shown below:
Total Return
-------------
Class A Class B Class C Class X
ASAF Founders International Small Capitalization Fund1
One Year 53.15% 55.61% 60.23% 59.71%
Since Inception 25.21% 26.35% 27.16% 27.49%
ASAF AIM International Equity Fund4
Since Inception -3.02% -3.20% 1.70% -0.63%
ASAF Janus Overseas Growth Fund2
One Year 60.31% 63.18% 68.37% 67.55%
Since Inception 32.48% 34.04% 35.31% 35.50%
ASAF American Century International Growth Fund1*
One Year 12.27% 12.41% 17.35% 15.34%
Since Inception 7.23% 7.76% 8.93% 8.83%
ASAF Janus Small-Cap Growth Fund1**
One Year 43.90% 46.07% 50.98% 49.78%
Since Inception 24.98% 26.09% 27.10% 27.30%
ASAF Kemper Small-Cap Growth Fund5
Since Inception -21.68% -22.07% -17.93% -19.91%
ASAF T. Rowe Price Small Company Value Fund1
One Year 3.37% 3.24% 8.25% 5.98%
Since Inception -2.15% -1.92% -0.54% -1.04%
ASAF Neuberger Berman Mid-Cap Growth Fund3
One Year 52.55% 55.39% 60.42% 59.29%
Since Inception 59.99% 62.83% 65.00% 65.18%
ASAF Neuberger Berman Mid-Cap Value Fund3
One Year -0.59% -1.01% 4.08% 1.54%
Since Inception 11.80% 12.52% 15.26% 14.13%
ASAF Alliance Growth Fund2***
One Year 37.82% 39.42% 44.40% 43.08%
Since Inception 26.06% 27.58% 28.63% 28.85%
ASAF Marsico Growth Fund3
One Year 17.45% 17.93% 22.88% 20.99%
Since Inception 31.86% 33.47% 35.77% 35.34%
ASAF Janus Capital Growth Fund1
One Year 18.53% 19.18% 24.23% 22.33%
Since Inception 33.24% 34.68% 35.45% 35.98%
ASAF Sanford Bernstein Managed Index 500 Fund4
Since Inception -1.04% -1.10% 3.90% 1.52%
ASAF Alliance Growth and Income Fund2****
One Year -1.98% -2.47% 2.54% -0.04%
Since Inception 9.18% 10.08% 11.50% 11.17%
ASAF MFS Growth with Income Fund4
Since Inception -2.36% -2.60% 2.20% -0.02%
ASAF INVESCO Equity Income Fund1
One Year -0.19% -0.53% 4.40% 2.11%
Since Inception 12.27% 13.05% 14.18% 14.07%
ASAF American Century Strategic Balanced Fund1
One Year 1.38% 1.04% 6.04% 3.80%
Since Inception 9.90% 10.46% 11.67% 11.49%
ASAF Federated High Yield Bond Fund1
One Year -9.97% -11.56% -7.36% -9.23%
Since Inception 0.61% 0.51% 1.67% 1.42%
ASAF PIMCO Total Return Bond Fund1
One Year -2.98% -4.91% -0.11% -2.37%
Since Inception 2.86% 2.55% 3.92% 3.52%
1. Commenced operations July 28, 1997.
2. Commenced operations January 2, 1998.
3. Commenced operations August 19, 1998.
4. Commenced operations November 1, 1999.
5. Commenced operations March 1, 2000.
* Prior to May 1, 2000, Rowe Price-Fleming International, Inc. served as Sub-advisor to the Fund. The performance
information provided in the above chart reflects that of the Fund for periods during which the Fund was sub-advised by
the prior Sub-advisor.
** Prior to January 1, 1999, Founders Asset Management LLC served as Sub-advisor to the Fund. The performance
information provided in the above chart reflects that of the Fund for periods during part of which the Fund was
sub-advised by the prior Sub-advisor.
*** Prior to December 31, 1998, Robertson, Stephens & Company Investment Management L.P. served as Sub-advisor to the
Fund. From December 31, 1998 to April 30, 2000, OppenheimerFunds, Inc. served as Sub-advisor to the Fund. The
performance information provided in the above chart reflects that of the Fund for periods during which the Fund was
sub-advised by the prior Sub-advisors.
**** Prior to May 1, 2000, Lord, Abbett & Co. served as Sub-advisor to the Fund. The performance information provided in
the above chart reflects that of the Fund for periods during which the Fund was sub-advised by the prior Sub-advisor.
Standardized Yield Quotations. The yield of a class of Fund shares is computed by dividing the class's net
investment income per share during a base period of 30 days, or one month, by the maximum offering price per share of the
class on the last day of such base period in accordance with the following formula:
YIELD = 2 [ (a - b + 1)6 - 1 ]
-----
cd
Where: a = net investment income earned during the period attributable to the subject class
b = net expenses accrued for the period attributable to the subject class
c = the average daily number of shares of the subject class outstanding during the period that
were entitled to receive dividends
d = the maximum offering price per share of the subject class
Net investment income will be determined in accordance with rules established by the SEC. The price per share of
Class A shares, other than shares of the ASAF JPM Money Market Fund, will include the maximum sales charge imposed on
purchases of Class A shares which decreases with the amount of shares purchased.
The yield for each class of shares of the ASAF Federated High Yield Fund and ASAF PIMCO Total Return Bond Fund
for the 30 day period ended April 30, 2000 is shown below:
Class A Class B Class C Class X
ASAF Federated High Yield Bond Fund 10.38% 10.34% 10.36% 10.35%
ASAF PIMCO Total Return Bond Fund 5.57% 5.31% 5.32% 5.31%
Non-Standardized Performance. In order to more completely represent a Fund's performance or more accurately
compare such performance to other measures of investment return, a Fund also may include in advertisements, sales
literature and shareholder reports other total return performance data ("Non-Standardized Return"). Non-Standardized
Return may be quoted for the same or different periods as those for which standardized return is quoted; it may consist
of an aggregate or average annual percentage rate of return, actual year-by-year rates or any combination thereof.
Non-Standardized Return may or may not take sales charges into account; performance data calculated without taking the
effect of sales charges into account will be higher than data including the effect of such charges. Non-standardized
performance will be advertised only if the standard performance data for the same period, as well as for the required
periods, is also presented.
Each Fund may also publish its distribution rate and/or its effective distribution rate. A Fund's distribution
rate is computed by dividing the most recent monthly distribution per share annualized, by the current NAV per share. A
Fund's effective distribution rate is computed by dividing the distribution rate by the ratio used to annualize the most
recent monthly distribution and reinvesting the resulting amount for a full year on the basis of such ratio. The
effective distribution rate will be higher than the distribution rate because of the compounding effect of the assumed
reinvestment. Unlike a Fund's yield, which is computed from the yields to maturity of all debt obligations held by the
Fund, the distribution rate is based on a Fund's last monthly distribution. A Fund's monthly distribution tends to be
relatively stable and may be more or less than the amount of net investment income and short-term capital gain actually
earned by the Fund during the month (see the Company's Prospectus under "Dividends, Capital Gains and Taxes").
Other data that may be advertised or published about each Fund include the average portfolio quality, the average
portfolio maturity and the average portfolio duration.
Comparative Information. From time to time in advertisements or sales material, the Fund's performance ratings
or other information as published by recognized mutual fund statistical or rating services, such as Lipper Analytical
Services, Inc. or Morningstar, or by publications of general interest, such as Forbes or Money, may be discussed. The
------ -----
performance of the Funds may also be compared to that of other selected mutual funds, mutual fund averages or recognized
stock market indicators. Such performance ratings or comparisons may be made with funds that may have different
investment restrictions, objectives, policies or techniques than the Funds and such other funds or market indicators may
be comprised of securities that differ significantly from the Funds' investments. Descriptions of some of the indices
which may be used are listed below:
o The Standard & Poor's 500 Composite Stock Price Index is a well-diversified list of 500 large capitalization
companies representing the U.S. Stock Market.
o The Standard and Poor's Small Cap 600 index is designed to represent price movements in the small cap U.S.
equity market. It contains companies chosen by the Standard & Poor's Index Committee for their size, industry
characteristics, and liquidity. None of the companies in the S&P 600 overlap with the S&P 500 or the S&P 400 (MidCap
Index). The S&P 600 is weighted by market capitalization.
o The NASDAQ Composite OTC Price Index is a market value-weighted and unmanaged index showing the changes in
the aggregate market value of approximately 3,500 stocks.
o The Lehman Government Bond Index is a measure of the market value of all public obligations of the U.S.
Treasury; all publicly issued debt of all agencies of the U.S. Government and all quasi-federal corporations; and all
corporate debt guaranteed by the U.S. Government. Mortgage backed securities, bonds and foreign targeted issues are not
included in the Lehman Government Index.
o The Lehman Government/Corporate Bond Index is a measure of the market value of approximately 5,300 bonds
with a face value currently in excess of $1.3 trillion. To be included in the Lehman Government/Corporate Index, an
issue must have amounts outstanding in excess of $1 million, have at least one year to maturity and be rated "Baa" or its
equivalent or higher ("investment grade") by a nationally recognized rating agency.
o The Russell 2000 Index represents the bottom two thirds of the largest 3000 publicly traded companies
domiciled in the U.S. Russell uses total market capitalization to determine the companies that are included in the
Index. Only common stocks are included in the Index.
o The Russell 2500 Index is a market value-weighted, unmanaged index showing total return (i.e., principal
changes with income) in the aggregate market value of 2,500 stocks of publicly traded companies domiciled in the United
States. The Index includes stocks traded on the New York Stock Exchange and the American Stock Exchange as well as in the
over-the-counter market.
o The Morgan Stanley Capital International EAFE Index (the "EAFE Index") is an unmanaged index, which includes
over 1,000 companies representing the stock markets of Europe, Australia, New Zealand and the Far East. The EAFE Index is
typically shown weighted by the market capitalization. However, EAFE is also available weighted by Gross Domestic
Product ("GDP"). These weights are modified on July 1st of each year to reflect the prior year's GDP.
o The Lehman Brothers High Yield BB Index is a measure of the market value of public debt issues with a
minimum par value of $100 million and rated Ba1-Ba3 by Moody's. All bonds within the index are U.S. dollar denominated,
non-convertible and have at least one year remaining to maturity.
In addition, the total return or yield of the Funds may be compared to the yield on U.S. Treasury obligations and to the
percentage change in the Consumer Price Index.
Each Fund's investment performance may be advertised in various financial publications, newspapers, magazines,
including: Across the Board, Advertising Age, Adviser's Magazine, Adweek, Agent, American Banker, American Agent and
Broker, Associated Press, Barron's, Best's Review, Bloomberg, Broker World, Business Daily, Business Insurance, Business
Marketing, Business Month, Business News Features, Business Week, Business Wire, California Broker, Changing Times,
Consumer Reports, Consumer Digest, Crain's, Dow Jones News Service, Economist, Entrepreneur, Entrepreneurial Woman,
Financial Planning, Financial Services Week, Financial Times, Financial World, Forbes, Fortune, Hartford Courant, Inc.,
Independent Business, Institutional Investor, Insurance Forum, Insurance Advocate Independent, Insurance Review
Investor's, Insurance Times, Insurance Week, Insurance Product News, Insurance Sales, Investment Dealers Digest,
Investment Advisor, Journal of Commerce, Journal of Accountancy, Journal of the American Society of CLU & ChFC,
Kiplinger's Personal Finance, Knight-Ridder, Life Association News, Life Insurance Selling, Life Times, LIMRA's
MarketFacts, Lipper Analytical Services, Inc., MarketFacts, Medical Economics, Money, Morningstar, Inc., Nation's
Business, National Underwriter, New Choices, New England Business, New York Times, Pension World, Pensions & Investments,
Professional Insurance Agents, Professional Agent, Registered Representative, Reuter's, Rough Notes, Round the Table,
Service, Success, The Standard, The Boston Globe, The Washington Post, Tillinghast, Time, U.S. News & World Report, U.S.
Banker, United Press International, USA Today, Value Line, The Wall Street Journal, Wiesenberger Investment and Working
Woman.
From time to time the Company may publish the sales of shares of one or more of the Funds on a gross or net basis
and for various periods of time, and compare such sales with sales similarly reported by other investment companies.
MANAGEMENT OF THE COMPANY
The following table sets forth information concerning the officers and Directors of the Company, including their
addresses and principal business occupations for the last five years:
Name, Age and Address:(1) Position Held with the Company:(2) Principal Occupation:(3)`
--------------------- ------------------------------ --------------------
John Birch (50) Vice President Senior Vice President and Chief
Operating Officer:
American Skandia Investment Services,
Incorporated
December 1997 to present
Executive Vice President and
Chief Operating Officer:
International Fund Administration
Bermuda
August 1996 to October 1997
Senior Vice President and
Chief Administrative Officer:
Gabelli Funds, Inc.
Rye, New York
March 1995 to August 1996
Gordon C. Boronow (47) Vice President President & Chief Operating Officer:
American Skandia Life Assurance
Corporation
Jan R. Carendi (55)* President, Principal Executive Officer Deputy Chief Executive Officer:
and Director Skandia Insurance Company Ltd.
David E. A. Carson (66) Director Director
People's Bank People's Bank (January 2000 - present)
850 Main Street
Bridgeport, CT 06604 Chairman
People's Bank (January 1999-December
1999)
Chairman & Chief Executive Officer:
People's Bank (January 1998 to December
1998)
President, Chairman & Chief Executive
Officer:
People's Bank (1983 to January 1998)
Richard G. Davy, Jr. (52) Treasurer and Chief Financial and Vice President, Operations:
Accounting Officer American Skandia Investment Services,
Incorporated (January 1997 to present)
Controller:
American Skandia Investment Services,
Incorporated (September 1994 to January
1997)
Eric C. Freed (37) Secretary Senior Counsel, Securities and
Securities Counsel:
American Skandia, Incorporated
(December 1996 to present)
Attorney, Senior Attorney and Special
Counsel:
U.S. Securities and Exchange Commission
(March 1991 to November 1996)
Julian A. Lerner (75) Director Semi-retired since 1995; Senior Vice
12850 Spurling Road President & Portfolio Manager of AIM
Suite 208 Charter Fund and AIM Summit Fund from
Dallas, TX 75230 1986 to 1995
Thomas M. Mazzaferro(47)* Director Executive Vice President and
Chief Financial Officer
American Skandia Life Assurance
Corporation
April 1988 to present
Thomas M. O'Brien (49) Director President & Chief Executive Officer
North Fork Bank Atlantic Bank (May 2000 to present)
275 Broad Hollow Road
Melville, NY 11747 Vice Chairman:
North Fork Bank (January 1997 to April
2000)
President & Chief Executive Officer:
North Side Savings Bank (December 1984
to December 1996)
F. Don Schwartz (65) Director Management Consultant
6 Sugan Close Drive (April 1985 to present)
New Hope, PA 18938
* Indicates a Director of the Company who is an "interested person" within the meaning set forth in the 1940 Act.
(1) Unless otherwise indicated, the address of each officer and director listed above is One Corporate Drive, Shelton,
Connecticut 06484.
(2) All of the officers and Directors of the Company listed above serve in similar capacities for the Trust and/or
American Skandia Trust, both of which are also investment companies managed by the Investment Manager.
(3) Unless otherwise indicated, each officer and director listed above has held his principal occupation for at least
the last five years. In addition to the principal occupations noted above, the following officers and Directors of the
Company hold the following positions with American Skandia Life Assurance Corporation ("ASLAC"), American Skandia
Investment Services, Incorporated ("ASISI"), American Skandia Marketing, Incorporated ("ASM"), American Skandia
Information Services and Technology Corporation ("ASIST") or American Skandia, Incorporated ("ASI"): Mr. Boronow also
serves as Executive Vice President, Chief Operating Officer and a Director of ASI, and a Director of ASLAC, ASISI, ASM
and ASIST; Mr. Carendi also serves as Chairman and a Director of ASI, and Chief Executive Officer and a Director of
ASLAC, ASISI and ASIST and a Director of ASM; Mssrs. Birch, Davy and also serve as Directors of ASISI.
The Company's Articles of Incorporation provides that the Directors, officers and employees of the Company may be
indemnified by the Company to the fullest extent permitted by federal and state law, including Maryland law. Neither the
Articles of Incorporation nor the By-laws of the Company authorize the Company to indemnify any director or officer
against any liability to which he or she would otherwise be subject by reason of or for willful misfeasance, bad faith,
gross negligence or reckless disregard of such person's duties.
Under the Maryland General Corporation Law, a Director of the Company who is held liable for assenting to a
distribution made in violation of the Company's Articles of Incorporation is entitled to contribution from each
shareholder of the Company for the amount the shareholder accepted knowing the distribution was made in violation of
those provisions. Absent such knowledge, a shareholder will not be obligated to the Company or its creditors in respect
of shares held in the Company except to the extent of any unpaid portion of the subscription price or purchase price for
such shares.
The officers and Directors of the Company who are affiliates of the Investment Manager do not receive
compensation directly from the Company for serving in the capacities described above. Those officers and Directors of
the Company, however, who are affiliated with the Investment Manager may receive remuneration indirectly from the Company
for services provided in their respective capacities with the Investment Manager. Each of the other Directors receives
for his service on the Board of Directors an annual and "per-meeting" fee, plus reimbursement for reasonable
out-of-pocket expenses incurred in connection with attendance at Board meetings. The following table sets forth
information concerning the compensation paid by the Company to the Directors in the fiscal year ended October 31, 1999.
Neither the Company nor any investment company in the Fund Complex offers any pension or retirement benefits to its
directors or trustees.
Aggregate Compensation Total Compensation from the
Name of Director: from the Company: Company and Fund Complex:(1)
---------------- ---------------- ------------------------
Jan R. Carendi $ 0 $ 0
David E.A. Carson $21,900 $78,000
Julian A. Lerner $24,100 $81,300
Thomas M. Mazzaferro $ 0 $ 0
Thomas M. O'Brien $24,100(2) $81,300(2)
F. Don Schwartz $24,100 $81,300
(1) As of the date of this SAI, the "Fund Complex" consisted of the Company, the Trust and American Skandia Trust. The
amount indicated is the compensation paid to the Directors by the Fund Complex for the twelve month period ending October
31, 1999.
(2) Mr. O'Brien deferred a portion of this compensation from the Company valued as of October 31, 1999 at $3,952 and
from the Fund Complex valued as of October 31, 1999 at $12,969.
As of August 1, 2000, the Directors and officers of the Company owned, in the aggregate, less than 1% of each class of
the Company's shares.
Codes of Ethics. The Company, the Trust, the Investment Manager and the Distributor have adopted codes of ethics under
rule 17j-1 of the 1940 Act. While these codes contain provisions reasonably necessary to prevent personnel subject to
the codes from engaging in unlawful conduct, they do not prohibit investments in securities, including securities that
may be purchased or held by the Funds and Portfolios, by such personnel.
ADDITIONAL INFORMATION ON THE "MASTER FEEDER" FUND STRUCTURE
As previously discussed, certain Funds of the Company are organized under a "master feeder" structure. The
Trust's Agreement and Declaration of Trust provides that the Feeder Funds and any other entities permitted to invest in a
Portfolio of the Trust (e.g., other U.S. and foreign investment companies, and common and commingled trust funds) will
each be liable for all obligations of each such Portfolio in the event that the Trust fails to satisfy such liabilities
and obligations. However, the risk of an investor in a Portfolio (including a Feeder Fund) incurring financial loss
beyond the amount of its investment on account of such liability is limited to circumstances in which the Portfolio had
inadequate insurance and was unable to meet its obligations out of its assets. Accordingly, the Trustees of the Trust
believe that neither a Feeder Fund nor its shareholders will be adversely affected by reason of the Fund investing in a
corresponding Portfolio of the Trust.
The Directors of the Company and the Trustees of the Trust have oversight responsibility for the operations of
each Fund and Portfolio, respectively. As of the date of this Prospectus, each of the Directors of the Company also
serves as a Trustee of the Trust. The Directors of the Company and the Trustees of the Trust, including a majority of
the Directors and Trustees who are not "interested persons" (as defined in the 1940 Act) of the Company or the Trust,
respectively, have adopted written procedures designed to identify and reasonably address any potential conflicts of
interest which might arise as a result of an "overlap" of Directors and Trustees, including, if necessary, the creation
of a separate board of trustees of the Trust.
INVESTMENT ADVISORY & ADMINISTRATION SERVICES
THE INVESTMENT MANAGER:
American Skandia Investment Services, Incorporated ("ASISI," as previously defined) acts as investment manager to
each Non-Feeder Fund and Portfolio pursuant to separate investment management agreements with the Company and the Trust,
respectively (the "Management Agreements"). Unlike the Non-Feeder Funds, each of the Feeder Funds invests all of its
respective investable assets in a corresponding Portfolio of the Trust and thus does not require an investment manager.
ASISI, a Connecticut corporation organized in 1991, is registered as an investment adviser with the SEC and is a
wholly-owned subsidiary of American Skandia, Incorporated, whose indirect parent is Skandia Insurance Company Ltd.
("Skandia"). Skandia is a Swedish company that owns, directly or indirectly, a number of insurance companies in many
countries. The predecessor to Skandia commenced operations in 1855. In addition to serving as investment manager to the
Company and the Trust, ASISI currently serves as the investment manager to American Skandia Trust, an open-end management
investment company whose shares are made available to life insurance companies writing variable annuity contracts and
variable life insurance policies. Shares of American Skandia Trust also may be offered directly to qualified pension and
retirement plans. For a list of those officers and Directors of the Company who also serve in similar capacities for the
Investment Manager, see this SAI under "Management of the Company."
The Management Agreements provide, in substance, that the Investment Manager will furnish each Non-Feeder Fund
and Portfolio with investment advice and investment management and administrative services subject to the supervision of
the Directors of the Company or the Trustees of the Trust, where applicable, and in conformity with the stated investment
objective, policies and limitations of the applicable Fund or Portfolio. The Investment Manager is responsible for
providing, at its expense, such personnel as is required by each Non-Feeder Fund or Portfolio for the proper conduct of
its affairs and may engage a sub-advisor to conduct the investment program of the Fund or Portfolio pursuant to the
Investment Manager's obligations under the Management Agreements. The Investment Manager, not the Funds or Portfolios,
is responsible for the expenses of conducting the investment programs of the Funds and Portfolios.
The Management Agreements provide further that neither the Investment Manager nor its personnel shall be liable
for any act or omission in the course of, or connected with, rendering services under the agreements, or for any losses
that may be sustained in the purchase, holding or sale of any security on behalf of the Funds or Portfolios, except for
willful misfeasance, bad faith or gross negligence in the performance of its or their duties or by reason of reckless
disregard of its or their obligations and duties under the agreements. The Management Agreements also permit the
Investment Manager to render services to others.
Under the terms of the Management Agreements, each Non-Feeder Fund and Portfolio has agreed to pay ASISI an
investment management fee, which is accrued daily and paid monthly, equal on an annual basis to a stated percentage of
the respective Fund or Portfolio's average daily NAV. The Investment Manager, not any Fund or Portfolio, is responsible
for the payment of the sub-advisory fees to the Sub-advisors. For a discussion of the fees payable to the Investment
Manager and the Sub-advisors, as well as any applicable voluntary fee waiver arrangements, see the Company's Prospectus
under "Expense Information" and "Management of the Funds."
Investment Management Fees. ASISI receives a monthly fee from each Non-Feeder Fund and Portfolio for the
performance of its services. ASISI pays each Sub-advisor a portion of such fee for the performance of the sub-advisory
services at no additional cost to any Fund or Portfolio. Each Non-Feeder Fund and Portfolio's investment management fee
is accrued daily for the purposes of determining the offering and redemption price of the Fund's shares. The fees
payable to ASISI, based on a stated percentage of the Non-Feeder Fund or Portfolio's average daily net assets, are as
follows:
Fund/Portfolio: Annual Rate:
-------------- -----------
ASAF Founders International Small Capitalization Fund: 1.10% of the first $100 million; plus 1.00
% of the amount over $100 million
ASAF AIM International Equity Fund: 1.10%
ASAF Janus Overseas Growth Fund: 1.10%
ASMT American Century International Growth Portfolio: 1.00%
ASAF Janus Small-Cap Growth Fund: 0.90%
ASAF Kemper Small-Cap Growth Fund: 0.95%
ASAF T. Rowe Price Small Company Value Fund: 1.00%
ASAF Janus Mid-Cap Growth Fund: 1.00%
ASAF Neuberger Berman Mid-Cap Growth Fund: 0.90%
ASAF Neuberger Berman Mid-Cap Value Fund: 0.90%
ASAF Alger All-Cap Growth Fund: 0.95%
ASAF Gabelli All-Cap Value Fund: 0.95%
ASAF INVESCO Technology Fund: 1.00%
ASAF Rydex OTX Fund: 0.85%
ASAF Alliance Growth Fund: .90% of the first $1 billion;
plus .85% of the amount over $1 billion
ASAF Marsico Capital Growth Fund: 1.00%
ASMT Janus Capital Growth Portfolio: 1.00%
ASAF Sanford Bernstein Managed Index 500 Fund: 0.80%
ASAF Alliance Growth and Income Fund: 1.00%
ASAF MFS Growth with Income Fund: 1.00%
ASMT INVESCO Equity Income Portfolio: 0.75%
ASAF American Century Strategic Balanced Fund: 0.90%
ASAF Federated High Yield Bond Fund: 0.70%
ASMT PIMCO Total Return Bond Portfolio: 0.65%
ASMT JPM Money Market Portfolio: 0.50%
Investment Management Fee Waivers. The Investment Manager may from time to time agree to voluntarily waive or
reduce its fees, while retaining their ability to be reimbursed for such fees prior to the end of each fiscal year. Such
voluntary fee waivers or reductions may be rescinded at any time and without notice to investors.
The Investment Manager has voluntarily agreed to waive portions of its investment management fees equal to .10%
of the average daily net assets of the ASAF Janus Overseas Growth Fund and .20% of the average daily net assets of the
ASAF Alliance Growth and Income Fund.
The investment management fees paid for each Fund and Portfolio that had commenced operations prior to October
31, 1999, for the fiscal period from commencement of operations until October 31, 1997 and for the fiscal years ended
October 31, 1998 and October 31, 1999, were as follows:
Period ended Year ended Year ended
------------- ----------- ----------
Name of Fund October 31, 1997 October 31, 1998 October 31, 1999
------------ ---------------- ---------------- ----------------
ASAF Founders International Small Capitalization Fund $520 $34,725 $103,320
ASAF Janus Overseas Growth Fund $0 $146,239 $1,437,199
ASMT American Century International Growth Portfolio $4,658 $94,058 $232,476
ASAF Janus Small-Cap Growth Fund $577 $46,399 $562,158
ASAF T. Rowe Price Small Company Value Fund $1,530 $210,032 $554,991
ASAF Neuberger Berman Mid-Cap Growth Fund $0 $1,920 $227,545
ASAF Neuberger Berman Mid-Cap Value Fund $0 $2,770 $187,273
ASAF Alliance Growth Fund $0 $89,166 $368,003
ASAF Marsico Capital Growth Fund $0 $43,773 $2,818,406
ASMT Janus Capital Growth Portfolio $10,500 $578,304 $6,824,885
ASAF Alliance Growth and Income Fund $0 $114,324 $808,859
ASMT INVESCO Equity Income Portfolio $4,791 $244,316 $990,476
ASAF American Century Strategic Balanced Fund $1,513 $81,420 $642,319
ASAF Federated High Yield Bond Fund $1,022 $148,821 $627,368
ASMT PIMCO Total Return Bond Portfolio $4,456 $151,673 $762,481
ASMT JPM Money Market Portfolio $1,134 $83,674 $495,966
Fees for the Portfolios are based upon the total assets of each Portfolio, which include assets other than those
of the Feeder Funds. The Portfolios commenced operations in June 1997, while the ASAF Founders International Small
Capitalization Fund, ASAF Janus Small-Cap Growth Fund, ASAF T. Rowe Price Small Company Value Fund, ASAF American Century
Strategic Balanced Fund, and ASAF Federated High Yield Bond Fund commenced operations on July 28, 1997. The ASAF Janus
Overseas Growth Fund, ASAF Alliance Growth Fund, and ASAF Alliance Growth and Income Fund commenced operations on January
2, 1998. The ASAF Neuberger Berman Mid-Cap Growth Fund, ASAF Neuberger Berman Mid-Cap Value Fund, and ASAF Marsico
Capital Growth Fund commenced operations on August 19, 1998. The ASAF AIM International Equity Fund, ASAF Kemper
Small-Cap Growth Fund, ASAF Janus Mid-Cap Growth Fund, Alger All-Cap Growth Fund, ASAF Gabelli All-Cap Value Fund, ASAF
INVESCO Technology Fund, ASAF Rydex Managed OTC Fund, ASAF Sanford Bernstein Managed Index 500 Fund, and ASAF MFS Growth with
Income Fund had not commenced operations prior to November 1, 1999; therefore, no fees were paid during the periods
presented in the above table. As discussed in this SAI under "Fund Expenses" and in the Company's Prospectus under
"Expense Information," the Investment Manager has voluntarily agreed to reimburse the other expenses of each Fund so that
each Fund's total expenses do not exceed specified levels. During the fiscal period, the amounts of these reimbursements
exceeded the investment management fees included in the above table.
Each Management Agreement will continue in effect from year to year, provided it is approved at least annually by
a vote of the majority of the Directors or Trustees, where applicable, who are not parties to the agreement or interested
persons of any such party, cast in person at a meeting specifically called for the purpose of voting on such approval.
Each Management Agreement may be terminated without penalty on 60 days' written notice by vote of a majority of the
Directors or Trustees, where applicable, or by the Investment Manager, or by holders of a majority of the applicable Fund
or Portfolio's outstanding shares, and will automatically terminate in the event of its "assignment" (as that term is
defined in the 1940 Act).
THE SUB-ADVISORS:
ASISI currently engages the following Sub-advisors to conduct the investment programs of each Non-Feeder Fund and
Portfolio pursuant to separate sub-advisory agreements with the Investment Manager (the "Sub-Advisory Agreements"): (a)
Founders Asset Management LLC for the ASAF Founders International Small Capitalization Fund; (b) A I M Capital
Management, Inc. for the ASAF AIM International Equity Fund; (c) Janus Capital Corporation for the ASAF Janus Overseas
Growth Fund, the ASMT Janus Capital Growth Portfolio, the ASAF Janus Small-Cap Growth Fund and the ASAF Janus Mid-Cap
Growth Fund; (d) American Century Investment Management, Inc. (formerly known as, "Investors Research Corporation") for
the ASAF American Century International Growth Fund and the ASAF American Century Strategic Balanced Fund; (d) Scudder
Kemper Investments, Inc. for the ASAF Kemper Small-Cap Growth Fund; (e) T. Rowe Price Associates, Inc. for the ASAF T.
Rowe Price Small Company Value Fund; (f) Neuberger Berman Management Inc. for the ASAF Neuberger Berman Mid-Cap Growth
Fund and the ASAF Neuberger Berman Mid-Cap Value Fund; (g) Fred Alger Management, Inc. for the ASAF Alger All-Cap Growth
Fund; (h) GAMCO Investors, Inc. for the ASAF Gabelli All-Cap Value Fund; (i) INVESCO Funds Group, Inc. for the ASAF
INVESCO Technology Fund, and the ASMT INVESCO Equity Income Portfolio; (j) Rydex Global Advisors for the ASAF Rydex Managed OTC
Fund; (k) Alliance Capital Management L.P. for the ASAF Alliance Growth Fund and the ASAF Alliance Growth and Income
Fund; (l) Marsico Capital Management, LLC for the ASAF Marsico Capital Growth Fund; (m) Sanford C. Bernstein & Co. for
the ASAF Sanford Bernstein Managed Index 500 Fund; (n) Massachusetts Financial Services Company for the ASAF MFS Growth
with Income Fund; (o) Federated Investment Counseling for the ASAF Federated High Yield Bond Fund; (p) Pacific Investment
Management Company for the ASMT PIMCO Total Return Bond Portfolio; (q) J.P. Morgan Investment Management Inc. for the
ASMT JPM Money Market Portfolio.
The Sub-Advisory Agreements provide that the Sub-advisors will formulate and implement a continuous investment
program for each Non-Feeder Fund or Portfolio in accordance with the Fund or Portfolio's investment objective, policies
and limitations and any investment guidelines established by the Investment Manager. Each Sub-advisor will, subject to
the supervision and control of the Investment Manager, determine in its discretion which issuers and securities will be
purchased, held, sold or exchanged by the Fund or Portfolio, and will place orders with and give instructions to brokers
and dealers to cause the execution of such transactions. The Sub-advisors are required to furnish the Investment Manager
with periodic reports concerning the transactions and performance of the Fund or Portfolio. Each Sub-advisor is required
to furnish at its own expense all investment facilities necessary to perform its obligations under the Sub-Advisory
Agreement. Nothing in the Sub-advisory Agreements prevents the Investment Manager from engaging other sub-advisors to
provide investment advice and other services to a Fund or Portfolio, or from providing such services itself.
Corporate Structure. Several of the Sub-advisors are controlled by other parties as noted below:
Founders Asset Management LLC ("Founders") is a 90%-owned subsidiary of Mellon Bank, N.A., with the remaining 10%
held by certain Founders executives and portfolio managers. Mellon Bank, N.A. is a wholly owned subsidiary of Mellon
Bank Corporation, a publicly owned multibank holding company which provides a comprehensive range of financial products
and services in domestic and selected international markets.
A I M Capital Management, Inc. is a wholly-owned subsidiary of A I M Advisors, Inc. also a registered investment
adviser. A I M Advisors, Inc. is wholly-owned by A I M Management Group Inc., a holding company engaged in the financial
services business and an indirect wholly-owned subsidiary of AMVESCAP PLC. AMVESCAP PLC and its subsidiaries are an
independent investment management group engaged in institutional investment management and retail mutual fund businesses
in the United States, Europe and the Pacific Region.
Stilwell Financial ("Stilwell") owns approximately 81.5% of the outstanding voting stock of Janus Capital
Corporation. Stilwell is a publicly traded holding company with principal operations in financial asset management
businesses. Thomas H. Bailey, President and Chairman of the Board of Janus Capital, owns approximately 12% of its voting
stock and, by agreement with Stilwell, selects a majority of Janus Capital's Board subject to the approval of Stilwell,
which approval can not be unreasonably withheld.
American Century Companies, Inc. is the parent of American Century Investment Management, Inc.
Zurich Insurance Company, a leading provider of insurance and financial services, owns approximately 70% of
Scudder Kemper, with the balance owned by Scudder Kemper's officers and employees.
All of the voting stock of Neuberger Berman Management Inc. is owned by Neuberger Berman Inc., a publicly traded
company listed on the NYSE.
GAMCO Investors, Inc. ("GAMCO") is a New York corporation organized in 1999 as successor to the investment
advisory business of a New York corporation of the same name that was organized in 1978. GAMCO is a wholly-owned
subsidiary of Gabelli Asset Management Inc. ("GAMI"), a publicly held company listed on the New York Stock Exchange. Mr.
Mario J. Gabelli may be deemed a "controlling person" of GAMCO on the basis of his controlling interest in GAMI. GAMCO
has several affiliates that also provide investment advisory services.
INVESCO is an indirect wholly owned subsidiary of AMVESCAP PLC, a publicly traded holding company.
Alliance Capital Management Corporation ("ACMC") is the general partner of Alliance Capital Management, L.P.
("Alliance") and a wholly owned subsidiary of The Equitable Life Assurance Society of the United States ("Equitable").
Equitable is the beneficial owner of an approximately 55.4% partnership interest in Alliance. Alliance Capital
Management Holding L.P., a publicly-traded company, owns an approximately 41.9% partnership interest in Alliance.
Equitable is a wholly owned subsidiary of AXA Financial, Inc., and AXA, a French insurance holding company, owned as of
June 30, 1999 approximately 58.2% of the issued and outstanding shares of common stock of AXA Financial, Inc.
Bank of America N.A., a national bank subsidiary of Bank of America Corporation, indirectly owns 50% of the
voting control of Marsico Capital Management, LLC ("Marsico Capital"). Thomas F. Marsico and a company controlled by Mr.
Marsico own the remainder of Marsico Capital's voting interests. Bank of America N.A. has agreed to purchase the
remaining 50% of Marsico Capital that it does not currently own. The purchase is expected to occur in January 2001.
The parent company of Sanford C. Bernstein & Co., Inc. ("Bernstein") has entered into an agreement under which
Bernstein's advisory business will combine with that of Alliance. After completion of the transaction, which is expected
to occur on or about September 30, 2000, the Sub-advisor for the ASAF Sanford Bernstein Managed Index 500 Fund will be
Sanford C. Bernstein & Co., LLC ("Bernstein LLC"), an indirect wholly owned subsidiary of Alliance.
Massachusetts Financial Services Company is a subsidiary of Sun Life of Canada (US) Financial Services Holdings,
Inc. whose ultimate parent is Sun Life Assurance Co. of Canada.
Federated Investment Counseling is a wholly owned subsidiary of Federated Investors.
Pacific Investment Management Company ("PIMCO") is a subsidiary general partnership of PIMCO Advisors L.P.
("PIMCO Advisors"). Allianz AG ("Allianz") is the majority owner of PIMCO Advisors and its subsidiaries, including PIMCO.
Allianz is the world's second largest insurance company and is represented in 68 countries world-wide through
subsidiaries, branch and representative offices and other affiliated entities. Pacific Life Insurance Company holds an
approximately 30% interest in PIMCO Advisors.
J.P. Morgan Investment Management Inc. is a wholly owned subsidiary of J.P. Morgan & Co. Incorporated, a bank
holding company organized under the laws of Delaware.
Sub-Advisory Fees. ASISI pays each Sub-advisor on a monthly basis for the performance of sub-advisory services.
The fee payable to the Sub-advisors with respect to each Non-Feeder Fund and Portfolio may differ, reflecting, among
other things, the investment objective, policies and limitations of each Fund or Portfolio and the nature of each
Sub-advisory Agreement. Each Sub-advisor's fee is accrued daily for purposes of determining the amount payable by the
Investment Manager to the Sub-advisor. The fees payable to the Sub-advisors, based on a stated percentage of the
Non-Feeder Fund or Portfolio's average daily net assets, are as follows:
Founders Asset Management LLC for the ASAF Founders International Small Capitalization Fund: An annual rate of
.60% of the portion of the average daily net assets of the Fund not in excess of $100 million; plus .50% of the portion
over $100 million.
A I M Capital Management, Inc. for the ASAF AIM International Equity Fund: An annual rate equal to the following
percentages of the combined average daily net assets of the Fund and the series of American Skandia Trust that is managed
by A I M Capital Management Inc. and identified by the Sub-advisor and ASISI as being similar to the Fund: .55% of the
portion of the combined average daily net assets not in excess of $75 million; plus .45% of the portion in excess of $75
million.
Janus Capital Corporation for the ASAF Janus Overseas Growth Fund: An annual rate of .60% of the portion of the
average daily net assets of the Fund not in excess of $100 million; when the average daily net assets of the Fund equal
or exceed $100 million, the annual rate will be .50% of the entire average daily net assets of the Fund.
American Century Investment Management, Inc. for the ASMT American Century International Growth Portfolio:
Because of the large amount of assets being sub-advised for the Investment Manager by American Century Investment
Management, Inc., the Investment Manager was able to negotiate a reduction to the Sub-advisor's standard fee schedule.
This reduced fee schedule is an annual rate equal to .45% of the combined average daily net assets of the Fund and
certain series of American Skandia Trust that are managed by the Sub-advisor and identified by the Sub-advisor and ASISI
as being similar to the Fund. Prior to May 1, 2000, the Investment Manager had engaged Rowe Price-Fleming International,
Inc. as Sub-advisor for the Portfolio (formerly the ASMT T. Rowe Price International Equity Portfolio), for a total
Sub-advisory fee of .75% of the portion of the average daily net assets of the Portfolio not in excess of $20 million;
plus .60% of the portion of the net assets over $20 million but not in excess of $50 million; plus .50% of the portion of
the net assets over $50 million.
Janus Capital Corporation for the ASAF Janus Small-Cap Growth Fund: An annual rate of .50% of the portion of the
average daily net assets of the Fund not in excess of $100 million; plus .45% of the portion over $100 million but not in
excess of $500 million; plus .40% of the portion over $500 million but not in excess of $1 billion; plus .35% of the
portion in excess of $1 billion.
Scudder Kemper Investments, Inc. for the ASAF Kemper Small-Cap Growth Fund: An annual rate of .50% of the
portion of the average daily net assets of the Fund not in excess of $100 million; plus .45% of the portion over $100
million but not in excess of $400 million; plus .40% of the portion over $400 million but not in excess of $900 million;
plus .35% of the portion in excess of $900 million.
T. Rowe Price Associates, Inc. for the ASAF T. Rowe Price Small Company Value Fund: An annual rate of .60% of
the average daily net assets of the Fund.
Janus Capital Corporation for the ASAF Janus Mid-Cap Growth Fund: An annual rate equal to the following
percentages of the combined average daily net assets of the Fund and the series of American Skandia Trust that is managed
by the Sub-Advisor and identified by the Sub-advisor and the Investment Manager as being similar to the Fund: .55% of the
portion of the average daily net assets of the Fund not in excess of $100 million; plus .50% of the portion of the net
assets over $100 million but not in excess of $500 million; plus .45% of the portion of the net assets over $500 million
but not in excess of $2 billion; plus .40% of the portion of the net assets over $2 billion but not in excess of $5
billion; plus .375% of the portion of the net assets over $5 billion but not in excess of $10 billion; plus .35% of the
portion of the net assets over $10 billion.
Neuberger Berman Management Inc. for the ASAF Neuberger Berman Mid-Cap Growth Fund: An annual rate of .40% of
the average daily net assets of the Fund.
Neuberger Berman Management Inc. for the ASAF Neuberger Berman Mid-Cap Value Fund: An annual rate of .40% of the
average daily net assets of the Fund.
Fred Alger Management, Inc. for the ASAF Alger All-Cap Growth Fund: An annual rate equal to the following
percentages of the combined average daily net assets of the Fund and all series of American Skandia Trust that are
managed by the Sub-Advisor: .40% of the portion of the combined average daily net assets not in excess of $500 million;
plus .35% of the portion over $500 million but not in excess of $1 billion; plus .30% of the portion over $1 billion but
not in excess of $1.5 billion; plus .25% of the portion in excess of $1.5 billion.
GAMCO Investors, Inc. for the ASAF Gabelli All-Cap Value Fund: An annual rate equal to the following percentages
of the combined average daily net assets of the Fund and the series of American Skandia Trust that is managed by the
Sub-Advisor and identified by the Sub-advisor and the Investment Manager as being similar to the Fund: .50% of the
combined average daily net assets not in excess of $500 million; plus .40% of the portion over $500 million.
INVESCO Funds Group, Inc. for the ASAF INVESCO Technology Fund: An annual rate of .55% of the average daily net
assets not in excess of $100 million; plus .45% of the portion of the net assets over $100 million but not in excess of
$200 million; plus .425% of the portion of the net assets over $200 million but not in excess of $400 million; plus .40%
of the portion of the net assets over $400 million but not in excess of $900 million; plus .35% of the portion of the net
assets over $900 million.
Rydex Global Services for the ASAF Rydex Managed OTC Fund: An annual rate of .35% of the portion of the average daily net
assets of the Fund not in excess of $400 million; plus .25% of the portion over $400 million.
Alliance Capital Management L.P. for the ASAF Alliance Growth Portfolio: An annual rate equal to .40% of the
combined average daily net assets of the Fund and the series of American Skandia Trust that is managed by the Sub-Adviser
and identified by the Sub-advisor and the Investment Manager as being similar to the Fund. Between December 31, 1998 and
April 30, 2000, the Investment Manager had engaged OppenheimerFunds, Inc. as Sub-advisor for the Fund at a total
Sub-advisory fee of .35% of the portion of the average daily net assets of the Fund not in excess of $500 million; plus
.30% of the portion over $500 million but not in excess of $1 billion; plus .25% of the portion in excess of $1 billion.
Prior to January 1, 1999, the Investment Manager had engaged Robertson, Stephens & Company Investment Management, L.P. as
Sub-advisor for the Fund, at a total Sub-advisory fee of .60% of the portion of the average daily net assets of the Fund
not in excess of $200 million; plus .50% of the portion of the net assets over $200 million.
Marsico Capital Management, LLC for the ASAF Marsico Capital Growth Fund: An annual rate of .45% of the average
daily net assets of the Fund.
Sanford C. Bernstein & Co. for the ASAF Sanford Bernstein Managed Index 500 Fund: An annual rate equal to the
following percentages of the combined average daily net assets of the Fund and the series of American Skandia Trust that
is managed by the Sub-Advisor and identified by the Sub-advisor and the Investment Manager as being similar to the Fund:
.1533% of the portion of the combined average daily net assets not in excess of $300 million; plus .10% of the portion of
the net assets over $300 million. Notwithstanding the foregoing, the following annual rate will apply for each day that
the combined average daily net assets are not in excess of $300 million: .40% of the first $10 million of combined
average daily net assets; plus .30% on the next $40 million of combined average daily net assets; plus .20% on the next
$50 million of combined average daily net assets; plus .10% on the next $200 million of combined average daily net
assets. Prior to May 1, 2000, the Investment Manager had engaged Bankers Trust Company as Sub-advisor for the Fund at a
total 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 that was managed by Bankers Trust Company and identified by the Sub-Advisor and ASISI as
being similar to the Fund: .17% of the portion of the combined average daily net assets not in excess of $300 million;
plus .13% of the portion over $300 million but not in excess of $1 billion; plus .08% of the portion in excess of $1
billion.
Janus Capital Corporation for the ASMT Janus Capital Growth Portfolio: An annual rate of .45% of the average
daily net assets of the Portfolio.
Alliance Capital Management L.P. for the ASAF Alliance Growth and Income Portfolio: An annual rate equal to the
following percentages of the combined average daily net assets of the Fund and the series of American Skandia Trust that
is managed by the Sub-Adviser and identified by the Sub-advisor and the Investment Manager as being similar to the
Portfolio: .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 .20% of the portion in excess of $1.5 billion. Prior to
May 1, 2000, the Investment Manager had engaged Lord, Abbett & Co. as Sub-advisor for the Fund at a total Sub-advisory
fee of .50% of the portion of the average daily net assets of the Fund not in excess of $200 million; plus .40% of the
portion over $200 million but not in excess of $500 million; plus .375% of the portion over $500 million but not in
excess of $700 million; plus .35% of the portion over $700 million but not in excess of $900 million; when the average
daily net assets of the Fund equal or exceed $900 million, the annual rate will be .30% of the entire average daily net
assets of the Fund.
Massachusetts Financial Services Company for the ASAF MFS Growth with Income Fund: An annual rate equal to the
following percentages of the combined average daily net assets of the Fund and the domestic equity series of American
Skandia Trust that are managed by Massachusetts Financial Services Company: .40% of the portion of the combined average
daily net assets not in excess of $300 million; plus .375% of the portion over $300 million but not in excess of $600
million; plus .35% of the portion over $600 million but not in excess of $900 million; plus .325% of the portion over
$900 million but not over $1.5 billion; plus .25% of the portion in excess of $1.5 billion.
INVESCO Funds Group, Inc. for the ASMT INVESCO Equity Income Portfolio: An annual rate of .35% of the average
daily net assets of the Portfolio.
American Century Investment Management, Inc. for the ASAF American Century Strategic Balanced Fund: Because of
the large amount of assets being sub-advised for the Investment Manager by American Century Investment Management, Inc.,
the Investment Manager was able to negotiate a reduction to the Sub-advisor's standard fee schedule. This reduced fee
schedule is an annual rate equal to the following percentages of the combined average daily net assets of the Fund and
the series of American Skandia Trust that is managed by the Sub-advisor and identified by the Sub-advisor and Investment
Manager as being similar to the Fund: .45% of the portion of the average daily net assets of the Fund not in excess of
$50 million; plus .40% of the portion over $50 million but not in excess of $100 million; plus .35% of the portion over
$100 million but not in excess of $500 million; plus .30% of the portion over $500 million.
Federated Investment Counseling for the ASAF Federated High Yield Bond Fund: An annual rate of .25% of the
portion of the average daily net assets of the Fund not in excess of $200 million; plus .20% of the portion over $200
million.
Pacific Investment Management Company for the ASMT PIMCO Total Return Bond Portfolio: An annual rate of .25% of
the average daily net assets of the Portfolio.
J.P. Morgan Investment Management Inc. for the ASMT JPM Money Market Portfolio: An annual rate equal to the
following percentages of the combined average daily net assets of the Portfolio and the series of American Skandia Trust
that is managed by J.P. Morgan Investment Management, Inc. and identified by it and ASISI as being similar to the
Portfolio: .09% of the portion of the combined average daily net assets not in excess of $500 million; plus .06% of the
portion over $500 million but not in excess of $1.5 billion; plus .04% of the portion over $1.5 billion.
Sub-Advisory Fee Waivers. Certain Sub-advisors have voluntarily agreed to waive a portion of their sub-advisory fees set
forth above, as follows:
Commencing January 1, 1998, Janus Capital Corporation, the Sub-advisor for the ASAF Janus Overseas Growth Fund,
has voluntarily agreed to waive a portion of its sub-advisory fee equal to .10% of the portion of the average daily net
assets of the Fund not in excess of $100 million. When the average daily net assets of the Fund equal or exceed $100
million, such voluntary fee waiver is no longer applicable, and the sub-advisory annual fee rate of .50% of the entire
average daily net assets of the Fund will be applied.
Commencing March 1, 1999, Janus Capital Corporation, the Sub-advisor for the ASAF Janus Small-Cap Growth Fund,
has voluntarily agreed to waive a portion of its sub-advisory fee equal to .05% of the portion of the average daily net
assets over $400 million but not in excess of $500 million and .05% on assets over $900 million but not in excess of $1
billion.
Commencing August 28, 2000, GAMCO Investors, Inc., the Sub-advisor for the ASAF Gabelli All-Cap Value Fund, has
voluntarily agreed to waive a portion of its sub-advisory fee equal to the following percentages of the combined average
daily net assets of the Fund and the corresponding series of American Skandia Trust as referenced above under
"Sub-advisory Fees": .10% of the portion of the combined average daily net assets not in excess of $500 million; .05% on
combined assets over $500 million but not in excess of $1 billion; and .10% on combined assets over $1 billion.
Commencing March 1, 2000, Janus Capital Corporation, the Sub-advisor for the ASMT Janus Capital Growth Portfolio,
has voluntarily agreed to the following revised fee schedule based on the combined average daily net assets of the
Portfolio and the AST JanCap Growth Portfolio of American Skandia Trust: .55% of the portion of the combined average
daily net assets not in excess of $100 million; plus .50% of the portion over $100 million but not in excess of $500
million; plus .45% of the portion over $500 million but not in excess of $2 billion; plus .40% of the portion over $2
billion but not in excess of $5 billion; plus .375% of the portion over $5 billion but not in excess of $10 billion; plus
.35% of the portion in excess of $10 billion.
Commencing May 1, 2000, INVESCO Funds Group, Inc., the Sub-advisor for the ASMT INVESCO Equity Income Portfolio,
has voluntarily agreed to waive a portion of its fee so that the following fee schedule based on the combined average
daily net assets of the Portfolio and the AST INVESCO Equity Income Portfolio is in effect: .35% of the portion of the
combined average daily net assets not in excess of $1 billion; plus .30% of the portion over $1 billion.
The sub-advisory fees paid by the Investment Manager for each Fund and Portfolio that had commenced operations
prior to October 31, 1999, for the fiscal period from commencement of operations until October 31, 1997 and for the
fiscal years ended October 31, 1998 and October 31, 1999, were as follows:
Name of Fund Period Ended Year Ended Year Ended
------------ ------------ ---------- ----------
October 31, 1997 October 31, 1998 October 31, 1999
---------------- ---------------- ----------------
ASAF Founders International Small Capitalization Fund $284 $18,941 $56,357
ASAF Janus Overseas Growth Fund $0 $66,472 $653,259
ASMT American Century International Growth Portfolio(1) $2,329 $47,029 $108,959
ASAF Janus Small-Cap Growth Fund(2) $320 $25,777 $307,453
ASAF T. Rowe Price Small Company Value Fund $917 $126,019 $332,996
ASAF Neuberger Berman Mid-Cap Growth Fund $0 $853 $101,131
ASAF Neuberger Berman Mid-Cap Value Fund $0 $1,231 $83,233
ASAF Alliance Growth Fund(3) $0 $40,530 $149,346
ASAF Marsico Capital Growth Fund $0 $19,698 $1,268,283
ASMT Janus Capital Growth Portfolio $4,725 $260,237 $3,071,198
ASAF Alliance Growth and Income Fund(4) $0 $34,297 $242,657
ASMT INVESCO Equity Income Portfolio $2,235 $114,014 $462,222
ASAF American Century Strategic Balanced Fund $839 $45,233 $343,430
ASAF Federated High Yield Bond Fund $365 $53,150 $224,060
ASMT PIMCO Total Return Bond Portfolio $1,714 $58,336 $293,262
ASMT JPM Money Market Portfolio $204 $15,061 $89,274
(1) For fiscal years 1997, 1998 and 1999, the entire fee noted above was paid to Rowe Price-Fleming International,
Inc., the prior Sub-advisor for the Fund.
(2) For fiscal years 1997 and 1998, the entire fee noted was paid to Founders Asset Management LLC, the prior Sub-advisor
for the Fund. For fiscal year 1999, $10,776 was paid to Founders and $296,677 was paid to Janus Capital Corporation.
(3) For fiscal years 1997 and 1998, the entire fee noted was paid to Robertson, Stephens & Company Investment Management,
L.P. For fiscal year 1999, $19,192 was paid to Robertson Stephens and $130,154 was paid to OppenheimerFunds, Inc.
(4) For fiscal year 1999, the entire fee noted above was paid to Lord, Abbett & Co., Inc., the prior Sub-advisor for the
Fund.
Fees for the Portfolios are based upon the total assets of each Portfolio, which include assets other than those
of the Feeder Funds. The Portfolios commenced operations in June 1997, while the ASAF Founders International Small
Capitalization Fund, ASAF Janus Small-Cap Growth Fund, ASAF T. Rowe Price Small Company Value Fund, ASAF American Century
Strategic Balanced Fund, and ASAF Federated High Yield Bond Fund commenced operations on July 28, 1997. The ASAF Janus
Overseas Growth Fund, Alliance Growth Fund, and ASAF Alliance Growth and Income Fund commenced operations on January 2,
1998. The ASAF Neuberger Berman Mid-Cap Growth Fund, ASAF Neuberger Berman Mid-Cap Value Fund, and ASAF Marsico Capital
Growth Fund commenced operations on August 19, 1998. The ASAF AIM International Equity Fund, ASAF Kemper Small-Cap
Growth Fund, ASAF Sanford Bernstein Managed Index 500 Fund, and ASAF MFS Growth Fund commenced operations on November 1,
1999. The ASAF Janus Mid-Cap Growth Fund, ASAF Alger All-Cap Growth Fund, ASAF Gabelli All-Cap Value Fund, ASAF INVESCO
Technology Fund and ASAF Rydex Managed OTC Fund had not commenced operations prior to the date of this SAI.
Each Sub-Advisory Agreement will continue in effect from year to year, provided it is approved at least annually
by a vote of the majority of the Directors or Trustees, where applicable, who are not parties to the agreement or
interested persons of any such party, cast in person at a meeting specifically called for the purpose of voting on such
approval. Each Sub-Advisory Agreement may be terminated without penalty at any time by the Investment Manager or the
Sub-advisor upon 60 days' written notice, and will automatically terminate in the event of its "assignment" (as that term
is defined in the 1940 Act) or upon termination of the Management Agreement with respect to that particular Fund or
Portfolio (provided that the Sub-advisor has received notice of such termination).
THE ADMINISTRATOR:
PFPC Inc. (the "Administrator"), 103 Bellevue Parkway, Wilmington, Delaware 19809, a Delaware corporation which
is an indirect wholly-owned subsidiary of PNC Financial Corp., serves as the administrator for both the Company and the
Trust. Pursuant to administration agreements between the Administrator and the Company and the Trust, respectively (the
"Administration Agreements"), the Administrator has agreed to provide certain fund accounting and administrative services
to the Company and the Trust, including, among other services, accounting relating to the Company and the Trust and the
investment transactions of the foregoing; computing daily NAVs; monitoring the investments and income of the Company and
the Trust for compliance with applicable tax laws; preparing for execution and filing federal and state tax returns, and
annual and semi-annual shareholder reports; preparing monthly financial statements including a schedule of investments;
assisting in the preparation of registration statements and other filings related to the registration of shares;
coordinating contractual relationships and communications between the Investment Manager and the Company's and the
Trust's custodians; preparing and maintaining the Company's and the Trust's books of account, records of securities
transactions, and all other books and records in accordance with applicable laws, rules and regulations (including, but
not limited to, those records required to be kept pursuant to the 1940 Act); and performing such other duties related to
the administration of the Company and the Trust as may be agreed upon in writing by the parties to the respective
Administration Agreements. The administrator does not have any responsibility or authority for the management of the
assets of the Funds or Portfolios, the determination of their investment policies, or for any matter pertaining to the
distribution of securities issued by the Company.
Under the terms of the Administration Agreements, the Administrator shall be obligated to exercise care and
diligence in the performance of its duties, to act in good faith and to use its best efforts, within reasonable limits,
in performing services to be provided for under the agreements. The Administrator shall be liable for any damages
arising out of its failure to perform its duties under the Administration Agreements to the extent such damages arise out
of its willful misfeasance, bad faith, gross negligence or reckless disregard of such duties. Any person, even though
also an officer, director, partner, employee or agent of the Administrator, who may be or become an officer, director,
trustee, employee or agent of the Company or the Trust, shall be deemed when rendering services to the Company or the
Trust or acting on any business of the Company or the Trust (other than services or business in connection with the
Administrator's duties under the Administration Agreements) to be rendering such services to or acting solely for the
Company or the Trust and not as an officer, director, partner, employee or agent or one under the control or direction of
the Administrator even though paid by them. The Administration Agreements shall continue until terminated by either
party on 60 days' prior written notice to the other party.
As compensation for the services and facilities provided by the Administrator to the Company, the Company has
agreed to pay the Administrator its "out-of-pocket" expenses, plus a monthly multi-class fee of $3,000 per Fund, plus a
monthly feeder fee of $2,000 per Feeder Fund, plus (except for the ASAF Sanford Bernstein Managed Index 500 Fund) the
greater of the following monthly fee based on the average daily net assets of the Non-Feeder Funds -- 0.10% (first $200
million), 0.06% (next $200 million), 0.0275% (next $200 million), 0.02% (next $400 million) and 0.01% (over $1 billion)
-- or a minimum monthly fee of $6,250 per Non-Feeder Fund. The fee for the ASAF Sanford Bernstein Managed Index 500 Fund
is the greater of the following monthly fee based on the average daily net assets of the Fund -- 0.05% (first $200
million), 0.03% (next $200 million), 0.0275% (next $200 million), 0.02% (next $400 million) and 0.01% (over $1 billion) -
or a minimum monthly fee of $6,250. The Administrator has agreed to waive the above monthly multi-class fee, the monthly
feeder fee and the minimum monthly fee for the first two months of each Fund's operations, and thereafter will decrease
such waiver by 10% increments for each of the remaining ten months of the initial contract year.
In addition, as compensation for the services and facilities provided by the Administrator to the Trust, the
Trust has agreed to pay the Administrator its "out-of-pocket" expenses, plus the greater of the following monthly fee
based on the average daily net assets of the Portfolios -- 0.10% (first $200 million), 0.06% (next $200 million), 0.0275%
(next $200 million), 0.02% (next $400 million) and 0.01% ($1+ billion) -- or a minimum monthly fee of $6,250 per
Portfolio. The Administrator has agreed to waive the above minimum monthly fee for the first two months of each
Portfolio's operations, and thereafter will decrease such waiver by 10% increments for each of the remaining ten months of
the initial contract year.
For all of the Funds and Portfolios that commenced operations prior to November 1, 1999, monthly fees payable to
the Administrator have been frozen at the amounts paid for the month of December 1999. The fees payable to the
Administrator for those Funds that commenced operations on or after November 1, 1999 (the ASAF AIM International Equity
Fund, the ASAF Kemper Small-Cap Growth Fund, the ASAF Janus Mid-Cap Growth Fund, the ASAF Alger All-Cap Growth Fund, the
ASAF Gabelli All-Cap Value Fund, the ASAF INVESCO Technology Fund, the ASAF Rydex Managed OTC Fund, the ASAF Sanford
Bernstein Managed Index 500 Fund, and the ASAF MFS Growth with Income Fund) are not subject to any freeze and will pay
the Administrator under the fee schedule set forth above, giving effect to the phased-in minimum fees as applicable.
These fee arrangements will remain in effect until such time as the aggregate fee resulting from the application of
revised fee schedules based on the combined average daily net assets of each Fund or Portfolio and its corresponding
portfolio of American Skandia Trust would result in a lower fee, at which point the revised fee schedules will take effect
Reimbursable "out-of-pocket" expenses include, but are not limited to, postage and mailing, telephone, telex,
Federal Express, outside independent pricing service charges and record retention/storage. For the period from
commencement of operations until October 31, 1997, the Company paid the Administrator $16,898, and the Trust paid the
Administrator $25,353. For the fiscal year ended October 31, 1998, the Company paid the Administrator $507,368 and the
Trust paid the Administrator $291,316. For the fiscal year ended October 31, 1999, the Company paid the Administrator
$1,395,979 and the Trust paid the Administrator $724,469. These amounts do not include out-of-pocket expenses for which
the Administrator was reimbursed.
QUALIFIED PLANS ADMINISTRATOR:
American Skandia Fund Services, Inc. ("ASFS"), an affiliate of ASISI, receives a fee from each Fund under an
Administration Agreement between ASFS and the Company with respect to services provided in connection with investments in
the Company by certain qualified retirement plans. Pursuant to this agreement, ASFS selects and contracts with third
parties providing administrative services for such plans ("third-party administrators") or agents for such third-party
administrators. Among other matters, third party administrators maintain records of the holdings in the Funds of
individual plan participants. As a result of the third-party administrators' services, the Company may realize savings
on costs that it would otherwise incur in maintaining shareholder accounts.
ASFS uses its fee from each Fund to pay the third-party administrators and their agents, which fee may be used to
reduce fees that would otherwise be payable by the qualified plan to the third-party administrator. The fee payable to
ASFS corresponds to the aggregate fees payable by ASFS to third-party administrators and agents under the terms of the
agreements between ASFS and such third-party administrators and agents. Such fees, depending on the particular
agreement, are payable by ASFS either (a) at an annual rate of 0.20% of plan assets invested in the Company through such
third-party administrator or agent, or (b) at a fixed dollar amount up to $15 annually per participant account that is
maintained by a third-party administrator reflecting the holdings of a plan participant in a Fund. ASFS does not receive
any compensation as qualified plans administrator in addition to amounts it pays to third-party administrators and their
agents and for other out-of -pocket expenses.
FUND EXPENSES
Each Non-Feeder Fund and Portfolio pays its own expenses including, without limitation: (i) expenses of
maintaining the Fund or Portfolio and continuing its existence; (ii) registration of the Fund or Portfolio under the 1940
Act; (iii) auditing, accounting and legal expenses; (iv) taxes and interest; (v) governmental fees; (vi) expenses of
issue, sale, repurchase and redemption of Fund shares; (vii) expenses of registering and qualifying the Fund or Portfolio
and its shares under federal and state securities laws and of preparing and printing prospectuses for such purposes and
for distributing the same to shareholders and investors; (viii) fees and expenses of registering and maintaining
registrations of the Fund or Portfolio and of the Fund's principal underwriter as a broker-dealer or agent under state
securities laws; (ix) expenses of reports and notices to shareholders and of meetings of shareholders and proxy
solicitations therefor; (x) expenses of reports to governmental officers and commissions; (xi) insurance expenses; (xii)
association membership dues; (xiii) fees, expenses and disbursements of custodians for all services to the Fund or
Portfolio; (xiv) fees, expenses and disbursements of transfer agents, dividend disbursing agents, shareholder servicing
agents and registrars for all services to the Fund or Portfolio; (xv) expenses for servicing shareholder accounts; (xvi)
any direct charges to shareholders approved by the Directors of the Company or the Trustees of the Trust, where
applicable; (xvii) compensation and expenses of Directors of the Company or the Trustees of the Trust, where applicable,
who are not "interested persons" of the Fund or Portfolio, respectively; and (xviii) such nonrecurring items as may
arise, including expenses incurred in connection with litigation, proceedings and claims and the obligation of the
Company and the Trust to indemnify its directors, trustees and officers with respect thereto. Expenses incurred by the
Company or the Trust not directly attributable to any specific Non-Feeder Fund or Portfolio are allocated on the basis of
the net assets of the respective Non-Feeder Funds and Portfolios.
The Investment Manager has voluntarily agreed until May 1, 2001 to reimburse each Fund for its respective
operating expenses (and, in the case of the Feeder Funds, the Feeder Fund's pro rata share of operating expenses of the
Fund's corresponding Portfolio), 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 the Fund's average
net assets as follows:
ASAF Founders International Small Capitalization Fund: 1.70%
ASAF AIM International Equity Fund: 1.60%
ASAF Janus Overseas Growth Fund: 1.60%
ASAF American Century International Growth Fund: 1.60%
ASAF Janus Small-Cap Growth Fund: 1.30%
ASAF Kemper Small-Cap Growth Fund: 1.30%
ASAF T. Rowe Price Small Company Value Fund: 1.40%
ASAF Janus Mid-Cap Growth Fund: 1.40%
ASAF Neuberger Berman Mid-Cap Growth Fund: 1.35%
ASAF Neuberger Berman Mid-Cap Value Fund: 1.35%
ASAF Alger All-Cap Growth Fund: 1.35%
ASAF Gabelli All-Cap Value Fund: 1.35%
ASAF INVESCO Technology Fund: 1.40%
ASAF Rydex Managed OTC Fund: 1.25%
ASAF Alliance Growth Fund: 1.30%
ASAF Marsico Capital Growth Fund: 1.30%
ASAF Janus Capital Growth Fund: 1.30%
ASAF Sanford Bernstein Managed Index 500 Fund: 1.00%
ASAF Alliance Growth & Income Fund: 1.15%
ASAF MFS Growth with Income Fund: 1.30%
ASAF INVESCO Equity Income Fund: 1.20%
ASAF American Century Strategic Balanced Fund: 1.20%
ASAF Federated High Yield Bond Fund: 1.00%
ASAF PIMCO Total Return Bond Fund: 1.00%
ASAF JPM Money Market Fund: 1.00%
The Investment Manager may terminate the above voluntary agreements at any time after May 1, 2001. 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.
DISTRIBUTION ARRANGEMENTS
THE DISTRIBUTOR:
American Skandia Marketing, Incorporated ("ASM" or the "Distributor"), located at One Corporate Drive, Shelton,
Connecticut 06484, serves as the principal underwriter and distributor for each Fund pursuant to an underwriting
agreement initially approved by the Directors of the Company (the "Underwriting Agreement"). The Distributor is a
registered broker-dealer and member of the National Association of Securities Dealers, Inc. ("NASD"). The Distributor is
an "affiliated person" (within the meaning of the 1940 Act) of the Company, the Trust and the Investment Manager, being a
wholly-owned subsidiary of American Skandia, Incorporated.
Shares of each Fund will be continuously offered and will be sold by selected broker-dealers who have executed
selling agreements with the Distributor. The Distributor bears all the expenses of providing services pursuant to the
Underwriting Agreement. Each Fund bears the expenses of registering its shares with the SEC and with applicable state
regulatory authorities. The Underwriting Agreement continues in effect for two years from initial approval and for
successive one-year periods thereafter, provided that each such continuance is specifically approved (i) by the vote of a
majority of the Directors of the Company, including a majority of the Directors who are not parties to the Underwriting
Agreement or "interested persons" of any such party (as defined in the 1940 Act); or (ii) by the vote of a "majority of
the outstanding voting securities" of a Fund (as defined in the 1940 Act). In the event that the Underwriting Agreement
terminates, all obligations of the Distributor thereunder shall cease, including the Distributor's undertaking to
purchase Class X Bonus Shares. For information regarding Class X Bonus Shares and the Distributor's undertaking, see the
Company's Prospectus under "How to Buy Shares: Purchase of Class X Shares." The Distributor is not obligated to sell any
specific amount of shares of any Fund.
The following table shows, for the fiscal year ended October 31, 1999, information about the compensation
received by the Distributor:
Net Underwriting Commissions
(portion of initial sales charge retained by Distributor): $0
Compensation on Redemptions: $4,065,671
Brokerage Commissions (compensation from Supplemental
Distribution Plans as described below under "The Distribution
Plans"): $217,537
Other Compensation (compensation from other Distribution Plans): $16,712,122
For the fiscal year ended October 31, 1999, aggregate underwriting commissions were $13,231,476 of which, as
noted above $0, was retained by the Distributor. For the fiscal year ended October 31, 1998, aggregate underwriting
commissions were $2,691,543, of which, $0 was retained by the Distributor. For the fiscal period ended October 31, 1997,
aggregate underwriting commissions were $90,116, of which $0 was retained by the Distributor.
THE DISTRIBUTION PLANS:
The Company has adopted separate Distribution and Service plans (commonly referred to as "12b-1 Plans") for Class
A, B, C and X shares of each Fund (the "Class A Plan," "Class B Plan," "Class C Plan" and "Class X Plan," individually,
and collectively, the "Class Plans") pursuant to appropriate resolutions of the Directors of the Company and in
accordance with the requirements of Rule 12b-1 under the 1940 Act and the requirements of the applicable rules of the
NASD regarding asset based sales charges. The Class Plans permit the payment of certain fees from Fund assets to the
Distributor, an affiliate of the Investment Manager, for its services and costs in distributing Fund shares and providing
for services to shareholder accounts. In addition, the Company has adopted a Supplemental Distribution Plan and the
Trust has adopted a Distribution Plan (the "Supplemental Plans," and together with the Class Plans, the "Plans") under
Rule 12b-1 under the 1940 Act to permit the Distributor to receive brokerage commissions in connection with purchases and
sales of securities held by the Funds and the Portfolios, and to use these commissions to promote the sale of shares of
the Funds.
Under the Plans, the Distributor may use the amounts received to pay various distribution-related expenses, such
as advertising, printing of sales materials, training sales personnel, and compensating broker-dealers who sell shares of
the Company and provide services to shareholder accounts. Such broker-dealer compensation may include initial sales
concessions, ongoing sales and service fees, and additional marketing fees requested by selling broker-dealers, all as
described below under "Dealer Compensation Information." The Distributor may receive compensation under the Plans
regardless of whether it actually uses such compensation to pay distribution expenses. The Distributor has assigned its
right to receive any distribution and service fees under the Class B Plan and the Class X Plan, as well as any contingent
deferred sales charge for Class B and Class X shares, to an unaffiliated third party that finances the sale of Class B
and Class X shares.
The following table shows, for the twelve months ended September 30, 1999, the nature and amount of the
expenditures made under the Plans:
Advertising and sales literature: $1,123,018
Printing of prospectuses and reports
for other than current
shareholders $220,409
Compensation to sales personnel
(including direct expenses
of sales personnel) $4,931,782
Compensation to dealers
(Class A shares) $1,507,083
Compensation to dealers
(Class B shares) $78,607,009
Compensation to dealers
(Class C shares) $4,863,486
Compensation to dealers
(Class X shares) $7,783,403
Purchase of Class X bonus
shares $5,710,821
Other dealer compensation $88,210
Conferences and seminars for
dealer personnel $19,542
The distribution expenses paid under the Plans will be intended to result in the sale of shares of the Company's
various Funds. As a result, amounts incurred by a Fund or Portfolio under the Plans (including brokerage commissions
paid by a Fund or Portfolio under the Supplemental Plans) may be used in a manner that promotes the sale of shares of
other Funds or Portfolios. Certain Funds of the Company may not be available for additional investments or for purchase
by new investors. Distribution expenses that are not attributable to a particular Fund or Portfolio will be allocated
among the Funds and Portfolios on different bases (e.g., relative asset size and relative new sales of the Funds or
Portfolios) depending on the nature of the expense and the manner in which the amount of such expense is determined.
Distribution expenses that are attributable to a particular class of a Fund (e.g., sales concessions) will be allocated
to that class.
The Plans were adopted by a majority vote of the Directors of the Company and Trustees of the Trust, including at
least a majority of Directors or Trustees, as applicable, who are not "interested persons" of the Funds or the Portfolios
(as defined in the 1940 Act) and who do not have any direct or indirect financial interest in the operation of the Plans,
cast in person at meetings called for the purpose of voting on the Plans. In approving the Plans, the Directors of the
Company and the Trustees of the Trust identified and considered a number of potential benefits which the Plans may
provide, including, but not limited to, improving the Distributor's ability to attract investments by enabling it to
compensate broker-dealers selling shares of the Funds adequately and in the most effective manner, and that the resulting
increases in assets should enable the Funds and Portfolios to achieve greater economies of scale and lower their
per-share operating expenses. The Directors also considered the benefit of promoting shareholder access to the services
of broker-dealer representatives who have knowledge of the shareholders' particular circumstances and goals. With
respect to the Class X Plan, the Directors considered the possible increase in investor interest and consequent increase
in portfolio assets resulting from the use of the fees payable under such plan, in part, to facilitate the Distributor's
purchase of additional shares for Class X investors as a bonus. The Directors of the Company and the Trustees of the
Trust believe that there is a reasonable likelihood that the Plans will benefit each Fund and Portfolio and its current
and future shareholders in the manner contemplated.
Each Plan, pursuant to its terms, remains in effect from year to year provided such continuance is approved
annually by vote of the Directors or Trustees, as applicable, in the manner described above. All material amendments to
the Plans must be approved by the Directors or Trustees, as applicable, in the manner described above. The Class Plans
may not be amended to increase materially the amount to be spent for distribution without approval of the shareholders of
each class of a Fund or Portfolio affected thereby entitled to vote thereon under the 1940 Act. The Supplemental Plans
may not be amended to materially change the source of monies from which distribution expenses are paid without approval
of the shareholders of each Fund or Portfolio affected thereby entitled to vote thereon under the 1940 Act. The Plans
may be terminated at any time, without payment of a penalty, by vote of the majority of the Directors or Trustees, as
applicable, who are not interested persons of the Fund or the Portfolio and have no direct or indirect financial interest
in the operations of the Plans, or by a vote of a "majority of the outstanding voting securities" (as defined in the 1940
Act) of the class, Fund or Portfolio affected thereby entitled to vote thereon under the 1940 Act. A Plan will
automatically terminate in the event of its "assignment" (as defined in the 1940 Act).
DEALER COMPENSATION INFORMATION
In addition to the dealer compensation information described in the Company's Prospectus, the following may be
applicable to the purchase of Fund shares.
Class A Dealer Compensation. The concessions paid to dealers and brokers from the initial sales charge on the
sale of Class A shares are as follows:
High Yield Bond & Total Return Bond Funds: All Other Funds (other than Money Market
Fund):
Concession Concession
(as % of (as % of
Amount of Purchase: offering offering
------------------ -------------- --------
price) price)
------ ------
Less than $50,000 3.50% 5.00%
$50,000 up to $100,000 3.00% 4.25%
$100,000 up to $250,000 2.50% 3.25%
$250,000 up to $500,000 1.75% 2.50%
$500,000 up to $1 million 1.25% 2.00%
In addition, the Distributor may allocate the entire amount of the initial sales charge for the sale of Class A
shares to dealers for all sales occurring during a particular period.
The Distributor uses distribution and service fees received under the Class A Plan to compensate qualified
dealers for services provided in connection with the sale of shares and the maintenance of shareholder accounts. Such
compensation generally is paid by the Distributor quarterly at an annual rate not to exceed 0.50% of the Fund's average
daily net assets attributable to Class A shares held in accounts of the dealer or its customers. However, in the case of
shares purchased at NAV with a CDSC, the Distributor will pay the dealer of record a sales commission in an amount equal
to 0.50% of the amount invested, and the ongoing compensation will not begin until one year after purchase. NAV shares
are not subject to the one-year exclusion in cases where the shareholder has made arrangements with the Company and the
dealer of record waives the sales commission.
Class B Dealer Compensation. The Distributor uses distribution and service fees received under the Class B Plan
to compensate qualified dealers for services provided in connection with the sale of shares and the maintenance of
shareholder accounts. Such compensation is paid by the Distributor quarterly at an annual rate not to exceed 0.50% of
the Fund's average daily net assets attributable to Class B shares (and any shares purchased by the reinvestment of
dividends or capital gains) held for over seven years.
The Distributor normally pays a sales concession of 5.50% (and may pay up to 6.00%) of the purchase price of
Class B shares to the dealer from its own resources at the time of the sale.
Class X Dealer Compensation. The Distributor uses distribution and service fees received under the Class X Plan
as reimbursement for its purchases of Bonus Shares, as well as to compensate qualified dealers, brokers, banks and other
financial institutions for services provided in connection with the sale of Class X shares and the maintenance of
shareholder accounts. Such latter compensation is paid by the Distributor quarterly at an annual rate not to exceed
0.50% of the Fund's average daily net assets attributable to Class X shares (and any shares purchased by the reinvestment
of dividends or capital gains as such shares) held for over seven years.
The Distributor normally pays a sales concession of 3.00% (and may pay up to 3.50%) of the purchase price of
Class X shares to the dealer from its own resources at the time of the sale.
Class C Dealer Compensation. The Distributor uses distribution and service fees received under the Class C Plan
to compensate qualified dealers for services provided in connection with the sale of shares and the maintenance of
shareholder accounts. The Distributor currently pays a 1.00% fee to dealers in advance upon sale of Class C shares and
retains the fee paid by the Fund in the first year. After the shares have been held for a year, the Distributor pays the
fee to dealers on a quarterly basis. The Class C CDSC is waived, and the one-year exclusion on ongoing compensation does
not apply, in cases where the shareholder has made arrangements with the Company and the dealer of record waives the
1.00% fee upon sale. Similarly, the initial fee is not paid and the payment of ongoing quarterly compensation begins
immediately after purchase with respect to shares purchased under an asset allocation program sponsored by ASISI or its
affiliates.
Additional Dealer Compensation. In addition to the amounts paid to dealers as concessions that are discussed
above with respect to each class of the Company's shares, the Distributor may enter into special compensation
arrangements with dealers that have sold or are expected to sell large amounts of shares. As of January 13, 2000, the
Distributor had entered into nineteen such arrangements, one of which called for compensation based on a specified
percentage of the value of shares held by the Dealer's customers, thirteen of which called for compensation based on a
specified percentage of the value of shares sold by the Dealer, and five of which called for compensation based on a
combination of assets and sales. None of these payments will change the price an investor pays for shares.
DETERMINATION OF NET ASSET VALUE
The net asset value ("NAV") per share of each Fund is determined in the manner described in the Company's
Prospectus. Each Fund will determine the NAV of its shares on each day that the New York Stock Exchange (the "NYSE") is
open for business. The Directors of the Company and the Trustees of the Trust have each established procedures for
valuing the assets of the Funds and Portfolios, respectively. In general, these valuations are based on market
quotations. However, in certain circumstances where market quotations are not readily available, assets are valued by
methods specified in the procedures that are believed to accurately reflect the assets' fair value.
Securities held by each Non-Feeder Fund and Portfolio, other than the ASMT JPM Money Market Portfolio (the "Money
Market Portfolio"), that are valued based on market quotations will be valued as follows: portfolio securities, including
open short positions and options written, are valued at the last sale price on the securities exchange or securities
market (including the NASDAQ National Market System) on which such securities primarily are traded. Securities not
listed on an exchange or securities market, or securities in which there were not transactions on that day, are valued at
the average of the most recent bid and asked price, except in the case of open short positions where the asked price is
available. Portfolio securities which are traded both "over-the-counter" and on an exchange are valued according to
their primary market, and it is expected that for debt securities this ordinarily will be the over-the-counter market.
Generally, trading in foreign securities, as well as U.S. Government securities, money market instruments and
repurchase agreements, is substantially completed each day at various times prior to the close of the NYSE. The values
of such securities used in computing the net asset value of the shares of a Fund or Portfolio generally are determined as
of such earlier times. Foreign currency exchange rates are also generally determined prior to the close of the NYSE.
Occasionally, events affecting the value of such securities and such exchange rates may occur between the times at which
such values usually are determined and the close of the NYSE. If such extraordinary events occur, their effects may not
be reflected in the net asset value of a Fund or Portfolio calculated as of the close of the NYSE on that day.
The NAV per share of the Money Market Portfolio is determined by using the amortized cost method of valuing
portfolio instruments. Under the amortized cost method of valuation, an instrument is valued at cost and the interest
payable at maturity upon the instrument is accrued as income, on a daily basis, over the remaining life of the
instrument. Neither the amount of daily income nor the NAV is affected by unrealized appreciation or depreciation of the
Portfolio's investments assuming the instrument's obligation is paid in full on maturity. In periods of declining
interest rates, the indicated daily yield on shares of the Portfolio computed using amortized cost may tend to be higher
than a similar computation made using a method of valuation based upon market prices and estimates. In periods of rising
interest rates, the indicated daily yield on shares of the Portfolio computed using amortized cost may tend to be lower
than a similar computation made using a method of valuation based upon market prices and estimates. In addition,
short-term obligations with remaining maturities of less than 60 days that are held by any Fund or Portfolio are valued
at amortized cost.
The amortized method of valuation is intended to permit the Money Market Portfolio to maintain a constant NAV per
share of $1.00. No assurances can be given that this can be attained. The Directors of the Company and the Trustees of
the Trust, where applicable, periodically review the extent of any deviation from the $1.00 per share value that would
occur if a method of valuation based on market prices and estimates were used. In the event such a deviation would
exceed one-half of one percent, the Directors of the Company and the Trustees of the Trust, where applicable, will
promptly consider any action that reasonably should be initiated to eliminate or reduce material dilution or other unfair
results to shareholders. Such action may include selling portfolio securities prior to maturity, not declaring earned
income dividends, valuing portfolio securities on the basis of current market prices, if available, or, if not available,
at fair value, and (considered highly unlikely by management of the Company and the Trust) redemption of shares in kind
(i.e., with portfolio securities).
A Fund's maximum offering price per Class A share, other than for the ASAF JPM Money Market Fund, is determined
by adding the maximum sales charge to the NAV per share. Class A shares of the ASAF JPM Money Market fund, Class B, C
and X shares are offered at NAV without the imposition of an initial sales charge.
ADDITIONAL INFORMATION ON THE
PURCHASE AND REDEMPTION OF SHARES
REDUCTION OR WAIVER OF SALES CHARGES AND CDSC ON CLASS A SHARES:
The Company's Prospectus under "How to Buy Shares" describes certain reductions and/or waivers of sales charges
and CDSC that apply to the purchase of Class A Shares. The following provides more specific information on such
reductions or waivers as well as certain additional waivers.
Waiver of All Class A Sales Charges. No sales charge is imposed on sales of Class A shares for the following
investors: (1) the Investment Manager, its parent company, any affiliate or subsidiary of the parent company; (2) present
or former officers, directors, trustees and employees (and their parents, spouses, siblings and dependent children) of
the Company, the Investment Manager (including its parent company or any affiliate or subsidiary of the parent company)
or the Sub-advisors, and any retirement plans established by such entities for their employees; (3) accounts with respect
to which any person described in (2) above acts as a custodian on behalf of a minor (including Uniform Gift to Minors Act
and Uniform Transfer to Minors Act accounts); (4) present partners and employees (and their parents, spouses and
dependent children) of the Transfer Agent and the Company's or the Trust's legal counsel and administrator; (5) dealers
that have a sales agreement with the Distributor, if they purchase shares for their own accounts or for retirement plans
for their employees; (6) employees and registered representatives (and their parents, spouses and dependent children) of
dealers or financial institutions that have entered into sales arrangements with such dealers (and are identified to the
Distributor) or with the Distributor; the purchaser must certify to the Distributor at the time of purchase that the
purchase is for the purchaser's own account (or for the benefit of such employee's parents, spouse, parents of spouse, or
minor children); (7) employees (and their parents, spouses and dependent children) of firms providing the Company, the
Trust or their affiliates with regular legal, actuarial, auditing, underwriting, claims, administrative,
computer-support, marketing, office or other services; (8) any Sub-advisor of the Company or the Trust; and (9) shares
issued in plans of reorganization, such as mergers, asset acquisitions and exchange offers, to which a Fund is a party.
Waiver of Class A CDSC. The Class A CDSC is waived in the following cases if shares are redeemed and the
Transfer Agent is notified: (1) redemptions under a Systematic Withdrawal Plan as described in this Prospectus under
"Special Investment Programs and Privileges"; (2) redemptions to pay premiums for optional insurance coverage described
in this Prospectus under "Special Investment Programs and Privileges"; (3) redemptions following death or post-purchase
disability (as defined by Section 72(m)(7) of the Code); (4) distributions or loans to participants of qualified
retirement plans and other employee benefit plans; (5) the portion of a mandated minimum distribution from an IRA, SIMPLE
IRA or 403(b)(7) plan equal to the percentage of your plan assets held in Class A shares of the Company; (6) the portion
of any substantially equal periodic payments (as described in Section 72(t) of the Code) equal to the percentage of your
plan assets held in class A shares of the Company; (7) the return of excess contributions made to your IRA, SIMPLE IRA,
403(b)(7) plan or 401(k) plan; and (8) where the shareholder has made arrangements with the Company and the dealer of
record waives its initial sales commission.
Combined Purchases. Initial sales charge reductions are available by combining into a single transaction the
purchase of Class A shares with the purchase of any other class of shares. Qualifying purchases include: (1) individual
purchases by a trustee (or other fiduciary) if the investment is for a single trust estate or single fiduciary account,
including an employee benefit plan other than those described above; and (2) purchases by qualified employee benefit
plans, other than those described above, of a single employer, or of affiliated employers as defined in the 1940 Act.
Purchases made for nominee or street name accounts (securities held in the name of an investment dealer or another
nominee such as a bank trust department instead of the customer) may not be aggregated with purchases made for other
accounts and may not be aggregated with other nominee or street name accounts unless otherwise qualified as described
above.
Rights of Accumulation: Each Fund offers to all qualifying investors certain "rights of accumulation" under
which investors are permitted to purchase Class A shares of any Fund at the price applicable to the total of (a) the then
current purchase amount plus (b) an amount equal to the then current NAV of the purchaser's holdings of all shares of any
Fund of the Company. Acceptance of the purchase order is subject to confirmation of qualification. A qualifying
investor's rights of accumulation may be amended or terminated at any time as to subsequent purchases.
Letter of Intent: Any person may qualify for a reduced sales charge on purchases of Class A shares made within a
thirteen-month period pursuant to a Letter of Intent ("LOI"). In computing the total amount purchased for purposes of
determining the applicable sales commission, the offering price of shares currently held in the Funds which were
purchased within 90 days from the date of acceptance of the LOI may be used as a credit toward Fund shares to be
purchased under the LOI. Class A, B, C and X shares acquired through the reinvestment of distributions do not constitute
purchases for purposes of the LOI. During the term of an LOI, Boston Financial Data Services, Inc., the Company's
transfer agent (the "Transfer Agent"), will hold shares in escrow to secure payment of the higher sales charge applicable
for shares actually purchased if the amount indicated on the LOI is not purchased. Dividends and capital gains will be
paid on all escrowed shares and these shares will be released when the amount indicated on the LOI has been purchased.
An LOI does not obligate the investor to buy or the Fund to sell the indicated amount of the LOI. If the specified
amount of the LOI is not purchased, the shareholder shall remit to the Transfer Agent an amount equal to the difference
between the sales charge paid and the sales charge that would have been paid had the aggregate purchases been made at a
single time. If the Class A shareholder does not (within twenty days after a written request by the Transfer Agent) pay
such difference in sales charge, the Transfer Agent will redeem an appropriate number of escrowed shares in order to
realize such difference. Additional information about the terms of the LOI are available from your registered
representative.
SPECIAL REDEMPTIONS:
Although it would not normally do so, each Fund has the right to pay the redemption price of shares of the Fund
in whole or in part in portfolio securities as prescribed by the Directors of the Company. When the shareholder sells
portfolio securities received in this fashion, he would incur a brokerage charge. Any such securities would be valued
for the purposes of making such payment at the same value as used in determining NAV. The Funds have elected to be
governed by Rule 18f-1 under the 1940 Act, pursuant to which each Fund is obligated to redeem shares solely in cash from
any one account during any 90-day period up to the lesser of $250,000 or 1% of the NAV of the applicable Fund or
Portfolio at the beginning of such period.
SUSPENSION OF REDEMPTIONS:
A Fund may not suspend a shareholder's right of redemption or postpone payment for a redemption for more than
seven days, unless the New York Stock Exchange ("NYSE") is closed for other than customary weekends or holidays, or
trading on the NYSE is restricted, or for any period during which an emergency exists as a result of which (1) disposal
by a Fund or Portfolio of securities owned by it is not reasonably practicable, or (2) it is not reasonably practicable
for a Fund to fairly determine the value of its assets, or for such other periods as the SEC may permit for the
protection of investors.
For further information regarding the purchase and redemption of Fund shares, see "How to Buy Shares" and "How to
Redeem Shares," respectively, in the Company's Prospectus.
PORTFOLIO TRANSACTIONS
BROKERAGE ALLOCATION:
Subject to the supervision of the Directors of the Company and the Trustees of the Trust, where applicable,
decisions to buy and sell securities for the Company and the Trust are made for each Non-Feeder Fund and Portfolio by its
respective Sub-advisor. Each Sub-advisor is authorized to allocate the orders placed by it on behalf of the applicable
Fund or Portfolio to brokers who also provide research or statistical material or other services to the Sub-advisor or
the Fund or Portfolio for the use of the applicable Fund or Portfolio and other accounts as to which the Sub-advisor
exercises investment discretion. Such allocation shall be in such amounts and proportions as the Sub-advisor shall
determine. The Sub-advisor will report on allocations of brokerage either to the Investment Manager, which will report
on such allocations to the Directors of the Company or the Trustees of the Trust, where applicable, or, if requested,
directly to the Directors or Trustees. These reports will indicate the brokers to whom such allocations have been made
and the basis therefor. The Sub-advisor may consider sale of shares of the Funds, or may consider or follow
recommendations of the Investment Manager that take such sales into account, as factors in the selection of brokers to
effect portfolio transactions for a Fund or Portfolio, subject to the requirements of best net price available and most
favorable execution. In this regard, the Investment Manager may direct certain of the Sub-advisors to try to effect a
portion of their Fund or Portfolio's investment transactions through broker-dealers that sell shares of the Fund (or
corresponding Fund, in the case of the Portfolios), to the extent consistent with best net price available and most
favorable execution.
Subject to the rules promulgated by the SEC, as well as other regulatory requirements, a Sub-advisor also may
allocate orders to brokers or dealers affiliated with the Sub-advisor or the Investment Manager. Such allocation shall
be in amounts and proportions as the Sub-advisor shall determine. The Sub-advisor will report on these allocations of
brokerage either to the Investment Manager, which will report on such allocations to the Directors of the Company or the
Trustees of the Trust, where applicable, or, if requested, directly to the Directors or Trustees.
In selecting a broker to effect each particular transaction, each Sub-advisor will take the following into
consideration: the best net price available; the reliability, integrity and financial condition of the broker; the size
and difficulty in executing the order; and the value of the expected contribution of the broker to the investment
performance of the Fund on a continuing basis. Subject to such policies and procedures as the Directors of the Company
and the Trustees of the Trust may determine, a Sub-advisor shall not be deemed to have acted unlawfully or to have
breached any duty solely by reason of its having caused a Fund or Portfolio to pay a broker that provides research
services to the Sub-advisor an amount of commission for effecting an investment transaction in excess of the amount of
commission another broker would have charged for effecting that transaction, if the Sub-advisor determines in good faith
that such amount of commission was reasonable in relation to the value of the research service provided by such broker
viewed in terms of either that particular transaction or the Sub-advisor's ongoing responsibilities with respect to the
Fund or Portfolio and other accounts as to which the Sub-advisor exercises investment discretion. Accordingly, the
amount of the brokerage commission in any transaction may be greater than that available from other brokers if the
difference is reasonably justified by other aspects of the services offered. For the period from commencement of
operations until October 31, 1997, aggregate brokerage commissions of $3,500 and $17,817 were paid in relation to
brokerage transactions of the Company and the Trust, respectively. For the fiscal year ended October 31, 1998, aggregate
brokerage commissions of $320,297 and $177,016 were paid in relation to brokerage transactions of the Company and the
Trust, respectively. For the fiscal year ended October 31, 1999, aggregate brokerage commissions of $2,169,322 and
$853,911 were paid in relation to brokerage transaction of the Company and the Trust, respectively. The increase in
commissions paid is primarily the result of the increase in the Company's and Trust's net assets.
During the period ended October 31, 1997 and the fiscal years ended October 31, 1998 and October 31, 1999,
brokerage commissions were paid by the ASMT American Century International Growth Portfolio to certain affiliates of Rowe
Price-Fleming International, Inc., the former Sub-advisor of the Portfolio, in the amount of $54, $821 and $1,924,
respectively. For the year ended October 31, 1999, 3.5% of the total brokerage commissions paid by this Portfolio were
paid to the affiliated brokers, with respect to transactions representing 3.7% of the Portfolio's total dollar amount of
transactions involving the payment of commissions. During the fiscal year ended October 31, 1998, brokerage commissions
were paid to NationsBanc Montgomery Securities LLC, an affiliate of the former Sub-advisor to the ASAF Alliance Growth
Fund, by this Fund in the amount of $3,542. During the fiscal years ended October 31, 1998 and October 31, 1999,
brokerage commissions were paid to J.P. Morgan Securities, Inc., an affiliate of American Century Investment Management,
Inc., by the ASAF American Century Strategic Balanced Fund in the amount of $735 and $150, respectively. For the year
ended October 31, 1999, .21% of the total brokerage commissions paid by this Fund were paid to the affiliated broker,
with respect to transactions representing .13% of the Fund's total dollar amount of transactions involving the payment of
commissions. During the fiscal years ended October 31, 1998 and October 31, 1999, brokerage commissions were paid to
Neuberger Berman, LLC, an affiliate of Neuberger Berman Management Inc., by the ASAF Neuberger Berman Mid-Cap Growth Fund
in the amount of $1,812 and $10,650, respectively. For the year ended October 31, 1999, 16.8% of the total brokerage
commissions paid by this Fund were paid to the affiliated broker, with respect to transactions representing 17.5% of the
Fund's total dollar amount of transactions involving the payment of commissions. During the fiscal years ended October
31, 1998 and October 31, 1999, brokerage commissions were paid to Neuberger Berman, LLC by the ASAF Neuberger Berman
Mid-Cap Value Fund in the amount of $688 and $28,311, respectively. For the year ended October 31, 1999, 22.7% of the
total brokerage commissions paid by this Fund were paid to the affiliated broker, with respect to transactions
representing 23.9% of the Fund's total dollar amount of transactions involving the payment of commissions. For the
fiscal year ended October 31, 1999, brokerage commissions were paid to NationsBanc Montgomery Services, LLC, an affiliate
of Marsico Capital Management, LLC, by the ASAF Marsico Capital Growth Fund in the amount of $28,029. For that period,
4.4% of the total brokerage commissions paid by this Fund were paid to the affiliated broker, with respect to
transactions representing 5.1% of the Fund's total dollar amount of transactions involving the payment of commissions.
In addition, as described above under "The Distribution Plans," certain Funds and Portfolios directed brokerage
transactions to a broker-dealer acting as the clearing firm for the Company's Distributor, which acted as introducing
broker in connection with the transactions. The table below reflects the commission amounts directed to such clearing
firm for each such Fund or Portfolio, the percentage of the Fund or Portfolio's total commissions this represents, and
the percentage of the Fund or Portfolio's total transaction value involving the payment of commissions that was directed
in this manner.
------------------------------------------------------- ------------------ ------------------------ -------------------------
Fund Name Commissions % of Total Fund % of Dollar Amount of
Commissions Fund Transactions
------------------------------------------------------- ------------------ ------------------------ -------------------------
------------------------------------------------------- ------------------ ------------------------ -------------------------
ASAF Janus Overseas Growth Fund 499,227 4.2% 7.3%
------------------------------------------------------- ------------------ ------------------------ -------------------------
------------------------------------------------------- ------------------ ------------------------ -------------------------
ASMT American Century International Growth Portfolio $54,705 5.7% 6.7%
------------------------------------------------------- ------------------ ------------------------ -------------------------
------------------------------------------------------- ------------------ ------------------------ -------------------------
ASAF Janus Small-Cap Growth Fund 102,880 6.5% 4.5%
------------------------------------------------------- ------------------ ------------------------ -------------------------
------------------------------------------------------- ------------------ ------------------------ -------------------------
ASAF Neuberger Berman Mid-Cap Growth Fund 63,201 9.3% 12.3%
------------------------------------------------------- ------------------ ------------------------ -------------------------
------------------------------------------------------- ------------------ ------------------------ -------------------------
ASAF Neuberger Berman Mid-Cap Value Fund 124,948 16.7% 18.4%
------------------------------------------------------- ------------------ ------------------------ -------------------------
------------------------------------------------------- ------------------ ------------------------ -------------------------
ASAF Marsico Capital Growth Fund 640,612 3.2% 2.8%
------------------------------------------------------- ------------------ ------------------------ -------------------------
------------------------------------------------------- ------------------ ------------------------ -------------------------
ASMT Janus Capital Growth Portfolio 580,029 11.5% 11.8%
------------------------------------------------------- ------------------ ------------------------ -------------------------
------------------------------------------------------- ------------------ ------------------------ -------------------------
ASAF Alliance Growth and Income Fund 209,798 12.5% 13.3%
------------------------------------------------------- ------------------ ------------------------ -------------------------
------------------------------------------------------- ------------------ ------------------------ -------------------------
ASAF INVESCO Equity Income Fund 214,833 21.6% 25.9%
------------------------------------------------------- ------------------ ------------------------ -------------------------
ALLOCATION OF INVESTMENTS:
The Sub-advisors of the Non-Feeder Funds and Portfolios have other advisory clients, some of which have similar
investment objectives to one or more of the Funds or Portfolios for which advisory services are being provided. In
addition, a Sub-advisor may be engaged to provide advisory services for more than one Fund or Portfolio. There will be
times when a Sub-advisor may recommend purchases and/or sales of the same securities for a Fund or Portfolio and the
Sub-advisor's other clients. In such circumstances, it will be the policy of each Sub-advisor to allocate purchases and
sales among a Fund or Portfolio and its other clients, including other Funds or Portfolios for which the Sub-advisor
provides advisory services, in a manner which the Sub-advisor deems equitable, taking into consideration such factors as
size of account, concentration of holdings, investment objectives, tax status, cash availability, purchase costs, holding
period and other pertinent factors relative to each account.
PORTFOLIO TURNOVER:
Each Non-Feeder Fund and Portfolio may sell its portfolio securities, regardless of the length of time that they
have been held, if the Sub-advisor and/or the Investment Manager determines that such a disposition is in the Fund's or
Portfolio's best interest. Portfolio turnover rates may increase as a result of the need for a Fund or Portfolio to
effect significant amounts of purchases or redemptions of portfolio securities due to economic, market, or other factors
that are not within the Sub-advisor's or Investment Manager's control. A high rate of portfolio turnover (generally in
excess of 100%) involves correspondingly higher brokerage commission expenses and other transaction costs, which must be
ultimately borne by a Fund's shareholders. Trading in fixed income securities does not generally involve the payment of
brokerage commissions, but does involve indirect transaction costs. High portfolio turnover rates may also generate
larger taxable income and taxable capital gains than would result from lower portfolio turnover rates and may create
higher tax liability for a Fund's shareholders.
The turnover rates for the ASAF Founders International Small Capitalization Fund for the year ended October 31,
1998 and the year ended October 31, 1999 were 49% and 268%, respectively. The increase in portfolio turnover resulted
primarily from a change in the portfolio manager responsible for the management of the Fund, who is expected to engage in
more frequent trading for the Fund than the prior portfolio manager. The turnover rates for the ASAF Neuberger Berman
Mid-Cap Value Fund for the period ended October 31, 1998 and the year ended October 31, 1999 were 3% and 126%,
respectively. The Fund commenced operations on August 19, 1998, and the turnover rate for the period ended October 31,
1998 reflects the short length of the period and the fact that the Fund's Sub-advisor primarily was acquiring, rather
than trading, portfolio securities during the period. The turnover rates for the ASAF Alliance Growth Fund for the
period ended October 31, 1998 and the year ended October 31, 1999 were 207% and 320%, respectively. OppenheimerFunds,
Inc. became the Fund's Sub-advisor on December 31, 1998 and there was a change in the portfolio manager responsible for
the management of the Fund during 1999. Trading precipitated by these changes resulted in the unusually high portfolio
turnover for the year ended October 31, 1999. The turnover rates for the ASMT PIMCO Total Return Bond Fund for the year
ended October 31, 1998 and the year ended October 31, 1999 were 418% and 145%, respectively. The substantial reduction
in the portfolio turnover rate was caused in large part by the Fund's decreased use of certain derivative instruments.
A 100% portfolio turnover rate would occur if all of the securities in a portfolio of investments were replaced
during a given period. For additional information regarding portfolio turnover, see the Company's Prospectus under
"Portfolio Turnover" and "Financial Highlights."
ADDITIONAL TAX CONSIDERATIONS
Federal Income Tax Consequences. 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 "Distribution Requirement"). For additional information regarding the Funds' treatment as
regulated investment companies under the Code, and certain consequences if such treatment is not accorded any Fund, see
the Company's Prospectus under "Dividends, Capital Gains and Taxes."
Each Fund will be subject to a 4% non-deductible federal excise tax on a portion of its undistributed taxable
income and capital gains if it fails to meet certain distribution requirements by the end of the calendar year. Each
Fund intends to avoid liability for such tax by satisfying such distribution requirements.
Each of the Feeder Funds will invest all of its investable assets in a corresponding Portfolio of the Trust.
Each such Fund will be deemed to own a proportionate share of its corresponding Portfolio's assets and income for the
purpose of determining whether the Fund qualifies as a regulated investment company. Accordingly, each Portfolio intends
to conduct its operations so that its corresponding Fund will be able to satisfy applicable tax requirements.
If a Fund or Portfolio acquires stock in certain non-U.S. corporations ("passive foreign investment companies" or
"PFICs") that receive at least 75% of their annual gross income from passive sources (such as interest, dividends, rents,
royalties or capital gains) or at least 50% of whose average assets produce or are held for the production of such
passive income, that Fund (or, in the case of a Portfolio, its corresponding Fund indirectly through its interest in the
Portfolio) could be subject to federal income tax and additional interest charges on "excess distributions" received from
such companies or gain from the sale of stock in such companies, even if the Fund distributes its share of the PFIC
income as a taxable dividend to its shareholders. A certain election (treating the PFIC as a "qualified electing fund")
filed with the Fund's federal income tax return may, if available, ameliorate these adverse tax consequences, but any
such election would require the applicable Fund to recognize ordinary taxable income and net capital gain of the PFIC
without the corresponding receipt of cash which may need to be distributed by the Fund to satisfy the Distribution
Requirement.
Pursuant to proposed regulations, open-end regulated investment companies such as the Funds would be entitled to
avoid the tax consequences described in the previous paragraph by electing to mark-to-market their stock in certain
PFICs. Marking to market in this context means recognizing as gain for each taxable year the excess, as of the end of
that year, of the fair market value of each PFIC's stock over the owner's adjusted basis in that stock (including mark to
market gains of a prior year for which an election was in effect).
Gains and losses realized by a Fund (directly, or through its interest in a Portfolio) in connection with certain
transactions involving foreign currency-denominated debt securities, certain foreign currency futures and options,
foreign currency forward contracts, foreign currencies themselves, or payables or receivables denominated in a foreign
currency are generally treated as ordinary income and loss.
Some Funds, or, in certain cases, the Portfolio in which a Fund may invest its assets, may be subject to
withholding and other taxes imposed by foreign countries with respect to their investments in foreign securities. Tax
conventions between certain countries and the U.S. may reduce or eliminate such taxes. A Fund, more than 50% of the
value of whose total assets at the close of a taxable year (held directly or indirectly through a corresponding
Portfolio) consists of stock or securities in foreign corporations, may elect to "pass-through" these foreign taxes to
its shareholders, in which case each shareholder will be required to include its pro rata portion thereof in its gross
income but, if it itemizes deductions, will be able to deduct or (subject to various limitations) will be able to claim a
credit for its portion of such taxes, in computing its federal income tax liability.
Each Fund or Portfolio that invests in zero coupon securities or in other securities with original issue discount
(or securities with market discount, if the Fund or Portfolio elects to include market discount in income currently) must
accrue such discount income currently even if no corresponding payment is received. However, because income subject to a
Fund's Distribution Requirement includes such accrued discount, to satisfy that requirement, a Fund may have to dispose
of its (or, as the case may be, its corresponding Portfolio's) securities under disadvantageous circumstances, or borrow,
to generate the needed cash.
Forward currency contracts, options and futures contracts entered into by a Fund or Portfolio may create
"straddles" for federal income tax purposes with other such contracts or with securities positions, and this may affect
the character and timing of gains or losses realized by the Fund (or, in the case of a Portfolio, by its corresponding
Fund) on such contracts, options or securities. Certain straddles treated as short sales for tax purposes may also
result in the loss of the holding period of securities included in the straddles for purposes of the 30% of gross income
test described above, and therefore, a Fund's or Portfolio's ability to enter into forward currency contracts, options
and futures contracts may be limited.
Certain options, futures and foreign currency contracts held by a Fund or Portfolio at the end of each taxable
year will be required to be "marked-to-market" for federal income tax purposes -- i.e., treated as having been sold at
market value. For options and futures contracts, 60% of any gain or loss recognized on these deemed sales and on actual
dispositions will be treated as long-term capital gain or loss, and the remainder will be treated as short-term capital
gain or loss regardless of how long the Fund or Portfolio has held such options or futures. However, gain or loss
recognized on certain foreign currency contracts will be treated as ordinary income or loss.
If a Fund or Portfolio satisfies certain requirements, any increase in value of a position that is part of a
"designated hedge" will be offset by any decrease in value (whether realized or not) of the offsetting hedging position
during the period of the hedge for purposes of determining whether the Fund (or, in the case of a Portfolio, its
corresponding Fund) satisfies the 30% gross income test above. Thus, only the net gain (if any) from the designated
hedge will be included in gross income for purposes of that limitation. Each Fund or Portfolio will consider whether it
should seek to satisfy those requirements to enable the Fund (or, in the case of a Portfolio, its corresponding Fund) to
qualify for this treatment for hedging transactions.
To maintain a constant $1.00 per share NAV, the Directors of the ASAF JPM Money Market Fund (the "Money Market
Fund") may direct that the number of outstanding shares be reduced pro rata. If this adjustment is made, it will reflect
the lower market value of portfolio securities and not realized losses. The adjustment may result in a shareholder
having more dividend income than net income in his account for a period. When the number of outstanding shares of the
Money Market Fund is reduced, the shareholder's basis in the shares of the Fund may be adjusted to reflect the difference
between taxable income and net dividends actually distributed. This difference may be realized as a capital loss when
the shares are liquidated.
Distributions from a Fund's current or accumulated earnings and profits ("E&P"), as computed for federal income
tax purposes, will be taxable as described in the Company's Prospectus whether taken in shares or in cash. These
distributions will be treated as dividends, but will qualify for the 70% dividends-received deduction for the Fund's
corporate shareholders only to the extent designated in a notice to the Fund's shareholders as being attributable to
dividends received by the Fund. Distributions, if any, in excess of E&P will constitute a return of capital, which will
first reduce an investor's tax basis in a Fund's shares and thereafter (after such basis is reduced to zero) will
generally give rise to capital gains. Shareholders electing to receive distributions in the form of additional shares
will have a cost basis for federal income tax purposes in each share so received equal to the amount of cash they would
have received had they elected to receive the distributions in cash, divided by the number of shares received.
At the time of an investor's purchase of shares of a Fund (other than the Money Market Fund), a portion of the
purchase price is often attributable to realized or unrealized appreciation in the Fund's portfolio or undistributed
taxable income of the Fund. Consequently, subsequent distributions from such appreciation or income may be taxable to
such investor even if the NAV of the investor's shares is, as a result of the distributions, reduced below the investor's
cost for such shares, and the distributions in reality represent a return of a portion of the purchase price.
Upon a redemption of shares of a Fund, other than the Money Market Fund (including an exchange for other Fund
shares), a shareholder may realize a taxable gain or loss. Such gain or loss will be capital if the shares are capital
assets in the shareholder's hands and will be long-term or short-term capital gain or loss, depending upon the
shareholder's holding period for the shares. A sales charge paid in purchasing shares of a Fund ("load charge") cannot
be taken into account for purposes of determining gain or loss on the redemption or exchange of such shares within 90
days after their purchase to the extent shares of the same or another Fund are subsequently acquired without payment of a
load charge pursuant to a reinvestment or exchange privilege. Such disregarded load charge will result in an increase in
the shareholder's tax basis in the Fund shares subsequently acquired. Also, any loss realized on a redemption or exchange
of shares of a Fund will be disallowed to the extent the shares disposed of are replaced with shares of the same Fund
within a period of 61 days beginning 30 days before and ending 30 days after such disposition. In such a case, the basis
of the shares acquired will be adjusted to reflect the disallowed loss. If Fund shares are redeemed or exchanged at a
loss after being held for six months or less, the loss will be treated as long-term, instead of short-term, capital loss
to the extent of any capital gains distributions received on those shares.
Each shareholder will be required to furnish its social security or taxpayer identification number and certify
that such number is correct and that the shareholder is not subject to back-up withholding for failure to report income
to the IRS. Failure to comply with applicable IRS regulations, including the certification procedures described above,
may result in the Fund being required to collect back-up withholding at a 31% rate on taxable distributions and
redemptions to the shareholder.
Different tax treatment, including penalties on certain excess contributions and deferrals, certain
pre-retirement and post-retirement distributions and certain prohibited transactions, is accorded to shareholder accounts
maintained as qualified retirement plans. Shareholders should consult their tax advisers for more information.
The foregoing discussion relates solely to federal income tax law as applicable to U.S. persons (i.e., U.S.
citizens or residents and U.S. domestic corporations, partnerships, trusts or estates) generally. The discussion does
not address special tax rules applicable to certain classes of investors, such as tax-exempt entities, insurance
companies, and financial institutions.
A foreign shareholder (i.e., a nonresident alien individual, foreign trust or estate, foreign corporation or
foreign partnership) not engaged in a U.S. trade or business with which its investment in a Fund is effectively connected
will be subject to federal income tax treatment that is different from that described above. These investors may be
subject to U.S. withholding tax at the rate of 30% (or a lower rate under an applicable tax treaty) on amounts treated as
ordinary dividends from a Fund and, unless an effective IRS Form W-8 or authorized substitute is on file, to backup
withholding at the rate of 31% on certain other payments from the Fund. Distributions treated as long term capital gains
to foreign shareholders will not be subject to federal income tax unless the distributions are effectively connected with
the shareholder's U.S. trade or business or, in the case of a non-resident alien individual, the shareholder is present
in the U.S. for more than 182 days during the taxable year and certain other conditions are met. Non-U.S. investors
should consult their tax advisers regarding such treatment and the application of foreign taxes to an investment in any
Fund.
State and Local Tax Consequences. Each Fund may be subject to state or local taxes in jurisdictions in which
such Fund may be deemed to be doing business. In addition, in those states or localities which have income tax laws, the
treatment of such Fund and its shareholders under such laws may differ from their treatment under federal income tax
laws, and investment in such Fund may have different tax consequences for shareholders than would direct investment in
such Fund's (or, in the case of a Feeder Fund, its corresponding Portfolio's) portfolio securities. Shareholders should
consult their own tax advisers with respect to any state or local taxes.
CAPITAL STOCK OF THE COMPANY &
PRINCIPAL HOLDERS OF SECURITIES
Capital Stock. The authorized capital stock of the Company consists of the following shares (par value $.001 per
share): ASAF Founders International Small Capitalization Fund (190 million); ASAF American Century International Growth
Fund (190 million); ASAF AIM International Equity Fund (190 million); ASAF Janus Overseas Growth Fund (100 million); ASAF
Janus Small-Cap Growth Fund (100 million); ASAF Kemper Small-Cap Growth Fund (190 million); ASAF T. Rowe Price Small
Company Value Fund (190 million); ASAF Janus Mid-Cap Growth Fund (190 million); ASAF Neuberger Berman Mid-Cap Growth Fund
(190 million); ASAF Neuberger Berman Mid-Cap Value Fund (190 million); ASAF Alger All-Cap Growth Fund (190 million); ASAF
Gabelli All-Cap Value Fund (190 million); ASAF INVESCO Technology Fund (190 million); ASAF Rydex Managed OTC Fund (190
million); ASAF Alliance Growth Fund (190 million); ASAF Marsico Capital Growth Fund (190 million); ASAF Janus Capital
Growth Fund (300 million); ASAF Sanford Bernstein Managed Index 500 Fund (190 million); ASAF Alliance Growth and Income
Fund (190 million); ASAF MFS Growth with Income Fund (190 million); ASAF INVESCO Equity Income Fund (190 million); ASAF
American Century Strategic Balanced Fund (190 million); ASAF Federated High Yield Bond Fund (190 million); ASAF PIMCO
Total Return Bond Fund (190 million); and ASAF JPM Money Market Fund (1.01 billion).
Description of Shares. The Company currently has twenty-five separate series of shares, each of which is divided
into Class A, B, C and X shares. The Directors of the Company are authorized to establish, from time to time and without
shareholder approval, additional series or classes of shares. The assets of each series of shares belong only to that
series, and the liabilities of each series are borne solely by that series and no other. Shares of each Fund represent
equal proportionate interests in the assets of that Fund only and have identical voting, dividend, redemption,
liquidation, and other rights. Each class of shares, however, bears different sales charges, distribution fees and
related expenses, and has exclusive voting rights with respect to its respective 12b-1 Distribution and Service Plan.
All shares issued are fully paid, non-assessable and freely transferable, and have no preference, preemptive or similar
rights.
Shareholder Voting and Meetings. The shares of the Funds are entitled to vote separately to approve investment
advisory agreements or changes in investment restrictions, but shareholders of all series vote together in the election
and selection of directors. Each shareholder is entitled to one vote for each share (and to the appropriate fractional
vote for each fractional share) of the Funds held upon all matters submitted to the shareholders generally. Shareholders
of all Funds and classes will vote together as a single class, except when otherwise required by applicable law or as
determined by the Directors of the Company; and provided that shareholders of a particular Fund or class shall not be
entitled to vote on any matter which does not affect any interest of that Fund or class, except as otherwise required by
applicable law. The Directors of the Company do not intend to hold annual meetings of shareholders of the Funds, and
will call special meetings of shareholders of a Fund only if required under the 1940 Act and other applicable law, in
their discretion or upon written request of holders of 10% or more of the outstanding shares of that Fund entitled to
vote. Although Directors are not elected annually by the shareholders, shareholders have under certain circumstances the
right to remove one or more Directors. If required by applicable law, a meeting will be held to vote on the removal of a
Director or Directors of the Company if requested in writing by the holders of not less than 10% of the Company's
outstanding shares.
The following table lists persons owning more than 5% of any class of the Fund's outstanding shares as of August
1, 2000.
American Skandia Advisor Funds, Inc., - Report of 5% or Greater Owners
----------------------------------------------------------------------
As of August 1, 2000
--------------------
----------------------------------------- -------------------------------- ----------------------------------- --------------
Fund and Share Class Owner Name Address Percent
Ownership
----------------------------------------- -------------------------------- ----------------------------------- --------------
----------------------------------------- -------------------------------- ----------------------------------- --------------
ASAF Founders International Small N/A N/A N/A
Capitalization Fund Class A, B, C and X
----------------------------------------- -------------------------------- ----------------------------------- --------------
----------------------------------------- -------------------------------- ----------------------------------- --------------
----------------------------------------- -------------------------------- ----------------------------------- --------------
----------------------------------------- -------------------------------- ----------------------------------- --------------
ASAF AIM International Equity Fund N/A N/A N/A
Class A, B, C and X
----------------------------------------- -------------------------------- ----------------------------------- --------------
----------------------------------------- -------------------------------- ----------------------------------- --------------
----------------------------------------- -------------------------------- ----------------------------------- --------------
----------------------------------------- -------------------------------- ----------------------------------- --------------
ASAF Janus Overseas Growth Fund N/A N/A N/A
Class A, B, C and X
----------------------------------------- -------------------------------- ----------------------------------- --------------
----------------------------------------- -------------------------------- ----------------------------------- --------------
----------------------------------------- -------------------------------- ----------------------------------- --------------
----------------------------------------- -------------------------------- ----------------------------------- --------------
ASAF American Century International Norwest Bank Minnesota, NA P.O. Box 1533 6.66%
Growth Fund Class A American Skandia #5000149000 Minneapolis, MN 55480
----------------------------------------- -------------------------------- ----------------------------------- --------------
----------------------------------------- -------------------------------- ----------------------------------- --------------
----------------------------------------- -------------------------------- ----------------------------------- --------------
----------------------------------------- -------------------------------- ----------------------------------- --------------
ASAF American Century International N/A N/A N/A
Growth Fund Class B, C and X
----------------------------------------- -------------------------------- ----------------------------------- --------------
----------------------------------------- -------------------------------- ----------------------------------- --------------
----------------------------------------- -------------------------------- ----------------------------------- --------------
----------------------------------------- -------------------------------- ----------------------------------- --------------
ASAF Janus Small-Cap Growth Fund N/A N/A N/A
Class A, B, C and X
----------------------------------------- -------------------------------- ----------------------------------- --------------
----------------------------------------- -------------------------------- ----------------------------------- --------------
----------------------------------------- -------------------------------- ----------------------------------- --------------
----------------------------------------- -------------------------------- ----------------------------------- --------------
ASAF Kemper Small-Cap Growth Fund American Skandia Investment One Corporate Drive 9.40%
Class A Services, Inc. Shelton, CT 06484
Fund Investment Seeding Account
----------------------------------------- -------------------------------- ----------------------------------- --------------
----------------------------------------- -------------------------------- ----------------------------------- --------------
Delaware Charter Guar & Trust 6918 Shallowford Road, Ste 302 5.53%
Galen Medical Group Employee Chattanooga, TN 37421
Retirement Savings Plan 401(k)
----------------------------------------- -------------------------------- ----------------------------------- --------------
----------------------------------------- -------------------------------- ----------------------------------- --------------
----------------------------------------- -------------------------------- ----------------------------------- --------------
----------------------------------------- -------------------------------- ----------------------------------- --------------
ASAF Kemper Small-Cap Growth Fund N/A N/A N/A
Class B, C and X
----------------------------------------- -------------------------------- ----------------------------------- --------------
----------------------------------------- -------------------------------- ----------------------------------- --------------
----------------------------------------- -------------------------------- ----------------------------------- --------------
----------------------------------------- -------------------------------- ----------------------------------- --------------
ASAF T. Rowe Price Small Company Value N/A N/A N/A
Fund
Class A, B, C and X
----------------------------------------- -------------------------------- ----------------------------------- --------------
----------------------------------------- -------------------------------- ----------------------------------- --------------
----------------------------------------- -------------------------------- ----------------------------------- --------------
----------------------------------------- -------------------------------- ----------------------------------- --------------
ASAF Neuberger Berman Mid-Cap Growth N/A N/A N/A
Fund Class A, B, C and X
----------------------------------------- -------------------------------- ----------------------------------- --------------
----------------------------------------- -------------------------------- ----------------------------------- --------------
----------------------------------------- -------------------------------- ----------------------------------- --------------
----------------------------------------- -------------------------------- ----------------------------------- --------------
ASAF Neuberger Berman Mid-Cap Value N/A N/A N/A
Fund Class A, B, C and X
----------------------------------------- -------------------------------- ----------------------------------- --------------
----------------------------------------- -------------------------------- ----------------------------------- --------------
----------------------------------------- -------------------------------- ----------------------------------- --------------
----------------------------------------- -------------------------------- ----------------------------------- --------------
ASAF Alliance Growth Fund N/A N/A N/A
Class A, B, C and X
----------------------------------------- -------------------------------- ----------------------------------- --------------
----------------------------------------- -------------------------------- ----------------------------------- --------------
----------------------------------------- -------------------------------- ----------------------------------- --------------
----------------------------------------- -------------------------------- ----------------------------------- --------------
ASAF Marsico Capital Growth Fund N/A N/A N/A
Class A, B, C and X
----------------------------------------- -------------------------------- ----------------------------------- --------------
----------------------------------------- -------------------------------- ----------------------------------- --------------
----------------------------------------- -------------------------------- ----------------------------------- --------------
----------------------------------------- -------------------------------- ----------------------------------- --------------
ASAF Janus Capital Growth Fund N/A N/A N/A
Class A, B, C and X
----------------------------------------- -------------------------------- ----------------------------------- --------------
----------------------------------------- -------------------------------- ----------------------------------- --------------
----------------------------------------- -------------------------------- ----------------------------------- --------------
----------------------------------------- -------------------------------- ----------------------------------- --------------
ASAF Sanford Bernstein Managed Index N/A N/A N/A
500 Fund
Class A, B and C
----------------------------------------- -------------------------------- ----------------------------------- --------------
----------------------------------------- -------------------------------- ----------------------------------- --------------
----------------------------------------- -------------------------------- ----------------------------------- --------------
----------------------------------------- -------------------------------- ----------------------------------- --------------
ASAF Sanford Bernstein Managed Index State Street Bank & Trust Co. 7121 Cutter Ct 5.92%
500 Fund Cust for the IRA rollover of Parkland, FL 33067
Class X Richard O. Lee
----------------------------------------- -------------------------------- ----------------------------------- --------------
----------------------------------------- -------------------------------- ----------------------------------- --------------
State Street Bank & Trust Co. 2230 S. Wedgewood Drive 5.10%
Cust for the IRA of Odeen Saint George, UT 84770
Manning
----------------------------------------- -------------------------------- ----------------------------------- --------------
----------------------------------------- -------------------------------- ----------------------------------- --------------
----------------------------------------- -------------------------------- ----------------------------------- --------------
----------------------------------------- -------------------------------- ----------------------------------- --------------
ASAF Alliance Growth and Income Fund N/A N/A N/A
Class A, B, C and X
----------------------------------------- -------------------------------- ----------------------------------- --------------
----------------------------------------- -------------------------------- ----------------------------------- --------------
----------------------------------------- -------------------------------- ----------------------------------- --------------
----------------------------------------- -------------------------------- ----------------------------------- --------------
ASAF MFS Growth with Income Fund Class A Marquette Trust Company 12727 Greenfield Road 7.77%
B&B Universal Distributor Inc. Detroit, MI 48227
PSP
----------------------------------------- -------------------------------- ----------------------------------- --------------
----------------------------------------- -------------------------------- ----------------------------------- --------------
----------------------------------------- -------------------------------- ----------------------------------- --------------
----------------------------------------- -------------------------------- ----------------------------------- --------------
ASAF MFS Growth with Income Fund Class N/A N/A N/A
B, C and X
----------------------------------------- -------------------------------- ----------------------------------- --------------
----------------------------------------- -------------------------------- ----------------------------------- --------------
----------------------------------------- -------------------------------- ----------------------------------- --------------
----------------------------------------- -------------------------------- ----------------------------------- --------------
ASAF INVESCO Equity Income Fund N/A N/A N/A
Class A, B, C and X
----------------------------------------- -------------------------------- ----------------------------------- --------------
----------------------------------------- -------------------------------- ----------------------------------- --------------
----------------------------------------- -------------------------------- ----------------------------------- --------------
----------------------------------------- -------------------------------- ----------------------------------- --------------
ASAF American Century Strategic Fahnestock & Co. Inc. FBO 125 Broad Street 9.86%
Balanced Fund Class A A320149329 New York, NY 10004
City of Waterbury
----------------------------------------- -------------------------------- ----------------------------------- --------------
----------------------------------------- -------------------------------- ----------------------------------- --------------
----------------------------------------- -------------------------------- ----------------------------------- --------------
----------------------------------------- -------------------------------- ----------------------------------- --------------
ASAF American Century Strategic N/A N/A N/A
Balanced Fund Class B, C and X
----------------------------------------- -------------------------------- ----------------------------------- --------------
----------------------------------------- -------------------------------- ----------------------------------- --------------
----------------------------------------- -------------------------------- ----------------------------------- --------------
----------------------------------------- -------------------------------- ----------------------------------- --------------
ASAF Federated High Yield Bond Fund Marquette Trust Company 56 Washington Street, Ste 401 10.67%
Class A Blachly, Tabor, Bozik & Hartman Valparaiso, IN 46383
401k Plan
----------------------------------------- -------------------------------- ----------------------------------- --------------
----------------------------------------- -------------------------------- ----------------------------------- --------------
----------------------------------------- -------------------------------- ----------------------------------- --------------
----------------------------------------- -------------------------------- ----------------------------------- --------------
ASAF Federated High Yield Bond Fund N/A N/A N/A
Class B, C and X
----------------------------------------- -------------------------------- ----------------------------------- --------------
----------------------------------------- -------------------------------- ----------------------------------- --------------
----------------------------------------- -------------------------------- ----------------------------------- --------------
----------------------------------------- -------------------------------- ----------------------------------- --------------
ASAF PIMCO Total Return Bond Fund N/A N/A N/A
Class A and B
----------------------------------------- -------------------------------- ----------------------------------- --------------
----------------------------------------- -------------------------------- ----------------------------------- --------------
----------------------------------------- -------------------------------- ----------------------------------- --------------
----------------------------------------- -------------------------------- ----------------------------------- --------------
ASAF PIMCO Total Return Bond Fund Raymond James & Assoc Inc. FBO 411 W. Tipton Street 7.63%
Class C Jackson County Schneck Seymour, IN 47274
Memorial Hospital
----------------------------------------- -------------------------------- ----------------------------------- --------------
----------------------------------------- -------------------------------- ----------------------------------- --------------
----------------------------------------- -------------------------------- ----------------------------------- --------------
----------------------------------------- -------------------------------- ----------------------------------- --------------
ASAF PIMCO Total Return Bond Fund N/A N/A N/A
Class X
----------------------------------------- -------------------------------- ----------------------------------- --------------
----------------------------------------- -------------------------------- ----------------------------------- --------------
----------------------------------------- -------------------------------- ----------------------------------- --------------
----------------------------------------- -------------------------------- ----------------------------------- --------------
ASAF JPM Money Market Fund Strategic Investors LLC 4111 E 37th Street N 5.15%
Class A Wichita, KS 67220
----------------------------------------- -------------------------------- ----------------------------------- --------------
----------------------------------------- -------------------------------- ----------------------------------- --------------
----------------------------------------- -------------------------------- ----------------------------------- --------------
----------------------------------------- -------------------------------- ----------------------------------- --------------
ASAF JPM Money Market Fund N/A N/A N/A
Class B, C and X
----------------------------------------- -------------------------------- ----------------------------------- --------------
OTHER INFORMATION
REPORTS TO SHAREHOLDERS:
Shareholders of each Fund are provided unaudited semi-annual financial statements, as well as year-end financial
statements audited by the Company's independent public accountants. Each Fund's financial statements show the
investments owned by the Fund or its corresponding Portfolio, where applicable, and the market values thereof.
Additionally, each Fund's financial statements provide other information about the Fund and its operations, including in
the case of the Feeder Funds, the Fund's beneficial interest in its corresponding Portfolio.
DOMESTIC AND FOREIGN CUSTODIANS:
pFPC Trust Company, located at Airport Business Center, International Court 2, 200 Stevens Drive, Philadelphia,
Pennsylvania 19113, serves as custodian for all domestic cash and securities holdings of the Funds and Portfolios
investing primarily in domestic securities. The Chase Manhattan Bank, located at One Pierrepont Plaza, Brooklyn, New
York 11201, serves as custodian for all cash and securities holdings of the ASAF Founders International Small
Capitalization Fund, the ASAF American Century International Growth Fund (and corresponding Portfolio), the ASAF AIM
International Equity Fund, and the ASAF Janus Overseas Growth Fund, and co-custodian for all foreign securities holdings
of the Funds and Portfolios which invest primarily in domestic securities.
TRANSFER AGENT:
Boston Financial Data Services, Inc. (the "Transfer Agent," as previously defined), located at Two Heritage
Drive, Quincy, Massachusetts 02171, serves as the transfer agent and dividend paying agent for the Company. In addition,
American Skandia Fund Services, Inc., an affiliate of ASISI and the Company, provides certain shareholder-related
services to the Company. ASAF pays ASFS per-service fees for such services at rates identical to those that are payable
by ASAF to the Transfer Agent for performing equivalent services.
INDEPENDENT ACCOUNTANTS:
PricewaterhouseCoopers LLP, located at Two Commerce Square, Suite 1700, 2001 Market Street, Philadelphia,
Pennsylvania 19103, has been selected as the independent certified public accountants of the Company, providing audit
services and assistance and consultation with respect to the preparation of filings with the SEC.
Legal Counsel:
Stradley Ronon Stevens & Young, LLP, located at 2600 One Commerce Square, Philadelphia, PA 19103-7098, serves as
counsel to the Company.
REGISTRATION STATEMENT:
This SAI and the Company's Prospectus do not contain all the information included in the Company's Registration
Statement filed with the SEC under the Securities Act of 1933 with respect to the securities offered by the Prospectus.
The Registration Statement, including the exhibits filed therewith, may be examined at the SEC's offices in Washington,
D.C. The SEC maintains a Website (http://www.sec.gov) that contains this SAI, material incorporated by reference, and
other information regarding the Funds and Portfolios.
FINANCIAL STATEMENTS
Audited financial statements of each Fund for the period ended October 31, 1999, together with the notes thereto
and the report of PricewaterhouseCoopers LLP, as well as Unaudited Financial Statements for the period ending April 30,
2000, are attached to this SAI.
FINANCIAL STATEMENTS
Audited financial statements of each Fund for the period ended October
31, 1999, together with the notes thereto and the report of
PricewaterhouseCoopers LLP, as well as Unaudited Financial Statements for the
period ending April 30, 2000, are attached to this SAI.
AMERICAN SKANDIA ADVISOR FUNDS, INC.
SCHEDULES OF INVESTMENTS
APRIL 30, 2000
(UNAUDITED)
ASAF FOUNDERS INTERNATIONAL SMALL CAPITALIZATION FUND
ASAF JANUS SMALL-CAP GROWTH FUND
ASAF T. ROWE PRICE SMALL COMPANY VALUE FUND
ASAF AMERICAN CENTURY STRATEGIC BALANCED FUND
ASAF FEDERATED HIGH YIELD BOND FUND
ASAF OPPENHEIMER LARGE-CAP GROWTH FUND
ASAF LORD ABBETT GROWTH AND INCOME FUND
ASAF JANUS OVERSEAS GROWTH FUND
ASAF MARSICO CAPITAL GROWTH FUND
ASAF NEUBERGER BERMAN MID-CAP GROWTH FUND
ASAF NEUBERGER BERMAN MID-CAP VALUE FUND
ASAF AIM INTERNATIONAL EQUITY FUND
ASAF BANKERS TRUST MANAGED INDEX 500 FUND
ASAF MFS GROWTH WITH INCOME FUND
ASAF KEMPER SMALL-CAP GROWTH FUND
ASAF FOUNDERS INTERNATIONAL
SMALL CAPITALIZATION FUND
- -----------------------------------------------------
SHARES VALUE
- -----------------------------------------------------
FOREIGN STOCK -- 80.5%
AUSTRALIA -- 1.0%
AAPT Ltd.* 99,500 $ 397,703
IBA Technologies Ltd.
144A* 352,850 261,482
ISIS Communications
Ltd.* 679,600 341,035
Keycorp Ltd.* 24,325 124,196
M2M Corp. Ltd.* 44,825 7,847
Solutions Ltd.* 34,775 103,487
Sustainable
Technologies* 531,725 58,951
------------
1,294,701
------------
AUSTRIA -- 0.4%
Cybertron Telekon AG* 3,325 561,141
------------
BELGIUM -- 0.1%
Custom Silicon
Configuration
Services* 10,000 187,718
------------
BRAZIL -- 0.9%
Celular CRT
Participacoes SA* 750 282,635
Cia de Tran Paulsita* 44,450 170,218
Companhia Riograndense
de Tele Comunicacoes* 1,965 698,032
Empresa Paulista de
Transmisao de
Enegeria Electrica* 6,325 59,589
Siderurgica Bego
Mineira* 200 15,739
------------
1,226,213
------------
CANADA -- 1.2%
Burntsand Warrants*+ 23,188 111,115
Certicom Corp.* 4,575 233,125
NHC Communications,
Inc.* 2,200 11,804
NHC Communications,
Inc. Warrants*+ 13,525 72,570
OCI Communications,
Inc. Warrants*+ 17,992 195,505
Precision Drilling
Corp.* 30,325 963,991
StressGen
Biotechnologies
Corp.* 14,150 51,093
------------
1,639,203
------------
CHINA -- 2.0%
Beijing Yanhua
Petrochemical Co.
Ltd.* 4,496,000 536,820
China Shipping
Development Co. Ltd.* 3,738,000 446,315
China Southern
Airlines* 2,774,000 509,286
Shanghai Petrochemical
Co. Ltd.* 5,538,000 746,555
SHARES VALUE
- -----------------------------------------------------
- -----------------------------------------------------
Shanghai Petrochemical
Co. Ltd. [ADR]* 1,700 $ 24,438
Yanzhou Coal Mining Co.
Ltd.* 1,952,000 390,952
------------
2,654,366
------------
DENMARK -- 0.8%
DSV, De Sammensluttede
Vognmaend AS* 28,450 747,655
Neurosearch AS* 1,650 106,488
Vestas Wind Systems AS
144A 550 184,202
------------
1,038,345
------------
FINLAND -- 2.4%
Alma Media Corp.* 6,600 282,671
Comptel Oyj 144A* 41,825 947,493
Eimo Oyj* 22,525 205,260
JOT Automation Group
Oyj 46,400 336,143
KCI Konecranes
International* 6,975 231,994
Menire Oyj* 18,000 123,019
Teleste Oyj* 40,025 1,055,890
------------
3,182,470
------------
FRANCE -- 6.2%
A Novo* 2,272 501,857
April SA* 3,000 530,349
BVRP Software* 2,834 273,744
Carbone Lorraine SA* 11,050 483,329
Cerep SA* 12,225 712,964
Devoteam SA* 950 131,585
Elior 144A* 28,525 311,142
Etam Developpement SA* 12,625 285,313
Faurecia* 15,375 580,736
Groupe Darmon* 575 64,606
ILOG SA [ADR]* 6,400 230,400
Info Realite* 4,500 149,673
Manitou B.F. SA* 3,350 268,637
Mediagerance SA* 1,275 106,774
Neopost SA* 10,275 272,467
Penauille Polyservices* 875 529,837
Pierre & Vacances* 3,275 169,511
Pinguely-Haulotte* 7,350 1,158,704
Societe Manutan* 5,800 482,545
Systar* 4,675 99,261
XRT-CERG* 2,275 265,357
Zodiac SA* 3,625 640,508
------------
8,249,299
------------
GERMANY -- 7.9%
ACG AG* 1,300 310,373
Adcon Telemetry AG* 33,325 768,297
Articon Information
Systems AG* 2,797 193,707
BMP AG* 3,125 68,344
AMERICAN SKANDIA ADVISOR FUNDS, INC.
- -----------------------------------------------------
SHARES VALUE
- -----------------------------------------------------
Ce Consumer Electronic
AG 550 $ 87,708
Comroad AG* 1,125 156,337
COR Insurance
Technologies AG* 41,475 646,281
Dis Deutscher Industrie
Service AG* 5,525 699,820
GFK AG 144A* 5,800 228,852
Highlight
Communications AG* 18,625 760,349
Hugo Boss AG* 4,500 711,461
Intertainment AG* 6,600 625,484
Kamps AG* 6 198
Kontron Embedded
Computers* 4,575 237,007
Muehlbauer Holding AG &
Co.* 3,700 236,015
MWG Biotech AG* 1,350 241,118
Norcom Information
Technology AG* 3,200 253,693
Pandatel AG* 4,725 613,558
RT-SET Ltd. 144A* 29,625 593,909
SER Systeme AG* 13,300 561,141
SZ Testsysteme AG* 25,525 651,273
Tecis Holding AG* 2,800 372,520
Thiel Logistik AG 144A* 12,300 764,413
Tiscon Infosystems AG* 4,275 348,657
Zapf Creation AG* 4,950 297,706
------------
10,428,221
------------
GREECE -- 0.7%
BWT AG* 950 279,618
Techem AG 144A* 22,700 589,535
------------
869,153
------------
HONG KONG -- 4.3%
Angang New Steel Co.
Ltd.* 4,470,000 367,288
Automated Systems
Holdings Ltd. 478,000 322,186
Brilliance China
Automotive Holdings
Ltd. [ADR]* 17,585 285,756
City Telecom Ltd.* 926,000 323,964
Dah Sing Financial
Group* 80,400 314,829
Espirit Holdings Ltd.* 70,000 74,593
Founders Holdings Ltd.* 782,000 449,282
Giordano International
Ltd.* 450,000 736,618
Great Eagle Holdings
Ltd.* 239,000 408,102
Huaneng Power
International, Inc.* 3,062,000 699,753
JCG Holdings Ltd. 138,000 71,755
Jiangxi Copper Co.
Ltd.* 502,000 41,893
Nanjing Panda
Electronics Co. Ltd.* 642,000 267,878
NG Fung Hong Ltd.* 466,000 233,330
SHARES VALUE
- -----------------------------------------------------
- -----------------------------------------------------
Quality Healthcare Asia
Ltd.* 530,000 $ 217,744
Shenzhen Expressway
Co.* 1,126,000 125,770
Wing Hang Bank Ltd.* 169,000 414,419
Yuxing Infotech
Holdings Ltd.* 438,000 365,516
------------
5,720,676
------------
IRELAND -- 1.3%
DCC PLC* 52,850 522,533
Grafton Group PLC 1,975 40,944
ITG Group PLC 144A* 35,508 405,107
Trinity Biotech PLC
[ADR]* 199,250 797,000
------------
1,765,584
------------
ISRAEL -- 1.6%
BreezeCom Ltd.* 38,100 1,047,750
On Track Innovations
Ltd.* 25,725 526,273
Radware Ltd.* 18,800 507,600
------------
2,081,623
------------
ITALY -- 0.7%
AISoftw@re SPA* 600 94,588
Buzzi Unicem SPA* 43,500 368,647
Caltagirone SPA* 56,700 188,072
Ericsson SPA* 5,700 310,610
------------
961,917
------------
JAPAN -- 16.5%
Aderans Co. Ltd.* 11,800 514,270
Amada Co.* 99,000 901,403
Colin Corp.* 7,000 848,512
Enplas Corp. 11,700 591,108
Furukawa Co. Ltd.* 299,000 567,170
Futaba Corp.* 58,000 615,574
Harmonic Drive Systems,
Inc.* 160 416,021
Hisamitsu
Pharmaceutical Co.* 13,000 319,973
Hitachi Transport
System Ltd.* 31,000 141,989
Homac Corp.* 12,200 302,540
Hunet, Inc.* 103,000 533,720
Ichiyoshi Securities
Co. Ltd.* 126,000 1,198,539
Idec Izumi Corp.* 63,500 1,010,627
Jac Co. Ltd.* 2,500 180,667
Japan Business Computer
Co. Ltd.* 3,000 139,907
Joint Corp.* 19,500 676,635
Katokichi Co. Ltd.* 20,000 486,714
Koa Corp.* 16,000 464,877
Koei Co. Ltd.* 15,100 542,122
Matsuya Foods Co. Ltd.* 18,000 526,318
Micronics Japan Co.
Ltd.* 4,600 92,790
ASAF FOUNDERS INTERNATIONAL
SMALL CAPITALIZATION FUND
- -----------------------------------------------------
SHARES VALUE
- -----------------------------------------------------
Moritex Corp. 8,000 $ 599,603
Mycal Card, Inc.* 9,900 367,340
Nicheli Corp.* 199,000 504,536
Nippon Thompson Co.
Ltd.* 72,000 746,838
Paltek Corp.* 4,000 126,583
Seiyu Ltd.* 230,000 689,543
Shimachu Co. Ltd.* 66,200 1,127,105
Stella Chemifa Corp.* 6,000 499,669
Sumisho Lease Co. Ltd.* 45,000 824,454
The Daimaru, Inc.* 222,000 733,347
Tohoku Pioneer Corp.* 11,000 748,115
Toko, Inc.* 124,000 1,032,649
Toky Individualized
Educational
Institute, Inc.* 9,000 387,243
Tsubakimoto Chain Co.* 50,500 631,767
Xebio Co. Ltd.* 40,300 753,260
Yamaichi Electronic Co.
Ltd.* 7,300 263,437
Yokowo Co. Ltd. 31,000 872,015
------------
21,978,980
------------
MALAYSIA -- 0.3%
Abric Berhad* 108,000 383,693
------------
NETHERLANDS -- 2.3%
BE Semiconductor
Industries NV* 16,900 343,424
Beter Bed Holding NV 8,875 298,424
IFCO Systems NV* 9,225 226,550
Meta4 NV* 2,750 31,324
PinkRoccade NV* 11,425 718,364
Unique International
NV* 13,275 305,446
Unit 4* 16,300 824,366
Wegener Arcade NV* 16,625 256,785
------------
3,004,683
------------
NEW ZEALAND -- 0.3%
Advantage Group Ltd.* 229,675 407,591
------------
NORWAY -- 0.6%
C.Rel ASA 144A* 90,125 130,955
Smedvig ASA Cl-B* 34,975 439,789
Software Innovation
ASA* 7,650 111,157
Visma ASA* 9,725 58,697
------------
740,598
------------
SINGAPORE -- 3.3%
Advanced Systems
Automation* 281,000 246,861
First Capital Corp.* 495,000 495,742
Fraser & Neave Ltd.* 151,000 486,401
Keppel Land Ltd.* 259,000 309,446
Natsteel Ltd.* 174,000 425,971
Neptune Orient Lines
Ltd.* 745,000 667,578
SHARES VALUE
- -----------------------------------------------------
- -----------------------------------------------------
Omni Industries Ltd.* 380,000 $ 743,335
Robotic Tech Systems
PLC* 32,000 269,145
Wing Tai Holdings Ltd.* 849,000 696,130
------------
4,340,609
------------
SPAIN -- 2.0%
Abengoa SA* 34,050 1,132,528
Cortefiel SA* 38,375 811,289
NH Hoteles SA* 27,075 304,701
Prosegur Cia de
Seguridad SA* 34,325 400,994
------------
2,649,512
------------
SWEDEN -- 5.4%
AcadeMedia AB* 11,150 242,859
Allgon AB Cl-B 18,500 409,150
Arkivator AB* 6,875 327,136
Biacaore International
AB* 9,575 347,590
Connova Group AB* 16,250 125,241
Enlight Interactive AB
Cl-B* 2,950 47,120
Glocalnet Cl-B* 6,675 216,219
Haldex AB* 16,625 184,769
HiQ International AB* 2,800 276,788
Industrial & Financial
Rights* 10,575 11,812
Infocast AB* 5,150 74,782
Information Highway AB 25,300 259,988
Karo Bio AB* 7,600 267,405
Kipling Holding AB* 11,325 218,842
Lindex AB* 23,925 582,578
Nobel Biocare AB* 20,150 540,172
Perbio Science AB* 48,000 332,413
Scandic Hotels AB* 47,075 499,528
Sifo Group AB Cl-B* 28,125 361,273
Sigma AB Cl-B* 15,250 439,476
SwitchCore AB* 3,225 232,346
Technology Nexus AB* 8,575 333,318
Telelogic AB* 112,825 856,958
------------
7,187,763
------------
SWITZERLAND -- 6.2%
Bank Sarasin & Cie
Reg.* 225 606,807
Card-Guard Scientific
Survival Ltd.* 14,725 624,782
Jelmoli Holding AG* 475 615,671
Jomed NV* 9,925 302,859
Kardex AG* 25 8,573
Kardex PC* 575 185,486
Kudelski SA* 50 515,554
Logitech International
SA* 2,100 1,389,032
Mikron Holding AG* 225 162,818
Rieter Holdings AG* 575 340,893
Saurer AG Reg.* 1,750 864,584
SEZ Holding AG 304 281,828
AMERICAN SKANDIA ADVISOR FUNDS, INC.
- -----------------------------------------------------
SHARES VALUE
- -----------------------------------------------------
Swisslog Holding AG 1,900 $ 837,092
Tecan AG* 1,050 906,898
Think Tools AG* 725 301,297
Unilabs AG* 225 227,553
------------
8,171,727
------------
UNITED KINGDOM -- 12.1%
Aberdeen Asset
Management PLC* 94,625 683,338
AIT Group PLC 25,050 354,744
Alba PLC* 6,125 55,110
Algo Vision PLC* 22,400 268,800
Antofagasta Holdings
PLC* 38,075 237,723
Axis - Shield PLC* 31,100 327,274
Cedar Group PLC* 21,000 242,348
Chloride Group PLC* 294,750 594,979
Chrysalis Group PLC* 44,675 145,058
Corporate Executive* 150,575 40,644
Easier PLC* 56,250 61,614
Easynet Group PLC* 625 8,924
ECsoft Group PLC* 3,725 53,917
European Telecom PLC* 47,725 336,060
European Telecom PLC
Rights* 6,818 0
Eyretel PLC* 425,300 1,008,245
Future Integrated
Telephony PLC* 35,063 274,333
Girovend Cashless
Systems PLC* 40,375 34,117
Gladstone PLC* 30,170 99,141
HIT Entertainment PLC 148,500 987,582
Imagination Tech Group
PLC* 38,625 173,162
IMS Group PLC* 5,700 18,062
Incepta Group PLC 232,300 390,765
Independent Energy
Holdings PLC [ADR]* 14,125 550,875
Intermediate Capital
Group PLC* 60,200 554,372
International Quantum
Epitaxy PLC* 4,725 285,863
Internet Indirect PLC* 97,925 31,030
ITE Group PLC* 198,475 273,305
ITNET PLC* 27,350 326,329
Johnson Press PLC* 96,225 491,620
Lex Service PLC* 102,125 649,607
Lynx Group PLC* 73,525 212,271
Man (E D & F) Group
PLC* 72,300 561,715
Nestor Healthcare Group
PLC* 96,675 658,054
SHARES VALUE
- -----------------------------------------------------
- -----------------------------------------------------
NetBenefit PLC* 11,600 $ 120,255
NewMedia SPARK PLC* 156,700 159,383
Oxford Asymmetry
International PLC* 77,875 511,806
Oxford GlycoSciences
PLC* 18,522 467,354
Plasmon PLC* 48,775 178,214
Redstone Telecom PLC
Rights* 8,018 7,528
RM PLC 7,325 81,668
Royalblue Group PLC* 8,675 182,579
RTS Networks Group PLC* 6,925 12,299
ServicePower
Technologies PLC* 83,700 146,690
Sherwood International
PLC 26,825 386,177
Sportsworld Media Group
PLC 21,497 169,874
Superscape VR PLC 74,700 374,049
Ted Baker PLC* 46,875 367,850
Telemetrix PLC* 145,475 751,208
Waste Recycling Group
PLC* 17,600 125,034
Wetherspoon, (J.D.)
PLC* 73,650 478,853
Xenova Group PLC* 252,425 552,992
------------
16,064,794
------------
TOTAL FOREIGN STOCK
(Cost $121,016,956) 106,790,580
------------
U.S. STOCK -- 1.3%
ELECTRONIC COMPONENTS & EQUIPMENT -- 0.3%
DSP Group, Inc.* 5,400 384,075
------------
INTERNET SERVICES -- 0.7%
NetNation
Communications, Inc.* 24,000 174,000
RADVision Ltd.* 21,950 839,588
------------
1,013,588
------------
TELECOMMUNICATIONS -- 0.3%
AudioCodes Ltd.* 5,025 376,875
------------
TOTAL U.S. STOCK
(Cost $2,113,987) 1,774,538
------------
ASAF FOUNDERS INTERNATIONAL
SMALL CAPITALIZATION FUND
- -----------------------------------------------------
PAR
(000) VALUE
- -----------------------------------------------------
U.S. GOVERNMENT AGENCY OBLIGATIONS -- 7.1%
Federal Home Loan Bank
5.60%, 05/01/00
(Cost $9,372,000) $9,372 $ 9,372,000
------------
COMMERCIAL PAPER -- 9.7%
American Express Co.
5.90%, 05/01/00 6,400 6,400,000
AT&T Corp.
5.97%, 05/01/00 112 112,000
GE Capital Corp.
5.75%, 05/01/00 6,400 6,400,000
------------
(Cost $12,912,000) 12,912,000
------------
TOTAL INVESTMENTS -- 98.6%
(Cost $145,414,943) 130,849,118
OTHER ASSETS LESS LIABILITIES -- 1.4% 1,804,488
------------
NET ASSETS -- 100.0% $132,653,606
============
Foreign currency exchange contracts outstanding at
April 30, 2000:
SETTLEMENT CONTRACTS TO IN EXCHANGE CONTRACTS UNREALIZED
MONTH TYPE RECEIVE FOR AT VALUE DEPRECIATION
- -------------------------------------------------------------------------------
05/00 Buy CHF 1,478,107 $ 860,824 $ 859,125 $ 1,699
05/00 Buy EUR 3,154,047 2,881,830 2,874,135 7,695
05/00 Buy GBP 259,682 408,426 406,350 2,076
05/00 Buy HKD 885,244 113,654 113,653 1
05/00 Buy JPY 204,467,180 1,916,609 1,891,961 24,648
05/00 Buy SEK 11,687,524 1,312,439 1,305,473 6,966
05/00 Buy SGD 1,657,496 972,452 970,749 1,703
---------- ---------- -------
$8,466,234 $8,421,446 $44,788
========== ========== =======
UNREALIZED
SETTLEMENT CONTRACTS TO IN EXCHANGE CONTRACTS APPRECIATION
MONTH TYPE DELIVER FOR AT VALUE (DEPRECIATION)
- -----------------------------------------------------------------------------
05/00 Sell AUD 1,112,721 $ 649,694 $ 649,282 $ 412
05/00 Sell CAD 49,892 33,738 33,673 65
05/00 Sell CHF 71,287 41,528 41,434 94
05/00 Sell EUR 616,382 562,681 561,680 1,001
05/00 Sell GBP 542,708 850,260 849,229 1,031
05/00 Sell HKD 2,064,132 265,006 265,007 (1)
05/00 Sell NOK 1,010,725 113,737 112,971 766
05/00 Sell SEK 3,353,549 376,122 374,585 1,537
---------- ---------- ------
$2,892,766 $2,887,861 $4,905
========== ========== ======
- -------------------------------------------------------
The following is a breakdown of the foreign stock portion of the Fund, by
industry classification, as of April 30, 2000. Percentages are based on net
assets.
INDUSTRY
- -------------------------------------------
Advertising 0.4%
Airlines 0.4%
Automobiles 0.7%
Automotive Parts 1.0%
Beverages 0.4%
Broadcasting 3.4%
Building Materials 2.1%
Business Services 3.3%
Chemicals 1.7%
Clothing & Apparel 0.9%
Computer Hardware 1.6%
Computer Services & Software 11.4%
Conglomerates 0.4%
Construction 0.1%
Consumer Products & Services 0.7%
Containers & Packaging 0.2%
Electronic Components & Equipment 9.9%
Entertainment & Leisure 1.5%
Environmental Services 0.3%
Financial -- Bank & Trust 0.6%
Financial Services 4.4%
Food 1.2%
Healthcare Services 0.2%
Hotels & Motels 0.4%
Industrial Products 1.2%
Insurance 0.4%
Internet Services 0.8%
Machinery & Equipment 5.4%
Medical Supplies & Equipment 4.4%
Metals & Mining 1.8%
Oil & Gas 1.1%
Personal Services 0.3%
Pharmaceuticals 2.3%
Printing & Publishing 0.8%
Real Estate 2.1%
Retail & Merchandising 5.7%
Semiconductors 0.8%
Telecommunications 4.2%
Transportation 1.5%
Utilities 0.5%
-----
TOTAL 80.5%
=====
- -------------------------------------------------------
Unless otherwise noted, all stocks are common stock.
Definitions of abbreviations are included following the Schedules of
Investments.
* Non-income producing security.
+ Illiquid security. At the end of the period, these securities amounted to 0.3%
of net assets.
144A -- Security was purchased pursuant to Rule 144A under the Securities Act of
1933 and may not be resold subject to that rule except to qualified
institutional buyers. At the end of the period, these securities
amounted to 3.3% of net assets.
See Notes to Financial Statements.
AMERICAN SKANDIA ADVISOR FUNDS, INC.
ASAF JANUS
SMALL-CAP GROWTH FUND
- ----------------------------------------------------
SHARES VALUE
- ----------------------------------------------------
COMMON STOCK -- 82.0%
ADVERTISING -- 3.0%
Getty Images, Inc.* 69,395 $ 2,107,873
Interep National
Radio Sales, Inc.* 61,395 353,021
Lamar Advertising
Co.* 99,460 4,382,456
TMP Worldwide, Inc.* 97,360 6,364,911
------------
13,208,261
------------
BROADCASTING -- 7.6%
Acme Communications,
Inc.* 70,875 1,630,125
ACTV, Inc.* 158,375 2,870,547
Citadel
Communications
Corp.* 156,685 6,120,508
Cumulus Media, Inc.
Cl-A* 142,515 1,870,509
Entercom
Communications
Corp.* 68,180 2,897,650
NDS Group PLC* 70,105 3,960,933
Radio One, Inc.* 118,865 6,894,169
Radio Unica Corp.* 112,960 1,087,240
Regent
Communications,
Inc.* 286,370 2,452,043
Spanish Broadcasting
Systems, Inc.* 177,655 3,319,928
------------
33,103,652
------------
BUSINESS SERVICES -- 5.2%
Adelphia Business
Solutions, Inc.* 138,005 4,830,174
AnswerThink
Consulting Group,
Inc.* 71,470 1,375,798
Avenue A, Inc.* 53,185 1,688,624
Brightpoint, Inc.* 142,435 1,682,513
CIBER, Inc.* 143,515 2,592,240
Eloyalty Corp.* 53,995 887,543
Informatica Corp.* 107,315 4,500,523
Iron Mountain, Inc.* 29,965 1,048,775
Pegasus Systems,
Inc.* 98,022 1,739,891
PurchasePro.com,
Inc.* 52,325 1,569,750
Tanning Technology
Corp.* 46,800 859,950
------------
22,775,781
------------
CABLE TELEVISION -- 0.2%
Classic
Communications,
Inc.* 64,525 782,366
------------
CAPITAL GOODS -- 0.5%
Mettler-Toledo
International,
Inc.* 66,360 2,289,420
------------
SHARES VALUE
- ----------------------------------------------------
- ----------------------------------------------------
CHEMICALS -- 0.7%
Lyondell Chemical Co. 169,130 $ 3,107,764
------------
COMPUTER HARDWARE -- 1.3%
Insight Enterprises,
Inc.* 136,607 5,711,880
------------
COMPUTER SERVICES & SOFTWARE -- 6.1%
Bluestone Software,
Inc.* 32,295 680,213
Brio Technology,
Inc.* 80,020 1,980,495
Broadbase Software,
Inc.* 104,990 1,660,154
Delano Technology
Corp.* 14,305 156,461
Emulex Corp.* 18,935 859,176
InterTrust
Technologies Corp.* 71,700 1,649,100
Jacada Ltd.* 29,035 274,018
JNI Corp.* 5,025 200,686
Media 100, Inc.* 104,770 2,534,124
NetIQ Corp.* 68,425 2,514,619
Numerical
Technologies, Inc.* 37,705 1,574,184
OTG Software, Inc.* 62,770 1,380,940
Quest Software, Inc.* 73,195 2,758,537
Razorfish, Inc.* 148,360 2,809,567
Silverstream
Software, Inc.* 37,470 1,480,065
Software.com, Inc.* 10,650 861,319
webMethods, Inc.* 38,245 3,442,049
------------
26,815,707
------------
CONSUMER PRODUCTS & SERVICES -- 0.3%
Action Performance
Companies, Inc.* 30,070 278,148
Rayovac Corp.* 44,775 934,678
------------
1,212,826
------------
ELECTRONIC COMPONENTS & EQUIPMENT -- 1.1%
Aeroflex, Inc.* 28,445 1,059,576
Dionex Corp.* 93,145 3,388,149
Robotic Vision
Systems, Inc.* 34,950 522,066
------------
4,969,791
------------
ENTERTAINMENT & LEISURE -- 4.0%
Ackerley Group, Inc. 16,920 219,960
Championship Auto
Racing Teams, Inc.* 68,700 1,391,175
Park Place
Entertainment
Corp.* 234,070 2,999,022
Playboy Enterprises,
Inc. Cl-B* 40,705 656,368
Premier Parks, Inc.* 127,245 2,743,720
ASAF JANUS
SMALL-CAP GROWTH FUND
- ----------------------------------------------------
SHARES VALUE
- ----------------------------------------------------
SFX Entertainment,
Inc. Cl-A* 135,840 $ 5,654,340
Station Casinos,
Inc.* 128,910 3,673,935
------------
17,338,520
------------
FINANCIAL SERVICES -- 1.3%
Investors Financial
Service Corp. 70,225 5,732,116
------------
FOOD -- 0.6%
Whole Foods Market,
Inc.* 64,515 2,745,920
------------
HEALTHCARE SERVICES -- 2.1%
Accredo Health, Inc.* 103,177 2,901,853
Apria Healthcare
Group, Inc.* 449,620 6,266,579
------------
9,168,432
------------
INDUSTRIAL -- 0.8%
Brooks Automation,
Inc.* 36,990 3,317,541
------------
INSURANCE -- 1.9%
Hooper Holmes, Inc.* 376,400 6,539,950
StanCorp Financial
Group, Inc. 60,990 1,776,334
------------
8,316,284
------------
INTERNET SERVICES -- 14.0%
24/7 Media, Inc.* 64,425 1,264,341
724 Solutions, Inc.* 57,400 2,898,700
Accrue Software,
Inc.* 24,380 580,549
Appnet Systems, Inc.* 124,105 2,978,520
Digital Impact, Inc.* 70,680 865,830
Eprise Corp.* 40,465 402,121
esoft, Inc.* 93,540 853,553
Extensity, Inc.* 13,560 166,110
Fairmarket, Inc.* 18,445 126,809
Globix Corp.* 462,745 10,411,762
Internet.com Corp.* 58,125 1,104,375
Intranet Solutions,
Inc.* 107,765 2,397,771
Keynote Systems,
Inc.* 31,550 1,415,806
L90, Inc.* 47,220 472,200
Lante Corp.* 30,910 641,383
Launch Media, Inc.* 29,890 311,977
Liberate
Technologies, Inc.* 118,120 4,621,444
NaviSite, Inc.* 93,590 4,346,085
Net.Genesis Corp.* 84,940 1,093,603
NetRatings, Inc.* 50,000 1,325,000
Radvision Ltd.* 20,110 769,208
Rare Medium Group,
Inc.* 85,140 1,750,691
Register.com, Inc.* 43,725 2,229,975
Retek, Inc.* 28,215 606,623
Selectica, Inc.* 35,135 1,335,130
Skillsoft Corp.* 19,410 258,396
SHARES VALUE
- ----------------------------------------------------
- ----------------------------------------------------
Verio, Inc.* 141,800 $ 5,326,362
VerticalNet, Inc.* 178,210 9,623,339
Vicinity Corp.* 54,820 650,988
------------
60,828,651
------------
MEDICAL SUPPLIES & EQUIPMENT -- 1.2%
Celera Genomics
Group* 29,230 2,411,475
Invitrogen Corp.* 41,900 2,613,513
------------
5,024,988
------------
OIL & GAS -- 0.3%
Core Laboratories NV* 44,115 1,251,763
------------
PERSONAL SERVICES -- 0.4%
Career Education
Corp.* 43,095 1,629,530
------------
PHARMACEUTICALS -- 7.8%
Abgenix, Inc.* 63,770 5,711,401
BioCryst
Pharmaceuticals,
Inc.* 111,020 2,692,235
Celgene Corp.* 63,615 2,993,881
Cubist
Pharmaceuticals,
Inc.* 52,870 1,698,449
Enzon, Inc.* 261,355 9,735,473
Priority Healthcare
Corp. Cl-B* 47,505 2,630,589
Professional
Detailing, Inc.* 70,065 1,891,755
QLT
PhotoTherapeutics,
Inc.* 121,325 6,741,120
------------
34,094,903
------------
PRINTING & PUBLISHING -- 1.4%
Valassis
Communications,
Inc.* 177,180 6,035,194
------------
RESTAURANTS -- 0.2%
P.F. Chang's China
Bistro, Inc.* 21,375 748,125
------------
RETAIL & MERCHANDISING -- 1.6%
Ames Department
Stores, Inc.* 148,400 2,661,926
pcOrder.com, Inc.* 59,530 959,921
Rent-Way, Inc.* 29,660 769,306
School Specialty,
Inc.* 129,640 2,414,545
------------
6,805,698
------------
SCIENCE & TECHNOLOGY -- 0.2%
Mead Instruments
Corp.* 9,425 689,203
------------
AMERICAN SKANDIA ADVISOR FUNDS, INC.
- ----------------------------------------------------
SHARES VALUE
- ----------------------------------------------------
SEMICONDUCTORS -- 10.3%
Alpha Industries,
Inc.* 223,524 $ 11,623,248
ATMI, Inc.* 145,155 5,588,468
Mattson Technology,
Inc.* 57,055 2,802,827
Quantam Effect
Devices, Inc.* 9,405 547,841
Quicklogic Corp.* 20,470 601,306
SDL, Inc.* 81,970 15,984,149
Silicon Image, Inc.* 9,855 395,432
TriQuint
Semiconductor,
Inc.* 32,500 3,341,406
Virata Corp.* 34,130 4,274,783
------------
45,159,460
------------
TELECOMMUNICATIONS -- 6.8%
Adaptive Broadband
Corp.* 67,300 2,187,250
Alamosa PCS Holdings,
Inc.* 47,075 1,341,638
Avanex Corp.* 4,720 575,250
Caprock
Communications
Corp.* 85,965 2,879,828
CTC Communications
Group, Inc.* 92,625 3,126,094
i3 Mobile, Inc.* 39,500 740,625
IDT Corp.* 60,085 1,900,188
Interwave
Communications
International Ltd.* 26,935 358,572
Metricom, Inc.* 5,615 157,571
Natural MicroSystems
Corp.* 63,960 4,165,394
Net2000
Communications,
Inc.* 62,635 923,866
Netro Corp.* 15,590 672,319
Pac-West Telecomm,
Inc.* 92,390 1,974,836
Price Communications
Corp.* 34,400 696,600
Viatel, Inc.* 135,800 5,194,349
WinStar
Communications,
Inc.* 70,200 2,799,225
------------
29,693,605
------------
UTILITIES -- 1.1%
Avista Corp. 158,745 4,692,899
------------
TOTAL COMMON STOCK
(Cost $341,170,898) 357,250,280
------------
SHARES VALUE
- ----------------------------------------------------
- ----------------------------------------------------
FOREIGN STOCK -- 1.5%
AUTOMOBILE MANUFACTURERS -- 0.0%
Ducati Motor Holding
SPA -- (ITL)* 17,757 $ 46,925
------------
ENTERTAINMENT & LEISURE -- 0.5%
Corporacion
Interamericana de
Entretenimento --
(MXP)* 522,600 2,142,982
------------
TELECOMMUNICATIONS -- 1.0%
Cogeco Cable, Inc. --
(CAD)* 97,290 2,429,525
Moffat Communications
Ltd. -- (CAD) 123,823 2,131,047
------------
4,560,572
------------
TOTAL FOREIGN STOCK
(Cost $5,326,301) 6,750,479
------------
PAR
(000)
-----
U.S. GOVERNMENT AGENCY OBLIGATIONS -- 7.9%
Federal Home Loan
Bank
5.70%, 07/07/00 $ 25,000 24,734,792
Federal Home Loan
Mortgage Corp.
5.95%, 07/03/00 10,000 9,895,875
------------
(Cost $34,630,667) 34,630,667
------------
COMMERCIAL PAPER -- 6.9%
CIT Group Holdings
6.00%, 05/01/00 20,200 20,200,000
Household Finance
Corp.
6.00%, 05/01/00 10,000 10,000,000
------------
(Cost $30,200,000) 30,200,000
------------
ASAF JANUS
SMALL-CAP GROWTH FUND
- ----------------------------------------------------
SHARES VALUE
- ----------------------------------------------------
SHORT-TERM INVESTMENTS -- 0.7%
Temporary Investment
Cash Fund 1,630,910 $ 1,630,910
Temporary Investment
Fund 1,630,910 1,630,910
------------
(Cost $3,261,820) 3,261,820
------------
TOTAL INVESTMENTS -- 99.0%
(Cost $414,589,686) 432,093,246
OTHER ASSETS LESS
LIABILITIES -- 1.0% 4,246,638
------------
NET ASSETS -- 100.0% $436,339,884
============
- -------------------------------------------------------
Unless otherwise noted, all stocks are common stock.
Definitions of abbreviations are included following the Schedules of
Investments.
* Non-income producing security.
See Notes to Financial Statements.
AMERICAN SKANDIA ADVISOR FUNDS, INC.
ASAF T. ROWE PRICE
SMALL COMPANY VALUE FUND
- ---------------------------------------------------
SHARES VALUE
- ---------------------------------------------------
COMMON STOCK -- 93.6%
AIRLINES -- 1.2%
Midwest Express
Holdings, Inc.* 36,700 $ 928,969
-----------
AUTOMOTIVE PARTS -- 1.6%
Myers Industries, Inc. 33,710 471,940
OEA, Inc.* 48,600 486,000
TBC Corp.* 47,700 262,350
-----------
1,220,290
-----------
BROADCASTING -- 0.7%
Saga Communications,
Inc. Cl-A* 25,650 519,413
-----------
BUILDING MATERIALS --11.4%
Ameron International
Corp. 6,700 238,269
Cameron Ashley Building
Products, Inc.* 56,700 992,249
Florida Rock Industries,
Inc. 12,100 391,738
Gibraltar Steel Corp. 30,500 526,125
Insituform Technology,
Inc.* 24,300 815,569
Lone Star Technologies,
Inc.* 36,200 1,669,724
Modine Manufacturing Co. 22,100 487,581
Republic Group, Inc. 51,000 583,313
SCP Pool Corp.* 21,600 795,150
Skyline Corp. 30,000 611,250
Thomas Industries, Inc. 32,400 652,050
U.S. Aggregates, Inc. 40,500 688,500
-----------
8,451,518
-----------
BUSINESS SERVICES -- 1.1%
IT Group, Inc.* 89,000 595,188
StaffMark, Inc.* 36,800 241,500
-----------
836,688
-----------
CABLE TELEVISION -- 0.2%
Sinclair Broadcasting
Group, Inc.* 21,600 168,750
-----------
CHEMICALS -- 2.8%
Arch Chemicals, Inc. 38,000 750,500
Schulman, (A.), Inc. 29,700 382,388
TETRA Technologies,
Inc.* 66,700 950,475
-----------
2,083,363
-----------
CLOTHING & APPAREL -- 0.9%
Dan River, Inc. Cl-A* 56,500 321,344
Unifi, Inc.* 35,100 357,581
-----------
678,925
-----------
COMPUTER HARDWARE -- 1.1%
Analogic Corp. 20,000 813,750
-----------
SHARES VALUE
- ---------------------------------------------------
- ---------------------------------------------------
COMPUTER SERVICES & SOFTWARE -- 4.0%
Analysts International
Corp. 47,200 $ 525,100
CompuCom Systems, Inc.* 72,800 250,250
Progress Software* 50,700 1,014,000
SPSS, Inc.* 42,600 1,214,100
-----------
3,003,450
-----------
CONSUMER PRODUCTS & SERVICES -- 0.6%
Culp, Inc. 32,200 187,163
Packaged Ice, Inc.* 80,900 288,206
-----------
475,369
-----------
CONTAINERS & PACKAGING -- 3.4%
Aptargroup, Inc. 40,500 1,154,250
Ivex Packaging Corp.* 62,100 558,900
Liqui-Box Corp. 17,400 830,850
-----------
2,544,000
-----------
ELECTRONIC COMPONENTS & EQUIPMENT -- 8.8%
Electro Rental Corp.* 75,800 833,800
FLIR Systems, Inc.* 37,800 278,775
Franklin Electric Co.,
Inc. 11,800 839,275
Landauer, Inc. 16,900 310,538
Littelfuse, Inc.* 45,900 1,629,449
Methode Electronics,
Inc. Cl-A 51,100 2,129,432
Pioneer-Standard
Electronics, Inc. 32,400 496,125
-----------
6,517,394
-----------
ENVIRONMENTAL SERVICES -- 1.1%
Newpark Resources, Inc.* 86,300 711,975
Waterlink, Inc.* 39,200 100,450
-----------
812,425
-----------
EQUIPMENT SERVICES -- 0.2%
Unifirst Corp. 18,900 181,913
-----------
FINANCIAL -- BANK & TRUST -- 6.0%
Community First
Bankshares, Inc. 58,000 978,749
First Republic Bank* 38,300 751,638
Silicon Valley
Bancshares* 41,800 2,581,149
Southwest Bancorporation
of Texas, Inc.* 5,000 97,813
-----------
4,409,349
-----------
FINANCIAL SERVICES -- 4.7%
Allied Capital Corp. 62,300 1,164,230
American Capital
Strategies Ltd. 27,000 654,750
First Financial Fund,
Inc.** 76,300 615,169
Medallion Financial
Corp. 16,100 266,656
Triad Guaranty, Inc.* 39,400 827,400
-----------
3,528,205
-----------
ASAF T. ROWE PRICE
SMALL COMPANY VALUE FUND
- ---------------------------------------------------
SHARES VALUE
- ---------------------------------------------------
FOOD -- 0.6%
International Multifoods
Corp. 32,400 $ 415,125
-----------
FURNITURE -- 0.9%
Stanley Furniture Co.,
Inc.* 29,700 681,244
-----------
INSURANCE -- 4.4%
Brown & Brown, Inc. 40,400 1,621,050
Markel Corp.* 5,300 768,500
Medical Assurance, Inc.* 39,730 526,423
Presidential Life Corp. 25,600 407,600
-----------
3,323,573
-----------
LUMBER & WOOD PRODUCTS -- 0.6%
Deltic Timber Corp. 20,100 442,200
-----------
MACHINERY & EQUIPMENT -- 3.7%
Alamo Group, Inc. 13,400 145,725
Carbo Ceramics, Inc. 24,300 807,975
Smith, (A.O.) Corp. 35,100 721,744
TransTechnology Corp. 35,600 500,625
Woodward Governor Co. 26,400 582,450
-----------
2,758,519
-----------
MEDICAL SUPPLIES & EQUIPMENT -- 1.9%
Ocular Sciences, Inc.* 24,200 400,813
Owens & Minor, Inc. 87,600 1,051,200
-----------
1,452,013
-----------
METALS & MINING -- 1.9%
Homestake Mining Co. 34,300 205,800
Layne Christensen Co.* 30,500 129,625
Material Sciences Corp.* 43,400 461,125
Penn Virginia Corp. 32,900 592,200
-----------
1,388,750
-----------
OFFICE EQUIPMENT -- 3.9%
Aaron Rents, Inc. Cl-A 15,000 231,563
Aaron Rents, Inc. Cl-B 34,100 494,450
CompX International,
Inc. 37,000 730,750
IDEX Corp. 34,500 1,078,124
McGrath Rentcorp 23,000 368,719
-----------
2,903,606
-----------
OIL & GAS -- 4.0%
Chieftan International,
Inc.* 51,300 974,700
Cross Timbers Oil Co. 65,500 945,656
Devon Energy Corp. 22,400 1,079,400
-----------
2,999,756
-----------
PAPER & FOREST PRODUCTS -- 1.0%
CSS Industries, Inc.* 10,800 211,950
Wausau-Mosinee Paper
Corp. 46,680 565,995
-----------
777,945
-----------
SHARES VALUE
- ---------------------------------------------------
- ---------------------------------------------------
PERSONAL SERVICES -- 1.4%
Matthews International
Corp. Cl-A 44,100 $ 1,014,300
-----------
PHARMACEUTICALS -- 0.4%
Coulter Pharmaceutical,
Inc.* 17,000 310,250
-----------
REAL ESTATE -- 4.7%
Glenborough Realty
Trust, Inc. [REIT] 63,400 935,150
Innkeepers USA Trust
[REIT] 57,200 514,800
Pacific Gulf Properties,
Inc. [REIT] 37,000 795,500
Parkway Co. [REIT] 15,800 474,000
Sun Communities, Inc.
[REIT] 24,300 804,938
-----------
3,524,388
-----------
RESTAURANTS -- 4.6%
Consolidated Products,
Inc.* 55,048 502,313
RARE Hospitality
International, Inc.* 43,200 1,336,500
Ruby Tuesday, Inc. 75,000 1,570,313
-----------
3,409,126
-----------
RETAIL & MERCHANDISING -- 4.5%
Bon-Ton Stores, Inc.* 37,700 89,538
Casey's General Stores,
Inc. 67,400 787,737
Fred's, Inc. 35,600 560,700
Goody's Family Clothing* 67,500 438,750
Hancock Fabrics, Inc. 51,300 201,994
Jo-Ann Stores, Inc.
Cl-B* 32,900 252,919
Stein Mart, Inc.* 114,700 1,030,507
-----------
3,362,145
-----------
TRANSPORTATION -- 1.9%
Hub Group, Inc. Cl-A* 28,300 339,600
Landstar Systems, Inc.* 19,100 1,093,475
-----------
1,433,075
-----------
UTILITIES -- 3.4%
Black Hills Corp. 39,900 915,206
Cleco Corp. 27,000 929,813
United Water Resources,
Inc. 20,000 695,000
-----------
2,540,019
-----------
TOTAL COMMON STOCK
(Cost $70,672,036) 69,909,805
-----------
AMERICAN SKANDIA ADVISOR FUNDS, INC.
- ---------------------------------------------------
SHARES VALUE
- ---------------------------------------------------
PREFERRED STOCK -- 0.4%
OIL & GAS
Cross Timbers Oil Co.
$1.5625 Cl-A
(Cost $294,277) 8,900 $ 282,575
-----------
PAR
(000)
-------
COMMERCIAL PAPER -- 3.3%
AWB Finance Ltd.+
6.05%, 05/26/00 $ 1,000 995,799
Equilon Enterprises LLC
6.02%, 05/17/00 1,500 1,495,986
-----------
(Cost $2,491,785) 2,491,785
-----------
SHARES VALUE
- ---------------------------------------------------
- ---------------------------------------------------
SHORT-TERM INVESTMENTS -- 1.9%
Temporary Investment
Cash Fund
(Cost $1,416,727) 1,416,727 $ 1,416,727
-----------
TOTAL INVESTMENTS -- 99.2%
(Cost $74,874,825) 74,100,892
OTHER ASSETS LESS LIABILITIES -- 0.8% 599,795
-----------
NET ASSETS -- 100.0% $74,700,687
===========
- -------------------------------------------------------
Definitions of abbreviations are included following the Schedules of
Investments.
* Non-income producing security.
** Closed-end fund.
+ Security is restricted to resale and may not be resold except to qualified
institutional buyers. At the end of the period, this security amounted to
1.3% of net assets.
See Notes to Financial Statements.
ASAF AMERICAN CENTURY
STRATEGIC BALANCED FUND
- ------------------------------------------------------
SHARES VALUE
- ------------------------------------------------------
COMMON STOCK -- 59.6%
ADVERTISING -- 0.1%
DoubleClick, Inc.* 1,200 $ 91,050
------------
AEROSPACE -- 0.6%
Boeing Co. 17,600 698,500
United Technologies
Corp. 3,600 223,875
------------
922,375
------------
AIRLINES -- 0.1%
AMR Corp.* 2,300 78,344
Delta Air Lines,
Inc. 900 47,475
------------
125,819
------------
AUTOMOBILE MANUFACTURERS -- 0.6%
Ford Motor Co. 12,500 683,593
General Motors Corp. 2,900 271,513
------------
955,106
------------
BEVERAGES -- 0.5%
Anheuser-Busch
Companies, Inc. 3,800 268,138
Coors, (Adolph) Co.
Cl-B 3,100 158,100
PepsiCo, Inc. 8,400 308,175
------------
734,413
------------
BROADCASTING -- 0.7%
CBS Corp.* 18,700 1,098,625
------------
BUILDING MATERIALS -- 0.1%
Centex Construction
Products, Inc. 3,500 108,063
------------
CABLE TELEVISION -- 0.3%
Comcast Corp. Cl-A* 12,300 492,769
------------
CAPITAL GOODS -- 0.2%
Cummins Engine Co.,
Inc. 7,500 266,719
------------
CHEMICALS -- 0.9%
Dow Chemical Co. 9,400 1,062,200
DuPont, (E.I.) de
Nemours & Co. 8,200 388,988
------------
1,451,188
------------
CLOTHING & APPAREL -- 0.1%
American Eagle
Outfitters, Inc.* 4,200 71,400
Jones Apparel Group,
Inc.* 5,500 163,281
------------
234,681
------------
COMPUTER HARDWARE -- 3.1%
Adaptec, Inc.* 6,800 183,600
Apple Computer,
Inc.* 3,600 446,625
SHARES VALUE
- ------------------------------------------------------
- ------------------------------------------------------
Dell Computer Corp.* 8,700 $ 436,088
EMC Corp.* 7,900 1,097,606
Hewlett-Packard Co. 13,500 1,822,500
International
Business Machines
Corp. 9,000 1,004,625
------------
4,991,044
------------
COMPUTER SERVICES & SOFTWARE -- 7.1%
Automatic Data
Processing, Inc. 6,300 339,019
Cisco Systems, Inc.* 55,600 3,854,643
Computer Associates
International,
Inc. 7,100 396,269
Electronic Data
Systems Corp. 7,500 515,625
Microsoft Corp.* 39,800 2,776,049
Oracle Corp.* 22,700 1,814,581
Siebel Systems,
Inc.* 900 110,588
Sun Microsystems,
Inc.* 14,000 1,287,125
Sybase, Inc.* 7,500 151,406
Symantec Corp.* 3,000 187,313
VERITAS Software
Corp.* 2,000 214,531
------------
11,647,149
------------
CONGLOMERATES -- 1.0%
Corning, Inc. 5,500 1,086,250
Tyco International
Ltd. 10,800 496,125
------------
1,582,375
------------
CONSTRUCTION -- 0.1%
Dycom Industries,
Inc.* 1,900 98,800
------------
CONSUMER PRODUCTS & SERVICES -- 0.8%
Fortune Brands, Inc. 4,800 120,000
Procter & Gamble Co. 7,600 453,149
Tupperware Corp. 9,900 186,863
Universal Corp. 4,500 84,938
Whirlpool Corp. 6,900 449,363
------------
1,294,313
------------
CONTAINERS & PACKAGING -- 0.1%
Ball Corp. 4,700 148,050
------------
ELECTRONIC COMPONENTS & EQUIPMENT -- 4.0%
American Power
Conversion Corp.* 3,800 134,188
AVX Corp.* 2,600 253,338
Comverse Technology,
Inc.* 6,500 579,718
Credence Systems
Corp.* 1,500 214,125
Electronics for
Imaging, Inc.* 3,200 167,200
General Electric Co. 20,900 3,286,524
AMERICAN SKANDIA ADVISOR FUNDS, INC.
- ------------------------------------------------------
SHARES VALUE
- ------------------------------------------------------
Harmonic, Inc.* 1,500 $ 110,719
KEMET Corp.* 6,100 454,450
Rockwell
International
Corp. 3,800 149,625
Texas Instruments,
Inc. 2,100 342,038
Vishay
Intertechnology,
Inc.* 11,100 931,012
------------
6,622,937
------------
ENTERTAINMENT & LEISURE -- 0.7%
Carnival Corp. 2,000 49,750
Disney, (Walt) Co. 15,900 688,668
Pixar, Inc.* 3,800 141,313
Viacom, Inc. Cl-B* 5,700 309,938
------------
1,189,669
------------
EQUIPMENT SERVICES -- 0.2%
Hertz Corp. Cl-A 8,100 252,619
------------
FINANCIAL -- BANK & TRUST -- 2.7%
Bank of America
Corp. 17,600 862,400
Chase Manhattan
Corp. 32,700 2,356,443
Old Kent Financial
Corp. 8,500 256,063
Silicon Valley
Bancshares* 1,600 98,800
UnionBanCal Corp. 24,100 667,269
Wells Fargo & Co. 3,400 139,613
------------
4,380,588
------------
FINANCIAL SERVICES -- 4.3%
AMBAC Financial
Group, Inc. 17,000 816,000
Citigroup, Inc. 30,700 1,824,730
Deluxe Corp. 15,000 377,813
Fannie Mae Corp. 21,300 1,284,656
Freddie Mac Corp. 9,100 418,031
Merrill Lynch & Co.,
Inc. 1,300 132,519
Morgan Stanley, Dean
Witter & Co. 22,800 1,749,900
Providian Financial
Corp. 5,500 484,344
------------
7,087,993
------------
FOOD -- 1.9%
General Mills, Inc. 2,600 94,575
Hormel Foods Corp. 11,000 167,750
IBP, Inc. 25,600 422,399
Quaker Oats Co. 19,200 1,251,599
Ralston Purina Group 13,000 229,938
Safeway, Inc.* 7,700 339,763
SHARES VALUE
- ------------------------------------------------------
- ------------------------------------------------------
Suiza Foods Corp.* 10,100 $ 393,269
Sysco Corp. 2,500 94,063
------------
2,993,356
------------
HEALTHCARE SERVICES -- 0.9%
Amgen, Inc.* 11,100 621,600
Oxford Health Plans,
Inc.* 10,600 201,400
PacifiCare Health
Systems, Inc.* 3,200 164,600
United Healthcare
Group, Inc.* 6,300 420,131
------------
1,407,731
------------
INSURANCE -- 1.5%
American
International
Group, Inc. 1,450 159,047
Arthur J. Gallagher
& Co. 8,800 327,800
CIGNA Corp. 4,900 390,775
Lincoln National
Corp. 27,300 950,381
MGIC Investment
Corp. 7,700 368,156
Radian Group, Inc. 4,500 229,219
------------
2,425,378
------------
INTERNET SERVICES -- 1.2%
America Online,
Inc.* 20,100 1,202,231
Exodus
Communications,
Inc.* 600 53,063
Yahoo!, Inc.* 5,000 651,250
------------
1,906,544
------------
MACHINERY & EQUIPMENT -- 0.9%
Illinois Tool Works,
Inc. 15,094 966,959
Ingersoll-Rand Co. 8,800 413,050
------------
1,380,009
------------
MEDICAL SUPPLIES & EQUIPMENT -- 0.9%
Bard, (C.R.), Inc. 8,700 378,994
Johnson & Johnson
Co. 12,000 990,000
Mallinckrodt, Inc. 5,400 145,125
------------
1,514,119
------------
METALS & MINING -- 0.2%
Alcan Aluminum Ltd. 4,700 153,925
Alcoa, Inc. 3,400 220,575
------------
374,500
------------
OIL & GAS -- 3.4%
Amerada Hess Corp. 27,800 1,768,775
Apache Corp. 18,300 886,406
ASAF AMERICAN CENTURY
STRATEGIC BALANCED FUND
- ------------------------------------------------------
SHARES VALUE
- ------------------------------------------------------
BP Amoco PLC [ADR] 9,512 $ 485,112
Ensco International,
Inc. 11,100 368,381
Exxon Mobil Corp. 6,100 473,894
Kerr-McGee Corp. 16,200 838,350
Noble Drilling
Corp.* 2,900 115,819
Texaco, Inc. 2,200 108,900
Union Pacific
Resources Group,
Inc. 18,900 362,644
------------
5,408,281
------------
PAPER & FOREST PRODUCTS -- 0.7%
Georgia Pacific
Group 5,300 194,775
Kimberly-Clark Corp. 4,000 232,250
Temple-Inland, Inc. 4,300 215,538
Weyerhaeuser Co. 8,000 427,500
------------
1,070,063
------------
PHARMACEUTICALS --4.0%
Allergan, Inc. 3,000 176,625
Andrx Corp.* 1,800 92,138
Biogen, Inc.* 4,000 235,250
Bristol-Meyers
Squibb Co. 13,100 686,931
Elan Corp. PLC
[ADR]* 3,900 167,213
Ivax Corp.* 20,400 558,450
Jones Pharma, Inc. 5,250 151,266
MedImmune, Inc.* 1,600 255,900
Merck & Co., Inc. 8,600 597,700
Pfizer, Inc. 31,500 1,326,937
Schering-Plough
Corp. 24,300 979,594
Warner-Lambert Co. 10,800 1,229,174
------------
6,457,178
------------
PRINTING & PUBLISHING -- 0.3%
Valassis
Communications,
Inc.* 12,700 432,594
------------
RESTAURANTS -- 0.4%
Brinker
International,
Inc.* 9,600 306,000
Jack in the Box,
Inc.* 11,800 289,100
------------
595,100
------------
RETAIL & MERCHANDISING -- 3.3%
Best Buy Co., Inc.* 4,300 347,225
Federated Department
Stores, Inc.* 4,800 163,200
Home Depot, Inc. 29,700 1,665,056
Sears, Roebuck & Co. 7,800 285,675
Tiffany & Co. 1,700 123,569
Wal-Mart Stores,
Inc. 43,500 2,408,813
Zale Corp.* 7,800 321,750
------------
5,315,288
------------
SHARES VALUE
- ------------------------------------------------------
- ------------------------------------------------------
SEMICONDUCTORS -- 3.4%
Applied Materials,
Inc.* 15,000 $ 1,527,188
Conexant Systems,
Inc.* 1,700 101,788
Integrated Device
Technology, Inc.* 13,700 658,456
Intel Corp. 16,100 2,041,680
Lam Research Corp.* 7,900 362,413
LSI Logic Corp.* 5,800 362,500
National
Semiconductor
Corp.* 7,300 443,475
------------
5,497,500
------------
TELECOMMUNICATIONS -- 7.0%
Adelphia
Communications
Corp. Cl-A* 2,300 113,994
Adtran, Inc.* 2,900 195,931
AT&T Corp. 23,800 1,111,163
Bell Atlantic Corp. 6,500 385,125
BellSouth Corp. 25,900 1,261,005
Commscope, Inc.* 11,600 551,000
Cox Communications,
Inc. Cl-A* 6,400 274,000
GTE Corp. 11,800 799,450
Lucent Technologies,
Inc. 12,800 796,000
MCI WorldCom, Inc.* 4,800 218,100
Motorola, Inc. 1,400 166,688
Nextel
Communications,
Inc. Cl-A* 2,900 317,369
NEXTLINK
Communications,
Inc. Cl-A* 1,200 101,175
Nortel Networks
Corp. 8,100 917,325
QUALCOMM, Inc.* 7,600 824,125
SBC Communications,
Inc. 29,935 1,311,526
Scientific-Atlanta,
Inc. 5,600 364,350
Sprint Corp. (FON
Group) 19,500 1,199,250
Sprint Corp. (PCS
Group)* 5,500 302,500
U.S. West, Inc. 2,700 192,206
------------
11,402,282
------------
TRANSPORTATION -- 0.1%
Paccar, Inc. 4,900 233,056
------------
UTILITIES -- 1.2%
AES Corp.* 1,700 152,894
Calpine Corp.* 2,500 228,750
Energy East Corp. 5,300 110,638
AMERICAN SKANDIA ADVISOR FUNDS, INC.
- ------------------------------------------------------
SHARES VALUE
- ------------------------------------------------------
Minnesota Power,
Inc. 7,200 $ 132,750
Public Service
Enterprise Group,
Inc. 12,900 462,787
Reliant Energy, Inc. 13,900 370,087
Southern Co. 9,600 239,400
Texas Utilities Co. 4,500 151,594
UtiliCorp United,
Inc. 5,200 100,100
------------
1,949,000
------------
TOTAL COMMON STOCK
(Cost $83,878,699) 96,138,324
------------
PAR
(000)
-----
CORPORATE OBLIGATIONS -- 7.8%
AEROSPACE -- 0.4%
Raytheon Corp. 144A
8.20%, 03/01/06 $ 600 599,250
------------
AUTOMOBILE MANUFACTURERS -- 0.4%
Daimler Chrysler
7.125%, 03/01/02 600 596,250
------------
AUTOMOTIVE PARTS -- 0.1%
Lear Corp.
7.96%, 05/15/05 250 232,188
------------
BEVERAGES -- 0.1%
Pepsi Bottling
Group, Inc. 144A
7.00%, 03/01/29 150 135,750
------------
BROADCASTING -- 0.2%
British Sky
Broadcasting
6.875%, 02/23/09 200 175,500
Liberty Media Group
144A
8.25%, 02/01/30 200 190,250
------------
365,750
------------
CONSUMER PRODUCTS & SERVICES -- 0.1%
Fort James Corp.
6.625%, 09/15/04 150 143,813
------------
DIVERSIFIED -- 0.4%
Tyco International
Group SA 144A
6.875%, 09/05/02 600 589,500
------------
FINANCIAL -- BANK & TRUST -- 0.6%
Bank of America
Corp.
7.80%, 02/15/10 500 500,000
Fleet National Bank
5.75%, 01/15/09 200 173,750
PAR
(000) VALUE
- ------------------------------------------------------
- ------------------------------------------------------
NationsBank Corp.
6.125%, 07/15/04 $ 200 $ 188,500
Southern Investments
UK
6.80%, 12/01/06 100 94,250
------------
956,500
------------
FINANCIAL SERVICES -- 2.3%
BMW Vehicle Owner
Trust
6.41%, 04/25/03 400 396,662
Cilcorp, Inc.
8.70%, 10/15/09 400 404,500
Ford Motor Credit
Co.
7.50%, 03/15/05 2,200 2,172,499
Hutchison Whampoa
Financial Corp.
144A
7.45%, 08/01/17 200 182,750
Lehman Brothers
Holdings, Inc.
6.625%, 04/01/04 200 191,250
Morgan Stanley, Dean
Witter & Co.
7.125%, 01/15/03 400 395,500
------------
3,743,161
------------
INSURANCE -- 0.0%
Conseco, Inc.
6.40%, 06/15/01 100 65,500
------------
OIL & GAS -- 0.8%
Enron Corp.
6.70%, 11/15/06 400 376,000
Gulf Canada
Resources Ltd.
8.35%, 08/01/06 200 197,000
Petro Geo-Services
ASA
6.625%, 03/30/08 400 366,000
USX Corp.
6.65%, 02/01/06 300 281,625
------------
1,220,625
------------
REAL ESTATE -- 0.1%
Chelsea GCA Realty,
Inc. [REIT]
7.25%, 10/21/07 200 181,000
------------
RETAIL & MERCHANDISING -- 0.7%
Home Depot, Inc.
6.50%, 09/15/04 400 387,000
Wal-Mart Stores,
Inc.
6.875%, 08/10/09 800 771,000
------------
1,158,000
------------
ASAF AMERICAN CENTURY
STRATEGIC BALANCED FUND
- ------------------------------------------------------
PAR
(000) VALUE
- ------------------------------------------------------
TELECOMMUNICATIONS -- 1.4%
CSC Holdings, Inc.
8.125%, 07/15/09 $ 750 $ 711,562
GTE North, Inc.
5.65%, 11/15/08 200 173,250
KPNQwest NV
8.125%, 06/01/09 350 334,250
MCI WorldCom, Inc.
6.95%, 08/15/28 400 354,500
TCI Communications,
Inc.
8.75%, 08/01/15 150 159,563
WorldCom, Inc.
7.55%, 04/01/04 500 499,375
------------
2,232,500
------------
UTILITIES -- 0.2%
Alliant Energy
Resources 144A
7.375%, 11/09/09 400 390,000
------------
TOTAL CORPORATE OBLIGATIONS
(Cost $12,910,666) 12,609,787
------------
U.S. GOVERNMENT AGENCY OBLIGATIONS -- 14.2%
Federal Home Loan
Mortgage Corp.
7.00%, 06/01/14-
08/01/29 1,611 1,562,466
7.50%, 08/01/29 1,772 1,736,993
------------
3,299,459
------------
Federal National
Mortgage Assoc.
5.25%, 01/15/03 1,500 1,430,049
6.00%, 12/01/13-
10/01/28 2,270 2,078,610
6.50%, 04/29/09-
01/01/28 2,886 2,686,488
6.50%, 05/15/30
[TBA] 2,500 2,332,812
7.00%, 05/01/11-
07/01/29 1,840 1,776,541
7.125%, 02/15/05-
01/15/30 1,450 1,440,635
7.25%, 01/15/10 1,150 1,147,063
7.50%, 07/01/29-
11/01/29 1,917 1,876,225
8.00%, 05/15/30
[TBA] 1,200 1,198,125
------------
15,966,548
------------
Government National
Mortgage Assoc.
6.00%, 08/15/28 181 164,564
6.50%, 11/23/10
[TBA] 1,000 936,563
PAR
(000) VALUE
- ------------------------------------------------------
- ------------------------------------------------------
6.50%, 05/15/28 $ 231 $ 216,470
7.00%, 05/15/30
[TBA] 1,400 1,346,188
7.50%, 01/01/20
[TBA] 1,000 983,125
------------
3,646,910
------------
(Cost $23,539,014) 22,912,917
------------
U.S. TREASURY OBLIGATIONS -- 16.1%
U.S. Treasury Bonds
4.25%, 01/15/10 1,507 1,551,794
8.75%, 05/15/17 500 625,629
7.875%, 02/15/21 4,000 4,739,664
6.125%, 08/15/29 1,300 1,302,498
------------
8,219,585
------------
U.S. Treasury Notes
4.875%, 03/31/01 4,500 4,436,558
6.625%, 07/31/01 500 500,021
6.375%, 01/31/02 2,500 2,486,868
6.00%, 07/31/02-
08/15/04 250 245,664
5.875%, 09/30/02-
11/15/04 3,200 3,118,073
5.75%, 11/30/02-
08/15/03 3,050 2,984,128
6.875%, 05/15/06 2,000 2,035,894
6.50%, 10/15/06-
02/15/10 1,900 1,930,050
------------
17,737,256
------------
(Cost $26,067,629) 25,956,841
------------
COLLATERALIZED MORTGAGE OBLIGATIONS -- 0.8%
Case Equipment Loan
Trust Series
1998-B Cl-A4
5.92%, 10/15/05 200 195,897
CIT RV Trust Series
1998-A
Cl-A4
6.09%, 02/15/12 100 96,611
Comed Transitional
Funding Trust
Series 1998-1
Cl-A6
5.63%, 06/25/09 100 90,982
General Motors
Acceptance Corp.
Series 1999-Cl
Cl-A2
6.175%, 05/15/33 150 135,174
Morgan Stanley
Capital I Series
1998-WF1 Cl-A2
6.55%, 12/15/07 500 468,486
AMERICAN SKANDIA ADVISOR FUNDS, INC.
- ------------------------------------------------------
PAR
(000) VALUE
- ------------------------------------------------------
Nationslink Funding
Corp. Series
1998-2 Cl-A1
6.001%, 11/20/07 $ 91 $ 85,798
Nationslink Funding
Corp. Series
1999-1 Cl-A2
6.316%, 11/20/08 250 229,221
------------
(Cost $1,380,206) 1,302,169
------------
PRINCIPAL
IN LOCAL
CURRENCY
(000)
---------
FOREIGN BONDS -- 1.0%
CANADA -- 0.5%
Canadian Government
5.00%, 09/01/04 1,200 771,635
------------
UNITED KINGDOM -- 0.5%
United Kingdom
Treasury
9.00%, 10/13/08 450 869,073
------------
TOTAL FOREIGN BONDS
(Cost $1,667,177) 1,640,708
------------
PAR
(000)
-----
SOVEREIGN ISSUES -- 0.2%
CANADA
Quebec Province
7.50%, 09/15/29
(Cost $345,793) $ 350 340,568
------------
TOTAL
INVESTMENTS -- 99.7%
(Cost $149,789,184) 160,901,314
OTHER ASSETS LESS LIABILITIES -- 0.3% 485,448
------------
NET ASSETS -- 100.0% $161,386,762
============
- -------------------------------------------------------
Cash with an aggregate market value of $187,500 has been segregated with the
custodian to cover margin requirements for the following open futures contracts
at April 30, 2000:
EXPIRATION NUMBER OF UNREALIZED
DESCRIPTION MONTH CONTRACTS APPRECIATION
- ----------------------------------------------------
S&P 500 Index 06/00 10 $40,654
=======
- -------------------------------------------------------
Definitions of abbreviations are included following the Schedules of
Investments.
* Non-income producing security.
144A -- Security was purchased pursuant to Rule 144A under the Securities Act of
1933 and may not be resold subject to that rule except to qualified
institutional buyers. At the end of the period, these securities
amounted to 1.3% of net assets.
See Notes to Financial Statements.
ASAF FEDERATED
HIGH YIELD BOND FUND
- ---------------------------------------------------
PAR
(000) VALUE
- ---------------------------------------------------
CORPORATE OBLIGATIONS -- 93.7%
AEROSPACE -- 0.4%
Anteon Corp.
12.00%, 05/15/09 $ 550 $ 497,750
------------
AUTOMOTIVE PARTS -- 3.7%
Accuride Corp. Cl-B
9.25%, 02/01/08 375 321,563
Aftermarket Technology,
Inc.
12.00%, 08/01/04 100 101,000
Aftermarket Technology,
Inc. Cl-D
12.00%, 08/01/04 425 429,250
American Axle &
Manufacturing, Inc.
9.75%, 03/01/09 1,250 1,196,875
French, (J.L.)
Automotive Casting,
Inc. 144A
11.50%, 06/01/09 600 595,500
HDA Parts System, Inc.
12.00%, 08/01/05 500 332,500
Lear Corp.
9.50%, 07/15/06 50 48,875
8.11%, 05/15/09 1,250 1,122,075
Oxford Automotive, Inc.
10.125%, 06/15/07 300 283,500
------------
4,431,138
------------
BEVERAGES -- 0.6%
National Wine & Spirits
10.125%, 01/15/09 175 167,125
Triarc Consumer Beverage
10.25%, 02/15/09 625 590,625
------------
757,750
------------
BROADCASTING -- 6.0%
Acme Television Co. Cl-B
[STEP]
10.717%, 09/30/04 475 437,266
Big City Radio, Inc.
[STEP]
13.028%, 03/15/05 450 268,013
Capstar Broadcasting
Corp.
9.25%, 07/01/07 100 101,000
Chancellor Media Corp.
9.00%, 10/01/08 1,425 1,446,374
Chancellor Media Corp.
L.A. Cl-B
8.75%, 06/15/07 50 49,500
8.125%, 12/15/07 1,525 1,521,187
Fox/Liberty Networks LLC
8.875%, 08/15/07 400 402,000
9.709%, 08/15/07
[STEP] 525 417,594
PAR
(000) VALUE
- ---------------------------------------------------
- ---------------------------------------------------
Sinclair Broadcasting
Group, Inc.
9.00%, 07/15/07 $ 425 $ 380,375
8.75%, 12/15/07 425 376,125
UIH Australia Pacific,
Inc. Cl-B [STEP]
15.663%, 05/15/06 325 295,960
United International
Holdings, Inc. Cl-B
[STEP]
11.179%, 02/15/08 1,600 1,080,680
XM Satellite Radio, Inc.
144A
14.00%, 03/15/10 375 340,313
------------
7,116,387
------------
BUILDING MATERIALS -- 0.9%
American Builders &
Contractors Supply
Co., Inc. Cl-B
10.625%, 05/15/07 300 253,500
Building Materials
Holdings Corp.
8.625%, 12/15/06 250 223,125
Juno Lighting, Inc.
11.875%, 07/01/09 300 253,500
NCI Building Systems,
Inc. Cl-B
9.25%, 05/01/09 300 276,000
------------
1,006,125
------------
BUSINESS SERVICES -- 4.4%
Dialog Corp. PLC Cl-A
11.00%, 11/15/07 425 427,125
Intermedia
Communications, Inc.
[STEP]
9.733%, 05/15/06 100 94,500
12.286%, 03/01/09 1,450 892,349
Intermedia
Communications, Inc.
Cl-B
10.56%, 07/15/07
[STEP] 850 661,265
8.875%, 11/01/07 50 47,000
8.60%, 06/01/08 275 253,688
Orion Network Systems
11.25%, 01/15/07 625 378,125
Sitel Corp.
9.25%, 03/15/06 375 343,125
Teligent, Inc.
11.50%, 12/01/07 625 546,875
Teligent, Inc. Cl-B
[STEP]
14.94%, 03/01/08 650 341,552
U.S. Office Products Co.
9.75%, 06/15/08 925 282,125
AMERICAN SKANDIA ADVISOR FUNDS, INC.
- ---------------------------------------------------
PAR
(000) VALUE
- ---------------------------------------------------
Winstar Communications
144A
10.525%, 04/15/10
[STEP] $1,119 $ 520,423
12.75%, 04/15/10 382 368,583
------------
5,156,735
------------
CABLE TELEVISION -- 5.5%
Charter Communications
Holdings LLC [STEP]
12.067%, 04/01/11 1,025 566,691
CSC Holdings, Inc.
9.25%, 11/01/05 500 505,000
9.875%, 05/15/06 400 406,000
7.875%, 12/15/07 50 47,354
9.875%, 02/15/13 300 307,500
Diamond Holdings Co. PLC
9.125%, 02/01/08 200 191,000
Echostar DBS Corp.
9.375%, 02/01/09 1,325 1,288,562
International CableTel,
Inc. Cl-B [STEP]
9.743%, 02/01/06 125 115,625
Pegasus Communications
Corp. Cl-B
9.625%, 10/15/05 1,150 1,124,125
9.75%, 12/01/06 225 221,625
TeleWest Communications
PLC
11.25%, 11/01/08 200 207,500
9.25%, 04/15/09 [STEP] 600 339,210
United Pan-Europe
Communication Corp.
[STEP]
12.446%, 08/01/09 1,800 909,716
13.011%, 11/01/09 144A 575 290,595
------------
6,520,503
------------
CAPITAL GOODS -- 0.1%
Buckeye Cellulose Corp.
9.25%, 09/15/08 100 99,500
------------
CHEMICALS -- 4.7%
General Chemical
Industry Products,
Inc.
10.625%, 05/01/09 600 519,000
Georgia Gulf Corp. 144A
10.375%, 11/01/07 400 412,000
Huntsman Corp. 144A
9.50%, 07/01/07 700 644,000
Huntsman ICI Chemicals
10.125%, 07/01/09 400 400,000
ISP Holdings, Inc. Cl-B
9.00%, 10/15/03 400 362,000
Lyondell Chemical Co.
9.625%, 05/01/07 144A 150 149,250
10.875%, 05/01/09 1,200 1,194,000
PAR
(000) VALUE
- ---------------------------------------------------
- ---------------------------------------------------
Polymer Group, Inc. Cl-B
9.00%, 07/01/07 $ 550 $ 503,250
8.75%, 03/01/08 750 675,000
Sterling Chemicals, Inc.
11.75%, 08/15/06 550 492,250
Texas Petrochemical
Corp.
11.125%, 07/01/06 300 247,500
------------
5,598,250
------------
CLOTHING & APPAREL -- 0.6%
Boyds Collection Ltd.
9.00%, 05/15/08 90 80,100
GFSI, Inc. Cl-B
9.625%, 03/01/07 575 373,750
Pillowtex Corp.
10.00%, 11/15/06 150 60,000
Pillowtex Corp. Cl-B
9.00%, 12/15/07 575 227,125
------------
740,975
------------
CONGLOMERATES -- 0.5%
Eagle-Picher Industries,
Inc.
9.375%, 03/01/08 700 595,000
------------
CONSTRUCTION -- 0.7%
Formica Corp.
10.875%, 03/01/09 425 367,625
MMI Products, Inc. Cl-B
11.25%, 04/15/07 400 404,000
------------
771,625
------------
CONSUMER PRODUCTS & SERVICES -- 3.8%
Albecca, Inc.
10.75%, 08/15/08 675 543,375
Amscan Holdings, Inc.
9.875%, 12/15/07 500 422,500
Cabot Safety Corp.
12.50%, 07/15/05 450 455,625
Chattem, Inc. Cl-B
8.875%, 04/01/08 550 475,750
Collins & Aikman Floor
Coverings Corp.
10.00%, 01/15/07 150 147,000
Collins & Aikman
Products Corp.
11.50%, 04/15/06 300 295,500
Diamond Brands
Operating, Inc.
10.125%, 04/15/08 50 33,000
12.83%, 04/15/09
[STEP] 50 8,750
Glenoit Corp.
11.00%, 04/15/07 175 44,625
NBTY, Inc. Cl-B
8.625%, 09/15/07 400 350,000
Playtex Family Products
Corp.
9.00%, 12/15/03 450 441,000
ASAF FEDERATED
HIGH YIELD BOND FUND
- ---------------------------------------------------
PAR
(000) VALUE
- ---------------------------------------------------
Revlon Consumer Products
Corp.
8.625%, 02/01/08 $1,500 $ 750,000
Sleepmaster, Inc.
11.00%, 05/15/09 150 145,500
Volume Services America
11.25%, 03/01/09 400 374,000
------------
4,486,625
------------
CONTAINERS & PACKAGING -- 1.3%
Owens-Illinois, Inc.
8.10%, 05/15/07 250 235,550
Russell Stanley
Holdings, Inc.
10.875%, 02/15/09 300 253,500
Stone Container Corp.
12.25%, 04/01/02 400 404,000
11.50%, 10/01/04 450 462,375
Tekni-Plex, Inc. Cl-B
9.25%, 03/01/08 150 144,750
------------
1,500,175
------------
ELECTRONIC COMPONENTS & EQUIPMENT -- 1.3%
Amphenol Corp.
9.875%, 05/15/07 260 265,200
SCG Holdings Corp.
12.00%, 08/01/09 250 265,625
WESCO Distribution, Inc.
Cl-B
9.125%, 06/01/08 1,050 955,500
------------
1,486,325
------------
ENTERTAINMENT & LEISURE -- 3.3%
AMF Group, Inc. [STEP]
16.056%, 03/15/06 512 125,767
Florida Panthers
Holdings, Inc.
9.875%, 04/15/09 1,025 943,000
Premier Parks, Inc.
9.25%, 04/01/06 75 70,875
9.75%, 06/15/07 500 481,250
10.321%, 04/01/08
[STEP] 2,150 1,403,757
Regal Cinemas, Inc.
9.50%, 06/01/08 1,125 466,875
True Temper Sports, Inc.
10.875%, 12/01/08 425 408,000
------------
3,899,524
------------
ENVIRONMENTAL SERVICES -- 2.0%
Allied Waste North
America Co.
10.00%, 08/01/09 1,725 1,190,250
Allied Waste North
America Co. Cl-B
7.625%, 01/01/06 1,100 830,500
7.875%, 01/01/09 525 391,125
------------
2,411,875
------------
PAR
(000) VALUE
- ---------------------------------------------------
- ---------------------------------------------------
FARMING & AGRICULTURE -- 0.3%
Royster-Clark, Inc.
10.25%, 04/01/09 $ 375 $ 307,500
------------
FINANCIAL -- BANK & TRUST -- 1.4%
GS Escrow Corp.
7.125%, 08/01/05 1,450 1,294,285
RBF Finance Co.
11.375%, 03/15/09 350 376,250
------------
1,670,535
------------
FINANCIAL SERVICES -- 0.7%
Caithness Coso Fund
Corp.
9.05%, 12/15/09 500 490,000
Unifrax Investment Corp.
10.50%, 11/01/03 325 304,688
------------
794,688
------------
FOOD -- 2.0%
Agrilink Foods, Inc.
11.875%, 11/01/08 650 581,750
Aurora Foods, Inc.
9.875%, 02/15/07 250 141,250
Dominos, Inc. Cl-B
10.375%, 01/15/09 400 371,000
Eagle Family Foods, Inc.
Cl-B
8.75%, 01/15/08 600 411,000
International Home
Foods, Inc.
10.375%, 11/01/06 850 845,750
Jitney-Jungle Stores,
Inc.++
10.375%, 09/15/07 150 1,875
Nebco Evans Holding Co.
[STEP]++
10.875%, 07/15/07 125 781
------------
2,353,406
------------
FURNITURE -- 0.2%
Sealy Mattress Co. Cl-B
9.875%, 12/15/07 50 47,750
10.95%, 12/15/07
[STEP] 350 246,750
------------
294,500
------------
HEALTHCARE SERVICES -- 3.1%
Columbia HCA Healthcare,
Inc.
6.91%, 06/15/05 800 722,328
Everest Healthcare
Services, Inc.
9.75%, 05/01/08 225 194,625
Genesis Health Ventures,
Inc.++
9.25%, 10/01/06 200 31,000
9.875%, 01/15/09 150 20,250
AMERICAN SKANDIA ADVISOR FUNDS, INC.
- ---------------------------------------------------
PAR
(000) VALUE
- ---------------------------------------------------
Hudson Respiratory Care,
Inc.
9.125%, 04/15/08 $ 250 $ 191,250
Tenet Healthcare Corp.
8.00%, 01/15/05 975 936,000
8.625%, 01/15/07 400 387,000
7.625%, 06/01/08 100 91,000
8.125%, 12/01/08 1,125 1,051,875
------------
3,625,328
------------
INDUSTRIAL PRODUCTS -- 1.3%
Blount, Inc.
13.00%, 08/01/09 425 427,125
Continental Global
Group, Inc. Cl-B
11.00%, 04/01/07 100 29,500
Hexcel Corp.
9.75%, 01/15/09 250 213,750
ISG Resources, Inc.
10.00%, 04/15/08 300 266,250
United Industries Corp.
Cl-B
9.875%, 04/01/09 300 226,500
URS Corp. Cl-B 144A
12.25%, 05/01/09 425 427,125
------------
1,590,250
------------
INTERNET SERVICES -- 5.0%
Call-Net Enterprises,
Inc. [STEP]
8.949%, 08/15/07 425 201,875
9.441%, 08/15/08 425 167,875
11.162%, 05/15/09 1,700 638,130
Global Crossing Holdings
Ltd. 144A
9.50%, 11/15/09 2,050 1,998,750
Northpoint
Communications Group,
Inc. 144A
12.875%, 02/15/10 600 537,000
PSINet, Inc.
11.50%, 11/01/08 325 299,000
11.00%, 08/01/09 800 724,000
PSINet, Inc. Cl-B
10.00%, 02/15/05 425 376,125
Rhythms Netconnections
144A
14.00%, 02/15/10 350 313,250
Verio, Inc.
11.25%, 12/01/08 250 247,500
10.625%, 11/15/09 144A 375 360,000
------------
5,863,505
------------
MACHINERY & EQUIPMENT -- 2.0%
Clark Materials Handling
Corp. Cl-D+
10.75%, 11/15/06 150 12,750
Columbus McKinnon Corp.
8.50%, 04/01/08 150 134,250
PAR
(000) VALUE
- ---------------------------------------------------
- ---------------------------------------------------
National Equipment
Services, Inc. Cl-B
10.00%, 11/30/04 $ 50 $ 45,250
National Equipment
Services, Inc. Cl-D
10.00%, 11/30/04 475 429,875
NationsRent, Inc.
10.375%, 12/15/08 450 321,750
United Rentals, Inc.
9.25%, 01/15/09 1,075 962,125
United Rentals, Inc.
Cl-B
9.00%, 04/01/09 200 176,000
Woods Equipment Co.
12.00%, 07/15/09 325 287,625
------------
2,369,625
------------
MEDICAL SUPPLIES & EQUIPMENT -- 2.7%
CONMED Corp.
9.00%, 03/15/08 625 571,875
Dade International, Inc.
Cl-B
11.125%, 05/01/06 475 434,625
Fisher Scientific
International, Inc.
9.00%, 02/01/08 500 462,500
9.00%, 02/01/08 875 809,375
Hanger Orthopedic Group
11.25%, 06/15/09 500 390,000
Kinetic Concepts, Inc.
Cl-B
9.625%, 11/01/07 725 529,250
------------
3,197,625
------------
METALS & MINING -- 1.7%
AEI Resources, Inc. 144A
10.50%, 12/15/05 450 94,500
11.50%, 12/15/06 300 33,000
California Steel
Industries
8.50%, 04/01/09 300 283,500
Euramax International
PLC
11.25%, 10/01/06 350 353,500
Metals USA, Inc.
8.625%, 02/15/08 525 479,063
Murrin Murrin Holdings
PTY
9.375%, 08/31/07 300 264,000
Neenah Corp. Cl-B
11.125%, 05/01/07 225 176,625
Neenah Corp. Cl-F
11.125%, 05/01/07 375 294,375
Republic Technologies,
Inc.
13.75%, 07/15/09 400 90,000
------------
2,068,563
------------
OFFICE EQUIPMENT -- 0.4%
Buhrmann U.S., Inc. 144A
12.25%, 11/01/09 500 513,750
------------
ASAF FEDERATED
HIGH YIELD BOND FUND
- ---------------------------------------------------
PAR
(000) VALUE
- ---------------------------------------------------
OIL & GAS -- 2.6%
Comstock Resources, Inc.
11.25%, 05/01/07 $ 200 $ 196,000
Continental Resources,
Inc.
10.25%, 08/01/08 375 333,750
Forest Oil Corp.
10.50%, 01/15/06 450 456,750
Pogo Producing Co. Cl-B
10.375%, 02/15/09 500 512,500
Pride Petroleum
Services, Inc.
9.375%, 05/01/07 350 343,000
R&B Falcon Corp.
12.25%, 03/15/06 500 547,500
Triton Energy Ltd.
8.75%, 04/15/02 575 572,125
Universal Compression
Holdings [STEP]
12.454%, 02/15/09 100 73,500
------------
3,035,125
------------
PRINTING & PUBLISHING -- 0.7%
Garden State Newspapers,
Inc. Cl-B
8.75%, 10/01/09 475 421,563
Hollinger International
Publishing Co.
9.25%, 02/01/06 125 120,625
9.25%, 03/15/07 300 292,500
------------
834,688
------------
RAILROADS -- 0.3%
Railworks Corp.
11.50%, 04/15/09 375 358,125
------------
REAL ESTATE -- 1.3%
HMH Properties, Inc.
Cl-A
7.875%, 08/01/05 400 362,000
HMH Properties, Inc.
Cl-B
7.875%, 08/01/08 825 719,813
HMH Properties, Inc.
Cl-C
8.45%, 12/01/08 450 402,750
------------
1,484,563
------------
RESTAURANTS -- 0.5%
Advantica Restaurant
Group, Inc.
11.25%, 01/15/08 250 168,750
Carrols Corp.
9.50%, 12/01/08 450 383,625
------------
552,375
------------
RETAIL & MERCHANDISING -- 0.1%
Community Distributors,
Inc. Cl-B
10.25%, 10/15/04 200 158,000
------------
PAR
(000) VALUE
- ---------------------------------------------------
- ---------------------------------------------------
SEMICONDUCTORS -- 0.4%
Fairchild Semiconductor
Corp.
10.375%, 10/01/07 144A $ 150 $ 149,250
10.75%, 04/15/09 550 305,250
------------
454,500
------------
TELECOMMUNICATIONS -- 23.9%
Arch Communications,
Inc.
12.75%, 07/01/07 150 123,750
Centennial Cellular
Corp.
10.75%, 12/15/08 500 498,750
Crown Castle
International Corp.
[STEP]
10.483%, 05/15/11 1,100 654,898
11.272%, 08/01/11 1,000 605,378
Dolphin Telecom PLC
[STEP]
14.00%, 05/15/09 600 189,232
Hermes Europe Railtel
BV, Inc.
11.50%, 08/15/07 1,000 895,000
10.375%, 01/15/09 350 295,750
Lenfest Communications,
Inc.
8.25%, 02/15/08 250 253,810
Level 3 Communications,
Inc.
9.125%, 05/01/08 1,500 1,312,500
10.79%, 12/01/08
[STEP] 2,350 1,334,525
McLeodUSA, Inc.
9.918%, 03/01/07
[STEP] 875 704,781
8.375%, 03/15/08 150 136,500
9.50%, 11/01/08 125 121,406
8.125%, 02/15/09 700 623,000
Metricom, Inc.
13.00%, 02/15/10 300 250,500
MetroMedia Fiber
Network, Inc.
10.00%, 12/15/09 775 742,063
Millicom International
Cellular, Inc. [STEP]
13.529%, 06/01/06 1,050 893,134
Nextel Communications,
Inc.
10.628%, 02/15/08
[STEP] 2,650 1,875,973
9.375%, 11/15/09 1,525 1,452,562
Nextel International,
Inc. [STEP]
12.125%, 04/15/08 50 31,288
Nextel Partners, Inc.
[STEP]
13.664%, 02/01/09 260 174,200
AMERICAN SKANDIA ADVISOR FUNDS, INC.
- ---------------------------------------------------
PAR
(000) VALUE
- ---------------------------------------------------
NEXTLINK Communications,
Inc.
9.00%, 03/15/08 $ 150 $ 137,625
11.07%, 04/15/08
[STEP] 950 572,765
10.75%, 06/01/09 500 495,000
12.269%, 06/01/09
[STEP] 2,300 1,346,402
NTL Communications Corp.
Cl-B
11.50%, 10/01/08 650 663,000
NTL, Inc. Cl-B [STEP]
10.381%, 04/01/08 2,375 1,520,970
10.732%, 10/01/08 1,800 1,179,686
Orius Capital Corp. 144A
12.75%, 02/01/10 475 482,125
Qwest Communications
International, Inc.
[STEP]
8.24%, 10/15/07 700 561,750
RCN Corp. [STEP]
12.214%, 10/15/07 1,050 667,250
Rogers Cantel, Inc.
8.80%, 10/01/07 225 222,750
SpectraSite Holdings,
Inc. [STEP] 144A
12.875%, 03/15/10 525 274,713
Telecommunications
Techniques Co.
9.75%, 05/15/08 1,450 1,348,500
Telesystem International
Wireless, Inc. Cl-B
[STEP]
14.691%, 06/30/07 800 492,426
10.352%, 11/01/07 75 39,375
Tritel PCS, Inc. [STEP]
13.458%, 05/15/09 300 199,500
Triton PCS, Inc. [STEP]
13.458%, 05/01/08 725 522,268
U.S. Unwired, Inc.
[STEP] 144A
13.375%, 11/01/09 400 218,000
US Xchange LLC+
15.00%, 07/01/08 400 301,000
Viatel, Inc.
11.25%, 04/15/08 75 67,125
13.739%, 04/15/08
[STEP] 1,800 1,026,865
11.50%, 03/15/09 100 91,500
Voicestream Wireless
Holdings 144A
10.375%, 11/15/09 100 101,500
11.553%, 11/15/09
[STEP] 1,825 1,125,709
Williams Communications
Group, Inc.
10.875%, 10/01/09 1,275 1,290,938
------------
28,117,742
------------
PAR
(000) VALUE
- ---------------------------------------------------
- ---------------------------------------------------
TRANSPORTATION -- 2.2%
Allied Holdings, Inc.
Cl-B
8.625%, 10/01/07 $ 400 $ 356,000
Ameritruck Distribution
Corp. Cl-B++
12.25%, 11/15/05 50 5
Gearbulk Holding Ltd.
11.25%, 12/01/04 525 527,625
Holt Group
9.75%, 01/15/06 100 50,500
Motor Coach Industries,
Inc.
11.25%, 05/01/09 400 386,000
Stena AB
10.50%, 12/15/05 500 467,500
8.75%, 06/15/07 900 751,500
Stena Line AB
10.625%, 06/01/08 100 65,000
------------
2,604,130
------------
UTILITIES -- 1.1%
CMS Energy Corp.
7.50%, 01/15/09 525 459,926
El Paso Electric Co.
Cl-E
9.40%, 05/01/11 300 314,760
International Utility
Structures, Inc.
10.75%, 02/01/08 125 104,375
Niagara Mohawk Power
Corp. Cl-H [STEP]
7.788%, 07/01/10 650 478,348
------------
1,357,409
------------
TOTAL CORPORATE OBLIGATIONS
(Cost $125,037,729) 110,682,194
------------
SHARES
------
COMMON STOCK -- 0.1%
METALS & MINING -- 0.0%
Republic Technologies
Warrants* 400 0
------------
OIL & GAS -- 0.1%
R&B Falcon Corp.
Warrants 144A* 275 107,388
------------
TELECOMMUNICATIONS -- 0.0%
Metricom, Inc. Warrants* 300 6,000
------------
TOTAL COMMON STOCK
(Cost $48,000) 113,388
------------
ASAF FEDERATED
HIGH YIELD BOND FUND
- ---------------------------------------------------
SHARES VALUE
- ---------------------------------------------------
PREFERRED STOCK -- 2.2%
BROADCASTING -- 0.5%
Benedek Communications
Corp.
11.50% [PIK] 100 $ 82,500
Sinclair Capital Cl-A
$11.625 5,600 546,000
------------
628,500
------------
FOOD -- 0.0%
Nebco Evans Holding Co.
11.25% [PIK] 663 414
------------
HEALTHCARE SERVICES -- 0.0%
River Holding Corp. Cl-B
11.50% [PIK] 626 47,892
------------
OIL & GAS -- 0.5%
R&B Falcon Corp.
13.875% [PIK] 569 611,456
------------
PRINTING & PUBLISHING -- 1.1%
Primedia, Inc.
Cl-D 10.00% 5,700 552,900
Primedia, Inc.
Cl-F 9.20% 2,950 269,925
Primedia, Inc.
Cl-H 8.625% 5,250 447,563
------------
1,270,388
------------
TELECOMMUNICATIONS -- 0.1%
AMFM Operating, Inc.
12.625% [PIK] 56,400 64,014
Nextel Communications,
Inc. Cl-E
11.125% [PIK] 25 24,380
------------
88,394
------------
TOTAL PREFERRED STOCK
(Cost $2,837,095) 2,647,044
------------
PAR
(000) VALUE
- ---------------------------------------------------
- ---------------------------------------------------
REPURCHASE AGREEMENTS -- 2.5%
Greenwich Capital Markets,
Inc., 5.70%, dated
04/28/00, maturing
05/01/00, repurchase
price $2,999,424,
(collateralized by U.S.
Treasury Notes, 5.25%,
par value $3,037,000,
market value $3,063,028,
due 05/31/01)
(Cost $2,998,000) $2,998 $ 2,998,000
------------
TOTAL INVESTMENTS -- 98.5%
(Cost $130,920,824) 116,440,626
OTHER ASSETS LESS
LIABILITIES -- 1.5% 1,817,325
------------
NET ASSETS -- 100.0% $118,257,951
============
- -------------------------------------------------------
Definitions of abbreviations are included following the Schedules of
Investments.
* Non-income producing security.
+ Illiquid security. At the end of the period these securities amounted to 0.3%
of net assets.
++ Defaulted Security. At the end of the period, these securities amounted to
less than 0.1% of net assets.
144A -- Security was purchased pursuant to Rule 144A under the Securities Act of
1933 and may not be resold subject to that rule except to qualified
institutional buyers. At the end of the period, these securities
amounted to 8.5% of net assets.
See Notes to Financial Statements.
AMERICAN SKANDIA ADVISOR FUNDS, INC.
ASAF OPPENHEIMER
LARGE-CAP GROWTH FUND
- -----------------------------------------------------
SHARES VALUE
- -----------------------------------------------------
COMMON STOCK -- 78.6%
BROADCASTING -- 1.4%
Infinity Broadcasting
Corp.* 50,100 $ 1,700,269
------------
CABLE TELEVISION -- 1.7%
Univision
Communications, Inc.* 19,200 2,097,600
------------
CLOTHING & APPAREL -- 0.5%
Intimate Brands, Inc. 14,450 556,325
------------
COMPUTER HARDWARE -- 4.3%
Dell Computer Corp.* 40,700 2,040,088
EMC Corp.* 23,400 3,251,137
------------
5,291,225
------------
COMPUTER SERVICES & SOFTWARE -- 9.7%
BEA Systems, Inc.* 6,000 289,500
Cisco Systems, Inc.* 50,000 3,466,405
Citrix Systems, Inc.* 31,800 1,941,788
Compuware Corp.* 20,600 258,788
MarchFirst, Inc.* 8,650 184,353
Microsoft Corp.* 38,100 2,657,475
Oracle Corp.* 17,400 1,390,913
VERITAS Software Corp.* 15,800 1,694,797
------------
11,884,019
------------
CONGLOMERATES -- 4.8%
Corning, Inc. 9,000 1,777,500
Tyco International Ltd. 90,000 4,134,375
------------
5,911,875
------------
ELECTRONIC COMPONENTS & EQUIPMENT -- 3.1%
Sanmina Corp.* 10,000 600,625
Tandy Corp. 44,500 2,536,500
Texas Instruments, Inc. 4,000 651,500
------------
3,788,625
------------
ENTERTAINMENT & LEISURE -- 0.4%
Royal Caribbean Cruises
Ltd. 22,000 457,875
------------
FINANCIAL -- BANK & TRUST -- 0.5%
Fifth Third Bancorp 8,800 555,500
------------
FINANCIAL SERVICES -- 1.5%
Citigroup, Inc. 30,400 1,806,900
------------
HEALTHCARE SERVICES -- 2.3%
Amgen, Inc.* 51,000 2,856,000
------------
INSURANCE -- 0.7%
American International
Group, Inc. 8,000 877,500
------------
INTERNET SERVICES -- 0.3%
VeriSign, Inc.* 2,700 376,313
------------
SHARES VALUE
- -----------------------------------------------------
- -----------------------------------------------------
OIL & GAS -- 1.9%
Exxon Mobil Corp. 30,754 $ 2,389,201
------------
PHARMACEUTICALS -- 3.5%
Biogen, Inc.* 21,300 1,252,706
Genentech, Inc.* 4,000 468,000
Immunex Corp.* 12,000 472,500
Waters Corp.* 22,200 2,109,000
------------
4,302,206
------------
PRINTING & PUBLISHING -- 2.4%
Lexmark International
Group, Inc. Cl-A* 25,200 2,973,600
------------
RETAIL & MERCHANDISING -- 10.0%
Bed, Bath & Beyond,
Inc.* 8,000 293,500
Best Buy Co., Inc.* 32,900 2,656,675
CVS Corp. 24,200 1,052,700
Home Depot, Inc. 40,800 2,287,350
Kohl's Corp.* 50,200 2,409,600
Tiffany & Co. 31,500 2,289,656
Wal-Mart Stores, Inc. 23,900 1,323,463
------------
12,312,944
------------
SEMICONDUCTORS -- 17.5%
Broadcom Corp. Cl-A* 3,000 517,125
E-Tek Dynamics, Inc.* 14,500 2,968,875
Intel Corp. 15,000 1,902,188
JDS Uniphase Corp.* 80,000 8,299,999
LSI Logic Corp.* 33,000 2,062,500
QLogic Corp.* 10,000 1,003,125
SDL, Inc.* 8,400 1,638,000
Vitesse Semiconductor
Corp.* 45,000 3,062,812
------------
21,454,624
------------
TELECOMMUNICATIONS -- 8.7%
BroadWing, Inc. 40,000 1,132,500
Lucent Technologies,
Inc. 16,100 1,001,219
MCI WorldCom, Inc.* 6,000 272,625
Nokia Corp. Cl-A [ADR] 40,800 2,320,500
Nortel Networks Corp. 34,700 3,929,774
QUALCOMM, Inc.* 8,000 867,500
Tellabs, Inc.* 21,000 1,151,063
------------
10,675,181
------------
UTILITIES -- 3.4%
AES Corp.* 25,000 2,248,438
Enron Corp. 27,600 1,923,375
------------
4,171,813
------------
TOTAL COMMON STOCK
(Cost $72,449,352) 96,439,595
------------
ASAF OPPENHEIMER
LARGE-CAP GROWTH FUND
- -----------------------------------------------------
SHARES VALUE
- -----------------------------------------------------
SHORT-TERM INVESTMENTS -- 9.7%
Temporary Investment
Cash Fund 5,928,872 $ 5,928,872
Temporary Investment
Fund 5,928,872 5,928,872
------------
(Cost $11,857,744) 11,857,744
------------
TOTAL INVESTMENTS -- 88.3%
(Cost $84,307,096) 108,297,339
OTHER ASSETS LESS LIABILITIES -- 11.7% 14,352,767
------------
NET ASSETS -- 100.0% $122,650,106
============
- -------------------------------------------------------
Definitions of abbreviations are included following the Schedules of
Investments.
* Non-income producing security.
See Notes to Financial Statements.
28
32
AMERICAN SKANDIA ADVISOR FUNDS, INC.
ASAF LORD ABBETT
GROWTH AND INCOME FUND
- ----------------------------------------------------
SHARES VALUE
- ----------------------------------------------------
COMMON STOCK -- 92.8%
AEROSPACE -- 3.4%
Boeing Co. 45,000 $ 1,785,938
Honeywell
International, Inc. 80,000 4,480,000
------------
6,265,938
------------
AUTOMOBILE MANUFACTURERS -- 1.1%
General Motors Corp. 22,000 2,059,750
------------
BEVERAGES -- 1.0%
Seagram Co. Ltd. 35,000 1,780,625
------------
BROADCASTING -- 1.3%
CBS Corp.* 40,000 2,350,000
------------
BUSINESS SERVICES -- 1.2%
First Data Corp. 45,000 2,190,938
------------
CHEMICALS -- 3.5%
Dow Chemical Co. 35,000 3,955,000
Rohm & Haas Co. 70,000 2,493,750
------------
6,448,750
------------
COMPUTER HARDWARE -- 4.0%
Apple Computer, Inc.* 18,000 2,233,125
Compaq Computer Corp. 85,000 2,486,250
International
Business Machines
Corp. 25,000 2,790,625
------------
7,510,000
------------
COMPUTER SERVICES & SOFTWARE -- 7.4%
Cadence Design
Systems, Inc.* 120,000 2,017,500
Ceridian Corp.* 80,000 1,735,000
Computer Sciences
Corp.* 25,000 2,039,063
Oracle Corp.* 45,000 3,597,187
Sun Microsystems,
Inc.* 25,000 2,298,438
Unisys Corp.* 100,000 2,318,749
------------
14,005,937
------------
CONGLOMERATES -- 1.9%
Minnesota Mining &
Manufacturing Co. 40,000 3,460,000
------------
ELECTRONIC COMPONENTS & EQUIPMENT -- 1.4%
Texas Instruments,
Inc. 16,000 2,606,000
------------
FINANCIAL -- BANK & TRUST -- 4.0%
Bank One Corp. 60,000 1,830,000
Chase Manhattan Corp. 35,000 2,522,188
Wells Fargo & Co. 75,000 3,079,687
------------
7,431,875
------------
SHARES VALUE
- ----------------------------------------------------
- ----------------------------------------------------
FINANCIAL SERVICES -- 5.4%
Fannie Mae Corp. 60,000 $ 3,618,750
Fleet Financial
Group, Inc. 100,000 3,543,750
Morgan Stanley, Dean
Witter & Co. 38,000 2,916,500
------------
10,079,000
------------
FOOD -- 1.8%
Archer Daniels
Midland Co. 200,000 1,987,500
Safeway, Inc.* 30,000 1,323,750
------------
3,311,250
------------
HEALTHCARE SERVICES -- 2.5%
Columbia HCA
Healthcare Corp. 80,000 2,275,000
United Healthcare
Group, Inc.* 35,000 2,334,063
------------
4,609,063
------------
INSURANCE -- 9.8%
Ace Ltd. 190,000 4,548,124
American General
Corp. 65,000 3,640,000
AON Corp. 100,000 2,706,250
CIGNA Corp. 30,000 2,392,500
Jefferson-Pilot Corp. 55,000 3,660,938
St. Paul Companies,
Inc. 45,000 1,603,125
------------
18,550,937
------------
MACHINERY & EQUIPMENT -- 2.6%
Black & Decker Corp. 50,000 2,103,125
Deere & Co. 70,000 2,826,250
------------
4,929,375
------------
MEDICAL SUPPLIES & EQUIPMENT -- 0.7%
Abbott Laboratories 35,000 1,345,313
------------
METALS & MINING -- 4.0%
Alcoa, Inc. 55,000 3,568,125
Phelps Dodge Corp. 50,000 2,312,500
USX-U.S. Steel Group,
Inc. 60,000 1,503,750
------------
7,384,375
------------
OIL & GAS -- 11.9%
BP Amoco PLC [ADR] 89,200 4,549,200
Coastal Corp. 80,000 4,015,000
Exxon Mobil Corp. 60,000 4,661,249
Schlumberger Ltd. 50,000 3,828,125
Total Fina SA [ADR] 55,000 4,159,375
Transocean Sedco
Forex, Inc. 25,000 1,175,000
------------
22,387,949
------------
ASAF LORD ABBETT
GROWTH AND INCOME FUND
- ----------------------------------------------------
SHARES VALUE
- ----------------------------------------------------
PAPER & FOREST PRODUCTS -- 2.4%
Champion
International Corp. 18,000 $ 1,183,500
International Paper
Co. 90,000 3,307,500
------------
4,491,000
------------
PHARMACEUTICALS -- 4.1%
American Home
Products Corp. 85,000 4,775,938
Pharmacia Corp. 59,500 2,971,281
------------
7,747,219
------------
PRINTING & PUBLISHING -- 1.4%
Dow Jones & Co., Inc. 40,000 2,595,000
------------
RETAIL & MERCHANDISING -- 1.6%
Consolidated Stores
Corp.* 110,000 1,368,125
Federated Department
Stores, Inc.* 50,000 1,700,000
------------
3,068,125
------------
TELECOMMUNICATIONS -- 7.2%
Alltel Corp. 40,000 2,665,000
AT&T Corp. 75,000 3,501,562
Bell Atlantic Corp. 50,000 2,962,499
MCI WorldCom, Inc.* 50,000 2,271,875
SBC Communications,
Inc. 45,000 1,971,563
------------
13,372,499
------------
TRANSPORTATION -- 0.5%
United Parcel
Service, Inc. Cl-B 15,000 997,500
------------
SHARES VALUE
- ----------------------------------------------------
- ----------------------------------------------------
UTILITIES -- 6.7%
Dominion Resources,
Inc.* 90,000 $ 4,050,000
Duke Energy Corp. 65,000 3,737,500
FirstEnergy Corp. 110,000 2,798,125
Unicom Corp. 50,000 1,987,500
------------
12,573,125
------------
TOTAL COMMON STOCK
(Cost $159,621,022) 173,551,543
------------
PREFERRED STOCK -- 1.2%
UTILITIES
Houston Industries,
Inc. 7.00% [CVT]
(Cost $1,503,279) 15,000 2,220,938
------------
SHORT-TERM INVESTMENTS -- 5.6%
Temporary Investment
Cash Fund 5,196,065 5,196,065
Temporary Investment
Fund 5,196,064 5,196,064
------------
(Cost $10,392,129) 10,392,129
------------
TOTAL INVESTMENTS -- 99.6%
(Cost $171,516,430) 186,164,610
OTHER ASSETS LESS
LIABILITIES -- 0.4% 695,720
------------
NET ASSETS -- 100.0% $186,860,330
============
- -------------------------------------------------------
Definitions of abbreviations are included following the Schedules of
Investments.
* Non-income producing security.
See Notes to Financial Statements.
AMERICAN SKANDIA ADVISOR FUNDS, INC.
ASAF JANUS
OVERSEAS GROWTH FUND
- ----------------------------------------------------
SHARES VALUE
- ----------------------------------------------------
FOREIGN STOCK -- 81.1%
ARGENTINA -- 0.1%
Telefonica SA [ADR]* 10,091 $ 668,529
------------
AUSTRALIA -- 0.3%
Melbourne It Ltd.* 120,361 577,024
News Corp. Ltd. [ADR]* 12,420 638,854
News Corp. Ltd. Pfd.
[ADR]* 23,470 1,032,679
------------
2,248,557
------------
BRAZIL -- 2.0%
Petroleo Brasileiro SA
[ADR]* 168,435 3,990,462
Tele Norte Leste
Participacoes SA
[ADR]* 6,054 107,840
Telecomunicacoes
Brasileiras SA Pfd.
[ADR] 51,745 6,115,612
Telesp Celular
Participacoes SA
[ADR]* 83,710 3,693,704
------------
13,907,618
------------
CANADA -- 4.9%
BCE, Inc. 19,527 2,260,222
BCE, Inc. NY Reg. 17,285 1,983,454
Bombardier, Inc. Cl-B 121,453 3,262,442
Celestica, Inc.* 2,864 154,444
Corus Entertainment,
Inc.* 103,632 2,797,727
Le Groupe Videotron
Ltee 149,370 3,588,929
Nortel Networks Corp. 74,255 8,409,379
Rogers Communications,
Inc. Cl-B* 290,114 7,548,219
Shaw Communications,
Inc. Cl-B 174,589 4,082,926
------------
34,087,742
------------
EGYPT -- 0.4%
MobiNil* 71,124 2,711,528
------------
FINLAND -- 7.3%
Nokia AB Oyj 450,930 25,928,506
Nokia Corp. Cl-A [ADR] 314,255 17,873,253
Sonera Group Oyj 29,325 1,616,711
Tieto Corp. Cl-B 108,417 5,236,152
------------
50,654,622
------------
FRANCE -- 3.6%
Alcatel 12,075 2,805,862
Atos SA* 14,594 1,581,231
Canal Plus* 8,457 1,633,771
Cap Gemini SA 13,227 2,603,479
Havas Advertising SA 2,044 1,022,568
SHARES VALUE
- ----------------------------------------------------
- ----------------------------------------------------
STMicroelectronics NV 24,894 $ 4,761,526
STMicroelectronics NV
NY Reg. 4,900 929,469
Total Fina SA Cl-B 62,364 9,484,824
------------
24,822,730
------------
GERMANY -- 3.1%
ADVA AG Optical
Networking* 581 319,251
EM.TV & Merchandising
AG 30,284 2,356,732
Intershop
Communications AG* 7,704 3,250,396
Marschollek,
Lautenschlaeger und
Partner AG Pfd. 11,127 5,860,639
Pharmacia Corp.* 62,830 3,137,573
Porsche AG Pfd. 882 2,274,140
SAP AG Pfd. 2,385 1,383,330
Software AG* 28,366 2,900,213
------------
21,482,274
------------
HONG KONG -- 6.7%
China Telecom Ltd.* 696,000 5,026,332
China Telecom Ltd.
[ADR]* 185,760 27,248,671
Citic Pacific Ltd.* 781,000 3,579,634
Global Tech (Holdings)
Ltd.* 302,000 345,077
Legend Holdings Ltd.* 8,790,000 10,213,083
------------
46,412,797
------------
INDIA -- 0.8%
Reliance Industries
[GDR] 144A 204,454 5,319,893
------------
ISRAEL -- 2.5%
Check Point Software
Technologies Ltd. 81,770 14,146,210
Partner Communications
Co. Ltd. [ADR]* 299,440 3,200,265
------------
17,346,475
------------
ITALY -- 0.7%
Banca Popolare di
Brescia 33,146 3,020,439
Telecom Italia Mobile
SPA 173,506 1,660,133
------------
4,680,572
------------
JAPAN -- 14.0%
Fuji Bank Ltd. 289,000 2,406,738
Fujitsu Ltd. 74,000 2,095,278
Furukawa Electric Co.* 333,000 4,618,856
Ito-Yokado Co. Ltd. 26,000 1,898,187
Murata Manufacturing
Co. Ltd. 22,000 4,274,945
NEC Corp. 266,000 7,236,316
ASAF JANUS
OVERSEAS GROWTH FUND
- ----------------------------------------------------
SHARES VALUE
- ----------------------------------------------------
Nippon Telegraph &
Telephone Corp. 3,290 $ 4,079,334
NTT Data Corp. 930 1,239,179
NTT Mobile
Communication
Network, Inc. 10,120 33,804,635
Rohm Co. Ltd. 3,100 1,038,386
SoftBank Corp. 15,100 3,716,611
SoftBank Corp. (New)* 30,200 7,461,167
Sony Corp. 100,800 11,574,996
Sony Corp. [ADR]* 6,535 1,474,459
Takeda Chemical
Industries Ltd. 124,000 8,157,927
Yamanouchi
Pharmaceutical Co.
Ltd. 26,000 1,373,719
------------
96,450,733
------------
KOREA -- 2.5%
Dacom Corp.* 17,340 2,515,728
Samsung Electronics
Co. 13,160 3,557,671
Samsung Electronics
Co. [GDR] 144A* 33,745 2,737,732
SK Telecom Co. Ltd.
[ADR] 269,414 8,638,087
------------
17,449,218
------------
MEXICO -- 3.1%
Grupo Televisa SA
[GDR]* 123,210 7,816,134
Telefonos de Mexico SA
Cl-L [ADR] 234,145 13,770,653
------------
21,586,787
------------
NETHERLANDS -- 3.7%
ASM Lithography
Holding NV* 35,532 1,392,282
ASM Lithography
Holding NV NY Reg.* 14,115 564,600
Completel Europe NV* 217,762 3,829,820
Getronics NV 68,736 4,108,914
Koninklijke (Royal)
Philips Electronics
NV* 187,744 8,395,008
Koninklijke (Royal)
Philips Electronics
NV NY Reg. 30,550 1,363,294
United Pan-Europe
Communications NV* 11,243 410,116
Versatel Telecom
International NV* 137,671 5,532,483
World Online
International* 22,536 303,933
------------
25,900,450
------------
NORWAY -- 0.1%
Tomra Systems ASA* 45,837 947,811
------------
SHARES VALUE
- ----------------------------------------------------
- ----------------------------------------------------
SINGAPORE -- 1.7%
Chartered
Semiconductor
Manufacturing Ltd.
[ADR]* 15,825 $ 1,382,709
Datadraft Asia Ltd. 255,000 1,912,500
Development Bank of
Singapore 160,599 2,210,371
Singapore Press
Holdings Ltd. 122,500 2,396,277
ST Assembly Test
Services Ltd.* 96,360 4,017,009
------------
11,918,866
------------
SOUTH AFRICA -- 0.6%
Dimension Data
Holdings Ltd.* 641,000 4,207,606
------------
SPAIN -- 2.0%
Banco Bilbao Vizcaya
SA 358,903 4,905,772
Telefonica SA 398,734 8,894,748
Terra Networks SA* 1,272 78,878
------------
13,879,398
------------
SWEDEN -- 5.4%
Assa Abloy AB Cl-B 380,338 7,731,906
Connecta AB* 35,377 1,126,189
Ericsson, (L.M.)
Telephone Co. [ADR] 66,445 5,876,230
Ericsson, (L.M.)
Telephone Co. Cl-B 144,260 12,842,505
Framtidsfabriken AB* 72,896 1,196,924
Information Highway AB 221,390 2,275,054
Securitas AB Cl-B 249,924 6,476,516
------------
37,525,324
------------
SWITZERLAND -- 0.7%
Ares-Serono Group 1,481 4,557,969
------------
TAIWAN -- 0.5%
Taiwan Semiconductor
Manufacturing Co.
Ltd. [ADR]* 64,073 3,351,819
------------
UNITED KINGDOM -- 14.4%
AstraZeneca Group PLC 80,510 3,387,654
AstraZeneca Group PLC
[ADR]* 1,640 69,085
Autonomy Corp. PLC* 4,720 627,760
Baltimore Technologies
PLC* 43,626 4,412,025
Cambridge Antibody
Technology Group
PLC* 114,779 4,422,797
Capita Group PLC 160,576 4,138,401
AMERICAN SKANDIA ADVISOR FUNDS, INC.
- ----------------------------------------------------
SHARES VALUE
- ----------------------------------------------------
Colt Telecom Group
PLC* 322,010 $ 13,750,904
Compass Group PLC 169,308 2,413,538
Energis PLC 144A* 89,575 4,441,886
GEO Interactive Media
Group PLC* 40,530 762,641
Hays PLC 179,281 1,237,877
Interactive Investor
International PLC* 1,343,544 2,207,494
Logica PLC 95,295 2,885,423
Oxford GlycoSciences
PLC* 65,953 1,664,151
Pace Micro Technology
PLC 111,997 1,314,395
Prudential Corp. PLC 350,067 5,401,153
Psion PLC 48,992 2,941,544
QXL Ltd.* 776,787 2,516,116
SEMA Group PLC 100,589 1,624,383
Telewest
Communications PLC* 574,700 3,509,478
The Sage Group PLC* 129,797 1,444,085
Vodafone AirTouch PLC 6,199,329 28,568,559
Vodafone AirTouch PLC
[ADR] 69,605 3,271,435
Williams PLC* 273,069 1,548,955
------------
98,561,739
------------
TOTAL FOREIGN STOCK
(Cost $445,806,485) 560,681,057
------------
U.S. STOCK -- 5.9%
CABLE TELEVISION -- 0.1%
Rogers Communications,
Inc. Cl-B* 17,790 462,540
------------
COMPUTER SERVICES & SOFTWARE -- 0.4%
Comtouch Software* 18,830 397,784
Comverse Technology,
Inc.* 30,345 2,706,394
------------
3,104,178
------------
ELECTRONIC COMPONENTS & EQUIPMENT -- 0.6%
Celestica, Inc.* 79,540 4,339,901
------------
SEMICONDUCTORS -- 1.5%
JDS Uniphase Corp.* 100,861 10,464,329
------------
TELECOMMUNICATIONS -- 3.3%
Amdocs Ltd.* 154,150 10,434,028
E-Tek Dynamics, Inc.* 4,180 855,855
SHARES VALUE
- ----------------------------------------------------
- ----------------------------------------------------
FirstCom Corp.* 65,405 $ 1,357,154
GT Group Telecom,
Inc.* 78,010 1,009,254
Hanaro Telecom, Inc.* 34,535 271,963
Infonet Services
Corp.* 110,050 1,857,094
Lumenon Innovative
Lightwave
Technology, Inc.* 6,125 116,375
NTL, Inc.* 45,913 3,512,345
Viatel, Inc.* 71,535 2,736,214
------------
22,150,282
------------
TOTAL U.S. STOCK
(Cost $31,219,007) 40,521,230
------------
PAR
(000)
-----
CORPORATE OBLIGATIONS -- 0.1%
CABLE TELEVISION
United Pan-Europe
Communications 144A
11.25%, 02/01/10 $ 544 508,640
11.50%, 02/01/10 301 278,425
------------
(Cost $838,891) 787,065
------------
U.S. GOVERNMENT AGENCY OBLIGATIONS -- 5.0%
Federal Home Loan Bank
5.68%, 05/12/00 20,000 19,965,289
------------
Federal National
Mortgage Assoc.
5.85%, 06/01/00 15,000 14,924,437
------------
(Cost $34,889,726) 34,889,726
------------
COMMERCIAL PAPER -- 6.9%
Associates Corp. of
North America
5.99%, 05/01/00 27,500 27,500,000
CIT Group Holdings
6.00%, 05/01/00 20,000 20,000,000
------------
(Cost $47,500,000) 47,500,000
------------
TOTAL INVESTMENTS -- 99.0%
(Cost $560,254,109) 684,379,078
OTHER ASSETS LESS LIABILITIES -- 1.0% 6,884,259
------------
NET ASSETS -- 100.0% $691,263,337
============
ASAF JANUS
OVERSEAS GROWTH FUND
Foreign currency exchange contracts outstanding at April 30, 2000:
UNREALIZED
SETTLEMENT CONTRACTS TO IN EXCHANGE CONTRACTS APPRECIATION/
MONTH TYPE RECEIVE FOR AT VALUE (DEPRECIATION)
- ----------------------------------------------------------------------------------
06/00 Buy CHF 600,000 $ 372,794 $ 349,738 $ (23,056)
10/00 Buy CHF 3,000,000 1,823,486 1,768,888 (54,598)
05/00 Buy EUR 1,580,378 1,442,458 1,440,124 (2,334)
06/00 Buy EUR 32,300,000 31,651,987 29,500,411 (2,151,576)
09/00 Buy EUR 11,900,000 11,532,730 10,938,862 (593,868)
05/00 Buy GBP 798,873 1,261,449 1,250,602 (10,847)
06/00 Buy GBP 3,200,000 5,033,088 5,003,753 (29,335)
09/00 Buy GBP 400,000 634,360 626,400 (7,960)
03/01 Buy HKD 52,000,000 6,671,596 6,669,198 (2,398)
05/01 Buy HKD 37,500,000 4,790,879 4,809,357 18,478
09/00 Buy JPY 1,640,000,000 16,039,504 15,562,482 (477,022)
----------- ----------- -----------
$81,254,331 $77,919,815 $(3,334,516)
=========== =========== ===========
UNREALIZED
SETTLEMENT CONTRACTS TO IN EXCHANGE CONTRACTS APPRECIATION/
MONTH TYPE DELIVER FOR AT VALUE (DEPRECIATION)
- ------------------------------------------------------------------------------------
05/00 Sell CAD 3,900,000 $ 2,704,456 $ 2,633,552 $ 70,904
09/00 Sell CAD 3,600,000 2,480,500 2,438,777 41,723
06/00 Sell CHF 600,000 394,477 349,738 44,739
09/00 Sell CHF 1,100,000 681,748 646,956 34,792
10/00 Sell CHF 6,145,000 3,772,253 3,623,274 148,979
05/00 Sell EUR 12,757,029 12,780,873 11,640,139 1,140,734
06/00 Sell EUR 34,250,000 34,555,260 31,280,631 3,274,629
09/00 Sell EUR 43,300,000 41,714,508 39,823,240 1,891,268
10/00 Sell EUR 20,500,000 19,700,500 18,877,828 822,672
05/00 Sell GBP 242,921 382,972 380,507 2,465
06/00 Sell GBP 16,400,000 26,343,345 25,644,233 699,112
09/00 Sell GBP 14,300,000 22,695,714 22,393,921 301,793
03/01 Sell HKD 171,000,000 21,948,025 21,931,400 16,625
05/01 Sell HKD 247,000,000 31,477,474 31,677,688 (200,214)
05/00 Sell JPY 380,651,332 3,587,573 3,531,367 56,206
06/00 Sell JPY 60,000,000 584,226 558,131 26,095
09/00 Sell JPY 5,701,000,000 54,609,763 54,013,336 596,427
10/00 Sell JPY 505,000,000 4,990,119 4,808,150 181,969
07/01 Sell SGD 950,000 586,482 582,297 4,185
------------ ------------ ----------
$285,990,268 $276,835,165 $9,155,103
============ ============ ==========
The following is a breakdown of the foreign stock portion of the Fund, by
industry classification, as of April 30, 2000. Percentages are based on net
assets.
INDUSTRY
- -------
Advertising 0.2%
Aerospace 0.5%
Automobile Manufacturers 0.3%
Broadcasting 1.8%
Business Services 1.2%
Cable Television 2.7%
Chemicals 2.0%
Computer Hardware 2.4%
Computer Services & Software 6.7%
Conglomerates 0.6%
Consumer Products & Service 2.7%
Electronic Components & Equipment 14.2%
Entertainment & Leisure 1.1%
Environmental Services 0.1%
Financial -- Bank & Trust 1.8%
Financial Services 2.5%
Industrial Products 0.4%
Insurance 0.8%
Internet Services 5.8%
Medical Supplies & Equipment 1.3%
Oil & Gas 2.0%
Pharmaceuticals 1.5%
Printing & Publishing 0.6%
Retail & Merchandising 0.6%
Semiconductors 2.4%
Telecommunications 24.9%
-----
TOTAL 81.1%
=====
- -------------------------------------------------------
Unless otherwise noted, all stocks are common stock.
Definitions of abbreviations are included following the Schedules of
Investments.
* Non-income producing security.
144A -- Security was purchased pursuant to Rule 144A under the Securities Act of
1933 and may not be resold subject to that rule except to qualified
institutional buyers. At the end of the period, these securities
amounted to 1.4% of net assets.
See Notes to Financial Statements.
AMERICAN SKANDIA ADVISOR FUNDS, INC.
ASAF MARSICO
CAPITAL GROWTH FUND
- ----------------------------------------------------
SHARES VALUE
- ----------------------------------------------------
COMMON STOCK -- 78.3%
ADVERTISING -- 0.9%
Omnicom Group, Inc. 97,706 $ 8,897,353
--------------
AEROSPACE -- 2.0%
General Dynamics
Corp. 120,710 7,061,535
General Motors Corp.
Cl-H* 129,189 12,442,515
The Titan Corp.* 33,794 1,451,030
--------------
20,955,080
--------------
AUTOMOBILE MANUFACTURERS -- 2.7%
Ford Motor Co. 164,689 9,006,430
General Motors Corp. 197,168 18,459,854
--------------
27,466,284
--------------
BEVERAGES -- 1.9%
Anheuser-Busch
Companies, Inc. 153,901 10,859,640
Coca-Cola Co. 185,524 8,731,223
--------------
19,590,863
--------------
BROADCASTING -- 2.0%
Clear Channel
Communications,
Inc.* 211,076 15,197,472
UnitedGlobalCom,
Inc. Cl-A* 93,778 4,981,956
--------------
20,179,428
--------------
CABLE TELEVISION -- 2.1%
Comcast Corp. Cl-A* 530,319 21,245,905
--------------
COMPUTER HARDWARE -- 5.0%
EMC Corp.* 375,413 52,158,944
--------------
COMPUTER SERVICES & SOFTWARE -- 11.8%
3Com Corp.* 39,686 1,565,117
Cisco Systems, Inc.* 551,680 38,246,940
Juniper Networks,
Inc.* 46,918 9,978,872
Oracle Corp.* 594,389 47,513,970
Sun Microsystems,
Inc.* 279,545 25,700,668
--------------
123,005,567
--------------
CONGLOMERATES -- 2.6%
Corning, Inc. 137,981 27,251,248
--------------
CONSTRUCTION -- 0.0%
M.D.C. Holdings,
Inc. 20,000 381,250
--------------
CONSUMER PRODUCTS & SERVICES -- 0.2%
Estee Lauder
Companies, Inc.
Cl-A 50,188 2,214,546
--------------
SHARES VALUE
- ----------------------------------------------------
- ----------------------------------------------------
ELECTRONIC COMPONENTS & EQUIPMENT -- 7.7%
Adobe Systems, Inc. 179,100 $ 21,659,906
Agilent
Technologies,
Inc.* 39,779 3,525,414
General Electric Co. 86,240 13,561,240
Sony Corp. 91,773 20,706,283
Texas Instruments,
Inc. 123,534 20,120,600
--------------
79,573,443
--------------
ENTERTAINMENT & LEISURE -- 3.6%
Time Warner, Inc. 409,643 36,842,267
--------------
FINANCIAL -- BANK & TRUST -- 0.6%
Northern Trust Corp. 89,637 5,747,973
--------------
FINANCIAL SERVICES -- 7.2%
Citigroup, Inc. 528,950 31,439,465
Fannie Mae Corp. 236,355 14,255,161
Morgan Stanley, Dean
Witter & Co. 368,673 28,295,653
--------------
73,990,279
--------------
HOTELS & MOTELS -- 1.6%
Four Seasons Hotels,
Inc. 289,409 16,206,904
--------------
INTERNET SERVICES -- 2.7%
America Online,
Inc.* 464,464 27,780,753
--------------
PAPER & FOREST PRODUCTS -- 0.8%
Kimberly-Clark Corp. 148,930 8,647,248
--------------
PHARMACEUTICALS -- 4.9%
Genentech, Inc.* 336,704 39,394,368
Priority Healthcare
Corp. Cl-B* 194,654 10,778,965
--------------
50,173,333
--------------
PRINTING & PUBLISHING -- 0.5%
Lexmark
International
Group, Inc. Cl-A* 42,653 5,033,054
--------------
RETAIL & MERCHANDISING -- 5.4%
Home Depot, Inc. 385,636 21,619,718
Tiffany & Co. 199,670 14,513,513
Wal-Mart Stores,
Inc. 359,576 19,911,521
--------------
56,044,752
--------------
SEMICONDUCTORS -- 5.2%
Applied Materials,
Inc.* 318,647 32,442,247
Chartered
Semiconductor
Manufacturing
[ADR]* 10,999 961,038
ASAF MARSICO
CAPITAL GROWTH FUND
- ----------------------------------------------------
SHARES VALUE
- ----------------------------------------------------
Infineon
Technologies AG
[ADR]* 150,000 $ 10,181,250
JDS Uniphase Corp.* 97,652 10,131,395
--------------
53,715,930
--------------
TELECOMMUNICATIONS -- 6.9%
FLAG Telecom
Holdings Ltd.* 29,319 571,721
Motorola, Inc. 35,382 4,212,669
QUALCOMM, Inc.* 126,525 13,720,055
SBC Communications,
Inc. 118,286 5,182,405
Sprint Corp. (PCS
Group)* 536,942 29,531,810
Vodafone AirTouch
PLC [ADR] 395,958 18,610,026
--------------
71,828,686
--------------
TOTAL COMMON STOCK
(Cost $632,286,433) 808,931,090
--------------
FOREIGN STOCK -- 2.1%
ELECTRONIC COMPONENTS & EQUIPMENT
Sony Corp. (New) --
(JPY) 92,300 10,675,796
Sony Corp. -- (JPY) 92,300 10,598,930
--------------
(Cost $13,589,897) 21,274,726
--------------
PREFERRED STOCK -- 0.6%
UTILITIES
AES Corp. 6.75%
[CVT]
(Cost $4,596,950) 91,939 6,556,400
--------------
PAR
(000)
--------
CORPORATE OBLIGATIONS -- 4.5%
BUSINESS SERVICES -- 0.1%
Redback Networks,
Inc. 144A
5.00%, 04/01/07 $ 1,668 1,188,450
--------------
PAR
(000) VALUE
- ----------------------------------------------------
- ----------------------------------------------------
COMPUTER SERVICES & SOFTWARE -- 3.8%
Juniper Networks, Inc.
4.75%, 03/15/07 $ 42,487 $ 39,141,149
--------------
TELECOMMUNICATIONS -- 0.6%
Level 3
Communications,
Inc. [CVT]
6.00%, 09/15/09 4,400 6,578,000
--------------
TOTAL CORPORATE OBLIGATIONS
(Cost $48,555,000) 46,907,599
--------------
U.S. GOVERNMENT AGENCY OBLIGATIONS -- 13.8%
Federal Home Loan
Bank
5.88%, 05/01/00
(Cost $142,400,000) 142,400 142,400,000
--------------
SHARES
------
SHORT-TERM INVESTMENTS -- 0.0%
Temporary Investment
Cash Fund 124,022 124,022
Temporary Investment
Fund 124,022 124,022
--------------
(Cost $248,044) 248,044
--------------
TOTAL
INVESTMENTS -- 99.3%
(Cost $841,676,324) 1,026,317,859
OTHER ASSETS LESS
LIABILITIES -- 0.7% 7,522,052
--------------
NET ASSETS -- 100.0% $1,033,839,911
==============
- -------------------------------------------------------
Definitions of abbreviations are included following the Schedules of
Investments.
* Non-income producing security.
144A -- Security was purchased pursuant to Rule 144A under the Securities Act of
1933 and may not be resold subject to that rule except to qualified
institutional buyers. At the end of the period, these securities
amounted to 0.1% of net assets.
See Notes to Financial Statements.
AMERICAN SKANDIA ADVISOR FUNDS, INC.
ASAF NEUBERGER BERMAN
MID-CAP GROWTH FUND
- ----------------------------------------------------
SHARES VALUE
- ----------------------------------------------------
COMMON STOCK -- 88.1%
ADVERTISING -- 1.5%
DoubleClick, Inc.* 23,700 $ 1,798,237
Lamar Advertising
Co.* 39,900 1,758,094
------------
3,556,331
------------
AEROSPACE -- 0.4%
General Motors Corp.
Cl-H* 8,500 818,656
------------
BROADCASTING -- 4.8%
Emmis Communications
Corp. Cl-A* 82,300 3,497,750
Entercom
Communications
Corp.* 28,300 1,202,750
TV Guide, Inc.* 13,500 402,469
UnitedGlobalCom, Inc.
Cl-A* 16,200 860,625
USA Networks, Inc.* 76,700 1,764,100
Westwood One, Inc.* 92,200 3,261,575
------------
10,989,269
------------
BUSINESS SERVICES -- 3.1%
Micromuse, Inc.* 17,800 1,746,625
Phone.com, Inc.* 30,200 2,536,800
PurchasePro.com,
Inc.* 22,050 661,500
Safeguard
Scientifics, Inc.* 54,800 2,287,900
------------
7,232,825
------------
CABLE TELEVISION -- 2.5%
Univision
Communications,
Inc.* 52,500 5,735,625
------------
CLOTHING & APPAREL -- 0.9%
Limited, Inc. 45,400 2,051,513
------------
COMPUTER SERVICES & SOFTWARE -- 15.4%
BEA Systems, Inc.* 78,200 3,773,150
Citrix Systems, Inc.* 68,400 4,176,674
Fiserv, Inc.* 73,100 3,358,031
Intuit, Inc.* 64,900 2,332,344
Network Appliance, Inc.* 49,500 3,659,906
Peregrine Systems,
Inc.* 98,700 2,374,969
Rational Software
Corp.* 40,800 3,473,100
Redback Networks,
Inc.* 15,300 1,214,438
Siebel Systems, Inc.* 30,900 3,796,838
VERITAS Software
Corp.* 71,250 7,642,675
------------
35,802,125
------------
ELECTRONIC COMPONENTS & EQUIPMENT -- 10.2%
Adobe Systems, Inc. 17,900 2,164,781
Analog Devices, Inc.* 45,100 3,464,244
Comverse Technology,
Inc.* 41,400 3,692,362
SHARES VALUE
- ----------------------------------------------------
- ----------------------------------------------------
Flextronics
International Ltd.* 47,300 $ 3,322,825
Gemstar International
Group Ltd.* 52,600 2,432,750
KLA-Tencor Corp.* 34,000 2,545,750
Metromedia Fiber
Network, Inc. Cl-A* 83,300 2,571,888
Sanmina Corp.* 60,800 3,651,800
------------
23,846,400
------------
ENTERTAINMENT & LEISURE -- 1.2%
Harley-Davidson, Inc. 70,900 2,822,706
------------
FINANCIAL SERVICES -- 3.4%
Capital One Financial
Corp. 32,400 1,417,500
Concord EFS, Inc.* 120,300 2,691,712
E*TRADE Group, Inc.* 51,800 1,113,700
Lehman Brothers
Holdings, Inc. 17,000 1,395,063
Providian Financial
Corp. 14,700 1,294,519
------------
7,912,494
------------
FOOD -- 1.3%
Starbucks Corp.* 96,400 2,914,594
------------
HEALTHCARE SERVICES -- 0.5%
Health Management
Associates, Inc.
Cl-A* 65,900 1,050,281
Sequenom, Inc.* 8,500 206,125
------------
1,256,406
------------
INTERNET SERVICES -- 6.4%
Art Technology Group,
Inc.* 27,800 1,688,850
BroadVision, Inc.* 29,800 1,309,338
Clarent Corp.* 19,000 1,292,000
Covad Communications
Group, Inc.* 41,400 1,148,850
Digex, Inc.* 26,100 2,035,800
eSPEED, Inc.* 22,500 1,063,125
Portal Software,
Inc.* 22,900 1,050,538
S1 Corp.* 20,500 1,113,406
VeriSign, Inc.* 17,200 2,397,249
Vignette Corp.* 36,000 1,734,750
------------
14,833,906
------------
MACHINERY & EQUIPMENT -- 1.1%
Cooper Cameron Corp.* 32,700 2,452,500
------------
MEDICAL SUPPLIES & EQUIPMENT -- 2.6%
MiniMed, Inc.* 28,500 3,503,719
PE Corp. - PE
Biosystems Group 40,200 2,412,000
------------
5,915,719
------------
ASAF NEUBERGER BERMAN
MID-CAP GROWTH FUND
- ----------------------------------------------------
SHARES VALUE
- ----------------------------------------------------
OIL & GAS -- 2.6%
Coastal Corp. 34,500 $ 1,731,469
Rowan Companies,
Inc.* 97,800 2,732,287
Union Pacific
Resources Group,
Inc. 79,000 1,515,813
------------
5,979,569
------------
PHARMACEUTICALS -- 7.9%
Abgenix, Inc.* 4,400 394,075
Human Genome
Sciences, Inc.* 10,900 834,531
Immunex Corp.* 45,000 1,771,875
MedImmune, Inc.* 37,100 5,933,681
Millennium
Pharmaceuticals,
Inc.* 22,200 1,762,125
Pharmacopeia, Inc.* 5,100 209,738
LT
PhotoTherapeutics,
Inc.* 28,000 1,555,750
Sepracor, Inc.* 31,400 2,888,800
Waters Corp.* 30,300 2,878,500
------------
18,229,075
------------
RETAIL & MERCHANDISING -- 4.5%
Best Buy Co., Inc.* 43,200 3,488,400
BJ's Wholesale Club,
Inc.* 48,100 1,704,544
Circuit City Stores,
Inc. 38,900 2,287,806
Tiffany & Co. 41,600 3,023,800
------------
10,504,550
------------
SEMICONDUCTORS -- 9.8%
Altera Corp.* 35,700 3,650,325
Conexant Systems,
Inc.* 39,000 2,335,125
E-Tek Dynamics, Inc.* 12,500 2,559,375
LSI Logic Corp.* 8,500 531,250
Maxim Integrated
Products, Inc.* 36,400 2,359,175
PMC-Sierra, Inc.* 33,500 6,427,813
QLogic Corp.* 21,700 2,176,781
Xilinx, Inc.* 36,000 2,637,000
------------
22,676,844
------------
TELECOMMUNICATIONS -- 6.3%
Amdocs Ltd.* 25,200 1,705,725
EchoStar
Communications
Corp. Cl-A* 21,000 1,337,438
SHARES VALUE
- ----------------------------------------------------
- ----------------------------------------------------
Efficient Networks,
Inc.* 37,000 $ 2,432,750
Intermedia
Communications,
Inc.* 62,100 2,530,575
Next Level
Communications,
Inc.* 11,400 907,725
NTL, Inc.* 30,588 2,339,982
Voicestream Wireless
Corp.* 16,700 1,653,300
WinStar
Communications,
Inc.* 42,200 1,682,725
------------
14,590,220
------------
UTILITIES -- 1.7%
Calpine Corp.* 42,000 3,843,000
------------
TOTAL COMMON STOCK
(Cost $181,504,057) 203,964,327
------------
PAR
(000)
-----
COMMERCIAL PAPER -- 1.0%
Albertson's, Inc.+
5.95%, 05/01/00
(Cost $2,254,000) $ 2,254 2,254,000
------------
SHARES
------
SHORT-TERM INVESTMENTS -- 9.2%
Temporary Investment
Cash Fund 10,593,457 10,593,457
Temporary Investment
Fund 10,593,456 10,593,456
------------
(Cost $21,186,913) 21,186,913
------------
TOTAL INVESTMENTS -- 98.3%
(Cost $204,944,970) 227,405,240
OTHER ASSETS LESS LIABILITIES -- 1.7% 3,915,236
------------
NET ASSETS -- 100.0% $231,320,476
============
- -------------------------------------------------------
Definitions of abbreviations are included following the Schedules of
Investments.
* Non-income producing security.
+ Security is restricted as to resale and may not be resold except to qualified
institutional buyers. At the end of the period, this security amounted to 1.0%
of net assets.
See Notes to Financial Statements.
AMERICAN SKANDIA ADVISOR FUNDS, INC.
ASAF NEUBERGER BERMAN
MID-CAP VALUE FUND
- ---------------------------------------------------
SHARES VALUE
- ---------------------------------------------------
COMMON STOCK -- 91.2%
AEROSPACE -- 3.6%
General Dynamics Corp. 29,300 $ 1,714,050
General Motors Corp.
Cl-H* 6,400 616,400
-----------
2,330,450
-----------
AIRLINES -- 2.4%
Continental Airlines,
Inc. Cl-B* 21,400 856,000
Southwest Airlines Co. 31,400 680,988
-----------
1,536,988
-----------
AUTOMOTIVE PARTS -- 3.1%
Eaton Corp. 8,100 680,400
Lear Corp.* 44,500 1,332,219
-----------
2,012,619
-----------
BROADCASTING -- 1.5%
Scripps, (E.W.) Co.
Cl-A 21,000 980,438
-----------
BUSINESS SERVICES -- 1.8%
ChoicePoint, Inc.* 8,900 338,200
Comdisco, Inc. 27,100 841,794
-----------
1,179,994
-----------
CAPITAL GOODS -- 1.7%
SPX Corp.* 10,200 1,120,725
-----------
CHEMICALS -- 4.0%
Engelhard Corp. 43,000 755,188
FMC Corp.* 13,300 773,894
Praxair, Inc. 23,600 1,048,724
-----------
2,577,806
-----------
COMPUTER HARDWARE -- 0.8%
Apple Computer, Inc.* 4,200 521,063
-----------
COMPUTER SERVICES & SOFTWARE -- 4.1%
Cadence Design Systems,
Inc.* 35,500 596,844
Ceridian Corp.* 31,000 672,313
Compuware Corp.* 33,500 420,844
Sungard Data Systems,
Inc.* 28,400 981,574
-----------
2,671,575
-----------
CONSUMER PRODUCTS & SERVICES -- 1.9%
Energizer Holdings,
Inc.* 28,000 477,750
Maytag Corp. 22,700 781,731
-----------
1,259,481
-----------
CONTAINERS & PACKAGING -- 2.3%
Sealed Air Corp.* 13,400 745,375
Smurfit-Stone Container
Corp.* 48,000 732,000
-----------
1,477,375
-----------
SHARES VALUE
- ---------------------------------------------------
- ---------------------------------------------------
ENERGY SERVICES -- 3.2%
American Standard
Companies, Inc.* 23,100 $ 947,100
Dynegy, Inc. 17,636 1,154,056
-----------
2,101,156
-----------
FINANCIAL -- BANK & TRUST -- 2.0%
Countrywide Credit
Industries, Inc. 30,500 842,563
Valley National Bancorp 16,900 444,681
-----------
1,287,244
-----------
FINANCIAL SERVICES -- 11.2%
AMBAC Financial Group,
Inc. 18,900 907,200
Bear Stearns Companies,
Inc. 22,400 960,400
Dun & Bradstreet Corp. 19,500 587,438
Fleet Financial Group,
Inc. 29,100 1,031,230
Franklin Resources,
Inc. 34,700 1,119,074
Household
International, Inc. 11,100 463,425
Lehman Brothers
Holdings, Inc. 5,100 418,519
Providian Financial
Corp. 11,500 1,012,719
SLM Holding Corp. 25,900 810,994
-----------
7,310,999
-----------
FOOD -- 3.5%
Hershey Foods Corp. 15,800 716,925
Kroger Co.* 47,900 889,144
Nabisco Holdings Corp.* 18,800 706,175
-----------
2,312,244
-----------
HEALTHCARE SERVICES -- 1.7%
Wellpoint Health
Networks, Inc.* 15,000 1,106,250
-----------
HOTELS & MOTELS -- 1.6%
Starwood Hotels &
Resorts Worldwide,
Inc. [REIT] 36,200 1,029,438
-----------
INSURANCE -- 5.1%
Ace Ltd. 46,600 1,115,487
AON Corp. 34,700 939,069
Nationwide Financial
Services, Inc. 16,200 450,563
Xl Capital Ltd. 16,600 790,575
-----------
3,295,694
-----------
MACHINERY & EQUIPMENT -- 2.3%
Danaher Corp. 15,900 908,287
Pall Corp. 26,200 584,588
-----------
1,492,875
-----------
ASAF NEUBERGER BERMAN
MID-CAP VALUE FUND
- ---------------------------------------------------
SHARES VALUE
- ---------------------------------------------------
MEDICAL SUPPLIES & EQUIPMENT -- 3.7%
Bard, (C.R.), Inc. 14,900 $ 649,081
Becton Dickinson & Co. 22,600 579,125
Genzyme Corp.* 24,400 1,191,025
-----------
2,419,231
-----------
OIL & GAS -- 11.2%
Anadarko Petroleum
Corp. 25,900 1,125,030
Apache Corp. 16,000 775,000
Coastal Corp. 20,800 1,043,900
Kinder Morgan, Inc. 16,700 506,219
Noble Drilling Corp.* 17,500 698,906
Tosco Corp. 11,400 365,513
Transocean Sedco Forex,
Inc. 21,700 1,019,900
USX-Marathon Group,
Inc. 31,000 722,688
Williams Companies,
Inc. 28,700 1,070,868
-----------
7,328,024
-----------
PAPER & FOREST PRODUCTS -- 1.4%
Bowater, Inc. 16,900 929,500
-----------
PHARMACEUTICALS -- 0.9%
Waters Corp.* 6,200 589,000
-----------
PRINTING & PUBLISHING -- 2.0%
Belo, (A.H.) Corp. Cl-A 78,300 1,306,631
-----------
REAL ESTATE -- 4.4%
Boston Properties, Inc.
[REIT] 20,700 721,913
Indymac Mortgage
Holdings, Inc. [REIT] 61,600 804,649
Spieker Properties,
Inc. [REIT] 16,300 722,294
Vornado Realty Trust
[REIT] 17,600 607,200
-----------
2,856,056
-----------
RETAIL & MERCHANDISING -- 1.0%
Consolidated Stores
Corp.* 54,500 677,844
-----------
SEMICONDUCTORS -- 1.7%
Atmel Corp.* 7,500 367,031
Micron Technology,
Inc.* 2,400 334,200
National Semiconductor
Corp.* 6,600 400,950
-----------
1,102,181
-----------
SHARES VALUE
- ---------------------------------------------------
- ---------------------------------------------------
TELECOMMUNICATIONS -- 4.6%
Allegiance Telecom,
Inc.* 5,800 $ 410,350
American Tower Corp.
Cl-A* 27,500 1,278,749
EchoStar Communications
Corp. Cl-A* 11,700 745,144
Loral Space &
Communications Ltd.* 55,800 547,538
-----------
2,981,781
-----------
UTILITIES -- 2.5%
AES Corp.* 9,000 809,438
Unicom Corp. 21,400 850,650
-----------
1,660,088
-----------
TOTAL COMMON STOCK
(Cost $54,654,292) 59,454,750
-----------
PAR
(000)
-------
COMMERCIAL PAPER -- 9.2%
Albertson's, Inc.+
5.95%, 05/01/00
(Cost $6,000,000) $ 6,000 6,000,000
-----------
SHARES
-------
SHORT-TERM INVESTMENTS -- 0.0%
Temporary Investment
Cash Fund 3,311 3,311
Temporary Investment
Fund 3,311 3,311
-----------
(Cost $6,622) 6,622
-----------
TOTAL INVESTMENTS -- 100.4%
(Cost $60,660,914) 65,461,372
LIABILITIES IN EXCESS OF OTHER
ASSETS -- (0.4%) (239,587)
-----------
NET ASSETS -- 100.0% $65,221,785
===========
- -------------------------------------------------------
Definitions of abbreviations are included following the Schedules of
Investments.
* Non-income producing security.
+ Security is restricted as to resale and may not be resold except to qualified
institutional buyers. At the end of the period, this security amounted to 9.2%
of net assets.
See Notes to Financial Statements.
AMERICAN SKANDIA ADVISOR FUNDS, INC.
ASAF AIM INTERNATIONAL
EQUITY FUND
- ---------------------------------------------------
SHARES VALUE
- ---------------------------------------------------
FOREIGN STOCK -- 73.0%
AUSTRALIA -- 1.0%
AMP Ltd. 6,100 $ 53,391
Brambles Industries
Ltd. 2,000 56,250
Cable & Wireless Optus
Ltd.* 13,200 42,594
Telstra Corp. 19,000 48,560
-----------
200,795
-----------
BRAZIL -- 0.8%
Embartel Participacoes
SA [ADR] 1,900 42,750
Petroleo Brasileiro SA 300,000 71,507
Tele Centro Sul
Participacoes SA
[ADR]* 400 25,500
Telecomunicacoes de Sao
Paulo SA [ADR] 600 15,150
-----------
154,907
-----------
CANADA -- 7.6%
BCE, Inc. 1,789 207,074
Bombardier, Inc. Cl-B 7,200 193,405
C-Mac Industries, Inc.* 2,640 133,188
Celestica, Inc.* 3,600 194,134
Mitel Corp.* 3,700 92,646
Nortel Networks Corp. 3,800 430,349
Research in Motion
Ltd.* 230 9,764
Rogers Communications,
Inc. Cl-B* 5,334 138,781
Shaw Communications,
Inc. Cl-B 5,000 116,930
-----------
1,516,271
-----------
DENMARK -- 0.2%
Vestas Wind Systems AS
144A 120 40,190
-----------
FINLAND -- 2.9%
Nokia AB Oyj 8,792 505,541
Sonera Group Oyj 1,410 77,734
-----------
583,275
-----------
FRANCE -- 8.6%
Altran Technologies SA 1,211 248,073
AXA SA 1,278 189,943
Banque National de
Paris 2,720 220,348
Havas Advertising SA 200 100,056
Peugeot Citroen SA 425 88,146
Pinault-Printemps
Redoute SA 773 156,306
Societe Television
Francaise 284 194,873
STMicroelectronics NV 1,255 240,046
Total Fina SA Cl-B 1,778 270,413
-----------
1,708,204
-----------
SHARES VALUE
- ---------------------------------------------------
- ---------------------------------------------------
GERMANY -- 4.2%
Epcos AG* 1,820 $ 256,733
Infineon Technologies
AG [ADR]* 2,400 163,588
Intershop
Communications AG* 20 8,438
Porsche AG Pfd. 39 100,557
Siemens AG 2,050 298,891
-----------
828,207
-----------
GREECE -- 0.0%
Jazztel PLC [ADR]* 100 5,200
-----------
HONG KONG -- 2.6%
China Telecom Ltd.* 38,000 274,425
Dao Heng Bank Group
Ltd. 16,000 73,951
Hutchison Whampoa Ltd. 11,000 160,291
-----------
508,667
-----------
ITALY -- 1.1%
Banca Popolare di
Brescia 680 61,965
Gruppo Editoriale
L'Espresso 600 8,475
Telecom Italia Mobile
SPA 15,588 149,148
-----------
219,588
-----------
JAPAN -- 13.9%
Advantest Corp. 800 182,916
DDI Corp. 140 160,634
Hirose Electric Co.
Ltd. 600 72,508
Hoya Corp. 1,000 101,784
Matsushita
Communication
Industrial Co. Ltd. 1,000 156,748
Murata Manufacturing
Co. Ltd. 1,000 194,316
NEC Corp. 9,000 244,838
Nippon Telegraph &
Telephone Corp. 110 136,391
NTT Data Corp. 80 106,596
NTT Mobile
Communication
Network, Inc. 50 167,019
Ricoh Co. Ltd. 5,000 105,486
Rohm Co. Ltd. 300 100,489
Sanyo Electric Co. 26,000 173,459
Sharp Corp. 3,000 57,878
Sony Corp. 1,200 137,798
Takeda Chemical
Industries Ltd. 3,000 197,369
Tokyo Electron Ltd. 2,000 325,894
Trend Micro, Inc. 1,000 149,901
-----------
2,772,024
-----------
ASAF AIM INTERNATIONAL
EQUITY FUND
- ---------------------------------------------------
SHARES VALUE
- ---------------------------------------------------
KOREA -- 1.2%
Korea Telecom Corp.
[ADR] 1,960 $ 67,620
LG Chemical Ltd. 2,700 62,043
Pohang Iron & Steel Co.
Ltd. [ADR] 2,400 50,400
Samsung Electronics Co. 200 54,068
-----------
234,131
-----------
MEXICO -- 2.8%
Cifra SA de CV Cl-C* 30,000 63,899
Coca-Cola Femsa SA
[ADR] 3,400 63,113
Fomento Economico
Mexicano SA de CV
[ADR] 2,850 117,563
Grupo Modelo SA de CV
Cl-C 17,000 36,119
Grupo Televisa SA
[GDR]* 2,000 126,874
Kimberly-Clark de
Mexico SA Cl-A 8,400 27,039
Telefonos de Mexico SA
Cl-L [ADR] 2,150 126,447
-----------
561,054
-----------
NETHERLANDS -- 4.0%
Koninklijke (Royal)
Philips Electronics
NV* 7,220 322,844
KPNQwest NV* 3,700 154,084
United Pan-Europe
Communications NV* 4,510 164,513
VNU NV 2,696 144,579
-----------
786,020
-----------
PORTUGAL -- 0.2%
PT Multimedia* 700 48,957
-----------
SINGAPORE -- 1.3%
Datadraft Asia Ltd. 9,000 67,500
Development Bank of
Singapore 5,000 68,816
Keppel Corp. Ltd. 23,000 53,343
Singapore Press
Holdings Ltd. 4,000 78,246
-----------
267,905
-----------
SPAIN -- 1.1%
Telefonica SA 9,784 218,256
-----------
SWEDEN -- 2.9%
Ericsson, (L.M.)
Telephone Co. Cl-B 4,160 370,337
Netcom AB Cl-B* 2,808 199,794
Om Gruppen AB 200 8,310
-----------
578,441
-----------
SHARES VALUE
- ---------------------------------------------------
- ---------------------------------------------------
SWITZERLAND -- 4.7%
ABB AG 2,190 $ 246,307
Adecco SA 237 194,919
Ares-Serono Group 45 138,493
Compagnie Financiere
Richemont AG Cl-A 67 163,170
Kudelski SA* 1 10,311
Zurich Allied AG 410 174,678
-----------
927,878
-----------
TAIWAN -- 1.2%
Far Eastern Textile
Ltd. [GDR]* 4,000 80,200
Taiwan Semiconductor
Manufacturing Co.
Ltd. [ADR]* 2,850 149,091
-----------
229,291
-----------
THAILAND -- 0.1%
Siam Commercial Bank* 24,000 19,221
-----------
UNITED KINGDOM -- 10.6%
Arm Holdings PLC* 14,500 148,617
Capita Group PLC 7,680 197,931
CMG PLC* 2,120 136,196
Colt Telecom Group PLC* 5,750 245,544
Compass Group PLC 11,500 163,936
Kingston Communication
(Hull) PLC* 500 6,283
Logica PLC 6,000 181,673
Marconi PLC 8,660 108,612
Pace Micro Technology
PLC 7,000 82,152
Shell Transport &
Trading Co. PLC 25,000 204,402
The Sage Group PLC* 3,700 41,165
Vodafone AirTouch PLC 87,327 402,452
WPP Group PLC 11,450 185,261
-----------
2,104,224
-----------
TOTAL FOREIGN STOCK
(Cost $14,984,589) 14,512,706
-----------
U.S. STOCK -- 1.1%
INTERNET SERVICES -- 0.1%
Crayfish Co. Ltd.* 900 13,388
-----------
OIL & GAS -- 0.1%
Gulf Indonesia
Resources Ltd.* 3,100 21,700
-----------
TELECOMMUNICATIONS -- 0.9%
360 Networks, Inc.* 2,300 34,931
NTL, Inc.* 1,875 143,437
-----------
178,368
-----------
TOTAL U.S. STOCK
(Cost $292,594) 213,456
-----------
AMERICAN SKANDIA ADVISOR FUNDS, INC.
- ---------------------------------------------------
PAR
(000) VALUE
- ---------------------------------------------------
U.S. GOVERNMENT AGENCY OBLIGATIONS -- 24.1%
Federal Home Loan
Mortgage Corp.
5.88%, 05/01/00
(Cost $4,789,000) $ 4,789 $ 4,789,000
-----------
TOTAL INVESTMENTS -- 98.2%
(Cost $20,066,183) 19,515,162
OTHER ASSETS LESS
LIABILITIES -- 1.8% 351,188
-----------
NET ASSETS -- 100.0% $19,866,350
===========
Foreign currency exchange contracts outstanding at April 30, 2000:
SETTLEMENT CONTRACTS TO IN EXCHANGE CONTRACTS UNREALIZED
MONTH TYPE RECEIVE FOR AT VALUE DEPRECIATION
- ------------------------------------------------------------------------------
05/00 Buy GBP 25,415 $40,021 $39,765 $256
======= ======= ====
- -------------------------------------------------------
The following is a breakdown of the foreign stock portion of the Fund, by
industry classification, as of April 30, 2000. Percentages are based on net
assets.
INDUSTRY
- -------------------------------------------
Advertising 1.4%
Aerospace 2.2%
Automobile Manufacturers 1.2%
Beverages 1.8%
Broadcasting 1.8%
Business Services 3.0%
Cable Television 0.7%
Capital Goods 0.4%
Chemicals 0.3%
Computer Services & Software 2.8%
Conglomerates 1.8%
Consumer Products & Services 2.1%
Electronic Components & Equipment 12.0%
Entertainment & Leisure 0.6%
Financial -- Bank & Trust 2.1%
Financial Services 1.2%
Food 0.1%
Industrial Products 0.5%
Insurance 2.9%
Machinery & Equipment 1.2%
Office Equipment 0.5%
Oil & Gas 2.8%
Paper & Forest Products 0.3%
Pharmaceuticals 2.2%
Printing & Publishing 1.6%
Retail & Merchandising 0.8%
Semiconductors 5.2%
Telecommunications 18.9%
Transportation 0.2%
Utilities 0.4%
-----
TOTAL 73.0%
=====
- -------------------------------------------------------
Unless otherwise noted, all stocks are common stock.
Definitions of abbreviations are included following the Schedules of
Investments.
* Non-income producing security.
See Notes to Financial Statements.
ASAF BANKERS TRUST
MANAGED INDEX 500 FUND
- ---------------------------------------------------
SHARES VALUE
- ---------------------------------------------------
COMMON STOCK -- 83.1%
ADVERTISING -- 0.2%
Interpublic Group of
Companies, Inc. 653 $ 26,773
Omnicom Group, Inc. 427 38,884
Young & Rubicam, Inc. 61 3,397
-----------
69,054
-----------
AEROSPACE -- 1.9%
Boeing Co. 2,250 89,297
Cordant Technologies,
Inc. 7,100 402,037
General Dynamics Corp. 754 44,109
Goodrich, (B.F.) Co. 144 4,590
Honeywell International,
Inc. 2,055 115,080
Lockheed Martin Corp. 1,079 26,840
Northrop Grumman Corp. 112 7,938
Raytheon Co. Cl-B 917 20,346
United Technologies
Corp. 1,460 90,794
-----------
801,031
-----------
AIRLINES -- 0.2%
AMR Corp.* 688 23,435
Delta Air Lines, Inc. 536 28,274
Southwest Airlines Co. 1,123 24,355
US Airways Group, Inc.* 160 4,450
-----------
80,514
-----------
AUTOMOBILE MANUFACTURERS -- 0.9%
Ford Motor Co. 3,484 190,531
General Motors Corp. 1,859 174,049
Navistar International
Corp.* 381 13,335
-----------
377,915
-----------
AUTOMOTIVE PARTS -- 0.3%
AutoZone, Inc.* 734 16,836
Cooper Tire & Rubber Co. 206 2,781
Dana Corp. 264 8,019
Delphi Automotive
Systems Corp. 2,093 40,028
Genuine Parts Co. 772 20,265
Goodyear Tire & Rubber
Co. 221 6,105
TRW, Inc. 249 14,567
-----------
108,601
-----------
BEVERAGES -- 1.7%
American National Can
Group, Inc.* 9,400 158,038
Anheuser-Busch
Companies, Inc. 1,189 83,899
Brown-Forman Corp. Cl-B 114 6,220
Coca-Cola Co. 6,590 310,142
Coca-Cola Enterprises,
Inc. 1,818 38,746
PepsiCo, Inc. 3,804 139,559
-----------
736,604
-----------
SHARES VALUE
- ---------------------------------------------------
- ---------------------------------------------------
BROADCASTING -- 0.5%
CBS Corp.* 2,608 $ 153,220
Clear Channel
Communications, Inc.* 902 64,944
-----------
218,164
-----------
BUILDING MATERIALS -- 0.1%
Armstrong World
Industries, Inc. 89 1,741
Masco Corp. 978 21,944
Owens Corning 147 2,674
Sherwin Williams Co. 231 5,746
Vulcan Materials Co. 180 7,886
-----------
39,991
-----------
BUSINESS SERVICES -- 0.2%
Avery Dennison Corp. 216 14,175
Ecolab, Inc. 196 7,656
First Data Corp. 1,023 49,807
Parametric Technology
Corp.* 1,765 14,396
Quintiles Transnational
Corp.* 312 4,466
-----------
90,500
-----------
CABLE TELEVISION -- 0.3%
Comcast Corp. Cl-A* 2,852 114,258
-----------
CAPITAL GOODS -- 0.0%
Briggs & Stratton Corp. 58 2,226
-----------
CHEMICALS -- 0.8%
Air Products &
Chemicals, Inc. 444 13,792
DuPont, (E.I.) de
Nemours & Co. 3,000 142,312
Engelhard Corp. 348 6,112
FMC Corp.* 213 12,394
Grace, (W.R.) & Co.* 198 2,574
Hercules, Inc. 290 4,513
PPG Industries, Inc. 373 20,282
Praxair, Inc. 315 13,998
Rohm & Haas Co. 480 17,100
Union Carbide Corp. 1,569 92,571
-----------
325,648
-----------
CLOTHING & APPAREL -- 0.3%
Limited, Inc. 808 36,511
Liz Claiborne, Inc. 460 21,304
Nike, Inc. Cl-B 333 14,465
Reebok International,
Ltd.* 930 15,810
Springs Industries, Inc.
Cl-A 373 15,316
V.F. Corp. 112 3,164
-----------
106,570
-----------
COMPUTER HARDWARE -- 4.7%
Adaptec, Inc.* 587 15,849
Apple Computer, Inc.* 518 64,264
AMERICAN SKANDIA ADVISOR FUNDS, INC.
- ---------------------------------------------------
SHARES VALUE
- ---------------------------------------------------
Compaq Computer Corp. 4,411 $ 129,022
Dell Computer Corp.* 7,159 358,845
EMC Corp.* 2,819 391,665
Gateway, Inc.* 1,041 57,515
Hewlett-Packard Co. 2,695 363,825
International Business
Machines Corp. 4,980 555,893
Seagate Technology,
Inc.* 772 39,227
-----------
1,976,105
-----------
COMPUTER SERVICES & SOFTWARE -- 9.6%
3Com Corp.* 1,156 45,590
Autodesk, Inc.* 99 3,799
Automatic Data
Processing, Inc. 1,615 86,907
BMC Software, Inc.* 813 38,059
Ceridian Corp.* 386 8,371
Cisco Systems, Inc.* 18,687 1,295,534
Citrix Systems, Inc.* 635 38,775
Computer Associates
International, Inc. 1,506 84,054
Computer Sciences Corp.* 579 47,225
Compuware Corp.* 1,486 18,668
Electronic Data Systems
Corp. 1,199 82,431
Microsoft Corp.* 14,282 996,169
NCR Corp.* 508 19,622
Network Appliance, Inc.* 968 71,572
Novell, Inc.* 1,326 26,023
Oracle Corp.* 7,822 625,270
Paychex, Inc. 924 48,626
PeopleSoft, Inc.* 1,283 17,882
Silicon Graphics, Inc.* 1,206 8,668
Sun Microsystems, Inc.* 4,391 403,697
Unisys Corp.* 1,260 29,216
VERITAS Software Corp.* 1,168 125,286
-----------
4,121,444
-----------
CONGLOMERATES -- 1.6%
Corning, Inc. 466 92,035
ITT Industries, Inc. 53 1,673
Johnson Controls, Inc. 142 8,990
Minnesota Mining &
Manufacturing Co. 1,196 103,454
National Service
Industries, Inc. 328 7,052
Philip Morris Companies,
Inc. 6,291 137,616
Seagram Co. Ltd. 1,420 76,680
Textron, Inc. 561 34,747
Tyco International Ltd. 4,477 205,662
-----------
667,909
-----------
SHARES VALUE
- ---------------------------------------------------
- ---------------------------------------------------
CONSTRUCTION -- 0.1%
Centex Corp. 137 $ 3,305
Kaufman & Broad Home
Corp. 102 1,964
Pulte Corp. 759 16,318
-----------
21,587
-----------
CONSUMER PRODUCTS & SERVICES -- 1.4%
Alberto-Culver Co. Cl-B 127 3,000
Bausch & Lomb, Inc. 67 4,045
Clorox Co. 521 19,147
Colgate-Palmolive Co. 1,491 85,173
Eastman Kodak Co. 1,029 57,560
Fortune Brands, Inc. 251 6,275
Gillette Co. 2,232 82,584
Hasbro, Inc. 1,089 17,356
International Flavors &
Fragrances, Inc. 173 5,958
Jostens, Inc. 3,910 96,528
Maytag Corp. 223 7,680
Procter & Gamble Co. 3,157 188,236
Snap-On, Inc. 69 1,824
Tupperware Corp. 475 8,966
UST, Inc. 470 7,050
Whirlpool Corp. 114 7,424
-----------
598,806
-----------
CONTAINERS & PACKAGING -- 0.1%
Crown Cork & Seal Co.,
Inc. 650 10,563
Owens Illinois, Inc.* 416 5,616
Pactiv Corp.* 460 3,766
Sealed Air Corp.* 422 23,474
-----------
43,419
-----------
DIVERSIFIED RESOURCES -- 0.0%
Fluor Corp. 81 2,719
-----------
ELECTRONIC COMPONENTS & EQUIPMENT -- 5.5%
Adobe Systems, Inc. 282 34,104
Analog Devices, Inc.* 1,117 85,800
Cabletron Systems, Inc.* 917 20,976
Comverse Technology,
Inc.* 531 47,359
Emerson Electric Co. 1,077 59,100
General Electric Co. 8,868 1,394,493
KLA-Tencor Corp.* 615 46,048
Linear Technology Corp. 739 42,215
Molex, Inc. 429 23,568
Parker-Hannifin Corp. 483 22,460
PerkinElmer, Inc. 264 14,454
Rockwell International
Corp. 391 15,396
Solectron Corp.* 1,808 84,637
Tandy Corp. 437 24,909
Teradyne, Inc.* 610 67,100
Texas Instruments, Inc. 2,171 353,602
-----------
2,336,221
-----------
ASAF BANKERS TRUST
MANAGED INDEX 500 FUND
- ---------------------------------------------------
SHARES VALUE
- ---------------------------------------------------
ENERGY SERVICES -- 0.1%
Halliburton Co. 1,097 $ 48,474
-----------
ENTERTAINMENT & LEISURE -- 2.9%
Brunswick Corp. 792 15,197
Carnival Corp. 963 23,955
Disney, (Walt) Co. 5,501 238,262
Harley-Davidson, Inc. 615 24,485
Harrah's Entertainment,
Inc.* 889 18,280
Mattel, Inc. 1,156 14,161
Mirage Resorts, Inc.* 24,661 502,467
Sabre Group Holdings* 207 7,232
Time Warner, Inc. 3,434 308,845
Viacom, Inc. Cl-B* 1,468 79,823
-----------
1,232,707
-----------
ENVIRONMENTAL SERVICES -- 0.1%
Allied Waste Industries,
Inc.* 500 3,063
Waste Management, Inc. 1,691 26,844
-----------
29,907
-----------
EQUIPMENT SERVICES -- 0.0%
Millipore Corp. 51 3,656
-----------
FINANCIAL -- BANK & TRUST -- 3.5%
AmSouth Bancorporation 1,069 15,567
Bank of America Corp. 4,627 226,722
Bank of New York Co.,
Inc. 1,895 77,813
Bank One Corp. 2,298 70,089
BB&T Corp. 338 8,999
Chase Manhattan Corp. 2,174 156,664
Comerica, Inc. 297 12,585
Fifth Third Bancorp 770 48,606
First Union Corp. 2,672 85,170
Firstar Corp. 2,436 60,596
Huntington Bancshares,
Inc. 423 7,720
KeyCorp. 1,491 27,584
MBNA Corp. 1,976 52,488
Mellon Financial Corp. 1,209 38,839
Morgan, (J.P.) & Co.,
Inc. 551 70,735
National City Corp. 1,923 32,691
Northern Trust Corp. 536 34,371
Old Kent Financial Corp. 173 5,212
PNC Bank Corp. NA 706 30,799
Regions Financial Corp. 390 7,971
State Street Corp. 386 37,394
Summit Bancorp 670 17,001
SunTrust Banks, Inc. 798 40,499
Synovus Financial Corp. 767 14,237
U.S. Bancorp 1,285 26,102
U.S. Trust Corp. 297 45,701
Union Planters Corp. 551 15,600
Wachovia Corp. 488 30,592
SHARES VALUE
- ---------------------------------------------------
- ---------------------------------------------------
Wells Fargo & Co. 4,355 $ 178,826
-----------
1,477,173
-----------
FINANCIAL SERVICES -- 4.2%
American Express Co. 1,277 191,629
Associates First Capital
Corp. Cl-A 1,224 27,158
Bear Stearns Companies,
Inc. 193 8,275
Block, (H&R), Inc. 571 23,875
Capital One Financial
Corp. 432 18,900
Citigroup, Inc. 9,280 551,579
Deluxe Corp. 401 10,100
Dun & Bradstreet Corp. 244 7,351
Fannie Mae Corp. 2,664 160,673
Fleet Financial Group,
Inc. 2,336 82,782
Franklin Resources, Inc. 561 18,092
Freddie Mac Corp. 1,333 61,235
Golden West Financial
Corp. 310 10,579
Household International,
Inc. 1,166 48,681
Lehman Brothers
Holdings, Inc. 467 38,323
MBIA, Inc. 183 9,047
Merrill Lynch & Co.,
Inc. 1,145 116,718
Morgan Stanley, Dean
Witter & Co. 3,218 246,981
Paine Webber Group, Inc. 739 32,424
Providian Financial
Corp. 137 12,065
Schwab, (Charles) Corp. 1,120 49,840
T. Rowe Price
Associates, Inc. 683 26,039
Washington Mutual, Inc. 1,372 35,072
-----------
1,787,418
-----------
FOOD -- 2.0%
Albertson's, Inc. 612 19,928
Archer Daniels Midland
Co. 1,645 16,347
Bestfoods, Inc. 645 32,411
Campbell Soup Co. 917 23,842
ConAgra, Inc. 1,069 20,177
General Mills, Inc. 673 24,480
Great Atlantic & Pacific
Tea Co., Inc. 665 12,178
Hannaford Bros. Co. 4,400 318,450
Heinz, (H.J.) Co. 825 28,050
Hershey Foods Corp. 267 12,115
Kellogg Co. 904 22,092
Kroger Co.* 2,265 42,044
Nabisco Group Holdings 787 10,133
Ralston Purina Group 1,567 27,716
Safeway, Inc.* 1,318 58,157
Sara Lee Corp. 2,476 37,140
Supervalu, Inc. 967 20,005
Sysco Corp. 785 29,536
Unilever NV NY Reg. 1,445 65,838
AMERICAN SKANDIA ADVISOR FUNDS, INC.
- ---------------------------------------------------
SHARES VALUE
- ---------------------------------------------------
Winn-Dixie Stores, Inc. 399 $ 6,608
Wrigley, (Wm., Jr.) Co. 244 17,660
-----------
844,907
-----------
FURNITURE -- 0.0%
Leggett & Platt, Inc. 292 6,242
-----------
HEALTHCARE SERVICES --0.8%
Amgen, Inc.* 2,936 164,417
Columbia HCA Healthcare
Corp. 1,336 37,993
Healthsouth Corp.* 2,227 17,955
Humana, Inc.* 437 3,359
IMS Health, Inc. 823 14,042
Manor Care, Inc.* 1,011 12,069
McKesson HBOC, Inc. 622 10,496
Tenet Healthcare Corp. 1,384 35,292
United Healthcare Group,
Inc.* 396 26,408
Wellpoint Health
Networks, Inc.* 173 12,759
-----------
334,790
-----------
HOTELS & MOTELS -- 0.1%
Hilton Hotels Corp. 998 8,483
Marriott International,
Inc. Cl-A 532 17,024
-----------
25,507
-----------
INDUSTRIAL PRODUCTS --0.0%
Crane Co. 183 4,918
-----------
INSURANCE -- 2.1%
Aetna, Inc. 282 16,321
AFLAC, Inc. 627 30,605
Allstate Corp. 1,425 33,666
American General Corp. 579 32,424
American International
Group, Inc. 4,302 471,875
Chubb Corp. 396 25,196
CIGNA Corp. 391 31,182
Cincinnati Financial
Corp. 323 13,021
Conseco, Inc. 894 4,861
Jefferson-Pilot Corp. 475 31,617
Lincoln National Corp. 363 12,637
Loews Corp. 188 10,364
Marsh & McLennan
Companies, Inc. 681 67,120
MGIC Investment Corp. 556 26,584
Safeco Corp. 576 12,744
St. Paul Companies, Inc. 452 16,103
The Hartford Financial
Services Group, Inc. 462 24,111
Torchmark Corp. 132 3,308
UNUM Corp. 650 11,050
-----------
874,789
-----------
SHARES VALUE
- ---------------------------------------------------
- ---------------------------------------------------
INTERNET SERVICES -- 1.4%
America Online, Inc.* 6,347 $ 379,629
Yahoo!, Inc.* 1,498 195,115
-----------
574,744
-----------
MACHINERY & EQUIPMENT -- 0.6%
Baker Hughes, Inc. 706 22,460
Caterpillar, Inc. 1,194 47,088
Cooper Industries, Inc. 107 3,671
Danaher Corp. 297 16,966
Deere & Co. 505 20,389
Dover Corp. 828 42,073
Grainger, (W.W.), Inc. 168 7,287
Illinois Tool Works,
Inc. 726 46,509
Pall Corp. 930 20,751
Stanley Works, Inc. 772 22,774
The Timken Co. 510 9,435
Thermo Electron Corp.* 434 8,409
-----------
267,812
-----------
MEDICAL SUPPLIES & EQUIPMENT -- 1.9%
Abbott Laboratories 3,655 140,489
Bard, (C.R.), Inc. 353 15,378
Baxter International,
Inc. 703 45,783
Becton Dickinson & Co. 513 13,146
Boston Scientific Corp.* 1,128 29,892
Guidant Corp.* 1,003 57,547
Johnson & Johnson Co. 3,703 305,497
Mallinckrodt, Inc. 104 2,795
Medtronic, Inc. 2,870 149,061
PE Corp. - PE Biosystems
Group 513 30,780
St. Jude Medical, Inc.* 615 19,180
-----------
809,548
-----------
METALS & MINING -- 0.5%
Alcan Aluminum Ltd. 945 30,948
Alcoa, Inc. 65 4,217
Allegheny Technologies,
Inc. 259 6,265
Arch Coal, Inc. 13 70
Barrick Gold Corp. 1,064 17,889
Bethlehem Steel Corp.* 1,851 9,949
Freeport-McMoRan Copper
& Gold, Inc. Cl-B* 603 5,804
Homestake Mining Co. 714 4,284
Newmont Mining Corp. 252 5,906
Nucor Corp. 518 22,274
Phelps Dodge Corp. 127 5,874
Placer Dome, Inc. 896 7,280
Reynolds Metals Co. 1,115 74,147
USX-U.S. Steel Group,
Inc. 28 702
Worthington Industries,
Inc. 658 8,143
-----------
203,752
-----------
ASAF BANKERS TRUST
MANAGED INDEX 500 FUND
- ---------------------------------------------------
SHARES VALUE
- ---------------------------------------------------
OFFICE EQUIPMENT -- 0.2%
Ikon Office Solutions,
Inc. 396 $ 2,327
Office Depot, Inc.* 902 9,527
Pitney Bowes, Inc. 610 24,934
Staples, Inc.* 1,816 34,617
Xerox Corp. 1,173 31,011
-----------
102,416
-----------
OIL & GAS -- 4.2%
Amerada Hess Corp. 460 29,268
Apache Corp. 204 9,881
Ashland, Inc. 54 1,843
Burlington Resources,
Inc. 464 18,241
Chevron Corp. 1,902 161,908
Coastal Corp. 797 39,999
Columbia Gas Systems,
Inc. 135 8,471
Conoco, Inc. Cl-B 1,496 37,213
El Paso Energy Corp. 513 21,803
Exxon Mobil Corp. 9,498 737,875
Kerr-McGee Corp. 175 9,056
Nicor, Inc. 277 9,383
Occidental Petroleum
Corp. 1,283 27,504
ONEOK, Inc. 282 7,121
Phillips Petroleum Co. 574 27,229
Rowan Companies, Inc.* 536 14,975
Royal Dutch Petroleum
Co. 5,729 328,701
Schlumberger Ltd. 1,437 110,020
Sunoco, Inc. 41 1,243
Texaco, Inc. 1,397 69,152
Tosco Corp. 249 7,984
Transocean Sedco Forex,
Inc. 454 21,338
Union Pacific Resources
Group, Inc. 673 12,913
Unocal Corp. 518 16,738
Williams Companies, Inc. 1,084 40,447
-----------
1,770,306
-----------
PAPER & FOREST PRODUCTS -- 0.6%
American Greetings Corp.
Cl-A 137 2,483
Boise Cascade Corp. 442 14,393
Champion International
Corp. 188 12,361
Georgia Pacific Group 338 12,422
International Paper Co. 1,338 49,171
Kimberly-Clark Corp. 1,422 82,564
Louisiana-Pacific Corp. 290 3,879
Mead Corp. 135 4,700
Potlatch Corp. 409 16,130
Temple-Inland, Inc. 328 16,441
Westvaco Corp. 706 21,798
Weyerhaeuser Co. 530 28,321
Willamette Industries,
Inc. 196 7,485
-----------
272,148
-----------
PERSONAL SERVICES -- 0.1%
Cendant Corp.* 2,641 40,770
-----------
SHARES VALUE
- ---------------------------------------------------
- ---------------------------------------------------
PHARMACEUTICALS -- 5.3%
Allergan, Inc. 257 $ 15,131
ALZA Corp.* 531 23,397
American Home Products
Corp. 3,187 179,070
Biogen, Inc.* 564 33,170
Bristol-Meyers Squibb
Co. 5,293 277,552
Cardinal Health, Inc. 637 35,075
Lilly, (Eli) & Co. 2,699 208,666
Merck & Co., Inc. 6,265 435,417
Pfizer, Inc. 8,970 377,861
Pharmacia Corp. 3,296 164,594
Schering-Plough Corp. 3,538 142,626
Warner-Lambert Co. 2,786 317,082
Watson Pharmaceuticals,
Inc.* 493 22,154
-----------
2,231,795
-----------
PRECIOUS METALS -- 0.0%
Inco Ltd.* 1,095 17,109
-----------
PRINTING & PUBLISHING -- 0.5%
Dow Jones & Co., Inc. 183 11,872
Gannett Co., Inc. 693 44,265
Knight-Ridder, Inc. 411 20,165
Lexmark International
Group, Inc. Cl-A* 439 51,802
McGraw-Hill Co., Inc. 783 41,108
New York Times Co. 343 14,127
Tribune Co. 531 20,643
-----------
203,982
-----------
RAILROADS -- 0.2%
Burlington Northern
Santa Fe Corp. 521 12,569
Kansas City Southern
Industries, Inc. 246 17,681
Norfolk Southern Corp. 1,034 18,224
Union Pacific Corp. 1,003 42,252
-----------
90,726
-----------
RESTAURANTS -- 0.4%
Darden Restaurants, Inc. 345 6,361
McDonald's Corp. 3,530 134,581
Tricon Global
Restaurants, Inc.* 340 11,603
Wendy's International,
Inc. 323 7,227
-----------
159,772
-----------
RETAIL & MERCHANDISING -- 4.1%
Bed, Bath & Beyond,
Inc.* 387 14,198
Best Buy Co., Inc.* 673 54,345
Circuit City Stores,
Inc. 427 25,113
Consolidated Stores
Corp.* 290 3,607
Costco Companies, Inc.* 1,473 79,633
CVS Corp. 615 26,753
Dillard's, Inc. Cl-A 297 4,139
Dollar General Corp. 523 11,964
AMERICAN SKANDIA ADVISOR FUNDS, INC.
- ---------------------------------------------------
SHARES VALUE
- ---------------------------------------------------
Federated Department
Stores, Inc.* 759 $ 25,806
Gap, Inc. 2,187 80,371
Harcourt General, Inc. 63 2,355
Home Depot, Inc. 6,169 345,849
Kmart Corp.* 2,456 19,955
Kohl's Corp.* 1,152 55,296
Long's Drug Stores Corp. 546 12,695
Lowe's Companies, Inc. 607 30,047
May Department Stores
Co. 724 19,910
Nordstrom, Inc. 368 10,235
Penney, (J.C.) Co., Inc. 701 9,683
Rite Aid Corp. 706 3,530
Sears, Roebuck & Co. 1,427 52,264
Target Corp. 1,120 74,550
Toys 'R' Us, Inc.* 1,618 24,675
Wal-Mart Stores, Inc. 12,018 665,496
Walgreen Co. 2,532 71,213
-----------
1,723,682
-----------
SEMICONDUCTORS -- 4.2%
Advanced Micro Devices,
Inc.* 556 48,789
Altera Corp.* 600 61,350
Applied Materials, Inc.* 2,173 221,239
Conexant Systems, Inc.* 731 43,769
Intel Corp. 9,123 1,156,909
LSI Logic Corp.* 917 57,313
Micron Technology, Inc.* 734 102,210
National Semiconductor
Corp.* 627 38,090
Xilinx, Inc.* 960 70,320
-----------
1,799,989
-----------
TELECOMMUNICATIONS --10.3%
ADC Telecommunications,
Inc.* 957 58,138
Alltel Corp. 777 51,768
Andrew Corp.* 742 21,843
AT&T Corp. 7,373 344,227
Bell Atlantic Corp. 4,132 244,821
BellSouth Corp. 5,004 243,632
CenturyTel, Inc. 277 6,787
Global Crossing Ltd.* 1,644 51,786
GTE Corp. 2,565 173,779
IPC Communications,
Inc.* 141 23,547
Lucent Technologies,
Inc. 8,575 533,278
MCI WorldCom, Inc.* 6,979 317,108
MediaOne Group, Inc.* 3,101 234,513
Motorola, Inc. 1,887 224,671
NetOptix Corp.* 279 49,209
Nextel Communications,
Inc. Cl-A* 1,097 120,053
Nortel Networks Corp. 3,873 438,616
SHARES VALUE
- ---------------------------------------------------
- ---------------------------------------------------
QUALCOMM, Inc.* 2,077 $ 225,225
SBC Communications, Inc. 9,500 416,218
Scientific-Atlanta, Inc. 620 40,339
Sprint Corp. (FON Group) 4,056 249,444
Sprint Corp. (PCS
Group)* 2,514 138,270
Tellabs, Inc.* 1,270 69,612
U.S. West, Inc. 1,549 110,269
-----------
4,387,153
-----------
TRANSPORTATION -- 0.2%
CSX Corp. 1,021 21,377
FedEx Corp.* 988 37,235
Paccar, Inc. 490 23,306
Ryder Systems, Inc. 175 3,883
-----------
85,801
-----------
UTILITIES -- 2.2%
AES Corp.* 696 62,597
Ameren Corp. 244 8,952
American Electric Power
Co., Inc. 350 12,819
Carolina Power & Light
Co. 345 12,614
Central & South West
Corp. 516 11,191
Cinergy Corp. 239 6,393
CMS Energy Corp. 630 11,970
Consolidated Edison,
Inc. 818 28,783
Constellation Energy
Group 561 18,548
Dominion Resources,
Inc.* 773 34,785
DTE Energy Co. 546 17,813
Duke Energy Corp. 891 51,233
Edison International Co. 1,542 29,394
Enron Corp. 1,879 130,942
Entergy Corp. 1,049 26,684
FirstEnergy Corp. 1,054 26,811
Florida Progress Corp. 564 27,636
FPL Group, Inc. 607 27,429
GPU, Inc. 152 4,266
New Century Energies,
Inc. 185 6,036
Niagara Mohawk Holdings,
Inc.* 510 7,076
Northern States Power
Co. 416 9,074
PECO Energy Co. 792 33,017
People's Energy Corp. 259 8,045
PG&E Corp. 1,696 43,990
Pinnacle West Capital
Co. 404 14,191
PPL Corp. 622 14,850
Public Service
Enterprise Group, Inc. 816 29,274
Reliant Energy, Inc. 1,031 27,450
Sempra Energy 565 10,488
Southern Co. 2,032 50,673
Texas Utilities Co. 582 19,606
ASAF BANKERS TRUST
MANAGED INDEX 500 FUND
- ---------------------------------------------------
SHARES VALUE
- ---------------------------------------------------
Unicom Corp. 714 $ 28,382
United Water Resources,
Inc. 2,700 93,824
-----------
946,836
-----------
TOTAL COMMON STOCK
(Cost $34,154,490) 35,198,115
-----------
PAR
(000)
-----
U.S. TREASURY OBLIGATIONS -- 16.1%
U.S. Treasury Bills
4.60%, 05/11/00 $ 320 319,509
4.95%, 05/11/00 370 369,389
5.35%, 05/11/00 480 479,152
5.38%, 05/11/00 120 119,785
5.42%, 05/11/00 510 509,079
5.45%, 05/11/00 420 419,237
5.46%, 05/11/00 890 888,380
5.52%, 05/11/00 180 179,669
5.57%, 05/11/00 1,600 1,597,029
5.59%, 05/11/00 900 898,323
5.61%, 05/11/00 300 299,439
5.62%, 07/13/00# 20 19,772
5.64%, 07/13/00# 15 14,830
5.67%, 07/13/00# 650 642,606
5.69%, 07/13/00# 50 49,431
-----------
(Cost $6,805,311) 6,805,630
-----------
- ---------------------------------------------------
SHARES VALUE
- ---------------------------------------------------
SHORT-TERM INVESTMENTS -- 0.0%
Temporary Investment
Cash Fund 9,395 $ 9,395
Temporary Investment
Fund 9,395 9,395
-----------
(Cost $18,790) 18,790
-----------
TOTAL INVESTMENTS -- 99.2%
(Cost $40,978,591) 42,022,535
OTHER ASSETS LESS
LIABILITIES -- 0.8% 356,138
-----------
NET ASSETS -- 100.0% $42,378,673
===========
# Securities with an aggregate market value of $723,680 have been segregated
with the custodian to cover margin requirements for the following open futures
contracts at April 30, 2000:
EXPIRATION NUMBER OF UNREALIZED
DESCRIPTION MONTH CONTRACTS DEPRECIATION
- ----------------------------------------------------
S&P 500 Index 06/00 12 $ 18,391
S&P 500 Index 06/00 22 254,881
--------
$273,272
========
- -------------------------------------------------------
Definitions of abbreviations are included following the Schedules of
Investments.
* Non-income producing security.
See Notes to Financial Statements.
AMERICAN SKANDIA ADVISOR FUNDS, INC.
ASAF MFS
GROWTH WITH INCOME FUND
- ---------------------------------------------------
SHARES VALUE
- ---------------------------------------------------
COMMON STOCK -- 88.8%
AEROSPACE -- 3.4%
Boeing Co. 1,470 $ 58,341
General Dynamics Corp. 2,470 144,495
Honeywell
International, Inc. 890 49,840
United Technologies
Corp. 4,450 276,734
-----------
529,410
-----------
AUTOMOBILE MANUFACTURERS -- 0.2%
Ford Motor Co. 450 24,609
-----------
AUTOMOTIVE PARTS -- 0.7%
Delphi Automotive
Systems Corp. 2,360 45,135
Federal-Mogul Corp. 520 7,053
TRW, Inc. 890 52,065
-----------
104,253
-----------
BEVERAGES -- 1.1%
Anheuser-Busch
Companies, Inc. 2,110 148,888
Coca-Cola Co. 70 3,294
PepsiCo, Inc. 540 19,811
-----------
171,993
-----------
BROADCASTING -- 0.1%
Infinity Broadcasting
Corp.* 560 19,005
-----------
BUSINESS SERVICES -- 0.8%
First Data Corp. 2,510 122,206
-----------
CHEMICALS -- 1.1%
Air Products &
Chemicals, Inc. 2,470 76,724
Dow Chemical Co. 80 9,040
DuPont, (E.I.) de
Nemours & Co. 130 6,167
Rohm & Haas Co. 2,200 78,375
-----------
170,306
-----------
CLOTHING & APPAREL -- 0.2%
Cintas Corp. 895 35,464
-----------
COMPUTER HARDWARE -- 4.9%
Compaq Computer Corp. 2,500 73,125
Dell Computer Corp.* 2,800 140,350
EMC Corp.* 900 125,044
Hewlett-Packard Co. 2,370 319,950
International Business
Machines Corp. 1,010 112,741
-----------
771,210
-----------
COMPUTER SERVICES & SOFTWARE -- 8.9%
Automatic Data
Processing, Inc. 1,020 54,889
BMC Software, Inc.* 560 26,215
Cisco Systems, Inc.* 4,210 291,870
SHARES VALUE
- ---------------------------------------------------
- ---------------------------------------------------
Computer Associates
International, Inc. 3,080 $ 171,903
Computer Sciences
Corp.* 1,010 82,378
DST Systems, Inc.* 970 71,962
Electronic Data Systems
Corp. 900 61,875
Microsoft Corp.* 3,510 244,822
Oracle Corp.* 2,180 174,264
Rational Software
Corp.* 340 28,943
Sun Microsystems, Inc.* 2,020 185,714
VERITAS Software Corp.* 220 23,598
-----------
1,418,433
-----------
CONGLOMERATES -- 3.1%
Corning, Inc. 1,320 260,700
Tyco International Ltd. 4,930 226,472
-----------
487,172
-----------
CONSUMER PRODUCTS & SERVICES -- 1.2%
Bausch & Lomb, Inc. 730 44,074
Clorox Co. 890 32,708
Colgate-Palmolive Co. 1,520 86,830
Gillette Co. 540 19,980
Procter & Gamble Co. 90 5,366
-----------
188,958
-----------
ELECTRONIC COMPONENTS & EQUIPMENT -- 4.5%
AT&T Wireless Group* 1,240 39,448
Cabletron Systems,
Inc.* 2,310 52,841
Emerson Electric Co. 1,480 81,215
General Electric Co. 3,290 517,352
Texas Instruments, Inc. 120 19,545
-----------
710,401
-----------
ENTERTAINMENT & LEISURE -- 1.4%
Time Warner, Inc. 2,370 213,152
-----------
FINANCIAL -- BANK & TRUST -- 3.3%
Bank of America Corp. 1,510 73,990
Chase Manhattan Corp. 100 7,206
Comerica, Inc. 520 22,035
Northern Trust Corp. 310 19,879
State Street Corp. 1,880 182,124
U.S. Bancorp 3,900 79,219
Wells Fargo & Co. 3,130 128,526
-----------
512,979
-----------
FINANCIAL SERVICES --5.0%
American Express Co. 520 78,033
Associates First
Capital Corp. Cl-A 260 5,769
AXA Financial, Inc. 1,840 60,030
Capital One Financial
Corp. 520 22,750
Citigroup, Inc. 1,530 90,939
Fannie Mae Corp. 1,520 91,675
Freddie Mac Corp. 4,370 200,746
MBIA, Inc. 530 26,202
ASAF MFS
GROWTH WITH INCOME FUND
- ---------------------------------------------------
SHARES VALUE
- ---------------------------------------------------
Merrill Lynch & Co.,
Inc. 930 $ 94,802
Providian Financial
Corp. 540 47,554
Reuters Group PLC [ADR] 670 69,889
-----------
788,389
-----------
FOOD -- 3.6%
Bestfoods, Inc. 740 37,185
Kroger Co.* 3,170 58,843
Quaker Oats Co. 1,430 93,218
Safeway, Inc.* 8,650 381,682
-----------
570,928
-----------
HEALTHCARE
SERVICES -- 0.4%
United Healthcare
Group, Inc.* 900 60,019
-----------
INSURANCE -- 2.8%
American International
Group, Inc. 1,050 115,172
Lincoln National Corp. 840 29,243
Marsh & McLennan
Companies, Inc. 710 69,979
St. Paul Companies,
Inc. 300 10,688
The Hartford Financial
Services Group, Inc. 3,890 203,009
Torchmark Corp. 750 18,797
-----------
446,888
-----------
MACHINERY & EQUIPMENT -- 1.8%
Baker Hughes, Inc. 2,920 92,893
Deere & Co. 1,560 62,985
Grainger, (W.W.), Inc. 980 42,508
Illinois Tool Works,
Inc. 260 16,656
Ingersoll-Rand Co. 1,530 71,814
-----------
286,856
-----------
MEDICAL SUPPLIES & EQUIPMENT -- 1.9%
Johnson & Johnson Co. 740 61,050
Medtronic, Inc. 4,500 233,719
-----------
294,769
-----------
METALS & MINING -- 0.1%
Alcoa, Inc. 130 8,434
-----------
OIL & GAS -- 7.3%
BP Amoco PLC [ADR] 7,015 357,765
Chevron Corp. 680 57,885
Coastal Corp. 3,420 171,641
Conoco, Inc. Cl-B 7,080 176,115
Exxon Mobil Corp. 3,988 309,818
Williams Companies,
Inc. 2,360 88,058
-----------
1,161,282
-----------
PAPER & FOREST PRODUCTS -- 0.4%
Weyerhaeuser Co. 1,060 56,644
-----------
SHARES VALUE
- ---------------------------------------------------
- ---------------------------------------------------
PHARMACEUTICALS -- 8.1%
American Home Products
Corp. 1,600 $ 89,900
Bristol-Meyers Squibb
Co. 4,610 241,737
Pfizer, Inc. 7,470 314,674
Pharmacia Corp. 8,282 413,581
Schering-Plough Corp. 1,420 57,244
Warner-Lambert Co. 1,570 178,686
-----------
1,295,822
-----------
PRINTING & PUBLISHING -- 2.7%
Gannett Co., Inc. 2,600 166,074
New York Times Co. 2,510 103,381
Tribune Co. 3,890 151,224
-----------
420,679
-----------
RESTAURANTS -- 0.2%
McDonald's Corp. 970 36,981
-----------
RETAIL & MERCHANDISING -- 3.3%
Costco Companies, Inc.* 110 5,947
CVS Corp. 4,960 215,760
Home Depot, Inc. 695 38,963
Lowe's Companies, Inc. 520 25,740
Target Corp. 120 7,988
Wal-Mart Stores, Inc. 4,160 230,360
-----------
524,758
-----------
SEMICONDUCTORS -- 3.7%
Intel Corp. 3,910 495,837
National Semiconductor
Corp.* 1,320 80,190
-----------
576,027
-----------
TELECOMMUNICATIONS -- 10.3%
Alltel Corp. 2,120 141,245
AT&T Corp. 1,520 70,965
Bell Atlantic Corp. 3,960 234,629
BellSouth Corp. 730 35,542
BroadWing, Inc. 1,520 43,035
Copper Mountain
Networks, Inc.* 110 9,171
Global Crossing Ltd.* 1,120 35,280
MCI WorldCom, Inc.* 3,120 141,765
Motorola, Inc. 2,594 308,847
Nokia Corp. Cl-A [ADR] 540 30,713
Nortel Networks Corp. 1,530 173,273
Qwest Communications
International, Inc.* 1,460 63,328
SBC Communications,
Inc. 2,580 113,036
Sprint Corp. (FON
Group) 1,600 98,400
Sprint Corp. (PCS
Group)* 1,420 78,100
Tellabs, Inc.* 1,220 66,871
-----------
1,644,200
-----------
AMERICAN SKANDIA ADVISOR FUNDS, INC.
- ---------------------------------------------------
SHARES VALUE
- ---------------------------------------------------
TRANSPORTATION -- 0.2%
Canadian National
Railway Co. 1,047 $ 29,381
-----------
UTILITIES -- 2.1%
CMS Energy Corp. 1,040 19,760
Enron Corp. 650 45,297
Nisource, Inc. 1,520 28,120
PECO Energy Co. 2,390 99,633
Pinnacle West Capital
Co. 690 24,236
Texas Utilities Co. 2,380 80,176
Unicom Corp. 670 26,633
-----------
323,855
-----------
TOTAL COMMON STOCK
(Cost $13,478,228) 14,005,463
-----------
FOREIGN STOCK -- 2.0%
CHEMICALS -- 0.3%
AKZO Nobel NV -- (NLG) 970 39,803
-----------
FINANCIAL -- BANK & TRUST -- 0.2%
ING Groep NV -- (NLG) 540 29,534
-----------
FOOD -- 0.5%
Nestle SA -- (CHF) 44 77,746
-----------
PHARMACEUTICALS -- 0.3%
AstraZeneca Group
PLC -- (GBP) 1,000 42,077
-----------
TELECOMMUNICATIONS -- 0.7%
KPN NV -- (NLG) 680 68,689
Vodafone AirTouch
PLC -- (GBP) 13,011 59,959
-----------
128,648
-----------
TOTAL FOREIGN STOCK
(Cost $322,174) 317,808
-----------
PREFERRED STOCK -- 0.3%
TELECOMMUNICATIONS -- 0.3%
Global Crossing Ltd.
6.75% [CVT]* 200 49,400
-----------
UTILITIES -- 0.0%
Texas Utilities Co.
3.315% [CVT] 20 719
-----------
TOTAL PREFERRED STOCK
(Cost $50,844) 50,119
-----------
PAR
(000) VALUE
- ---------------------------------------------------
- ---------------------------------------------------
CORPORATE OBLIGATIONS -- 0.4%
FINANCIAL
SERVICES -- 0.1%
Bell Atlantic Financial
Services 144A
4.25%, 09/15/05 $15 $ 18,926
-----------
TELECOMMUNICATIONS -- 0.3%
NTL, Inc. 144A
5.75%, 12/15/09 43 38,001
-----------
TOTAL CORPORATE OBLIGATIONS
(Cost $63,143) 56,927
-----------
SHARES
------
SHORT-TERM INVESTMENTS -- 5.6%
Temporary Investment
Cash Fund 444,777 444,777
Temporary Investment
Fund 444,777 444,777
-----------
(Cost $889,554) 889,554
-----------
TOTAL INVESTMENTS -- 97.1%
(Cost $14,803,943) 15,319,871
OTHER ASSETS LESS
LIABILITIES -- 2.9% 458,348
-----------
NET ASSETS -- 100.0% $15,778,219
===========
Foreign currency exchange contracts outstanding at April 30, 2000:
UNREALIZED
SETTLEMENT CONTRACTS TO IN EXCHANGE CONTRACTS APPRECIATION/
MONTH TYPE RECEIVE FOR AT VALUE (DEPRECIATION)
- ---------------------------------------------------------------------------
05/00 Buy CHF 9,195 $ 5,329 $ 5,346 $ 17
05/00 Buy EUR 11,563 10,643 10,539 (104)
05/00 Buy GBP 5,161 8,125 8,074 (51)
------- ------- -----
$24,097 $23,959 $(138)
======= ======= =====
- -------------------------------------------------------
Definitions of abbreviations are included following the Schedules of
Investments.
* Non-income producing security.
144A -- Security was purchased pursuant to Rule 144A under the Securities Act of
1933 and may not be resold subject to that rule except to qualified
institutional buyers. At the end of the period, these securities
amounted to 0.4% of net assets.
See Notes to Financial Statements.
ASAF KEMPER
SMALL-CAP GROWTH
- ---------------------------------------------------
SHARES VALUE
- ---------------------------------------------------
COMMON STOCK -- 73.5%
AEROSPACE -- 0.1%
Remec, Inc.* 900 $ 34,144
-----------
AUTOMOTIVE PARTS -- 1.3%
Copart, Inc.* 18,900 326,025
-----------
BEVERAGES -- 0.0%
Celestial Seasonings,
Inc.* 100 3,363
-----------
BROADCASTING -- 1.1%
Cumulus Media, Inc.
Cl-A* 19,700 258,563
-----------
BUILDING MATERIALS -- 1.3%
Simpson Manufacturing
Co., Inc.* 1,800 81,450
Trex Co., Inc.* 5,600 225,050
-----------
306,500
-----------
BUSINESS SERVICES -- 4.8%
AnswerThink Consulting
Group, Inc.* 7,200 138,600
Digital Courier
Technologies, Inc.* 19,000 124,688
Interactive
Intelligence, Inc.* 1,400 34,300
Korn/Ferry
International, Inc.* 7,700 204,049
Loislaw.com, Inc.* 1,100 7,563
Mediaplex, Inc.* 400 20,500
Micromuse, Inc.* 2,600 255,124
Newgen Results Corp.* 5,000 64,688
RSA Security, Inc.* 1,400 82,163
Watchguard Technologies,
Inc.* 5,000 240,937
-----------
1,172,612
-----------
CHEMICALS -- 0.6%
Cabot Microelectronics
Corp.* 4,200 136,500
-----------
CLOTHING & APPAREL -- 1.8%
David's Bridal, Inc.* 3,300 37,950
Gildan Activewear, Inc.
Cl-A* 7,200 247,050
Pacific Sunwear of
California, Inc.* 4,200 143,063
-----------
428,063
-----------
COMPUTER HARDWARE -- 4.8%
Mercury Computer
Systems, Inc.* 3,000 115,313
Silicon Storage
Technology, Inc.* 10,700 1,043,249
-----------
1,158,562
-----------
SHARES VALUE
- ---------------------------------------------------
- ---------------------------------------------------
COMPUTER SERVICES & SOFTWARE -- 15.9%
Active Software, Inc.* 2,300 $ 92,719
Advent Software, Inc.* 6,500 341,250
AVT Corp.* 8,100 89,606
Braun Consulting, Inc.* 5,000 125,000
BSQUARE Corp.* 3,700 64,750
Digital River, Inc.* 3,300 49,500
Information Architects
Corp.* 12,000 132,000
ISS Group, Inc.* 6,400 578,799
Mercator Software, Inc.* 2,700 99,394
Mercury Interactive
Corp.* 5,600 503,999
National Computer
Systems, Inc. 2,900 149,169
National Information
Consortium, Inc.* 18,500 228,938
Numerical Technologies,
Inc.* 800 33,400
Open Text Corp.* 100 2,488
Pinnacle Systems, Inc.* 26,500 635,999
Quintus Corp.* 10,000 98,125
Radisys Corp.* 900 37,238
Technology Solutions
Corp.* 29,200 191,625
Ultimate Software Group,
Inc.* 9,100 80,763
Viador, Inc.* 6,400 129,200
Vocaltec Ltd.* 6,800 120,700
Xpedior, Inc.* 6,800 110,500
-----------
3,895,162
-----------
CONSUMER PRODUCTS & SERVICES -- 1.5%
JAKKS Pacific, Inc.* 8,900 163,538
Rent-A-Center, Inc.* 9,300 189,487
Steiner Leisure Ltd.* 900 18,113
-----------
371,138
-----------
ELECTRONIC COMPONENTS & EQUIPMENT -- 3.4%
Burr-Brown Corp.* 3,800 258,875
Power-One, Inc.* 5,300 361,724
SonoSight, Inc.* 6,400 210,800
-----------
831,399
-----------
ENTERTAINMENT & LEISURE -- 0.7%
The 3DO Co.* 9,500 58,188
THQ, Inc.* 7,200 111,600
-----------
169,788
-----------
FINANCIAL SERVICES -- 1.3%
Hudson United Bankcorp* 8,700 196,294
Multex.com, Inc.* 5,600 113,750
-----------
310,044
-----------
FOOD -- 0.4%
Hain Food Group, Inc.* 3,800 101,888
-----------
FURNITURE -- 1.0%
Cost Plus, Inc.* 7,800 238,388
-----------
AMERICAN SKANDIA ADVISOR FUNDS, INC.
- ---------------------------------------------------
SHARES VALUE
- ---------------------------------------------------
HEALTHCARE SERVICES -- 2.1%
Albany Molecular
Research, Inc.* 4,400 $ 193,050
Gene Logic, Inc.* 4,400 118,250
MedQuist, Inc.* 5,600 198,450
-----------
509,750
-----------
INDUSTRIAL -- 1.1%
Brooks Automation, Inc.* 3,000 269,063
-----------
INTERNET SERVICES -- 2.1%
Firstworld
Communications, Inc.* 10,200 121,763
Internet Pictures Corp.* 6,200 97,650
Netopia, Inc.* 3,800 158,649
S1 Corp.* 800 43,450
Vicinity Corp.* 6,500 77,188
-----------
498,700
-----------
MACHINERY & EQUIPMENT -- 3.6%
Asyst Technologies,
Inc.* 10,000 534,999
National-Oilwell, Inc.* 7,800 186,713
SpeedFam-IPEC, Inc.* 9,300 147,056
-----------
868,768
-----------
MEDICAL SUPPLIES & EQUIPMENT -- 2.2%
Aclara Biosciences,
Inc.* 3,700 141,063
Biovail Corp.* 4,400 209,825
Cytyc Corp.* 900 40,275
Fusion Medical
Technologies, Inc.* 8,100 141,750
-----------
532,913
-----------
OIL & GAS -- 3.3%
Barrett Resources Corp.* 6,400 203,200
Key Production Co.,
Inc.* 2,200 29,013
Stone Energy Corp.* 5,500 259,875
Swift Energy Co.* 15,000 306,562
-----------
798,650
-----------
PERSONAL SERVICES -- 0.1%
Cornell Corrections,
Inc.* 1,500 13,500
-----------
PHARMACEUTICALS -- 2.3%
Alexion Pharmaceuticals,
Inc.* 4,400 196,350
Cryolife, Inc.* 3,400 65,875
Intermune
Pharmaceuticals, Inc.* 400 6,800
SHARES VALUE
- ---------------------------------------------------
- ---------------------------------------------------
Maxim Pharmaceuticals,
Inc.* 1,700 $ 65,875
QLT PhotoTherapeutics,
Inc.* 4,000 222,250
-----------
557,150
-----------
REAL ESTATE -- 0.6%
CoStar Group, Inc.* 6,500 155,898
-----------
RESTAURANTS -- 0.3%
The Cheesecake Factory,
Inc.* 1,800 73,688
-----------
RETAIL & MERCHANDISING -- 0.5%
Duane Reade, Inc.* 3,800 114,000
-----------
SEMICONDUCTORS -- 4.1%
Alpha Industries, Inc.* 4,800 249,600
American Superconductor
Corp.* 3,800 145,113
Silicon Image, Inc.* 3,800 152,475
Therma-Wave, Inc.* 5,900 162,250
TranSwitch Corp.* 3,300 290,605
-----------
1,000,043
-----------
TELECOMMUNICATIONS -- 11.2%
ANTEC Corp.* 11,000 591,249
Com21, Inc.* 6,800 190,400
Cypress Communications,
Inc.* 10,900 143,744
Insight Communications
Co., Inc.* 13,400 273,025
Inter-Tel, Inc. 1,200 24,300
Lightbridge, Inc.* 11,100 233,100
Natural MicroSystems
Corp.* 4,200 273,525
Polycom, Inc.* 5,500 435,187
Proxim, Inc.* 800 61,550
Research in Motion Ltd.* 4,400 187,000
SBA Communications
Corp.* 2,700 109,688
Spectrasite Holdings,
Inc.* 9,500 199,500
-----------
2,722,268
-----------
TOTAL COMMON STOCK
(Cost $20,133,843) 17,856,530
-----------
ASAF KEMPER
SMALL-CAP GROWTH
- ---------------------------------------------------
PAR
(000) VALUE
- ---------------------------------------------------
U.S. GOVERNMENT AGENCY OBLIGATIONS -- 23.0%
Federal Home Loan Bank
5.88%, 05/01/00
(Cost $5,600,000) $5,600 $ 5,600,000
-----------
SHARES
------
SHORT-TERM INVESTMENTS -- 0.5%
Temporary Investment
Cash Fund 65,758 65,758
Temporary Investment
Fund 65,758 65,758
-----------
(Cost $131,516) 131,516
-----------
TOTAL INVESTMENTS -- 97.0%
(Cost $25,865,359) 23,588,046
OTHER ASSETS LESS
LIABILITIES -- 3.0% 730,044
-----------
NET ASSETS -- 100.0% $24,318,090
===========
- -------------------------------------------------------
* Non-income producing security.
DEFINITION OF ABBREVIATIONS
-------------------------------------------------------
THE FOLLOWING ABBREVIATIONS ARE USED THROUGHOUT THE SCHEDULES OF INVESTMENTS:
SECURITY DESCRIPTIONS:
ADR -- American Depositary Receipt
CVT -- Convertible Security
GDR -- Global Depositary Receipt
PIK -- Payment in Kind Security
REIT -- Real Estate Investment Trust
STEP -- Stepped Coupon Bond (Rates shown are the
effective yields at purchase date.)
TBA -- To be Announced Security
COUNTRIES/CURRENCIES:
AUD -- Australia/Australian Dollar
CAD -- Canada/Canadian Dollar
CHF -- Switzerland/Swiss Franc
EUR -- Europe/Euro Currency
GBP -- United Kingdom/British Pound
HKD -- Hong Kong/Hong Kong Dollar
ITL -- Italy/Italian Lira
JPY -- Japan/Japanese Yen
MXP -- Mexico/Mexican Peso
NLG -- Netherlands/Netherland Guilder
NOK -- Norway/Norwegian Krone
SEK -- Sweden/Swedish Krona
SGD -- Singapore/Singapore Dollar
See Notes to Financial Statements.
(This page intentionally left blank)
APRIL 30, 2000
(UNAUDITED)
STATEMENTS OF ASSETS AND LIABILITIES
--------------------------------------------------------------------------------
ASAF ASAF ASAF
FOUNDERS ASAF T. ROWE AMERICAN ASAF
INTERNATIONAL JANUS PRICE SMALL CENTURY FEDERATED
SMALL SMALL-CAP COMPANY STRATEGIC HIGH YIELD
CAPITALIZATION GROWTH VALUE BALANCED BOND
FUND FUND FUND FUND FUND
-------------- ------------ ----------- ------------ ------------
ASSETS:
Investments in Securities at Value (A) $130,849,118 $432,093,246 $74,100,892 $160,901,314 $116,440,626
Collateral Received for Securities Lent -- 41,671,367 1,570,000 15,079,265 4,037,727
Cash 5,321,830 71,785 52,413 6,506,673 200
Foreign Currency (B) 41,465 -- -- -- --
Receivable for:
Securities Sold 2,024,501 6,347,697 -- 70,159 728,574
Dividends and Interest 103,716 52,082 29,419 988,954 2,860,331
Fund Shares Sold 2,300,167 199,353 649,883 684,775 284,675
Unrealized Appreciation on Foreign
Currency Exchange Contracts 4,906 -- -- -- --
Receivable from Investment Manager -- -- -- -- --
Deferred Organization Costs 33,287 33,287 33,287 33,287 33,369
Prepaid Expenses 44,841 46,908 28,089 32,800 21,093
------------ ------------ ----------- ------------ ------------
Total Assets 140,723,831 480,515,725 76,463,983 184,297,227 124,406,595
------------ ------------ ----------- ------------ ------------
LIABILITIES:
Cash Overdraft -- -- -- -- --
Payable to Investment Manager 33,814 121,373 36,046 71,961 34,778
Unrealized Depreciation on Foreign
Currency Exchange Contracts 44,789 -- -- -- --
Payable upon Return of Securities Lent -- 41,671,367 1,570,000 15,079,265 4,037,727
Payable for:
Securities Purchased 7,224,576 1,510,452 -- 7,399,108 692,562
Fund Shares Redeemed 619,895 97,045 6,885 8,496 323,672
Futures Variation Margin -- -- -- 18,250 --
Distribution Fees 93,195 335,235 53,207 119,018 84,871
Accrued Expenses and Other
Liabilities 53,956 440,369 97,158 214,367 131,846
Accrued Dividends -- -- -- -- 843,188
------------ ------------ ----------- ------------ ------------
Total Liabilities 8,070,225 44,175,841 1,763,296 22,910,465 6,148,644
------------ ------------ ----------- ------------ ------------
NET ASSETS $132,653,606 $436,339,884 $74,700,687 $161,386,762 $118,257,951
============ ============ =========== ============ ============
COMPONENTS OF NET ASSETS
Capital Stock $ 7,059 $ 22,566 $ 7,774 $ 12,164 $ 13,689
Additional Paid-In Capital 148,772,950 385,212,592 75,132,124 148,970,115 134,196,348
Undistributed Net Investment Income
(Loss) (427,462) (2,616,288) (61,149) 532,505 59,614
Accumulated Net Realized Gain (Loss) on
Investments (1,094,482) 36,219,975 395,871 719,272 (1,531,502)
Net Unrealized Appreciation
(Depreciation) on Investments (14,604,459) 17,501,039 (773,933) 11,152,706 (14,480,198)
------------ ------------ ----------- ------------ ------------
NET ASSETS $132,653,606 $436,339,884 $74,700,687 $161,386,762 $118,257,951
============ ============ =========== ============ ============
(A) Investments at Cost $145,414,943 $414,589,686 $74,874,825 $149,789,184 $130,920,824
(B) Foreign Currency at Cost $ 47,092 $ -- $ -- $ -- $ --
============ ============ =========== ============ ============
--------------------------------------------------------------------------------
AMERICAN SKANDIA ADVISOR FUNDS, INC.
ASAF ASAF ASAF
FOUNDERS ASAF T. ROWE AMERICAN ASAF
INTERNATIONAL JANUS PRICE SMALL CENTURY FEDERATED
SMALL SMALL-CAP COMPANY STRATEGIC HIGH YIELD
CAPITALIZATION GROWTH VALUE BALANCED BOND
FUND FUND FUND FUND FUND
-------------- ------------ ----------- ----------- -----------
NET ASSET VALUE:
Class A: Net Assets $30,213,385 $ 98,977,783 $14,772,762 $28,836,751 $17,115,983
----------- ------------ ----------- ----------- -----------
Shares Outstanding 1,592,092 5,065,779 1,525,479 2,167,369 1,981,603
----------- ------------ ----------- ----------- -----------
Net Asset Value and
Redemption Price Per
Share $ 18.98 $ 19.54 $ 9.68 $ 13.30 $ 8.64
=========== ============ =========== =========== ===========
Divided by (1 - Maximum
Sales Charge) 94 1/4% 94 1/4% 94 1/4% 94 1/4% 95 3/4%
----------- ------------ ----------- ----------- -----------
Offering Price Per Share* $ 20.14 $ 20.73 $ 10.27 $ 14.11 $ 9.02
=========== ============ =========== =========== ===========
Class B: Net Assets $63,181,259 $209,161,492 $29,298,564 $81,858,927 $70,541,334
----------- ------------ ----------- ----------- -----------
Shares Outstanding 3,368,464 10,852,640 3,053,779 6,172,718 8,164,426
----------- ------------ ----------- ----------- -----------
Net Asset Value, Offering
and Redemption Price
Per Share $ 18.76 $ 19.27 $ 9.59 $ 13.26 $ 8.64
=========== ============ =========== =========== ===========
Class C: Net Assets $26,152,450 $ 89,655,105 $15,422,826 $28,358,810 $12,423,473
----------- ------------ ----------- ----------- -----------
Shares Outstanding 1,399,412 4,648,587 1,608,751 2,138,854 1,438,310
----------- ------------ ----------- ----------- -----------
Net Asset Value, Offering
and Redemption Price
Per Share $ 18.69 $ 19.29 $ 9.59 $ 13.26 $ 8.64
=========== ============ =========== =========== ===========
Class X: Net Assets $13,106,512 $ 38,545,504 $15,206,535 $22,332,274 $18,177,161
----------- ------------ ----------- ----------- -----------
Shares Outstanding 699,319 1,998,591 1,585,668 1,684,613 2,104,808
----------- ------------ ----------- ----------- -----------
Net Asset Value, Offering
and Redemption Price
Per Share $ 18.74 $ 19.29 $ 9.59 $ 13.26 $ 8.64
=========== ============ =========== =========== ===========
* On sales of $50,000 or more, the offering price of Class A shares is reduced.
See Notes to Financial Statements.
APRIL 30, 2000
(UNAUDITED)
STATEMENTS OF ASSETS AND LIABILITIES
--------------------------------------------------------------------------------
ASAF
ASAF ASAF ASAF ASAF NEUBERGER
OPPENHEIMER LORD ABBETT JANUS MARSICO BERMAN
LARGE-CAP GROWTH AND OVERSEAS CAPITAL MID-CAP
GROWTH INCOME GROWTH GROWTH GROWTH
FUND FUND FUND FUND FUND
------------ ------------ ------------ -------------- ------------
ASSETS:
Investments in Securities at Value
(A) $108,297,339 $186,164,610 $684,379,078 $1,026,317,859 $227,405,240
Collateral Received for Securities
Lent 13,110,502 23,018,894 -- 214,507,421 70,280,465
Cash 13,983,196 388,206 101,652 -- 3,393,513
Foreign Currency (B) -- -- 272 -- --
Receivable for:
Securities Sold -- -- 4,688,007 9,565,719 --
Dividends and Interest 60,353 212,911 477,189 661,362 83,244
Fund Shares Sold 507,481 505,229 365,168 5,013,182 2,373,852
Unrealized Appreciation on Foreign
Currency Exchange Contracts -- -- 9,373,795 -- --
Receivable from Investment Manager -- -- -- -- --
Deferred Organization Costs -- -- -- -- --
Prepaid Expenses 36,477 31,081 50,339 22,214 30,472
------------ ------------ ------------ -------------- ------------
Total Assets 135,995,348 210,320,931 699,435,500 1,256,087,757 303,566,786
------------ ------------ ------------ -------------- ------------
LIABILITIES:
Cash Overdraft -- -- -- 113,654 --
Payable to Investment Manager 74,805 86,500 606,472 739,002 50,753
Unrealized Depreciation on Foreign
Currency Exchange Contracts -- -- 3,553,208 -- --
Payable upon Return of Securities
Lent 13,110,502 23,018,894 -- 214,507,421 70,280,465
Payable for:
Securities Purchased -- -- 2,766,437 5,113,686 1,628,219
Fund Shares Redeemed 7,555 18,661 309,120 460,483 6,548
Futures Variation Margin -- -- -- -- --
Distribution Fees 95,518 127,139 505,173 699,378 154,598
Accrued Expenses and Other
Liabilities 56,862 209,407 431,753 614,222 125,727
Accrued Dividends -- -- -- -- --
------------ ------------ ------------ -------------- ------------
Total Liabilities 13,345,242 23,460,601 8,172,163 222,247,846 72,246,310
------------ ------------ ------------ -------------- ------------
NET ASSETS $122,650,106 $186,860,330 $691,263,337 $1,033,839,911 $231,320,476
============ ============ ============ ============== ============
COMPONENTS OF NET ASSETS
Capital Stock $ 6,947 $ 14,990 $ 34,111 $ 61,366 $ 9,970
Additional Paid-In Capital 96,010,847 171,973,902 529,860,964 866,263,346 212,847,232
Undistributed Net Investment Income
(Loss) (635,811) 17,515 (3,354,751) (4,341,230) (1,003,260)
Accumulated Net Realized Gain (Loss) on
Investments 3,277,880 205,743 34,784,000 (12,784,360) (2,993,735)
Net Unrealized Appreciation
(Depreciation) on Investments 23,990,243 14,648,180 129,939,013 184,640,789 22,460,269
------------ ------------ ------------ -------------- ------------
NET ASSETS $122,650,106 $186,860,330 $691,263,337 $1,033,839,911 $231,320,476
============ ============ ============ ============== ============
(A) Investments at Cost $ 84,307,096 $171,516,430 $560,254,109 $ 841,676,324 $204,944,970
(B) Foreign Currency at Cost $ -- $ -- $ 303 $ -- $ --
============ ============ ============ ============== ============
--------------------------------------------------------------------------------
AMERICAN SKANDIA ADVISOR FUNDS, INC.
ASAF
ASAF ASAF ASAF ASAF NEUBERGER
OPPENHEIMER LORD ABBETT JANUS MARSICO BERMAN
LARGE-CAP GROWTH AND OVERSEAS CAPITAL MID-CAP
GROWTH INCOME GROWTH GROWTH GROWTH
FUND FUND FUND FUND FUND
----------- ----------- ------------ ------------ ------------
NET ASSET VALUE:
Class A: Net Assets $22,456,359 $36,819,561 $172,184,478 $197,509,435 $ 51,155,050
----------- ----------- ------------ ------------ ------------
Shares Outstanding 1,261,606 2,847,145 8,425,665 11,649,008 2,191,646
----------- ----------- ------------ ------------ ------------
Net Asset Value and
Redemption Price Per
Share $ 17.80 $ 12.93 $ 20.44 $ 16.96 $ 23.34
=========== =========== ============ ============ ============
Divided by (1 -Maximum
Sales Charge) 94 1/4% 94 1/4% 94 1/4% 94 1/4% 94 1/4%
----------- ----------- ------------ ------------ ------------
Offering Price Per
Share* $ 18.89 $ 13.72 $ 21.69 $ 17.99 $ 24.76
=========== =========== ============ ============ ============
Class B: Net Assets $60,998,234 $87,302,761 $288,480,632 $513,776,646 $113,528,617
----------- ----------- ------------ ------------ ------------
Shares Outstanding 3,458,260 6,770,279 14,282,934 30,525,107 4,901,870
----------- ----------- ------------ ------------ ------------
Net Asset Value,
Offering and
Redemption Price Per
Share $ 17.64 $ 12.90 $ 20.20 $ 16.83 $ 23.16
=========== =========== ============ ============ ============
Class C: Net Assets $17,832,731 $33,297,890 $163,812,839 $244,005,010 $ 45,667,554
----------- ----------- ------------ ------------ ------------
Shares Outstanding 1,014,300 2,584,985 8,095,649 14,514,958 1,970,749
----------- ----------- ------------ ------------ ------------
Net Asset Value,
Offering and
Redemption Price Per
Share $ 17.58 $ 12.88 $ 20.23 $ 16.81 $ 23.17
=========== =========== ============ ============ ============
Class X: Net Assets $21,362,782 $29,440,118 $ 66,785,388 $ 78,548,820 $ 20,969,255
----------- ----------- ------------ ------------ ------------
Shares Outstanding 1,214,195 2,286,914 3,306,689 4,675,903 906,234
----------- ----------- ------------ ------------ ------------
Net Asset Value,
Offering and
Redemption Price Per
Share $ 17.59 $ 12.87 $ 20.20 $ 16.80 $ 23.14
=========== =========== ============ ============ ============
* On sales of $50,000 or more, the offering price of Class A shares is reduced.
See Notes to Financial Statements.
APRIL 30, 2000
(UNAUDITED)
STATEMENTS OF ASSETS AND LIABILITIES
--------------------------------------------------------------------------------
ASAF ASAF ASAF
NEUBERGER ASAF BANKERS MFS ASAF
BERMAN AIM TRUST GROWTH KEMPER
MID-CAP INTERNATIONAL MANAGED WITH SMALL-CAP
VALUE EQUITY INDEX 500 INCOME GROWTH
FUND FUND FUND FUND FUND
----------- ------------- ----------- ----------- -----------
ASSETS:
Investments in Securities at Value (A) $65,461,372 $19,515,162 $42,022,535 $15,319,871 $23,588,046
Collateral Received for Securities Lent 7,411,100 -- -- -- --
Cash 55 2,569 -- 424,787 --
Foreign Currency (B) -- 26,902 -- -- --
Receivable for:
Securities Sold -- 92,371 -- 24,390 80,495
Dividends and Interest 56,105 6,362 24,520 15,869 1,831
Fund Shares Sold 435,912 495,063 409,310 188,059 741,055
Unrealized Appreciation on Foreign
Currency Exchange Contracts -- -- -- 17 --
Receivable from Investment Manager -- -- -- -- --
Deferred Organization Costs -- -- -- -- --
Prepaid Expenses 12,796 52,295 55,589 51,726 53,859
----------- ----------- ----------- ----------- -----------
Total Assets 73,377,340 20,190,724 42,511,954 16,024,719 24,465,286
----------- ----------- ----------- ----------- -----------
LIABILITIES:
Cash Overdraft -- -- 16,712 -- --
Payable to Investment Manager 29,367 12,273 20,206 4,541 6,657
Unrealized Depreciation on Foreign
Currency Exchange Contracts -- 256 -- 155 --
Payable upon Return of Securities Lent 7,411,100 -- -- -- --
Payable for:
Securities Purchased 583,216 231,409 -- 181,323 114,808
Fund Shares Redeemed 10,583 -- 2,117 4,448 --
Futures Variation Margin -- -- 44,830 -- --
Distribution Fees 46,480 13,281 28,869 10,249 19,732
Accrued Expenses and Other Liabilities 74,809 67,155 20,547 45,784 5,999
Accrued Dividends -- -- -- -- --
----------- ----------- ----------- ----------- -----------
Total Liabilities 8,155,555 324,374 133,281 246,500 147,196
----------- ----------- ----------- ----------- -----------
NET ASSETS $65,221,785 $19,866,350 $42,378,673 $15,778,219 $24,318,090
=========== =========== =========== =========== ===========
COMPONENTS OF NET ASSETS
Capital Stock $ 5,220 $ 1,932 $ 4,039 $ 1,526 $ 2,931
Additional Paid-In Capital 61,469,233 20,782,891 41,193,829 15,438,104 27,115,249
Undistributed Net Investment Income (Loss) (181,729) (14,368) 17,076 (9,193) (1,384)
Accumulated Net Realized Gain (Loss) on
Investments (871,396) (352,971) 393,057 (168,285) (521,393)
Net Unrealized Appreciation (Depreciation)
on Investments 4,800,457 (551,134) 770,672 516,067 (2,277,313)
----------- ----------- ----------- ----------- -----------
NET ASSETS $65,221,785 $19,866,350 $42,378,673 $15,778,219 $24,318,090
=========== =========== =========== =========== ===========
(A) Investments at Cost $60,660,914 $20,066,183 $40,978,591 $14,803,943 $25,865,359
(B) Foreign Currency at Cost $ -- $ 27,086 $ -- $ -- $ --
=========== =========== =========== =========== ===========
--------------------------------------------------------------------------------
AMERICAN SKANDIA ADVISOR FUNDS, INC.
ASAF ASAF ASAF
NEUBERGER ASAF BANKERS MFS ASAF
BERMAN AIM TRUST GROWTH KEMPER
MID-CAP INTERNATIONAL MANAGED WITH SMALL-CAP
VALUE EQUITY INDEX 500 INCOME GROWTH
FUND FUND FUND FUND FUND
----------- ------------- ----------- ---------- -----------
NET ASSET VALUE:
Class A: Net Assets $13,243,939 $5,021,019 $ 9,171,232 $2,553,460 $ 5,632,070
----------- ---------- ----------- ---------- -----------
Shares Outstanding 1,054,860 487,868 873,254 246,422 678,901
----------- ---------- ----------- ---------- -----------
Net Asset Value and
Redemption Price Per
Share $ 12.56 $ 10.29 $ 10.50 $ 10.36 $ 8.30
=========== ========== =========== ========== ===========
Divided by (1 - Maximum
Sales Charge) 94 1/4% 94 1/4% 94 1/4% 94 1/4% 94 1/4%
----------- ---------- ----------- ---------- -----------
Offering Price Per Share* $ 13.33 $ 10.92 $ 11.14 $ 10.99 $ 8.81
=========== ========== =========== ========== ===========
Class B: Net Assets $31,128,962 $7,263,617 $18,564,183 $7,546,631 $11,093,913
----------- ---------- ----------- ---------- -----------
Shares Outstanding 2,494,088 706,359 1,770,158 730,097 1,337,290
----------- ---------- ----------- ---------- -----------
Net Asset Value, Offering
and Redemption Price Per
Share $ 12.48 $ 10.28 $ 10.49 $ 10.34 $ 8.30
=========== ========== =========== ========== ===========
Class C: Net Assets $13,751,780 $5,901,082 $11,157,110 $3,909,642 $ 5,928,750
----------- ---------- ----------- ---------- -----------
Shares Outstanding 1,101,456 574,414 1,063,111 378,741 714,582
----------- ---------- ----------- ---------- -----------
Net Asset Value, Offering
and Redemption Price Per
Share $ 12.49 $ 10.27 $ 10.49 $ 10.32 $ 8.30
=========== ========== =========== ========== ===========
Class X: Net Assets $ 7,097,104 $1,680,632 $ 3,486,148 $1,768,486 $ 1,663,357
----------- ---------- ----------- ---------- -----------
Shares Outstanding 569,615 163,484 332,445 170,999 200,553
----------- ---------- ----------- ---------- -----------
Net Asset Value, Offering
and Redemption Price Per
Share $ 12.46 $ 10.28 $ 10.49 $ 10.34 $ 8.29
=========== ========== =========== ========== ===========
* On sales of $50,000 or more, the offering price of Class A shares is reduced.
See Notes to Financial Statements.
APRIL 30, 2000
(UNAUDITED)
STATEMENTS OF ASSETS AND LIABILITIES
--------------------------------------------------------------------------------
ASAF ASAF ASAF ASAF ASAF
T. ROWE PRICE JANUS INVESCO TOTAL JPM
INTERNATIONAL CAPITAL EQUITY RETURN MONEY
EQUITY GROWTH INCOME BOND MARKET
FUND FUND FUND FUND FUND
------------- -------------- ------------ ------------ ------------
ASSETS:
Investments in Corresponding
Portfolios of American Skandia
Master Trust (A) $41,272,965 $2,362,665,361 $236,415,885 $155,648,721 $201,901,385
Receivable for Investments Sold
in Corresponding Portfolios of
American Skandia Master Trust 493 692,196 102,852 158,068 220,030
Receivable for Fund Shares Sold 321,687 11,291,179 903,925 623,631 446,155
Receivable from Investment
Manager 8,223 1,434 40,103 20,141 963
Deferred Organization Costs 31,646 31,724 31,724 31,724 31,735
Prepaid Expenses 23,536 4,276 30,684 15,364 47,609
----------- -------------- ------------ ------------ ------------
Total Assets 41,658,550 2,374,686,170 237,525,173 156,497,649 202,647,877
----------- -------------- ------------ ------------ ------------
LIABILITIES:
Payable for Investments
Purchased in Corresponding
Portfolios of American Skandia
Master Trust 321,687 11,291,179 903,925 623,631 446,155
Payable For:
Fund Shares Redeemed 493 692,196 102,852 158,068 220,030
Distribution Fees 27,097 1,581,421 160,192 109,992 150,545
Accrued Dividends -- -- -- 628,203 674,165
Accrued Expenses and Other
Liabilities 28,964 1,054,071 235,754 47,079 86,478
----------- -------------- ------------ ------------ ------------
Total Liabilities 378,241 14,618,867 1,402,723 1,566,973 1,577,373
----------- -------------- ------------ ------------ ------------
NET ASSETS $41,280,309 $2,360,067,303 $236,122,450 $154,930,676 $201,070,504
=========== ============== ============ ============ ============
COMPONENTS OF NET ASSETS
Capital Stock $ 3,271 $ 99,847 $ 16,901 $ 15,587 $ 201,070
Additional Paid-In Capital 35,390,279 1,947,359,590 216,246,457 161,677,662 200,868,190
Undistributed Net Investment
Income (Loss) (195,691) (9,369,561) 630,211 (145,032) --
Accumulated Net Realized Gain
(Loss) on Investments (458,204) (91,929,273) 518,961 (3,319,471) 1,244
Net Unrealized Appreciation
(Depreciation) on Investments 6,540,654 513,906,700 18,709,920 (3,298,070) --
----------- -------------- ------------ ------------ ------------
NET ASSETS $41,280,309 $2,360,067,303 $236,122,450 $154,930,676 $201,070,504
=========== ============== ============ ============ ============
(A) Investments at Cost $34,732,311 $1,848,758,661 $217,705,965 $158,946,791 $201,901,385
=========== ============== ============ ============ ============
64
68
--------------------------------------------------------------------------------
AMERICAN SKANDIA ADVISOR FUNDS, INC.
ASAF ASAF ASAF ASAF ASAF
T. ROWE PRICE JANUS INVESCO TOTAL JPM
INTERNATIONAL CAPITAL EQUITY RETURN MONEY
EQUITY GROWTH INCOME BOND MARKET
FUND FUND FUND FUND FUND
------------- -------------- ------------ ----------- -----------
NET ASSET VALUE:
Class A: Net Assets $ 8,028,336 $ 458,762,156 $ 41,426,362 $25,020,888 $69,950,057
----------- -------------- ------------ ----------- -----------
Shares Outstanding 645,479 17,577,774 2,970,199 2,496,160 69,947,131
----------- -------------- ------------ ----------- -----------
Net Asset Value and
Redemption Price
Per Share $ 12.44 $ 26.10 $ 13.95 $ 10.02 $ 1.00
=========== ============== ============ =========== ===========
Divided by
(1 - Maximum
Sales Charge) 94 1/4% 94 1/4% 94 1/4% 95 3/4% 100%
----------- -------------- ------------ ----------- -----------
Offering Price Per
Share* $ 13.20 $ 27.69 $ 14.80 $ 10.46 $ 1.00
=========== ============== ============ =========== ===========
Class B: Net Assets $17,244,525 $1,265,664,585 $110,013,078 $86,688,864 $73,410,993
----------- -------------- ------------ ----------- -----------
Shares Outstanding 1,361,403 54,748,802 7,869,031 8,736,292 73,413,667
----------- -------------- ------------ ----------- -----------
Net Asset Value,
Offering and
Redemption Price
Per Share $ 12.67 $ 23.12 $ 13.98 $ 9.92 $ 1.00
=========== ============== ============ =========== ===========
Class C: Net Assets $ 7,984,393 $ 445,541,226 $ 46,790,100 $23,731,153 $35,202,202
----------- -------------- ------------ ----------- -----------
Shares Outstanding 631,517 19,307,428 3,348,452 2,392,048 35,201,536
----------- -------------- ------------ ----------- -----------
Net Asset Value,
Offering and
Redemption Price
Per Share $ 12.64 $ 23.08 $ 13.97 $ 9.92 $ 1.00
=========== ============== ============ =========== ===========
Class X: Net Assets $ 8,023,055 $ 190,099,336 $ 37,892,910 $19,489,771 $22,507,252
----------- -------------- ------------ ----------- -----------
Shares Outstanding 632,225 8,213,247 2,712,918 1,962,753 22,506,922
----------- -------------- ------------ ----------- -----------
Net Asset Value,
Offering and
Redemption Price
Per Share $ 12.69 $ 23.15 $ 13.97 $ 9.93 $ 1.00
=========== ============== ============ =========== ===========
* The offering price of Class A shares is reduced on sales of $50,000 or more,
with the exception of the Money Market Fund.
See Notes to Financial Statements.
FOR THE SIX MONTHS ENDED APRIL 30, 2000
(UNAUDITED)
STATEMENTS OF OPERATIONS
--------------------------------------------------------------------------------
ASAF ASAF ASAF
FOUNDERS ASAF T. ROWE AMERICAN ASAF
INTERNATIONAL JANUS PRICE SMALL CENTURY FEDERATED
SMALL SMALL-CAP COMPANY STRATEGIC HIGH YIELD
CAPITALIZATION GROWTH VALUE BALANCED BOND
FUND FUND FUND FUND FUND
-------------- ------------ ----------- ---------- -----------
INVESTMENT INCOME:
Interest $ 264,660 $ 2,502,914 $ 93,147 $1,858,365 $ 6,547,059
Dividends 159,840 55,536 550,210 473,293 142,804
Foreign Taxes Withheld (17,082) -- -- (1,074) --
------------ ------------ ---------- ---------- -----------
Total Investment Income 407,418 2,558,450 643,357 2,330,584 6,689,863
------------ ------------ ---------- ---------- -----------
EXPENSES:
Advisory Fees 382,803 2,233,733 326,334 669,055 431,936
Shareholder Servicing Fees 51,781 700,439 92,821 249,635 183,075
Administration and Accounting Fees 27,304 167,129 45,750 82,449 74,681
Custodian Fees 14,209 47,222 24,468 43,666 11,856
Distribution Fees -- Class A 33,929 285,497 29,749 66,642 45,520
Distribution Fees -- Class B 174,273 1,179,577 129,646 379,466 361,414
Distribution Fees -- Class C 62,996 509,452 67,346 122,621 67,393
Distribution Fees -- Class X 47,410 221,901 69,846 105,083 97,145
Supplemental Distribution Fees -- 585 -- -- --
Audit and Legal Fees 2,065 15,877 2,195 4,966 4,180
Organization Costs 7,415 7,415 7,416 7,415 7,415
Directors' Fees 560 4,256 583 1,320 1,110
Registration Fees 21,024 61,705 26,611 33,665 34,658
Miscellaneous Expenses 9,111 38,766 7,565 16,425 36,335
------------ ------------ ---------- ---------- -----------
Total Expenses 834,880 5,473,554 830,330 1,782,408 1,356,718
Less: Reimbursement of
Expenses by
Investment Manager -- (298,231) (125,824) (291,450) (168,195)
Waiver of Fees by
Investment Manager -- -- -- -- --
Fees Paid Indirectly -- (585) -- -- --
------------ ------------ ---------- ---------- -----------
Net Expenses 834,880 5,174,738 704,506 1,490,958 1,188,523
------------ ------------ ---------- ---------- -----------
Net Investment Income (Loss) (427,462) (2,616,288) (61,149) 839,626 5,501,340
------------ ------------ ---------- ---------- -----------
--------------------------------------------------------------------------------
AMERICAN SKANDIA ADVISOR FUNDS, INC.
ASAF ASAF ASAF
FOUNDERS ASAF T. ROWE AMERICAN ASAF
INTERNATIONAL JANUS PRICE SMALL CENTURY FEDERATED
SMALL SMALL-CAP COMPANY STRATEGIC HIGH YIELD
CAPITALIZATION GROWTH VALUE BALANCED BOND
FUND FUND FUND FUND FUND
-------------- ------------ ----------- ---------- -----------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net Realized Gain (Loss) on:
Securities (681,101) 36,399,596 1,173,071 1,619,428 (1,182,279)
Futures Contracts -- -- -- 451,178 --
Written Options Contracts -- -- -- -- --
Swap Agreements -- -- -- -- --
Foreign Currency Transactions (380,818) 1,317 -- (680,354) --
------------ ------------ ---------- ---------- -----------
Net Realized Gain (Loss) (1,061,919) 36,400,913 1,173,071 1,390,252 (1,182,279)
------------ ------------ ---------- ---------- -----------
Net Change in Unrealized
Appreciation (Depreciation) on:
Securities (15,586,243) (28,810,247) 6,187,150 5,003,380 (5,836,468)
Futures Contracts -- -- -- (217,521) --
Written Options Contracts -- -- -- -- --
Swap Agreements -- -- -- -- --
Translation of Assets and
Liabilities Denominated in
Foreign Currencies (36,510) (2,556) -- (2,173) --
------------ ------------ ---------- ---------- -----------
Net Change in Unrealized
Appreciation (Depreciation) (15,622,753) (28,812,803) 6,187,150 4,783,686 (5,836,468)
------------ ------------ ---------- ---------- -----------
Net Gain (Loss) on Investments (16,684,672) 7,588,110 7,360,221 6,173,938 (7,018,747)
------------ ------------ ---------- ---------- -----------
Net Increase (Decrease) in Net
Assets Resulting from Operations $(17,112,134) $ 4,971,822 $7,299,072 $7,013,564 $(1,517,407)
============ ============ ========== ========== ===========
See Notes to Financial Statements.
67
71
FOR THE SIX MONTHS ENDED APRIL 30, 2000
(UNAUDITED)
STATEMENTS OF OPERATIONS
--------------------------------------------------------------------------------
ASAF
ASAF ASAF ASAF ASAF NEUBERGER
OPPENHEIMER LORD ABBETT JANUS MARSICO BERMAN
LARGE-CAP GROWTH AND OVERSEAS CAPITAL MID-CAP
GROWTH INCOME GROWTH GROWTH GROWTH
FUND FUND FUND FUND FUND
----------- ----------- ------------ ----------- -----------
INVESTMENT INCOME:
Interest $ 258,366 $ 228,501 $ 1,999,197 $ 3,443,550 $ 378,561
Dividends 77,698 1,418,352 993,500 1,411,747 24,762
Foreign Taxes Withheld -- (1,782) (92,005) (3,267) --
----------- ---------- ------------ ----------- -----------
Total Investment Income 336,064 1,645,071 2,900,692 4,852,030 403,323
----------- ---------- ------------ ----------- -----------
EXPENSES:
Advisory Fees 404,932 812,901 3,145,947 4,262,922 594,571
Shareholder Servicing Fees 55,864 294,831 502,282 811,675 145,282
Administration and Accounting Fees 46,071 88,146 168,889 215,431 46,513
Custodian Fees 16,487 20,618 88,424 51,087 23,139
Distribution Fees -- Class A 37,521 79,534 364,816 398,313 77,026
Distribution Fees -- Class B 223,116 381,589 1,184,629 2,144,121 308,515
Distribution Fees -- Class C 61,321 138,084 645,465 981,505 127,609
Distribution Fees -- Class X 90,442 134,159 300,225 340,669 70,459
Supplemental Distribution Fees -- 57,780 83,499 62,208 22,760
Audit and Legal Fees 2,905 5,444 17,897 27,780 4,022
Organization Costs -- -- -- -- --
Directors' Fees 776 1,447 4,810 7,413 1,085
Registration Fees 26,584 35,747 69,101 132,379 35,503
Miscellaneous Expenses 8,561 13,958 48,953 63,860 11,463
----------- ---------- ------------ ----------- -----------
Total Expenses 974,580 2,064,238 6,624,937 9,499,363 1,467,947
Less: Reimbursement of
Expenses by
Investment Manager (2,705) (216,322) -- (243,895) (38,604)
Waiver of Fees by
Investment Manager -- (162,580) (285,995) -- --
Fees Paid Indirectly -- (57,780) (83,499) (62,208) (22,760)
----------- ---------- ------------ ----------- -----------
Net Expenses 971,875 1,627,556 6,255,443 9,193,260 1,406,583
----------- ---------- ------------ ----------- -----------
Net Investment Income (Loss) (635,811) 17,515 (3,354,751) (4,341,230) (1,003,260)
----------- ---------- ------------ ----------- -----------
--------------------------------------------------------------------------------
AMERICAN SKANDIA ADVISOR FUNDS, INC.
ASAF
ASAF ASAF ASAF ASAF NEUBERGER
OPPENHEIMER LORD ABBETT JANUS MARSICO BERMAN
LARGE-CAP GROWTH AND OVERSEAS CAPITAL MID-CAP
GROWTH INCOME GROWTH GROWTH GROWTH
FUND FUND FUND FUND FUND
----------- ----------- ------------ ----------- -----------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net Realized Gain (Loss) on:
Securities 3,317,724 3,260,332 37,186,200 (529,112) (970,634)
Futures Contracts -- -- -- -- --
Written Options Contracts -- -- -- (3,119,693) --
Swap Agreements -- -- -- -- --
Foreign Currency Transactions -- -- 3,470,870 200 --
----------- ---------- ------------ ----------- -----------
Net Realized Gain (Loss) 3,317,724 3,260,332 40,657,070 (3,648,605) (970,634)
----------- ---------- ------------ ----------- -----------
Net Change in Unrealized
Appreciation (Depreciation) on:
Securities 18,318,818 4,309,399 76,988,147 96,726,994 13,661,949
Futures Contracts -- -- -- -- --
Written Options Contracts -- -- -- -- --
Swap Agreements -- -- -- -- --
Translation of Assets and
Liabilities Denominated in
Foreign Currencies -- -- 6,379,078 (1,257) --
----------- ---------- ------------ ----------- -----------
Net Change in Unrealized
Appreciation (Depreciation) 18,318,818 4,309,399 83,367,225 96,725,737 13,661,949
----------- ---------- ------------ ----------- -----------
Net Gain (Loss) on Investments 21,636,542 7,569,731 124,024,295 93,077,132 12,691,315
----------- ---------- ------------ ----------- -----------
Net Increase (Decrease) in Net
Assets Resulting from Operations $21,000,731 $7,587,246 $120,669,544 $88,735,902 $11,688,055
=========== ========== ============ =========== ===========
See Notes to Financial Statements.
FOR THE SIX MONTHS ENDED APRIL 30, 2000
(UNAUDITED)
STATEMENTS OF OPERATIONS
--------------------------------------------------------------------------------
ASAF ASAF ASAF
NEUBERGER ASAF BANKERS MFS ASAF
BERMAN AIM TRUST GROWTH KEMPER
MID-CAP INTERNATIONAL MANAGED WITH SMALL-CAP
VALUE EQUITY INDEX 500 INCOME GROWTH
FUND FUND FUND FUND FUND
---------- ------------- ---------- ---------- -----------
INVESTMENT INCOME:
Interest $ 133,189 $ 34,661 $ 128,728 $ 35,304 $ 43,219
Dividends 247,766 16,632 86,216 28,071 446
Foreign Taxes Withheld (318) (1,788) (10) (207) --
---------- --------- ---------- --------- -----------
Total Investment Income 380,637 49,505 214,934 63,168 43,665
---------- --------- ---------- --------- -----------
EXPENSES:
Advisory Fees 235,514 28,426 85,305 33,019 21,164
Shareholder Servicing Fees 103,651 45,511 45,898 44,386 550
Administration and Accounting Fees 31,642 388 3,442 1,145 2,286
Custodian Fees 12,835 8,263 8,143 8,263 623
Distribution Fees -- Class A 26,020 3,314 15,401 2,384 3,080
Distribution Fees -- Class B 128,033 9,371 44,812 17,838 9,228
Distribution Fees -- Class C 52,720 7,539 24,014 7,398 5,171
Distribution Fees -- Class X 28,890 2,304 7,002 2,772 1,718
Supplemental Distribution Fees 35,512 7,946 -- -- --
Audit and Legal Fees 1,731 144 630 191 38
Organization Costs -- -- -- -- --
Directors' Fees 461 39 171 52 10
Registration Fees 28,671 305 1,326 401 531
Miscellaneous Expenses 6,170 12,372 9,608 2,705 650
---------- --------- ---------- --------- -----------
Total Expenses 691,850 125,922 245,752 120,554 45,049
Less: Reimbursement of Expenses
by Investment Manager (93,972) (54,103) (47,894) (48,193) --
Waiver of Fees by
Investment Manager -- -- -- -- --
Fees Paid Indirectly (35,512) (7,946) -- -- --
---------- --------- ---------- --------- -----------
Net Expenses 562,366 63,873 197,858 72,361 45,049
---------- --------- ---------- --------- -----------
Net Investment Income (Loss) (181,729) (14,368) 17,076 (9,193) (1,384)
---------- --------- ---------- --------- -----------
--------------------------------------------------------------------------------
AMERICAN SKANDIA ADVISOR FUNDS, INC.
ASAF ASAF ASAF
NEUBERGER ASAF BANKERS MFS ASAF
BERMAN AIM TRUST GROWTH KEMPER
MID-CAP INTERNATIONAL MANAGED WITH SMALL-CAP
VALUE EQUITY INDEX 500 INCOME GROWTH
FUND FUND FUND FUND FUND
---------- ------------- ---------- ---------- -----------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS:
Net Realized Gain (Loss) on:
Securities (780,652) (339,583) (325,300) (167,809) (521,393)
Futures Contracts -- -- 718,357 -- --
Written Options Contracts -- -- -- -- --
Swap Agreements -- -- -- -- --
Foreign Currency Transactions -- (13,388) -- (476) --
---------- --------- ---------- --------- -----------
Net Realized Gain (Loss) (780,652) (352,971) 393,057 (168,285) (521,393)
---------- --------- ---------- --------- -----------
Net Change in Unrealized
Appreciation (Depreciation) on:
Securities 6,447,360 (551,224) 1,043,944 515,928 (2,277,313)
Futures Contracts -- -- (273,272) -- --
Written Options Contracts -- -- -- -- --
Swap Agreements -- -- -- -- --
Translation of Assets and
Liabilities Denominated in
Foreign Currencies -- 90 -- 139 --
---------- --------- ---------- --------- -----------
Net Change in Unrealized
Appreciation (Depreciation) 6,447,360 (551,134) 770,672 516,067 (2,277,313)
---------- --------- ---------- --------- -----------
Net Gain (Loss) on Investments 5,666,708 (904,105) 1,163,729 347,782 (2,798,706)
---------- --------- ---------- --------- -----------
Net Increase (Decrease) in Net
Assets Resulting from Operations $5,484,979 $(918,473) $1,180,805 $ 338,589 $(2,800,090)
========== ========= ========== ========= ===========
See Notes to Financial Statements.
71
75
FOR THE SIX MONTHS ENDED APRIL 30, 2000
(UNAUDITED)
STATEMENTS OF OPERATIONS
--------------------------------------------------------------------------------
ASAF ASAF ASAF ASAF ASAF
T. ROWE PRICE JANUS INVESCO TOTAL JPM
INTERNATIONAL CAPITAL EQUITY RETURN MONEY
EQUITY GROWTH INCOME BOND MARKET
FUND FUND FUND FUND FUND
------------- ------------ ---------- ----------- ----------
INVESTMENT INCOME:
Investment Income from
Corresponding Portfolios of
American Skandia Master Trust:
Interest $ 82,714 $ 9,494,457 $1,956,871 $ 5,552,216 $5,470,318
Dividends 145,722 1,622,565 1,103,928 -- --
Foreign Taxes Withheld (18,809) (2,135) (641) -- --
---------- ------------ ---------- ----------- ----------
Total Investment Income 209,627 11,114,887 3,060,158 5,552,216 5,470,318
Expenses from Corresponding
Portfolios of American
Skandia Master Trust (207,865) (10,130,661) (892,362) (623,638) (583,786)
---------- ------------ ---------- ----------- ----------
Net Investment Income (Loss)
from Corresponding
Portfolios of American
Skandia Master Trust 1,762 984,226 2,167,796 4,928,578 4,886,532
---------- ------------ ---------- ----------- ----------
EXPENSES:
Shareholder Servicing Fees 44,177 1,839,863 361,579 103,349 284,311
Administration and Accounting Fees 14,024 26,751 22,979 23,930 17,000
Distribution Fees -- Class A 15,587 912,521 90,230 61,302 168,976
Distribution Fees -- Class B 64,046 5,237,864 466,458 435,433 400,331
Distribution Fees -- Class C 29,010 1,764,033 196,119 121,747 142,412
Distribution Fees -- Class X 37,657 870,216 179,248 98,148 125,631
Supplemental Distribution Fees 4,794 44,179 51,281 -- --
Audit and Legal Fees 392 23,122 2,507 1,936 2,514
Organization Costs 7,049 7,049 7,049 7,049 7,049
Directors' Fees 284 16,784 1,813 1,397 1,818
Registration Fees 20,273 152,189 39,527 38,639 56,299
Miscellaneous Expenses 2,380 141,764 15,774 12,271 15,825
---------- ------------ ---------- ----------- ----------
Total Expenses 239,673 11,036,335 1,434,564 905,201 1,222,166
Less: Reimbursement of
Expenses by
Investment Manager (37,426) (638,369) (270,192) (114,693) --
Fees Paid Indirectly (4,794) (44,179) (51,281) -- --
---------- ------------ ---------- ----------- ----------
Net Expenses 197,453 10,353,787 1,113,091 790,508 1,222,166
---------- ------------ ---------- ----------- ----------
Net Investment Income (Loss) (195,691) (9,369,561) 1,054,705 4,138,070 3,664,366
---------- ------------ ---------- ----------- ----------
--------------------------------------------------------------------------------
AMERICAN SKANDIA ADVISOR FUNDS, INC.
ASAF ASAF ASAF ASAF ASAF
T. ROWE PRICE JANUS INVESCO TOTAL JPM
INTERNATIONAL CAPITAL EQUITY RETURN MONEY
EQUITY GROWTH INCOME BOND MARKET
FUND FUND FUND FUND FUND
------------- ------------ ---------- ----------- ----------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS FROM CORRESPONDING
PORTFOLIOS OF AMERICAN SKANDIA
MASTER TRUST:
Net Realized Gain (Loss) on:
Securities (60,349) (35,087,912) 521,045 (819,807) 1,244
Futures Contracts -- -- -- (160,027) --
Written Options Contracts -- -- -- 187,433 --
Swap Agreements -- -- -- (27,388) --
Foreign Currency Transactions (48,036) 2,430 -- 201,944 --
---------- ------------ ---------- ----------- ----------
Net Realized Gain (Loss) (108,385) (35,085,482) 521,045 (617,845) 1,244
---------- ------------ ---------- ----------- ----------
Net Change in Unrealized
Appreciation (Depreciation) on:
Securities 3,252,336 271,626,101 7,047,129 (615,762) --
Futures Contracts -- -- -- (59,357) --
Written Options Contracts -- -- -- (163,348) --
Swap Agreements -- -- -- (12,123) --
Translation of Assets and
Liabilities Denominated in
Foreign Currencies (819) (8) -- 3,388 --
---------- ------------ ---------- ----------- ----------
Net Change in Unrealized
Appreciation (Depreciation) 3,251,517 271,626,093 7,047,129 (847,202) --
---------- ------------ ---------- ----------- ----------
Net Gain (Loss) on Investments 3,143,132 236,540,611 7,568,174 (1,465,047) 1,244
---------- ------------ ---------- ----------- ----------
Net Increase (Decrease) in Net
Assets Resulting from Operations $2,947,441 $227,171,050 $8,622,879 $ 2,673,023 $3,665,610
========== ============ ========== =========== ==========
See Notes to Financial Statements.
STATEMENTS OF CHANGES IN NET ASSETS
--------------------------------------------------------------------------------
ASAF
FOUNDERS ASAF
INTERNATIONAL JANUS
SMALL SMALL-CAP
CAPITALIZATION GROWTH
FUND FUND
---------------------------- -----------------------------
SIX MONTHS SIX MONTHS
ENDED YEAR ENDED ENDED YEAR ENDED
APRIL 30, 2000 OCTOBER 31, APRIL 30, 2000 OCTOBER 31,
(UNAUDITED) 1999 (UNAUDITED) 1999
-------------- ----------- -------------- ------------
FROM OPERATIONS:
Net Investment Income (Loss) $ (427,462) $ (155,453) $ (2,616,288) $ (697,207)
Net Realized Gain (Loss) on Investments (1,061,919) 1,560,137 36,400,913 3,609,591
Net Change in Unrealized Appreciation
(Depreciation) on Investments (15,622,753) 1,083,661 (28,812,803) 46,265,247
------------ ----------- ------------ ------------
Net Increase (Decrease) in Net Assets
Resulting from Operations (17,112,134) 2,488,345 4,971,822 49,177,631
------------ ----------- ------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS:
From Net Investment Income:
Class A -- -- -- --
Class B -- -- -- --
Class C -- -- -- --
Class X -- -- -- --
In Excess of Net Investment Income:
Class A -- -- -- --
Class B -- -- -- --
Class C -- -- -- --
Class X -- -- -- --
From Net Realized Gains:
Class A (184,026) -- (558,335) --
Class B (623,192) -- (1,037,796) --
Class C (185,090) -- (438,987) --
Class X (253,879) -- (197,451) --
------------ ----------- ------------ ------------
Total Distributions (1,246,187) -- (2,232,569) --
------------ ----------- ------------ ------------
CAPITAL SHARE TRANSACTIONS
Net Increase in Net Assets from Capital Share
Transactions 134,070,338 8,904,367 218,388,547 155,373,353
------------ ----------- ------------ ------------
Net Increase in Net Assets 115,712,017 11,392,712 221,127,800 204,550,984
NET ASSETS:
Beginning of Period 16,941,589 5,548,877 215,212,084 10,661,100
------------ ----------- ------------ ------------
End of Period $132,653,606 $16,941,589 $436,339,884 $215,212,084
============ =========== ============ ============
--------------------------------------------------------------------------------
AMERICAN SKANDIA ADVISOR FUNDS, INC.
ASAF
T. ROWE ASAF
PRICE AMERICAN ASAF ASAF
SMALL CENTURY FEDERATED OPPENHEIMER
COMPANY STRATEGIC HIGH YIELD LARGE-CAP
VALUE BALANCED BOND GROWTH
FUND FUND FUND FUND
- ---------------------------- ----------------------------- ----------------------------- ----------------------------
SIX MONTHS SIX MONTHS SIX MONTHS SIX MONTHS
ENDED YEAR ENDED ENDED YEAR ENDED ENDED YEAR ENDED ENDED YEAR ENDED
APRIL 30, 2000 OCTOBER 31, APRIL 30, 2000 OCTOBER 31, APRIL 30, 2000 OCTOBER 31, APRIL 30, 2000 OCTOBER 31,
(UNAUDITED) 1999 (UNAUDITED) 1999 (UNAUDITED) 1999 (UNAUDITED) 1999
- -------------- ----------- -------------- ------------ -------------- ------------ -------------- -----------
(61,149)
$ $ (135,216) $ 839,626 $ 727,476 $ 5,501,340 $ 7,002,080 $ (635,811) $ (619,997)
1,173,071 1,392,258 1,390,252 1,997,987 (1,182,279) (327,421) 3,317,724 4,509,503
6,187,150 (1,429,144) 4,783,686 4,935,120 (5,836,468) (5,663,260) 18,318,818 4,407,755
----------- ----------- ------------ ------------ ------------ ------------ ------------ -----------
7,299,072 (172,102) 7,013,564 7,660,583 (1,517,407) 1,011,399 21,000,731 8,297,261
----------- ----------- ------------ ------------ ------------ ------------ ------------ -----------
-- -- (200,082) (112,620) (844,526) (1,066,043) -- --
-- -- (371,417) (136,565) (3,157,357) (3,686,137) -- --
-- -- (116,232) (51,277) (588,837) (853,383) -- --
-- -- (103,157) (58,449) (851,006) (1,396,517) -- --
-- (27,592) -- -- -- -- -- --
-- -- -- -- -- -- -- --
-- -- -- -- -- -- -- --
-- -- -- -- -- -- -- --
(286,577) -- (252,195) -- -- -- (283,324) --
(657,305) -- (717,191) -- -- -- (876,043) --
(335,141) -- (223,762) -- -- -- (229,295) --
(354,340) -- (197,887) -- -- -- (383,701) --
----------- ----------- ------------ ------------ ------------ ------------ ------------ -----------
(1,633,363) (27,592) (2,181,923) (358,911) (5,441,726) (7,002,080) (1,772,363) --
----------- ----------- ------------ ------------ ------------ ------------ ------------ -----------
7,153,345 21,076,473 26,152,510 101,103,998 7,879,816 77,719,547 44,349,697 31,103,658
----------- ----------- ------------ ------------ ------------ ------------ ------------ -----------
12,819,054 20,876,779 30,984,151 108,405,670 920,683 71,728,866 63,578,065 39,400,919
61,881,633 41,004,854 130,402,611 21,996,941 117,337,268 45,608,402 59,072,041 19,671,122
----------- ----------- ------------ ------------ ------------ ------------ ------------ -----------
$74,700,687 $61,881,633 $161,386,762 $130,402,611 $118,257,951 $117,337,268 $122,650,106 $59,072,041
=========== =========== ============ ============ ============ ============ ============ ===========
See Notes to Financial Statements.
STATEMENTS OF CHANGES IN NET ASSETS
--------------------------------------------------------------------------------
ASAF ASAF
LORD ABBETT JANUS
GROWTH OVERSEAS
AND INCOME GROWTH
FUND FUND
----------------------------- -----------------------------
SIX MONTHS SIX MONTHS
ENDED YEAR ENDED ENDED YEAR ENDED
APRIL 30, 2000 OCTOBER 31, APRIL 30, 2000 OCTOBER 31,
(UNAUDITED) 1999 (UNAUDITED) 1999
-------------- ------------ -------------- ------------
FROM OPERATIONS:
Net Investment Income (Loss) $ 17,515 $ (17,756) $ (3,354,751) $ (1,430,239)
Net Realized Gain (Loss) on Investments 3,260,332 (1,864,544) 40,657,070 (4,311,423)
Net Change in Unrealized Appreciation
(Depreciation) on Investments 4,309,399 9,399,850 83,367,225 45,431,509
------------ ------------ ------------ ------------
Net Increase (Decrease) in Net Assets
Resulting from Operations 7,587,246 7,517,550 120,669,544 39,689,847
------------ ------------ ------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS:
From Net Investment Income:
Class A -- (12,015) -- --
Class B -- (1,848) -- --
Class C -- (855) -- --
Class X -- (1,589) -- --
In Excess of Net Investment Income:
Class A -- (36,455) -- --
Class B -- (5,608) -- --
Class C -- (2,595) -- --
Class X -- (4,822) -- --
From Net Realized Gains:
Class A -- -- -- --
Class B -- -- -- --
Class C -- -- -- --
Class X -- -- -- --
------------ ------------ ------------ ------------
Total Distributions -- (65,787) -- --
------------ ------------ ------------ ------------
CAPITAL SHARE TRANSACTIONS
Net Increase in Net Assets from Capital Share
Transactions 37,562,421 101,607,672 315,444,099 170,502,829
------------ ------------ ------------ ------------
Net Increase in Net Assets 45,149,667 109,059,435 436,113,643 210,192,676
NET ASSETS:
Beginning of Period 141,710,663 32,651,228 255,149,694 44,957,018
------------ ------------ ------------ ------------
End of Period $186,860,330 $141,710,663 $691,263,337 $255,149,694
============ ============ ============ ============
--------------------------------------------------------------------------------
AMERICAN SKANDIA ADVISOR FUNDS, INC.
ASAF ASAF ASAF
ASAF NEUBERGER NEUBERGER ASAF BANKERS
MARSICO BERMAN BERMAN AIM TRUST
CAPITAL MID-CAP MID-CAP INTERNATIONAL MANAGED
GROWTH GROWTH VALUE EQUITY INDEX 500
FUND FUND FUND FUND FUND
- ----------------------------- ---------------------------- ---------------------------- -------------- --------------
SIX MONTHS SIX MONTHS SIX MONTHS SIX MONTHS SIX MONTHS
ENDED YEAR ENDED ENDED YEAR ENDED ENDED YEAR ENDED ENDED ENDED
APRIL 30, 2000 OCTOBER 31, APRIL 30, 2000 OCTOBER 31, APRIL 30, 2000 OCTOBER 31, APRIL 30, 2000 APRIL 30, 2000
(UNAUDITED) 1999 (UNAUDITED) 1999 (UNAUDITED) 1999 (UNAUDITED)(1) (UNAUDITED)(1)
- -------------- ------------ -------------- ----------- -------------- ----------- -------------- --------------
(4,341,230)
$ $ (3,100,567) $ (1,003,260) $ (397,056) $ (181,729) $ (72,401) $ (14,368) $ 17,076
(3,648,605) (8,185,872) (970,634) (2,023,108) (780,652) 862,653 (352,971) 393,057
96,725,737 85,729,373 13,661,949 8,571,273 6,447,360 (1,727,464) (551,134) 770,672
- -------------- ------------ ------------ ----------- ----------- ----------- ----------- -----------
88,735,902 74,442,934 11,688,055 6,151,109 5,484,979 (937,212) (918,473) 1,180,805
- -------------- ------------ ------------ ----------- ----------- ----------- ----------- -----------
-- (14,303) -- -- -- (508) -- --
-- -- -- -- -- (549) -- --
-- -- -- -- -- (242) -- --
-- -- -- -- -- (132) -- --
-- (35) -- -- -- (2,758) -- --
-- -- -- -- -- (2,976) -- --
-- -- -- -- -- (1,315) -- --
-- -- -- -- -- (718) -- --
-- -- -- (20,483) (171,598) (237) -- --
-- -- -- (34,595) (442,601) (761) -- --
-- -- -- (22,944) (162,987) (336) -- --
-- -- -- (16,107) (96,065) (162) -- --
- -------------- ------------ ------------ ----------- ----------- ----------- ----------- -----------
-- (14,338) -- (94,129) (873,251) (10,694) -- --
- -------------- ------------ ------------ ----------- ----------- ----------- ----------- -----------
380,790,194 448,096,651 170,223,842 40,361,211 18,150,341 39,513,072 20,784,823 41,197,868
- -------------- ------------ ------------ ----------- ----------- ----------- ----------- -----------
469,526,096 522,525,247 181,911,897 46,418,191 22,762,069 38,565,166 19,866,350 42,378,673
564,313,815 41,788,568 49,408,579 2,990,388 42,459,716 3,894,550 -- --
- -------------- ------------ ------------ ----------- ----------- ----------- ----------- -----------
$1,033,839,911 $564,313,815 $231,320,476 $49,408,579 $65,221,785 $42,459,716 $19,866,350 $42,378,673
============== ============ ============ =========== =========== =========== =========== ===========
(1) Commenced operations on November 1, 1999.
See Notes to Financial Statements.
STATEMENTS OF CHANGES IN NET ASSETS
--------------------------------------------------------------------------------
ASAF ASAF ASAF
MFS KEMPER T. ROWE PRICE
GROWTH SMALL-CAP INTERNATIONAL
WITH INCOME GROWTH EQUITY
FUND FUND FUND
-------------- -------------- ----------------------------
SIX MONTHS SIX MONTHS SIX MONTHS
ENDED ENDED ENDED YEAR ENDED
APRIL 30, 2000 APRIL 30, 2000 APRIL 30, 2000 OCTOBER 31,
(UNAUDITED)(1) (UNAUDITED)(2) (UNAUDITED) 1999
-------------- -------------- -------------- -----------
FROM OPERATIONS:
Net Investment Income (Loss) $ (9,193) $ (1,384) $ (195,691) $ (135,544)
Net Realized Gain (Loss) on Investments (168,285) (521,393) (108,385) (299,549)
Net Change in Unrealized Appreciation
(Depreciation) on Investments 516,067 (2,277,313) 3,251,517 3,328,830
----------- ----------- ------------ -----------
Net Increase (Decrease) in Net Assets Resulting
from Operations 338,589 (2,800,090) 2,947,441 2,893,737
----------- ----------- ------------ -----------
DISTRIBUTIONS TO SHAREHOLDERS:
From Net Investment Income:
Class A -- -- -- --
Class B -- -- -- --
Class C -- -- -- --
Class X -- -- -- --
In Excess of Net Investment Income:
Class A -- -- -- (13,643)
Class B -- -- -- (6,565)
Class C -- -- -- (4,600)
Class X -- -- -- (9,863)
From Net Realized Gains:
Class A -- -- -- --
Class B -- -- -- --
Class C -- -- -- --
Class X -- -- -- --
----------- ----------- ------------ -----------
Total Distributions -- -- -- (34,671)
----------- ----------- ------------ -----------
CAPITAL SHARE TRANSACTIONS
Net Increase in Net Assets from Capital Share
Transactions 15,439,630 27,118,180 13,346,525 9,698,559
----------- ----------- ------------ -----------
Net Increase in Net Assets 15,778,219 24,318,090 16,293,966 12,557,625
NET ASSETS:
Beginning of Period -- -- 24,986,343 12,428,718
----------- ----------- ------------ -----------
End of Period $15,778,219 $24,318,090 $ 41,280,309 $24,986,343
=========== =========== ============ ===========
--------------------------------------------------------------------------------
AMERICAN SKANDIA ADVISOR FUNDS, INC.
ASAF ASAF ASAF ASAF
JANUS INVESCO TOTAL JPM
CAPITAL EQUITY RETURN MONEY
GROWTH INCOME BOND MARKET
FUND FUND FUND FUND
------------------------------- ----------------------------- ----------------------------- -----------------------------
SIX MONTHS SIX MONTHS SIX MONTHS SIX MONTHS
ENDED YEAR ENDED ENDED YEAR ENDED ENDED YEAR ENDED ENDED YEAR ENDED
APRIL 30, 2000 OCTOBER 31, APRIL 30, 2000 DECEMBER 31, APRIL 30, 2000 OCTOBER 31, APRIL 30, 2000 OCTOBER 31,
(UNAUDITED) 1999 (UNAUDITED) 1999 (UNAUDITED) 1999 (UNAUDITED) 1999
-------------- -------------- -------------- ------------ -------------- ------------ -------------- ------------
$ (9,369,561) $ (5,862,887) $ 1,054,705 $ 1,256,636 $ 4,138,070 $ 4,837,649 $ 3,664,366 $ 2,950,305
(35,085,482) (51,875,533) 521,045 3,247,433 (617,845) (2,890,558) 1,244 2,598
271,626,093 228,050,803 7,047,129 9,613,363 (847,202) (2,697,991) -- --
-------------- -------------- ------------ ------------ ------------ ------------ ------------ ------------
227,171,050 170,312,383 8,622,879 14,117,432 2,673,023 (750,900) 3,665,610 2,952,903
-------------- -------------- ------------ ------------ ------------ ------------ ------------ ------------
-- -- (264,861) (207,977) (685,257) (746,581) (1,356,576) (790,112)
-- -- (459,104) (267,381) (2,262,923) (2,433,498) (1,377,350) (1,124,422)
-- -- (189,906) (120,280) (634,007) (857,234) (496,397) (488,137)
-- -- (184,606) (171,251) (512,271) (800,336) (434,043) (547,634)
-- -- -- -- -- -- -- --
-- -- -- -- -- -- -- --
-- -- -- -- -- -- -- --
-- -- -- -- -- -- -- --
-- -- (483,054) -- -- (41,731) (574) --
-- -- (1,231,558) -- -- (174,101) (855) --
-- -- (509,576) -- -- (68,174) (255) --
-- -- (495,635) -- -- (87,038) (248) --
-------------- -------------- ------------ ------------ ------------ ------------ ------------ ------------
-- -- (3,818,300) (766,889) (4,094,458) (5,208,693) (3,666,298) (2,950,305)
-------------- -------------- ------------ ------------ ------------ ------------ ------------ ------------
857,658,593 965,500,168 51,354,708 112,998,444 3,589,698 114,425,804 21,557,358 136,157,181
-------------- -------------- ------------ ------------ ------------ ------------ ------------ ------------
1,084,829,643 1,135,812,551 56,159,287 126,348,987 2,168,263 108,466,211 21,556,670 136,159,779
1,275,237,660 139,425,109 179,963,163 53,614,176 152,762,413 44,296,202 179,513,834 43,354,055
-------------- -------------- ------------ ------------ ------------ ------------ ------------ ------------
$2,360,067,303 $1,275,237,660 $236,122,450 $179,963,163 $154,930,676 $152,762,413 $201,070,504 $179,513,834
============== ============== ============ ============ ============ ============ ============ ============
(1) Commenced operations on November 1, 1999.
(2) Commenced operations on March 1, 2000.
See Notes to Financial Statements.
FINANCIAL HIGHLIGHTS
--------------------------------------------------------------------------------
Per Share Data (For a Share Outstanding
throughout each period)
Increase (Decrease) from
Investment Operations
Net Asset -----------------------------------------
Value Net Net Realized Total from
Period Beginning Investment & Unrealized Investment
Ended of Period Income (Loss) Gain (Loss) Operations
-------- --------- ------------- ------------ ----------
ASAF FOUNDERS INTERNATIONAL
SMALL CAPITALIZATION FUND:
- -------------------------------
- -------------------------------
Class A 04/30/00* $ 13.56 $(0.08) $ 6.22 $ 6.14
10/31/99 10.27 (0.14) 3.43 3.29
10/31/98 9.87 (0.02) 0.45 0.43
10/31/97(1) 10.00 0.05 (0.18) (0.13)
Class B 04/30/00* 13.44 (0.14) 6.18 6.04
10/31/99 10.23 (0.22) 3.43 3.21
10/31/98 9.85 (0.08) 0.46 0.38
10/31/97(1) 10.00 0.04 (0.19) (0.15)
Class C 04/30/00* 13.43 (0.14) 6.12 5.98
10/31/99 10.22 (0.21) 3.42 3.21
10/31/98 9.86 (0.08) 0.44 0.36
10/31/97(1) 10.00 0.04 (0.18) (0.14)
Class X 04/30/00* 13.43 (0.15) 6.18 6.03
10/31/99 10.21 (0.19) 3.41 3.22
10/31/98 9.84 (0.08) 0.45 0.37
10/31/97(1) 10.00 0.04 (0.20) (0.16)
ASAF JANUS SMALL-CAP
GROWTH FUND:
- -------------------------------
- -------------------------------
Class A 04/30/00* $ 17.08 $(0.08) $ 2.65 $ 2.57
10/31/99 9.11 (0.10) 8.07 7.97
10/31/98 9.94 (0.07) (0.76) (0.83)
10/31/97(1) 10.00 (0.03) (0.03) (0.06)
Class B 04/30/00* 16.87 (0.14) 2.65 2.51
10/31/99 9.04 (0.17) 8.00 7.83
10/31/98 9.93 (0.12) (0.77) (0.89)
10/31/97(1) 10.00 (0.04) (0.03) (0.07)
Class C 04/30/00* 16.90 (0.14) 2.64 2.50
10/31/99 9.06 (0.16) 8.00 7.84
10/31/98 9.94 (0.10) (0.78) (0.88)
10/31/97(1) 10.00 (0.04) (0.02) (0.06)
Class X 04/30/00* 16.90 (0.14) 2.64 2.50
10/31/99 9.06 (0.15) 7.99 7.84
10/31/98 9.93 (0.11) (0.76) (0.87)
10/31/97(1) 10.00 (0.04) (0.03) (0.07)
ASAF T. ROWE PRICE
SMALL COMPANY VALUE FUND:
- -------------------------------
- -------------------------------
Class A 04/30/00* $ 8.90 $ 0.01 $ 1.01 $ 1.02
10/31/99 8.85 0.02 0.06 0.08
10/31/98 10.46 0.04 (1.62) (1.58)
10/31/97(1) 10.00 0.02 0.44 0.46
Class B 04/30/00* 8.84 (0.01) 1.00 0.99
10/31/99 8.80 (0.03) 0.07 0.04
10/31/98 10.44 (0.02) (1.61) (1.63)
10/31/97(1) 10.00 -- 0.44 0.44
Class C 04/30/00* 8.84 (0.01) 1.00 0.99
10/31/99 8.80 (0.03) 0.07 0.04
10/31/98 10.45 (0.02) (1.62) (1.64)
10/31/97(1) 10.00 -- 0.45 0.45
Class X 04/30/00* 8.84 (0.01) 1.00 0.99
10/31/99 8.80 (0.03) 0.07 0.04
10/31/98 10.44 (0.02) (1.61) (1.63)
10/31/97(1) 10.00 -- 0.44 0.44
ASAF AMERICAN CENTURY
STRATEGIC BALANCED FUND:
- -------------------------------
- -------------------------------
Class A 04/30/00* $ 12.85 $ 0.10 $ 0.58 $ 0.68
10/31/99 10.89 0.19 1.89 2.08
10/31/98 9.99 0.15 0.84 0.99
10/31/97(1) 10.00 0.04 (0.05) (0.01)
Class B 04/30/00* 12.81 0.07 0.58 0.65
10/31/99 10.86 0.12 1.88 2.00
10/31/98 9.96 0.09 0.85 0.94
10/31/97(1) 10.00 0.02 (0.06) (0.04)
Class C 04/30/00* 12.80 0.07 0.59 0.66
10/31/99 10.87 0.11 1.87 1.98
10/31/98 9.98 0.09 0.84 0.93
10/31/97(1) 10.00 0.02 (0.04) (0.02)
Class X 04/30/00* 12.80 0.07 0.59 0.66
10/31/99 10.85 0.11 1.89 2.00
10/31/98 9.96 0.09 0.84 0.93
10/31/97(1) 10.00 0.02 (0.06) (0.04)
Less Distributions
-------------------------------------
From Net In Excess of From
Investment Net Investment Capital
Income Income Gains
---------- -------------- -------
ASAF FOUNDERS INTERNATIONAL
SMALL CAPITALIZATION FUND:
- -------------------------------
- -------------------------------
Class A $ -- $ -- $(0.72)
-- -- --
(0.03) -- --
-- -- --
Class B -- -- (0.72)
-- -- --
-- -- --
-- -- --
Class C -- -- (0.72)
-- -- --
-- -- --
-- -- --
Class X -- -- (0.72)
-- -- --
-- -- --
-- -- --
ASAF JANUS SMALL-CAP
GROWTH FUND:
- -------------------------------
- -------------------------------
Class A $ -- $ -- $(0.11)
-- -- --
-- -- --
-- -- --
Class B -- -- (0.11)
-- -- --
-- -- --
-- -- --
Class C -- -- (0.11)
-- -- --
-- -- --
-- -- --
Class X -- -- (0.11)
-- -- --
-- -- --
-- -- --
ASAF T. ROWE PRICE
SMALL COMPANY VALUE FUND:
- -------------------------------
- -------------------------------
Class A $ -- $ -- $(0.24)
-- (0.03) --
-- (0.03) --
-- -- --
Class B -- -- (0.24)
-- -- --
-- (0.01) --
-- -- --
Class C -- -- (0.24)
-- -- --
-- (0.01) --
-- -- --
Class X -- -- (0.24)
-- -- --
-- (0.01) --
-- -- --
ASAF AMERICAN CENTURY
STRATEGIC BALANCED FUND:
- -------------------------------
- -------------------------------
Class A $(0.10) $ -- $(0.13)
(0.12) -- --
(0.09) -- --
-- -- --
Class B (0.07) -- (0.13)
(0.05) -- --
(0.04) -- --
-- -- --
Class C (0.07) -- (0.13)
(0.05) -- --
(0.04) -- --
-- -- --
Class X (0.07) -- (0.13)
(0.05) -- --
(0.04) -- --
-- -- --
AMERICAN SKANDIA ADVISOR FUNDS, INC.
--------------------------------------------------------------------------------
Ratios of Expenses
Supplemental Data to Average Net Assets(3)
------------------------------------- ------------------------------------------
Net Asset Net Assets at Portfolio Net After Expense Before Expense
Total Value Total End of Period Turnover Operating Reimbursement Reimbursement
Distributions End of Period Return(2) (in 000's) Rate Expenses And Waiver(4) and Waiver(4)
------------- ------------- --------- ------------- --------- --------- ------------- --------------
$(0.72) $18.98 45.13% $30,213 313% 1.98% 1.98% 1.98%
-- 13.56 32.04% 2,374 268% 2.10% 2.10% 4.53%
(0.03) 10.27 4.32% 886 49% 2.10% 2.10% 9.20%
-- 9.87 (1.30%) 106 -- 2.10% 2.10% 136.49%
(0.72) 18.76 44.78% 63,181 313% 2.49% 2.49% 2.49%
-- 13.44 31.38% 7,722 268% 2.60% 2.60% 5.04%
-- 10.23 3.90% 1,387 49% 2.60% 2.60% 9.80%
-- 9.85 (1.50%) 230 -- 2.60% 2.60% 90.64%
(0.72) 18.69 44.43% 26,152 313% 2.49% 2.49% 2.49%
-- 13.43 31.41% 2,540 268% 2.60% 2.60% 5.05%
-- 10.22 3.69% 872 49% 2.60% 2.60% 9.72%
-- 9.86 (1.40%) 79 -- 2.60% 2.60% 55.02%
(0.72) 18.74 44.82% 13,107 313% 2.49% 2.49% 2.49%
-- 13.43 31.54% 4,305 268% 2.60% 2.60% 5.07%
-- 10.21 3.80% 2,404 49% 2.60% 2.60% 9.58%
-- 9.84 (1.60%) 206 -- 2.60% 2.60% 54.45%
$(0.11) $19.54 14.85% $98,978 57% 1.70% 1.70% 1.82%
-- 17.08 87.80% 54,039 74% 1.70% 1.71% 2.20%
-- 9.11 (8.45%) 1,801 94% 1.70% 1.70% 6.38%
-- 9.94 (0.60%) 193 -- 1.70% 1.70% 105.48%
(0.11) 19.27 14.68% 209,161 57% 2.20% 2.20% 2.32%
-- 16.87 86.73% 98,524 74% 2.20% 2.21% 2.69%
-- 9.04 (8.96%) 2,685 94% 2.20% 2.20% 6.86%
-- 9.93 (0.70%) 353 -- 2.20% 2.20% 57.99%
(0.11) 19.29 14.59% 89,655 57% 2.20% 2.20% 2.32%
-- 16.90 86.64% 38,337 74% 2.20% 2.21% 2.73%
-- 9.06 (8.85%) 2,090 94% 2.20% 2.20% 6.60%
-- 9.94 (0.60%) 74 -- 2.20% 2.20% 42.48%
(0.11) 19.29 14.66% 38,546 57% 2.20% 2.20% 2.32%
-- 16.90 86.53% 24,312 74% 2.20% 2.21% 2.82%
-- 9.06 (8.76%) 4,085 94% 2.20% 2.20% 6.69%
-- 9.93 (0.70%) 270 -- 2.20% 2.20% 47.29%
$(0.24) $ 9.68 11.62% $14,773 13% 1.75% 1.75% 2.14%
(0.03) 8.90 0.86% 10,881 35% 1.75% 1.75% 2.61%
(0.03) 8.85 (15.13%) 7,155 4% 1.75% 1.75% 3.51%
-- 10.46 4.60% 383 -- 1.75% 1.75% 54.47%
(0.24) 9.59 11.46% 29,299 13% 2.25% 2.25% 2.64%
-- 8.84 0.45% 23,890 35% 2.25% 2.25% 3.13%
(0.01) 8.80 (15.63%) 13,184 4% 2.25% 2.25% 4.03%
-- 10.44 4.40% 1,155 -- 2.25% 2.25% 30.14%
(0.24) 9.59 11.35% 15,423 13% 2.25% 2.25% 2.64%
-- 8.84 0.45% 13,164 35% 2.25% 2.25% 3.13%
(0.01) 8.80 (15.71%) 8,298 4% 2.25% 2.25% 3.97%
-- 10.45 4.50% 335 -- 2.25% 2.25% 33.60%
(0.24) 9.59 11.35% 15,207 13% 2.25% 2.25% 2.64%
-- 8.84 0.45% 13,947 35% 2.25% 2.25% 3.12%
(0.01) 8.80 (15.63%) 12,368 4% 2.25% 2.25% 4.00%
-- 10.44 4.40% 640 -- 2.25% 2.25% 22.43%
$(0.23) $13.30 5.26% $28,837 43% 1.60% 1.60% 2.00%
(0.12) 12.85 19.10% 24,443 104% 1.60% 1.60% 2.15%
(0.09) 10.89 9.93% 3,359 93% 1.60% 1.60% 4.32%
-- 9.99 (0.10%) 257 2% 1.60% 1.60% 37.87%
(0.20) 13.26 5.00% 81,859 43% 2.10% 2.10% 2.50%
(0.05) 12.81 18.46% 65,933 104% 2.10% 2.10% 2.67%
(0.04) 10.86 9.45% 8,272 93% 2.10% 2.10% 4.65%
-- 9.96 (0.40%) 381 2% 2.10% 2.10% 29.90%
(0.20) 13.26 5.09% 28,359 43% 2.10% 2.10% 2.50%
(0.05) 12.80 18.26% 20,769 104% 2.10% 2.10% 2.67%
(0.04) 10.87 9.33% 3,202 93% 2.10% 2.10% 4.77%
-- 9.98 (0.20%) 215 2% 2.10% 2.10% 38.96%
(0.20) 13.26 5.09% 22,332 43% 2.10% 2.10% 2.50%
(0.05) 12.80 18.48% 19,258 104% 2.10% 2.10% 2.67%
(0.04) 10.85 9.34% 7,164 93% 2.10% 2.10% 4.66%
-- 9.96 (0.40%) 398 2% 2.10% 2.10% 26.66%
Ratio of Net Investment
Income (Loss) to
Average Net Assets(3)
-----------------------
(0.76%)
(1.19%)
(0.28%)
2.03%
(1.32%)
(1.84%)
(0.74%)
1.62%
(1.27%)
(1.74%)
(0.79%)
1.72%
(1.46%)
(1.63%)
(0.76%)
1.58%
(0.66%)
(0.73%)
(0.75%)
(1.16%)
(1.17%)
(1.24%)
(1.26%)
(1.73%)
(1.17%)
(1.25%)
(1.13%)
(1.73%)
(1.16%)
(1.21%)
(1.19%)
(1.70%)
0.21%
0.17%
0.20%
0.69%
(0.28%)
(0.35%)
(0.30%)
0.17%
(0.28%)
(0.34%)
(0.32%)
0.02%
(0.28%)
(0.31%)
(0.32%)
0.19%
1.54%
1.44%
1.30%
1.56%
1.05%
0.94%
0.80%
0.79%
1.05%
0.92%
0.79%
0.78%
1.04%
0.88%
0.79%
1.07%
(1) Commenced Operations on July 28, 1997.
(2) Total return for Class X shares does not reflect the payment of bonus
shares.
(3) Annualized for periods less than one year.
(4) Includes commissions received by American Skandia Marketing, Incorporated
under the Funds' Supplemental Distribution Plan, as described in Note 3 to
the Financial Statements.
* Unaudited.
Per share data has been calculated based on the average daily number of shares
outstanding throughout the period.
See Notes to Financial Statements.
FINANCIAL HIGHLIGHTS
--------------------------------------------------------------------------------
Per Share Data (For a Share Outstanding
throughout each period)
Increase (Decrease) from
Investment Operations
Net Asset -----------------------------------------
Value Net Net Realized Total from
Period Beginning Investment & Unrealized Investment
Ended of Period Income (Loss) Gain (Loss) Operations
-------- --------- ------------- ------------ ----------
ASAF FEDERATED
HIGH YIELD BOND FUND:
- ---------------------------
- ---------------------------
Class A 04/30/00* $ 9.13 $ 0.42 $(0.49) $(0.07)
10/31/99 9.38 0.80 (0.25) 0.55
10/31/98 9.93 0.74 (0.55) 0.19
10/31/97(1) 10.00 0.05 (0.07) (0.02)
Class B 04/30/00* 9.13 0.40 (0.50) (0.10)
10/31/99 9.39 0.75 (0.26) 0.49
10/31/98 9.93 0.69 (0.54) 0.15
10/31/97(1) 10.00 0.04 (0.07) (0.03)
Class C 04/30/00* 9.13 0.40 (0.50) (0.10)
10/31/99 9.38 0.75 (0.25) 0.50
10/31/98 9.93 0.69 (0.55) 0.14
10/31/97(1) 10.00 0.03 (0.07) (0.04)
Class X 04/30/00* 9.13 0.40 (0.50) (0.10)
10/31/99 9.39 0.75 (0.26) 0.49
10/31/98 9.93 0.69 (0.54) 0.15
10/31/97(1) 10.00 0.04 (0.07) (0.03)
ASAF OPPENHEIMER
LARGE-CAP GROWTH FUND:
- ---------------------------
- ---------------------------
Class A 04/30/00* $ 13.64 $(0.08) $ 4.61 $ 4.53
10/31/99 10.44 (0.15) 3.35 3.20
10/31/98(5) 10.00 (0.10) 0.54 0.44
Class B 04/30/00* 13.55 (0.12) 4.58 4.46
10/31/99 10.43 (0.21) 3.33 3.12
10/31/98(5) 10.00 (0.14) 0.57 0.43
Class C 04/30/00* 13.51 (0.12) 4.56 4.44
10/31/99 10.40 (0.21) 3.32 3.11
10/31/98(5) 10.00 (0.14) 0.54 0.40
Class X 04/30/00* 13.51 (0.12) 4.57 4.45
10/31/99 10.41 (0.21) 3.31 3.10
10/31/98(5) 10.00 (0.14) 0.55 0.41
ASAF LORD ABBETT
GROWTH AND INCOME FUND:
- ---------------------------
- ---------------------------
Class A 04/30/00* $ 12.33 $ 0.03 $ 0.57 $ 0.60
10/31/99 10.52 0.06 1.80 1.86
10/31/98(5) 10.00 0.05 0.50 0.55
Class B 04/30/00* 12.32 -- 0.58 0.58
10/31/99 10.53 (0.01) 1.81 1.80
10/31/98(5) 10.00 0.01 0.52 0.53
Class C 04/30/00* 12.31 (0.01) 0.58 0.57
10/31/99 10.51 (0.01) 1.82 1.81
10/31/98(5) 10.00 0.01 0.50 0.51
Class X 04/30/00* 12.30 -- 0.57 0.57
10/31/99 10.52 (0.01) 1.80 1.79
10/31/98(5) 10.00 0.01 0.51 0.52
ASAF JANUS
OVERSEAS GROWTH FUND:
- ---------------------------
- ---------------------------
Class A 04/30/00* $ 14.06 $(0.08) $ 6.46 $ 6.38
10/31/99 10.55 (0.09) 3.60 3.51
10/31/98(5) 10.00 0.01 0.54 0.55
Class B 04/30/00* 13.94 (0.13) 6.39 6.26
10/31/99 10.51 (0.15) 3.58 3.43
10/31/98(5) 10.00 (0.04) 0.55 0.51
Class C 04/30/00* 13.96 (0.13) 6.40 6.27
10/31/99 10.52 (0.15) 3.59 3.44
10/31/98(5) 10.00 (0.04) 0.56 0.52
Class X 04/30/00* 13.93 (0.14) 6.41 6.27
10/31/99 10.50 (0.14) 3.57 3.43
10/31/98(5) 10.00 (0.04) 0.54 0.50
Less Distributions
------------------------------------------
From Net In Excess of
Investment Net Investment From Capital
Income Income Gains
---------- -------------- ------------
ASAF FEDERATED
HIGH YIELD BOND FUND:
- ---------------------------
- ---------------------------
Class A $(0.42) $ -- $ --
(0.80) -- --
(0.74) -- --
(0.05) -- --
Class B (0.39) -- --
(0.75) -- --
(0.69) -- --
(0.04) -- --
Class C (0.39) -- --
(0.75) -- --
(0.69) -- --
(0.03) -- --
Class X (0.39) -- --
(0.75) -- --
(0.69) -- --
(0.04) -- --
ASAF OPPENHEIMER
LARGE-CAP GROWTH FUND:
- ---------------------------
- ---------------------------
Class A $ -- $ -- $(0.37)
-- -- --
-- -- --
Class B -- -- (0.37)
-- -- --
-- -- --
Class C -- -- (0.37)
-- -- --
-- -- --
Class X -- -- (0.37)
-- -- --
-- -- --
ASAF LORD ABBETT
GROWTH AND INCOME FUND:
- ---------------------------
- ---------------------------
Class A $ -- $ -- $ --
-- (0.05) --
(0.03) -- --
Class B -- -- --
-- (0.01) --
-- -- --
Class C -- -- --
-- (0.01) --
-- -- --
Class X -- -- --
-- (0.01) --
-- -- --
ASAF JANUS
OVERSEAS GROWTH FUND:
- ---------------------------
- ---------------------------
Class A $ -- $ -- $ --
-- -- --
-- -- --
Class B -- -- --
-- -- --
-- -- --
Class C -- -- --
-- -- --
-- -- --
Class X -- -- --
-- -- --
-- -- --
AMERICAN SKANDIA ADVISOR FUNDS, INC.
--------------------------------------------------------------------------------
Ratios of Expenses
Supplemental Data to Average Net Assets(3)
------------------------------------- ------------------------------------------
Net Asset Net Assets at Portfolio Net After Expense Before Expense
Total Value Total End of Period Turnover Operating Reimbursement Reimbursement
Distributions End of Period Return(2) (in 000's) Rate Expenses and Waiver(4) and Waiver(4)
------------- ------------- --------- ------------- --------- --------- ------------- --------------
$(0.42) 8.6$4..... (1.00%) $ 17,116 9% 1.50% 1.50% 1.78%
(0.80) 9.13..... 5.70% 16,079 18% 1.50% 1.50% 1.81%
(0.74) 9.38..... 1.67% 6,979 22% 1.50% 1.50% 2.90%
(0.05) 9.93..... 0.23% 2,154 11% 1.50% 1.50% 30.49%
(0.39) 8.64..... (1.13%) 70,541 9% 2.00% 2.00% 2.27%
(0.75) 9.13..... 5.05% 68,160 18% 2.00% 2.00% 2.31%
(0.69) 9.39..... 1.25% 20,495 22% 2.00% 2.00% 3.32%
(0.04) 9.93..... 0.30% 920 11% 2.00% 2.00% 30.22%
(0.39) 8.64..... (1.25%) 12,423 9% 2.00% 2.00% 2.27%
(0.75) 9.13..... 5.05% 13,205 18% 2.00% 2.00% 2.32%
(0.69) 9.38..... 1.26% 5,732 22% 2.00% 2.00% 3.41%
(0.03) 9.93..... 0.36% 206 11% 2.00% 2.00% 29.26%
(0.39) 8.64..... (1.25%) 18,177 9% 2.00% 2.00% 2.27%
(0.75) 9.13..... 5.06% 19,893 18% 2.00% 2.00% 2.32%
(0.69) 9.39..... 1.26% 12,402 22% 2.00% 2.00% 3.33%
(0.04) 9.93..... 0.25% 556 11% 2.00% 2.00% 30.95%
$(0.37) 17.$80.... 33.48% $ 22,456 19% 1.75% 1.75% 1.76%
-- 13.64.... 30.65% 9,271 320% 1.80% 1.80% 2.41%
-- 10.44.... 4.40% 2,690 207% 1.80% 1.80% 4.29%
(0.37) 17.64.... 33.18% 60,998 19% 2.25% 2.25% 2.26%
-- 13.55.... 29.91% 29,219 320% 2.30% 2.30% 2.91%
-- 10.43.... 4.30% 7,468 207% 2.30% 2.30% 4.77%
(0.37) 17.58.... 33.13% 17,833 19% 2.25% 2.25% 2.26%
-- 13.51.... 29.90% 7,370 320% 2.30% 2.30% 2.92%
-- 10.40.... 4.00% 2,634 207% 2.30% 2.30% 4.67%
(0.37) 17.59.... 33.28% 21,363 19% 2.25% 2.25% 2.26%
-- 13.51.... 29.78% 13,212 320% 2.30% 2.30% 2.93%
-- 10.41.... 4.10% 6,879 207% 2.30% 2.30% 4.77%
$ -- 12.$93.... 4.87% $ 36,820 23% 1.60% 1.67% 2.14%
(0.05) 12.33.... 17.72% 28,123 47% 1.60% 1.63% 2.21%
(0.03) 10.52.... 5.48% 5,572 42% 1.60% 1.60% 3.57%
-- 12.90.... 4.71% 87,303 23% 2.10% 2.17% 2.64%
(0.01) 12.32.... 17.05% 66,009 47% 2.10% 2.13% 2.71%
-- 10.53.... 5.32% 10,710 42% 2.10% 2.10% 4.06%
-- 12.88.... 4.63% 33,298 23% 2.10% 2.17% 2.64%
(0.01) 12.31.... 17.18% 23,210 47% 2.10% 2.13% 2.72%
-- 10.51.... 5.12% 5,019 42% 2.10% 2.10% 4.01%
-- 12.87.... 4.63% 29,440 23% 2.10% 2.17% 2.64%
(0.01) 12.30.... 16.97% 24,369 47% 2.10% 2.13% 2.72%
-- 10.52.... 5.22% 11,350 42% 2.10% 2.10% 3.98%
$ -- 20.$44.... 45.48% $172,184 47% 1.81% 1.84% 1.94%
-- 14.06.... 33.18% 61,082 71% 2.10% 2.12% 2.47%
-- 10.55.... 5.50% 8,812 101% 2.10% 2.10% 4.12%
-- 20.20.... 45.01% 288,481 47% 2.31% 2.34% 2.44%
-- 13.94.... 32.54% 105,965 71% 2.60% 2.62% 2.97%
-- 10.51.... 5.10% 15,339 101% 2.60% 2.60% 4.58%
-- 20.23.... 45.09% 163,813 47% 2.31% 2.34% 2.44%
-- 13.96.... 32.60% 54,101 71% 2.60% 2.62% 2.97%
-- 10.52.... 5.20% 9,580 101% 2.60% 2.60% 4.58%
-- 20.20.... 45.12% 66,785 47% 2.31% 2.34% 2.44%
-- 13.93.... 32.57% 34,002 71% 2.60% 2.62% 2.98%
-- 10.50.... 5.00% 11,226 101% 2.60% 2.60% 4.60%
Ratio of Net Investment
Income (Loss) to
Average Net Assets(3)
-----------------------
9.36%
8.26%
7.42%
4.76%
8.83%
7.73%
6.90%
3.15%
8.82%
7.74%
6.96%
3.55%
8.85%
7.76%
6.96%
3.65%
(1.00%)
(1.15%)
(1.12%)
(1.50%)
(1.66%)
(1.62%)
(1.50%)
(1.68%)
(1.62%)
(1.50%)
(1.68%)
(1.62%)
0.43%
0.39%
0.62%
(0.08%)
(0.13%)
0.14%
(0.08%)
(0.12%)
0.15%
(0.08%)
(0.08%)
0.17%
(0.79%)
(0.70%)
0.06%
(1.31%)
(1.22%)
(0.44%)
(1.30%)
(1.21%)
(0.45%)
(1.33%)
(1.19%)
(0.41%)
(1) Commenced operations on July 28, 1997.
(2) Total return for Class X shares does not reflect the payment of bonus
shares.
(3) Annualized for periods less than one year.
(4) Includes commissions received by American Skandia Marketing, Incorporated
under the Fund's Supplemental Distribution Plan, as described in Note 3 to
the Financial Statements.
(5) Commenced operations on December 31, 1997.
* Unaudited.
Per share data has been calculated based on the average daily number of shares
outstanding throughout the period.
See Notes to Financial Statements.
FINANCIAL HIGHLIGHTS
--------------------------------------------------------------------------------
Per Share Data (For a Share Outstanding
throughout each period)
Increase (Decrease) from
Investment Operations
Net Asset -----------------------------------------
Value Net Net Realized Total from
Period Beginning Investment & Unrealized Investment
Ended of Period Income (Loss) Gain (Loss) Operations
-------- --------- ------------- ------------ ----------
ASAF MARSICO
CAPITAL GROWTH FUND:
- -------------------------------
- -------------------------------
Class A 04/30/00* $ 14.58 $(0.06) $2.44 $2.38
10/31/99 10.13 (0.09) 4.55 4.46
10/31/98(6) 10.00 0.01 0.12 0.13
Class B 04/30/00* 14.51 (0.06) 2.38 2.32
10/31/99 10.12 (0.16) 4.55 4.39
10/31/98(6) 10.00 -- 0.12 0.12
Class C 04/30/00* 14.49 (0.06) 2.38 2.32
10/31/99 10.11 (0.16) 4.54 4.38
10/31/98(6) 10.00 -- 0.11 0.11
Class X 04/30/00* 14.48 (0.08) 2.40 2.32
10/31/99 10.11 (0.15) 4.52 4.37
10/31/98(6) 10.00 -- 0.11 0.11
ASAF NEUBERGER BERMAN
MID-CAP GROWTH FUND:
- -------------------------------
- -------------------------------
Class A 04/30/00* $ 16.22 $(0.13) $7.25 $7.12
10/31/99 11.81 (0.17) 4.73 4.56
10/31/98(6) 10.00 (0.01) 1.82 1.81
Class B 04/30/00* 16.12 (0.19) 7.23 7.04
10/31/99 11.79 (0.25) 4.73 4.48
10/31/98(6) 10.00 (0.01) 1.80 1.79
Class C 04/30/00* 16.12 (0.19) 7.24 7.05
10/31/99 11.79 (0.24) 4.72 4.48
10/31/98(6) 10.00 (0.01) 1.80 1.79
Class X 04/30/00* 16.12 (0.19) 7.21 7.02
10/31/99 11.79 (0.25) 4.73 4.48
10/31/98(6) 10.00 (0.01) 1.80 1.79
ASAF NEUBERGER BERMAN
MID-CAP VALUE FUND:
- -------------------------------
- -------------------------------
Class A 04/30/00* $ 11.42 $(0.02) $1.38 $1.36
10/31/99 10.23 0.03 1.19 1.22
10/31/98(6) 10.00 0.02 0.21 0.23
Class B 04/30/00* 11.38 (0.05) 1.37 1.32
10/31/99 10.22 (0.05) 1.22 1.17
10/31/98(6) 10.00 0.01 0.21 0.22
Class C 04/30/00* 11.38 (0.05) 1.38 1.33
10/31/99 10.22 (0.05) 1.22 1.17
10/31/98(6) 10.00 -- 0.22 0.22
Class X 04/30/00* 11.36 (0.05) 1.37 1.32
10/31/99 10.22 (0.05) 1.20 1.15
10/31/98(6) 10.00 0.01 0.21 0.22
ASAF AIM INTERNATIONAL
EQUITY FUND:
- -------------------------------
- -------------------------------
Class A 04/30/00(7)* $ 10.00 $(0.01) $0.30 $0.29
Class B 04/30/00(7)* 10.00 (0.03) 0.31 0.28
Class C 04/30/00(7)* 10.00 (0.04) 0.31 0.27
Class X 04/30/00(7)* 10.00 (0.04) 0.32 0.28
Less Distributions
------------------------------------------
From Net In Excess of
Investment Net Investment From Capital
Income Income Gains
---------- -------------- ------------
ASAF MARSICO
CAPITAL GROWTH FUND:
- -------------------------------
- -------------------------------
Class A $ -- $ -- $ --
-- (0.01) --
-- -- --
Class B -- -- --
-- -- --
-- -- --
Class C -- -- --
-- -- --
-- -- --
Class X -- -- --
-- -- --
-- -- --
ASAF NEUBERGER BERMAN
MID-CAP GROWTH FUND:
- -------------------------------
- -------------------------------
Class A $ -- $ -- $ --
-- -- (0.15)
-- -- --
Class B -- -- --
-- -- (0.15)
-- -- --
Class C -- -- --
-- -- (0.15)
-- -- --
Class X -- -- --
-- -- (0.15)
-- -- --
ASAF NEUBERGER BERMAN
MID-CAP VALUE FUND:
- -------------------------------
- -------------------------------
Class A $ -- $ -- $(0.22)
-- (0.03) --
-- -- --
Class B -- -- (0.22)
-- (0.01) --
-- -- --
Class C -- -- (0.22)
-- (0.01) --
-- -- --
Class X -- -- (0.22)
-- (0.01) --
-- -- --
ASAF AIM INTERNATIONAL
EQUITY FUND:
- -------------------------------
- -------------------------------
Class A $ -- $ -- $ --
Class B -- -- --
Class C -- -- --
Class X -- -- --
AMERICAN SKANDIA ADVISOR FUNDS, INC.
--------------------------------------------------------------------------------
Ratios of Expenses
Supplemental Data to Average Net Assets(3)
------------------------------------- ------------------------------------------
Net Asset Net Assets at Portfolio Net After Expense Before Expense
Total Value Total End of Period Turnover Operating Reimbursement Reimbursement
Distributions End of Period Return(2) (In 000's) Rate Expenses and Waiver(4) and Waiver(4)
- ------------- ------------- --------- ------------- --------- --------- ------------- --------------
$ -- $16.96 16.32% $197,509 62% 1.75% 1.77% 1.82%
(0.01) 14.58 44.18% 103,196 105% 1.75% 1.76% 2.03%
-- 10.13 1.20% 7,037 67% 1.75% 1.75% 2.84%
-- 16.83 15.99% 513,777 62% 2.25% 2.27% 2.33%
-- 14.51 43.52% 285,342 105% 2.25% 2.26% 2.53%
-- 10.12 1.10% 17,994 67% 2.25% 2.25% 3.29%
-- 16.81 16.01% 244,005 62% 2.25% 2.27% 2.33%
-- 14.49 43.32% 125,796 105% 2.25% 2.26% 2.53%
-- 10.11 1.10% 11,012 67% 2.25% 2.25% 3.44%
-- 16.80 15.94% 78,549 62% 2.25% 2.27% 2.33%
-- 14.48 43.47% 49,980 105% 2.25% 2.26% 2.53%
-- 10.11 1.10% 5,746 67% 2.25% 2.25% 3.22%
$ -- $23.34 43.90% $ 51,155 65% 1.75% 1.78% 1.85%
(0.15) 16.22 38.83% 10,908 106% 1.75% 1.77% 2.65%
-- 11.81 18.00% 587 122% 1.75% 1.75% 5.66%
-- 23.16 43.67% 113,529 65% 2.25% 2.28% 2.35%
(0.15) 16.12 38.21% 22,400 106% 2.25% 2.27% 3.14%
-- 11.79 17.80% 991 122% 2.25% 2.25% 15.98%
-- 23.17 43.80% 45,668 65% 2.25% 2.28% 2.35%
(0.15) 16.12 38.09% 9,674 106% 2.25% 2.27% 3.17%
-- 11.79 17.90% 903 122% 2.25% 2.25% 20.25%
-- 23.14 43.55% 20,969 65% 2.25% 2.28% 2.35%
(0.15) 16.12 38.09% 6,427 106% 2.25% 2.27% 3.19%
-- 11.79 17.90% 509 122% 2.25% 2.25% 10.43%
$(0.22) $12.56 11.85% $ 13,244 74% 1.75% 1.89% 2.25%
(0.03) 11.42 12.06% 8,561 126% 1.75% 1.85% 2.76%
-- 10.23 2.30% 717 3% 1.75% 1.75% 9.44%
(0.22) 12.48 11.54% 31,129 74% 2.25% 2.39% 2.75%
(0.01) 11.38 11.57% 21,560 126% 2.25% 2.35% 3.29%
-- 10.22 2.20% 1,886 3% 2.25% 2.25% 9.10%
(0.22) 12.49 11.63% 13,752 74% 2.25% 2.39% 2.75%
(0.01) 11.38 11.57% 7,731 126% 2.25% 2.35% 3.32%
-- 10.22 2.20% 997 3% 2.25% 2.25% 13.91%
(0.22) 12.46 11.56% 7,097 74% 2.25% 2.39% 2.75%
(0.01) 11.36 11.38% 4,608 126% 2.25% 2.35% 3.35%
-- 10.22 2.20% 295 3% 2.25% 2.25% 12.90%
$ -- $10.29 2.90% $ 5,021 22% 2.10% 2.10% 3.98%
-- 10.28 2.80% 7,264 22% 2.60% 2.60% 4.93%
-- 10.27 2.70% 5,901 22% 2.60% 2.60% 4.70%
-- 10.28 2.80% 1,681 22% 2.60% 2.60% 6.31%
Ratio of Net Investment
Income (Loss) to
Average Net Assets(3)
-----------------------
(0.61%)
(0.69%)
0.72%
(1.12%)
(1.20%)
0.25%
(1.11%)
(1.19%)
0.24%
(1.12%)
(1.18%)
0.20%
(1.14%)
(1.17%)
(0.52%)
(1.65%)
(1.68%)
(0.78%)
(1.65%)
(1.68%)
(0.72%)
(1.65%)
(1.69%)
(0.67%)
(0.30%)
0.06%
0.87%
(0.80%)
(0.44%)
0.47%
(0.80%)
(0.45%)
0.26%
(0.79%)
(0.46%)
0.34%
(0.15%)
(0.69%)
(0.74%)
(0.82%)
(2) Total return for Class X shares does not reflect the payment of bonus
shares.
(3) Annualized for periods less than one year.
(4) Includes commissions received by American Skandia Marketing, Incorporated
under the Funds' Supplemental Distribution Plan, as described in Note 3 to
the Financial Statements.
(6) Commenced operations on August 19, 1998.
(7) Commenced operations on November 1, 1999.
* Unaudited.
Per share data has been calculated based on the average daily number of shares
outstanding throughout the period.
See Notes to Financial Statements.
FINANCIAL HIGHLIGHTS
--------------------------------------------------------------------------------
Per Share Data (For a Share Outstanding
throughout each period)
Increase (Decrease) from
Investment Operations
Net Asset -----------------------------------------
Value Net Net Realized Total from
Period Beginning Investment & Unrealized Investment
Ended of Period Income (Loss) Gain (Loss) Operations
-------- --------- ------------- ------------ ----------
ASAF BANKERS TRUST
MANAGED INDEX 500 FUND:
- ------------------------------
- ------------------------------
Class A 04/30/00(7)* $ 10.00 $ 0.03 $ 0.47 $ 0.50
Class B 04/30/00(7)* 10.00 -- 0.49 0.49
Class C 04/30/00(7)* 10.00 -- 0.49 0.49
Class X 04/30/00(7)* 10.00 -- 0.49 0.49
ASAF MFS GROWTH
WITH INCOME FUND:
- ------------------------------
- ------------------------------
Class A 04/30/00(7)* $ 10.00 $ -- $ 0.36 $ 0.36
Class B 04/30/00(7)* 10.00 (0.01) 0.35 0.34
Class C 04/30/00(7)* 10.00 (0.02) 0.34 0.32
Class X 04/30/00(7)* 10.00 (0.02) 0.36 0.34
ASAF KEMPER
SMALL-CAP GROWTH FUND:
- ------------------------------
- ------------------------------
Class A 04/30/00(8)* $ 10.00 $ 0.02 $(1.72) $(1.70)
Class B 04/30/00(8)* 10.00 (0.01) (1.69) (1.70)
Class C 04/30/00(8)* 10.00 (0.01) (1.69) (1.70)
Class X 04/30/00(8)* 10.00 (0.01) (1.70) (1.71)
Less Distributions
------------------------------------------
From Net In Excess of
Investment Net Investment From Capital
Income Income Gains
---------- -------------- ------------
ASAF BANKERS TRUST
MANAGED INDEX 500 FUND:
- ------------------------------
- ------------------------------
Class A $ -- $ -- $ --
Class B -- -- --
Class C -- -- --
Class X -- -- --
ASAF MFS GROWTH
WITH INCOME FUND:
- ------------------------------
- ------------------------------
Class A $ -- $ -- $ --
Class B -- -- --
Class C -- -- --
Class X -- -- --
ASAF KEMPER
SMALL-CAP GROWTH FUND:
- ------------------------------
- ------------------------------
Class A $ -- $ -- $ --
Class B -- -- --
Class C -- -- --
Class X -- -- --
AMERICAN SKANDIA ADVISOR FUNDS, INC.
--------------------------------------------------------------------------------
Ratios of Expenses
Supplemental Data to Average Net Assets(3)
------------------------------------- ------------------------------------------
Net Asset Net Assets at Portfolio Net After Expense Before Expense
Total Value Total End of Period Turnover Operating Reimbursement Reimbursement
Distributions End of Period Return(2) (In 000's) Rate Expenses and Waiver(4) and Waiver(4)
- ------------- ------------- --------- ------------- --------- --------- ------------- --------------
$ -- $10.50 5.00% $ 9,171 125% 1.50% 1.50% 1.87%
-- 10.49 4.90% 18,564 125% 2.00% 2.00% 2.53%
-- 10.49 4.90% 11,157 125% 2.00% 2.00% 2.54%
-- 10.49 4.90% 3,486 125% 2.00% 2.00% 2.45%
$ -- $10.36 3.60% $ 2,553 24% 1.80% 1.80% 3.16%
-- 10.34 3.40% 7,547 24% 2.30% 2.30% 3.96%
-- 10.32 3.20% 3,910 24% 2.30% 2.30% 3.69%
-- 10.34 3.40% 1,768 24% 2.30% 2.30% 3.69%
$ -- $ 8.30 (16.90%) $ 5,632 8% 1.80% 1.80% 1.80%
-- 8.30 (17.10%) 11,094 8% 2.30% 2.30% 2.30%
-- 8.30 (17.10%) 5,929 8% 2.30% 2.30% 2.30%
-- 8.29 (17.00%) 1,663 8% 2.30% 2.30% 2.30%
Ratio of Net Investment
Income (Loss) to
Average Net Assets(3)
-----------------------
0.59%
(0.04%)
(0.05%)
(0.06%)
0.10%
(0.30%)
(0.45%)
(0.44%)
0.45%
(0.28%)
(0.25%)
(0.13%)
(2) Total return for Class X shares does not reflect the payment of bonus
shares.
(3) Annualized for periods less than one year.
(4) Includes commissions received by American Skandia Marketing, Incorporated
under the Funds' Supplemental Distribution Plan, as described in Note 3 to
the Financial Statements.
(7) Commenced operations on November 1, 1999.
(8) Commenced operations on March 1, 2000.
* Unaudited.
Per share data has been calculated based on the average daily number of shares
outstanding throughout the period.
See Notes to Financial Statements.
FINANCIAL HIGHLIGHTS
--------------------------------------------------------------------------------
Per Share Data (For a Share Outstanding
Throughout Each Period)
Increase (Decrease) from
Investment Operations
Net Asset -----------------------------------------
Value Net Net Realized Total from
Period Beginning Investment & Unrealized Investment
Ended of Period Income (Loss) Gain (Loss) Operations
-------- --------- ------------- ------------ ----------
ASAF T. ROWE PRICE
INTERNATIONAL
EQUITY FUND:
- -------------------------------
- -------------------------------
Class A 04/30/00* $ 10.99 $(0.05) $ 1.50 $ 1.45
10/31/99 9.39 (0.01) 1.68 1.67
10/31/98 8.93 (0.02) 0.48 0.46
10/31/97(1) 9.74 0.01 (0.82) (0.81)
Class B 04/30/00* 11.22 (0.08) 1.53 1.45
10/31/99 9.59 (0.08) 1.73 1.65
10/31/98 9.16 (0.07) 0.50 0.43
10/31/97(1) 10.00 (0.01) (0.83) (0.84)
Class C 04/30/00* 11.21 (0.08) 1.51 1.43
10/31/99 9.57 (0.08) 1.74 1.66
10/31/98 9.16 (0.06) 0.47 0.41
10/31/97(1) 10.00 (0.01) (0.83) (0.84)
Class X 04/30/00* 11.25 (0.08) 1.52 1.44
10/31/99 9.61 (0.09) 1.75 1.66
10/31/98 9.18 (0.07) 0.50 0.43
10/31/97(1) 10.00 (0.01) (0.81) (0.82)
ASAF JANUS
CAPITAL GROWTH FUND:
- -------------------------------
- -------------------------------
Class A 04/30/00* $ 21.97 $(0.07) $ 4.20 $ 4.13
10/31/99 14.41 (0.10) 7.66 7.56
10/31/98 11.40 (0.01) 3.05 3.04
10/31/97(1) 11.18 0.09 0.13 0.22
Class B 04/30/00* 19.50 (0.12) 3.74 3.62
10/31/99 12.87 (0.17) 6.80 6.63
10/31/98 10.19 (0.08) 2.77 2.69
10/31/97(1) 10.00 0.06 0.13 0.19
Class C 04/30/00* 19.47 (0.12) 3.73 3.61
10/31/99 12.85 (0.18) 6.80 6.62
10/31/98 10.19 (0.08) 2.75 2.67
10/31/97(1) 10.00 0.05 0.14 0.19
Class X 04/30/00* 19.52 (0.12) 3.75 3.63
10/31/99 12.88 (0.18) 6.82 6.64
10/31/98 10.20 (0.09) 2.78 2.69
10/31/97(1) 10.00 0.05 0.15 0.20
ASAF INVESCO
EQUITY INCOME FUND:
- -------------------------------
- -------------------------------
Class A 04/30/00* $ 13.66 $ 0.20 $ 0.39 $ 0.59
10/31/99 11.75 0.22 1.84 2.06
10/31/98 10.45 0.22 1.20 1.42
10/31/97(1) 9.98 0.14 0.33 0.47
Class B 04/30/00* 13.69 0.14 0.41 0.55
10/31/99 11.77 0.14 1.87 2.01
10/31/98 10.45 0.15 1.24 1.39
10/31/97(1) 10.00 0.10 0.35 0.45
Class C 04/30/00* 13.68 0.14 0.41 0.55
10/31/99 11.77 0.14 1.86 2.00
10/31/98 10.46 0.15 1.23 1.38
10/31/97(1) 10.00 0.10 0.36 0.46
Class X 04/30/00* 13.68 0.14 0.41 0.55
10/31/99 11.76 0.14 1.87 2.01
10/31/98 10.45 0.15 1.23 1.38
10/31/97(1) 10.00 0.11 0.34 0.45
Less Distributions
------------------------------------------
From Net In Excess of
Investment Net Investment From Capital
Income Income Gains
---------- -------------- ------------
ASAF T. ROWE PRICE
INTERNATIONAL
EQUITY FUND:
- -------------------------------
- -------------------------------
Class A $ -- $ -- $ --
-- (0.07) --
-- -- --
-- -- --
Class B -- -- --
-- (0.02) --
-- -- --
-- -- --
Class C -- -- --
-- (0.02) --
-- -- --
-- -- --
Class X -- -- --
-- (0.02) --
-- -- --
-- -- --
ASAF JANUS
CAPITAL GROWTH FUND:
- -------------------------------
- -------------------------------
Class A $ -- $ -- $ --
-- -- --
(0.02) (0.01) --
-- -- --
Class B -- -- --
-- -- --
(0.01) -- --
-- -- --
Class C -- -- --
-- -- --
(0.01) -- --
-- -- --
Class X -- -- --
-- -- --
(0.01) -- --
-- -- --
ASAF INVESCO
EQUITY INCOME FUND:
- -------------------------------
- -------------------------------
Class A $(0.11) $ -- $(0.19)
(0.15) -- --
(0.12) -- --
-- -- --
Class B (0.07) -- (0.19)
(0.09) -- --
(0.07) -- --
-- -- --
Class C (0.07) -- (0.19)
(0.09) -- --
(0.07) -- --
-- -- --
Class X (0.07) -- (0.19)
(0.09) -- --
(0.07) -- --
-- -- --
AMERICAN SKANDIA ADVISOR FUNDS, INC.
--------------------------------------------------------------------------------
Ratios of Expenses
Supplemental Data to Average Net Assets(4)
------------------------------------- -----------------------------------------------
Net Asset Net Assets at Portfolio Net After Expense Before Expense
Total Value Total End of Period Turnover Operating Reimbursement Reimbursement
Distributions End of Period Return(2) (In 000's) Rate(3) Expenses and Waiver(5) and Waiver(5)
- ------------- ------------- --------- ------------- --------- --------- ---------------- ----------------
$ -- $12.44 13.19% $ 8,028 28% 2.10% 2.13% 2.36%
(0.07) 10.99 17.82% 4,623 31% 2.10% 2.12% 3.36%
-- 9.39 5.15% 1,685 20% 2.10% 2.10% 6.06%
-- 8.93 (8.32%) 218 1% 2.10% 2.10% 51.87%
-- 12.67 12.82% 17,245 28% 2.60% 2.63% 2.86%
(0.02) 11.22 17.30% 9,257 31% 2.60% 2.62% 3.86%
-- 9.59 4.69% 3,318 20% 2.60% 2.60% 6.50%
-- 9.16 (8.40%) 390 1% 2.60% 2.60% 38.12%
-- 12.64 12.76% 7,984 28% 2.60% 2.63% 2.86%
(0.02) 11.21 17.33% 4,379 31% 2.60% 2.62% 3.90%
-- 9.57 4.48% 2,282 20% 2.60% 2.60% 6.55%
-- 9.16 (8.40%) 198 1% 2.60% 2.60% 33.95%
-- 12.69 12.80% 8,023 28% 2.60% 2.63% 2.86%
(0.02) 11.25 17.26% 6,727 31% 2.60% 2.62% 3.94%
-- 9.61 4.68% 5,144 20% 2.60% 2.60% 6.54%
-- 9.18 (8.20%) 756 1% 2.60% 2.60% 46.77%
$ -- $26.10 18.80% $ 458,762 10% 1.70% 1.70% 1.77%
-- 21.97 52.46% 234,575 47% 1.70% 1.71% 2.00%
(0.03) 14.41 26.77% 24,558 77% 1.70% 1.70% 2.65%
-- 11.40 1.97% 706 83% 1.70% 1.70% 26.77%
-- 23.12 18.56% 1,265,665 10% 2.20% 2.21% 2.27%
-- 19.50 51.52% 684,778 47% 2.20% 2.21% 2.51%
(0.01) 12.87 26.40% 56,582 77% 2.20% 2.20% 3.14%
-- 10.19 1.90% 1,718 83% 2.20% 2.20% 16.45%
-- 23.08 18.54% 445,541 10% 2.20% 2.21% 2.27%
-- 19.47 51.52% 222,230 47% 2.20% 2.21% 2.50%
(0.01) 12.85 26.20% 21,710 77% 2.20% 2.20% 3.13%
-- 10.19 1.90% 452 83% 2.20% 2.20% 15.78%
-- 23.15 18.60% 190,099 10% 2.20% 2.20% 2.27%
-- 19.52 51.55% 133,655 47% 2.20% 2.21% 2.48%
(0.01) 12.88 26.37% 36,575 77% 2.20% 2.20% 3.16%
-- 10.20 2.00% 1,474 83% 2.20% 2.20% 24.39%
$(0.30) $13.95 4.35% $ 41,426 35% 1.55% 1.60% 1.87%
(0.15) 13.66 17.60% 31,960 66% 1.55% 1.59% 1.91%
(0.12) 11.75 13.64% 8,911 70% 1.55% 1.55% 2.86%
-- 10.45 4.71% 471 46% 1.55% 1.55% 29.14%
(0.26) 13.98 4.08% 110,013 35% 2.05% 2.10% 2.37%
(0.09) 13.69 17.08% 79,962 66% 2.05% 2.09% 2.42%
(0.07) 11.77 13.30% 18,045 70% 2.05% 2.05% 3.38%
-- 10.45 4.50% 1,408 46% 2.05% 2.05% 19.54%
(0.26) 13.97 4.01% 46,790 35% 2.05% 2.10% 2.37%
(0.09) 13.68 17.08% 34,157 66% 2.05% 2.09% 2.41%
(0.07) 11.77 13.19% 8,362 70% 2.05% 2.05% 3.33%
-- 10.46 4.60% 255 46% 2.05% 2.05% 20.89%
(0.26) 13.97 4.08% 37,893 35% 2.05% 2.10% 2.36%
(0.09) 13.68 17.09% 33,884 66% 2.05% 2.09% 2.42%
(0.07) 11.76 13.21% 18,296 70% 2.05% 2.05% 3.35%
-- 10.45 4.50% 1,174 46% 2.05% 2.05% 36.25%
Ratio of Net Investment
Income (Loss) to
Average Net Assets(4)
-----------------------
(0.80%)
(0.28%)
(0.16%)
0.07%
(1.30%)
(0.80%)
(0.70%)
(0.51%)
(1.30%)
(0.83%)
(0.58%)
(0.53%)
(1.33%)
(0.86%)
(0.68%)
(0.28%)
(0.56%)
(0.49%)
(0.24%)
2.72%
(1.06%)
(0.98%)
(0.74%)
2.27%
(1.07%)
(0.99%)
(0.75%)
1.95%
(1.06%)
(1.02%)
(0.76%)
2.05%
1.45%
1.52%
1.72%
4.81%
0.94%
1.02%
1.27%
3.68%
0.94%
1.02%
1.27%
3.82%
0.95%
0.99%
1.27%
4.05%
(1) Calculated from July 28, 1997 (Date of initial shares sold subsequent to
effective date of the Funds' registration statement under The Securities Act
of 1933.)
(2) Total return for Class X shares does not reflect the payment of bonus
shares.
(3) Represents Portfolio Turnover Rate in corresponding Master Portfolios.
(4) Annualized for periods less than one year and represents the combined ratios
for the respective fund and its respective pro rata share of its Master
Portfolio.
(5) Includes commissions received by American Skandia Marketing, Incorporated
under the Funds' Supplemental Distribution Plan, as described in Note 3 to
the Financial Statements.
* Unaudited.
Per share data has been calculated based on the average daily number of shares
outstanding throughout the period.
See Notes to Financial Statements.
FINANCIAL HIGHLIGHTS
--------------------------------------------------------------------------------
Per Share Data (For a Share Outstanding
throughout each period)
Increase (Decrease) from
Investment Operations
Net Asset -----------------------------------------
Value Net Net Realized Total from
Period Beginning Investment & Unrealized Investment
Ended of Period Income (Loss) Gain (Loss) Operations
-------- --------- ------------- ------------ ----------
ASAF TOTAL
RETURN BOND FUND:
- -------------------------------
- -------------------------------
Class A 04/30/00* $ 10.11 $ 0.29 $(0.09) $ 0.20
10/31/99 10.79 0.60 (0.61) (0.01)
10/31/98 10.28 0.35 0.54 0.89
10/31/97(1) 10.07 0.15 0.09 0.24
Class B 04/30/00* 10.01 0.26 (0.09) 0.17
10/31/99 10.68 0.54 (0.60) (0.06)
10/31/98 10.16 0.31 0.53 0.84
10/31/97(1) 10.00 0.10 0.09 0.19
Class C 04/30/00* 10.01 0.26 (0.09) 0.17
10/31/99 10.67 0.54 (0.59) (0.05)
10/31/98 10.16 0.31 0.52 0.83
10/31/97(1) 10.00 0.10 0.09 0.19
Class X 04/30/00* 10.02 0.26 (0.09) 0.17
10/31/99 10.69 0.54 (0.60) (0.06)
10/31/98 10.17 0.34 0.50 0.84
10/31/97(1) 10.00 0.09 0.10 0.19
ASAF JPM
MONEY MARKET FUND:
- -------------------------------
- -------------------------------
Class A 04/30/00* $ 1.00 $0.020 $ -- $0.020
10/31/99 1.00 0.035 -- 0.035
10/31/98 1.00 0.039 -- 0.039
10/31/97(1) 1.00 0.009 -- 0.009
Class B 04/30/00* 1.00 0.017 -- 0.017
10/31/99 1.00 0.030 -- 0.030
10/31/98 1.00 0.033 -- 0.033
10/31/97(1) 1.00 0.007 -- 0.007
Class C 04/30/00* 1.00 0.017 -- 0.017
10/31/99 1.00 0.030 -- 0.030
10/31/98 1.00 0.034 -- 0.034
10/31/97(1) 1.00 0.007 -- 0.007
Class X 04/30/00* 1.00 0.017 -- 0.017
10/31/99 1.00 0.030 -- 0.030
10/31/98 1.00 0.034 -- 0.034
10/31/97(1) 1.00 0.008 -- 0.008
Less Distributions
------------------------------------------
From Net In Excess of
Investment Net Investment From Capital
Income Income Gains
---------- -------------- ------------
ASAF TOTAL
RETURN BOND FUND:
- -------------------------------
- -------------------------------
Class A $ (0.29) $ -- $ --
(0.60) -- (0.07)
(0.38) -- --
(0.03) -- --
Class B (0.26) -- --
(0.54) -- (0.07)
(0.32) -- --
(0.03) -- --
Class C (0.26) -- --
(0.54) -- (0.07)
(0.32) -- --
(0.03) -- --
Class X (0.26) -- --
(0.54) -- (0.07)
(0.32) -- --
(0.02) -- --
ASAF JPM
MONEY MARKET FUND:
- -------------------------------
- -------------------------------
Class A $(0.020) $ -- $ --
(0.035) -- --
(0.039) -- --
(0.009) -- --
Class B (0.017) -- --
(0.030) -- --
(0.033) -- --
(0.007) -- --
Class C (0.017) -- --
(0.030) -- --
(0.034) -- --
(0.007) -- --
Class X (0.017) -- --
(0.030) -- --
(0.034) -- --
(0.008) -- --
AMERICAN SKANDIA ADVISOR FUNDS, INC.
--------------------------------------------------------------------------------
Ratios of Expenses
Supplemental Data to Average Net Assets(4)
------------------------------------- ------------------------------------------
Net Asset Net Assets at Portfolio Net After Expense Before Expense
Total Value Total End of Period Turnover Operating Reimbursement Reimbursement
Distributions End of Period Return(2) (In 000's) Rate(3) Expenses and Waiver(5) and Waiver(5)
- ------------- ------------- --------- ------------- --------- --------- ------------- --------------
$ (0.29) $10.02 1.97% $25,021 101% 1.40% 1.40% 1.53%
(0.67) 10.11 (0.55%) 23,140 145% 1.40% 1.40% 1.73%
(0.38) 10.79 8.79% 6,034 418% 1.40% 1.40% 2.93%
(0.03) 10.28 2.39% 61 93% 1.40% 1.40% 66.92%
(0.26) 9.92 1.71% 86,689 101% 1.90% 1.90% 2.05%
(0.61) 10.01 (1.02%) 83,936 145% 1.90% 1.90% 2.23%
(0.32) 10.68 8.36% 17,821 418% 1.90% 1.90% 3.58%
(0.03) 10.16 1.90% 547 93% 1.90% 1.90% 39.35%
(0.26) 9.92 1.71% 23,731 101% 1.90% 1.90% 2.05%
(0.61) 10.01 (0.92%) 26,112 145% 1.90% 1.90% 2.24%
(0.32) 10.67 8.26% 8,743 418% 1.90% 1.90% 3.52%
(0.03) 10.16 1.93% 165 93% 1.90% 1.90% 33.68%
(0.26) 9.93 1.71% 19,490 101% 1.90% 1.90% 2.05%
(0.61) 10.02 (1.00%) 19,574 145% 1.90% 1.90% 2.25%
(0.32) 10.69 8.36% 11,698 418% 1.90% 1.90% 3.68%
(0.02) 10.17 1.94% 410 93% 1.90% 1.90% 67.46%
$(0.020) $ 1.00 1.97% $69,950 N/A 1.45% 1.45% 1.45%
(0.035) 1.00 3.57% 43,004 N/A 1.50% 1.50% 1.63%
(0.039) 1.00 3.94% 7,372 N/A 1.50% 1.50% 2.42%
(0.009) 1.00 0.92% 307 N/A 1.50% 1.50% 31.53%
(0.017) 1.00 1.72% 73,411 N/A 1.97% 1.97% 1.97%
(0.030) 1.00 3.05% 79,202 N/A 2.00% 2.00% 2.12%
(0.033) 1.00 3.39% 16,554 N/A 2.00% 2.00% 2.89%
(0.007) 1.00 0.75% 354 N/A 2.00% 2.00% 37.83%
(0.017) 1.00 1.72% 35,202 N/A 1.97% 1.97% 1.97%
(0.030) 1.00 3.06% 28,923 N/A 2.00% 2.00% 2.13%
(0.034) 1.00 3.42% 6,895 N/A 2.00% 2.00% 3.07%
(0.007) 1.00 0.71% 332 N/A 2.00% 2.00% 24.34%
(0.017) 1.00 1.72% 22,507 N/A 1.97% 1.97% 1.97%
(0.030) 1.00 3.06% 28,385 N/A 2.00% 2.00% 2.13%
(0.034) 1.00 3.42% 12,533 N/A 2.00% 2.00% 3.18%
(0.008) 1.00 0.77% 566 N/A 2.00% 2.00% 39.71%
Ratio of Net Investment
Income (Loss) to
Average Net Assets(4)
- -----------------------
5.66%
5.33%
4.76%
4.42%
5.25%
4.82%
4.23%
4.13%
5.26%
4.84%
4.27%
4.32%
5.28%
4.86%
4.25%
3.94%
4.03%
3.56%
3.90%
3.34%
3.43%
3.04%
3.30%
2.98%
3.50%
3.07%
3.40%
2.85%
3.44%
3.06%
3.42%
2.97%
(1) Calculated from July 28, 1997 (Date of initial shares sold subsequent to the
effective date of the Funds' registration statement under The Securities Act
of 1933.
(2) Total return for Class X shares does not reflect the payment of bonus
shares.
(3) Represents Portfolio Turnover Rate in corresponding Master Portfolios.
(4) Annualized for periods less than one year and represents the combined ratios
for the respective fund and its respective pro rata share of its Master
Portfolio.
(5) Includes commissions received by American Skandia Marketing, Incorporated
under the Funds' Supplemental Distribution Plan, as described in Note 3 to
the Financial Statements.
* Unaudited.
Per share data has been calculated based on the average daily number of shares
outstanding throughout the period.
See Notes to Financial Statements.
APRIL 30, 2000
(UNAUDITED)
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION
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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, 2000,
consisted of 20 diversified investment portfolios (each a "Fund" and
collectively the "Funds"). Five of the Funds -- ASAF T. Rowe Price International
Equity Fund ("T. Rowe International Equity"), ASAF Janus Capital Growth Fund
("Janus Capital Growth"), ASAF INVESCO Equity Income Fund ("Equity Income"),
ASAF Total Return Bond Fund ("Total Return Bond"), and ASAF JPM Money Market
Fund ("Money Market") (each a "Feeder Fund" and collectively the "Feeder
Funds") -- invest all of their investable assets in a corresponding portfolio of
American Skandia Master Trust (each a "Portfolio" and collectively the
"Portfolios"), an open-end management investment company comprised of five
diversified investment portfolios. The value of each Feeder Fund's investment in
each Portfolio, included in the accompanying Statements of Assets and
Liabilities, reflects each Feeder Fund's beneficial interest in the net assets
of that Portfolio. At April 30, 2000, the Feeder Funds held the following
percentage interests in their corresponding Portfolios.
ASMT T. Rowe Price International Equity Portfolio 57.8%
ASMT Janus Capital Growth Portfolio 97.2%
ASMT INVESCO Equity Income Portfolio 88.1%
ASMT PIMCO Total Return Bond Portfolio 90.2%
ASMT JPM Money Market Portfolio 94.4%
The financial statements of each Portfolio, including the Schedules of
Investments, are included elsewhere within this report and should be read in
conjunction with each Feeder Fund's financial statements.
The remaining 15 Funds of the Company -- ASAF Founders International Small
Capitalization Fund ("International Small Cap"), ASAF Janus Small-Cap Growth
Fund ("Janus Small-Cap Growth"), ASAF T. Rowe Price Small Company Value Fund
("Small Company Value"), ASAF American Century Strategic Balanced Fund
("Strategic Balanced"), ASAF Federated High Yield Bond Fund ("High Yield Bond"),
ASAF Oppenheimer Large-Cap Growth Fund ("Large-Cap Growth"), ASAF Lord Abbett
Growth and Income Fund ("Growth and Income"), ASAF Janus Overseas Growth Fund
("Overseas Growth"), ASAF Marsico Capital Growth Fund ("Marsico Capital
Growth"), ASAF Neuberger Berman Mid-Cap Growth Fund ("Mid-Cap Growth"), ASAF
Neuberger Berman Mid-Cap Value Fund ("Mid-Cap Value"), ASAF AIM International
Equity Fund ("AIM International Equity"), ASAF Bankers Trust Managed Index 500
Fund ("Managed Index 500"), ASAF MFS Growth with Income Fund ("Growth with
Income"), and ASAF Kemper Small-Cap Growth Fund ("Kemper Small-Cap Growth")
(each a "Non-Feeder Fund" and collectively the "Non-Feeder Funds") -- directly
invest and manage their own portfolio of securities.
2. SIGNIFICANT ACCOUNTING POLICIES
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The following is a summary of significant accounting policies followed by
the Funds, in conformity with generally accepted accounting principles, 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.
AMERICAN SKANDIA ADVISOR FUNDS, INC.
SECURITY VALUATION
FEEDER FUNDS -- The value of each Feeder Fund's beneficial interest in the
Portfolio in which it invests is determined by the Fund's percentage interest in
the Portfolio, multiplied by the Portfolio's net assets. Valuation of securities
held by the Portfolios is discussed in Note 2 to the financial statements of
American Skandia Master Trust.
NON-FEEDER FUNDS -- 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 last reported sales 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 which mature in 60 days or less are valued at cost (or market value
60 days prior to maturity), adjusted for amortization to maturity of any premium
or discount.
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. As of April 30, 2000, there were no securities valued in
accordance with such procedures.
FOREIGN CURRENCY TRANSLATION
NON-FEEDER FUNDS -- 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 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
NON-FEEDER FUNDS -- 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
NON-FEEDER FUNDS -- 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 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 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
NON-FEEDER FUNDS -- 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 bear a risk of loss in the event that the seller
defaults on its obligation to repurchase the securities. In such case, the Fund
may be delayed or prevented from exercising its right to dispose of the
securities.
SECURITIES LOANS
NON-FEEDER FUNDS -- 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.
AMERICAN SKANDIA ADVISOR FUNDS, INC.
At April 30, 2000, securities lending activities are summarized as follows:
MARKET VALUE INCOME
OF SECURITIES MARKET VALUE FROM
ON LOAN OF COLLATERAL LENDING*
------------- ------------- --------
Janus Small-Cap Growth $ 42,533,687 $ 41,671,367 $313,114
Small Company Value 1,548,575 1,570,000 10,290
Strategic Balanced 14,691,514 15,079,265 17,269
High Yield Bond 3,844,593 4,037,727 23,343
Large-Cap Growth 13,169,637 13,110,502 13,302
Growth and Income 22,234,387 23,018,894 22,880
Marsico Capital Growth 214,298,419 214,507,421 152,585
Mid-Cap Growth 71,707,783 70,280,465 32,909
Mid-Cap Value 7,461,869 7,411,100 7,078
* Income earned is included in interest income on the Statements of Operations.
DEFERRED ORGANIZATION COSTS
ALL FUNDS -- 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.
INVESTMENT TRANSACTIONS AND INVESTMENT INCOME
FEEDER FUNDS -- The Feeder Funds record their proportionate share of investment
operations, including net investment income and realized and unrealized gains
and losses, from the corresponding Portfolios in which they invest.
NON-FEEDER FUNDS -- 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 Funds' sources. Interest income is
recorded on the accrual basis and includes the accretion of discount and
amortization of premium.
MULTIPLE CLASSES OF SHARES
ALL FUNDS -- 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, 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.
DISTRIBUTIONS TO SHAREHOLDERS
ALL FUNDS -- Dividends, if any, from net investment income are declared and paid
at least annually by the International Small Cap, Janus Small-Cap Growth, Small
Company Value, Large-Cap Growth, Growth and Income, Overseas Growth, Marsico
Capital Growth, Mid-Cap Growth, Mid-Cap Value, T. Rowe International Equity,
Janus Capital Growth, AIM International Equity, Managed Index 500, Growth with
Income, and Kemper Small-Cap Growth Funds, semiannually by the Strategic
Balanced, and Equity Income Funds, declared daily and paid quarterly by the
Total Return Bond Fund, and declared daily and paid monthly by the High Yield
Bond and Money Market Funds. Net realized gains
from investment transactions, if any, are distributed at least annually.
Distributions to shareholders are recorded on the ex-dividend date.
3. AGREEMENTS AND OTHER TRANSACTIONS WITH AFFILIATES
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The Non-Feeder Funds have entered into investment management agreements
with American Skandia Investment Services, Inc. ("Investment Manager") which
provide that the Investment Manager will furnish each Fund with investment
advice and investment management and administrative services. The Investment
Manager has engaged the following firms as Sub-advisors for their respective
Funds: Founders Asset Management, Inc. for International Small Cap; T. Rowe
Price Associates, Inc. for Small Company Value; American Century Investment
Management, Inc. for Strategic Balanced; Federated Investment Counseling for
High Yield Bond; OppenheimerFunds, Inc. for Large-Cap Growth; Lord Abbett & Co.
for Growth and Income; Janus Capital Corporation for Janus Small-Cap Growth and
Overseas Growth; Marsico Capital Management, LLC for Marsico Capital Growth;
Neuberger Berman Management Inc. for Mid-Cap Growth and Mid-Cap Value; A I M
Capital Management, Inc. for AIM International Equity; Bankers Trust Company for
Managed Index 500; Massachusetts Financial Services Co. for Growth with Income;
and Scudder Kemper Investments, Inc. for Kemper Small-Cap Growth.
ADVISORY FEES
NON-FEEDER FUNDS -- The Investment Manager receives a fee, computed daily and
paid monthly, based on an annual rate of 1.10%, .90%, 1.00%, .90%, .70%, .90%,
1.00%, 1.10%, 1.00%, .90%, .90%, 1.10%, .80%, 1.00%, and .95% of the average
daily net assets of the International Small Cap, Small-Cap Growth, Small Company
Value, Strategic Balanced, High Yield Bond, Large-Cap Growth, Growth and Income,
Overseas Growth, Marisco Capital Growth, Mid-Cap Growth, Mid-Cap Value, AIM
International Equity, Managed Index 500, Growth with Income, and Kemper
Small-Cap Growth Funds, respectively. The fee for International Small Cap is
reduced to 1.00% of the average daily net assets in excess of $100 million. The
fee for Large-Cap Growth is reduced to .85% of the average daily net assets in
excess of $1 billion. The Investment Manager is currently waiving a portion of
its fee equal to .20% and .10% of the average daily net assets of the Growth and
Income and Overseas Growth Funds, respectively. The Investment Manager pays each
Sub-advisor a fee as compensation for advisory services provided to the Funds.
On May 1, 2000, Alliance Capital Management L.P. will become the
Sub-advisor to the Large-Cap Growth and Growth and Income Funds. The names of
the Funds will change to ASAF Alliance Growth Fund ("Growth") and ASAF Alliance
Growth and Income ("Growth and Income"), respectively. Also on May 1, 2000,
Sanford C. Bernstein & Co., Inc. will become the Sub-advisor to Managed Index
500 and the name of the Fund will change to ASAF Managed Index 500 Fund
("Managed Index 500").
EXPENSE LIMITATION
ALL FUNDS -- The Investment Manager has voluntarily agreed to limit the
operating expenses of each Fund (exclusive of class-specific distribution fees)
to an annual rate of 1.60%, 1.20%, 1.25%, 1.10%, 1.00%, 1.30%, 1.10%, 1.60%,
1.25%, 1.25%, 1.25%, 1.60%, 1.00%, 1.30%, 1.30%, 1.60%, 1.20%, 1.05%, .90%, and
1.00% of the average daily net assets of the International Small Cap, Janus
Small-Cap Growth, Small Company Value, Strategic Balanced, High Yield Bond,
Large-Cap Growth, Growth and Income, Overseas Growth, Marsico Capital Growth,
Mid-Cap Growth, Mid-Cap Value, AIM International Equity, Managed Index 500,
Growth with Income, Kemper Small-Cap Growth, T. Rowe International Equity, Janus
Capital Growth, Equity Income, Total Return Bond, and Money Market
AMERICAN SKANDIA ADVISOR FUNDS, INC.
Funds, respectively. All amounts paid or payable to the Funds by the Investment
Manager, under the agreement, are reflected in the Statements of Operations.
MANAGEMENT OF THE COMPANY
NON-FEEDER FUNDS -- Certain officers and directors of the Funds are officers or
directors of the Investment Manager. The Funds pay no compensation directly to
their officers or interested directors.
DISTRIBUTOR
ALL FUNDS -- American Skandia Marketing, Incorporated ("ASMI") serves as the
principal underwriter and distributor for each Fund. The Company has adopted a
separate Distribution and Service plan (each a "Plan" and collectively the
"Plans") for Class A, B, C, and X shares of each Fund in accordance with the
requirements of Rule 12b-1 of the Investment Company Act of 1940.
Under the Class A Plan, the Funds pay ASMI a distribution and service fee
of .50% of the average daily net assets attributable to Class A shares, half of
which is intended as a fee for services provided to existing shareholders. ASMI
uses distribution and service fees received under the Plan to compensate
qualified dealers, brokers, banks, and other financial institutions ("Dealers")
for services provided in connection with the sale of Class A shares and the
maintenance of shareholder accounts. Such compensation is paid by ASMI quarterly
at an annual rate not to exceed .50% of the Funds' average daily net assets
attributable to Class A shares.
A portion of the sales charge on sales of Class A shares may be retained by
ASMI or allocated to Dealers attributable to the sale of those shares. For the
period ended April 30, 2000, ASMI retained $1,710,265 as its portion of the
sales charge on sales of Class A shares of the Funds.
Under the Class B Plan, the Funds pay ASMI a distribution and service fee
of 1.00% of the average daily net assets attributable to Class B shares that are
outstanding for eight years or less, a quarter of which is intended as a fee for
services provided to existing shareholders. ASMI uses distribution and service
fees received under the Plan to compensate Dealers for services provided in
connection with the sale of Class B shares and the maintenance of shareholder
accounts. Such compensation is paid by ASMI quarterly at an annual rate not to
exceed .50% of the Funds' average daily net assets attributable to Class B
shares held for over seven years.
Under the Class C Plan, the Funds pay ASMI a distribution and service fee
of 1.00% of the average daily net assets attributable to Class C shares, a
quarter of which is intended as a fee for services provided to existing
shareholders. ASMI uses distribution and service fees received under the Plan to
compensate Dealers for services provided in connection with the sale of Class C
shares and the maintenance of shareholder accounts. ASMI currently pays a 1.00%
fee to Dealers, in advance, upon sale of Class C shares and retains the fee paid
by the Funds in the first year. After the shares have been held for a year, ASMI
pays such compensation on a quarterly basis.
Under the Class X Plan, the Funds pay ASMI a distribution and service fee
of 1.00% of the average daily net assets attributable to Class X shares that are
outstanding for ten years or less, a quarter of which is intended as a fee for
services provided to existing shareholders. ASMI uses distribution and service
fees received under the Plan to compensate Dealers for services provided in
connection with the sale of Class X shares and the maintenance of shareholder
accounts. Compensation to Dealers is paid by ASMI quarterly at an annual rate
not to exceed .50% of the Funds' average daily net assets attributable to Class
X shares held for over seven years. ASMI also uses distribution and service fees
as reimbursement for its purchase of Bonus Shares. Bonus shares are paid to
shareholders at
the time of the initial purchase and each subsequent purchase of Class X shares
in an amount equal to 2.5% of the purchase.
Purchases of $1 million or more or purchases by certain retirement plans,
with respect to Class A shares, are subject to a contingent deferred sales
charge ("CDSC") if shares are redeemed within 12 months of their purchase. A
CDSC is imposed on Class B and Class X shares redeemed within seven and eight
years, respectively, after their purchase. A CDSC is imposed on Class C shares
redeemed within 12 months of their purchase. The maximum CDSC imposed is equal
to 1%, 6%, 1%, and 6% of the amount subject to the charge for Class A, B, C, and
X, respectively. During the period ended April 30, 2000, CDSCs collected by ASMI
totaled $0, $5,998,432, $277,390, and $500,850 for Class A, B, C, and X,
respectively.
In addition, the Company has adopted a Supplemental Distribution Plan
("Supplemental Plan") under Rule 12b-1. The Supplemental Plan permits ASMI to
receive brokerage commissions in connection with purchases and sales of
securities by the Funds, and to use these commissions to promote the sale of
shares of the Company. Under the Supplemental Plan, securities transactions for
a Fund may be directed to certain brokers for execution ("clearing brokers") who
have agreed to pay part of the brokerage commissions received on these
transactions to ASMI for "introducing" transactions to the clearing broker. In
turn, ASMI uses the brokerage commissions received as an introducing broker to
pay various distribution-related expenses, such as advertising, printing of
sales materials, and payments to dealers.
Commissions received by ASMI under the Supplemental Plan are reflected in
the cost of securities purchased and the proceeds from the sale of securities.
These commissions are shown in the Statements of Operations as "Supplemental
Distribution Fees" and a corresponding reduction "Fees Paid Indirectly". Net
expenses of the Funds are unaffected by these commissions. From November 1, 1999
to April 30, 2000, commissions received by ASMI totaled $370,544, of which
$270,290 and $100,254 were received from the Non-Feeder Funds and the Portfolios
of American Skandia Master Trust, respectively.
4. SHARES OF CAPITAL STOCK
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ALL FUNDS -- The authorized capital stock of the Funds is 5.5 billion shares,
with a par value of $.001 per share. Transactions in shares of capital stock,
during the period ended April 30, 2000, were as follows:
CLASS A CLASS B CLASS C CLASS X
-------------------------------- ---------------------------- ---------------------------- -----------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES
-------------- --------------- ------------ ------------- ------------ ------------- -----------
INTERNATIONAL SMALL
CAP:
Sold 2,347,978 $ 56,354,435 3,160,761 $ 73,506,962 1,632,517 $ 37,956,496 448,157
Reinvested 9,250 180,376 30,159 582,934 9,115 175,926 13,183
Redeemed (940,195) (24,147,070) (397,058) (9,341,642) (431,365) (10,060,971) (82,539)
-------------- --------------- ------------ ------------- ------------ ------------- -----------
Net Increase 1,417,033 $ 32,387,741 2,793,862 $ 64,748,254 1,210,267 $ 28,071,451 378,801
============== =============== ============ ============= ============ ============= ===========
JANUS SMALL-CAP
GROWTH:
Sold 6,319,619 $ 149,878,356 6,576,654 $ 148,411,853 3,100,148 $ 69,817,281 885,233
Reinvested 18,110 449,484 40,353 988,661 17,537 430,204 8,037
Redeemed (4,435,646) (109,066,096) (1,603,002) (37,947,847) (737,266) (17,321,868) (333,224)
-------------- --------------- ------------ ------------- ------------ ------------- -----------
Net Increase 1,902,083 $ 41,261,744 5,014,005 $ 111,452,667 2,380,419 $ 52,925,617 560,046
============== =============== ============ ============= ============ ============= ===========
CLASS X
------------
AMOUNT
------------
INTERNATIONAL SMALL
CAP:
Sold $ 10,445,421
Reinvested 254,604
Redeemed (1,837,133)
------------
Net Increase $ 8,862,892
============
JANUS SMALL-CAP
GROWTH:
Sold $ 20,235,315
Reinvested 197,141
Redeemed (7,683,937)
------------
Net Increase $ 12,748,519
============
AMERICAN SKANDIA ADVISOR FUNDS, INC.
CLASS A CLASS B CLASS C CLASS X
-------------------------------- ---------------------------- ---------------------------- -----------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES
-------------- --------------- ------------ ------------- ------------ ------------- -----------
SMALL COMPANY VALUE:
Sold 730,843 $ 6,717,159 1,049,435 $ 9,498,154 718,286 $ 6,499,556 388,598
Reinvested 30,963 278,977 70,423 630,297 35,421 316,661 38,991
Redeemed (459,408) (4,184,209) (767,705) (6,938,081) (634,887) (5,724,764) (419,598)
-------------- --------------- ------------ ------------- ------------ ------------- -----------
Net Increase 302,398 $ 2,811,927 352,153 $ 3,190,370 118,820 $ 1,091,453 7,991
============== =============== ============ ============= ============ ============= ===========
STRATEGIC BALANCED:
Sold 805,667 $ 10,594,664 2,307,573 $ 30,091,948 838,311 $ 10,914,451 407,503
Reinvested 33,168 440,147 77,557 1,028,408 25,296 335,167 22,487
Redeemed (574,271) (7,535,358) (1,360,813) (17,579,115) (347,372) (4,487,010) (249,757)
-------------- --------------- ------------ ------------- ------------ ------------- -----------
Net Increase 264,564 $ 3,499,453 1,024,317 $ 13,541,241 516,235 $ 6,762,608 180,233
============== =============== ============ ============= ============ ============= ===========
HIGH YIELD BOND:
Sold 3,639,495 $ 32,871,598 2,931,871 $ 26,598,866 872,882 $ 7,870,879 605,050
Reinvested 62,456 562,936 176,156 1,588,605 47,661 430,139 68,404
Redeemed (3,481,151) (31,343,576) (2,405,990) (21,691,290) (928,308) (8,348,388) (747,364)
-------------- --------------- ------------ ------------- ------------ ------------- -----------
Net Increase 220,800 $ 2,090,958 702,037 $ 6,496,181 (7,765) $ (47,370) (73,910)
============== =============== ============ ============= ============ ============= ===========
LARGE-CAP GROWTH:
Sold 701,206 $ 12,175,574 1,570,181 $ 26,793,239 574,822 $ 9,744,792 340,582
Reinvested 17,193 278,847 49,821 801,615 14,220 228,078 23,993
Redeemed (136,695) (2,302,130) (318,772) (5,298,226) (120,382) (2,006,350) (128,346)
-------------- --------------- ------------ ------------- ------------ ------------- -----------
Net Increase 581,704 $ 10,152,291 1,301,230 $ 22,296,628 468,660 $ 7,966,520 236,229
============== =============== ============ ============= ============ ============= ===========
GROWTH AND INCOME:
Sold 1,228,775 $ 15,380,374 2,670,063 $ 33,411,667 1,303,253 $ 16,286,149 760,100
Redeemed (663,193) (8,267,567) (1,257,092) (15,625,619) (603,812) (7,524,975) (453,807)
-------------- --------------- ------------ ------------- ------------ ------------- -----------
Net Increase 565,582 $ 7,112,807 1,412,971 $ 17,786,048 699,441 $ 8,761,174 306,293
============== =============== ============ ============= ============ ============= ===========
OVERSEAS GROWTH:
Sold 15,022,073 $ 316,690,477 7,571,172 $ 152,620,773 6,419,340 $ 131,716,145 1,149,410
Redeemed (10,940,523) (238,464,880) (891,345) (18,196,072) (2,200,270) (46,326,153) (284,145)
-------------- --------------- ------------ ------------- ------------ ------------- -----------
Net Increase 4,081,550 $ 78,225,597 6,679,827 $ 134,424,701 4,219,070 $ 85,389,992 865,265
============== =============== ============ ============= ============ ============= ===========
MARSICO CAPITAL
GROWTH:
Sold 14,728,827 $ 257,187,498 13,435,523 $ 227,544,256 7,147,832 $ 121,498,630 1,686,791
Redeemed (10,158,385) (180,019,710) (2,573,814) (43,769,684) (1,313,770) (22,441,986) (461,482)
-------------- --------------- ------------ ------------- ------------ ------------- -----------
Net Increase 4,570,442 $ 77,167,788 10,861,709 $ 183,774,572 5,834,062 $ 99,056,644 1,225,309
============== =============== ============ ============= ============ ============= ===========
MID-CAP GROWTH:
Sold 3,340,582 $ 80,403,762 3,882,040 $ 96,097,553 1,525,614 $ 37,440,762 700,939
Redeemed (1,821,560) (43,488,034) (369,711) (8,845,658) (154,979) (3,694,379) (193,467)
-------------- --------------- ------------ ------------- ------------ ------------- -----------
Net Increase 1,519,022 $ 36,915,728 3,512,329 $ 87,251,895 1,370,635 $ 33,746,383 507,472
============== =============== ============ ============= ============ ============= ===========
MID-CAP VALUE:
Sold 558,648 $ 6,785,416 1,168,196 $ 14,095,876 657,127 $ 7,960,631 246,206
Reinvested 12,566 153,809 35,064 427,077 13,171 160,551 7,901
Redeemed (265,694) (3,224,524) (602,948) (7,183,635) (247,933) (2,977,903) (90,052)
-------------- --------------- ------------ ------------- ------------ ------------- -----------
Net Increase 305,520 $ 3,714,701 600,312 $ 7,339,318 422,365 $ 5,143,279 164,055
============== =============== ============ ============= ============ ============= ===========
CLASS X
------------
AMOUNT
------------
SMALL COMPANY VALUE:
Sold $ 3,494,715
Reinvested 348,967
Redeemed (3,784,087)
------------
Net Increase $ 59,595
============
STRATEGIC BALANCED:
Sold $ 5,311,377
Reinvested 297,955
Redeemed (3,260,124)
------------
Net Increase $ 2,349,208
============
HIGH YIELD BOND:
Sold $ 5,478,483
Reinvested 616,823
Redeemed (6,755,259)
------------
Net Increase $ (659,953)
============
LARGE-CAP GROWTH:
Sold $ 5,688,533
Reinvested 385,092
Redeemed (2,139,367)
------------
Net Increase $ 3,934,258
============
GROWTH AND INCOME:
Sold $ 9,517,592
Redeemed (5,615,200)
------------
Net Increase $ 3,902,392
============
OVERSEAS GROWTH:
Sold $ 23,096,972
Redeemed (5,693,163)
------------
Net Increase $ 17,403,809
============
MARSICO CAPITAL
GROWTH:
Sold $ 28,580,911
Redeemed (7,789,721)
------------
Net Increase $ 20,791,190
============
MID-CAP GROWTH:
Sold $ 17,067,370
Redeemed (4,757,534)
------------
Net Increase $ 12,309,836
============
MID-CAP VALUE:
Sold $ 2,925,205
Reinvested 96,079
Redeemed (1,068,241)
------------
Net Increase $ 1,953,043
============
CLASS A CLASS B CLASS C CLASS X
-------------------------------- ---------------------------- ---------------------------- -----------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES
-------------- --------------- ------------ ------------- ------------ ------------- -----------
AIM INTERNATIONAL
EQUITY:
Sold 553,755 $ 5,997,659 725,996 $ 7,797,155 614,314 $ 6,564,530 189,129
Redeemed (65,887) (661,212) (19,637) (210,505) (39,900) (453,878) (25,645)
-------------- --------------- ------------ ------------- ------------ ------------- -----------
Net Increase 487,868 $ 5,336,447 706,359 $ 7,586,650 574,414 $ 6,110,652 163,484
============== =============== ============ ============= ============ ============= ===========
MANAGED INDEX 500:
Sold 3,486,026 $ 35,762,875 2,047,161 $ 21,162,791 1,153,585 $ 12,024,363 362,618
Redeemed (2,612,772) (27,486,379) (277,003) (2,814,778) (90,474) (916,327) (30,173)
-------------- --------------- ------------ ------------- ------------ ------------- -----------
Net Increase 873,254 $ 8,276,496 1,770,158 $ 18,348,013 1,063,111 $ 11,108,036 332,445
============== =============== ============ ============= ============ ============= ===========
MFS GROWTH WITH
INCOME:
Sold 280,191 $ 2,826,827 863,190 $ 8,715,118 423,031 $ 4,291,573 188,434
Redeemed (33,769) (344,887) (133,093) (1,328,744) (44,290) (451,580) (17,435)
-------------- --------------- ------------ ------------- ------------ ------------- -----------
Net Increase 246,422 $ 2,481,940 730,097 $ 7,386,374 378,741 $ 3,839,993 170,999
============== =============== ============ ============= ============ ============= ===========
KEMPER SMALL-CAP
GROWTH:
Sold 807,171 $ 7,566,581 1,510,107 $ 13,747,519 780,419 $ 7,205,367 269,673
Redeemed (128,270) (1,165,982) (172,817) (1,522,456) (65,837) (595,879) (69,120)
-------------- --------------- ------------ ------------- ------------ ------------- -----------
Net Increase 678,901 $ 6,400,599 1,337,290 $ 12,225,063 714,582 $ 6,609,488 200,553
============== =============== ============ ============= ============ ============= ===========
T. ROWE INTERNATIONAL
EQUITY:
Sold 423,510 $ 5,368,102 623,565 $ 8,065,377 641,087 $ 7,810,062 133,938
Redeemed (198,624) (2,528,500) (86,855) (1,114,190) (400,397) (4,734,870) (99,762)
-------------- --------------- ------------ ------------- ------------ ------------- -----------
Net Increase 224,886 $ 2,839,602 536,710 $ 6,951,187 240,690 $ 3,075,192 34,176
============== =============== ============ ============= ============ ============= ===========
JANUS CAPITAL GROWTH:
Sold 28,511,789 $ 768,276,601 24,283,474 $ 564,965,396 9,466,680 $ 221,474,924 2,314,154
Redeemed (21,612,377) (583,504,083) (4,649,710) (108,744,911) (1,575,153) (36,681,260) (946,756)
-------------- --------------- ------------ ------------- ------------ ------------- -----------
Net Increase 6,899,412 $ 184,772,518 19,633,764 $ 456,220,485 7,891,527 $ 184,793,664 1,367,398
============== =============== ============ ============= ============ ============= ===========
EQUITY INCOME:
Sold 1,093,170 $ 14,909,188 2,996,891 $ 40,976,338 1,232,440 $ 16,838,658 578,846
Reinvested 52,941 721,582 115,153 1,575,301 49,808 680,868 49,296
Redeemed (515,186) (6,999,827) (1,083,882) (14,765,692) (430,033) (5,867,652) (392,879)
-------------- --------------- ------------ ------------- ------------ ------------- -----------
Net Increase 630,925 $ 8,630,943 2,028,162 $ 27,785,947 852,215 $ 11,651,874 235,263
============== =============== ============ ============= ============ ============= ===========
TOTAL RETURN BOND:
Sold 2,785,175 $ 27,949,741 3,398,205 $ 33,814,173 881,654 $ 8,780,725 533,083
Reinvested 59,832 601,899 181,148 1,804,234 56,828 565,359 48,724
Redeemed (2,637,482) (26,450,141) (3,228,857) (32,065,866) (1,155,764) (11,511,647) (573,133)
-------------- --------------- ------------ ------------- ------------ ------------- -----------
Net Increase 207,525 $ 2,101,499 350,496 $ 3,552,541 (217,282) $ (2,165,563) 8,674
============== =============== ============ ============= ============ ============= ===========
MONEY MARKET:
Sold 1,161,826,968 $ 1,161,826,968 160,777,023 $ 160,777,023 123,441,171 $ 123,441,171 45,955,146
Reinvested 882,870 882,870 1,014,104 1,014,104 349,518 349,518 345,840
Redeemed (1,135,766,113) (1,135,766,113) (167,579,683) (167,579,683) (117,511,654) (117,511,654) (52,177,832)
-------------- --------------- ------------ ------------- ------------ ------------- -----------
Net Increase 26,943,725 $ 26,943,725 (5,788,556) $ (5,788,556) 6,279,035 $ 6,279,035 (5,876,846)
============== =============== ============ ============= ============ ============= ===========
CLASS X
------------
AMOUNT
------------
AIM INTERNATIONAL
EQUITY:
Sold $ 2,033,977
Redeemed (282,903)
------------
Net Increase $ 1,751,074
============
MANAGED INDEX 500:
Sold $ 3,777,687
Redeemed (312,364)
------------
Net Increase $ 3,465,323
============
MFS GROWTH WITH
INCOME:
Sold $ 1,905,994
Redeemed (174,671)
------------
Net Increase $ 1,731,323
============
KEMPER SMALL-CAP
GROWTH:
Sold $ 2,506,361
Redeemed (623,331)
------------
Net Increase $ 1,883,030
============
T. ROWE INTERNATIONAL
EQUITY:
Sold $ 1,736,664
Redeemed (1,256,120)
------------
Net Increase $ 480,544
============
JANUS CAPITAL GROWTH:
Sold $ 53,979,777
Redeemed (22,107,851)
------------
Net Increase $ 31,871,926
============
EQUITY INCOME:
Sold $ 7,943,578
Reinvested 673,383
Redeemed (5,331,017)
------------
Net Increase $ 3,285,944
============
TOTAL RETURN BOND:
Sold $ 5,340,007
Reinvested 485,294
Redeemed (5,724,080)
------------
Net Increase $ 101,221
============
MONEY MARKET:
Sold $ 45,955,146
Reinvested 345,840
Redeemed (52,177,832)
------------
Net Increase $ (5,876,846)
============
AMERICAN SKANDIA ADVISOR FUNDS, INC.
Transactions in shares of capital stock, during the year ended October 31,
1999, were as follows:
CLASS A CLASS B CLASS C CLASS X
-------------------------------- ---------------------------- ---------------------------- -----------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES
-------------- --------------- ------------ ------------- ------------ ------------- -----------
INTERNATIONAL SMALL
CAP:
Sold 131,573 $ 1,625,013 519,007 $ 6,481,186 191,446 $ 2,192,239 159,967
Redeemed (42,759) (499,629) (80,020) (954,057) (87,643) (936,217) (74,837)
-------------- --------------- ------------ ------------- ------------ ------------- -----------
Net Increase 88,814 $ 1,125,384 438,987 $ 5,527,129 103,803 $ 1,256,022 85,130
============== =============== ============ ============= ============ ============= ===========
JANUS SMALL-CAP
GROWTH:
Sold 4,521,498 $ 62,279,844 6,131,106 $ 82,109,946 2,453,044 $ 32,502,450 1,388,410
Redeemed (1,555,645) (21,272,349) (589,414) (7,913,337) (415,557) (5,293,724) (400,722)
-------------- --------------- ------------ ------------- ------------ ------------- -----------
Net Increase 2,965,853 $ 41,007,495 5,541,692 $ 74,196,609 2,037,487 $ 27,208,726 987,688
============== =============== ============ ============= ============ ============= ===========
SMALL COMPANY VALUE:
Sold 2,152,263 $ 19,728,209 2,202,266 $ 19,780,241 1,278,728 $ 11,579,459 899,829
Reinvested 2,950 27,202 -- -- -- -- --
Redeemed (1,740,590) (16,175,699) (998,544) (8,851,216) (731,195) (6,613,615) (727,801)
-------------- --------------- ------------ ------------- ------------ ------------- -----------
Net Increase 414,623 $ 3,579,712 1,203,722 $ 10,929,025 547,533 $ 4,965,844 172,028
============== =============== ============ ============= ============ ============= ===========
STRATEGIC BALANCED:
Sold 1,815,075 $ 22,578,144 4,889,067 $ 60,790,616 1,513,809 $ 18,669,567 1,064,235
Reinvested 8,478 106,949 10,128 127,960 4,003 50,510 4,619
Redeemed (229,284) (2,869,225) (512,249) (6,347,305) (189,856) (2,369,264) (224,538)
-------------- --------------- ------------ ------------- ------------ ------------- -----------
Net Increase 1,594,269 $ 19,815,868 4,386,946 $ 54,571,271 1,327,956 $ 16,350,813 844,316
============== =============== ============ ============= ============ ============= ===========
HIGH YIELD BOND:
Sold 3,357,420 $ 32,790,500 7,275,129 $ 70,565,721 1,847,050 $ 17,923,216 1,855,501
Reinvested 87,677 841,629 232,789 2,227,094 79,920 767,588 122,941
Redeemed (2,428,133) (23,736,985) (2,228,915) (21,481,204) (1,091,741) (10,529,290) (1,121,235)
-------------- --------------- ------------ ------------- ------------ ------------- -----------
Net Increase 1,016,964 $ 9,895,144 5,279,003 $ 51,311,611 835,229 $ 8,161,514 857,207
============== =============== ============ ============= ============ ============= ===========
LARGE-CAP GROWTH:
Sold 638,225 $ 8,103,545 1,851,812 $ 23,314,526 418,749 $ 5,236,468 637,307
Redeemed (215,891) (2,716,616) (410,694) (5,186,475) (126,506) (1,592,157) (320,143)
-------------- --------------- ------------ ------------- ------------ ------------- -----------
Net Increase 422,334 $ 5,386,929 1,441,118 $ 18,128,051 292,243 $ 3,644,311 317,164
============== =============== ============ ============= ============ ============= ===========
GROWTH AND INCOME:
Sold 2,372,960 $ 28,578,838 4,969,282 $ 60,277,008 1,774,560 $ 21,393,909 1,298,681
Reinvested 3,892 47,183 633 7,193 299 3,391 571
Redeemed (625,028) (7,479,489) (629,845) (7,571,053) (366,786) (4,442,443) (397,677)
-------------- --------------- ------------ ------------- ------------ ------------- -----------
Net Increase 1,751,824 $ 21,146,532 4,340,070 $ 52,713,148 1,408,073 $ 16,954,857 901,575
============== =============== ============ ============= ============ ============= ===========
OVERSEAS GROWTH:
Sold 5,875,239 $ 72,910,399 6,847,241 $ 83,827,854 3,845,340 $ 46,929,956 1,792,053
Redeemed (2,366,221) (29,831,109) (703,924) (8,772,633) (879,415) (10,959,877) (419,635)
-------------- --------------- ------------ ------------- ------------ ------------- -----------
Net Increase 3,509,018 $ 43,079,290 6,143,317 $ 75,055,221 2,965,925 $ 35,970,079 1,372,418
============== =============== ============ ============= ============ ============= ===========
CLASS X
------------
AMOUNT
------------
INTERNATIONAL SMALL
CAP:
Sold $ 2,003,516
Redeemed (1,007,684)
------------
Net Increase $ 995,832
============
JANUS SMALL-CAP
GROWTH:
Sold $ 17,986,369
Redeemed (5,025,846)
------------
Net Increase $ 12,960,523
============
SMALL COMPANY VALUE:
Sold $ 8,082,697
Reinvested --
Redeemed (6,480,805)
------------
Net Increase $ 1,601,892
============
STRATEGIC BALANCED:
Sold $ 13,076,631
Reinvested 57,949
Redeemed (2,768,534)
------------
Net Increase $ 10,366,046
============
HIGH YIELD BOND:
Sold $ 18,027,252
Reinvested 1,182,704
Redeemed (10,858,678)
------------
Net Increase $ 8,351,278
============
LARGE-CAP GROWTH:
Sold $ 7,894,652
Redeemed (3,950,285)
------------
Net Increase $ 3,944,367
============
GROWTH AND INCOME:
Sold $ 15,523,163
Reinvested 6,430
Redeemed (4,736,458)
------------
Net Increase $ 10,793,135
============
OVERSEAS GROWTH:
Sold $ 21,928,837
Redeemed (5,530,598)
------------
Net Increase $ 16,398,239
============
CLASS A CLASS B CLASS C CLASS X
-------------------------------- ---------------------------- ---------------------------- -----------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES
-------------- --------------- ------------ ------------- ------------ ------------- -----------
MARSICO CAPITAL
GROWTH:
Sold 7,854,783 $ 101,851,952 19,502,450 $ 253,703,042 8,427,772 $ 108,624,094 3,463,385
Reinvested 1,125 13,337 -- -- -- -- --
Redeemed (1,472,317) (19,722,964) (1,617,686) (21,694,601) (835,906) (11,098,692) (581,156)
-------------- --------------- ------------ ------------- ------------ ------------- -----------
Net Increase 6,383,591 $ 82,142,325 17,884,764 $ 232,008,441 7,591,866 $ 97,525,402 2,882,229
============== =============== ============ ============= ============ ============= ===========
MID-CAP GROWTH:
Sold 876,248 $ 12,737,534 1,648,044 $ 23,798,375 681,405 $ 9,773,936 455,953
Reinvested 1,117 16,244 2,164 31,032 1,571 22,824 1,145
Redeemed (254,503) (3,676,648) (344,773) (5,076,953) (159,471) (2,340,370) (101,469)
-------------- --------------- ------------ ------------- ------------ ------------- -----------
Net Increase 622,862 $ 9,077,130 1,305,435 $ 18,752,454 523,505 $ 7,456,390 355,629
============== =============== ============ ============= ============ ============= ===========
MID-CAP VALUE:
Sold 893,170 $ 10,487,415 1,971,205 $ 23,270,387 719,632 $ 8,511,354 457,970
Reinvested 311 3,371 385 4,172 171 1,858 99
Redeemed (214,164) (2,487,388) (262,235) (3,044,027) (138,303) (1,625,892) (81,385)
-------------- --------------- ------------ ------------- ------------ ------------- -----------
Net Increase 679,317 $ 8,003,398 1,709,355 $ 20,230,532 581,500 $ 6,887,320 376,684
============== =============== ============ ============= ============ ============= ===========
T. ROWE INTERNATIONAL
EQUITY:
Sold 580,067 $ 5,981,540 664,660 $ 6,995,897 534,152 $ 5,615,638 302,217
Reinvested 1,335 13,416 617 6,351 424 4,358 957
Redeemed (340,252) (3,535,835) (186,621) (1,979,171) (382,168) (4,024,965) (240,600)
-------------- --------------- ------------ ------------- ------------ ------------- -----------
Net Increase 241,150 $ 2,459,121 478,656 $ 5,023,077 152,408 $ 1,595,031 62,574
============== =============== ============ ============= ============ ============= ===========
JANUS CAPITAL GROWTH:
Sold 11,152,498 $ 222,428,056 34,148,101 $ 606,063,473 11,402,214 $ 201,850,746 5,298,045
Redeemed (2,178,199) (43,528,627) (3,428,551) (61,160,249) (1,675,387) (29,604,961) (1,291,629)
-------------- --------------- ------------ ------------- ------------ ------------- -----------
Net Increase 8,974,299 $ 178,899,429 30,719,550 $ 544,903,224 9,726,827 $ 172,245,785 4,006,416
============== =============== ============ ============= ============ ============= ===========
EQUITY INCOME:
Sold 2,536,827 $ 33,506,551 5,068,587 $ 66,599,293 2,104,000 $ 27,723,451 1,345,013
Reinvested 15,267 203,306 18,552 248,016 8,801 117,852 12,841
Redeemed (970,970) (12,988,032) (779,404) (10,139,354) (327,011) (4,264,826) (435,651)
-------------- --------------- ------------ ------------- ------------ ------------- -----------
Net Increase 1,581,124 $ 20,721,825 4,307,735 $ 56,707,955 1,785,790 $ 23,576,477 922,203
============== =============== ============ ============= ============ ============= ===========
TOTAL RETURN BOND:
Sold 2,801,868 $ 29,031,058 9,085,766 $ 93,370,295 2,715,698 $ 27,941,412 1,476,934
Reinvested 62,591 645,265 190,650 1,946,935 75,148 768,265 79,406
Redeemed (1,135,022) (11,679,664) (2,559,842) (26,261,168) (1,000,668) (10,260,166) (696,973)
-------------- --------------- ------------ ------------- ------------ ------------- -----------
Net Increase 1,729,437 $ 17,996,659 6,716,574 $ 69,056,062 1,790,178 $ 18,449,511 859,367
============== =============== ============ ============= ============ ============= ===========
MONEY MARKET:
Sold 165,732,220 $ 165,732,220 160,855,657 $ 160,855,657 91,366,940 $ 91,366,940 72,496,475
Reinvested 729,338 729,338 1,043,507 1,043,507 448,412 448,412 507,926
Redeemed (130,829,982) (130,829,982) (99,250,785) (99,250,785) (69,788,348) (69,788,348) (57,154,179)
-------------- --------------- ------------ ------------- ------------ ------------- -----------
Net Increase 35,631,576 $ 35,631,576 62,648,379 $ 62,648,379 22,027,004 $ 22,027,004 15,850,222
============== =============== ============ ============= ============ ============= ===========
CLASS X
------------
AMOUNT
------------
MARSICO CAPITAL
GROWTH:
Sold $ 44,011,902
Reinvested --
Redeemed (7,591,419)
------------
Net Increase $ 36,420,483
============
MID-CAP GROWTH:
Sold $ 6,580,126
Reinvested 16,499
Redeemed (1,521,388)
------------
Net Increase $ 5,075,237
============
MID-CAP VALUE:
Sold $ 5,399,847
Reinvested 1,070
Redeemed (1,009,095)
------------
Net Increase $ 4,391,822
============
T. ROWE INTERNATIONAL
EQUITY:
Sold $ 3,142,322
Reinvested 9,894
Redeemed (2,530,886)
------------
Net Increase $ 621,330
============
JANUS CAPITAL GROWTH:
Sold $ 92,328,700
Redeemed (22,876,970)
------------
Net Increase $ 69,451,730
============
EQUITY INCOME:
Sold $ 17,492,175
Reinvested 169,817
Redeemed (5,669,805)
------------
Net Increase $ 11,992,187
============
TOTAL RETURN BOND:
Sold $ 15,232,870
Reinvested 816,063
Redeemed (7,125,361)
------------
Net Increase $ 8,923,572
============
MONEY MARKET:
Sold $ 72,496,475
Reinvested 507,926
Redeemed (57,154,179)
------------
Net Increase $ 15,850,222
============
AMERICAN SKANDIA ADVISOR FUNDS, INC.
5. TAX MATTERS
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
ALL FUNDS -- Each Fund intends to qualify as a regulated investment company
under the Internal Revenue Code and to distribute all of its taxable income,
including any net realized gains on investments, to shareholders. Accordingly,
no provision for federal income or excise tax has been made.
Income and capital gains of the Funds are determined in accordance with
both tax regulations and generally accepted accounting principles. Such may
result in temporary and permanent differences between tax basis earnings and
earnings reported for financial statement purposes. Temporary differences that
result in over-distributions for financial statement purposes are classified as
distributions in excess of net investment income or accumulated net realized
gains. Permanent differences in the recognition of earnings are reclassified to
additional paid-in capital. Distributions in excess of tax-basis earnings are
recorded as a return of capital.
CAPITAL LOSS CARRYFORWARDS -- At October 31, 1999, the following Funds had, for
federal income tax purposes, capital loss carryforwards available to offset
future net realized capital gains.
EXPIRING IN
--------------------------------------
2005 2006 2007
------- ---------- -----------
High Yield Bond $ 4,183 $ 17,619 $ 327,379
Growth and Income -- 1,122,945 1,772,304
Overseas Growth -- 2,242,636 3,428,829
Marsico Capital Growth -- 682,762 7,950,369
Mid-Cap Growth -- -- 1,874,798
T. Rowe International Equity -- 73,332 49,869
Janus Capital Growth 38,807 4,789,881 52,015,103
Total Return Bond -- -- 1,499,612
6. PORTFOLIO SECURITIES
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
NON-FEEDER FUNDS -- Purchases and sales of securities, other than U.S.
government securities and short-term obligations, during the period ended April
30, 2000, were as follows:
PURCHASES SALES
------------ ------------
International Small Cap $253,741,591 $200,753,958
Janus Small-Cap Growth 396,590,400 225,233,472
Small Company Value 11,171,476 8,438,354
Strategic Balanced 90,878,093 58,531,179
High Yield Bond 25,518,295 8,944,188
Large-Cap Growth 40,473,825 14,665,173
Growth and Income 69,478,335 36,220,012
Overseas Growth 486,397,399 228,664,017
Marsico Capital Growth 728,358,439 469,983,935
Mid-Cap Growth 202,026,039 69,061,999
Mid-Cap Value 51,048,079 35,831,331
AIM International Equity 16,981,198 1,382,875
Managed Index 500 57,239,617 22,766,966
Growth with Income 15,830,039 1,752,058
Kemper Small-Cap Growth 21,759,949 1,104,714
Purchases and sales of U.S. government securities, during the period ended
April 30, 2000, were as follows:
PURCHASES SALES
---------- ----------
Strategic Balanced $5,419,157 $1,473,213
High Yield Bond 1,100,764 1,521,736
At April 30, 2000, the cost and unrealized appreciation or depreciation in
value of the investments owned by the Non-Feeder Funds, for federal income tax
purposes, were as follows:
NET
GROSS GROSS UNREALIZED
AGGREGATE UNREALIZED UNREALIZED APPRECIATION
COST APPRECIATION DEPRECIATION (DEPRECIATION)
------------ ------------ ------------ --------------
International Small Cap $145,462,035 $ 3,689,284 $18,260,736 $(14,571,452)
Janus Small-Cap Growth 414,589,686 83,162,686 65,659,126 17,503,560
Small Company Value 74,874,825 9,866,084 10,640,017 (773,933)
Strategic Balanced 149,789,184 16,378,342 5,266,212 11,112,130
High Yield Bond 130,920,824 702,515 15,182,713 (14,480,198)
Large-Cap Growth 84,307,096 26,584,984 2,594,741 23,990,243
Growth and Income 171,516,430 22,392,715 7,744,535 14,648,180
Overseas Growth 560,254,412 154,566,978 30,442,040 124,124,938
Marsico Capital Growth 841,676,324 206,611,516 21,969,981 184,641,535
Mid-Cap Growth 204,944,970 34,365,262 11,904,992 22,460,270
Mid-Cap Value 60,660,914 6,590,432 1,789,974 4,800,458
AIM International Equity 20,093,269 433,901 985,106 (551,205)
Managed Index 500 40,978,591 2,582,123 1,538,179 1,043,944
Growth with Income 14,803,943 931,891 415,963 515,928
Kemper Small-Cap Growth 25,865,359 1,038,080 3,315,393 (2,277,313)
7. WRITTEN OPTIONS TRANSACTIONS
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Written options transactions, during the period ended April 30, 2000, were
as follows:
MARSICO CAPITAL GROWTH
----------------------------
NUMBER OF
CONTRACTS PREMIUM
--------- -----------
Balance at beginning of year -- $ --
Written 825 1,503,387
Expired -- --
Exercised -- --
Closed (825) (1,503,387)
---- -----------
Balance at end of period -- $ --
==== ===========
8. LINE OF CREDIT
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
ALL FUNDS -- The Funds and other affiliated funds participate in a $100 million
unsecured, committed line of credit, provided by a syndication of banks, under a
line of credit agreement. Borrowings may be made for temporary or emergency
purposes, including the meeting of redemption requests that otherwise might
require the untimely disposition of securities. Any borrowings must be repaid
within 30 days of their receipt. Interest is charged to each Fund, based on its
borrowings, at a premium above the Federal Funds Rate. In addition, a commitment
fee, equal to an annual rate of .09% of the average daily unused portion of the
line of credit, is allocated among the participants at the end of each quarter.
During the period ended April 30, 2000, there were no borrowings under the
agreement.
AMERICAN SKANDIA MASTER TRUST
SCHEDULES OF INVESTMENTS
APRIL 30, 2000
(UNAUDITED)
ASMT T. ROWE PRICE INTERNATIONAL EQUITY PORTFOLIO
ASMT JANUS CAPITAL GROWTH PORTFOLIO
ASMT INVESCO EQUITY INCOME PORTFOLIO
ASMT PIMCO TOTAL RETURN BOND PORTFOLIO
ASMT JPM MONEY MARKET PORTFOLIO
ASMT T. ROWE PRICE
INTERNATIONAL EQUITY PORTFOLIO
- ---------------------------------------------------
SHARES VALUE
- ---------------------------------------------------
FOREIGN STOCK -- 91.8%
ARGENTINA -- 0.1%
Telefonica de Argentina
SA Cl-B [ADR] 1,730 $ 60,766
-----------
AUSTRALIA -- 3.1%
Brambles Industries Ltd. 7,000 196,876
Broken Hill Proprietary
Co. Ltd. 5,062 54,467
Commonwealth Bank of
Australia 12,111 184,304
Lend Lease Corp. Ltd. 7,490 81,099
News Corp. Ltd. 38,212 484,871
News Corp. Ltd. Pfd. 55,026 591,431
Publishing &
Broadcasting Ltd. 24,000 186,256
TABCORP Holdings Ltd. 13,000 69,530
Telstra Corp. 5,000 12,779
Telstra Corp. Ltd. 42,000 179,884
Westpac Banking Corp.
Ltd. 27,173 173,303
-----------
2,214,800
-----------
BELGIUM -- 0.6%
Dexia Belgium 1,140 148,137
Fortis Cl-B 8,400 212,566
Societe Europeene des
Satellites [FDR]* 290 44,165
UCB SA 510 17,195
-----------
422,063
-----------
BRAZIL -- 1.6%
Companhia Brasileira de
Distribuicoa Grupo Pao
de Acucar [GDR] 1,272 36,332
Embartel Participacoes
SA [ADR] 3,000 67,500
Tele Norte Leste
Participacoes SA
[ADR]* 931 16,581
Telecomunicacoes
Brasileiras SA Pfd.
[ADR] 7,956 940,299
Uniao de Bancos
Brasileiros SA [GDR] 2,000 49,875
-----------
1,110,587
-----------
CANADA -- 0.5%
Alcan Aluminium Ltd. 2,380 77,424
Nortel Networks Corp. 2,030 229,352
Royal Bank of Canada 1,240 58,499
-----------
365,275
-----------
DENMARK -- 0.2%
Nordic Baltic Holdings
AB* 3,303 20,590
Tele Danmark AS 1,460 107,075
-----------
127,665
-----------
SHARES VALUE
- ---------------------------------------------------
- ---------------------------------------------------
FINLAND -- 3.1%
Nokia AB Oyj 38,480 $ 2,212,603
-----------
FRANCE -- 11.5%
Alcatel 2,610 606,484
Altran Technologies SA 540 110,619
Aventis SA* 8,471 467,013
AXA SA 3,590 533,565
Banque National de Paris 5,890 477,151
Canal Plus* 1,270 245,346
Cap Gemini SA 1,240 244,070
Carrefour Supermarche SA 820 53,501
Compagnie de Saint-
Gobain 1,410 192,859
Groupe Danone 170 37,257
Hermes International
Designs* 720 102,352
L'Oreal 80 54,384
Lafarge SA 460 38,187
Legrand SA 1,210 226,036
Louis Vuitton Moet
Hennessy* 682 286,873
Sanofi SA* 9,560 357,610
Schneider SA 880 57,737
Societe Generale 426 88,431
Societe Television
Francaise 1,780 1,221,389
Sodexho Alliance SA 404 60,671
STMicroelectronics NV 2,880 550,863
Total Fina SA Cl-B 6,963 1,058,955
Vivendi 11,160 1,106,451
-----------
8,177,804
-----------
GERMANY -- 4.5%
Allianz AG 1,050 395,165
Aventis AG 907 49,342
Bayer AG 1,850 75,272
Bayerische Hypo-Und
Vereinsbank AG 6,830 425,712
Deutsche Bank AG 5,678 381,848
Deutsche Telekom AG* 6,280 410,888
Gehe AG 3,020 97,695
Infineon Technologies AG
[ADR]* 4,989 340,059
Rhoen-Klinikum AG 1,870 69,014
SAP AG 1,300 611,268
SAP AG Pfd. 70 40,601
Siemens AG 670 97,686
Veba AG 4,760 232,060
-----------
3,226,610
-----------
HONG KONG -- 3.2%
Cheung Kong Holdings
Ltd. 31,000 370,138
China Telecom Ltd.* 67,000 483,857
Dao Heng Bank Group Ltd. 31,000 143,279
Henderson Land
Development Co. Ltd. 30,000 130,954
AMERICAN SKANDIA MASTER TRUST
- ---------------------------------------------------
SHARES VALUE
- ---------------------------------------------------
Hong Kong
Telecommunications
Ltd. 54,800 $ 129,103
HSBC Holdings PLC 15,600 174,246
Hutchison Whampoa Ltd. 40,000 582,875
Pacific Century
Cyberworks Ltd.* 106,000 197,330
Sun Hung Kai Properties
Ltd. 8,000 63,423
-----------
2,275,205
-----------
INDIA -- 0.3%
ICICI Ltd.* 9,469 240,276
-----------
IRELAND -- 0.2%
SmartForce PLC [ADR]* 2,891 138,045
-----------
ITALY -- 4.7%
Alleanza Assicurazioni* 17,000 176,291
Banca Popolare di
Brescia 4,000 364,501
Banco Intesa SPA 29,544 109,034
Ente Nazionale
Idrocarburi SPA 60,000 299,073
Mediaset SPA 14,000 227,722
Mediolanum SPA 17,000 282,716
San Paolo-IMI SPA 10,225 143,490
Tecnost SPA* 30,600 107,634
Telecom Italia Mobile
SPA 81,000 775,022
Telecom Italia SPA 43,000 602,648
Unicredito Italiano SPA 71,000 288,557
-----------
3,376,688
-----------
JAPAN -- 20.1%
Bridgestone Corp. 4,000 86,794
Canon, Inc. 20,000 914,209
DDI Corp. 90 103,265
East Japan Railway Co.
Ltd. 13 76,986
Fanuc Co. 2,500 261,864
Fuji Bank Ltd. 58,000 483,013
Fuji Television Network,
Inc. 210 349,768
Fujitsu Ltd. 13,000 368,089
Hitachi Ltd. 7,000 83,556
Ito-Yokado Co. Ltd. 2,000 146,014
Kao Corp. 4,000 121,771
Kokuyo Co. Ltd. 4,000 56,814
Komori Corp. 2,000 27,408
Kyocera Corp. 5,000 836,020
Makita Corp. 6,000 52,077
Matsushita Electric
Industrial Co. 27,000 714,526
Mauri Co. Ltd. 12,000 225,406
Mitsui Fudosan Co. Ltd. 31,000 314,958
Murata Manufacturing Co.
Ltd. 6,000 1,165,895
NEC Corp. 37,000 1,006,555
Nippon Telegraph &
Telephone Corp. 770 954,738
Nomura Securities Co.
Ltd. 25,000 629,213
SHARES VALUE
- ---------------------------------------------------
- ---------------------------------------------------
NTT Mobile Communication
Network, Inc. 230 $ 768,287
Sankyo Co. Ltd. 8,000 176,180
Seven-Eleven Japan Co.
Ltd. 4,000 492,266
Shin-Etsu Chemical Co.
Ltd. 4,000 211,341
Shiseido Co. Ltd. 10,000 126,398
SoftBank Corp. 300 73,840
SoftBank Corp. (New)* 600 148,235
Sony Corp. 5,800 666,022
Sony Corp. (New)* 4,400 508,922
Sumitomo Bank Ltd. 30,000 375,029
Sumitomo Corp. 15,000 167,944
Sumitomo Electric
Industries 10,000 133,153
TDK Corp. 2,000 267,786
Toshiba Corp.* 76,000 736,993
Yamanouchi
Pharmaceutical Co.
Ltd. 9,000 475,518
-----------
14,306,853
-----------
KOREA -- 1.3%
Korea Telecom Corp.
[ADR] 5,000 172,500
Pohang Iron & Steel Co.
Ltd. [ADR] 2,201 46,221
Samsung Electronics Co. 2,500 675,849
Sk Telecom Co. Ltd.* 2,000 53,167
-----------
947,737
-----------
MEXICO -- 2.2%
Fomento Economico
Mexicano SA de CV UBD
Units 39,000 154,331
Grupo Iusacell SA de CV
[ADR]* 4,300 68,531
Grupo Televisa SA [GDR]* 9,300 589,969
Telefonos de Mexico SA
Cl-L [ADR] 13,000 764,562
-----------
1,577,393
-----------
NETHERLANDS -- 6.6%
ABN AMRO Holding NV 2,630 54,283
AKZO Nobel NV 780 32,006
ASM Lithography Holding
NV* 12,570 492,541
CSM NV 4,060 69,924
Equant NV* 2,310 179,240
Fortis (NL) NV 11,050 278,518
Gucci Group NV NY Reg. 435 38,117
ING Groep NV 16,820 919,943
Koninklijke (Royal)
Philips Electronics
NV* 21,400 956,906
KPN NV 2,050 207,075
Royal Dutch Petroleum
Co. 6,960 402,103
TNT Post Group NV 580 12,685
ASMT T. ROWE PRICE
INTERNATIONAL EQUITY PORTFOLIO
- ---------------------------------------------------
SHARES VALUE
- ---------------------------------------------------
United Pan-Europe
Communications NV* 5,081 $ 185,342
VNU NV 13,480 722,895
Wolters Kluwer NV 7,050 166,776
-----------
4,718,354
-----------
NEW ZEALAND -- 0.2%
Telecom Corp. of New
Zealand Ltd. 31,000 131,129
-----------
NORWAY -- 0.1%
Orkla ASA Cl-A 6,760 104,648
-----------
PORTUGAL -- 0.1%
Jeronimo Martins SGPS SA 3,713 66,384
-----------
SINGAPORE -- 0.5%
United Overseas Bank
Ltd. 50,008 348,531
-----------
SPAIN -- 2.8%
Banco Bilbao Vizcaya SA 17,950 245,355
Banco Santander Central
Hispano SA 50,032 522,938
Endesa SA 17,400 378,319
Repsol SA 8,773 179,875
Telefonica SA 31,632 705,630
-----------
2,032,117
-----------
SWEDEN -- 3.1%
Atlas Copco AB Cl-B 1,520 34,805
Electrolux AB Cl-B 6,210 105,087
Ericsson, (L.M.)
Telephone Co. Cl-B 10,320 918,721
Hennes & Mauritz AB Cl-B 9,970 265,044
Nordbanken Holding Co.
AB 48,340 305,071
Sandvik AB Cl-B 1,570 37,528
Securitas AB Cl-B 20,195 523,332
-----------
2,189,588
-----------
SWITZERLAND -- 3.8%
ABB AG 2,462 276,898
ABB Ltd.* 1,349 150,681
Adecco SA 860 707,302
Credit Suisse Group 1,460 264,339
Nestle SA 340 600,763
Roche Holding AG 25 261,700
Swisscom AG 223 78,806
UBS AG 1,542 378,670
-----------
2,719,159
-----------
TAIWAN -- 0.2%
Hon Hai Precision
Industry Co. Ltd.
[GDR] 144A* 4,605 128,572
-----------
SHARES VALUE
- ---------------------------------------------------
- ---------------------------------------------------
UNITED KINGDOM -- 17.2%
Abbey National PLC 7,000 $ 80,125
AstraZeneca Group PLC 10,330 434,660
Baltimore Technologies
PLC* 1,100 111,246
BG Group PLC 5,888 35,289
British Petroleum Co.
PLC 32,000 277,658
Cable & Wireless PLC 53,400 888,245
Cadbury Schweppes PLC 28,300 194,406
Celltech Group PLC* 8,000 131,693
Centrica PLC 11,400 40,672
Compass Group PLC 50,000 712,766
Diageo PLC 35,876 291,641
Electrocomponents PLC 8,000 80,744
GKN PLC 2,000 27,791
Glaxo Wellcome PLC 45,200 1,401,139
Hays PLC 3,600 24,857
Kingfisher PLC 27,000 222,127
Ladbroke Group PLC 14,000 59,040
Marconi PLC 19,100 239,549
Reed International PLC 68,355 475,445
Rio Tinto PLC 19,000 295,825
Royal Bank of Scotland
NY Reg.* 60,960 950,562
Safeway PLC 11,000 37,266
Shell Transport &
Trading Co. PLC 121,000 989,305
Smith, (Davis S.)
Holdings PLC 9,000 19,012
SmithKline Beecham PLC 53,800 739,575
Standard Chartered PLC 17,759 239,265
Tesco PLC 33,200 113,773
Tomkins PLC 60,248 185,959
Unilever PLC 24,714 148,986
United News & Media PLC 10,900 139,350
Vodafone AirTouch PLC 453,292 2,088,922
WPP Group PLC 38,000 614,841
-----------
12,291,734
-----------
TOTAL FOREIGN STOCK
(Cost $56,619,399) 65,510,586
-----------
U.S. STOCK -- 0.6%
ELECTRONIC COMPONENTS & EQUIPMENT
Celestica, Inc.*
(Cost $322,195) 7,862 428,970
-----------
TOTAL INVESTMENTS -- 92.4%
(Cost $56,941,594) 65,939,556
OTHER ASSETS LESS LIABILITIES -- 7.6% 5,433,530
-----------
NET ASSETS -- 100.0% $71,373,086
===========
Foreign currency exchange contracts outstanding at April 30, 2000:
CONTRACTS IN
SETTLEMENT TO EXCHANGE CONTRACTS UNREALIZED
MONTH TYPE RECEIVE FOR AT VALUE DEPRECIATION
- ----------------------------------------------------------------------------
05/00 Buy EUR 345,867 $ 325,808 $ 315,717 $10,091
05/00 Buy GBP 480,873 760,678 752,387 8,291
---------- ---------- -------
$1,086,486 $1,068,104 $18,382
========== ========== =======
AMERICAN SKANDIA MASTER TRUST
- -------------------------------------------------------
The following is a breakdown of the foreign stock portion of the Portfolio, by
industry classification, as of April 30, 2000. Percentages are based on net
assets.
INDUSTRY
- -------------------------------------------
Advertising 0.9%
Automotive Parts 0.2%
Beverages 0.8%
Broadcasting 1.7%
Building Materials 0.1%
Business Services 1.1%
Chemicals 0.4%
Clothing & Apparel 0.2%
Computer Services & Software 3.1%
Conglomerates 2.0%
Construction 0.3%
Consumer Products & Service 2.3%
Electronic Components & Equipment 11.1%
Entertainment & Leisure 1.3%
Equipment Services 0.4%
Financial -- Bank & Trust 9.9%
Financial Services 3.7%
Food 2.7%
Healthcare Services 0.2%
Hotels & Motels 0.1%
Industrial Products 0.1%
Insurance 3.6%
Internet Services 0.3%
Machinery & Equipment 2.0%
Medical Supplies & Equipment 0.6%
Metals & Mining 0.7%
Office Equipment 1.3%
Oil & Gas 3.0%
Paper & Forest Products 0.2%
Pharmaceuticals 5.6%
Printing & Publishing 3.6%
Real Estate 1.2%
Retail & Merchandising 1.4%
Semiconductors 0.8%
Telecommunications 24.4%
Transportation 0.1%
Utilities 0.4%
-----
TOTAL 91.8%
=====
- -------------------------------------------------------
Unless otherwise noted, all stocks are common stock. Definitions of
abbreviations are included following the Schedules of Investments.
* Non-income producing security.
144A -- Security was purchased pursuant to Rule 144A under the Securities Act of
1933 and may not be resold subject to that rule except to qualified
institutional buyers. At the end of the period, these securities
amounted to 0.2% of net assets.
See Notes to Financial Statements.
ASMT JANUS
CAPITAL GROWTH PORTFOLIO
- ----------------------------------------------------
SHARES VALUE
- ----------------------------------------------------
COMMON STOCK -- 87.7%
ADVERTISING -- 2.8%
DoubleClick, Inc.* 887,060 $ 67,305,678
--------------
AEROSPACE -- 0.1%
General Motors
Corp. Cl-H* 17,930 1,726,883
--------------
BEVERAGES -- 1.1%
Coca-Cola Co. 584,385 27,502,619
--------------
COMPUTER HARDWARE -- 8.3%
Apple Computer,
Inc.* 846,100 104,969,281
Dell Computer
Corp.* 845,540 42,382,693
EMC Corp.* 384,480 53,418,690
--------------
200,770,664
--------------
COMPUTER SERVICES & SOFTWARE -- 18.4%
3Com Corp.* 979,035 38,610,693
Cisco Systems,
Inc.* 2,162,538 149,924,704
Digital Island,
Inc.* 235,285 8,205,564
Inktomi Corp.* 365,035 56,192,575
Intuit, Inc.* 586,775 21,087,227
Microsoft Corp.* 709,470 49,485,533
VERITAS Software
Corp.* 1,166,164 125,089,284
--------------
448,595,580
--------------
ELECTRONIC COMPONENTS & EQUIPMENT -- 10.0%
General Electric
Co. 660,695 103,894,289
Metromedia Fiber
Network, Inc.
Cl-A* 630,350 19,462,056
Texas Instruments,
Inc. 755,080 122,983,655
--------------
246,340,000
--------------
ENTERTAINMENT & LEISURE -- 4.4%
Time Warner, Inc. 1,199,420 107,872,836
--------------
FINANCIAL SERVICES -- 2.5%
Schwab, (Charles)
Corp. 1,362,020 60,609,890
--------------
INSURANCE -- 2.2%
American
International
Group, Inc. 479,100 52,551,281
--------------
INTERNET SERVICES -- 6.5%
America Online,
Inc.* 1,867,745 111,714,498
Yahoo!, Inc.* 355,685 46,327,971
--------------
158,042,469
--------------
SHARES VALUE
- ----------------------------------------------------
- ----------------------------------------------------
PHARMACEUTICALS -- 4.8%
MedImmune, Inc.* 506,715 $ 81,042,730
Pfizer, Inc. 844,529 35,575,784
--------------
116,618,514
--------------
RESTAURANTS -- 0.8%
McDonald's Corp. 486,505 18,548,003
--------------
RETAIL & MERCHANDISING -- 5.3%
Amazon.com, Inc.* 356,535 19,676,275
Costco Companies,
Inc.* 1,063,275 57,483,305
Home Depot, Inc. 913,460 51,210,851
--------------
128,370,431
--------------
TELECOMMUNICATIONS -- 20.5%
EchoStar
Communications
Corp. Cl-A* 507,300 32,308,669
Level 3
Communications,
Inc.* 581,985 51,796,665
Nextel
Communications,
Inc. Cl-A* 254,680 27,871,543
Nokia Corp. Cl-A
[ADR] 2,610,580 148,476,738
Nortel Networks
Corp. 271,995 30,803,434
Sprint Corp. (PCS
Group)* 1,892,675 104,097,125
Telefonos de Mexico
SA Cl-L [ADR] 179,795 10,574,193
Vodafone AirTouch
PLC [ADR] 1,354,230 63,648,810
WinStar
Communications,
Inc.* 758,525 30,246,184
--------------
499,823,361
--------------
TOTAL COMMON STOCK
(Cost $1,594,434,430) 2,134,678,209
--------------
FOREIGN STOCK -- 1.2%
SEMICONDUCTORS -- 0.1%
Infineon
Technologies
AG -- (DEM)* 44,614 3,040,967
--------------
TELECOMMUNICATIONS -- 1.1%
Vodafone AirTouch
PLC -- (GBP) 5,433,361 25,038,726
--------------
TOTAL FOREIGN STOCK
(Cost $30,386,086) 28,079,693
--------------
AMERICAN SKANDIA MASTER TRUST
- ----------------------------------------------------
PAR
(000) VALUE
- ----------------------------------------------------
U.S. GOVERNMENT AGENCY OBLIGATIONS -- 8.2%
Federal Home Loan
Bank
5.68%, 05/12/00 $ 10,000 $ 9,982,644
5.77%, 05/26/00 20,000 19,919,861
5.87%, 05/12/00 30,000 29,946,192
5.93%, 07/24/00 25,000 24,654,083
6.02%, 09/15/00 50,000 48,854,528
--------------
133,357,308
--------------
Federal Home Loan
Mortgage Corp.
5.89%, 05/19/00 50,000 49,852,750
--------------
Federal National
Mortgage Assoc.
5.60%, 05/25/00 15,000 14,944,000
--------------
(Cost $198,154,058) 198,154,058
--------------
CORPORATE OBLIGATIONS -- 0.0%
ENTERTAINMENT & LEISURE -- 0.0%
Venetian Casino
Resort LLC
12.25%, 11/15/04 275 269,500
--------------
TELECOMMUNICATIONS -- 0.0%
Lenfest
Communications,
Inc.
7.625%, 02/15/08 140 134,050
8.25%, 02/15/08 175 170,625
--------------
304,675
--------------
TOTAL CORPORATE OBLIGATIONS
(Cost $589,686) 574,175
--------------
PAR
(000) VALUE
- ----------------------------------------------------
- ----------------------------------------------------
PAR
COMMERCIAL PAPER -- 4.7%
Associates First
Capital Corp.
5.99%, 05/01/00
(Cost $113,200,000) $ 113,200 $ 113,200,000
--------------
SHARES
---------
SHORT-TERM INVESTMENTS -- 0.0%
Temporary
Investment Cash
Fund 43,322 43,322
Temporary
Investment Fund 43,322 43,322
--------------
(Cost $86,644) 86,644
--------------
TOTAL INVESTMENTS -- 101.8%
(Cost $1,936,850,904) 2,474,772,779
LIABILITIES IN EXCESS OF OTHER
ASSETS -- (1.8%) (44,393,773)
--------------
NET ASSETS -- 100.0% $2,430,379,006
==============
- -------------------------------------------------------
Definitions of abbreviations are included following the Schedules of
Investments.
* Non-income producing security.
See Notes to Financial Statements.
ASMT INVESCO
EQUITY INCOME PORTFOLIO
- ----------------------------------------------------
SHARES VALUE
- ----------------------------------------------------
COMMON STOCK -- 70.7%
ADVERTISING -- 0.9%
Omnicom Group, Inc. 26,000 $ 2,367,625
------------
AEROSPACE -- 3.6%
Boeing Co. 66,000 2,619,375
General Motors Corp.
Cl-H* 26,500 2,552,281
Honeywell
International, Inc. 56,000 3,136,000
Northrop Grumman
Corp. 21,000 1,488,375
------------
9,796,031
------------
AUTOMOBILE MANUFACTURERS -- 0.8%
Ford Motor Co. 39,900 2,182,031
------------
BEVERAGES -- 1.7%
Anheuser-Busch
Companies, Inc. 23,000 1,622,938
Coors, (Adolph) Co.
Cl-B 60,000 3,060,000
------------
4,682,938
------------
BROADCASTING -- 0.7%
AT&T Corp. Liberty
Media Group Cl-A* 36,000 1,797,750
------------
CHEMICALS -- 0.5%
Lyondell Chemical Co. 75,600 1,389,150
------------
COMPUTER SERVICES & SOFTWARE -- 3.3%
Cisco Systems, Inc.* 45,000 3,119,765
Computer Associates
International, Inc. 52,900 2,952,481
I2 Technologies,
Inc.* 12,400 1,602,700
SAP AG [ADR]* 26,500 1,301,813
------------
8,976,759
------------
CONGLOMERATES -- 0.8%
Textron, Inc. 35,400 2,192,588
------------
CONSUMER PRODUCTS & SERVICES -- 1.8%
Colgate-Palmolive Co. 47,500 2,713,438
Gillette Co. 60,000 2,220,000
------------
4,933,438
------------
ELECTRONIC COMPONENTS & EQUIPMENT -- 6.0%
General Electric Co. 32,800 5,157,800
KLA-Tencor Corp.* 31,400 2,351,075
Tandy Corp. 80,000 4,560,000
Texas Instruments,
Inc. 25,000 4,071,875
------------
16,140,750
------------
SHARES VALUE
- ----------------------------------------------------
- ----------------------------------------------------
ENTERTAINMENT & LEISURE -- 0.9%
Harrah's
Entertainment,
Inc.* 60,000 $ 1,233,750
Park Place
Entertainment
Corp.* 82,600 1,058,313
------------
2,292,063
------------
FINANCIAL -- BANK & TRUST -- 6.2%
Bank of America Corp. 40,000 1,960,000
Bank of New York Co.,
Inc. 70,000 2,874,375
Charter One
Financial, Inc. 106,224 2,157,675
Chase Manhattan Corp. 40,000 2,882,500
Morgan, (J.P.) & Co.,
Inc. 20,000 2,567,500
Summit Bancorp 60,000 1,522,500
Wells Fargo & Co. 64,500 2,648,531
------------
16,613,081
------------
FINANCIAL SERVICES -- 2.6%
Citigroup, Inc. 70,000 4,160,625
Morgan Stanley, Dean
Witter & Co. 37,000 2,839,750
------------
7,000,375
------------
FOOD -- 2.6%
General Mills, Inc. 27,300 993,038
Heinz, (H.J.) Co. 44,000 1,496,000
Kellogg Co. 49,000 1,197,438
Quaker Oats Co. 30,000 1,955,624
Tasty Baking Co. 120,000 1,312,500
------------
6,954,600
------------
INSURANCE -- 3.0%
Allmerica Financial
Corp. 70,000 3,788,750
John Hancock
Financial Services,
Inc.* 110,000 2,007,500
MetLife, Inc.* 130,000 2,153,125
Ohio Casualty Corp. 13,000 216,125
------------
8,165,500
------------
MACHINERY & EQUIPMENT -- 0.7%
Illinois Tool Works,
Inc. 30,000 1,921,875
------------
OIL & GAS -- 8.2%
Apache Corp. 67,300 3,259,844
BP Amoco PLC [ADR] 49,200 2,509,200
Exxon Mobil Corp. 60,000 4,661,249
National Fuel Gas Co. 70,000 3,320,625
AMERICAN SKANDIA MASTER TRUST
- ----------------------------------------------------
SHARES VALUE
- ----------------------------------------------------
Royal Dutch Petroleum
Co. 40,000 $ 2,295,000
Schlumberger Ltd. 45,000 3,445,312
Unocal Corp. 70,000 2,261,875
------------
21,753,105
------------
PAPER & FOREST PRODUCTS -- 1.6%
Bowater, Inc. 8,000 440,000
Champion
International Corp. 20,800 1,367,600
Weyerhaeuser Co. 47,000 2,511,563
------------
4,319,163
------------
PHARMACEUTICALS -- 6.6%
American Home
Products Corp. 70,000 3,933,125
Genentech, Inc.* 26,100 3,053,700
Incyte
Pharmaceuticals,
Inc.* 10,000 770,000
Merck & Co., Inc. 35,000 2,432,500
Pharmacia Corp. 60,000 2,996,250
Warner-Lambert Co. 40,000 4,552,500
------------
17,738,075
------------
RAILROADS -- 2.5%
Kansas City Southern
Industries, Inc. 80,000 5,750,000
Norfolk Southern
Corp. 50,000 881,250
------------
6,631,250
------------
RETAIL & MERCHANDISING -- 2.4%
Circuit City Stores,
Inc. 55,000 3,234,687
Target Corp. 39,000 2,595,938
Wal-Mart Stores, Inc. 12,000 664,500
------------
6,495,125
------------
SEMICONDUCTORS -- 2.7%
Intel Corp. 31,000 3,931,188
Maxim Integrated
Products, Inc.* 50,000 3,240,625
------------
7,171,813
------------
TELECOMMUNICATIONS -- 8.0%
AT&T Corp. 52,000 2,427,750
Bell Atlantic Corp. 29,700 1,759,725
Cable & Wireless
Communications PLC 50,000 2,468,750
Crown Castle
International
Corp.* 38,500 1,477,438
EchoStar
Communications
Corp. Cl-A* 30,000 1,910,625
SHARES VALUE
- ----------------------------------------------------
- ----------------------------------------------------
Nortel Networks Corp. 30,000 $ 3,397,500
SBC Communications,
Inc. 79,372 3,477,485
U.S. West, Inc. 60,000 4,271,249
------------
21,190,522
------------
UTILITIES -- 2.6%
Duke Energy Corp. 33,500 1,926,250
Enron Corp. 37,000 2,578,438
Northern States Power
Co. 59,200 1,291,300
Unicom Corp. 33,100 1,315,725
------------
7,111,713
------------
TOTAL COMMON STOCK
(Cost $164,609,518) 189,817,320
------------
PREFERRED STOCK -- 0.6%
TELECOMMUNICATIONS
Cincinnati Bell, Inc.
Cl-B 12.50%* 1,000 1,030,000
Global Crossing
Holdings Ltd.
10.50% [PIK] 5,000 491,250
------------
(Cost $1,596,250) 1,521,250
------------
PAR
(000)
-----
CORPORATE OBLIGATIONS -- 17.2%
ADVERTISING -- 0.1%
MDC Corp., Inc.
10.50%, 12/01/06 $ 250 236,250
------------
AIRLINES -- 0.2%
Delta Air Lines, Inc.
10.375%, 12/15/22 500 555,000
------------
BROADCASTING -- 0.4%
Chancellor Media
Corp.
9.00%, 10/01/08 250 254,375
Chancellor Media
Corp. L.A. Cl-B
8.125%, 12/15/07 800 801,000
------------
1,055,375
------------
BUILDING MATERIALS -- 0.3%
US Home Corp.
8.875%, 02/15/09 250 253,750
USG Corp.
8.50%, 08/01/05 500 504,289
------------
758,039
------------
ASMT INVESCO
EQUITY INCOME PORTFOLIO
- ----------------------------------------------------
PAR
(000) VALUE
- ----------------------------------------------------
CABLE
TELEVISION -- 0.7%
Charter Communication
Holdings LLC
8.625%, 04/01/09 $ 500 $ 439,375
Comcast U.K. Cable
Corp. [STEP]
7.137%, 11/15/07 750 714,375
Telewest
Communications PLC
[STEP]
10.926%, 10/01/07 750 708,750
------------
1,862,500
------------
CHEMICALS -- 0.1%
Equistar Chemicals
L.P.
7.55%, 02/15/26 250 199,063
------------
COMPUTER SERVICES & SOFTWARE -- 0.7%
Juniper Networks,
Inc.
4.75%, 03/15/07 1,500 1,381,875
Splitrock Services,
Inc. Cl-B
11.75%, 07/15/08 500 532,500
------------
1,914,375
------------
ENTERTAINMENT & LEISURE -- 0.2%
Park Place
Entertainment 144A
9.375%, 02/15/07 500 496,250
Time Warner
Entertainment Co.
7.25%, 09/01/08 100 95,375
------------
591,625
------------
FINANCIAL SERVICES -- 0.2%
Associates Corp. of
North America Cl-E
7.375%, 06/11/07 500 490,159
------------
HEALTHCARE SERVICES -- 0.0%
FHP International
Corp.
7.00%, 09/15/03 50 48,813
------------
HOTELS & MOTELS -- 0.1%
Hilton Hotels Corp.
7.20%, 12/15/09 250 218,125
------------
INSURANCE -- 0.3%
Progressive Corp.
6.625%, 03/01/29 500 401,875
The Equitable
Companies, Inc.
9.00%, 12/15/04 500 523,125
------------
925,000
------------
PAR
(000) VALUE
- ----------------------------------------------------
- ----------------------------------------------------
INTERNET
SERVICES -- 0.2%
Call-Net Enterprises,
Inc. [STEP]
10.80%, 05/15/09 $ 500 $ 182,500
PSINet, Inc. Cl-B
10.00%, 02/15/05 500 445,000
------------
627,500
------------
MACHINERY & EQUIPMENT -- 0.3%
NationsRent, Inc.
10.375%, 12/15/08 500 362,500
United Rentals, Inc.
9.25%, 01/15/09 500 453,750
------------
816,250
------------
OIL & GAS -- 1.1%
Atlantic Richfield
Co.
10.875%, 07/15/05 500 573,125
Canadian Forest Oil
Ltd.
8.75%, 09/15/07 500 468,750
Cliffs Drilling Co.
Cl-B
10.25%, 05/15/03 250 251,250
CMS Panhandle Holding
Co.
6.50%, 07/15/09 500 444,375
Forest Oil Corp.
10.50%, 01/15/06 500 510,000
Gulf Canada Resources
Ltd.
8.25%, 03/15/17 100 91,500
Noram Energy Corp.
[CVT]
6.00%, 03/15/12 400 332,000
Ocean Energy, Inc.
Cl-B
8.875%, 07/15/07 250 248,125
------------
2,919,125
------------
PAPER & FOREST PRODUCTS -- 0.4%
Bowater, Inc.
9.00%, 08/01/09 500 526,875
Chesapeake Corp.
7.20%, 03/15/05 500 458,750
------------
985,625
------------
PHARMACEUTICALS -- 0.1%
McKesson Corp.
4.50%, 03/01/04 200 171,000
------------
TELECOMMUNICATIONS -- 5.0%
Allegiance Telecom,
Inc. Cl-B [STEP]
11.489%, 02/15/08 500 355,000
AT&T Corp.
6.00%, 03/15/09 400 357,500
Centel Capital Corp.
9.00%, 10/15/19 250 271,250
AMERICAN SKANDIA MASTER TRUST
- ----------------------------------------------------
PAR
(000) VALUE
- ----------------------------------------------------
East Telecom Group
PLC
10.023%, 02/01/07
[STEP] $ 500 $ 463,750
11.875%, 12/01/08 250 293,750
Global Crossing
Holdings Ltd.
9.625%, 05/15/08 200 197,000
GTE Corp.
7.90%, 02/01/27 731 691,709
Level 3
Communications,
Inc.
11.00%, 03/15/08
144A 400 389,000
8.55%, 12/01/08
[STEP] 1,000 575,000
Lin Television Co.
8.375%, 03/01/08 250 216,875
McLeodUSA, Inc.
10.633%, 03/01/07
[STEP] 500 400,000
9.50%, 11/01/08 250 241,875
Metromedia Fiber
Network, Inc. Cl-B
10.00%, 11/15/08 750 716,250
MetroNet
Communications
Corp. [STEP]
8.655%, 06/15/08 3,000 2,366,250
NEXTLINK
Communications,
Inc.
12.50%, 04/15/06 750 787,500
9.625%, 10/01/07 250 235,000
11.51%, 04/15/08
[STEP] 250 152,500
Paramount
Communication
8.25%, 08/01/22 700 678,125
Qwest Communications
International, Inc.
Cl-B
7.77%, 02/01/08
[STEP] 800 614,000
7.25%, 11/01/08 250 236,250
RCN Corp.
10.125%, 01/15/10 500 447,500
Renaissance Media
Group [STEP]
9.587%, 04/15/08 598 406,640
Rogers Cantel, Inc.
9.75%, 06/01/16 500 540,000
TCI
Telecommunications,
Inc.
7.875%, 02/15/26 500 495,000
PAR
(000) VALUE
- ----------------------------------------------------
- ----------------------------------------------------
TeleCommunications,
Inc.
9.80%, 02/01/12 $ 500 $ 568,750
US West
Communications
5.65%, 11/01/04 650 600,956
------------
13,297,430
------------
UTILITIES -- 6.8%
Appalachian Power Co.
8.00%, 06/01/25 500 481,250
Arizona Public
Service Co.
8.00%, 02/01/25 1,000 952,500
Cleveland Electric
Illuminating Co.
7.43%, 11/01/09 250 236,250
9.00%, 07/01/23 250 252,188
Cleveland Electric
Illuminating Co.
Cl-D
7.88%, 11/01/17 500 471,875
Commonwealth Edison
Co.
8.00%, 05/15/08 400 400,500
8.375%, 02/15/23 828 820,755
Consumers Energy Co.
7.375%, 09/15/23 500 450,000
Duquesne Light Co.
7.55%, 06/15/25 1,000 915,000
El Paso Electric Co.
8.90%, 02/01/06 1,000 1,026,249
El Paso Electric Co.
Cl-C
8.25%, 02/01/03 200 200,500
Gulf Power Co.
6.875%, 01/01/26 500 428,750
Gulf States Utilities
8.70%, 04/01/24 250 244,688
Indiana Michigan
Power
8.50%, 12/15/22 1,000 988,749
Jersey Central Power
& Light Co.
7.98%, 02/16/23 500 483,125
7.50%, 05/01/23 500 463,750
Kentucky Utility
Energy Corp.
7.55%, 06/01/25 500 465,000
Metropolitan Edison
Co. Cl-B
8.15%, 01/30/23 75 72,764
New York State
Electric & Gas
Corp.
8.30%, 12/15/22 200 196,750
ASMT INVESCO
EQUITY INCOME PORTFOLIO
- ----------------------------------------------------
PAR
(000) VALUE
- ----------------------------------------------------
Niagra Mohawk Power
Corp.
8.50%, 07/01/23 $ 124 $ 122,605
8.50%, 07/01/23 500 491,875
Niagara Mohawk Power
Corp. Cl-H
7.529%, 07/01/10
[STEP] 1,000 767,500
Potomac Electric
Power
8.50%, 05/15/27 1,000 973,750
Potomic Edison Co.
8.00%, 06/01/24 500 471,875
7.75%, 05/01/25 650 602,063
Public Service Co. of
New Mexico Cl-A
7.10%, 08/01/05 750 719,063
Public Service
Electric & Gas Co.
6.375%, 05/01/08 500 456,250
Public Service of
Colorado
9.875%, 07/01/20 500 523,750
Texas Utilities
8.50%, 08/01/24 500 496,875
7.375%, 10/01/25 500 450,625
Union Electric Co.
8.75%, 12/01/21 750 752,813
8.25%, 10/15/22 1,000 980,756
Western Massachusetts
Electric Co. Cl-V
7.75%, 12/01/02 120 118,481
Wisconsin Electric &
Power
8.375%, 12/02/26 1,000 974,999
------------
18,453,923
------------
TOTAL CORPORATE OBLIGATIONS
(Cost $49,311,731) 46,125,177
------------
U.S. GOVERNMENT AGENCY OBLIGATIONS -- 0.5%
Federal Home Loan
Mortgage Corp.
6.50%, 02/01/30
(Cost $1,394,429) 1,497 1,398,232
------------
U.S. TREASURY OBLIGATIONS -- 3.0%
U.S. Treasury Notes
5.875%, 11/15/04 3,000 2,921,493
5.625%, 05/15/08 4,750 4,518,441
6.00%, 08/15/09 500 489,171
------------
(Cost $8,327,711) 7,929,105
------------
PAR
(000) VALUE
- ----------------------------------------------------
- ----------------------------------------------------
SOVEREIGN ISSUES -- 0.4%
Resolution Funding
Corp. [ZCB]
6.58%, 04/15/09
(Cost $1,119,432) $ 2,000 $ 1,095,066
------------
COMMERCIAL PAPER -- 4.5%
American Express
Credit Co.
6.02%, 05/05/00 7,000 7,000,000
Heller Financial,
Inc.
6.06%, 05/01/00 5,000 5,000,000
------------
(Cost $12,000,000) 12,000,000
------------
SHARES
------
SHORT-TERM INVESTMENTS -- 4.4%
Temporary Investment
Cash Fund 5,958,070 5,958,070
Temporary Investment
Fund 5,958,069 5,958,069
------------
(Cost $11,916,139) 11,916,139
------------
TOTAL INVESTMENTS -- 101.3%
(Cost $250,275,210) 271,802,289
LIABILITIES IN EXCESS OF OTHER
ASSETS -- (1.3%) (3,396,218)
------------
NET ASSETS -- 100.0% $268,406,071
============
- -------------------------------------------------------
Definitions of abbreviations are included following the Schedules of
Investments.
* Non-income producing security.
144A -- Security was purchased pursuant to Rule 144A under the Securities Act of
1933 and may not be resold subject to that rule except to qualified
institutional buyers. At the end of the period, these securities
amounted to 0.3% of net assets.
See Notes to Financial Statements.
AMERICAN SKANDIA MASTER TRUST
ASMT PIMCO
TOTAL RETURN BOND PORTFOLIO
- -----------------------------------------------------
PAR
(000) VALUE
- -----------------------------------------------------
U.S. GOVERNMENT AGENCY OBLIGATIONS -- 33.2%
Federal Home Loan
Mortgage Corp.
6.30%, 06/01/04 $ 3,000 $ 2,886,354
6.50%, 08/15/23-
12/15/23 4,461 4,328,782
------------
7,215,136
------------
Federal National
Mortgage Assoc.
6.023%, 01/01/28
[VR] 227 220,793
6.50%, 05/18/23 2,112 2,064,758
7.00%, 02/15/27 3,742 3,254,717
8.50%, 08/01/24-
12/01/25 763 776,738
------------
6,317,006
------------
Government National
Mortgage Assoc.
6.50%, 05/22/30 22,400 20,982,529
6.875%, 02/01/40-
02/04/40 5,000 4,875,529
7.00%, 11/15/27-
05/22/30 5,160 4,951,156
7.50%, 05/22/30 12,200 11,989,025
------------
42,798,239
------------
Student Loan Marketing
Assoc.
5.349%, 07/25/04
[FRB] 947 941,808
------------
(Cost $58,724,324) 57,272,189
------------
U.S. TREASURY OBLIGATIONS -- 11.2%
U.S. Treasury Bonds
11.25%, 02/15/15 100 146,534
8.75%, 08/15/20 1,300 1,665,286
8.00%, 11/15/21 400 481,690
6.00%, 02/15/26 400 389,724
------------
2,683,234
------------
U.S. Treasury
Inflationary Bonds
3.625%, 07/15/02-
01/15/08 4,409 4,633,046
3.375%, 01/15/07 5,000 5,158,328
3.875%, 01/15/09-
04/15/29 1,803 1,854,266
------------
11,645,640
------------
U.S. Treasury Strips
5.125%, 08/31/00# 565 563,058
6.762%, 05/15/20 1,100 326,134
6.054%, 11/15/21 15,300 4,185,177
------------
5,074,369
------------
(Cost $19,287,973) 19,403,243
------------
PAR
(000) VALUE
- -----------------------------------------------------
- -----------------------------------------------------
COLLATERALIZED MORTGAGE OBLIGATIONS -- 20.1%
Brazo 1998-A Cl-A2
[FRB]
6.77%, 06/01/23 $ 5,000 $ 4,948,874
Centre Series 1999
144A
6.715%, 02/01/09 2,962 2,772,548
Chase Mortgage Finance
Corp. 1995-A Cl-A
6.204%, 04/25/25 1,847 1,869,085
Chase Series 1999-S8
Cl-A1
6.35%, 06/25/29 5,000 4,857,225
Countrywide Home Loans
Series 1998-18
Cl-2A3
6.75%, 11/25/28 1,000 874,709
Federal Housing
Authority
6.68%, 01/01/09 854 797,580
First Plus Home Loan
Trust Series 1998-5
Cl-A3 [VR]
6.06%, 09/10/11 658 656,805
GE Capital Mortgage
Services, Inc.
Series 1999-11 Cl-Y2
6.00%, 05/25/29 3,100 2,989,563
Green Tree Financial
Corp. 1999 Cl-A5
7.86%, 04/01/31 1,400 1,358,623
Morgan Stanley Capital
Corp. Series 1997-H
144A
6.86%, 05/15/06 2,375 2,324,276
Norwest Asset
Securities Corp.
Series 1999-18,
Cl-A2
6.00%, 07/25/29 5,200 4,789,330
Norwest Asset
Securities Corp.
Series 1999-25,
Cl-A4
6.50%, 10/25/29 1,988 1,774,347
PNC Mortgage
Securities Corp.
Series 1998-10,
Cl-1A6
6.50%, 10/25/28 2,000 1,802,222
Prudential Securities
Secured Financing
Co. Series 1999-C2,
Cl-A1
6.955%, 06/15/08 2,883 2,800,019
------------
(Cost $35,728,314) 34,615,206
------------
ASMT PIMCO
TOTAL RETURN BOND PORTFOLIO
- -----------------------------------------------------
PAR
(000) VALUE
- -----------------------------------------------------
CORPORATE OBLIGATIONS -- 44.1%
AEROSPACE -- 1.1%
Lockheed Martin Corp.
6.85%, 05/15/01 $ 2,000 $ 1,977,500
------------
AIRLINES -- 1.6%
Continental Airlines,
Inc.
6.954%, 02/02/11 2,898 2,751,991
------------
AUTOMOTIVE PARTS -- 2.7%
TRW, Inc.
6.625%, 06/01/04 5,000 4,712,500
------------
CONGLOMERATES -- 0.6%
Philip Morris
Companies, Inc.
7.625%, 05/15/02 1,000 972,541
------------
CONSUMER PRODUCTS & SERVICES -- 1.2%
Sears Roebuck
Acceptance Corp.
Cl-2
6.86%, 08/06/01 2,000 1,985,000
------------
ENVIRONMENTAL SERVICES -- 2.6%
Waste Management, Inc.
6.50%, 05/14/04 5,000 4,460,000
------------
FINANCIAL -- BANK & TRUST -- 5.6%
Banco Latinamericano
SA 144A
7.639%, 12/10/01 3,000 2,978,850
Bankers Trust Corp.
[FRN]
6.14%, 01/30/02 1,000 1,000,276
PNC Bank Corp. NA
5.948%, 08/15/02 2,800 2,800,860
Popular North America,
Inc. Cl-D
6.625%, 01/15/04 3,000 2,855,214
------------
9,635,200
------------
FINANCIAL SERVICES -- 20.9%
Bear Stearns Co.
6.596%, 03/28/03 1,000 997,847
6.566%, 03/18/05
[VR] 500 500,480
Beneficial Corp. Cl-H
[FRN]
6.28%, 01/09/02 500 500,222
Caterpillar Financial
Services Corp., Inc.
6.30%, 02/11/02
[FRN] 500 500,304
6.875%, 08/01/04 4,000 3,875,000
PAR
(000) VALUE
- -----------------------------------------------------
- -----------------------------------------------------
Cincinnati Financial
Corp.
6.90%, 05/15/28 $ 4,700 $ 4,118,375
DTE Capital Corp. [VR]
144A
7.11%, 11/15/03 3,000 2,872,500
Ford Motor Credit Co.
6.249%, 09/03/01
[FRN] 1,000 1,000,065
6.70%, 07/16/04 2,000 1,925,000
GMAC [FRN]
6.165%, 04/29/02 2,800 2,795,061
Goldman Sachs Group
Cl-A [FRN] 144A
6.39%, 12/07/01 2,000 2,004,802
John Deere Capital
Corp. [FRN]
6.461%, 04/21/03 3,100 3,100,000
Lehman Brothers
Holdings, Inc. [FRN]
6.758%, 05/01/00 800 800,838
6.421%, 09/03/02 1,800 1,784,203
Merrill Lynch & Co.,
Inc. [FRN]
6.73%, 01/11/02 2,000 2,004,796
Morgan Stanley, Dean
Witter & Co. [FRN]
6.327%, 03/11/03 1,000 997,293
New England
Educational Loan
Marketing Assoc.
Cl-B [FRN] 144A
6.31%, 06/11/01 1,000 999,549
Pemex Finance Ltd.
9.69%, 08/15/09 5,000 5,421,499
------------
36,197,834
------------
HEALTHCARE SERVICES -- 2.3%
Columbia HCA
Healthcare Corp.
6.63%, 07/15/45 4,275 4,023,844
------------
INSURANCE -- 0.9%
Gold Eagle Capital
144A
11.453%, 07/17/00 1,500 1,592,550
------------
TELECOMMUNICATIONS -- 1.7%
Cable & Wireless
Communications PLC
6.75%, 12/01/08 2,000 1,977,500
MCI WorldCom, Inc.
6.125%, 08/15/01 1,000 986,250
------------
2,963,750
------------
AMERICAN SKANDIA MASTER TRUST
- -----------------------------------------------------
PAR
(000) VALUE
- -----------------------------------------------------
UTILITIES -- 2.9%
Alliant Energy
Resources 144A
7.25%, 02/15/30 $ 10 $ 7,450
Edison Mission Energy
144A [FRN]
6.82%, 06/15/01 3,000 2,999,247
Philippine Long
Distance Telephone
10.50%, 04/15/09 2,000 1,915,000
------------
4,921,697
------------
TOTAL CORPORATE
OBLIGATIONS
(Cost $77,503,597) 76,194,407
------------
PRINCIPAL
IN LOCAL
CURRENCY
(000)
---------
FOREIGN BONDS -- 3.1%
NEW ZEALAND -- 0.3%
International Bank
Reconstruction &
Development
7.25%, 05/27/03 200 96,461
New Zealand Government
10.00%, 03/15/02 600 306,980
5.50%, 04/15/03 400 186,702
------------
590,143
------------
UNITED KINGDOM -- 2.8%
United Mexican States
8.75%, 05/30/02 3,000 4,719,909
------------
TOTAL FOREIGN BONDS
(Cost $5,252,548) 5,310,052
------------
PAR
(000)
-----
SOVEREIGN ISSUES -- 1.3%
ARGENTINA -- 0.5%
Republic of Argentina
[FRB, BRB]++
11.595%, 04/10/05 $ 1,000 938,751
------------
BRAZIL -- 0.3%
Republic of Brazil
7.00%, 07/03/00 443 442,534
------------
PHILIPPINES -- 0.5%
Republic of
Philippines
9.50%, 10/21/24 859 823,566
------------
TOTAL SOVEREIGN ISSUES
(Cost $2,233,066) 2,204,851
------------
PAR
(000) VALUE
- -----------------------------------------------------
- -----------------------------------------------------
COMMERCIAL PAPER -- 5.9%
Deutsche Bank, Inc.
6.24%, 06/26/00 $ 1,400 $ 1,385,925
DuPont, (E.I.) de
Nemours & Co.
6.03%, 06/07/00 4,300 4,271,911
General Electric
Capital Corp.
6.17%, 07/18/00 2,100 2,070,847
Monsanto Co.
6.05%, 06/14/00 2,100 2,083,495
Procter & Gamble Co.
6.08%, 06/02/00 400 397,795
------------
(Cost $10,213,998) 10,209,973
------------
CERTIFICATES OF DEPOSIT -- 0.6%
Mexico Credit Link
11.818%, 02/22/02
(Cost $1,000,000) 1,000 994,900
------------
SHARES
------
SHORT-TERM INVESTMENTS -- 1.2%
Temporary Investment
Cash Fund 1,021,826 1,021,826
Temporary Investment
Fund 1,021,825 1,021,825
------------
(Cost $2,043,651) 2,043,651
------------
TOTAL INVESTMENTS --120.7%
(Cost $211,987,471) 208,248,472
------------
NUMBER OF
CONTRACTS
---------
WRITTEN OPTIONS -- (0.1)%
CALL OPTIONS -- 0.0%
10 Year June U.S.
Treasury Note
Futures, Strike
Price 98, Expires
05/19/00 (11) (2,750)
10 Year June U.S.
Treasury Note
Futures, Strike
Price 99, Expires
05/19/00 (12) (938)
30 Year June U.S.
Treasury Bond
Futures, Strike
Price 100, Expires
05/19/00 (44) (2,062)
30 Year June U.S.
Treasury Bond
Futures, Strike
Price 98, Expires
05/19/00 (2) (626)
March 2001 Eurodollar
Futures, Strike
Price 93.25, Expires
03/19/01 (9) (2,362)
------------
(8,738)
------------
ASMT PIMCO
TOTAL RETURN BOND PORTFOLIO
- -----------------------------------------------------
NUMBER OF
CONTRACTS VALUE
- -----------------------------------------------------
PUT OPTIONS -- (0.1)%
10 Year June U.S.
Treasury Note
Futures, Strike
Price 95, Expires
05/19/00 (11) $ (1,375)
10 Year June U.S.
Treasury Note
Futures, Strike
Price 96, Expires
05/19/00 (12) (3,562)
5 Year June U.S.
Treasury Note
Futures, Strike
Price 96, Expires
05/19/00 (62) (3,875)
December Eurodollar
Futures, Strike
Price 93.5, Expires
12/18/00 (94) (191,525)
March 2001 Eurodollar
Futures, Strike
Price 92.75, Expires
03/19/01 (9) (7,875)
------------
(208,212)
------------
TOTAL WRITTEN OPTIONS
(Cost $(171,612)) (216,950)
------------
LIABILITIES IN EXCESS OF
OTHER ASSETS -- (20.6%) (35,481,927)
------------
NET ASSETS -- 100.0% $172,549,595
============
Foreign currency exchange contracts outstanding at April 30, 2000:
SETTLEMENT CONTRACTS TO IN EXCHANGE CONTRACTS UNREALIZED
MONTH TYPE DELIVER FOR AT VALUE APPRECIATION
- ---------------------------------------------------------------------------
05/00 Sell GBP 3,060,000 $4,881,434 $4,786,635 $94,799
========== ========== =======
# Securities with an aggregate market value of $523,031 have been segregated
with the custodian to cover margin requirements for the following open futures
contracts at April 30, 2000:
NOTIONAL UNREALIZED
EXPIRATION AMOUNT APPRECIATION
DESCRIPTION MONTH (000) (DEPRECIATION)
- -----------------------------------------------------------------------
U.S. Treasury 30 Year Bond 06/00 $5,800 $ 50,125
U.S. Treasury 10 Year Note 06/00 4,000 (26,250)
Euro Dollar 03/01 EUR 14,250 (39,800)
--------
$(15,925)
========
Credit default swap agreements outstanding at April 30, 2000.
NOTIONAL
EXPIRATION AMOUNT UNREALIZED
DESCRIPTION MONTH (000) DEPRECIATION
- ----------------------------------------------------------------------
Credit default on Republic of
Argentina Bonds
6.15% 03/01 $300 $15,993
5.70% 03/01 200 9,255
-------
$25,248
=======
Interest rate swap agreements outstanding at April 30, 2000:
FIXED NOTIONAL
SPREAD EXPIRATION AMOUNT UNREALIZED
DESCRIPTION (%) MONTH (000) APPRECIATION
- ------------------------------------------------------------------------
Receive the 30-year Swap
Spread and pay a fixed
spread. The 30-year Swap
Spread is the difference
between the 30-year Swap
Rate and the 30-year
Treasury Rate. 1.15 08/00 $100 $ 1,000
=======
- -------------------------------------------------------
Definitions of abbreviations are included following the Schedules of
Investments.
144A -- Security was purchased pursuant to Rule 144A under the Securities Act of
1933 and may not be resold subject to that rule except to qualified
institutional buyers. At the end of the period, these securities
amounted to 10.8% of net assets.
See Notes to Financial Statements.
AMERICAN SKANDIA MASTER TRUST
ASMT JPM
MONEY MARKET PORTFOLIO
- ----------------------------------------------------
PAR
(000) VALUE
- ----------------------------------------------------
U.S. GOVERNMENT AGENCY OBLIGATIONS -- 2.3%
Federal Home Loan Bank
[FRN]
6.13%, 07/05/00
(Cost $4,998,534) $ 5,000 $ 4,998,534
------------
CERTIFICATES OF DEPOSIT -- 28.1%
Abbey National Treasury
5.22%, 05/11/00 1,500 1,499,980
6.45%, 01/08/01 4,000 3,998,687
6.47%, 01/10/01 2,000 1,999,338
Bayerische Landesbank
NY
5.929%, 05/15/00
[FRN] 1,500 1,499,206
5.875%, 08/04/00 1,000 999,925
6.11%, 10/02/00 3,000 2,997,788
Commerzbank AG NY
6.10%, 05/26/00 3,000 2,999,420
6.049%, 05/28/00 5,000 4,997,969
Credit Commercial de
Belgium
6.70%, 02/26/01 4,000 3,998,435
Deutsche Bank
6.035%, 05/16/00
[FRN] 3,000 2,998,833
6.19%, 12/01/00 5,500 5,497,849
Dresdner Bank NY [FRN]
6.059%, 05/28/00 5,000 4,998,219
Rabobank Nederland NV
6.66%, 03/09/01 1,000 999,594
Suntrust Bank Atlanta
6.24%, 07/06/00 3,000 3,000,000
Suntrust Banks, Inc.
5.98%, 05/12/00 7,000 7,000,000
Union Bank of
Switzerland
6.235%, 12/04/00 5,000 4,997,876
6.39%, 12/21/00 2,500 2,499,237
Westdeutsche Landesbank
NY [FRN]
6.07%, 05/25/00 3,000 2,998,607
------------
(Cost $59,980,963) 59,980,963
------------
CORPORATE OBLIGATIONS -- 43.5%
FINANCIAL -- BANK & TRUST -- 24.1%
American Express
Centurion [FRN]
6.00%, 07/12/00 1,000 999,242
Bank of America [FRN]
6.17%, 05/03/00 5,000 5,000,000
Bank of Austria [FRN]
6.04%, 05/16/00 8,000 7,996,886
Bank of Scotland [FRN]
6.079%, 05/08/00 10,000 9,999,588
Citigroup, Inc. [FRN]
6.096%, 05/04/00 5,000 5,000,000
PAR
(000) VALUE
- ----------------------------------------------------
- ----------------------------------------------------
Comerica Bank [FRN]
5.911%, 05/15/00 $ 4,000 $ 3,998,222
First Union National
Bank [FRN]
6.18%, 06/16/00++ 3,000 2,999,657
Fleet Financial Group
[FRN]
6.343%, 07/13/00 1,500 1,497,777
National City Bank
6.102%, 05/04/00 5,000 5,000,000
NationsBank Texas Corp.
6.75%, 08/15/00 1,000 1,002,082
PNC Bank Corp. [FRN]
5.939%, 07/12/00++ 3,000 2,999,711
SouthTrust Bank NA
[FRN]
6.10%, 05/24/00++ 5,000 4,998,350
------------
51,491,515
------------
FINANCIAL SERVICES -- 12.1%
AT&T Capital Corp.
6.20%, 07/10/00 3,000 3,005,357
Caterpillar Financial
Services Corp.
6.15%, 09/15/00 3,500 3,500,816
CIT Group, Inc.
6.25%, 05/01/00 3,500 3,473,677
6.10%, 05/15/00 3,000 2,997,909
6.16%, 01/19/01 3,000 2,998,633
General Electric
Capital Corp.
6.221%, 07/07/00 5,000 5,000,000
US Bank NA Minnesota
[FRN]
6.17%, 05/04/00 5,000 4,997,996
------------
25,974,388
------------
INDUSTRIAL -- 6.1%
Diageo Capital PLC
[FRN]
6.105%, 05/24/00 5,000 4,998,995
Ford Motor Credit Co.
[FRN]
6.27%, 06/30/00 5,000 5,000,663
General Motors
Acceptance Corp.
[FRN]
6.37%, 06/30/00 3,000 3,003,981
------------
13,003,639
------------
TELECOMMUNICATIONS -- 1.2%
AT&T Corp. [FRN]
6.24%, 07/13/00++ 2,500 2,499,801
------------
TOTAL CORPORATE OBLIGATIONS
(Cost $92,969,343) 92,969,343
------------
ASMT JPM
MONEY MARKET PORTFOLIO
- ----------------------------------------------------
PAR
(000) VALUE
- ----------------------------------------------------
SOVEREIGN ISSUES -- 7.9%
Province of Manitoba
9.50%, 10/01/00 $ 5,000 $ 5,054,750
Quebec Province
5.93%, 06/15/00 12,000 11,911,050
------------
(Cost $16,965,800) 16,965,800
------------
COMMERCIAL PAPER -- 19.8%
FINANCIAL SERVICES -- 10.0%
Dexia Finance+
6.13%, 06/30/00 7,000 6,928,483
General Electric
Capital Corp.
6.17%, 05/22/00 7,562 7,562,000
Morgan Stanley, Dean
Witter Co.
6.17%, 05/22/00 7,000 6,974,806
------------
21,465,289
------------
INDUSTRIAL -- 4.7%
Ford Motor Credit Co.
6.01%, 05/18/00 5,000 4,985,810
General Motors
Acceptance Corp.
6.06%, 06/02/00 5,000 4,973,067
------------
9,958,877
------------
TELECOMMUNICATIONS -- 5.1%
AT&T Corp.
5.399%, 05/08/00 7,000 6,998,841
Bell South
Telecommunications,
Inc.
6.00%, 05/25/00 4,000 3,984,000
------------
10,982,841
------------
TOTAL COMMERCIAL PAPER
(Cost $42,407,007) 42,407,007
------------
TOTAL INVESTMENTS -- 101.6%
(Cost $217,321,647) 217,321,647
LIABILITIES IN EXCESS OF OTHER
ASSETS -- (1.6%) (3,351,189)
------------
NET ASSETS -- 100.0% $213,970,458
============
- -------------------------------------------------------
Definitions of abbreviations are included following the Schedules of
Investments.
+ Security is restricted as to resale and may not be resold except to qualified
institutional buyers. At the end of the period, this security amounted to
3.2% of net assets.
++ Maturity date reflects the next interest rate change date.
See Notes to Financial Statements.
DEFINITION OF ABBREVIATIONS
-------------------------------------------------------
THE FOLLOWING ABBREVIATIONS ARE USED THROUGHOUT THE SCHEDULES OF INVESTMENTS:
SECURITY DESCRIPTIONS:
ADR -- American Depositary Receipt
BRB -- Brady Bond
CVT -- Convertible Security
FDR -- Federal Depositary Receipt
FRB -- Floating Rate Bond(1)
FRN -- Floating Rate Note(1)
GDR -- Global Depositary Receipt
PIK -- Payment in Kind Security
REIT -- Real Estate Investment Trust
STEP -- Stepped Coupon Bond(2)
VR -- Variable Rate Bond(1)
ZCB -- Zero Coupon Bond(2)
COUNTRIES/CURRENCIES:
DEM -- Germany/German Deutschemark
EUR -- Europe/Euro Currency
GBP -- United Kingdom/British Pound
- -------------------------------------------------------
(1) Rates shown for variable and floating rate securities are the coupon rates
as of April 30, 2000.
(2) Rates shown are the effective yields at purchase date.
122
126
(This page intentionally left blank)
APRIL 30, 2000
(UNAUDITED)
STATEMENTS OF ASSETS AND LIABILITIES
--------------------------------------------------------------------------------
ASMT ASMT ASMT ASMT ASMT
T. ROWE PRICE JANUS INVESCO TOTAL JPM
INTERNATIONAL CAPITAL EQUITY RETURN MONEY
EQUITY GROWTH INCOME BOND MARKET
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------ ------------- ------------ ------------ -----------
----------- ------------- ------------ ------------ -----------
ASSETS:
Investments in Securities
at Value (A) $65,939,556 $2,474,772,779 $271,802,289 $208,248,472 $217,321,647
Collateral Received for
Securities Lent -- 501,213,967 38,528,988 -- --
Cash 6,093,330 55,504 -- 834,410 722
Foreign Currency (B) 80,850 -- -- 161,356 --
Receivable for:
Securities Sold 501 -- 2,327,770 7,412,591 --
Dividends and Interest 170,907 96,581 1,493,228 2,516,198 1,043,920
Contributions by Feeder
Fund 477,492 11,467,320 916,893 669,026 792,451
Unrealized Appreciation on
Foreign Currency Exchange
Contracts -- -- -- 94,799 --
Unrealized Appreciation on
Swap Agreements -- -- -- 1,000 --
Deferred Organization Costs 10,994 10,994 11,118 11,118 11,138
----------- -------------- ------------ ------------ ------------
Total Assets 72,773,630 2,987,617,145 315,080,286 219,948,970 219,169,878
----------- -------------- ------------ ------------ ------------
LIABILITIES:
Cash Overdraft -- -- 4,155,620 -- --
Written Options
Outstanding, at Value -- -- -- 216,950 --
Unrealized Depreciation on
Foreign Currency Exchange
Contracts 18,382 -- -- -- --
Unrealized Depreciation on
Swap Agreements -- -- -- 25,248 --
Payable upon Return of
Securities Lent -- 501,213,967 38,528,988 -- --
Payable to Investment
Manager 83,606 1,929,656 162,653 92,723 79,298
Payable for:
Securities Purchased 1,084,812 52,752,442 3,646,819 46,767,747 5,095,653
Withdrawals by Feeder
Funds 122,441 1,165,854 102,834 158,068 --
Futures Variation Margin -- -- -- 92,187 --
Accrued Expenses and
Other Liabilities 91,303 176,220 77,301 46,452 24,469
----------- -------------- ------------ ------------ ------------
Total Liabilities 1,400,544 557,238,139 46,674,215 47,399,375 5,199,420
----------- -------------- ------------ ------------ ------------
NET ASSETS $71,373,086 $2,430,379,006 $268,406,071 $172,549,595 $213,970,458
=========== ============== ============ ============ ============
(A) Investments at Cost $56,941,594 $1,936,850,904 $250,275,210 $211,815,859 $217,321,647
=========== ============== ============ ============ ============
(B) Foreign Currency at Cost $ 81,089 $ -- $ -- $ 170,531 $ --
=========== ============== ============ ============ ============
AMERICAN SKANDIA MASTER TRUST
FOR THE SIX MONTHS ENDED APRIL 30, 2000
(UNAUDITED)
STATEMENTS OF OPERATIONS
--------------------------------------------------------------------------------
ASMT ASMT ASMT ASMT ASMT
T. ROWE PRICE JANUS INVESCO TOTAL JPM
INTERNATIONAL CAPITAL EQUITY RETURN MONEY
EQUITY GROWTH INCOME BOND MARKET
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
----------- ------------ ----------- ----------- ----------
------------ ------------ ----------- ----------- ----------
INVESTMENT INCOME:
Interest $ 140,568 $ 9,797,806 $ 2,258,793 $ 6,223,871 $5,779,980
Dividends 249,391 1,673,890 1,275,121 -- --
Foreign Taxes Withheld (40,690) (13,511) (64,124) (1,970) (20)
---------- ------------ ----------- ----------- ----------
Total Investment Income 349,269 11,458,185 3,469,790 6,221,901 5,779,960
---------- ------------ ----------- ----------- ----------
EXPENSES:
Advisory Fees 270,374 10,015,211 886,057 570,721 530,614
Shareholder Servicing Fees 3,000 3,000 3,000 3,000 3,000
Administration and Accounting Fees 21,598 258,517 106,380 89,677 56,000
Custodian Fees 31,093 99,768 18,656 24,200 15,487
Distribution Fees 4,794 44,179 51,281 -- --
Audit and Legal Fees 698 25,978 3,130 2,347 2,838
Organization Costs 2,595 2,596 2,590 2,589 2,586
Trustees' Fees 547 20,369 2,453 1,838 2,225
Miscellaneous Expenses 15,107 22,989 6,793 5,271 4,130
---------- ------------ ----------- ----------- ----------
Total Expenses 349,806 10,492,607 1,080,340 699,643 616,880
Less: Fees Paid Indirectly (4,794) (44,179) (51,281) -- --
---------- ------------ ----------- ----------- ----------
Net Expenses 345,012 10,448,428 1,029,059 699,643 616,880
---------- ------------ ----------- ----------- ----------
Net Investment Income (Loss) 4,257 1,009,757 2,440,731 5,522,258 5,163,080
---------- ------------ ----------- ----------- ----------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS:
Net Realized Gain (Loss) on:
Securities $ (249,244) $(36,167,187) $ 666,621 $ (993,017) $ 1,331
Futures Contracts -- -- -- (193,510) --
Written Options Contracts -- -- -- 205,941 --
Swap Agreements -- -- -- (30,301) --
Foreign Currency Transactions (87,094) 2,509 -- 230,231 --
---------- ------------ ----------- ----------- ----------
Net Realized Gain (Loss) (336,338) (36,164,678) 666,621 (780,656) 1,331
---------- ------------ ----------- ----------- ----------
Net Change in Unrealized Appreciation
(Depreciation) on:
Securities 4,793,379 282,241,606 8,001,385 (647,248) --
Futures Contracts -- -- -- (55,557) --
Written Options Contracts -- -- -- (172,298) --
Swap Agreements -- -- -- (12,725) --
Translation of Assets and
Liabilities Denominated in
Foreign Currencies (1,623) (9) -- 241 --
---------- ------------ ----------- ----------- ----------
Net Change in Unrealized Appreciation
(Depreciation) 4,791,756 282,241,597 8,001,385 (887,587) --
---------- ------------ ----------- ----------- ----------
Net Gain (Loss) on Investments 4,455,418 246,076,919 8,668,006 (1,668,243) 1,331
---------- ------------ ----------- ----------- ----------
Net Increase (Decrease) in Net Assets
Resulting from Operations $4,459,675 $247,086,676 $11,108,737 $ 3,854,015 $5,164,411
========== ============ =========== =========== ==========
See Notes to Financial Statements.
STATEMENTS OF CHANGES IN NET ASSETS
--------------------------------------------------------------------------------
ASMT ASMT
T. ROWE PRICE JANUS
INTERNATIONAL EQUITY CAPITAL GROWTH
PORTFOLIO PORTFOLIO
----------------------------- -------------------------------
SIX MONTHS SIX MONTHS
ENDED YEAR ENDED ENDED YEAR ENDED
APRIL 30, 2000 OCTOBER 31, APRIL 30, 2000 OCTOBER 31,
(UNAUDITED) 1999 (UNAUDITED) 1999
-------------- ------------ -------------- --------------
FROM OPERATIONS:
Net Investment Income (Loss) $ 4,257 $ 47,233 $ 1,009,757 $ 827,438
Net Realized Gain (Loss) on Investments (336,338) (426,619) (36,164,678) (53,595,339)
Net Change in Unrealized Appreciation (Depreciation) on
Investments 4,791,756 4,321,537 282,241,597 239,637,126
------------ ------------ -------------- --------------
Net Increase (Decrease) in Net Assets Resulting from
Operations 4,459,675 3,942,151 247,086,676 186,869,225
------------ ------------ -------------- --------------
CAPITAL TRANSACTIONS:
Contributions by Feeder Funds 40,894,159 31,129,167 1,635,490,289 1,150,697,636
Withdrawals by Feeder Funds (10,560,224) (13,512,625) (776,480,621) (167,522,691)
------------ ------------ -------------- --------------
Net Increase in Net Assets from Capital Transactions 30,333,935 17,616,542 859,009,668 983,174,945
------------ ------------ -------------- --------------
Total Increase in Net Assets 34,793,610 21,558,693 1,106,096,344 1,170,044,170
NET ASSETS:
Beginning of Period 36,579,476 15,020,783 1,324,282,662 154,238,492
------------ ------------ -------------- --------------
End of Period $ 71,373,086 $ 36,579,476 $2,430,379,006 $1,324,282,662
============ ============ ============== ==============
--------------------------------------------------------------------------------
AMERICAN SKANDIA MASTER TRUST
ASMT ASMT
INVESCO ASMT JPM
EQUITY INCOME TOTAL RETURN BOND MONEY MARKET
PORTFOLIO PORTFOLIO PORTFOLIO
----------------------------- ----------------------------- -------------------------------
SIX MONTHS SIX MONTHS SIX MONTHS
ENDED YEAR ENDED ENDED YEAR ENDED ENDED YEAR ENDED
APRIL 30, 2000 OCTOBER 31, APRIL 30, 2000 OCTOBER 31, APRIL 30, 2000 OCTOBER 31,
(UNAUDITED) 1999 (UNAUDITED) 1999 (UNAUDITED) 1999
-------------- ------------ -------------- ------------ --------------- -------------
FROM OPERATIONS:
Net Investment Income (Loss) $ 2,440,731 $ 2,788,141 $ 5,522,258 $ 6,925,203 $ 5,163,080 $ 4,396,358
Net Realized Gain (Loss) on
Investments 666,621 3,669,326 (780,656) (3,407,117) 1,331 2,986
Net Change in Unrealized
Appreciation (Depreciation)
on Investments 8,001,385 11,102,698 (887,587) (3,235,236) -- --
------------ ------------ ------------ ------------ --------------- -------------
Net Increase (Decrease) in Net
Assets Resulting from
Operations 11,108,737 17,560,165 3,854,015 282,850 5,164,411 4,399,344
------------ ------------ ------------ ------------ --------------- -------------
CAPITAL TRANSACTIONS:
Contributions by Feeder Funds 85,979,851 169,163,603 77,834,976 163,559,170 1,498,172,479 398,826,561
Withdrawals by Feeder Funds (40,701,050) (38,155,462) (85,238,884) (47,117,698) (1,480,450,222) (261,147,912)
------------ ------------ ------------ ------------ --------------- -------------
Net Increase in Net Assets from
Capital Transactions 45,278,801 131,008,141 (7,403,908) 116,441,472 17,722,257 137,678,649
------------ ------------ ------------ ------------ --------------- -------------
Total Increase in Net
Assets 56,387,538 148,568,306 (3,549,893) 116,724,322 22,886,668 142,077,993
NET ASSETS:
Beginning of Period 212,018,533 63,450,227 176,099,488 59,375,166 191,083,790 49,005,797
------------ ------------ ------------ ------------ --------------- -------------
End of Period $268,406,071 $212,018,533 $172,549,595 $176,099,488 $ 213,970,458 $ 191,083,790
============ ============ ============ ============ =============== =============
See Notes to Financial Statements.
SUPPLEMENTAL DATA
--------------------------------------------------------------------------------
Ratio of Expenses to
Average Net Assets(4)
---------------------------
Net Assets at Portfolio Net Expenses Before Ratio of Net Investment
Period End of Period Turnover Operating Fees Paid Income (Loss) to
Ended (in 000's) Rate Expenses Indirectly** Average Net Assets(4)
-------- ------------- --------- --------- --------------- -----------------------
ASMT T. ROWE PRICE
INTERNATIONAL EQUITY PORTFOLIO:
- ------------------------------------
- ------------------------------------
04/30/00* $ 71,373 28% 1.28% 1.30% 0.02%
10/31/99 36,579 31% 1.57% 1.58% 0.20%
10/31/98 15,021 20% 2.60% 2.60% (0.67%)
10/31/97(1) 3,497 1% 6.26% 6.26% (3.78%)
ASMT JANUS
CAPITAL GROWTH PORTFOLIO:
- ------------------------------------
- ------------------------------------
04/30/00* $2,430,379 10% 1.05% 1.05% 0.10%
10/31/99 1,324,283 47% 1.08% 1.09% 0.12%
10/31/98 154,238 77% 1.27% 1.27% 0.17%
10/31/97(1) 7,983 83% 2.79% 2.79% 0.69%
ASMT INVESCO
EQUITY INCOME PORTFOLIO:
- ------------------------------------
- ------------------------------------
04/30/00* $ 268,406 35% 0.87% 0.92% 2.07%
10/31/99 212,019 66% 0.90% 0.93% 2.11%
10/31/98 63,450 70% 1.13% 1.13% 2.11%
10/31/97(2) 6,503 46% 2.66% 2.66% 2.39%
ASMT PIMCO
TOTAL RETURN BOND PORTFOLIO:
- ------------------------------------
- ------------------------------------
04/30/00* $ 172,550 101% 0.80% 0.80% 6.29%
10/31/99 176,099 145% 0.81% 0.81% 5.90%
10/31/98 59,375 418% 1.07% 1.07% 5.05%
10/31/97(2) 5,025 93% 2.22% 2.22% 3.51%
ASMT JPM
MONEY MARKET PORTFOLIO:
- ------------------------------------
- ------------------------------------
04/30/00* $ 213,970 N/A 0.58% 0.58% 4.86%
10/31/99 191,084 N/A 0.63% 0.63% 4.43%
10/31/98 49,006 N/A 0.72% 0.72% 4.69%
10/31/97(3) 1,995 N/A 3.91% 3.91% 1.00%
(1) Commenced operations on June 10, 1997.
(2) Commenced operations on June 18, 1997.
(3) Commenced operations on June 19, 1997.
(4) Annualized for periods less than one year.
* Unaudited.
** Includes commissions received by American Skandia Marketing, Incorporated
under the Trust's Distribution Plan as described in Note 3 to the Financial
Statements.
See Notes to Financial Statements.
AMERICAN SKANDIA MASTER TRUST
APRIL 30, 2000
(UNAUDITED)
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
American Skandia Master Trust (the "Trust") is an open-end management
investment company, registered under the Investment Company Act of 1940, as
amended. The Trust was organized on March 6, 1997 as a business trust under the
laws of the State of Delaware. The Trust operates as a series company and, at
April 30, 2000, consisted of five diversified portfolios: ASMT T. Rowe Price
International Equity Portfolio ("International Equity"), ASMT Janus Capital
Growth Portfolio ("Capital Growth"), ASMT INVESCO Equity Income Portfolio
("Equity Income"), ASMT PIMCO Total Return Bond Portfolio ("Total Return Bond"),
and ASMT JPM Money Market Portfolio ("Money Market") (each a "Portfolio" and
collectively the "Portfolios").
2. SIGNIFICANT ACCOUNTING POLICIES
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
The following is a summary of significant accounting policies followed by
the Trust, in conformity with generally accepted accounting principles, in the
preparation of its 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 -- Portfolio 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 last reported sales 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 of Money Market are valued at amortized cost, which approximates
market value. The amortized cost method values a security at its cost at the
time of purchase and thereafter assumes a constant amortization to maturity of
discount or premium. For Portfolios other than Money Market, debt securities
which mature in 60 days or less are valued at cost (or market value 60 days
prior to maturity), adjusted for amortization to maturity of any premium or
discount.
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 Trustees. As of April 30, 2000, there were no securities valued in accordance
with such procedures.
FOREIGN CURRENCY TRANSLATION -- Portfolio 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 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 Portfolio 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 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 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 bear 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.
SWAP AGREEMENTS -- A swap agreement is a two-party contract under which an
agreement is made to exchange returns from predetermined investments or
instruments, including a particular interest rate,
AMERICAN SKANDIA MASTER TRUST
foreign currency, or "basket" of securities representing a particular index. The
gross returns to be exchanged or "swapped" between the parties are calculated
based on a "notional amount", which, each business day, is valued to determine
each party's obligation under the contract. Fluctuations in value are recorded
as unrealized gains and losses during the term of the contract.
Commonly used swap agreements include interest rate caps, under which, in
return for a premium, one party agrees to make payments to the other to the
extent that interest rates exceed a specified rate or "cap"; interest rate
floors, under which, in return for a premium, one party agrees to make payments
to the other to the extent that interest rates fall below a specified level or
"floor"; and interest rate collars, under which a party sells a cap and
purchases a floor or vice versa.
Risks could arise from entering into swap agreements from the potential
inability of counterparties to meet the terms of their contracts, and from the
potential inability to enter into a closing transaction. It is possible that
developments in the swaps market, including potential governmental regulation,
could affect the Portfolio's ability to terminate existing swap agreements or to
realize amounts to be received under such agreements.
SECURITIES LOANS -- Each Portfolio 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
Portfolio may be delayed or prevented from recovering the collateral if the
borrower fails to return the securities.
At April 30, 2000, securities lending activities are summarized as follows:
MARKET
VALUE
OF SECURITIES MARKET VALUE INCOME FROM
ON LOAN OF COLLATERAL LENDING*
------------- ------------- -----------
Capital Growth $505,118,249 $501,213,967 $286,400
Equity Income 37,630,274 38,528,988 28,610
* Income earned for the period is included in interest income on the Statements
of Operations.
DEFERRED ORGANIZATION COSTS -- The Trust 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.
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 Trust's
sources. Interest income is recorded on the accrual basis and includes the
accretion of discount and amortization of premium.
3. AGREEMENTS AND OTHER TRANSACTIONS WITH AFFILIATES
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
ADVISORY FEES -- The Portfolios have entered into investment management
agreements with American Skandia Investment Services, Inc. ("Investment
Manager") which provide that the Investment Manager will furnish each Portfolio
with investment advice and investment management and administrative services.
The Investment Manager has engaged the following firms as Sub-advisors for their
respective Portfolios: Rowe Price-Fleming International, Inc., a United Kingdom
Corporation, for International Equity; Janus Capital Corporation for Capital
Growth; INVESCO Funds Group, Inc. for Equity Income; Pacific Investment
Management Co. for Total Return Bond; and J. P. Morgan Investment Management
Inc. for Money Market.
The Investment Manager receives a fee, computed daily and paid monthly,
based on an annual rate of 1.00%, 1.00%, .75%, .65%, and .50% of the average
daily net assets of the International Equity, Capital Growth, Equity Income,
Total Return Bond, and Money Market Portfolios, respectively.
On May 1, 2000, American Century Investment Management, Inc. will become
the Sub-advisor to International Equity and the name of the Portfolio will
change to ASMT American Century International Growth Portfolio ("International
Growth").
MANAGEMENT OF THE TRUST -- Certain officers and trustees of the Trust are
officers or directors of the Investment Manager. The Trust pays no compensation
directly to its officers or interested trustees.
DISTRIBUTOR -- The Trust has adopted a Distribution Plan (the "Plan") under Rule
12b-1 of the Investment Company Act of 1940. The Plan permits American Skandia
Marketing, Incorporated ("ASMI") to receive brokerage commissions in connection
with purchases and sales of securities by the Portfolios, and to use these
commissions to promote the sale of shares of the American Skandia Advisor Funds,
Inc. Under the Plan, securities transactions for a Portfolio may be directed to
certain brokers for execution ("clearing brokers") who have agreed to pay part
of the brokerage commissions received on these transactions to ASMI for
"introducing" transactions to the clearing broker. In turn, ASMI uses the
brokerage commissions received as an introducing broker to pay various
distribution-related expenses, such as advertising, printing of sales materials,
and payments to dealers.
Commissions received by ASMI under the Plan are reflected in the cost of
securities purchased and the proceeds from the sale of securities. These
commissions are shown in the Statements of Operations as "Distribution Fees" and
a corresponding reduction "Fees Paid Indirectly". Net expenses of the Portfolios
are unaffected by these commissions. From November 1, 1999 to April 30, 2000,
commissions received by ASMI totaled $100,254.
4. TAX MATTERS
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
The Portfolios will be treated as partnerships for federal income tax
purposes. Accordingly, each investor in the Portfolios will be allocated its
share of net investment income and realized and unrealized gains and losses from
investment transactions. It is intended that the Portfolios will be managed in
such a way that an investor will be able to satisfy the requirements of the
Internal Revenue Code applicable to regulated investment companies.
AMERICAN SKANDIA MASTER TRUST
5. PORTFOLIO SECURITIES
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Purchases and sales of securities, other than U.S. government securities
and short-term obligations, during the period ended April 30, 2000, were as
follows:
PURCHASES SALES
-------------- --------------
International Equity $ 40,545,116 $ 13,481,208
Capital Growth 1,020,704,951 168,617,432
Equity Income 113,458,061 78,238,837
Total Return Bond 133,058,620 111,068,568
Purchases and sales of U.S. government securities, during the period ended
April 30, 2000, were as follows:
PURCHASES SALES
-------------- --------------
Equity Income $ 6,611,526 $ 1,584,824
Total Return Bond 97,442,886 84,921,475
At April 30, 2000, the cost and unrealized appreciation or depreciation in
value of the investments owned by the Portfolios, for federal income tax
purposes, were as follows:
NET
GROSS GROSS UNREALIZED
AGGREGATE UNREALIZED UNREALIZED APPRECIATION
COST APPRECIATION DEPRECIATION (DEPRECIATION)
-------------- ------------ -------------- --------------
International Equity $ 57,022,683 $11,122,313 $ 2,124,590 $ 8,997,723
Capital Growth 1,936,850,904 658,146,613 120,224,738 537,921,875
Equity Income 250,275,210 32,421,319 10,894,240 21,527,079
Total Return Bond 211,986,390 1,046,636 4,840,148 (3,793,512)
Money Market 217,321,647 -- -- --
6. WRITTEN OPTIONS TRANSACTIONS
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Written options transactions, during the period ended April 30, 2000, were
as follows:
TOTAL RETURN BOND
--------------------------
NUMBER OF
CONTRACTS PREMIUM
--------- ---------
Balance at beginning of period 314 204,067
Written 638 246,558
Expired (613) (226,157)
Exercised -- --
Closed (73) (52,856)
---- ---------
Balance at end of period 266 171,612
==== =========
At April 30, 2000, Total Return Bond had sufficient cash and/or securities
at least equal to the value of written options.
7. LINE OF CREDIT
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
The Portfolios and other affiliated funds participate in a $100 million
unsecured, committed line of credit, provided by a syndication of banks, under a
line of credit agreement. Borrowings may be made for temporary or emergency
purposes, including the meeting of redemption requests that otherwise might
require the untimely disposition of securities. Any borrowings must be repaid
within 30 days of their receipt. Interest is charged to each Portfolio, based on
its borrowings, at a premium above the Federal Funds Rate. In addition, a
commitment fee, equal to an annual rate of .09% of the average daily unused
portion of the line of credit, is allocated among the participants at the end of
each quarter. During the period ended April 30, 2000, there were no borrowings
under the agreement.
Board of Directors
Gordon C. Boronow
Jan R. Carendi
David E. A. Carson
Julian A. Lerner
Thomas M. Mazzaferro
Thomas M. O'Brien
F. Don Schwartz
[STAR GRAPHIC]
Investment Manager
American Skandia Investment Services, Incorporated
Shelton, CT 06484
Distributor
American Skandia Marketing, Incorporated
Shelton, CT 06484
Transfer Agent
Boston Financial Data Services, Inc.
Quincy, MA 02171
Administrator
PFPC Inc.
Wilmington, DE 19809
Independent Accountants
PricewaterhouseCoopers LLP
Philadelphia, PA 19103
Custodian
FOR DOMESTIC SECURITIES OF FUNDS AND PORTFOLIOS INVESTING PRIMARILY IN DOMESTIC
SECURITIES:
PNC Bank
Philadelphia, PA 19113
CO-CUSTODIAN FOR FOREIGN SECURITIES OF FUNDS AND PORTFOLIOS INVESTING PRIMARILY
IN DOMESTIC SECURITIES AND CUSTODIAN FOR FUNDS AND PORTFOLIOS INVESTING
PRIMARILY IN FOREIGN SECURITIES:
The Chase Manhattan Bank
New York, NY 11201
Legal Counsel
Stradley, Ronon, Stevens & Young, LLP
Philadelphia, PA 19103
Shares of the American Skandia Advisor Funds are:
- - not deposits or obligations of, or guaranteed or endorsed by, any bank
institution;
- - not federally insured by the Federal Deposit Insurance Corporation (FDIC),
the Federal Reserve Board, or any other government agency;
- - subject to investment risk, including the possible loss of the principal
amount invested.
The report and the financial statements contained herein are submitted for the
general information of the shareholders of the Funds. This report is not
authorized for distribution to prospective investors in a Fund unless preceded
or accompanied by a current prospectus.
For more information, including a prospectus, contact American Skandia
Marketing, Incorporated.
One Corporate Drive
P.O. Box 883
Shelton, CT 06484
Telephone: 800-752-6342 (800-SKANDIA)
Website: www.americanskandia.com
AMERICAN SKANDIA ADVISOR FUNDS, INC.
SCHEDULES OF INVESTMENTS
OCTOBER 31, 1999
ASAF FOUNDERS INTERNATIONAL SMALL CAPITALIZATION FUND
ASAF JANUS SMALL-CAP GROWTH FUND
ASAF T. ROWE PRICE SMALL COMPANY VALUE FUND
ASAF AMERICAN CENTURY STRATEGIC BALANCED FUND
ASAF FEDERATED HIGH YIELD BOND FUND
ASAF OPPENHEIMER LARGE-CAP GROWTH FUND
ASAF LORD ABBETT GROWTH AND INCOME FUND
ASAF JANUS OVERSEAS GROWTH FUND
ASAF MARSICO CAPITAL GROWTH FUND
ASAF NEUBERGER BERMAN MID-CAP GROWTH FUND
ASAF NEUBERGER BERMAN MID-CAP VALUE FUND
ASAF FOUNDERS INTERNATIONAL
SMALL CAPITALIZATION FUND
---------------------------------------------------
SHARES VALUE
---------------------------------------------------
FOREIGN STOCK -- 88.0%
AUSTRALIA -- 5.7%
Challenger
International 58,825 $ 153,693
Chip Application* 49,900 47,380
Davnet Ltd.* 255,850 117,388
LibertyOne Ltd.* 62,625 77,420
Multiemedia.Com Ltd.* 265,875 67,771
Novogen Ltd.* 37,475 80,000
PowerLan Ltd.144A 21,375 49,989
Sausage Software Ltd.* 20,925 36,669
Solution 6 Holdings
Ltd.* 10,900 47,788
Solutions Ltd.* 74,075 109,041
Sonic Healthcare Ltd. 11,575 44,994
Westel Group Ltd.* 447,850 97,032
Wine Planet Holdings
Ltd.* 279,725 41,889
-----------
971,054
-----------
BELGIUM -- 0.3%
Creyf's SA* 1,975 49,508
-----------
CANADA -- 1.5%
Agnico Eagle Mines Ltd. 6,075 48,942
Eldorado Gold Corp.* 30,725 20,889
Genesis Microchip,
Inc.* 2,650 43,394
Goldcorp, Inc.* 7,475 48,278
Meridian Gold, Inc.* 6,450 46,701
Xenos Group, Inc.*144A 7,450 53,941
-----------
262,145
-----------
DENMARK -- 1.7%
Damgaard AS* 2,275 120,635
Vestas Wind Systems AS
144A* 1,275 166,767
-----------
287,402
-----------
EGYPT -- 0.4%
Commercial
International Bank
[GDR]*144A 6,250 74,636
-----------
FINLAND -- 1.9%
JOT Automation Group
Oyj 48,750 251,069
Perlos Oyj* 3,550 58,207
PMJ automec Oyj 1,350 8,386
-----------
317,662
-----------
FRANCE -- 5.8%
ALTEN 875 95,554
Cegid* 375 70,355
Colas SA* 675 139,551
Consodata SA* 7,075 133,851
FI System 875 87,368
Genesys* 1,175 22,983
Infogrames
Entertainment SA* 850 78,708
IPSOS* 1,725 87,661
Mecatherm SA 1,625 61,486
Neopost SA* 3,375 116,706
NRJ SA* 275 85,555
-----------
979,778
-----------
---------------------------------------------------
SHARES VALUE
---------------------------------------------------
GERMANY -- 8.2%
Brokat Infosystems AG* 950 $ 113,329
Ce Consumer Electronic
AG 1,850 166,250
Fantastic Corp.* 1,225 84,977
GFK AG*144A 11,225 316,186
Intershop
Communications AG* 2,175 268,609
Kabel New Media* 5,325 74,438
Kamps AG* 1,975 108,981
Telegate AG* 3,500 119,557
Zapf Creation AG* 3,975 136,827
-----------
1,389,154
-----------
GREECE -- 0.5%
Ideal Group SA* 1,950 80,156
Intralot SA* 350 8,922
-----------
89,078
-----------
HONG KONG -- 2.7%
APT Satellite Holdings 5,500 2,832
ASM Pacific Technology
Ltd. 28,000 32,975
Automated Systems
Holdings Ltd. 348,000 179,162
Celestial Asia
Securities Holdings
Ltd.* 860,000 85,230
China Everbright Ltd.
Warrants 410,000 65,963
China Pharmaceutical,
Inc. 80,000 14,621
Computer & Technologies
Holdings Ltd.* 206,000 53,028
JCG Holdings Ltd. 56,000 30,453
-----------
464,264
-----------
INDONESIA -- 0.1%
PT Kalbe Farma* 116,000 14,447
-----------
IRELAND -- 1.6%
Grafton Group PLC 1,975 43,592
Iaws Group PLC 9,575 47,300
ITG Group PLC* 8,650 58,641
Jurys Doyle Hotel Group
PLC 4,775 41,154
Kingspan Group PLC* 16,000 40,024
Waterford Wedgwood PLC 42,900 45,541
-----------
276,252
-----------
ISRAEL -- 0.8%
BATM Advanced
Communications Ltd. 2,750 143,159
-----------
AMERICAN SKANDIA ADVISOR FUNDS, INC.
---------------------------------------------------
SHARES VALUE
---------------------------------------------------
ITALY -- 3.2%
Buffetti SPA 10,025 $ 83,135
ERG SPA 29,100 92,674
Gruppo Coin SPA* 18,200 179,814
Tiscali SPA*144A 1,400 96,249
Trenno (Societa) SPA* 12,675 93,654
-----------
545,526
-----------
JAPAN -- 24.2%
Able, Inc.* 2,000 183,978
Acces Co. Ltd.* 1 147,566
Alpha Systems, Inc. 2,000 277,883
Arcland Sakamoto Co.
Ltd.* 5,000 83,844
Arrk Corp.* 3,000 106,363
Avex, Inc.* 800 168,647
Cecile Co. Ltd. 1,200 58,873
Chiyoda Integre Co.
Ltd.* 7,000 114,699
Cresco Ltd.* 1,500 127,923
Daisyo Corp.* 4,000 54,235
Fuso Lexel, Inc.* 7,000 146,895
H.I.S. Co. Ltd. 4,160 165,427
Happinet Corp.* 900 51,744
Ichiyoshi Securities
Co. Ltd.* 6,000 37,486
Japan Lifeline Co.
Ltd.* 1,000 22,039
Kappa Create Co. Ltd.* 4,000 126,485
Koei Co. Ltd.* 2,400 92,679
Komatsu Electronic
Metals Co. Ltd.* 3,800 39,325
Kuroda Electric Co.
Ltd.* 200 11,460
Matsuya Foods Co. Ltd* 2,000 137,601
Medical Support Co.
Ltd.* 1,000 46,857
Megane Top Co. Ltd.* 4,000 176,313
Meiki Co. Ltd.* 6,000 139,996
Mimasu Semiconductor
Industry Co. Ltd.* 3,700 77,113
Musashi Seimitsu
Industry Co.* 3,000 43,120
New Japan Radio Co.
Ltd.* 1,000 8,528
NIDEC Copal Electronics
Corp.* 8,000 125,719
Nishimatsuya Chain Co.
Ltd.* 3,000 143,733
Nitori Co.* 1,000 41,204
Okamura Corp. 26,000 97,164
Paltek Corp.* 2,000 99,655
PCA Corp.* 1,418 65,900
Q'Sai Co. Ltd.* 1,000 68,896
Star Micronics Co.
Ltd.* 5,000 69,950
Stella Chemifa Corp.* 2,000 121,694
Tanseisha Co. Ltd.* 7,500 50,307
Toyo Corp.* 3,000 81,928
Uchida Yoko Co. Ltd.* 27,000 250,958
Yokowo Co. Ltd.* 13,000 222,355
-----------
4,086,542
-----------
NETHERLANDS -- 0.2%
Detron Group NV* 2,200 27,748
-----------
---------------------------------------------------
SHARES VALUE
---------------------------------------------------
NORWAY -- 0.4%
Norman ASA* 15,950 $ 75,230
-----------
PORTUGAL -- 0.6%
ParaRede SGPS SA* 9,275 97,485
-----------
SINGAPORE -- 0.7%
Elec & Eltek
International Co.
Ltd. 23,000 78,200
Informatics Holdings
Ltd.* 48,000 23,368
NatSteel Broadway Ltd. 13,000 23,140
-----------
124,708
-----------
SOUTH AFRICA -- 0.8%
Edgars Consolidated
Stores Ltd. 4,700 45,891
JD Group Ltd. 6,300 40,394
Specialised Outsourcing
Ltd. 11,400 56,396
-----------
142,681
-----------
SPAIN -- 0.2%
Transportes Azkar SA 3,250 28,420
-----------
SWEDEN -- 5.4%
A-Com AB*144A 9,800 113,010
Allgon AB Cl-B 13,350 179,876
Connecta AB*144A 2,150 31,317
Enlight Interactive AB
Cl-B* 725 8,360
HiQ International AB* 3,675 104,832
Information Highway AB 3,700 121,713
JM Byggnads och
Fastighets AB 2,050 38,570
Technology Nexus AB* 2,975 25,098
Telelogic AB* 7,550 123,722
Teligent AB* 16,950 163,570
-----------
910,068
-----------
SWITZERLAND -- 5.5%
Edipresse SA 240 98,757
Esec Holdings AG 60 90,567
Gretag Imaging Group 700 88,663
Kaba Holding AG Cl-B* 230 169,058
Kudelski SA* 15 62,412
Micronas Semiconductor
Holding AG 900 172,471
Selecta Group 75 26,530
Straumann AG 365 161,691
Swisslog Holding AG 400 62,937
-----------
933,086
-----------
UNITED KINGDOM -- 15.6%
Autonomy Corp. PLC* 8,050 174,283
Baltimore Technologies
PLC* 4,050 124,606
Bloomsbury Publishing
PLC* 8,350 69,535
ASAF FOUNDERS INTERNATIONAL
SMALL CAPITALIZATION FUND
---------------------------------------------------
SHARES VALUE
---------------------------------------------------
Capital Radio PLC 4,850 $ 79,504
Dialog Semiconductor
PLC* 144A 10,450 269,094
Eidos PLC [ADR]* 3,125 218,164
Electronics Boutique
PLC* 42,775 68,084
F.I. Group PLC 6,050 51,722
Guardian IT PLC 11,275 123,033
Incepta Group PLC 31,300 32,614
Independent Energy
Holdings PLC [ADR]* 6,800 184,025
Kewill Systems PLC 13,350 147,866
Matalan PLC 7,775 173,509
Pace Micro Tech PLC 11,700 52,460
Psion PLC 5,625 141,220
Redstone Telecom PLC 6,800 21,926
RM PLC 7,325 75,123
Select Appointments
Holdings PLC* 12,500 214,548
Trafficmaster PLC* 5,450 44,715
VideoLogic Group PLC* 19,400 54,117
Wetherspoon, (J.D.) PLC 13,150 73,257
Whatman PLC 7,025 126,801
Xaar PLC* 44,325 99,281
-----------
2,619,487
-----------
TOTAL FOREIGN STOCK
(Cost $13,870,125) 14,909,520
-----------
U.S. STOCK -- 1.9%
COMPUTER SERVICES & SOFTWARE -- 1.1%
4front Technologies,
Inc.* 7,550 102,868
BackWeb Technologies
Ltd.* 4,425 93,202
-----------
196,070
-----------
TELECOMMUNICATIONS --0.8%
AudioCodes Ltd.* 2,150 130,075
-----------
TOTAL U.S. STOCK
(Cost $349,603) 326,145
-----------
---------------------------------------------------
PAR
(000) VALUE
---------------------------------------------------
U.S. GOVERNMENT AGENCY OBLIGATIONS -- 11.5%
Federal Mortgage Corp.
5.16%, 11/01/99
(Cost $1,951,000) $ 1,951 $ 1,951,000
-----------
TOTAL INVESTMENTS -- 101.4%
(Cost $16,170,728) 17,186,665
LIABILITIES IN EXCESS OF OTHER
ASSETS -- (1.4%) (245,076)
-----------
NET ASSETS -- 100.0% $16,941,589
===========
Foreign currency exchange contracts outstanding at October 31, 1999:
UNREALIZED
SETTLEMENT CONTRACTS TO IN EXCHANGE CONTRACTS APPRECIATION
MONTH TYPE RECEIVE FOR AT VALUE (DEPRECIATION)
-------------------------------------------------------------------------------
11/99 Buy AUD 67,331 $ 43,442 $ 42,922 $ (520)
11/99 Buy EUR 226,103 239,433 237,779 (1,654)
11/99 Buy GBP 136,851 226,657 224,616 (2,041)
11/99 Buy HKD 188,432 24,252 24,251 (1)
11/99 Buy JPY 36,104,931 346,034 346,183 149
11/99 Buy SEK 1,267,707 154,679 153,938 (741)
---------- ---------- -------
$1,034,497 $1,029,689 $(4,808)
========== ========== =======
UNREALIZED
SETTLEMENT CONTRACTS TO IN EXCHANGE CONTRACTS APPRECIATION
MONTH TYPE DELIVER FOR AT VALUE (DEPRECIATION)
-------------------------------------------------------------------------------
11/99 Sell CHF 120,198 $ 78,974 $ 78,929 $ 45
11/99 Sell EUR 26,511 27,920 27,893 27
11/99 Sell GBP 36,507 8,444 8,387 57
11/99 Sell JPY 27,656,392 263,007 265,209 (2,202)
11/99 Sell SGD 8,130 4,868 4,890 (22)
-------- -------- -------
$383,213 $385,308 $(2,095)
======== ======== =======
AMERICAN SKANDIA ADVISOR FUNDS, INC.
The following is a breakdown of the foreign stock portion of the Fund, by
industry classification, as of October 31, 1999. Percentages are based on net
assets.
INDUSTRY
--------
Automotive Parts 0.3%
Beverages 0.2%
Broadcasting 1.0%
Building Materials 0.5%
Business Services 5.0%
Chemicals 0.7%
Clothing & Apparel 1.1%
Computer Hardware 1.9%
Computer Services & Software 22.6%
Conglomerates 0.5%
Construction 1.3%
Electronic Components & Equipment 9.7%
Entertainment & Leisure 2.7%
Financial -- Bank & Trust 0.4%
Financial Services 2.1%
Food 3.0%
Hotels & Motels 0.2%
Machinery & Equipment 4.1%
Medical Supplies & Equipment 1.9%
Metals & Mining 1.0%
Office Equipment 2.1%
Oil & Gas 0.5%
Pharmaceuticals 0.9%
Printing & Publishing 1.6%
Real Estate 2.0%
Retail & Merchandising 6.4%
Semiconductors 5.5%
Telecommunications 5.6%
Transportation 1.1%
Utilities 2.1%
-----
TOTAL 88.0%
=====
-------------------------------------------------------
Unless otherwise noted, all stocks are common stock.
Definitions of abbreviations are included following the Schedules of
Investments.
* Non-income producing security.
144A -- Security was purchased pursuant to Rule 144A under the Securities Act of
1933 and may not be resold subject to that rule except to qualified
institutional buyers. At the end of the year, these securities amounted
to 6.8% of net assets.
See Notes to Financial Statements.
ASAF JANUS SMALL-CAP
GROWTH FUND
---------------------------------------------------
SHARES VALUE
---------------------------------------------------
COMMON STOCK -- 84.4%
ADVERTISING -- 4.0%
DoubleClick, Inc.* 17,605 $ 2,464,700
Lamar Advertising Co.* 72,875 3,935,250
TMP Worldwide, Inc.* 36,200 2,260,238
------------
8,660,188
------------
BROADCASTING -- 7.5%
Acme Communications,
Inc.* 39,420 1,419,120
ACTV, Inc.* 68,435 1,082,129
Citadel Communications
Corp.* 72,805 3,517,392
Cox Radio, Inc. Cl-A* 30,970 2,167,900
Cumulus Media, Inc.
Cl-A* 58,255 2,089,898
Entercom
Communications
Corp.* 27,460 1,367,851
Radio One, Inc.* 31,350 1,563,581
Radio Unica Corp.* 48,550 1,389,744
TIVO, Inc.* 25,185 1,079,807
Wink Communications,
Inc.* 12,570 441,521
------------
16,118,943
------------
BUSINESS
SERVICES -- 10.4%
Adelphia Business
Solutions, Inc.* 69,905 1,983,554
Appnet Systems, Inc.* 45,815 1,995,816
Brightpoint, Inc.* 61,605 483,214
CIBER, Inc.* 32,325 527,302
F5 Networks, Inc.* 9,270 1,286,213
Foundry Networks,
Inc.* 6,245 1,183,428
Informatica Corp.* 31,765 2,295,021
Insweb Corp.* 24,745 445,410
Internet Capital
Group, Inc. Rights* 827 96,242
Interwoven, Inc.* 13,220 1,036,118
Jupiter
Communications,
Inc.* 10,155 349,078
Liberate Technologies,
Inc.* 59,060 4,023,463
Pegasus Systems, Inc.* 27,115 1,159,166
Phone.com, Inc.* 23,000 4,726,499
Tanning Technology
Corp.* 27,250 957,156
------------
22,547,680
------------
CAPITAL GOODS -- 0.3%
Mettler-Toledo
International, Inc.* 22,510 671,079
------------
COMPUTER HARDWARE -- 1.0%
Insight Enterprises,
Inc.* 48,267 1,803,979
Paradyne Networks,
Inc.* 12,215 371,031
------------
2,175,010
------------
COMPUTER SERVICES & SOFTWARE -- 21.9%
Active Software, Inc.* 7,390 267,426
Bluestone Software,
Inc.* 9,180 338,513
---------------------------------------------------
SHARES VALUE
---------------------------------------------------
Breakaway Solutions,
Inc.* 6,375 $ 339,070
Brio Technology, Inc.* 33,710 817,468
Broadbase Software,
Inc.* 20,900 950,950
BSQUARE Corp.* 19,255 761,776
Calico Commerce, Inc.* 14,185 883,016
Commerce One, Inc.* 30,715 5,259,943
Concentric Network
Corp.* 89,640 2,297,025
Cysive, Inc.* 6,850 394,303
E.piphany, Inc.* 6,010 516,860
ECsoft Group PLC
[ADR]* 5,065 68,378
Emulex Corp.* 10,615 1,655,277
Exodus Communications,
Inc.* 53,000 4,557,999
Globix Corp.* 53,825 1,937,700
internet.com LLC* 12,690 253,800
Interspeed, Inc.* 13,630 150,782
Intertrust
Technologies Corp.* 39,345 2,144,303
Jacada, Ltd.* 15,355 222,648
JNI Corp.* 5,025 268,523
Kana Communications,
Inc.* 7,280 612,430
Keynote Systems, Inc.* 6,735 305,601
Launch Media, Inc.* 8,120 88,305
Marimba, Inc.* 20,455 582,968
NaviSite, Inc.* 34,040 1,599,880
Netcentives, Inc.* 28,370 475,198
Netiq Corp.* 4,530 206,964
Portal Software, Inc.* 21,585 1,411,119
Quest Software, Inc.* 4,915 362,481
Radware Ltd.* 7,175 369,064
Razorfish, Inc.* 48,730 3,593,837
Scient Corp.* 16,155 2,001,201
Silverstream Software,
Inc.* 15,255 795,167
Software.com, Inc.* 25,500 1,716,469
Verio, Inc.* 117,765 4,394,106
VerticalNet, Inc. 76,500 4,283,999
Vitria Technology,
Inc.* 5,970 393,647
Vixel Corp.* 2,655 84,960
------------
47,363,156
------------
CONSUMER PRODUCTS & SERVICES -- 1.1%
Action Performance
Companies, Inc.* 30,070 611,737
Bally Total Fitness
Holdings Corp.* 22,815 548,986
Critical Path, Inc.* 15,415 705,236
Martha Stewart Living
Omnimedia, Inc.* 11,105 409,497
------------
2,275,456
------------
ELECTRONIC COMPONENTS & EQUIPMENT -- 5.9%
Applied Micro Circuits
Corp.* 27,050 2,104,828
Dionex Corp.* 36,070 1,602,861
AMERICAN SKANDIA ADVISOR FUNDS, INC.
---------------------------------------------------
SHARES VALUE
---------------------------------------------------
Galileo Technology Ltd.* 63,020 $ 1,441,583
Pittway Corp. Cl-A 36,570 1,206,810
RF Micro Devices,
Inc.* 83,275 4,299,071
Sawtek, Inc.* 48,135 1,973,535
------------
12,628,688
------------
ENTERTAINMENT & LEISURE -- 3.6%
Ackerley Group, Inc. 8,355 139,424
Championship Auto
Racing Teams, Inc.* 52,125 1,195,617
Playboy Enterprises,
Inc. Cl-B* 40,705 1,043,066
Premier Parks, Inc.* 73,220 2,118,804
SFX Entertainment,
Inc. Cl-A* 87,190 3,046,200
World Wrestling
Federation
Entertainment, Inc.* 12,140 292,878
------------
7,835,989
------------
FINANCIAL -- BANK & TRUST -- 0.2%
Digital Insight Corp.* 6,340 251,222
Doral Financial Corp. 17,080 218,838
------------
470,060
------------
FINANCIAL
SERVICES -- 0.8%
Investors Financial
Service Corp. 45,125 1,669,625
------------
FOOD -- 0.6%
Whole Foods Market,
Inc.* 37,245 1,266,330
------------
HEALTHCARE
SERVICES -- 1.4%
Accredo Health, Inc.* 37,245 1,229,085
Apria Healthcare
Group, Inc.* 92,750 1,466,609
InfoCure Corp.* 17,180 270,585
------------
2,966,279
------------
INSURANCE -- 0.6%
Blanch, (E.W.)
Holdings, Inc. 15,715 1,017,546
StanCorp Financial
Group, Inc. 11,330 287,499
------------
1,305,045
------------
MEDICAL SUPPLIES & EQUIPMENT -- 1.0%
Celera Genomics Group* 9,300 363,863
Invitrogen Corp.* 57,030 1,425,750
ViroPharma, Inc.* 13,615 284,213
------------
2,073,826
------------
PERSONAL SERVICES --0.2%
Career Education
Corp.* 14,230 313,060
Corinthian Colleges,
Inc.* 3,415 66,593
------------
379,653
------------
---------------------------------------------------
SHARES VALUE
---------------------------------------------------
PHARMACEUTICALS -- 6.4%
Abgenix, Inc.* 3,100 $ 137,563
ChiRex, Inc.* 45,755 1,292,579
Enzon, Inc.* 193,475 5,671,235
MedImmune, Inc.* 13,340 1,494,080
Priority Healthcare
Corp. Cl-B* 27,855 558,841
Professional
Detailing, Inc.* 25,740 643,500
QLT PhotoTherapeutics,
Inc.* 94,800 4,017,150
------------
13,814,948
------------
PRINTING & PUBLISHING -- 1.5%
Valassis
Communications,
Inc.* 73,055 3,141,365
------------
RETAIL & MERCHANDISING -- 2.7%
Ames Department
Stores, Inc.* 67,575 2,141,282
Beyond.com Corp.* 59,510 550,468
Liquid Audio, Inc.* 995 35,074
pcOrder.com, Inc.* 16,725 827,888
Rent-Way, Inc.* 35,530 590,686
REX Stores Corp.* 4,615 132,104
School Specialty,
Inc.* 98,890 1,464,808
------------
5,742,310
------------
SEMICONDUCTORS -- 7.0%
Alpha Industries,
Inc.* 64,197 3,546,884
ATMI, Inc.* 68,555 1,846,700
Kopin Corp.* 6,810 286,020
NVIDIA Corp.* 19,600 433,650
Quicklogic Corp.* 20,470 376,136
SDL, Inc.* 56,635 6,983,804
Silicon Image, Inc.* 9,855 435,468
TriQuint
Semiconductor, Inc.* 13,355 1,068,400
------------
14,977,062
------------
TELECOMMUNICATIONS -- 5.5%
Allied Riser
Communications
Corp.* 88,300 1,594,919
Caprock Communications
Corp.* 17,845 514,159
Ditech Communications
Corp.* 12,065 1,060,212
Efficient Networks,
Inc.* 4,410 187,425
MCK Communications,
Inc.* 4,990 112,275
Spanish Broadcasting
Systems, Inc.* 100,900 2,686,462
Splitrock Services,
Inc.* 49,145 1,075,047
Terayon Communication
Systems, Inc.* 31,250 1,367,188
ASAF JANUS SMALL-CAP
GROWTH FUND
---------------------------------------------------
SHARES VALUE
---------------------------------------------------
Viatel, Inc.* 62,425 $ 2,083,434
WinStar
Communications,
Inc.* 31,485 1,222,012
------------
11,903,133
------------
UTILITIES -- 0.8%
Avista Corp. 90,785 1,634,130
------------
TOTAL COMMON STOCK
(Cost $135,334,600) 181,619,955
------------
FOREIGN STOCK -- 1.4%
AUTOMOBILE MANUFACTURERS -- 0.0%
Ducati Motor Holding
SPA -- (ITL)* 17,757 50,522
------------
ENTERTAINMENT & LEISURE -- 0.3%
Corporacion
Interamericana de
Entretenimento --
(MXP)* 268,100 723,653
------------
TELECOMMUNICATIONS -- 1.1%
Cogeco Cable, Inc. --
(CAD)* 65,217 964,355
Moffat Communications
Ltd. -- (CAD)* 82,353 1,203,745
------------
2,168,100
------------
TOTAL FOREIGN STOCK
(Cost $2,911,274) 2,942,275
------------
---------------------------------------------------
PAR
(000) VALUE
---------------------------------------------------
U.S. GOVERNMENT AGENCY OBLIGATIONS -- 9.5%
Federal Home Loan
Mortgage Corp.
5.16%, 11/01/99-
12/09/99
(Cost $20,345,533) $20,400 $ 20,342,984
------------
COMMERCIAL PAPER -- 4.6%
Prudential Funding
Corp.
5.20%, 11/01/99
(Cost $10,000,000) 10,000 10,000,000
------------
SHARES
------
SHORT-TERM INVESTMENTS -- 0.2%
Temporary Investment
Cash Fund 210,389 210,389
Temporary Investment
Fund
210,389 210,389
------------
(Cost $420,778) 420,778
------------
TOTAL INVESTMENTS -- 100.1%
(Cost $169,012,185) 215,325,992
LIABILITIES IN EXCESS OF OTHER
ASSETS -- (0.1%) (113,908)
------------
NET ASSETS -- 100.0% $215,212,084
============
-------------------------------------------------------
Unless otherwise noted, all stocks are common stock.
Definitions of abbreviations are included following the Schedules of
Investments.
* Non-income producing security.
See Notes to Financial Statements.
AMERICAN SKANDIA ADVISOR FUNDS, INC.
ASAF T. ROWE PRICE
SMALL COMPANY VALUE FUND
---------------------------------------------------
SHARES VALUE
---------------------------------------------------
COMMON STOCK -- 94.3%
AIRLINES -- 1.6%
Midwest Express
Holdings, Inc.* 33,200 $ 973,175
-----------
AUTOMOTIVE PARTS -- 1.7%
Myers Industries, Inc. 29,410 413,578
OEA, Inc. 55,600 382,250
TBC Corp.* 41,600 284,700
-----------
1,080,528
-----------
BUILDING MATERIALS -- 9.9%
Cameron Ashley Building
Products, Inc.* 50,600 436,425
Giant Cement Holding,
Inc.* 16,500 315,563
Gibraltar Steel Corp. 26,600 650,038
Lone Star Technologies,
Inc.* 35,600 745,374
Modine Manufacturing
Co. 23,500 584,563
Republic Group, Inc. 44,500 767,624
Skyline Corp. 26,600 661,675
Synthetic Industries,
Inc.* 35,300 997,224
Thomas Industries, Inc. 28,700 513,013
U.S. Aggregates, Inc.* 35,300 421,394
-----------
6,092,893
-----------
BUSINESS SERVICES -- 1.1%
IT Group, Inc.* 70,300 694,213
-----------
CHEMICALS -- 2.2%
Arch Chemicals, Inc. 33,200 489,700
Schulman, (A.), Inc. 25,900 403,069
TETRA Technologies,
Inc.* 55,300 459,681
-----------
1,352,450
-----------
CLOTHING & APPAREL -- 1.1%
Dan River, Inc. Cl-A* 55,500 294,844
Unifi, Inc.* 30,600 367,200
-----------
662,044
-----------
COMPUTER HARDWARE -- 0.8%
Analogic Corp. 17,700 464,625
-----------
COMPUTER SERVICES & SOFTWARE -- 3.4%
Analysts International
Corp. 41,200 481,525
CompuCom Systems, Inc.* 70,600 227,244
Progress Software* 22,100 740,350
SPSS, Inc.* 37,700 669,175
-----------
2,118,294
-----------
CONSUMER PRODUCTS & SERVICES -- 0.7%
Culp, Inc. 31,100 215,756
Packaged Ice, Inc.* 58,900 198,788
-----------
414,544
-----------
---------------------------------------------------
SHARES VALUE
---------------------------------------------------
CONTAINERS & PACKAGING -- 4.6%
Aptargroup, Inc. 35,300 $ 948,688
Ivex Packaging Corp.* 49,500 467,156
Liqui-Box Corp. 15,500 852,500
Shorewood Packaging
Corp.* 44,700 567,131
-----------
2,835,475
-----------
ELECTRONIC COMPONENTS & EQUIPMENT -- 8.8%
Electro Rental Corp.* 66,600 799,200
FLIR Systems, Inc.* 30,600 434,138
Franklin Electric Co.,
Inc. 9,000 649,125
Landauer, Inc. 14,800 379,250
Littelfuse, Inc.* 49,900 1,110,274
Methode Electronics,
Inc. Cl-A 61,900 990,399
Nichols Research Corp.* 23,400 668,363
Pioneer-Standard
Electronics, Inc. 28,700 374,894
-----------
5,405,643
-----------
ENVIRONMENTAL SERVICES -- 0.9%
Newpark Resources,
Inc.* 75,300 484,744
Waterlink, Inc.* 17,900 58,175
-----------
542,919
-----------
EQUIPMENT SERVICES -- 1.4%
Cort Business Services
Corp.* 33,000 670,313
Unifirst Corp. 14,600 178,850
-----------
849,163
-----------
FINANCIAL -- BANK & TRUST -- 5.1%
Community First
Bankshares, Inc. 44,700 850,697
First Republic Bank* 33,400 835,000
Silicon Valley
Bancshares* 45,000 1,468,124
-----------
3,153,821
-----------
FINANCIAL SERVICES -- 5.2%
Allied Capital Corp. 55,600 1,115,474
American Capital
Strategies Ltd. 23,500 492,031
First Financial Fund,
Inc.** 66,600 566,100
Medallion Financial
Corp. 16,500 337,219
Triad Guaranty, Inc.* 34,400 707,350
-----------
3,218,174
-----------
FOOD -- 0.8%
International
Multifoods Corp. 23,600 498,550
-----------
FURNITURE -- 0.6%
Stanley Furniture Co.,
Inc.* 17,600 358,600
-----------
INSURANCE -- 5.3%
Brown & Brown, Inc. 35,500 1,198,124
Markel Corp.* 4,100 709,044
ASAF T. ROWE PRICE
SMALL COMPANY VALUE FUND
---------------------------------------------------
SHARES VALUE
---------------------------------------------------
Medical Assurance, Inc.* 33,400 $ 780,724
Presidential Life Corp. 23,500 431,813
PXRE Corp. 15,300 187,425
-----------
3,307,130
-----------
LUMBER & WOOD PRODUCTS -- 0.6%
Deltic Timber Corp. 17,700 397,144
-----------
MACHINERY & EQUIPMENT -- 3.7%
Alamo Group, Inc. 10,100 83,325
Carbo Ceramics, Inc. 21,200 551,200
Smith, (A.O.) Corp. 31,100 754,175
TransTechnology Corp. 31,100 299,338
Woodward Governor Co. 23,500 622,750
-----------
2,310,788
-----------
MEDICAL SUPPLIES & EQUIPMENT -- 2.0%
Lunar Corp.* 14,400 100,800
Ocular Sciences, Inc.* 22,400 411,600
Owens & Minor, Inc. 77,700 728,438
-----------
1,240,838
-----------
METALS & MINING -- 2.4%
Homestake Mining Co. 29,900 250,413
Layne Christensen Co.* 26,600 217,788
Material Sciences
Corp.* 37,900 471,381
Penn Virginia Corp. 28,700 561,443
-----------
1,501,025
-----------
OFFICE EQUIPMENT -- 4.1%
Aaron Rents, Inc. Cl-A 15,000 231,563
Aaron Rents, Inc. Cl-B 28,200 445,913
CompX International,
Inc.* 37,000 684,500
IDEX Corp. 31,100 765,837
McGrath Rentcorp 23,000 391,000
-----------
2,518,813
-----------
OIL & GAS -- 3.6%
Chieftan International,
Inc.* 44,700 854,888
Cross Timbers Oil Co. 55,600 618,550
Devon Energy Corp. 20,000 777,500
-----------
2,250,938
-----------
PAPER & FOREST PRODUCTS -- 1.3%
CSS Industries, Inc.* 11,800 263,288
Wausau-Mosinee Paper
Corp. 40,780 514,847
-----------
778,135
-----------
PERSONAL SERVICES -- 1.5%
Matthews International
Corp. Cl-A 37,900 952,238
-----------
PHARMACEUTICALS -- 0.5%
Coulter Pharmaceutical,
Inc.* 18,400 312,800
-----------
---------------------------------------------------
SHARES VALUE
---------------------------------------------------
REAL ESTATE -- 4.8%
Glenborough Realty
Trust, Inc. [REIT] 55,600 $ 726,274
Innkeepers USA Trust
[REIT] 49,900 430,388
National Health
Investors, Inc.
[REIT] 5,100 77,138
Pacific Gulf
Properties, Inc.
[REIT] 33,400 676,350
Parkway Co. [REIT] 11,800 361,375
Sun Communities, Inc.
[REIT] 22,100 704,437
-----------
2,975,962
-----------
RESTAURANTS -- 4.1%
Consolidated Products,
Inc.* 44,699 514,039
RARE Hospitality
International, Inc.* 37,700 751,644
Ruby Tuesday, Inc. 67,000 1,277,187
-----------
2,542,870
-----------
RETAIL & MERCHANDISING -- 4.9%
Bon-Ton Stores, Inc.* 37,700 174,363
Casey's General Stores,
Inc. 55,300 711,987
Fred's, Inc. 28,700 344,400
Goody's Family
Clothing* 58,800 595,350
Hancock Fabrics, Inc. 44,700 184,388
Jo-Ann Stores, Inc.
Cl-B* 28,700 364,131
Stein Mart, Inc.* 100,000 662,499
-----------
3,037,118
-----------
TRANSPORTATION -- 2.0%
Hub Group, Inc. Cl-A* 21,600 410,400
Landstar System, Inc.* 20,000 810,000
-----------
1,220,400
-----------
UTILITIES -- 3.6%
Black Hills Corp. 35,300 794,250
Cleco Corp. 23,500 778,438
United Water Resources,
Inc. 20,000 675,000
-----------
2,247,688
-----------
TOTAL COMMON STOCK
(Cost $65,228,056) 58,308,998
-----------
PREFERRED STOCK -- 0.3%
Cross Timbers Oil Co.
$1.5625 Cl-A [CVT]
(Cost $251,075) 7,400 209,050
-----------
AMERICAN SKANDIA ADVISOR FUNDS, INC.
---------------------------------------------------
PAR)
(000 VALUE
---------------------------------------------------
COMMERCIAL PAPER -- 5.6%
Motorola, Inc.
5.30%, 12/23/99 $1,000 $ 992,344
PPG Industries, Inc.
5.30%, 11/05/99 1,000 999,411
Wal-Mart Stores, Inc.
5.28%, 12/02/99+ 1,500 1,493,181
-----------
(Cost $3,484,936) 3,484,936
-----------
---------------------------------------------------
SHARES VALUE
---------------------------------------------------
SHORT-TERM INVESTMENTS -- 2.0%
Temporary Investment
Cash Fund
(Cost $1,237,206) 1,237,206 $ 1,237,206
-----------
TOTAL INVESTMENTS -- 102.2%
(Cost $70,201,273) 63,240,190
LIABILITIES IN EXCESS OF
OTHER ASSETS -- (2.2%) (1,358,557)
-----------
NET ASSETS -- 100.0% $61,881,633
===========
-------------------------------------------------------
Definitions of abbreviations are included following the Schedules of
Investments.
* Non-income producing security.
** Closed-end fund.
+ Security is restricted to resale and may not be resold except to qualified
institutional buyers. At the end of the year, this security amounted to 2.4%
of net assets.
See Notes to Financial Statements.
27
31
ASAF AMERICAN CENTURY
STRATEGIC BALANCED FUND
-----------------------------------------------------
SHARES VALUE
-----------------------------------------------------
COMMON STOCK -- 55.5%
AEROSPACE -- 0.3%
General Dynamics
Corp. 4,300 $ 238,381
United Technologies
Corp. 3,100 187,550
------------
425,931
------------
AIRLINES -- 0.1%
AMR Corp.* 1,900 120,650
Delta Air Lines, Inc. 600 32,663
------------
153,313
------------
AUTOMOBILE MANUFACTURERS -- 0.8%
Ford Motor Co. 13,400 735,325
General Motors Corp. 4,300 302,075
------------
1,037,400
------------
AUTOMOTIVE PARTS -- 0.0%
Delphi Automotive
Systems Corp. 2,200 36,163
------------
BEVERAGES -- 0.2%
Anheuser-Busch
Companies, Inc. 2,500 179,531
Coors, (Adolph) Co.
Cl-B 2,600 144,300
------------
323,831
------------
BROADCASTING -- 0.6%
CBS Corp.* 15,900 776,119
------------
BUILDING MATERIALS -- 0.1%
Centex Construction
Products, Inc. 2,700 96,019
------------
BUSINESS SERVICES -- 0.2%
American Management
Systems, Inc.* 500 12,938
Navigant Consulting,
Inc.* 7,200 205,650
------------
218,588
------------
CAPITAL GOODS -- 0.1%
Cummins Engine Co.,
Inc. 2,200 111,513
------------
CHEMICALS -- 1.2%
Dexter Corp. 5,600 196,350
Dow Chemical Co. 8,100 957,825
DuPont, (E.I.) de
Nemours & Co. 6,500 418,844
------------
1,573,019
------------
CLOTHING & APPAREL -- 0.4%
Abercrombie & Fitch
Co. Cl-A* 1,400 38,150
AnnTaylor Stores
Corp.* 6,700 285,169
Jones Apparel Group,
Inc.* 2,000 63,250
Tommy Hilfiger Corp.* 5,000 141,250
------------
527,819
------------
-----------------------------------------------------
SHARES VALUE
-----------------------------------------------------
COMPUTER HARDWARE -- 2.8%
Adaptec, Inc.* 37,500 $ 1,687,499
Apple Computer, Inc.* 400 32,050
Dell Computer Corp.* 3,000 120,375
Hewlett-Packard Co. 15,100 1,118,344
International
Business Machines
Corp. 7,500 737,813
------------
3,696,081
------------
COMPUTER SERVICES & SOFTWARE -- 5.4%
Adobe Systems, Inc. 600 41,963
America Online, Inc.* 7,400 959,688
Cisco Systems, Inc.* 14,300 1,058,199
Computer Associates
International, Inc. 2,600 146,900
Comverse Technology,
Inc.* 5,400 612,900
Microsoft Corp.* 35,600 3,295,224
Sterling Software,
Inc.* 2,800 61,425
Symantec Corp.* 2,300 109,827
Unisys Corp.* 14,800 358,900
USWeb Corp.* 5,900 228,625
------------
6,873,651
------------
CONGLOMERATES -- 1.5%
Corning, Inc. 15,500 1,218,687
Tyco International
Ltd. 18,600 742,838
------------
1,961,525
------------
CONSTRUCTION -- 0.2%
Centex Corp. 5,000 134,063
Dycom Industries,
Inc.* 2,800 91,175
Pulte Corp. 2,800 56,350
------------
281,588
------------
CONSUMER PRODUCTS & SERVICES -- 1.4%
Eastman Kodak Co. 3,300 227,494
Fortune Brands, Inc. 3,800 134,663
Premark
International, Inc. 8,600 470,850
Procter & Gamble Co. 6,700 702,662
Tupperware Corp. 4,700 93,119
Universal Corp. 4,800 112,800
Whirlpool Corp. 1,500 104,531
------------
1,846,119
------------
CONTAINERS & PACKAGING -- 0.2%
Ball Corp. 4,400 177,375
Sealed Air Corp.* 1,600 88,600
------------
265,975
------------
AMERICAN SKANDIA ADVISOR FUNDS, INC.
-----------------------------------------------------
SHARES VALUE
-----------------------------------------------------
ELECTRONIC COMPONENTS & EQUIPMENT -- 2.1%
American Power
Conversion Corp.* 3,100 $ 69,556
Electronics for
Imaging, Inc.* 14,800 596,625
General Electric Co. 11,200 1,518,299
PerkinElmer, Inc.* 3,500 142,844
Rockwell
International Corp. 3,800 184,063
Teleflex, Inc. 1,100 37,469
Texas Instruments,
Inc. 1,900 170,525
------------
2,719,381
------------
ENTERTAINMENT & LEISURE -- 0.4%
Anchor Gaming* 1,600 97,600
Carnival Corp. 2,500 111,250
Pixar, Inc.* 2,000 76,125
Station Casinos,
Inc.* 2,700 65,306
Viacom, Inc. Cl-B* 4,800 214,800
------------
565,081
------------
EQUIPMENT SERVICES -- 0.3%
Hertz Corp. Cl-A 6,800 294,950
Millipore Corp. 1,900 60,563
------------
355,513
------------
FINANCIAL -- BANK & TRUST -- 3.8%
BankAmerica Corp. 8,800 566,500
Chase Manhattan Corp. 24,400 2,131,949
Fifth Third Bancorp 3,200 236,200
Fleet Boston Corp. 6,300 274,838
GreenPoint Financial
Corp. 2,800 79,800
Old Kent Financial
Corp. 9,200 374,900
Pacific Century
Financial Corp. 1,900 43,344
UnionBanCal Corp. 16,400 712,374
Wells Fargo & Co. 3,700 177,138
Zions Bancorp 6,700 394,881
------------
4,991,924
------------
FINANCIAL SERVICES -- 4.3%
AMBAC Financial
Group, Inc. 10,200 609,450
Citigroup, Inc. 9,000 487,125
Deluxe Corp. 12,900 364,425
Fannie Mae 17,400 1,231,050
Freddie Mac 9,200 497,375
Merrill Lynch & Co.,
Inc. 1,100 86,350
Morgan Stanley, Dean
Witter & Co. 16,600 1,831,187
Providian Financial
Corp. 4,600 501,400
------------
5,608,362
------------
FOOD -- 2.6%
ConAgra, Inc. 4,300 112,069
General Mills, Inc. 1,600 139,500
-----------------------------------------------------
SHARES VALUE
-----------------------------------------------------
Hormel Foods Corp. 4,900 $ 211,313
IBP, Inc. 19,700 471,568
Keebler Foods Co.* 14,000 447,125
Kroger Co.* 16,200 337,163
Quaker Oats Co. 14,900 1,042,999
Suiza Foods Corp.* 8,300 299,319
The Earthgrains Co. 6,100 139,156
Unilever NV NY Reg.* 2,932 195,528
------------
3,395,740
------------
HEALTHCARE SERVICES -- 1.1%
Amgen, Inc.* 12,600 1,004,850
MedQuist, Inc.* 2,200 70,400
Oxford Health Plans,
Inc.* 8,500 100,406
PacifiCare Health
Systems, Inc.* 3,300 130,144
United HealthCare
Corp.* 1,300 67,194
------------
1,372,994
------------
INSURANCE -- 1.0%
American
International
Group, Inc. 950 97,791
Arthur J. Gallagher &
Co. 4,100 212,175
Lincoln National
Corp. 20,200 931,724
Radian Group, Inc. 2,300 121,469
------------
1,363,159
------------
MACHINERY & EQUIPMENT -- 0.3%
Ingersoll-Rand Co. 8,500 444,125
------------
MEDICAL SUPPLIES & EQUIPMENT -- 1.6%
Bard, (C.R.), Inc. 7,300 393,744
Forest Laboratories,
Inc.* 6,200 284,425
Genzyme Corp.* 6,300 240,975
Johnson & Johnson Co. 6,800 712,299
Mallinckrodt, Inc. 4,500 152,719
VISX, Inc.* 5,100 319,069
------------
2,103,231
------------
METALS & MINING -- 0.2%
Alcan Aluminum Ltd. 3,800 125,163
Alcoa, Inc. 2,200 133,650
------------
258,813
------------
OIL & GAS -- 3.1%
Amerada Hess Corp. 23,900 1,371,262
Anadarko Petroleum
Corp. 2,500 77,031
Apache Corp. 14,600 569,400
Atlantic Richfield
Co. 4,500 419,344
Ensco International,
Inc. 7,200 139,500
Mobil Corp. 7,300 704,450
Noble Drilling Corp.* 1,300 28,844
Texaco, Inc. 2,200 135,025
ASAF AMERICAN CENTURY
STRATEGIC BALANCED FUND
-----------------------------------------------------
SHARES VALUE
-----------------------------------------------------
Union Pacific Resources
Group, Inc. 37,300 $ 540,850
Vastar Resources,
Inc. 1,400 82,688
------------
4,068,394
------------
PAPER & FOREST PRODUCTS -- 0.7%
Boise Cascade Corp. 1,900 67,688
Georgia Pacific Group 3,800 150,813
Kimberly-Clark Corp. 3,700 233,562
Weyerhaeuser Co. 7,300 435,718
------------
887,781
------------
PHARMACEUTICALS -- 3.5%
Allergan, Inc. 1,100 118,113
Andrx Corp.* 4,500 214,875
Biogen, Inc.* 3,300 244,613
Bristol-Meyers Squibb
Co. 10,400 798,849
IDEC Pharmaceuticals
Corp.* 1,600 185,900
Ivax Corp.* 13,900 244,119
Jones Pharma, Inc. 1,500 46,500
Lilly, (Eli) & Co. 4,600 316,825
MedImmune, Inc.* 2,100 235,200
Merck & Co., Inc. 2,700 214,819
Pfizer, Inc. 4,600 181,700
Roberts
Pharmaceutical
Corp.* 2,200 70,950
Schering-Plough Corp. 21,400 1,059,299
Warner-Lambert Co. 8,100 646,481
------------
4,578,243
------------
PRINTING & PUBLISHING -- 0.5%
Lexmark International
Group, Inc. Cl-A* 900 70,256
Tribune Co. 500 30,000
Valassis
Communications,
Inc.* 12,200 524,600
------------
624,856
------------
RAILROADS -- 0.1%
Union Pacific Corp. 1,200 66,900
------------
RESTAURANTS -- 0.4%
Brinker
International,
Inc.* 6,300 146,869
Darden Restaurants,
Inc. 2,600 49,563
Jack in the Box,
Inc.* 9,400 226,187
Tricon Global
Restaurants, Inc.* 1,600 64,300
------------
486,919
------------
RETAIL & MERCHANDISING -- 3.3%
Best Buy Co., Inc.* 3,500 194,469
Home Depot, Inc. 17,400 1,313,700
Kohl's Corp.* 1,200 89,775
TJX Companies, Inc. 1,500 40,688
Wal-Mart Stores, Inc. 43,200 2,467,799
Zale Corp.* 6,200 259,625
------------
4,366,056
------------
-----------------------------------------------------
SHARES VALUE
-----------------------------------------------------
SEMICONDUCTORS -- 2.1%
Applied Materials,
Inc.* 22,100 $ 1,984,856
Integrated Device
Technology, Inc.* 15,600 320,775
Lam Research Corp.* 1,500 126,656
Motorola, Inc. 2,100 204,619
National
Semiconductor
Corp.* 5,400 161,663
------------
2,798,569
------------
TELECOMMUNICATIONS -- 7.1%
AT&T Corp. 23,600 1,103,300
Bell Atlantic Corp. 5,000 324,688
BellSouth Corp. 27,200 1,223,999
Comcast Corp. Cl-A 5,100 214,838
Commscope, Inc.* 8,600 342,925
Cox Communications,
Inc. Cl-A* 4,900 222,644
EchoStar
Communications
Corp. Cl-A* 2,000 123,750
GTE Corp. 5,900 442,500
Lucent Technologies,
Inc. 18,600 1,195,050
MCI WorldCom, Inc.* 300 25,744
Nortel Networks Corp. 5,800 359,238
QUALCOMM, Inc.* 1,600 356,400
SBC Communications,
Inc. 27,135 1,382,188
Sprint Corp. (FON
Group) 20,000 1,486,249
Sprint Corp. (PCS
Group)* 2,600 215,638
U.S. West, Inc. 1,300 79,381
------------
9,098,532
------------
TRANSPORTATION -- 0.1%
Paccar, Inc. 2,700 127,238
USFreightways Corp. 1,300 58,906
------------
186,144
------------
UTILITIES -- 1.4%
DTE Energy Co. 900 29,869
Energy East Corp. 5,300 133,163
FPL Group, Inc. 2,100 105,656
LG&E Energy Corp. 8,700 191,400
Minnesota Power, Inc. 6,800 125,800
Public Service
Enterprise Group,
Inc. 11,700 462,881
Reliant Energy, Inc. 4,100 111,725
Southern Co. 9,700 257,656
AMERICAN SKANDIA ADVISOR FUNDS, INC.
-----------------------------------------------------
SHARES VALUE
-----------------------------------------------------
Texas Utilities Co. 2,900 $ 112,375
UtiliCorp United,
Inc. 12,900 278,963
------------
1,809,488
------------
TOTAL COMMON STOCK
(Cost $65,349,427) 72,354,859
------------
PAR
(000)
-----
CORPORATE OBLIGATIONS -- 6.5%
AIRLINES -- 0.1%
Continental Airlines,
Inc.
8.00%, 12/15/05 $ 200 186,000
------------
AUTOMOTIVE PARTS -- 0.2%
Lear Corp. 144A
7.96%, 05/15/05 250 245,313
------------
BEVERAGES -- 0.2%
Pepsi Bottling Group,
Inc. 144A
7.00%, 03/01/29 150 139,313
Pepsi Bottling
Holdings, Inc. 144A
5.625%, 02/17/09 100 90,375
------------
229,688
------------
BROADCASTING -- 0.2%
British Sky
Broadcasting
6.875%, 02/23/09 300 271,500
------------
CHEMICALS -- 0.3%
DuPont, (E.I.) de
Nemours & Co.
6.875%, 10/15/09 400 397,500
------------
CONSUMER PRODUCTS & SERVICES -- 0.1%
Fort James Corp.
6.625%, 09/15/04 150 145,688
------------
CONTAINERS & PACKAGING -- 0.1%
Owens-Illinois, Inc.
7.15%, 05/15/05 150 139,875
------------
FINANCIAL -- BANK & TRUST -- 0.4%
Fleet National Bank
5.75%, 01/15/09 200 179,000
NationsBank Corp.
6.125%, 07/15/04 200 194,000
Southern Investments
UK
6.80%, 12/01/06 100 95,125
------------
468,125
------------
FINANCIAL
SERVICES -- 1.1%
BMW Vehicle Owner
Trust
6.41%, 04/25/03 400 399,934
-----------------------------------------------------
PAR
(000) VALUE
-----------------------------------------------------
Ford Motor Credit Co.
7.375%, 10/28/09 $ 800 $ 807,999
Lehman Brothers
Holdings, Inc.
6.625%, 04/01/04 200 194,250
------------
1,402,183
------------
FOOD -- 0.2%
Kroger Co.
7.25%, 06/01/09 $ 300 $ 292,125
------------
INSURANCE -- 0.4%
Conseco, Inc.
6.40%, 06/15/01 100 97,625
9.00%, 10/15/06 400 402,000
------------
499,625
------------
MACHINERY & EQUIPMENT -- 0.3%
Caterpillar, Inc.
7.25%, 09/15/09 400 401,000
------------
OIL & GAS -- 1.1%
Enron Corp.
6.625%, 11/15/05 350 336,438
6.70%, 11/15/06 400 387,999
Petroleum Geo-Services
7.125%, 03/30/28 400 359,500
USX Corp.
6.65%, 02/01/06 300 286,875
------------
1,370,812
------------
PAPER & FOREST PRODUCTS -- 0.3%
Abitibi-Consolidated,
Inc.
8.50%, 08/01/29 400 393,500
------------
REAL ESTATE -- 0.1%
Chelsea GCA Realty,
Inc. [REIT]
7.25%, 10/21/07 200 185,500
------------
RETAIL & MERCHANDISING -- 0.7%
Home Depot, Inc. 144A
6.50%, 09/15/04 400 398,500
Rite Aid Corp.
6.70%, 12/15/01 150 122,250
Wal-Mart Stores, Inc.
6.875%, 08/10/09 400 402,000
------------
922,750
------------
TELECOMMUNICATIONS -- 0.7%
CSC Holdings, Inc.
8.125%, 07/15/09 200 200,750
GTE North, Inc.
5.65%, 11/15/08 200 180,500
Qwest Communications
International, Inc.
7.50%, 11/01/08 400 398,500
TCI Communications,
Inc.
8.75%, 08/01/15 150 167,813
------------
947,563
------------
TOTAL CORPORATE
OBLIGATIONS
(Cost $8,651,602) 8,498,747
------------
ASAF AMERICAN CENTURY
STRATEGIC BALANCED FUND
-----------------------------------------------------
PAR
(000) VALUE
-----------------------------------------------------
U.S. GOVERNMENT AGENCY OBLIGATIONS -- 17.6%
Federal Home Loan
Mortgage Corp.
7.00%, 06/01/14-
08/01/29 $ 1,670 $ 1,657,878
7.50%, 08/01/29 1,862 1,869,680
------------
3,527,558
------------
Federal National
Mortgage Assoc.
5.16%, 11/01/99 10,326 10,326,000
6.00%, 10/01/28 1,585 1,478,399
6.50%, 08/15/04-
01/01/28 3,924 3,814,540
7.00%, 05/01/11-
07/01/29 1,926 1,906,458
7.50%, 09/01/14-
07/01/29 1,489 1,497,094
------------
19,022,491
------------
Government National
Mortgage Assoc.
6.00%, 08/15/28 192 178,446
6.50%, 05/15/28 239 228,581
------------
407,027
------------
(Cost $23,195,479) 22,957,076
------------
U.S. TREASURY OBLIGATIONS -- 11.5%
U.S. Treasury Bonds
7.875%, 02/15/21 1,900 2,196,230
5.25%, 11/15/28-
02/15/29 300 259,553
------------
2,455,783
------------
U.S. Treasury Notes
5.875%, 09/30/02 200 200,014
5.75%, 11/30/02-
08/15/03 3,050 3,036,307
6.00%, 07/31/02-
08/15/04 250 250,781
6.625%, 07/31/01-
05/15/06 2,500 2,583,813
4.75%, 11/15/08 1,700 1,537,903
5.50%, 03/31/00-
05/15/09 4,900 4,883,749
------------
12,492,567
------------
(Cost $15,217,537) 14,948,350
------------
COLLATERALIZED MORTGAGE OBLIGATIONS -- 1.0%
Case Equipment Loan
Trust Series 1998-B
Cl-A4
5.92%, 10/15/05 200 197,293
CIT RV Trust Series
1998-A Cl-A4
6.09%, 02/15/12 100 98,488
Comed Transitional
Funding Trust Series
1998-1 Cl-A6
5.63%, 06/25/09 100 94,037
-----------------------------------------------------
PAR
(000) VALUE
-----------------------------------------------------
General Motors
Acceptance Corp.
Series 1999-Cl
Cl-A2
6.17%, 05/15/33 $ 150 $ 139,022
Morgan Stanley Capital
I 1998-WF1 Cl-A2
6.55%, 12/15/07 500 479,447
Nationslink Funding
Corp. Series 1998-2
Cl-A1
6.001%, 11/20/07 94 90,511
Nationslink Funding
Corp. Series 1999-1
Cl-A2
6.316%, 11/20/08 250 235,776
------------
(Cost $1,382,987) 1,334,574
------------
PRINCIPAL
IN LOCAL
CURRENCY
(000)
---------
FOREIGN BONDS -- 6.6%
AUSTRALIA -- 0.2%
Australian Government
9.50%, 08/15/03 435 307,629
------------
CANADA -- 0.3%
Canadian Government
5.00%, 03/15/00 440 299,124
6.00%, 06/01/08 100 67,714
------------
366,838
------------
DENMARK -- 0.1%
Kingdom of Denmark
8.00%, 03/15/06 450 72,234
------------
GERMANY -- 3.4%
Deutschland Republic
6.00%, 09/15/03 2,337 2,575,703
4.12%, 07/04/08 1,900 1,849,216
------------
4,424,919
------------
JAPAN -- 1.9%
Japanese Government
2.90%, 12/20/05 240,000 2,524,794
------------
UNITED KINGDOM -- 0.7%
United Kingdom
Treasury
9.00%, 10/13/08 450 904,844
------------
TOTAL FOREIGN BONDS
(Cost $8,789,084) 8,601,258
------------
AMERICAN SKANDIA ADVISOR FUNDS, INC.
-----------------------------------------------------
SHARES VALUE
-----------------------------------------------------
SHORT-TERM INVESTMENTS -- 0.0%
Temporary Investment
Cash Fund 2,276 $ 2,276
Temporary Investment
Fund 2,276 2,276
------------
(Cost $4,552) 4,552
------------
TOTAL INVESTMENTS -- 98.7%
(Cost $122,590,668) 128,699,416
OTHER ASSETS LESS LIABILITIES -- 1.3% 1,703,195
------------
NET ASSETS -- 100.0% $130,402,611
============
Cash with an aggregate market value of $318,750 has been segregated with the
custodian to cover margin requirements for the following open futures contracts
at October 31, 1999:
EXPIRATION NUMBER OF UNREALIZED
DESCRIPTION MONTH CONTRACTS APPRECIATION
----------- ---------- --------- ------------
S&P 500 Index 12/99 7 $173,100
S&P 500 Index 03/00 8 85,075
--------
$258,175
========
-------------------------------------------------------
Definitions of abbreviations are included following the Schedules of
Investments.
* Non-income producing security.
144A -- Security was purchased pursuant to Rule 144A under the Securities Act of
1933 and may not be resold subject to that rule except to qualified
institutional buyers. At the end of the year, these securities amounted
to 0.7% of net assets.
See Notes to Financial Statements.
ASAF FEDERATED
HIGH YIELD BOND FUND
---------------------------------------------------
PAR)
(000 VALUE
---------------------------------------------------
CORPORATE OBLIGATIONS -- 92.9%
ADVERTISING -- 0.4%
Outdoor Systems, Inc.
9.375%, 10/15/06 $ 75 $ 78,000
8.875%, 06/15/07 350 357,000
------------
435,000
------------
AEROSPACE -- 0.4%
Anteon Corp.
12.00%, 05/15/09 450 434,250
------------
AUTOMOTIVE PARTS -- 3.0%
Accuride Corp. Cl-B
9.25%, 02/01/08 475 429,875
Aftermarket Technology,
Inc.
12.00%, 08/01/04 100 101,000
Aftermarket Technology,
Inc. Cl-D
12.00%, 08/01/04 325 328,250
American Axle &
Manufacturing, Inc.
144A
9.75%, 03/01/09 800 792,000
French, (J.L.)
Automotive Casting,
Inc. 144A
11.50%, 06/01/09 600 595,500
HDA Parts System, Inc.
144A
12.00%, 08/01/05 250 241,250
Lear Corp.
9.50%, 07/15/06 50 50,625
8.11%, 05/15/09 144A 700 672,315
Oxford Automotive, Inc.
10.125%, 06/15/07 300 271,500
------------
3,482,315
------------
BEVERAGES -- 0.7%
National Wine & Spirits
10.125%, 01/15/09 175 173,688
Triarc Consumer
Beverage Co. 144A
10.25%, 02/15/09 625 593,750
------------
767,438
------------
BROADCASTING -- 6.5%
Acme Television Co.
Cl-B [STEP]
10.635%, 09/30/04 575 508,875
Big City Radio, Inc.
[STEP]
13.028%, 03/15/05 450 308,250
Capstar Broadcasting
Corp.
9.25%, 07/01/07 100 102,500
Chancellor Media Corp.
9.00%, 10/01/08 1,425 1,467,750
---------------------------------------------------
PAR
(000) VALUE
---------------------------------------------------
Chancellor Media Corp.
L.A. Cl-B
10.50%, 01/15/07 $ 50 $ 54,500
8.75%, 06/15/07 50 49,750
8.125%, 12/15/07 1,525 1,509,749
Cumulus Media, Inc.
10.375%, 07/01/08 375 388,125
Fox/Liberty Networks
LLC
8.875%, 08/15/07 400 406,000
9.709%, 08/15/07
[STEP] 525 417,375
Lamar Advertising
8.625%, 09/15/07 100 98,500
SFX Broadcasting, Inc.
Cl-B
10.75%, 05/15/06 200 223,834
Sinclair Broadcasting
Group, Inc.
10.00%, 09/30/05 175 175,000
9.00%, 07/15/07 425 399,500
8.75%, 12/15/07 425 395,250
UIH Australia Pacific,
Inc. Cl-B [STEP]
15.663%, 05/15/06 325 253,500
United International
Holdings, Inc. Cl-B
[STEP]
11.532%, 02/15/08 1,525 937,875
------------
7,696,333
------------
BUILDING MATERIALS -- 1.0%
American Builders &
Contractors Supply
Co., Inc. Cl-B
10.625%, 05/15/07 300 265,500
Building Materials
Holdings Corp.
8.625%, 12/15/06 250 236,875
Falcon Building
Products, Inc. Cl-B
[STEP]
12.198%, 06/15/07 350 260,750
Juno Lighting, Inc.
144A
11.875%, 07/01/09 150 135,750
NCI Building Systems,
Inc. Cl-B
9.25%, 05/01/09 250 232,500
------------
1,131,375
------------
BUSINESS SERVICES -- 5.0%
Dialog Corp. PLC Cl-A
11.00%, 11/15/07 425 361,250
e.spire Communications,
Inc. [STEP]
13.324%, 11/01/05 275 166,375
AMERICAN SKANDIA ADVISOR FUNDS, INC.
---------------------------------------------------
PAR
(000) VALUE
---------------------------------------------------
Intermedia Communications,
Inc. [STEP]
9.733%, 05/15/06 $ 100 $ 82,500
12.25%, 03/01/09 1,300 708,500
Intermedia
Communications, Inc.
Cl-B
10.56%, 07/15/07
[STEP] 850 590,750
8.875%, 11/01/07 50 45,000
8.60%, 06/01/08 275 243,375
NEXTLINK
Communications, Inc.
9.00%, 03/15/08 150 141,375
11.077%, 04/15/08
[STEP] 950 570,000
10.75%, 06/01/09 500 511,250
12.274%, 06/01/09
[STEP] 2,100 1,238,999
Orion Network Systems
11.25%, 01/15/07 450 335,250
Sitel Corp.
9.25%, 03/15/06 375 346,875
U.S. Office Products
Co.
9.75%, 06/15/08 925 476,375
------------
5,817,874
------------
CABLE TELEVISION -- 6.0%
Charter Communication
Holdings LLC [STEP]
9.92%, 04/01/11 775 461,125
CSC Holdings, Inc.
9.25%, 11/01/05 500 510,000
9.875%, 05/15/06 400 414,000
7.875%, 12/15/07 50 49,544
9.875%, 02/15/13 300 312,000
Diamond Holdings Co.
PLC
9.125%, 02/01/08 200 199,000
Echostar DBS Corp.
9.375%, 02/01/09 1,325 1,318,374
International CableTel,
Inc. Cl-B [STEP]
9.743%, 02/01/06 125 110,313
Lenfest Communications,
Inc.
8.375%, 11/01/05 150 154,125
Pegasus Communications
Corp. Cl-B
9.625%, 10/15/05 1,000 975,000
9.75%, 12/01/06 225 219,375
Telewest Communications
PLC
10.802%, 10/01/07
[STEP] 800 733,000
11.25%, 11/01/08 200 217,000
9.25%, 04/15/09
[STEP] 144A 600 367,500
---------------------------------------------------
PAR
(000) VALUE
---------------------------------------------------
United Pan-Europe
Communication Corp.
[STEP] 144A
12.446%, 08/01/09 $1,800 $ 954,000
13.375%, 11/01/09 375 198,750
------------
7,193,106
------------
CAPITAL GOODS -- 0.1%
Buckeye Cellulose Corp.
9.25%, 09/15/08 100 100,500
------------
CHEMICALS -- 4.3%
General Chemical
Industry Products,
Inc. 144A
10.625%, 05/01/09 500 488,750
Huntsman Corp. 144A
9.50%, 07/01/07 625 581,250
Huntsman ICI Chemicals
144A
10.125%, 07/01/09 400 402,000
ISP Holdings, Inc. Cl-B
9.00%, 10/15/03 400 391,000
Lyondell Chemical Co.
9.625%, 05/01/07 144A 150 150,375
10.875%, 05/01/09 1,075 1,075,000
Polymer Group, Inc.
Cl-B
9.00%, 07/01/07 550 529,375
8.75%, 03/01/08 750 706,875
Sterling Chemicals,
Inc.
12.375%, 07/15/06
144A 175 170,625
11.75%, 08/15/06 450 285,750
Texas Petrochemical
Corp.
11.125%, 07/01/06 300 244,500
------------
5,025,500
------------
CLOTHING & APPAREL -- 0.6%
Boyds Collection Ltd.
9.00%, 05/15/08 90 87,975
GFSI, Inc. Cl-B
9.625%, 03/01/07 475 315,875
Pillowtex Corp.
10.00%, 11/15/06 150 54,750
Pillowtex Corp. Cl-B
9.00%, 12/15/07 575 204,125
------------
662,725
------------
COMPUTER SERVICES & SOFTWARE -- 0.3%
Alvey Systems, Inc.
11.375%, 01/31/03 35 35,875
DIVA Systems Corp. Cl-B
[STEP]
11.851%, 03/01/08 100 28,500
Verio, Inc.
11.25%, 12/01/08 250 262,188
------------
326,563
------------
ASAF FEDERATED
HIGH YIELD BOND FUND
---------------------------------------------------
PAR
(000) VALUE
---------------------------------------------------
CONGLOMERATES -- 0.3%
Eagle-Picher
Industries, Inc.
9.375%, 03/01/08 $ 400 $ 342,000
------------
CONSTRUCTION -- 0.8%
Building Materials
Holdings Corp. Cl-B
8.00%, 10/15/07 100 91,250
Formica Corp.
10.875%, 03/01/09 425 384,625
MMI Products, Inc. Cl-B
11.25%, 04/15/07 400 408,000
------------
883,875
------------
CONSUMER PRODUCTS & SERVICES -- 3.3%
Albecca, Inc.
10.75%, 08/15/08 350 253,750
Amscan Holdings, Inc.
9.875%, 12/15/07 425 346,375
Chattem, Inc. Cl-B
8.875%, 04/01/08 550 492,250
Collins & Aikman Floor
Coverings Corp.
10.00%, 01/15/07 150 145,500
Collins & Aikman
Products Corp.
11.50%, 04/15/06 450 430,875
Diamond Brands
Operating, Inc.
10.125%, 04/15/08 50 38,750
12.83%, 04/15/09
[STEP] 50 9,250
Glenoit Corp.
11.00%, 04/15/07 175 97,125
NBTY, Inc. Cl-B
8.625%, 09/15/07 400 342,000
Playtex Family Products
Corp.
9.00%, 12/15/03 450 444,375
Revlon Consumer
Products Corp.
8.625%, 02/01/08 1,500 817,500
Sleepmaster, Inc. 144A
11.00%, 05/15/09 150 150,750
Volume Services America
11.25%, 03/01/09 250 247,500
------------
3,816,000
------------
CONTAINERS & PACKAGING -- 1.1%
Owens-Illinois, Inc.
8.10%, 05/15/07 250 241,565
Packaging Corp. of
America, Inc. 144A
9.625%, 04/01/09 250 250,000
---------------------------------------------------
PAR
(000) VALUE
---------------------------------------------------
Russell Stanley
Holdings, Inc.
10.875%, 02/15/09 $ 300 $ 274,500
Stone Container Corp.
12.25%, 04/01/02 400 404,000
Tekni-Plex, Inc. Cl-B
9.25%, 03/01/08 150 144,000
------------
1,314,065
------------
ELECTRONIC COMPONENTS & EQUIPMENT -- 1.3%
Amphenol Corp.
9.875%, 05/15/07 450 452,250
SCG Holdings Corp. 144A
12.00%, 08/01/09 250 256,250
Viasystems, Inc. Cl-B
9.75%, 06/01/07 100 80,500
WESCO Distribution,
Inc. Cl-B
9.125%, 06/01/08 800 720,000
------------
1,509,000
------------
ENTERTAINMENT & LEISURE -- 3.4%
AMF Group, Inc. [STEP]
16.056%, 03/15/06 512 258,560
Florida Panthers
Holdings, Inc.
9.875%, 04/15/09 700 661,500
Premier Parks, Inc.
9.25%, 04/01/06 75 71,813
9.75%, 06/15/07 500 493,750
10.321%, 04/01/08
[STEP] 2,150 1,408,249
Regal Cinemas, Inc.
9.50%, 06/01/08 1,125 860,625
True Temper Sports,
Inc.
10.875%, 12/01/08 225 215,438
------------
3,969,935
------------
ENVIRONMENTAL SERVICES -- 2.3%
Allied Waste North
America Co. 144A
10.00%, 08/01/09 1,475 1,261,125
Allied Waste North
America Co. Cl-B
7.625%, 01/01/06 1,100 959,750
7.875%, 01/01/09 525 444,938
------------
2,665,813
------------
FARMING & AGRICULTURE -- 0.1%
Royster-Clark, Inc.
144A
10.25%, 04/01/09 125 113,125
------------
FINANCIAL -- BANK & TRUST -- 1.3%
GS Escrow Corp.
7.125%, 08/01/05 1,300 1,195,441
RBF Finance Co.
11.375%, 03/15/09 350 371,000
------------
1,566,441
------------
AMERICAN SKANDIA ADVISOR FUNDS, INC.
---------------------------------------------------
PAR
(000) VALUE
---------------------------------------------------
FINANCIAL SERVICES -- 0.6%
Caithness Coso Fund
Corp. 144A
9.05%, 12/15/09 $ 500 $ 495,000
Unilab Finance Corp.
144A
12.75%, 10/01/09 250 251,250
------------
746,250
------------
FOOD -- 2.6%
Agrilink Foods, Inc.
11.875%, 11/01/08 500 445,000
Ameriserv Food
Distributor, Inc.
8.875%, 10/15/06 100 65,500
10.125%, 07/15/07 1,025 497,125
Aurora Foods, Inc.
9.875%, 02/15/07 250 255,625
Dominos, Inc. Cl-B
10.375%, 01/15/09 400 367,000
Eagle Family Foods,
Inc. Cl-B
8.75%, 01/15/08 600 465,000
International Home
Foods, Inc.
10.375%, 11/01/06 850 875,500
Jitney-Jungle Stores,
Inc.+
10.375%, 09/15/07 150 3,750
Nebco Evans Holding Co.
[STEP]
10.875%, 07/15/07 125 38,125
------------
3,012,625
------------
FURNITURE -- 0.2%
Sealy Mattress Co. Cl-B
9.875%, 12/15/07 50 48,750
10.95%, 12/15/07
[STEP] 350 236,250
------------
285,000
------------
HEALTHCARE SERVICES -- 3.4%
Alliance Imaging, Inc.
9.625%, 12/15/05 450 492,750
Columbia HCA
Healthcare, Inc.
6.91%, 06/15/05 800 724,560
Everest Healthcare
Services, Inc.
9.75%, 05/01/08 225 204,750
Genesis Health
Ventures, Inc.
9.25%, 10/01/06 200 71,000
9.875%, 01/15/09 150 56,250
Hudson Respiratory
Care, Inc.
9.125%, 04/15/08 250 196,250
---------------------------------------------------
PAR
(000) VALUE
---------------------------------------------------
Tenet Healthcare Corp.
8.00%, 01/15/05 $ 850 $ 799,000
8.625%, 01/15/07 400 376,000
7.625%, 06/01/08 100 88,500
8.125%, 12/01/08 1,125 1,023,750
------------
4,032,810
------------
INDUSTRIAL PRODUCTS -- 1.3%
Continental Global
Group, Inc. Cl-B
11.00%, 04/01/07 100 55,500
Hexcel Corp.
9.75%, 01/15/09 475 391,875
ISG Resources, Inc.
10.00%, 04/15/08 300 268,500
Simmons Co.
10.25%, 03/15/09 75 74,250
United Industries Corp.
144A
9.875%, 04/01/09 300 270,000
URS Corp. Series B 144A
12.25%, 05/01/09 425 431,375
------------
1,491,500
------------
MACHINERY & EQUIPMENT -- 2.4%
Blount, Inc. 144A
13.00%, 08/01/09 425 438,813
Clark Materials
Handling Corp. Cl-D
10.75%, 11/15/06 150 101,250
Columbus McKinnon Corp.
8.50%, 04/01/08 150 126,750
National Equipment
Services, Inc. Cl-B
10.00%, 11/30/04 50 49,250
National Equipment
Services, Inc. Cl-D
10.00%, 11/30/04 475 467,875
Nationsrent, Inc.
10.375%, 12/15/08 450 435,375
United Rentals, Inc.
9.25%, 01/15/09 1,075 986,312
Wec Co. 144A
12.00%, 07/15/09 250 236,250
------------
2,841,875
------------
MEDICAL SUPPLIES & EQUIPMENT -- 2.5%
CONMED Corp.
9.00%, 03/15/08 625 559,375
Dade International,
Inc. Cl-B
11.125%, 05/01/06 475 491,625
ASAF FEDERATED
HIGH YIELD BOND FUND
---------------------------------------------------
PAR
(000) VALUE
---------------------------------------------------
Fisher Scientific
International, Inc.
9.00%, 02/01/08 $ 500 $ 472,500
9.00%, 02/01/08 725 685,125
Hanger Orthopedic
Group, Inc. 144A
11.25%, 06/15/09 250 243,750
Kinetic Concepts, Inc.
Cl-B
9.625%, 11/01/07 725 474,875
------------
2,927,250
------------
METALS & MINING -- 2.8%
AEI Resources, Inc.
144A
10.50%, 12/15/05 450 398,250
11.50%, 12/15/06 300 262,500
California Steel
Industries 144A
8.50%, 04/01/09 300 286,500
Euramax International
PLC
11.25%, 10/01/06 350 351,750
Metals USA, Inc.
8.625%, 02/15/08 525 472,499
Murrin Murrin Holdings
PTY
9.375%, 08/31/07 300 259,500
National Steel Corp.
Cl-D
9.875%, 03/01/09 300 298,500
Neenah Corp.
11.125%, 05/01/07 375 347,813
Neenah Corp. Cl-B
11.125%, 05/01/07 225 208,688
Republic Technologies,
Inc. 144A
13.75%, 07/15/09 400 372,000
Ryerson Tull, Inc.
8.50%, 07/15/01 50 50,202
------------
3,308,202
------------
OFFICE EQUIPMENT -- 0.3%
Buhrmann U.S., Inc.
144A
12.25%, 11/01/09 400 398,000
------------
OIL & GAS -- 2.8%
Comstock Resources,
Inc. 144A
11.25%, 05/01/07 200 207,500
Continental Resources,
Inc.
10.25%, 08/01/08 375 315,000
Forcenergy, Inc.+
8.50%, 02/15/07 300 247,500
Forest Oil Corp.
10.50%, 01/15/06 300 307,500
Houston Exploration Co.
Cl-B
8.625%, 01/01/08 200 192,000
---------------------------------------------------
PAR
(000) VALUE
---------------------------------------------------
Pogo Producing Co. Cl-B
10.375%, 02/15/09 $ 250 $ 260,000
Pride Petroleum
Services, Inc.
9.375%, 05/01/07 350 349,125
R&B Falcon Corp.
12.25%, 03/15/06 500 530,000
Triton Energy Ltd.
8.75%, 04/15/02 575 567,813
Universal Compression
Holdings [STEP]
9.665%, 02/15/08 325 201,500
12.454%, 02/15/09 100 55,500
------------
3,233,438
------------
PRINTING & PUBLISHING -- 0.9%
Garden State
Newspapers, Inc. Cl-B
8.75%, 10/01/09 475 440,563
Hollinger International
Publishing Co.
9.25%, 02/01/06-
03/15/07 425 418,625
Ziff-Davis, Inc.
8.50%, 05/01/08 150 139,875
------------
999,063
------------
RAILROADS -- 0.2%
Railworks Corp.
11.50%, 04/15/09 250 243,750
------------
REAL ESTATE -- 1.3%
HMH Properties, Inc.
Cl-A
7.875%, 08/01/05 400 370,000
HMH Properties, Inc.
Cl-B
7.875%, 08/01/08 825 726,000
HMH Properties, Inc.
Cl-C
8.45%, 12/01/08 450 409,500
------------
1,505,500
------------
RESTAURANTS -- 0.5%
Advantica Restaurant
Group, Inc.
11.25%, 01/15/08 250 201,250
Carrols Corp.
9.50%, 12/01/08 450 374,625
------------
575,875
------------
RETAIL & MERCHANDISING -- 0.1%
Community Distributors,
Inc. Cl-B
10.25%, 10/15/04 200 171,000
------------
AMERICAN SKANDIA ADVISOR FUNDS, INC.
---------------------------------------------------
PAR
(000) VALUE
---------------------------------------------------
SEMICONDUCTORS -- 0.5%
Fairchild Semiconductor
Corp.
10.375%, 10/01/07
144A $ 150 $ 150,750
10.75%, 04/15/09 550 475,750
------------
626,500
------------
TELECOMMUNICATIONS -- 24.4%
American Cellular Corp.
10.50%, 05/15/08 500 540,000
Arch Communications,
Inc.
12.75%, 07/01/07 150 105,750
Call-Net Enterprises,
Inc. [STEP]
8.949%, 08/15/07 425 278,375
9.441%, 08/15/08 425 252,875
11.162%, 05/15/09 1,700 964,750
Centennial Cellular
Corp.
10.75%, 12/15/08 500 525,000
Crown Castle
International Corp.
[STEP]
10.483%, 05/15/11 1,100 654,500
11.272%, 08/01/11
144A 1,000 600,000
Dolphin Telecom PLC
[STEP] 144A
14.00%, 05/15/09 600 240,000
Hermes Europe Railtel
BV, Inc.
11.50%, 08/15/07 750 750,000
10.375%, 01/15/09 350 334,250
ICG Holdings, Inc.
[STEP]
11.727%, 05/01/06 500 383,265
10.82%, 03/15/07 525 345,471
IXC Communications,
Inc.
9.00%, 04/15/08 500 500,000
Lenfest Communications,
Inc.
8.25%, 02/15/08 250 251,250
Level 3 Communications,
Inc.
9.125%, 05/01/08 1,500 1,406,250
10.79%, 12/01/08
[STEP] 2,350 1,427,625
McLeodUSA, Inc.
9.918%, 03/01/07
[STEP] 875 693,438
8.375%, 03/15/08 150 141,000
8.125%, 02/15/09 700 651,000
MetroNet Communications
Corp. [STEP]
10.282%, 06/15/08 1,000 782,500
---------------------------------------------------
PAR
(000) VALUE
---------------------------------------------------
Millicom International
Cellular, Inc. [STEP]
13.416%, 06/01/06 $ 850 $ 620,500
Nextel Communications,
Inc. [STEP]
10.845%, 09/15/07 700 528,500
10.628%, 02/15/08 2,650 1,894,749
Nextel International,
Inc. [STEP]
12.125%, 04/15/08 50 26,261
Nextel Partners, Inc.
[STEP]
13.273%, 02/01/09 400 250,000
NTL Communications
Corp. Cl-B
11.50%, 10/01/08 650 698,750
NTL, Inc. Cl-B [STEP]
10.369%, 04/01/08 2,125 1,444,999
10.732%, 10/01/08 1,800 1,233,000
Orange PLC
8.00%, 08/01/08 550 551,375
Paging Network, Inc.
10.125%, 08/01/07 50 15,750
10.00%, 10/15/08 325 102,375
Pathnet, Inc.
12.25%, 04/15/08 100 58,500
PSINet, Inc.
11.50%, 11/01/08 325 338,000
11.00%, 08/01/09 144A 600 618,000
PSINet, Inc. Cl-B
10.00%, 02/15/05 425 418,625
Qwest Communications
International, Inc.
[STEP]
8.24%, 10/15/07 700 553,000
RCN Corp. [STEP]
12.214%, 10/15/07 1,050 732,375
Rogers Cantel, Inc.
8.80%, 10/01/07 225 227,250
Telecommunications
Techniques Co.
9.75%, 05/15/08 1,200 1,146,000
Telesystem
International
Wireless, Inc. Cl-B
[STEP]
14.691%, 06/30/07 800 412,000
10.352%, 11/01/07 75 32,625
Teligent, Inc.
11.50%, 12/01/07 600 555,000
Teligent, Inc. Cl-B
[STEP]
14.947%, 03/01/08 650 347,750
Tritel PCS, Inc. [STEP]
144A
12.75%, 05/15/09 450 273,375
Triton PCS, Inc. [STEP]
13.458%, 05/01/08 725 503,875
U.S. Unwired, Inc.
[STEP] 144A
13.375%, 11/01/09 500 263,750
ASAF FEDERATED
HIGH YIELD BOND FUND
---------------------------------------------------
PAR
(000) VALUE
---------------------------------------------------
US Xchange LLC
15.00%, 07/01/08 $ 400 $ 393,000
Viatel, Inc.
11.25%, 04/15/08 75 71,625
13.739%, 04/15/08
[STEP] 1,800 1,053,000
11.50%, 03/15/09 100 97,000
Williams Communications
Group, Inc.
10.875%, 10/01/09 875 903,438
Winstar Communications,
Inc. [STEP]
8.386%, 03/15/08 625 553,125
------------
28,744,871
------------
TRANSPORTATION -- 2.7%
Allied Holdings, Inc.
Cl-B
8.625%, 10/01/07 400 350,000
Ameritruck Distribution
Corp. Cl-B+*
12.25%, 11/15/05 50 2,750
Avis Rent A Car, Inc.
144A
11.00%, 05/01/09 350 362,250
Gearbulk Holding Ltd.
11.25%, 12/01/04 525 531,563
Holt Group
9.75%, 01/15/06 100 68,500
Johnstown America
Industries, Inc.
11.75%, 08/15/05 250 255,625
Motor Coach Industries,
Inc. 144A
11.25%, 05/01/09 400 404,000
Stena AB
10.50%, 12/15/05 350 343,875
8.75%, 06/15/07 900 803,250
Stena Line AB
10.625%, 06/01/08 100 70,250
------------
3,192,063
------------
UTILITIES -- 1.2%
CMS Energy Corp.
7.50%, 01/15/09 525 483,121
El Paso Electric Co.
Cl-E
9.40%, 05/01/11 300 327,609
International Utility
Structures, Inc.
10.75%, 02/01/08 125 113,125
Niagara Mohawk Power
Corp. Cl-H [STEP]
7.788%, 07/01/10 650 491,829
------------
1,415,684
------------
TOTAL CORPORATE OBLIGATIONS
(Cost $117,522,685) 109,004,489
------------
---------------------------------------------------
SHARES VALUE
---------------------------------------------------
COMMON STOCK -- 0.0%
COMPUTER SERVICES & SOFTWARE -- 0.0%
Diva Systems Corp.
Warrants* 300 2,400
------------
OIL & GAS -- 0.0%
R&B Falcon Corp.
Warrants 144A* 275 55,137
------------
TELECOMMUNICATIONS -- 0.0%
Pathnet, Inc. Warrants
144A* 100 1,013
------------
TOTAL COMMON STOCK
(Cost $0) 58,550
------------
PREFERRED STOCK -- 2.5%
BROADCASTING -- 0.9%
Benedek Communications
Corp.
11.50% [PIK] 100 77,500
Capstar Communications,
Inc. Cl-E
12.625% [PIK] 564 67,963
Cumulus Media, Inc.
Cl-A
13.75% 278 304,410
Sinclair Capital Cl-A
$11.625 5,600 562,800
------------
1,012,673
------------
CONTAINERS & PACKAGING -- 0.1%
Packaging Corp of
America, Inc.
12.375% [PIK] 144A 793 84,653
------------
FOOD -- 0.0%
Nebco Evans Holding Co.
11.25% [PIK] 645 19,673
------------
HEALTHCARE SERVICES -- 0.0%
River Holding Corp.
Cl-B
11.50% [PIK] 592 40,348
------------
OIL & GAS -- 0.4%
R&B Falcon Corp.
13.875% [PIK] 425 419,418
------------
PRINTING & PUBLISHING -- 1.1%
Primedia, Inc. Cl-D
10.00% 5,700 561,449
Primedia, Inc. Cl-F
9.20% 2,950 275,825
Primedia, Inc. Cl-H
8.625% 5,250 454,125
------------
1,291,399
------------
AMERICAN SKANDIA ADVISOR FUNDS, INC.
---------------------------------------------------
SHARES VALUE
---------------------------------------------------
TELECOMMUNICATIONS -- 0.0%
Nextel Communications,
Inc. Cl-E
11.125% [PIK] 25 $ 25,875
------------
TOTAL PREFERRED STOCK
(Cost $3,078,123) 2,894,039
------------
PAR
(000)
-----
REPURCHASE AGREEMENTS -- 2.7%
Greenwich Capital
Markets, Inc., 5.15%,
dated 10/29/99,
maturing 11/01/99,
repurchase price
$3,182,365,
(Collateralized by U.S.
Treasury Notes, 5.75%,
par value $3,187,000,
market value
$3,239,293, due
11/30/02)
(Cost $3,181,000) $3,181 3,181,000
------------
---------------------------------------------------
SHARES VALUE
---------------------------------------------------
SHORT-TERM INVESTMENTS -- 0.0%
Temporary Investment
Cash Fund 518 $ 518
Temporary Investment
Fund 518 518
------------
(Cost $1,036) 1,036
------------
TOTAL INVESTMENTS -- 98.1%
(Cost $123,782,844) 115,139,114
OTHER ASSETS LESS
LIABILITIES -- 1.9% 2,198,154
------------
NET ASSETS -- 100.0% $117,337,268
============
-------------------------------------------------------
Definitions of abbreviations are included following the Schedules of
Investments.
* Non-income producing security.
+ Illiquid security. At the end of the year these securities amounted to 0.2% of
net assets.
144A -- Security was purchased pursuant to Rule 144A under the Securities Act of
1933 and may not be resold subject to that rule except to qualified
institutional buyers. At the end of the year, these securities amounted
to 12.9% of net assets.
See Notes to Financial Statements.
ASAF OPPENHEIMER
LARGE-CAP GROWTH FUND
---------------------------------------------------
SHARES VALUE
---------------------------------------------------
COMMON STOCK -- 83.0%
BROADCASTING -- 1.4%
Infinity Broadcasting
Corp.* 24,500 $ 846,781
-----------
CLOTHING & APPAREL -- 1.9%
Abercrombie & Fitch Co.
Cl-A* 18,900 515,025
Intimate Brands, Inc. 14,450 592,450
-----------
1,107,475
-----------
COMPUTER HARDWARE -- 3.3%
Apple Computer, Inc.* 8,000 641,000
Dell Computer Corp.* 11,700 469,463
EMC Corp.* 11,400 832,200
-----------
1,942,663
-----------
COMPUTER SERVICES & SOFTWARE -- 10.6%
America Online, Inc.* 9,200 1,193,125
At Home Corp.* 11,200 418,600
Cisco Systems, Inc.* 20,000 1,480,000
Citrix Systems, Inc.* 8,000 513,000
Compuware Corp.* 18,600 517,313
Microsoft Corp.* 23,100 2,138,193
-----------
6,260,231
-----------
CONGLOMERATES -- 4.1%
Tyco International Ltd. 61,000 2,436,188
-----------
ELECTRONIC COMPONENTS & EQUIPMENT -- 6.4%
E-Tek Dynamics, Inc.* 7,000 466,375
Sanmina Corp.* 5,000 450,313
Solectron Corp.* 9,900 744,975
Tandy Corp.* 33,500 2,108,406
-----------
3,770,069
-----------
ENTERTAINMENT & LEISURE -- 0.5%
Royal Caribbean Cruises
Ltd. 6,000 318,375
-----------
FINANCIAL -- BANK & TRUST -- 1.0%
Fifth Third Bancorp 7,800 575,738
-----------
FINANCIAL SERVICES -- 3.8%
Citigroup, Inc. 13,000 703,625
Merrill Lynch & Co.,
Inc. 6,500 510,250
Schwab, (Charles) Corp. 26,000 1,012,375
-----------
2,226,250
-----------
HEALTHCARE SERVICES -- 1.9%
Amgen, Inc.* 14,000 1,116,500
-----------
INSURANCE -- 2.8%
American International
Group, Inc. 16,100 1,657,294
-----------
MEDICAL SUPPLIES & EQUIPMENT -- 0.9%
Medtronic, Inc. 16,000 554,000
-----------
---------------------------------------------------
SHARES VALUE
---------------------------------------------------
OIL & GAS -- 2.5%
Mobil Corp. 15,100 $ 1,457,150
-----------
PHARMACEUTICALS -- 4.7%
Biogen, Inc.* 16,300 1,208,238
Genentech, Inc.* 2,000 291,500
IDEC Pharmaceuticals
Corp.* 2,000 232,375
Immunex Corp.* 4,000 252,000
Waters Corp.* 15,200 807,500
-----------
2,791,613
-----------
PRINTING & PUBLISHING -- 2.3%
Lexmark International
Group, Inc. Cl-A* 17,200 1,342,675
-----------
RESTAURANTS -- 0.5%
Outback Steakhouse,
Inc.* 12,800 294,400
-----------
RETAIL & MERCHANDISING -- 14.1%
Bed, Bath & Beyond,
Inc.* 8,000 266,500
Best Buy Co., Inc.* 27,900 1,550,193
CVS Corp. 20,200 877,438
Gap, Inc. 16,850 625,556
Home Depot, Inc. 19,200 1,449,600
Kohl's Corp.* 20,100 1,503,730
Tiffany & Co. 20,500 1,219,750
Wal-Mart Stores, Inc. 14,900 851,163
-----------
8,343,930
-----------
SEMICONDUCTORS -- 10.9%
Intel Corp. 15,000 1,161,563
JDS Uniphase Corp.* 23,000 3,838,124
Vitesse Semiconductor
Corp.* 32,000 1,468,000
-----------
6,467,687
-----------
TELECOMMUNICATIONS -- 6.8%
Lucent Technologies,
Inc. 16,100 1,034,425
MCI WorldCom, Inc.* 8,000 686,500
Nortel Networks Corp. 25,700 1,591,794
Tellabs, Inc.* 11,000 695,750
-----------
4,008,469
-----------
UTILITIES -- 2.6%
AES Corp.* 10,000 564,375
Enron Corp. 23,600 942,525
-----------
1,506,900
-----------
TOTAL COMMON STOCK
(Cost $43,352,963) 49,024,388
-----------
AMERICAN SKANDIA ADVISOR FUNDS, INC.
---------------------------------------------------
SHARES VALUE
---------------------------------------------------
SHORT-TERM INVESTMENTS -- 9.7%
Temporary Investment
Cash Fund 2,858,963 $ 2,858,963
Temporary Investment
Fund 2,858,963 2,858,962
-----------
(Cost $5,717,925) 5,717,925
-----------
TOTAL INVESTMENTS -- 92.7%
(Cost $49,070,888) 54,742,313
OTHER ASSETS LESS
LIABILITIES -- 7.3% 4,329,728
-----------
NET ASSETS -- 100.0% $59,072,041
===========
-------------------------------------------------------
Definitions of abbreviations are included following the Schedules of
Investments.
* Non-income producing security.
See Notes to Financial Statements.
ASAF LORD ABBETT
GROWTH AND INCOME FUND
----------------------------------------------------
SHARES VALUE
----------------------------------------------------
COMMON STOCK -- 94.5%
AEROSPACE -- 0.6%
AlliedSignal, Inc. 15,000 $ 854,063
------------
AUTOMOBILE MANUFACTURERS -- 1.0%
Ford Motor Co. 27,000 1,481,625
------------
BROADCASTING -- 1.4%
CBS Corp.* 40,000 1,952,500
------------
CHEMICALS -- 2.9%
Dow Chemical Co. 18,000 2,128,500
Rohm & Haas Co. 50,000 1,912,500
------------
4,041,000
------------
COMPUTER HARDWARE -- 2.6%
Apple Computer, Inc.* 12,000 961,500
International
Business Machines
Corp. 27,000 2,656,125
------------
3,617,625
------------
COMPUTER SERVICES & SOFTWARE -- 7.5%
Cadence Design
Systems, Inc.* 105,000 1,594,688
First Data Corp. 35,000 1,599,063
Oracle Corp.* 35,000 1,664,688
Sun Microsystems,
Inc.* 35,000 3,703,437
Unisys Corp.* 85,000 2,061,249
------------
10,623,125
------------
CONGLOMERATES -- 1.1%
Minnesota Mining &
Manufacturing Co. 17,000 1,616,063
------------
ELECTRONIC COMPONENTS & EQUIPMENT -- 5.5%
Emerson Electric Co. 35,000 2,102,188
Honeywell, Inc. 20,000 2,108,750
Texas Instruments,
Inc. 40,000 3,590,000
------------
7,800,938
------------
FINANCIAL -- BANK & TRUST -- 7.9%
Bank One Corp. 60,000 2,253,750
BankAmerica Corp. 20,000 1,287,500
Chase Manhattan Corp. 30,000 2,621,250
Fleet Boston Corp. 55,000 2,399,375
Wells Fargo & Co. 55,000 2,633,124
------------
11,194,999
------------
FINANCIAL SERVICES -- 1.2%
Morgan Stanley, Dean
Witter & Co. 15,000 1,654,688
------------
FOOD -- 3.3%
Heinz, (H.J.) Co. 45,000 2,148,750
Ralston Purina Group 80,000 2,515,000
------------
4,663,750
------------
----------------------------------------------------
SHARES VALUE
----------------------------------------------------
HEALTHCARE SERVICES -- 1.2%
Columbia HCA
Healthcare Corp. 70,000 $ 1,688,750
------------
INSURANCE -- 8.4%
Ace Ltd. 110,000 2,138,125
Aetna, Inc. 45,000 2,261,250
American General
Corp. 45,000 3,338,437
AON Corp. 75,000 2,662,500
CIGNA Corp. 20,000 1,495,000
------------
11,895,312
------------
MACHINERY & EQUIPMENT -- 2.4%
Black & Decker Corp. 30,000 1,290,000
Deere & Co. 58,000 2,102,500
------------
3,392,500
------------
METALS & MINING -- 3.3%
Alcoa, Inc. 45,000 2,733,750
Phelps Dodge Corp. 35,000 1,973,125
------------
4,706,875
------------
OIL & GAS -- 11.7%
Atlantic Richfield
Co. 20,000 1,863,750
BP Amoco PLC [ADR] 24,000 1,386,000
Coastal Corp. 70,000 2,948,750
Mobil Corp. 35,000 3,377,499
Schlumberger Ltd. 35,000 2,119,688
Texaco, Inc. 35,000 2,148,125
Total SA [ADR] 40,000 2,667,500
------------
16,511,312
------------
PAPER & FOREST PRODUCTS -- 2.6%
International Paper
Co. 70,000 3,683,750
------------
PHARMACEUTICALS -- 4.5%
American Home
Products Corp. 70,000 3,657,500
Pharmacia & Upjohn,
Inc. 50,000 2,696,875
------------
6,354,375
------------
PRINTING & PUBLISHING -- 3.2%
Dow Jones & Co., Inc. 40,000 2,460,000
Gannett Co., Inc. 26,000 2,005,250
------------
4,465,250
------------
RETAIL & MERCHANDISING -- 2.4%
Consolidated Stores
Corp.* 100,000 1,831,250
Federated Department
Stores, Inc.* 38,000 1,622,125
------------
3,453,375
------------
AMERICAN SKANDIA ADVISOR FUNDS, INC.
----------------------------------------------------
SHARES VALUE
----------------------------------------------------
TELECOMMUNICATIONS -- 13.7%
Alltel Corp. 36,000 $ 2,997,000
AT&T Corp. 70,000 3,272,499
Bell Atlantic Corp. 42,000 2,727,375
Loral Space and
Communications* 90,000 1,355,625
MCI WorldCom, Inc.* 35,000 3,003,438
MediaOne Group, Inc.* 10,000 710,625
QUALCOMM, Inc.* 13,000 2,895,750
SBC Communications,
Inc. 50,000 2,546,875
------------
19,509,187
------------
UTILITIES -- 6.1%
Carolina Power &
Light Co. 50,000 1,725,000
Dominion Resources,
Inc. 40,000 1,925,000
Duke Energy Corp. 50,000 2,825,000
FirstEnergy Corp. 85,000 2,215,313
------------
8,690,313
------------
TOTAL COMMON STOCK
(Cost $123,545,236) 133,851,375
------------
PREFERRED STOCK -- 1.9%
CONTAINERS & PACKAGING -- 0.7%
Owens - Illinois,
Inc.
4.75% [CVT] 30,000 990,000
------------
----------------------------------------------------
SHARES VALUE
----------------------------------------------------
UTILITIES -- 1.2%
Houston Industries,
Inc.
7.00% [CVT] 15,000 $ 1,721,250
------------
TOTAL PREFERRED STOCK
(Cost $2,678,608) 2,711,250
------------
SHORT-TERM INVESTMENTS -- 6.1%
Temporary Investment
Cash Fund 4,333,783 4,333,783
Temporary Investment
Fund 4,333,783 4,333,783
------------
(Cost $8,667,566) 8,667,566
------------
TOTAL INVESTMENTS -- 102.5%
(Cost $134,891,410) 145,230,191
LIABILITIES IN EXCESS OF OTHER
ASSETS -- (2.5%) (3,519,528)
------------
NET ASSETS -- 100.0% $141,710,663
============
-------------------------------------------------------
Definitions of abbreviations are included following the Schedules of
Investments.
* Non-income producing security.
See Notes to Financial Statements.
ASAF JANUS
OVERSEAS GROWTH FUND
----------------------------------------------------
SHARES VALUE
----------------------------------------------------
FOREIGN STOCK -- 81.8%
ARGENTINA -- 0.1%
Telefonica SA [ADR]* 2,570 $ 128,339
------------
BRAZIL -- 1.0%
Telecomunicacoes
Brasileiras SA Pfd.
[ADR] 24,260 1,889,247
Telesp Celular
Participacoes SA
[ADR]* 30,385 748,231
------------
2,637,478
------------
CANADA -- 4.8%
BCE, Inc. 12,022 724,148
Bombardier, Inc. Cl-B 30,035 529,885
Corus Entertainment,
Inc.* 43,107 674,051
Le Groupe Videotron
Ltee 60,602 865,213
Nortel Networks Corp. 86,850 5,379,272
OCI Communications,
Inc.* 91,079 743,047
Rogers Communications,
Inc. Cl-B* 107,792 2,183,833
Shaw Communications,
Inc. Cl-B 33,570 1,021,319
------------
12,120,768
------------
FINLAND -- 7.1%
Nokia AB Oyj 33,093 3,784,671
Nokia Corp. Cl-A [ADR] 72,085 8,330,323
Sonera Group Oyj 176,125 5,285,064
Talentum Oyj Cl-B 17,775 231,662
Tieto Corp. Cl-B 16,811 583,083
------------
18,214,803
------------
FRANCE -- 7.8%
Atos SA* 25,741 3,295,307
Cap Gemini SA* 10,304 1,559,522
Carrefour Supermarche
SA 27,961 5,172,356
STMicroelectronics NV* 41,279 3,622,754
STMicroelectronics NV
NY Reg. 22,995 2,089,671
Total Fina SA Cl-B 14,611 1,973,360
Vivendi 27,580 2,088,581
------------
19,801,551
------------
GERMANY -- 4.9%
Intershop
Communications AG* 5,068 625,889
Mannesmann AG 56,681 8,739,585
Marschollek,
Lautenschlaeger und
Partner AG Non-
Voting Pfd. 8,409 1,765,887
Porsche AG Pfd. 484 1,322,641
------------
12,454,002
------------
----------------------------------------------------
SHARES VALUE
----------------------------------------------------
HONG KONG -- 3.5%
China Telecom Ltd.* 2,307,000 $ 7,898,326
China Telecom Ltd.
[ADR]* 210 14,175
Legend Holdings Ltd.* 968,000 1,034,092
------------
8,946,593
------------
INDIA -- 0.3%
Reliance Industries
[GDR] 144A* 62,694 771,763
------------
ISRAEL -- 0.7%
Check Point Software
Technologies Ltd. 2,455 284,013
Partner Communications
Co. Ltd. [ADR]* 93,445 1,471,759
------------
1,755,772
------------
ITALY -- 1.2%
Banca Popolare di
Brescia 19,683 832,684
Gucci Group Designs 1,852 148,229
Telecom Italia Mobile
SPA 197,816 1,235,012
Unicredito Italiano
SPA 175,662 821,601
------------
3,037,526
------------
JAPAN -- 20.8%
Fuji Bank Ltd.* 190,000 2,603,487
Fujitsu Ltd. 48,000 1,444,231
Internet Initiative,
Inc. [ADR]* 6,800 365,500
Ito-Yokado Co. Ltd. 11,000 879,072
Kirin Brewery Co. Ltd. 67,000 766,558
Matsushita Electric
Industrial Co. Ltd.* 1,000 167,880
NEC Corp. 112,000 2,264,468
Nippon Telegraph &
Telephone Corp. 137 2,100,421
NTT Data Corp. 97 1,533,633
NTT Mobile
Communication
Network, Inc. 704 18,686,078
Rohm Co. Ltd. 1,900 425,115
Softbank Corp.* 12,200 5,061,899
Sony Corp. 30,600 4,767,686
Takeda Chemical
Industries Ltd. 65,000 3,730,834
Tokio Marine & Fire
Insurance Co. Ltd. 31,000 405,471
Tyco International
Ltd. 154,225 6,159,361
Yamanouchi
Pharmaceutical Co.
Ltd.* 42,000 1,903,602
------------
53,265,296
------------
KOREA -- 0.7%
SK Telecom Co. Ltd.
[ADR] 145,364 1,898,817
------------
AMERICAN SKANDIA ADVISOR FUNDS, INC.
----------------------------------------------------
SHARES VALUE
----------------------------------------------------
MEXICO -- 1.7%
Grupo Televisa SA
[GDR]* 37,795 $ 1,606,288
Telefonos de Mexico SA
Cl-L [ADR] 32,095 2,744,122
------------
4,350,410
------------
NETHERLANDS -- 9.4%
ASM Lithography
Holding NV* 25,891 1,825,974
ASM Lithography
Holding NV NY Reg.* 4,320 313,740
Equant NV* 1,837 178,597
Equant NV NY Reg.* 7,196 698,012
Getronics NV 64,762 3,226,426
Gucci Group NV NY Reg. 42,404 3,424,123
Koninklijke (Royal)
Philips Electronics
NV 47,190 4,835,906
Koninklijke (Royal)
Philips Electronics
NV NY Reg. 20,389 2,119,182
TNT Post Group NV 176,497 4,489,271
United Pan-Europe
Communications NV* 25,181 1,934,699
Versatel Telecom
International NV* 70,043 868,700
------------
23,914,630
------------
SINGAPORE -- 0.8%
Development Bank of
Singapore* 77,921 880,442
Singapore Press
Holdings Ltd. 68,000 1,164,776
------------
2,045,218
------------
SPAIN -- 1.0%
Argentaria Caja Postal
Y Banco Hipotecario
de Espana SA 8,577 190,213
Banco Bilbao Vizcaya
SA 28,744 386,101
Banco Santander
Central Hispano SA 32,673 338,945
Tele Pizza SA* 1,947 10,396
Telefonica SA 98,959 1,626,729
------------
2,552,384
------------
SWEDEN -- 5.2%
Assa Abloy AB Cl-B 276,452 3,070,487
Ericsson, (L.M.)
Telephone Co. [ADR] 70,730 3,023,708
Ericsson, (L.M.)
Telephone Co. Cl-B 70,363 2,921,037
Securitas AB Cl-B 130,808 1,937,139
WM-Data AB Cl-B 53,518 2,244,474
------------
13,196,845
------------
----------------------------------------------------
SHARES VALUE
----------------------------------------------------
SWITZERLAND -- 0.8%
ABB AG* 9,776 $ 984,824
Julius Baer Holdings
AG Cl-B 347 1,044,138
------------
2,028,962
------------
TAIWAN -- 1.0%
Taiwan Semiconductor
Manufacturing Co.
Ltd. [ADR]* 75,913 2,628,488
------------
UNITED KINGDOM -- 9.0%
Baltimore Technologies
PLC* 27,957 860,152
Capita Group PLC 46,926 622,939
CMG PLC* 18,899 733,731
Colt Telecom Group
PLC* 159,116 4,749,303
Compass Group PLC 131,500 1,406,879
Energis PLC* 13,770 438,574
Hays PLC 34,007 388,663
Logica PLC 116,025 1,771,541
Orange PLC* 35,307 878,880
Prudential Corp. PLC* 121,071 1,896,266
QXL Ltd.* 175,077 598,988
SEMA Group PLC 159,398 2,079,377
Telewest
Communications PLC* 390,993 1,669,718
Telewest
Communications PLC
Rights* 35,545 31,496
Vodafone AirTouch PLC 789,590 3,666,666
Vodafone AirTouch PLC
[ADR] 22,475 1,077,395
------------
22,870,568
------------
TOTAL FOREIGN STOCK
(Cost $167,384,585) 208,620,213
------------
U.S. STOCK -- 8.4%
BROADCASTING -- 2.1%
UnitedGlobalCom, Inc.
Cl-A* 40,690 3,540,029
UnitedGlobalCom, Inc.
Pfd. 144A* 27,815 1,665,423
------------
5,205,452
------------
COMPUTER SERVICES & SOFTWARE --1.0%
Comverse Technology,
Inc.* 15,755 1,788,193
StarMedia Network,
Inc.* 26,655 766,331
------------
2,554,524
------------
CONGLOMERATES -- 0.7%
Seagram Co. Ltd. 37,860 1,869,338
------------
ASAF JANUS
OVERSEAS GROWTH FUND
----------------------------------------------------
SHARES VALUE
----------------------------------------------------
ELECTRONIC COMPONENTS & EQUIPMENT -- 0.5%
Galileo Technology
Ltd.* 60,015 $ 1,372,843
------------
PHARMACEUTICALS -- 0.7%
QLT PhotoTherapeutics,
Inc.* 44,180 1,872,128
------------
SEMICONDUCTORS -- 1.5%
Chartered
Semiconductor
Manufacturing 17,780 590,074
Uniphase Corp.* 20,029 3,342,339
------------
3,932,413
------------
TELECOMMUNICATIONS -- 1.9%
Amdocs Ltd. 87,035 2,420,661
Firstcom Corp.* 32,720 361,965
NTL, Inc.* 24,688 1,860,820
------------
4,643,446
------------
TOTAL U.S. STOCK
(Cost $15,546,519) 21,450,144
------------
PAR
(000)
-----
U.S. GOVERNMENT AGENCY OBLIGATIONS -- 7.8%
Federal Home Loan Bank
5.22%, 12/23/99
(Cost $19,849,200) $20,000 19,846,728
------------
COMMERCIAL PAPER -- 3.2%
Household Finance
Corp.
5.30%, 11/01/99
(Cost $8,200,000) 8,200 8,200,000
------------
TOTAL INVESTMENTS -- 101.2%
(Cost $210,980,304) 258,117,085
LIABILITIES IN EXCESS OF OTHER
ASSETS -- (1.2%) (2,967,391)
------------
NET ASSETS -- 100.0% $255,149,694
============
Foreign currency exchange contracts outstanding at October 31, 1999:
UNREALIZED
SETTLEMENT CONTRACTS TO IN EXCHANGE CONTRACTS APPRECIATION
MONTH TYPE RECEIVE FOR AT VALUE (DEPRECIATION)
--------------------------------------------------------------------------------
11/99 Buy CHF 135,000 $ 91,656 $ 88,801 $ (2,855)
12/99 Buy CHF 150,000 100,569 98,839 (1,730)
04/00 Buy CHF 530,000 365,039 354,041 (10,998)
11/99 Buy CAD 1,301,128 884,381 884,637 256
11/99 Buy EUR 3,858,595 4,170,835 4,064,153 (106,682)
11/99 Buy GBP 496,526 818,017 815,012 (3,005)
12/99 Buy GBP 1,200,000 2,000,382 1,973,197 (27,185)
04/00 Buy GBP 2,100,000 3,486,021 3,453,607 (32,414)
11/99 Buy HKD 12,443,399 1,601,423 1,601,444 21
05/01 Buy HKD 8,500,000 1,070,014 1,073,871 3,857
11/99 Buy JPY 43,186,338 414,175 414,142 (33)
04/00 Buy JPY 1,200,000,000 11,518,691 11,818,210 299,519
11/99 Buy SEK 1,931,097 235,836 234,492 (1,344)
----------- ----------- ---------
$26,757,039 $26,874,446 $ 117,407
=========== =========== =========
UNREALIZED
SETTLEMENT CONTRACTS TO IN EXCHANGE CONTRACTS APPRECIATION
MONTH TYPE DELIVER FOR AT VALUE (DEPRECIATION)
--------------------------------------------------------------------------------
11/99 Sell CHF 135,000 $ 94,274 $ 88,801 $ 5,473
12/99 Sell CHF 750,000 496,838 494,196 2,642
04/00 Sell CHF 530,000 365,517 354,041 11,476
11/99 Sell CAD 300,000 206,401 204,003 2,398
04/00 Sell CAD 1,300,000 889,315 886,634 2,681
11/99 Sell EUR 5,320,326 5,532,581 5,605,797 (73,216)
12/99 Sell EUR 3,050,000 3,250,888 3,219,443 31,445
04/00 Sell EUR 8,300,000 8,983,470 8,842,343 141,127
11/99 Sell GBP 685,648 1,130,726 1,125,414 5,312
12/99 Sell GBP 3,700,000 5,908,527 6,084,026 (175,499)
04/00 Sell GBP 2,100,000 3,477,035 3,453,606 23,429
05/01 Sell HKD 56,000,000 7,048,783 7,074,915 (26,132)
11/99 Sell JPY 80,192,224 685,218 771,241 (86,023)
12/99 Sell JPY 60,000,000 500,000 578,723 (78,723)
03/00 Sell JPY 125,000,000 1,206,403 1,226,128 (19,725)
04/00 Sell JPY 1,786,000,000 17,152,886 17,596,531 (443,645)
07/01 Sell SGD 950,000 586,482 597,589 (11,107)
----------- ----------- ---------
$57,515,344 $58,203,431 $(688,087)
=========== =========== =========
AMERICAN SKANDIA ADVISOR FUNDS, INC.
The following is a breakdown of the foreign stock portion of the Fund, by
industry classification, as of October 31, 1999. Percentages are based on net
assets.
INDUSTRY
--------
Aerospace 0.2%
Automobile Manufacturers 0.5%
Beverages 0.3%
Broadcasting 0.6%
Business Services 0.2%
Cable Television 1.4%
Chemicals 2.2%
Clothing & Apparel 1.4%
Computer Hardware 1.2%
Computer Services & Software 4.5%
Conglomerates 3.6%
Consumer Products & Services 5.3%
Electronic Components & Equipment 15.1%
Entertainment & Leisure 0.6%
Financial -- Bank & Trust 2.0%
Financial Services 3.1%
Industrial Products 4.1%
Insurance 0.9%
Machinery & Equipment 0.9%
Oil & Gas 0.8%
Pharmaceuticals 0.9%
Printing & Publishing 2.6%
Retail & Merchandising 0.6%
Semiconductors 4.1%
Telecommunications 22.9%
Transportation 1.8%
----
TOTAL 81.8%
====
----------------------------------------------------
Unless otherwise noted, all stocks are common stock. Definitions of
abbreviations are included following the Schedules of Investments.
* Non-income producing security.
144A -- Security was purchased pursuant to Rule 144A under the Securities Act of
1933 and may not be resold subject to that rule except to qualified
institutional buyers. At the end of the year, these securities amounted
to 1.0% of net assets.
See Notes to Financial Statements.
ASAF MARSICO
CAPITAL GROWTH FUND
---------------------------------------------------
SHARES VALUE
---------------------------------------------------
COMMON STOCK -- 90.5%
ADVERTISING -- 1.0%
Young & Rubicam, Inc. 119,089 $ 5,448,322
------------
AIRLINES -- 2.0%
UAL Corp.* 162,165 11,037,355
------------
BEVERAGES -- 2.6%
Anheuser-Busch
Companies, Inc. 203,208 14,592,875
------------
BROADCASTING -- 2.0%
Clear Channel
Communications,
Inc.* 88,530 7,115,599
UnitedGlobalCom, Inc.
Cl-A* 46,889 4,079,343
------------
11,194,942
------------
COMPUTER HARDWARE -- 6.5%
Dell Computer Corp.* 262,567 10,535,501
EMC Corp.* 358,666 26,182,618
------------
36,718,119
------------
COMPUTER SERVICES & SOFTWARE -- 13.6%
America Online, Inc.* 129,351 16,775,208
Cisco Systems, Inc.* 200,868 14,864,232
Juniper Networks,
Inc.* 25,864 7,128,765
Microsoft Corp.* 280,353 25,950,174
Sun Microsystems,
Inc.* 111,961 11,846,873
------------
76,565,252
------------
CONSTRUCTION -- 0.1%
M.D.C. Holdings, Inc. 20,000 312,500
------------
CONSUMER PRODUCTS & SERVICES -- 0.7%
Estee Lauder
Companies, Inc. Cl-A 84,149 3,923,447
------------
ELECTRONIC COMPONENTS & EQUIPMENT -- 4.1%
General Electric Co. 88,571 12,006,906
Texas Instruments,
Inc. 122,220 10,969,245
------------
22,976,151
------------
ENTERTAINMENT & LEISURE -- 3.3%
Time Warner, Inc. 270,148 18,825,939
------------
EQUIPMENT SERVICES -- 1.2%
Hertz Corp. Cl-A 150,266 6,517,788
------------
FINANCIAL -- BANK & TRUST -- 0.9%
Northern Trust Corp. 53,698 5,185,213
------------
FINANCIAL SERVICES -- 9.9%
Citigroup, Inc. 523,443 28,331,353
Fannie Mae 236,355 16,722,116
Merrill Lynch & Co.,
Inc. 138,790 10,895,015
------------
55,948,484
------------
HOTELS & MOTELS -- 1.1%
Four Seasons Hotels,
Inc. 155,068 6,464,397
------------
---------------------------------------------------
SHARES VALUE
---------------------------------------------------
OIL & GAS -- 4.3%
Anadarko Petroleum
Corp. 109,145 $ 3,363,030
Atlantic Richfield Co. 81,469 7,591,892
Royal Dutch Petroleum
Co. 220,975 13,244,690
------------
24,199,612
------------
PHARMACEUTICALS -- 4.7%
Genentech, Inc.* 101,780 14,834,435
Pfizer, Inc. 211,020 8,335,290
Priority Healthcare
Corp. Cl-B* 162,154 3,253,215
------------
26,422,940
------------
PRINTING & PUBLISHING -- 0.3%
Houghton Mifflin Co. 44,564 1,888,400
------------
RESTAURANTS -- 1.5%
McDonald's Corp. 202,608 8,357,580
------------
RETAIL & MERCHANDISING -- 9.0%
Best Buy Co., Inc.* 82,417 4,579,295
CVS Corp. 63,269 2,748,247
Home Depot, Inc. 212,424 16,038,012
Tiffany & Co. 152,547 9,076,547
Wal-Mart Stores, Inc. 318,189 18,176,546
------------
50,618,647
------------
SEMICONDUCTORS -- 1.5%
JDS Uniphase Corp.* 51,328 8,565,360
------------
TELECOMMUNICATIONS -- 19.4%
Comcast Corp. Cl-A 54,994 2,316,622
Lucent Technologies,
Inc. 229,755 14,761,759
MCI WorldCom, Inc.* 253,509 21,754,241
MediaOne Group, Inc.* 181,994 12,932,949
QUALCOMM, Inc.* 133,708 29,783,456
Sprint Corp.
(PCS Group)* 168,538 13,978,120
Vodafone AirTouch PLC
[ADR] 252,508 12,104,602
Williams
Communications
Group, Inc.* 82,746 2,637,529
------------
110,269,278
------------
UTILITIES -- 0.8%
AES Corp. [CVT]* 91,939 4,637,173
------------
TOTAL COMMON STOCK
(Cost $424,574,799) 510,669,774
------------
FOREIGN STOCK -- 2.5%
ELECTRONIC COMPONENTS & EQUIPMENT
Sony Corp. -- (JPY)
(Cost $13,589,897) 92,300 14,380,963
------------
AMERICAN SKANDIA ADVISOR FUNDS, INC.
---------------------------------------------------
PAR
(000) VALUE
---------------------------------------------------
U.S. GOVERNMENT AGENCY OBLIGATIONS -- 9.0%
Federal Home Loan Bank
5.16%, 11/01/99
(Cost $50,700,000) $50,700 $ 50,700,000
------------
CORPORATE OBLIGATIONS -- 1.0%
TELECOMMUNICATIONS
Level 3
Communications, Inc.
[CVT]
6.00%, 09/15/09
(Cost $4,400,000) 4,400 5,428,500
------------
---------------------------------------------------
SHARES VALUE
---------------------------------------------------
SHORT-TERM INVESTMENTS -- 0.0%
Temporary Investment
Cash Fund 37,561 $ 37,561
Temporary Investment
Fund 37,560 37,560
------------
(Cost $75,121) 75,121
------------
TOTAL INVESTMENTS -- 103.0%
(Cost $493,339,817) 581,254,358
LIABILITIES IN EXCESS OF
OTHER ASSETS -- (3.0%) (16,940,543)
------------
NET ASSETS -- 100.0% $564,313,815
============
-------------------------------------------------------
Definitions of abbreviations are included following the Schedules of
Investments.
* Non-income producing security.
See Notes to Financial Statements.
ASAF NEUBERGER BERMAN
MID-CAP GROWTH FUND
----------------------------------------------------
SHARES VALUE
----------------------------------------------------
COMMON STOCK -- 95.1%
ADVERTISING -- 1.3%
DoubleClick, Inc.* 3,100 $ 434,000
Lamar Advertising Co.* 3,900 210,600
-----------
644,600
-----------
BROADCASTING -- 4.1%
AMFM, Inc.* 13,700 958,999
Emmis Communications
Corp. Cl-A* 7,500 540,938
Entercom
Communications
Corp.* 10,200 508,088
Westwood One, Inc.* 300 13,838
-----------
2,021,863
-----------
BUSINESS SERVICES --1.6%
Digex, Inc.* 18,500 529,563
Navigant Consulting,
Inc.* 8,500 242,781
-----------
772,344
-----------
CLOTHING & APPAREL -- 2.1%
AnnTaylor Stores
Corp.* 10,900 463,931
Limited, Inc. 14,300 588,088
-----------
1,052,019
-----------
COMPUTER HARDWARE -- 1.5%
Adaptec, Inc.* 16,800 756,000
-----------
COMPUTER SERVICES & SOFTWARE -- 21.1%
BroadVision, Inc.* 3,900 284,700
CheckFree Holdings
Corp.* 21,300 796,088
Citrix Systems, Inc.* 21,400 1,372,274
CMG PLC* 3,700 404,919
Comverse Technology,
Inc.* 8,200 930,699
Covad Communications
Group, Inc. 3,900 187,200
Intuit, Inc.* 20,700 602,888
Lycos, Inc.* 7,900 422,650
Network Appliance,
Inc.* 6,900 510,600
Peregrine Systems,
Inc.* 5,700 250,088
Portal Software, Inc.* 3,100 202,663
PSINet, Inc.* 13,000 468,000
Rational Software
Corp.* 12,400 530,100
Safeguard Scientifics,
Inc.* 5,800 487,925
Safeguard Scientifics,
Inc. Rights* 490 0
Siebel Systems, Inc.* 8,400 922,424
Starmedia Network,
Inc.* 8,400 241,500
USWeb Corp.* 19,800 767,250
VERITAS Software
Corp.* 9,700 1,046,387
-----------
10,428,355
-----------
----------------------------------------------------
SHARES VALUE
----------------------------------------------------
ELECTRONIC COMPONENTS & EQUIPMENT -- 11.5%
Altera Corp.* 14,600 $ 709,924
Broadcom Corp.* 2,600 332,313
Conexant Systems,
Inc.* 6,700 625,612
E-Tek Dynamics, Inc.* 6,700 446,388
Flextronics
International Ltd.* 5,600 397,600
Gemstar International
Group Ltd.* 9,300 807,937
Metromedia Fiber
Network, Inc. Cl-A* 18,600 614,963
Sanmina Corp.* 12,700 1,143,793
Tandy Corp.* 9,800 616,788
-----------
5,695,318
-----------
ENTERTAINMENT & LEISURE -- 4.6%
Harley-Davidson, Inc. 14,900 883,755
Park Place
Entertainment Corp.* 44,500 584,063
Royal Caribbean
Cruises Ltd. 5,200 275,925
SFX Entertainment,
Inc. Cl-A* 14,550 508,341
-----------
2,252,084
-----------
FINANCIAL
SERVICES -- 6.2%
Capital One Financial
Corp. 12,900 683,700
Donaldson, Lufkin &
Jenrette, Inc. 8,600 445,050
E*TRADE Group, Inc.* 21,000 500,063
Lehman Brothers
Holdings, Inc. 7,100 523,181
Providian Financial
Corp. 8,300 904,700
-----------
3,056,694
-----------
HEALTHCARE SERVICES -- 0.2%
Express Scripts, Inc.
Cl-A* 2,300 112,988
-----------
MEDICAL SUPPLIES & EQUIPMENT -- 2.3%
MiniMed, Inc.* 7,400 561,013
PE Corp. - PE
Biosystems Group 8,600 557,925
-----------
1,118,938
-----------
OFFICE EQUIPMENT -- 0.6%
Staples, Inc.* 13,950 309,516
-----------
OIL & GAS -- 2.8%
Coastal Corp. 13,800 581,325
EOG Resources, Inc. 16,100 335,081
Union Pacific
Resources Group,
Inc. 31,200 452,400
-----------
1,368,806
-----------
PERSONAL SERVICES --0.9%
Cendant Corp.* 28,200 465,300
-----------
AMERICAN SKANDIA ADVISOR FUNDS, INC.
----------------------------------------------------
SHARES VALUE
----------------------------------------------------
PHARMACEUTICALS -- 7.9%
Biogen, Inc.* 12,100 $ 896,912
Gilead Sciences, Inc. 3,500 221,156
Immunex Corp.* 10,500 661,500
MedImmune, Inc.* 7,300 817,599
QLT PhotoTherapeutics,
Inc.* 8,300 351,713
Sepracor, Inc.* 5,800 482,488
Waters Corp.* 9,100 483,438
-----------
3,914,806
-----------
PRINTING & PUBLISHING -- 1.3%
Valassis
Communications,
Inc.* 14,500 623,500
-----------
RETAIL & MERCHANDISING -- 5.2%
Best Buy Co., Inc.* 11,900 661,194
Circuit City Stores,
Inc. 13,200 563,475
TJX Companies, Inc. 31,900 865,287
Williams-Sonoma, Inc.* 8,700 467,625
-----------
2,557,581
-----------
SEMICONDUCTORS -- 10.6%
JDS Uniphase Corp.* 6,800 1,134,750
Maxim Integrated
Products, Inc.* 13,500 1,065,656
Micron Technology,
Inc.* 7,100 506,319
PMC-Sierra, Inc.* 8,000 754,000
Vitesse Semiconductor
Corp.* 15,200 697,300
Xilinx, Inc.* 13,800 1,085,025
-----------
5,243,050
-----------
----------------------------------------------------
SHARES VALUE
----------------------------------------------------
TELECOMMUNICATIONS -- 7.1%
Adelphia
Communications Corp.
Cl-A* 7,600 $ 415,150
Efficient Networks,
Inc.* 10,200 433,500
Intermedia
Communications,
Inc.* 22,500 585,000
NTL, Inc.* 12,375 932,766
Voicestream Wireless
Corp.* 7,800 770,250
WinStar
Communications,
Inc.* 9,600 372,600
-----------
3,509,266
-----------
UTILITIES -- 2.2%
Calpine Corp.* 9,000 518,625
Montana Power Co. 20,200 574,437
-----------
1,093,062
-----------
TOTAL COMMON STOCK
(Cost $38,197,770) 46,996,090
-----------
SHORT-TERM INVESTMENTS -- 5.0%
Temporary Investment
Cash Fund 1,240,373 1,240,373
Temporary Investment
Fund 1,240,372 1,240,372
-----------
(Cost $2,480,745) 2,480,745
-----------
TOTAL INVESTMENTS -- 100.1%
(Cost $40,678,515) 49,476,835
LIABILITIES IN EXCESS OF OTHER
ASSETS -- (0.1%) (68,256)
-----------
NET ASSETS -- 100.0% $49,408,579
===========
-------------------------------------------------------
Definitions of abbreviations are included following the Schedules of
Investments.
* Non-income producing security.
See Notes to Financial Statements.
ASAF NEUBERGER BERMAN
MID-CAP VALUE FUND
----------------------------------------------------
SHARES VALUE
----------------------------------------------------
COMMON STOCK -- 91.4%
AEROSPACE -- 4.8%
General Dynamics Corp. 18,100 $ 1,003,419
General Motors Corp.
Cl-H* 14,400 1,048,500
-----------
2,051,919
-----------
AIRLINES -- 1.3%
Continental Airlines,
Inc. Cl-B* 13,500 546,750
-----------
AUTOMOTIVE PARTS -- 3.0%
Eaton Corp. 4,500 338,625
Lear Corp.* 27,200 918,000
-----------
1,256,625
-----------
BEVERAGES -- 1.2%
American National Can
Group, Inc. 41,400 517,500
-----------
BROADCASTING -- 4.0%
AT&T Corp. Liberty
Media Group Cl-A* 17,200 682,625
News Corp. Ltd. [ADR] 22,000 606,375
Scripps, (E.W.) Co.
Cl-A 9,000 415,688
-----------
1,704,688
-----------
BUILDING
MATERIALS -- 1.0%
Sherwin Williams Co. 18,700 418,413
-----------
BUSINESS SERVICES --4.3%
Comdisco, Inc. 48,000 969,000
Parametric Technology
Corp.* 44,000 838,750
-----------
1,807,750
-----------
CAPITAL GOODS -- 1.9%
SPX Corp.* 9,600 813,600
-----------
CHEMICALS -- 5.5%
Engelhard Corp. 25,400 447,675
Grace, (W.R.) & Co.* 49,000 731,937
Lyondell Chemical Co. 32,300 391,638
Praxair, Inc. 16,200 757,349
-----------
2,328,599
-----------
CLOTHING & APPAREL -- 0.2%
Neiman Marcus Group,
Inc. Cl-B* 3,977 85,260
-----------
COMPUTER SERVICES & SOFTWARE -- 4.6%
Cadence Design
Systems, Inc.* 47,300 718,369
Ceridian Corp.* 42,500 932,344
Computer Associates
International, Inc. 5,400 305,100
-----------
1,955,813
-----------
CONSUMER PRODUCTS & SERVICES -- 1.2%
Maytag Corp. 12,600 504,788
-----------
ELECTRONIC COMPONENTS & EQUIPMENT -- 1.5%
UCAR International,
Inc.* 33,500 655,344
-----------
----------------------------------------------------
SHARES VALUE
----------------------------------------------------
ENTERTAINMENT & LEISURE -- 1.1%
Mirage Resorts, Inc.* 32,300 $ 470,369
-----------
FINANCIAL -- BANK & TRUST -- 4.3%
Countrywide Credit
Industries, Inc. 24,900 845,043
Fleet Boston Corp. 13,900 606,388
Valley National
Bancorp 13,700 365,619
-----------
1,817,050
-----------
FINANCIAL SERVICES -- 7.4%
AMBAC Financial Group,
Inc. 10,400 621,400
Dun & Bradstreet Corp. 30,300 890,062
FINOVA Group, Inc. 20,400 898,874
SLM Holding Corp. 14,900 729,169
-----------
3,139,505
-----------
HEALTHCARE SERVICES -- 1.6%
Wellpoint Health
Networks, Inc.* 12,000 696,000
-----------
INSURANCE -- 3.0%
Ace Ltd. 32,300 627,831
AON Corp. 9,600 340,800
Cincinnati Financial
Corp. 8,800 315,150
-----------
1,283,781
-----------
MACHINERY & EQUIPMENT -- 2.1%
Grainger, (W.W.), Inc. 9,900 419,513
McDermott
International, Inc. 26,800 485,750
-----------
905,263
-----------
MEDICAL SUPPLIES & EQUIPMENT -- 2.8%
Becton Dickinson & Co. 23,900 606,463
Genzyme Corp.* 15,600 596,700
-----------
1,203,163
-----------
METALS & MINING -- 2.3%
AK Steel Holding Corp. 29,300 507,256
Reynolds Metals Co. 7,600 459,325
-----------
966,581
-----------
OIL & GAS -- 10.9%
Apache Corp. 12,700 495,300
Coastal Corp. 16,900 711,912
Dynegy, Inc. 22,500 514,688
Kinder Morgan, Inc. 14,000 281,750
Noble Drilling Corp.* 14,700 326,156
Tosco Corp. 17,800 450,563
Transocean Offshore,
Inc. 17,500 475,781
USX-Marathon Group,
Inc. 24,200 704,824
Williams Companies,
Inc. 18,000 675,000
-----------
4,635,974
-----------
PAPER & FOREST PRODUCTS -- 2.9%
Bowater, Inc. 14,000 735,000
Fort James Corp. 19,300 507,831
-----------
1,242,831
-----------
AMERICAN SKANDIA ADVISOR FUNDS, INC.
----------------------------------------------------
SHARES VALUE
----------------------------------------------------
PRINTING & PUBLISHING -- 2.3%
Belo, (A.H.) Corp.
Cl-A 38,500 $ 784,437
Lexmark International
Group, Inc. Cl-A* 2,300 179,544
-----------
963,981
-----------
RAILROADS -- 1.7%
Kansas City Southern
Industries, Inc. 14,800 702,075
-----------
REAL ESTATE -- 1.5%
Indymac Mortgage
Holdings, Inc.
[REIT] 47,000 655,063
-----------
RETAIL & MERCHANDISING -- 3.0%
Consolidated Stores
Corp.* 40,700 745,319
Harcourt General, Inc. 13,200 508,200
-----------
1,253,519
-----------
SEMICONDUCTORS -- 0.5%
National Semiconductor
Corp.* 6,400 191,600
-----------
TELECOMMUNICATIONS -- 4.0%
American Tower Corp.
Cl-A* 23,600 449,875
Global Crossing Ltd.* 15,300 529,762
Sonera Oyj Corp.
[ADR]* 11,900 368,900
WinStar
Communications,
Inc.* 9,400 364,838
-----------
1,713,375
-----------
TRANSPORTATION -- 2.4%
Galileo International,
Inc. 21,800 655,363
Navistar International
Corp.* 8,800 366,850
-----------
1,022,213
-----------
----------------------------------------------------
SHARES VALUE
----------------------------------------------------
UTILITIES -- 3.1%
Cinergy Corp. 10,400 $ 293,800
Niagara Mohawk
Holdings, Inc.* 32,300 512,762
Unicom Corp. 13,100 501,894
-----------
1,308,456
-----------
TOTAL COMMON STOCK
(Cost $40,464,751) 38,817,848
-----------
SHORT-TERM INVESTMENTS -- 6.2%
Temporary Investment
Cash Fund 1,306,794 1,306,794
Temporary Investment
Fund 1,306,794 1,306,794
-----------
(Cost $2,613,588) 2,613,588
-----------
TOTAL INVESTMENTS -- 97.6%
(Cost $43,078,339) 41,431,436
OTHER ASSETS LESS
LIABILITIES -- 2.4% 1,028,280
-----------
NET ASSETS -- 100.0% $42,459,716
===========
-------------------------------------------------------
Definitions of abbreviations are included following the Schedules of
Investments.
* Non-income producing security.
DEFINITION OF ABBREVIATIONS
--------------------------------------------------------------------------------
THE FOLLOWING ABBREVIATIONS ARE USED THROUGHOUT THE SCHEDULES OF INVESTMENTS:
SECURITY DESCRIPTIONS:
ADR -- American Depositary Receipt
CVT -- Convertible Security
GDR -- Global Depositary Receipt
PIK -- Payment in Kind Security
REIT -- Real Estate Investment Trust
STEP -- Stepped Coupon Bond (Rates shown are the
effective yields at purchase date.)
COUNTRIES/CURRENCIES:
AUD -- Australia/Australian Dollar
CAD -- Canada/Canadian Dollar
CHF -- Switzerland/Swiss Franc
EUR -- Europe/Euro Currency
GBP -- United Kingdom/British Pound
HKD -- Hong Kong/Hong Kong Dollar
ITL -- Italy/Italian Lira
JPY -- Japan/Japanese Yen
MXP -- Mexico/Mexican Peso
SEK -- Sweden/Swedish Krona
SGD -- Singapore/Singapore Dollar
See Notes to Financial Statements.
OCTOBER 31, 1999
STATEMENTS OF ASSETS AND LIABILITIES
--------------------------------------------------------------------------------
ASAF ASAF ASAF
FOUNDERS ASAF T. ROWE AMERICAN ASAF
INTERNATIONAL JANUS PRICE SMALL CENTURY FEDERATED
SMALL SMALL-CAP COMPANY STRATEGIC HIGH YIELD
CAPITALIZATION GROWTH VALUE BALANCED BOND
FUND FUND FUND FUND FUND
-------------- ------------ ----------- ------------ ------------
ASSETS:
Investments in Securities at Value (A) $17,186,665 $215,325,992 $63,240,190 $128,699,416 $115,139,114
Collateral Received for Securities Lent -- 56,763,136 306,000 5,569,999 3,617,250
Cash -- 1 -- 318,750 --
Foreign Currency (B) 47,826 -- -- -- --
Receivable For:
Securities Sold 500,718 512,517 355,799 1,130,245 159,067
Dividends and Interest 18,243 27,725 32,344 650,473 2,460,351
Futures Variation Margin -- -- -- 97,789 --
Fund Shares Sold 1,135,004 6,689,835 304,575 775,562 388,159
Unrealized Appreciation on Foreign
Currency Exchange Contracts 278 -- -- -- --
Receivable from Investment Manager 27,594 -- -- 14,728 --
Deferred Organization Costs 40,702 40,702 40,702 40,702 40,702
Prepaid Expenses 23,565 26,159 24,099 22,892 23,647
----------- ------------ ----------- ------------ ------------
Total Assets 18,980,595 279,386,067 64,303,709 137,320,556 121,828,290
----------- ------------ ----------- ------------ ------------
LIABILITIES:
Cash Overdraft 515,097 -- -- -- 159,567
Payable to Investment Manager -- 11,898 17,891 -- 36,544
Unrealized Depreciation on Foreign
Currency Exchange Contracts 7,181 -- -- -- --
Payable Upon Return of Securities Lent -- 56,763,136 306,000 5,569,999 3,617,250
Payable For:
Securities Purchased 1,431,077 6,898,731 1,786,392 1,104,964 --
Fund Shares Redeemed -- 244,078 127,706 18,030 238,202
Distribution Fees 12,619 128,809 47,585 94,499 92,752
Accrued Expenses and Other Liabilities 73,032 127,331 136,502 130,453 105,686
Accrued Dividends -- -- -- -- 241,021
----------- ------------ ----------- ------------ ------------
Total Liabilities 2,039,006 64,173,983 2,422,076 6,917,945 4,491,022
----------- ------------ ----------- ------------ ------------
NET ASSETS $16,941,589 $215,212,084 $61,881,633 $130,402,611 $117,337,268
=========== ============ =========== ============ ============
COMPONENTS OF NET ASSETS
Capital Stock $ 1,259 $ 12,709 $ 6,992 $ 10,178 $ 12,848
Additional Paid-In Capital 14,708,412 166,833,902 67,979,561 122,819,591 126,317,373
Undistributed Net Investment Income (Loss) -- -- -- 483,767 --
Accumulated Net Realized Gain (Loss) on
Investments 1,213,624 2,051,631 856,163 720,055 (349,223)
Net Unrealized Appreciation (Depreciation)
on Investments 1,018,294 46,313,842 (6,961,083) 6,369,020 (8,643,730)
----------- ------------ ----------- ------------ ------------
NET ASSETS $16,941,589 $215,212,084 $61,881,633 $130,402,611 $117,337,268
=========== ============ =========== ============ ============
(A) Investments at Cost $16,170,728 $169,012,185 $70,201,273 $122,590,668 $123,782,844
=========== ============ =========== ============ ============
(B) Foreign Currency at Cost $ 48,972 $ -- $ -- $ -- $ --
=========== ============ =========== ============ ============
AMERICAN SKANDIA ADVISOR FUNDS, INC.
--------------------------------------------------------------------------------
ASAF ASAF ASAF
FOUNDERS ASAF T. ROWE AMERICAN ASAF
INTERNATIONAL JANUS PRICE SMALL CENTURY FEDERATED
SMALL SMALL-CAP COMPANY STRATEGIC HIGH YIELD
CAPITALIZATION GROWTH VALUE BALANCED BOND
FUND FUND FUND FUND FUND
-------------- ------------- ------------- ----------------- ---------------
NET ASSET VALUE:
Class A: Net Assets $2,374,130 $54,038,868 $10,881,109 $24,443,323 $16,079,404
---------- ----------- ----------- ----------- -----------
Shares Outstanding 175,059 3,163,696 1,223,081 1,902,805 1,760,803
---------- ----------- ----------- ----------- -----------
Net Asset Value and
Redemption Price
Per Share $ 13.56 $ 17.08 $ 8.90 $ 12.85 $ 9.13
========== =========== =========== =========== ===========
Divided by
(1 - Maximum
Sales Charge) 95% 95% 95% 95% 95 3/4%
---------- ----------- ----------- ----------- -----------
Offering Price
Per Share* $ 14.27 $ 17.98 $ 9.37 $ 13.53 $ 9.54
========== =========== =========== =========== ===========
Class B: Net Assets $7,722,312 $98,524,397 $23,890,289 $65,932,391 $68,159,659
---------- ----------- ----------- ----------- -----------
Shares Outstanding 574,602 5,838,635 2,701,626 5,148,401 7,462,389
---------- ----------- ----------- ----------- -----------
Net Asset Value,
Offering and
Redemption
Price Per Share $ 13.44 $ 16.87 $ 8.84 $ 12.81 $ 9.13
========== =========== =========== =========== ===========
Class C: Net Assets $2,540,530 $38,336,650 $13,163,886 $20,769,289 $13,204,895
---------- ----------- ----------- ----------- -----------
Shares Outstanding 189,145 2,268,168 1,489,931 1,622,619 1,446,075
---------- ----------- ----------- ----------- -----------
Net Asset Value,
Offering and
Redemption
Price Per Share $ 13.43 $ 16.90 $ 8.84 $ 12.80 $ 9.13
========== =========== =========== =========== ===========
Class X: Net Assets $4,304,617 $24,312,169 $13,946,349 $19,257,608 $19,893,310
---------- ----------- ----------- ----------- -----------
Shares Outstanding 320,518 1,438,545 1,577,677 1,504,380 2,178,718
---------- ----------- ----------- ----------- -----------
Net Asset Value,
Offering and
Redemption
Price Per Share $ 13.43 $ 16.90 $ 8.84 $ 12.80 $ 9.13
========== =========== =========== =========== ===========
* On sales of $50,000 or more, the offering price of Class A shares is reduced.
See Notes to Financial Statements.
OCTOBER 31, 1999
STATEMENTS OF ASSETS AND LIABILITIES
--------------------------------------------------------------------------------
ASAF ASAF
ASAF ASAF ASAF ASAF NEUBERGER NEUBERGER
OPPENHEIMER LORD ABBETT JANUS MARSICO BERMAN BERMAN
LARGE-CAP GROWTH AND OVERSEAS CAPITAL MID-CAP MID-CAP
GROWTH INCOME GROWTH GROWTH GROWTH VALUE
FUND FUND FUND FUND FUND FUND
----------- ------------ ------------ ------------ ----------- -----------
ASSETS:
Investments in Securities at
Value (A) $54,742,313 $145,230,191 $258,117,085 $581,254,358 $49,476,835 $41,431,436
Collateral Received for Securities
Lent 9,831,788 17,938,097 -- 142,103,987 17,874,935 3,132,300
Cash 4,292,941 -- 586,553 -- -- --
Foreign Currency (B)
Receivable For: -- -- 315 -- -- --
Securities Sold 19,839 494,863 2,313,435 4,158,382 915,976 1,210,332
Dividends and Interest 26,911 199,023 142,375 222,624 12,650 72,207
Futures Variation Margin -- -- -- -- -- --
Fund Shares Sold 372,008 1,454,032 3,117,992 6,787,915 497,986 438,861
Unrealized Appreciation on Foreign
Currency Exchange Contracts -- -- 529,636 -- -- --
Receivable from Investment Manager -- -- -- -- 35,293 1,375
Deferred Organization Costs -- -- -- -- -- --
Prepaid Expenses 30,852 30,615 26,377 37,730 21,737 25,769
----------- ------------ ------------ ------------ ----------- -----------
Total Assets 69,316,652 165,346,821 264,833,768 734,564,996 68,835,412 46,312,280
----------- ------------ ------------ ------------ ----------- -----------
LIABILITIES:
Cash Overdraft -- 364 -- -- 651 499
Payable to Investment Manager 15,471 40,914 167,479 291,189 -- --
Unrealized Depreciation on Foreign
Currency Exchange Contracts -- -- 1,100,316 -- -- --
Payable Upon Return of Securities
Lent 9,831,788 17,938,097 -- 142,103,987 17,874,935 3,132,300
Payable For:
Securities Purchased 207,268 5,119,823 7,732,633 26,355,762 1,352,849 582,927
Fund Shares Redeemed 44,123 319,179 184,238 610,284 92,038 45,881
Distribution Fees 43,655 99,528 172,061 398,960 34,101 29,868
Accrued Expenses and Other
Liabilities 102,306 118,253 327,347 490,999 72,259 61,089
Accrued Dividends -- -- -- -- -- --
----------- ------------ ------------ ------------ ----------- -----------
Total Liabilities 10,244,611 23,636,158 9,684,074 170,251,181 19,426,833 3,852,564
----------- ------------ ------------ ------------ ----------- -----------
NET ASSETS $59,072,041 $141,710,663 $255,149,694 $564,313,815 $49,408,579 $42,459,716
=========== ============ ============ ============ =========== ===========
COMPONENTS OF NET ASSETS
Capital Stock $ 4,361 $ 11,505 $ 18,265 $ 38,874 $ 3,061 $ 3,728
Additional Paid-In Capital 51,663,736 134,414,966 214,432,711 485,495,644 42,630,299 43,320,384
Undistributed Net Investment Income
(Loss) 1,732,519 (3,054,589) (5,873,070) (9,135,755) (2,023,101) 782,507
Accumulated Net Realized Gain (Loss)
on Investments 5,671,425 10,338,781 46,571,788 87,915,052 8,798,320 (1,646,903)
----------- ------------ ------------ ------------ ----------- -----------
Net Unrealized Appreciation
(Depreciation) on Investments
NET ASSETS $59,072,041 $141,710,663 $255,149,694 $564,313,815 $49,408,579 $42,459,716
=========== ============ ============ ============ =========== ===========
(A) Investments at Cost $49,070,888 $134,891,410 $210,980,304 $493,339,817 $40,678,515 $43,078,339
=========== ============ ============ ============ =========== ===========
(B) Foreign Currency at Cost $ -- $ -- $ 304 $ -- $ -- $ --
=========== ============ ============ ============ =========== ===========
AMERICAN SKANDIA ADVISOR FUNDS, INC.
--------------------------------------------------------------------------------
ASAF ASAF
ASAF ASAF ASAF ASAF NEUBERGER NEUBERGER
OPPENHEIMER LORD ABBETT JANUS MARSICO BERMAN BERMAN
LARGE-CAP GROWTH AND OVERSEAS CAPITAL MID-CAP MID-CAP
GROWTH INCOME GROWTH GROWTH GROWTH VALUE
FUND FUND FUND FUND FUND FUND
----------- ------------ ------------ ------------ ----------- -----------
NET ASSET VALUE:
Class A: Net Assets $9,270,606 $ 28,123,296 $ 61,081,797 $103,195,999 $10,907,551 $ 8,560,674
----------- ------------ ------------ ------------ ----------- -----------
Shares Outstanding 679,902 2,281,563 4,344,115 7,078,566 672,624 749,340
----------- ------------ ------------ ------------ ----------- -----------
Net Asset Value and
Redemption Price
Per Share $ 13.64 $ 12.33 $ 14.06 $ 14.58 $ 16.22 $ 11.42
=========== ============ ============ ============ =========== ===========
Divided by
(1 - Maximum
Sales Charge) 95% 95% 95% 95% 95% 95%
----------- ------------ ------------ ------------ ----------- -----------
Offering Price
Per Share* $ 14.36 $ 12.98 $ 14.80 $ 15.35 $ 17.07 $ 12.02
=========== ============ ============ ============ =========== ===========
Class B: Net Assets $29,218,517 $ 66,008,756 $105,964,953 $285,342,300 $22,399,488 $21,560,444
----------- ------------ ------------ ------------ ----------- -----------
Shares Outstanding 2,157,030 5,357,308 7,603,107 19,663,398 1,389,541 1,893,776
----------- ------------ ------------ ------------ ----------- -----------
Net Asset Value,
Offering and Redemption
Price Per Share $ 13.55 $ 12.32 $ 13.94 $ 14.51 $ 16.12 $ 11.38
=========== ============ ============ ============ =========== ===========
Class C: Net Assets $7,370,553 $ 23,209,861 $ 54,100,603 $125,795,774 $ 9,674,022 $ 7,730,820
----------- ------------ ------------ ------------ ----------- -----------
Shares Outstanding 545,640 1,885,544 3,876,579 8,680,896 600,114 679,091
----------- ------------ ------------ ------------ ----------- -----------
Net Asset Value,
Offering and Redemption
Price Per Share $ 13.51 $ 12.31 $ 13.96 $ 14.49 $ 16.12 $ 11.38
=========== ============ ============ ============ =========== ===========
Class X: Net Assets $13,212,365 $ 24,368,750 $ 34,002,341 $ 49,979,742 $ 6,427,518 $ 4,607,778
----------- ------------ ------------ ------------ ----------- -----------
Shares Outstanding 977,966 1,980,621 2,441,424 3,450,594 398,762 405,560
----------- ------------ ------------ ------------ ----------- -----------
Net Asset Value,
Offering and Redemption
Price Per Share $ 13.51 $ 12.30 $ 13.93 $ 14.48 $ 16.12 $ 11.36
=========== ============ ============ ============ =========== ===========
* On sales of $50,000 or more, the offering price of Class A shares is reduced.
See Notes to Financial Statements.
OCTOBER 31, 1999
STATEMENTS OF ASSETS AND LIABILITIES
--------------------------------------------------------------------------------
ASAF ASAF ASAF ASAF ASAF
T. ROWE PRICE JANUS INVESCO TOTAL JPM
INTERNATIONAL CAPITAL EQUITY RETURN MONEY
EQUITY GROWTH INCOME BOND MARKET
FUND FUND FUND FUND FUND
------------- -------------- ------------ ------------ ------------
ASSETS:
Investments in corresponding Portfolios of
American Skandia Master Trust (A) $24,993,897 $1,276,516,880 $180,102,822 $153,534,101 $179,652,618
Receivable for Investments Sold
in Corresponding Portfolios of
American Skandia Master Trust 6,997 1,336,306 159,131 473,971 1,686,396
Receivable for Fund Shares Sold 112,026 16,622,290 1,029,358 713,194 3,401,282
Receivable from Investment Manager -- -- -- 4,414 --
Deferred Organization Costs 38,695 38,696 38,697 38,696 38,695
Prepaid Expenses 21,154 52,519 24,770 22,694 30,329
----------- -------------- ------------ ------------ ------------
Total Assets 25,172,769 1,294,566,691 181,354,778 154,787,070 184,809,320
----------- -------------- ------------ ------------ ------------
LIABILITIES:
Payable for Investments Purchased
in Corresponding Portfolios of
American Skandia Master Trust 112,026 16,622,290 1,029,358 713,194 3,401,282
Payable to Investment Manager
Payable For: 3,797 1,434 -- -- --
Fund Shares Redeemed 6,997 1,336,306 159,131 473,971 1,686,396
Distribution Fees 30,938 896,464 130,366 117,954 131,793
Accrued Dividends -- -- -- 642,723 9,637
Accrued Expenses and Other Liabilities 32,668 472,537 72,760 76,815 66,378
----------- -------------- ------------ ------------ ------------
Total Liabilities 186,426 19,329,031 1,391,615 2,024,657 5,295,486
----------- -------------- ------------ ------------ ------------
NET ASSETS $24,986,343 $1,275,237,660 $179,963,163 $152,762,413 $179,513,834
=========== ============== ============ ============ ============
COMPONENTS OF NET ASSETS
Capital Stock $ 2,234 $ 64,055 $ 13,154 $ 15,238 $ 179,512
Additional Paid-In Capital 22,044,791 1,089,736,789 164,895,496 158,088,313 179,332,390
Undistributed Net Investment Income (Loss) -- -- 673,983 (188,644) --
Accumulated Net Realized Gain (Loss) on
Investments (349,819) (56,843,791) 2,717,739 (2,701,626) 1,932
Net Unrealized Appreciation (Depreciation) on
Investments 3,289,137 242,280,607 11,662,791 (2,450,868) --
----------- -------------- ------------ ------------ ------------
NET ASSETS $24,986,343 $1,275,237,660 $179,963,163 $152,762,413 $179,513,834
=========== ============== ============ ============ ============
(A) Investments at Cost $21,704,760 $1,034,236,273 $168,440,031 $155,984,969 $179,652,618
=========== ============== ============ ============ ============
AMERICAN SKANDIA ADVISOR FUNDS, INC.
--------------------------------------------------------------------------------
ASAF ASAF ASAF ASAF ASAF
T. ROWE PRICE JANUS INVESCO TOTAL JPM
INTERNATIONAL CAPITAL EQUITY RETURN MONEY
EQUITY GROWTH INCOME BOND MARKET
FUND FUND FUND FUND FUND
------------- ------------ ----------- ----------- -----------
NET ASSET VALUE:
Class A: Net Assets $4,623,226 $234,575,043 $31,959,866 $23,139,515 $43,003,741
---------- ------------ ----------- ----------- -----------
Shares Outstanding 420,593 10,678,362 2,339,274 2,288,635 43,003,406
---------- ------------ ----------- ----------- -----------
Net Asset Value and
Redemption Price
Per Share $ 10.99 $ 21.97 $ 13.66 $ 10.11 $ 1.00
========== ============ =========== =========== ===========
Divided by
(1 - Maximum
Sales Charge) 95% 95% 95% 95 3/4% 100%
---------- ------------ ----------- ----------- -----------
Offering Price
Per Share* $ 11.57 $ 23.13 $ 14.38 $ 10.56 $ 1.00
========== ============ =========== =========== ===========
Class B: Net Assets $9,256,942 $684,777,602 $79,962,364 $83,936,225 $79,202,220
---------- ------------ ----------- ----------- -----------
Shares Outstanding 824,693 35,115,038 5,840,869 8,385,796 79,202,223
---------- ------------ ----------- ----------- -----------
Net Asset Value,
Offering and Redemption
Price Per Share $ 11.22 $ 19.50 $ 13.69 $ 10.01 $ 1.00
========== ============ =========== =========== ===========
Class C: Net Assets $4,379,296 $222,229,979 $34,157,237 $26,112,418 $28,923,173
---------- ------------ ----------- ----------- -----------
Shares Outstanding 390,827 11,415,901 2,496,237 2,609,330 28,922,501
---------- ------------ ----------- ----------- -----------
Net Asset Value,
Offering and Redemption
Price Per Share $ 11.21 $ 19.47 $ 13.68 $ 10.01 $ 1.00
========== ============ =========== =========== ===========
Class X: Net Assets $6,726,879 $133,655,036 $33,883,696 $19,574,255 $28,384,700
---------- ------------ ----------- ----------- -----------
Shares Outstanding 598,049 6,845,849 2,477,655 1,954,079 28,383,768
---------- ------------ ----------- ----------- -----------
Net Asset Value,
Offering and Redemption
Price Per Share $ 11.25 $ 19.52 $ 13.68 $ 10.02 $ 1.00
========== ============ =========== =========== ===========
* The offering price of Class A shares is reduced on sales of $50,000 or more,
with the exception of the Money Market Fund.
See Notes to Financial Statements.
FOR THE YEAR ENDED OCTOBER 31, 1999
STATEMENTS OF OPERATIONS
--------------------------------------------------------------------------------
ASAF ASAF ASAF
FOUNDERS ASAF T. ROWE AMERICAN ASAF
INTERNATIONAL JANUS PRICE SMALL CENTURY FEDERATED
SMALL SMALL-CAP COMPANY STRATEGIC HIGH YIELD
CAPITALIZATION GROWTH VALUE BALANCED BOND
FUND FUND FUND FUND FUND
-------------- ----------- ----------- ---------- -----------
INVESTMENT INCOME:
Interest $ 38,149 $ 580,730 $ 162,162 $1,654,984 $ 8,531,231
Dividends 48,981 22,948 902,060 508,357 198,666
Foreign Taxes Withheld (5,180) (620) (68) (4,614) --
---------- ----------- ----------- ---------- -----------
Total Investment Income 81,950 603,058 1,064,154 2,158,727 8,729,897
---------- ----------- ----------- ---------- -----------
EXPENSES:
Advisory Fees 103,317 562,160 554,993 642,319 627,384
Shareholder Servicing Fees 109,282 237,978 375,101 232,693 237,126
Administration and Accounting Fees 55,499 93,570 100,499 102,076 122,344
Custodian Fees 52,315 43,428 38,939 78,532 18,334
Distribution Fees -- Class A 6,802 73,902 49,365 67,494 64,562
Distribution Fees -- Class B 31,178 259,463 199,794 323,442 476,811
Distribution Fees -- Class C 15,363 115,840 117,161 119,533 110,332
Distribution Fees -- Class X 33,781 101,514 139,309 135,725 179,982
Supplemental Distribution Fees -- 6,666 -- -- --
Audit and Legal Fees 1,966 12,974 11,850 14,853 18,657
Organization Costs 13,673 13,673 13,673 13,673 13,673
Directors' Fees 492 2,649 3,133 3,436 4,732
Registration Fees 37,044 81,405 65,063 74,051 85,727
Miscellaneous Expenses 6,794 20,898 14,622 26,231 48,085
---------- ----------- ----------- ---------- -----------
Total Expenses 467,506 1,626,120 1,683,502 1,834,058 2,007,749
Less: Reimbursement of Expenses by
Investment Manager (230,103) (319,189) (484,132) (402,807) (279,932)
Waiver of Fees by
Investment Manager -- -- -- -- --
Fees Paid Indirectly -- (6,666) -- -- --
---------- ----------- ----------- ---------- -----------
Net Expenses 237,403 1,300,265 1,199,370 1,431,251 1,727,817
---------- ----------- ----------- ---------- -----------
Net Investment Income (Loss) (155,453) (697,207) (135,216) 727,476 7,002,080
---------- ----------- ----------- ---------- -----------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS:
Net Realized Gain (Loss) on:
Securities 1,627,328 3,607,424 1,392,258 1,971,847 (327,421)
Futures Contracts -- -- -- (57,735) --
Written Options Contracts -- -- -- -- --
Foreign Currency Transactions (67,191) 2,167 -- 83,875 --
---------- ----------- ----------- ---------- -----------
Net Realized Gain (Loss) 1,560,137 3,609,591 1,392,258 1,997,987 (327,421)
---------- ----------- ----------- ---------- -----------
Net Change in Unrealized Appreciation
(Depreciation) on:
Securities 1,080,293 46,265,212 (1,429,144) 4,674,848 (5,663,260)
Futures Contracts -- -- -- 258,175 --
Translation of Assets and
Liabilities Denominated in
Foreign Currencies 3,368 35 -- 2,097 --
---------- ----------- ----------- ---------- -----------
Net Change in Unrealized Appreciation
(Depreciation) 1,083,661 46,265,247 (1,429,144) 4,935,120 (5,663,260)
---------- ----------- ----------- ---------- -----------
Net Gain (Loss) on Investments 2,643,798 49,874,838 (36,886) 6,933,107 (5,990,681)
---------- ----------- ----------- ---------- -----------
Net Increase (Decrease) in Net Assets Resulting
from Operations $2,488,345 $49,177,631 $ (172,102) $7,660,583 $ 1,011,399
========== =========== =========== ========== ===========
See Notes to Financial Statements.
AMERICAN SKANDIA ADVISOR FUNDS, INC.
--------------------------------------------------------------------------------
ASAF ASAF
ASAF ASAF ASAF ASAF NEUBERGER NEUBERGER
OPPENHEIMER LORD ABBETT JANUS MARSICO BERMAN BERMAN
LARGE-CAP GROWTH AND OVERSEAS CAPITAL MID-CAP MID-CAP
GROWTH INCOME GROWTH GROWTH GROWTH VALUE
FUND FUND FUND FUND FUND FUND
----------- ----------- ----------- ----------- ----------- -----------
INVESTMENT INCOME:
Interest $ 153,759 $ 242,807 $ 977,363 $ 1,429,409 $ 106,813 $ 91,154
Dividends 93,715 1,365,786 885,635 1,593,953 37,950 284,549
Foreign Taxes Withheld -- (1,708) (46,902) (44,737) -- (156)
---------- ----------- ----------- ----------- ----------- -----------
Total Investment Income 247,474 1,606,885 1,816,096 2,978,625 144,763 375,547
---------- ----------- ----------- ----------- ----------- -----------
EXPENSES:
Advisory Fees 368,000 808,861 1,437,139 2,818,404 227,549 187,268
Shareholder Servicing Fees 207,061 290,360 555,520 784,373 150,870 134,008
Administration and Accounting Fees 71,124 111,509 159,094 248,223 52,952 46,443
Custodian Fees 24,170 26,948 205,373 35,192 28,595 17,796
Distribution Fees -- Class A 28,832 73,966 150,582 262,216 27,152 20,223
Distribution Fees -- Class B 176,865 344,597 500,421 1,356,677 108,589 103,750
Distribution Fees -- Class C 51,192 130,849 283,330 654,589 54,187 40,117
Distribution Fees -- Class X 103,978 185,482 221,576 282,705 35,752 23,763
Supplemental Distribution Fees -- 26,208 21,031 20,637 5,851 20,744
Audit and Legal Fees 8,215 17,152 27,144 56,071 4,964 4,149
Organization Costs -- -- -- -- -- --
Directors' Fees 2,044 4,056 6,387 13,040 1,163 949
Registration Fees 55,974 81,130 113,088 258,494 64,074 58,381
Miscellaneous Expenses 10,588 22,099 50,934 80,101 10,079 8,925
---------- ----------- ----------- ----------- ----------- -----------
Total Expenses 1,108,043 2,123,217 3,731,619 6,870,722 771,777 666,516
Less: Reimbursement of
Expenses by
Investment Manager (231,936) (310,596) (333,601) (770,893) (224,107) (197,824)
Waiver of Fees by
Investment Manager (8,636) (161,772) (130,652) -- -- --
Fees Paid Indirectly -- (26,208) (21,031) (20,637) (5,851) (20,744)
---------- ----------- ----------- ----------- ----------- -----------
Net Expenses 867,471 1,624,641 3,246,335 6,079,192 541,819 447,948
---------- ----------- ----------- ----------- ----------- -----------
Net Investment Income (Loss) (619,997) (17,756) (1,430,239) (3,100,567) (397,056) (72,401)
---------- ----------- ----------- ----------- ----------- -----------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS:
Net Realized Gain (Loss) on:
Securities 4,509,503 (1,864,544) (3,345,216) (8,079,193) (2,023,101) 862,653
Futures Contracts -- -- -- -- -- --
Written Options Contracts -- -- -- (106,679) -- --
Foreign Currency Transactions -- -- (966,207) -- (7) --
---------- ----------- ----------- ----------- ----------- -----------
Net Realized Gain (Loss) 4,509,503 (1,864,544) (4,311,423) (8,185,872) (2,023,108) 862,653
---------- ----------- ----------- ----------- ----------- -----------
Net Change in Unrealized
Appreciation (Depreciation) on:
Securities 4,407,755 9,399,850 45,683,029 85,728,862 8,571,273 (1,727,464)
Futures Contracts -- -- -- -- -- --
Translation of Assets and
Liabilities Denominated in
Foreign Currencies -- -- (251,520) 511 -- --
---------- ----------- ----------- ----------- ----------- -----------
Net Change in Unrealized
Appreciation (Depreciation) 4,407,755 9,399,850 45,431,509 85,729,373 8,571,273 (1,727,464)
---------- ----------- ----------- ----------- ----------- -----------
Net Gain (Loss) on Investments 8,917,258 7,535,306 41,120,086 77,543,501 6,548,165 (864,811)
---------- ----------- ----------- ----------- ----------- -----------
Net Increase (Decrease) in Net
Assets Resulting from Operations $8,297,261 $7,517,550 $39,689,847 $74,442,934 $6,151,109 $ (937,212)
========== =========== =========== =========== =========== ===========
See Notes to Financial Statements.
FOR THE YEAR ENDED OCTOBER 31, 1999
STATEMENTS OF OPERATIONS
--------------------------------------------------------------------------------
ASAF ASAF ASAF ASAF ASAF
T. ROWE PRICE JANUS INVESCO TOTAL JPM
INTERNATIONAL CAPITAL EQUITY RETURN MONEY
EQUITY GROWTH INCOME BOND MARKET
FUND FUND FUND FUND FUND
------------- ------------ ----------- ----------- ----------
INVESTMENT INCOME:
Investment Income from Corresponding Portfolios
of American Skandia Master Trust:
Interest $ 44,459 $ 6,584,137 $ 2,108,171 $ 6,642,731 $4,699,238
Dividends 335,263 1,342,055 1,386,277 -- --
Foreign Taxes Withheld (51,880) (23,013) (1,174) -- --
---------- ------------ ----------- ----------- ----------
Total Investment Income 327,842 7,903,179 3,493,274 6,642,731 4,699,238
Expenses from Corresponding Portfolios of
American Skandia Master Trust (290,199) (7,087,896) (1,022,828) (801,428) (584,434)
---------- ------------ ----------- ----------- ----------
Net Investment Income (Loss) from Corresponding
Portfolios of American Skandia Master Trust 37,643 815,283 2,470,446 5,841,303 4,114,804
---------- ------------ ----------- ----------- ----------
EXPENSES:
Shareholder Servicing Fees 146,904 1,741,738 339,852 219,645 255,176
Administration and Accounting Fees 30,001 60,000 53,000 52,999 36,646
Distribution Fees -- Class A 15,996 607,936 100,877 70,007 111,055
Distribution Fees -- Class B 57,662 3,279,348 462,979 504,909 369,569
Distribution Fees -- Class C 32,883 1,164,717 206,540 177,205 159,278
Distribution Fees -- Class X 61,840 873,700 268,978 164,863 179,037
Supplemental Distribution Fees 3,142 66,845 46,415 -- --
Audit and Legal Fees 1,943 62,198 11,485 9,853 8,924
Organization Costs 12,955 12,955 12,955 12,955 12,955
Directors' Fees 996 30,274 5,791 4,923 4,501
Registration Fees 43,112 556,476 93,359 92,057 119,927
Miscellaneous Expenses 4,072 174,025 28,311 24,858 25,600
---------- ------------ ----------- ----------- ----------
Total Expenses 411,506 8,630,212 1,630,542 1,334,274 1,282,668
Less: Reimbursement of Expenses by Investment
Manager (235,177) (1,885,197) (370,317) (330,620) (118,169)
Fees Paid Indirectly (3,142) (66,845) (46,415) -- --
---------- ------------ ----------- ----------- ----------
Net Expenses 173,187 6,678,170 1,213,810 1,003,654 1,164,499
---------- ------------ ----------- ----------- ----------
Net Investment Income (Loss) (135,544) (5,862,887) 1,256,636 4,837,649 2,950,305
---------- ------------ ----------- ----------- ----------
REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS FROM
CORRESPONDING PORTFOLIOS OF
AMERICAN SKANDIA MASTER TRUST:
Net Realized Gain (Loss) on:
Securities (278,463) (51,859,781) 3,247,433 (1,695,853) 2,598
Futures Contracts -- -- -- (1,072,511) --
Written Options Contracts -- -- -- 97,353 --
Swap Agreements -- -- -- (30,823) --
Foreign Currency Transactions (21,086) (15,752) -- (188,724) --
---------- ------------ ----------- ----------- ----------
Net Realized Gain (Loss) (299,549) (51,875,533) 3,247,433 (2,890,558) 2,598
---------- ------------ ----------- ----------- ----------
Net Change in Unrealized Appreciation
(Depreciation) on:
Securities 3,333,045 228,050,761 9,613,363 (2,874,806) --
Futures Contracts -- -- -- 5,847 --
Written Options Contracts -- -- -- 89,366 --
Swap Agreements -- -- -- (8,723) --
Translation of Assets and Liabilities Denominated
in Foreign Currencies (4,215) 42 -- 90,325 --
---------- ------------ ----------- ----------- ----------
Net Change in Unrealized Appreciation
(Depreciation) 3,328,830 228,050,803 9,613,363 (2,697,991) --
---------- ------------ ----------- ----------- ----------
Net Gain (Loss) on Investments 3,029,281 176,175,270 12,860,796 (5,588,549) 2,598
---------- ------------ ----------- ----------- ----------
Net Increase (Decrease) in Net Assets Resulting
from Operations $2,893,737 $170,312,383 $14,117,432 $ (750,900) $2,952,903
========== ============ =========== =========== ==========
See Notes to Financial Statements.
AMERICAN SKANDIA ADVISOR FUNDS, INC.
STATEMENTS OF CHANGES IN NET ASSETS
--------------------------------------------------------------------------------
ASAF ASAF ASAF
FOUNDERS ASAF T. ROWE AMERICAN
INTERNATIONAL JANUS PRICE SMALL CENTURY
SMALL SMALL-CAP COMPANY STRATEGIC
CAPITALIZATION GROWTH VALUE BALANCED
FUND FUND FUND FUND
------------------------- -------------------------- ------------------------- ------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31,
1999 1998 1999 1998 1999 1998 1999
----------- ----------- ------------ ----------- ----------- ----------- ------------
FROM OPERATIONS:
Net Investment Income (Loss) $ (155,453) $ (21,602) $ (697,207) $ (57,296) $ (135,216) $ (46,776) $ 727,476
Net Realized Gain (Loss) on
Investments 1,560,137 (203,090) 3,609,591 (860,753) 1,392,258 (373,253) 1,997,987
Net Change in Unrealized
Appreciation
(Depreciation) on
Investments 1,083,661 (55,153) 46,265,247 50,611 (1,429,144) (5,500,322) 4,935,120
----------- ---------- ------------ ----------- ----------- ----------- ------------
Net Increase (Decrease) in
Net Assets Resulting from
Operations 2,488,345 (279,845) 49,177,631 (867,438) (172,102) (5,920,351) 7,660,583
----------- ---------- ------------ ----------- ----------- ----------- ------------
DISTRIBUTIONS TO SHAREHOLDERS:
From Net Investment Income:
Class A -- (452) -- -- -- (181) (112,620)
Class B -- (125) -- -- -- (114) (136,565)
Class C -- (62) -- -- -- (35) (51,277)
Class X -- (180) -- -- -- (92) (58,449)
In Excess of Net Investment
Income:
Class A -- (74) -- -- (27,592) (4,193) --
Class B -- (20) -- -- -- (2,624) --
Class C -- (10) -- -- -- (814) --
Class X -- (29) -- -- -- (2,136) --
From Net Realized Gains:
Class A -- -- -- -- -- -- --
Class B -- -- -- -- -- -- --
Class C -- -- -- -- -- -- --
Class X -- -- -- -- -- -- --
----------- ---------- ------------ ----------- ----------- ----------- ------------
Total Distributions -- (952) -- -- (27,592) (10,189) (358,911)
----------- ---------- ------------ ----------- ----------- ----------- ------------
CAPITAL SHARE TRANSACTIONS
(NOTE 4):
Net Increase in Net Assets
from Capital Share
Transactions 8,904,367 5,208,868 155,373,353 10,639,455 21,076,473 44,422,288 101,103,998
----------- ---------- ------------ ----------- ----------- ----------- ------------
Net Increase in Net Assets 11,392,712 4,928,071 204,550,984 9,772,017 20,876,779 38,491,748 108,405,670
NET ASSETS:
Beginning of Period 5,548,877 620,806 10,661,100 889,083 41,004,854 2,513,106 21,996,941
----------- ---------- ------------ ----------- ----------- ----------- ------------
End of Period $16,941,589 $5,548,877 $215,212,084 $10,661,100 $61,881,633 $41,004,854 $130,402,611
=========== ========== ============ =========== =========== =========== ============
ASAF
AMERICAN
CENTURY
STRATEGIC
BALANCED
FUND
-----------
YEAR ENDED
OCTOBER 31,
1998
-----------
FROM OPERATIONS:
Net Investment Income (Loss) $ 79,418
Net Realized Gain (Loss) on
Investments (1,207,852)
Net Change in Unrealized
Appreciation
(Depreciation) on
Investments 1,441,116
-----------
Net Increase (Decrease) in
Net Assets Resulting from
Operations 312,682
-----------
DISTRIBUTIONS TO SHAREHOLDERS
From Net Investment Income:
Class A (11,493)
Class B (9,726)
Class C (4,525)
Class X (9,794)
In Excess of Net Investment
Income:
Class A --
Class B --
Class C --
Class X --
From Net Realized Gains:
Class A --
Class B --
Class C --
Class X --
-----------
Total Distributions (35,538)
-----------
CAPITAL SHARE TRANSACTIONS
(NOTE 4):
Net Increase in Net Assets
from Capital Share
Transactions 20,468,469
-----------
Net Increase in Net Assets 20,745,613
NET ASSETS:
Beginning of Period 1,251,328
-----------
End of Period $21,996,941
===========
See Notes to Financial Statements.
STATEMENTS OF CHANGES IN NET ASSETS
--------------------------------------------------------------------------------
ASAF ASAF ASAF ASAF
FEDERATED OPPENHEIMER LORD ABBETT JANUS
HIGH YIELD LARGE-CAP GROWTH OVERSEAS
BOND GROWTH AND INCOME GROWTH
FUND FUND FUND FUND
-------------------------- ------------------------- -------------------------- ------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31,
1999 1998 1999 1998(1) 1999 1998(1) 1999
------------ ----------- ----------- ----------- ------------ ----------- ------------
FROM OPERATIONS:
Net Investment Income (Loss) $ 7,002,080 $ 1,488,563 $ (619,997) $ (126,014) $ (17,756) $ 26,263 $ (1,430,239)
Net Realized Gain (Loss) on
Investments (327,421) (17,619) 4,509,503 (2,156,987) (1,864,544) (1,190,045) (4,311,423)
Net Change in Unrealized
Appreciation
(Depreciation) on
Investments (5,663,260) (2,955,623) 4,407,755 1,263,670 9,399,850 938,931 45,431,509
------------ ----------- ----------- ----------- ------------ ----------- ------------
Net Increase (Decrease) in
Net Assets Resulting from
Operations 1,011,399 (1,484,679) 8,297,261 (1,019,331) 7,517,550 (224,851) 39,689,847
------------ ----------- ----------- ----------- ------------ ----------- ------------
DISTRIBUTIONS TO SHAREHOLDERS:
From Net Investment Income:
Class A (1,066,043) (230,890) -- -- (12,015) (6,881) --
Class B (3,686,137) (635,141) -- -- (1,848) (1,202) --
Class C (853,383) (207,080) -- -- (855) (484) --
Class X (1,396,517) (415,452) -- -- (1,589) (1,389) --
In Excess of Net Investment
Income:
Class A -- -- -- -- (36,455) -- --
Class B -- -- -- -- (5,608) -- --
Class C -- -- -- -- (2,595) -- --
Class X -- -- -- -- (4,822) -- --
From Net Realized Gains:
Class A -- -- -- -- -- -- --
Class B -- -- -- -- -- -- --
Class C -- -- -- -- -- -- --
Class X -- -- -- -- -- -- --
------------ ----------- ----------- ----------- ------------ ----------- ------------
Total Distributions (7,002,080) (1,488,563) -- -- (65,787) (9,956) --
------------ ----------- ----------- ----------- ------------ ----------- ------------
CAPITAL SHARE TRANSACTIONS
(NOTE 4):
Net Increase in Net Assets
from Capital Share
Transactions 77,719,547 44,745,185 31,103,658 20,690,453 101,607,672 32,886,035 170,502,829
------------ ----------- ----------- ----------- ------------ ----------- ------------
Net Increase in Net Assets 71,728,866 41,771,943 39,400,919 19,671,122 109,059,435 32,651,228 210,192,676
NET ASSETS:
Beginning of Period 45,608,402 3,836,459 19,671,122 -- 32,651,228 -- 44,957,018
------------ ----------- ----------- ----------- ------------ ----------- ------------
End of Period $117,337,268 $45,608,402 $59,072,041 $19,671,122 $141,710,663 $32,651,228 $255,149,694
============ =========== =========== =========== ============ =========== ============
ASAF
JANUS
OVERSEAS
GROWTH
FUND
-----------
YEAR ENDED
OCTOBER 31,
1998(1)
-----------
FROM OPERATIONS:
Net Investment Income (Loss) $ (45,889)
Net Realized Gain (Loss) on
Investments (2,636,468)
Net Change in Unrealized
Appreciation
(Depreciation) on
Investments 1,140,279
-----------
Net Increase (Decrease) in
Net Assets Resulting from
Operations (1,542,078)
-----------
DISTRIBUTIONS TO SHAREHOLDERS
From Net Investment Income:
Class A --
Class B --
Class C --
Class X --
In Excess of Net Investment
Income:
Class A --
Class B --
Class C --
Class X --
From Net Realized Gains:
Class A --
Class B --
Class C --
Class X --
-----------
Total Distributions --
-----------
CAPITAL SHARE TRANSACTIONS
(NOTE 4):
Net Increase in Net Assets
from Capital Share
Transactions 46,499,096
-----------
Net Increase in Net Assets 44,957,018
NET ASSETS:
Beginning of Period --
-----------
End of Period $44,957,018
===========
See Notes to Financial Statements.
AMERICAN SKANDIA ADVISOR FUNDS, INC.
--------------------------------------------------------------------------------
ASAF ASAF
ASAF NEUBERGER NEUBERGER
MARSICO BERMAN BERMAN
CAPITAL MID-CAP MID-CAP
GROWTH GROWTH VALUE
FUND FUND FUND
-------------------------- ------------------------- -------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31,
1999 1998(2) 1999 1998(2) 1999 1998(2)
------------ ----------- ----------- ----------- ----------- -----------
FROM OPERATIONS:
Net Investment Income (Loss) $ (3,100,567) $ 14,303 $ (397,056) $ (1,506) $ (72,401) $ 1,431
Net Realized Gain (Loss) on
Investments (8,185,872) (949,883) (2,023,108) 94,129 862,653 1,518
Net Change in Unrealized
Appreciation (Depreciation)
on Investments 85,729,373 2,185,679 8,571,273 227,047 (1,727,464) 80,561
------------ ----------- ----------- ---------- ----------- ----------
Net Increase (Decrease) in Net
Assets Resulting from
Operations 74,442,934 1,250,099 6,151,109 319,670 (937,212) 83,510
------------ ----------- ----------- ---------- ----------- ----------
DISTRIBUTIONS TO SHAREHOLDERS:
From Net Investment Income:
Class A (14,303) -- -- -- (508) --
Class B -- -- -- -- (549) --
Class C -- -- -- -- (242) --
Class X -- -- -- -- (132) --
In Excess of Net Investment
Income:
Class A (35) -- -- -- (2,758) --
Class B -- -- -- -- (2,976) --
Class C -- -- -- -- (1,315) --
Class X -- -- -- -- (718) --
From Net Realized Gains:
Class A -- -- (20,483) -- (237) --
Class B -- -- (34,595) -- (761) --
Class C -- -- (22,944) -- (336) --
Class X -- -- (16,107) -- (162) --
------------ ----------- ----------- ---------- ----------- ----------
Total Distributions (14,338) -- (94,129) -- (10,694) --
------------ ----------- ----------- ---------- ----------- ----------
CAPITAL SHARE TRANSACTIONS
(NOTE 4):
Net Increase in Net Assets
from Capital Share
Transactions 448,096,651 40,538,469 40,361,211 2,670,718 39,513,072 3,811,040
------------ ----------- ----------- ---------- ----------- ----------
Net Increase in Net Assets 522,525,247 41,788,568 46,418,191 2,990,388 38,565,166 3,894,550
NET ASSETS:
Beginning of Period 41,788,568 -- 2,990,388 -- 3,894,550 --
------------ ----------- ----------- ---------- ----------- ----------
End of Period $564,313,815 $41,788,568 $49,408,579 $2,990,388 $42,459,716 $3,894,550
============ =========== =========== ========== =========== ==========
ASAF
T. ROWE PRICE
INTERNATIONAL
EQUITY
FUND
-------------------------
YEAR ENDED YEAR ENDED
OCTOBER 31, OCTOBER 31,
1999 1998
----------- -----------
FROM OPERATIONS:
Net Investment Income (Loss) $ (135,544) $ (43,968)
Net Realized Gain (Loss) on
Investments (299,549) (67,792)
Net Change in Unrealized
Appreciation (Depreciation)
on Investments 3,328,830 25,778
----------- -----------
Net Increase (Decrease) in Net
Assets Resulting from
Operations 2,893,737 (85,982)
----------- -----------
DISTRIBUTIONS TO SHAREHOLDERS:
From Net Investment Income:
Class A -- --
Class B -- --
Class C -- --
Class X -- --
In Excess of Net Investment
Income:
Class A (13,643) --
Class B (6,565) --
Class C (4,600) --
Class X (9,863) --
From Net Realized Gains:
Class A -- --
Class B -- --
Class C -- --
Class X -- --
----------- -----------
Total Distributions (34,671) --
----------- -----------
CAPITAL SHARE TRANSACTIONS
(NOTE 4):
Net Increase in Net Assets
from Capital Share
Transactions 9,698,559 10,953,519
----------- -----------
Net Increase in Net Assets 12,557,625 10,867,537
NET ASSETS:
Beginning of Period 12,428,718 1,561,181
----------- -----------
End of Period $24,986,343 $12,428,718
=========== ===========
(1) Commenced operations on December 31, 1997.
(2) Commenced operations on August 19, 1998.
See Notes to Financial Statements.
STATEMENTS OF CHANGES IN NET ASSETS
--------------------------------------------------------------------------------
ASAF ASAF ASAF
JANUS INVESCO TOTAL
CAPITAL EQUITY RETURN
GROWTH INCOME BOND
FUND FUND FUND
----------------------------- -------------------------- --------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31,
1999 1998 1999 1998 1999 1998
-------------- ------------ ------------ ----------- ------------ -----------
FROM OPERATIONS:
Net Investment Income (Loss) $ (5,862,887) $ (334,631) $ 1,256,636 $ 346,202 $ 4,837,649 $ 604,031
Net Realized Gain (Loss) on
Investments (51,875,533) (4,945,536) 3,247,433 (517,156) (2,890,558) 371,331
Net Change in Unrealized
Appreciation
(Depreciation) on
Investments 228,050,803 14,298,404 9,613,363 2,038,173 (2,697,991) 235,283
-------------- ------------ ------------ ----------- ------------ -----------
Net Increase (Decrease) in
Net Assets Resulting from
Operations 170,312,383 9,018,237 14,117,432 1,867,219 (750,900) 1,210,645
-------------- ------------ ------------ ----------- ------------ -----------
DISTRIBUTIONS TO
SHAREHOLDERS:
From Net Investment Income:
Class A -- (3,261) (207,977) (38,382) (746,581) (81,710)
Class B -- (1,754) (267,381) (49,590) (2,433,498) (203,491)
Class C -- (551) (120,280) (19,657) (857,234) (142,796)
Class X -- (1,648) (171,251) (53,610) (800,336) (178,399)
In Excess of Net Investment
Income:
Class A -- (2,821) -- -- -- --
Class B -- (1,518) -- -- -- --
Class C -- (476) -- -- -- --
Class X -- (1,426) -- -- -- --
From Net Realized Gains:
Class A -- -- -- -- (41,731) (35)
Class B -- -- -- -- (174,101) (98)
Class C -- -- -- -- (68,174) (43)
Class X -- -- -- -- (87,038) (111)
-------------- ------------ ------------ ----------- ------------ -----------
Total Distributions -- (13,455) (766,889) (161,239) (5,208,693) (606,683)
-------------- ------------ ------------ ----------- ------------ -----------
CAPITAL SHARE TRANSACTIONS
(NOTE 4):
Net Increase in Net Assets
from Capital Share
Transactions 965,500,168 126,069,978 112,998,444 48,599,599 114,425,804 42,508,563
-------------- ------------ ------------ ----------- ------------ -----------
Net Increase in Net Assets 1,135,812,551 135,074,760 126,348,987 50,305,579 108,466,211 43,112,525
NET ASSETS:
Beginning of Period 139,425,109 4,350,349 53,614,176 3,308,597 44,296,202 1,183,677
-------------- ------------ ------------ ----------- ------------ -----------
End of Period $1,275,237,660 $139,425,109 $179,963,163 $53,614,176 $152,762,413 $44,296,202
============== ============ ============ =========== ============ ===========
ASAF
JPM
MONEY
MARKET
FUND
--------------------------
YEAR ENDED YEAR ENDED
OCTOBER 31, OCTOBER 31,
1999 1998
------------ -----------
FROM OPERATIONS:
Net Investment Income (Loss) $ 2,950,305 $ 521,976
Net Realized Gain (Loss) on
Investments 2,598 (666)
Net Change in Unrealized
Appreciation
(Depreciation) on
Investments -- --
------------ -----------
Net Increase (Decrease) in
Net Assets Resulting from
Operations 2,952,903 521,310
------------ -----------
DISTRIBUTIONS TO
SHAREHOLDERS:
From Net Investment Income:
Class A (790,112) (105,287)
Class B (1,124,422) (132,858)
Class C (488,137) (78,804)
Class X (547,634) (205,027)
In Excess of Net Investment
Income:
Class A -- --
Class B -- --
Class C -- --
Class X -- --
From Net Realized Gains:
Class A -- (4)
Class B -- (10)
Class C -- (4)
Class X -- (7)
------------ -----------
Total Distributions (2,950,305) (522,001)
------------ -----------
CAPITAL SHARE TRANSACTIONS
(NOTE 4):
Net Increase in Net Assets
from Capital Share
Transactions 136,157,181 41,796,215
------------ -----------
Net Increase in Net Assets 136,159,779 41,795,524
NET ASSETS:
Beginning of Period 43,354,055 1,558,531
------------ -----------
End of Period $179,513,834 $43,354,055
============ ===========
See Notes to Financial Statements.
[This page intentionally left blank]
FINANCIAL HIGHLIGHTS
--------------------------------------------------------------------------------
Per Share Data (For a Share Outstanding
throughout each period)
Increase (Decrease) from
Investment Operations
Net Asset -----------------------------------------
Year Value Net Net Realized Total from
Ended Beginning Investment & Unrealized Investment
October 31, of Period Income (Loss) Gain (Loss) Operations
----------- --------- ------------- ------------ ----------
ASAF FOUNDERS
INTERNATIONAL SMALL
CAPITALIZATION FUND:
------------------------------
------------------------------
Class A 1999 $ 10.27 $(0.14) $ 3.43 $ 3.29
1998 9.87 (0.02) 0.45 0.43
1997(1) 10.00 0.05 (0.18) (0.13)
Class B 1999 10.23 (0.22) 3.43 3.21
1998 9.85 (0.08) 0.46 0.38
1997(1) 10.00 0.04 (0.19) (0.15)
Class C 1999 10.22 (0.21) 3.42 3.21
1998 9.86 (0.08) 0.44 0.36
1997(1) 10.00 0.04 (0.18) (0.14)
Class X 1999 10.21 (0.19) 3.41 3.22
1998 9.84 (0.08) 0.45 0.37
1997(1) 10.00 0.04 (0.20) (0.16)
ASAF JANUS SMALL-CAP
GROWTH FUND:
------------------------------
------------------------------
Class A 1999 $ 9.11 $(0.10) $ 8.07 $ 7.97
1998 9.94 (0.07) (0.76) (0.83)
1997(1) 10.00 (0.03) (0.03) (0.06)
Class B 1999 9.04 (0.17) 8.00 7.83
1998 9.93 (0.12) (0.77) (0.89)
1997(1) 10.00 (0.04) (0.03) (0.07)
Class C 1999 9.06 (0.16) 8.00 7.84
1998 9.94 (0.10) (0.78) (0.88)
1997(1) 10.00 (0.04) (0.02) (0.06)
Class X 1999 9.06 (0.15) 7.99 7.84
1998 9.93 (0.11) (0.76) (0.87)
1997(1) 10.00 (0.04) (0.03) (0.07)
ASAF T. ROWE PRICE SMALL COMPANY
VALUE FUND:
------------------------------
------------------------------
Class A 1999 $ 8.85 $ 0.02 $ 0.06 $ 0.08
1998 10.46 0.04 (1.62) (1.58)
1997(1) 10.00 0.02 0.44 0.46
Class B 1999 8.80 (0.03) 0.07 0.04
1998 10.44 (0.02) (1.61) (1.63)
1997(1) 10.00 -- 0.44 0.44
Class C 1999 8.80 (0.03) 0.07 0.04
1998 10.45 (0.02) (1.62) (1.64)
1997(1) 10.00 -- 0.45 0.45
Class X 1999 8.80 (0.03) 0.07 0.04
1998 10.44 (0.02) (1.61) (1.63)
1997(1) 10.00 -- 0.44 0.44
ASAF AMERICAN
CENTURY STRATEGIC
BALANCED FUND:
------------------------------
------------------------------
Class A 1999 $ 10.89 $ 0.19 $ 1.89 $ 2.08
1998 9.99 0.15 0.84 0.99
1997(1) 10.00 0.04 (0.05) (0.01)
Class B 1999 10.86 0.12 1.88 2.00
1998 9.96 0.09 0.85 0.94
1997(1) 10.00 0.02 (0.06) (0.04)
Class C 1999 10.87 0.11 1.87 1.98
1998 9.98 0.09 0.84 0.93
1997(1) 10.00 0.02 (0.04) (0.02)
Class X 1999 10.85 0.11 1.89 2.00
1998 9.96 0.09 0.84 0.93
1997(1) 10.00 0.02 (0.06) (0.04)
Less Distributions
------------------------------------------
From Net In Excess of From Net
Investment Net Investment Realized
Income Income Gains
---------- -------------- ------------
ASAF FOUNDERS
INTERNATIONAL SMALL
CAPITALIZATION FUND:
------------------------------
------------------------------
Class A $ -- $ -- $--
(0.03) -- --
-- -- --
Class B -- -- --
-- -- --
-- -- --
Class C -- -- --
-- -- --
-- -- --
Class X -- -- --
-- -- --
-- -- --
ASAF JANUS SMALL-CAP
GROWTH FUND:
------------------------------
------------------------------
Class A $ -- $ -- $--
-- -- --
-- -- --
Class B -- -- --
-- -- --
-- -- --
Class C -- -- --
-- -- --
-- -- --
Class X -- -- --
-- -- --
-- -- --
ASAF T. ROWE PRICE SMALL COMPANY
VALUE FUND:
------------------------------
------------------------------
Class A $ -- $(0.03) $--
-- (0.03) --
-- -- --
Class B -- -- --
-- (0.01) --
-- -- --
Class C -- -- --
-- (0.01) --
-- -- --
Class X -- -- --
-- (0.01) --
-- -- --
ASAF AMERICAN
CENTURY STRATEGIC
BALANCED FUND:
------------------------------
------------------------------
Class A $(0.12) $ -- $--
(0.09) -- --
-- -- --
Class B (0.05) -- --
(0.04) -- --
-- -- --
Class C (0.05) -- --
(0.04) -- --
-- -- --
Class X (0.05) -- --
(0.04) -- --
-- -- --
AMERICAN SKANDIA ADVISOR FUNDS, INC.
--------------------------------------------------------------------------------
Ratios of Expenses
Supplemental Data to Average Net Assets(3)
------------------------------------- ------------------------------------------
Net Asset Net Assets at Portfolio Net After Expense Before Expense
Total Value Total End of Period Turnover Operating Reimbursement Reimbursement
Distributions End of Period Return(2) (in 000s) Rate Expenses and Waiver(4) and Waiver(4)
------------- ------------- --------- ------------- --------- --------- ------------- --------------
$ -- $13.56 32.04% $ 2,374 268% 2.10% 2.10% 4.53%
(0.03) 10.27 4.32% 886 49% 2.10% 2.10% 9.20%
-- 9.87 (1.30%) 106 -- 2.10% 2.10% 136.49%
-- 13.44 31.38% 7,722 268% 2.60% 2.60% 5.04%
-- 10.23 3.90% 1,387 49% 2.60% 2.60% 9.80%
-- 9.85 (1.50%) 230 -- 2.60% 2.60% 90.64%
-- 13.43 31.41% 2,540 268% 2.60% 2.60% 5.05%
-- 10.22 3.69% 872 49% 2.60% 2.60% 9.72%
-- 9.86 (1.40%) 79 -- 2.60% 2.60% 55.02%
-- 13.43 31.54% 4,305 268% 2.60% 2.60% 5.07%
-- 10.21 3.80% 2,404 49% 2.60% 2.60% 9.58%
-- 9.84 (1.60%) 206 -- 2.60% 2.60% 54.45%
$ -- $17.08 87.80% $54,039 74% 1.70% 1.71% 2.20%
-- 9.11 (8.45%) 1,801 94% 1.70% 1.70% 6.38%
-- 9.94 (0.60%) 193 -- 1.70% 1.70% 105.48%
-- 16.87 86.73% 98,524 74% 2.20% 2.21% 2.69%
-- 9.04 (8.96%) 2,685 94% 2.20% 2.20% 6.86%
-- 9.93 (0.70%) 353 -- 2.20% 2.20% 57.99%
-- 16.90 86.64% 38,337 74% 2.20% 2.21% 2.73%
-- 9.06 (8.85%) 2,090 94% 2.20% 2.20% 6.60%
-- 9.94 (0.60%) 74 -- 2.20% 2.20% 42.48%
-- 16.90 86.53% 24,312 74% 2.20% 2.21% 2.82%
-- 9.06 (8.76%) 4,085 94% 2.20% 2.20% 6.69%
-- 9.93 (0.70%) 270 -- 2.20% 2.20% 47.29%
$(0.03) $ 8.90 0.86% $10,881 35% 1.75% 1.75% 2.61%
(0.03) 8.85 (15.13%) 7,155 4% 1.75% 1.75% 3.51%
-- 10.46 4.60% 383 -- 1.75% 1.75% 54.47%
-- 8.84 0.45% 23,890 35% 2.25% 2.25% 3.13%
(0.01) 8.80 (15.63%) 13,184 4% 2.25% 2.25% 4.03%
-- 10.44 4.40% 1,155 -- 2.25% 2.25% 30.14%
-- 8.84 0.45% 13,164 35% 2.25% 2.25% 3.13%
(0.01) 8.80 (15.71%) 8,298 4% 2.25% 2.25% 3.97%
-- 10.45 4.50% 335 -- 2.25% 2.25% 33.60%
-- 8.84 0.45% 13,947 35% 2.25% 2.25% 3.12%
(0.01) 8.80 (15.63%) 12,368 4% 2.25% 2.25% 4.00%
-- 10.44 4.40% 640 -- 2.25% 2.25% 22.43%
$(0.12) $12.85 19.10% $24,443 104% 1.60% 1.60% 2.15%
(0.09) 10.89 9.93% 3,359 93% 1.60% 1.60% 4.32%
-- 9.99 (0.10%) 257 2% 1.60% 1.60% 37.87%
(0.05) 12.81 18.46% 65,933 104% 2.10% 2.10% 2.67%
(0.04) 10.86 9.45% 8,272 93% 2.10% 2.10% 4.65%
-- 9.96 (0.40%) 381 2% 2.10% 2.10% 29.90%
(0.05) 12.80 18.26% 20,769 104% 2.10% 2.10% 2.67%
(0.04) 10.87 9.33% 3,202 93% 2.10% 2.10% 4.77%
-- 9.98 (0.20%) 215 2% 2.10% 2.10% 38.96%
(0.05) 12.80 18.48% 19,258 104% 2.10% 2.10% 2.67%
(0.04) 10.85 9.34% 7,164 93% 2.10% 2.10% 4.66%
-- 9.96 (0.40%) 398 2% 2.10% 2.10% 26.66%
Ratio of Net Investment
Income (Loss) to
Average Net Assets(3)
-----------------------
(1.19%)
(0.28%)
2.03%
(1.84%)
(0.74%)
1.62%
(1.74%)
(0.79%)
1.72%
(1.63%)
(0.76%)
1.58%
(0.73%)
(0.75%)
(1.16%)
(1.24%)
(1.26%)
(1.73%)
(1.25%)
(1.13%)
(1.73%)
(1.21%)
(1.19%)
(1.70%)
0.17%
0.20%
0.69%
(0.35%)
(0.30%)
0.17%
(0.34%)
(0.32%)
0.02%
(0.31%)
(0.32%)
0.19%
1.44%
1.30%
1.56%
0.94%
0.80%
0.79%
0.92%
0.79%
0.78%
0.88%
0.79%
1.07%
(1) Commenced operations on July 28, 1997.
(2) Total return for Class X shares does not reflect the payment of bonus
shares.
(3) Annualized for periods less than one year.
(4) Includes commissions received by American Skandia Marketing, Incorporated
under the Funds' Supplemental Distribution Plan, as described in Note 3 to
the Financial Statements.
Per share data has been calculated based on the average daily number of shares
outstanding throughout the period.
See Notes to Financial Statements.
FINANCIAL HIGHLIGHTS
--------------------------------------------------------------------------------
Per Share Data (For a Share Outstanding
throughout each period)
Increase (Decrease) from
Investment Operations
Net Asset -----------------------------------------
Year Value Net Net Realized Total from
Ended Beginning Investment & Unrealized Investment
October 31, of Period Income (Loss) Gain (Loss) Operations
----------- --------- ------------- ------------ ----------
ASAF FEDERATED
HIGH YIELD BOND FUND:
------------------------------
------------------------------
Class A 1999 $ 9.38 $ 0.80 $(0.25) $0.55
1998 9.93 0.74 (0.55) 0.19
1997(1) 10.00 0.05 (0.07) (0.02)
Class B 1999 9.39 0.75 (0.26) 0.49
1998 9.93 0.69 (0.54) 0.15
1997(1) 10.00 0.04 (0.07) (0.03)
Class C 1999 9.38 0.75 (0.25) 0.50
1998 9.93 0.69 (0.55) 0.14
1997(1) 10.00 0.03 (0.07) (0.04)
Class X 1999 9.39 0.75 (0.26) 0.49
1998 9.93 0.69 (0.54) 0.15
1997(1) 10.00 0.04 (0.07) (0.03)
ASAF OPPENHEIMER
LARGE-CAP GROWTH FUND:
------------------------------
------------------------------
Class A 1999 $ 10.44 $(0.15) $ 3.35 $3.20
1998(5) 10.00 (0.10) 0.54 0.44
Class B 1999 10.43 (0.21) 3.33 3.12
1998(5) 10.00 (0.14) 0.57 0.43
Class C 1999 10.40 (0.21) 3.32 3.11
1998(5) 10.00 (0.14) 0.54 0.40
Class X 1999 10.41 (0.21) 3.31 3.10
1998(5) 10.00 (0.14) 0.55 0.41
ASAF LORD ABBETT GROWTH
AND INCOME FUND:
------------------------------
------------------------------
Class A 1999 $ 10.52 $ 0.06 $ 1.80 $1.86
1998(5) 10.00 0.05 0.50 0.55
Class B 1999 10.53 (0.01) 1.81 1.80
1998(5) 10.00 0.01 0.52 0.53
Class C 1999 10.51 (0.01) 1.82 1.81
1998(5) 10.00 0.01 0.50 0.51
Class X 1999 10.52 (0.01) 1.80 1.79
1998(5) 10.00 0.01 0.51 0.52
ASAF JANUS OVERSEAS
GROWTH FUND:
------------------------------
------------------------------
Class A 1999 $ 10.55 $(0.09) $ 3.60 $3.51
1998(5) 10.00 0.01 0.54 0.55
Class B 1999 10.51 (0.15) 3.58 3.43
1998(5) 10.00 (0.04) 0.55 0.51
Class C 1999 10.52 (0.15) 3.59 3.44
1998(5) 10.00 (0.04) 0.56 0.52
Class X 1999 10.50 (0.14) 3.57 3.43
1998(5) 10.00 (0.04) 0.54 0.50
Less Distributions
--------------------------------------
From Net In Excess of From Net
Investment Net Investment Realized
Income Income Gains
---------- -------------- --------
ASAF FEDERATED
HIGH YIELD BOND FUND:
------------------------------
------------------------------
Class A $(0.80) $ -- $--
(0.74) -- --
(0.05) -- --
Class B (0.75) -- --
(0.69) -- --
(0.04) -- --
Class C (0.75) -- --
(0.69) -- --
(0.03) -- --
Class X (0.75) -- --
(0.69) -- --
(0.04) -- --
ASAF OPPENHEIMER
LARGE-CAP GROWTH FUND:
------------------------------
------------------------------
Class A $ -- $ -- $--
-- -- --
Class B -- -- --
-- -- --
Class C -- -- --
-- -- --
Class X -- -- --
-- -- --
ASAF LORD ABBETT GROWTH
AND INCOME FUND:
------------------------------
------------------------------
Class A $(0.01) $(0.04) $--
(0.03) -- --
Class B -- (0.01) --
-- -- --
Class C -- (0.01) --
-- -- --
Class X -- (0.01) --
-- -- --
ASAF JANUS OVERSEAS
GROWTH FUND:
------------------------------
------------------------------
Class A $ -- $ -- $--
-- -- --
Class B -- -- --
-- -- --
Class C -- -- --
-- -- --
Class X -- -- --
-- -- --
72
76
AMERICAN SKANDIA ADVISOR FUNDS, INC.
--------------------------------------------------------------------------------
Supplemental Data Ratios of Expenses to Average Net Assets(3)
------------------------------------- --------------------------------------------
Net Asset Net Assets at Portfolio Net After Expense Before Expense
Total Value Total End of Period Turnover Operating Reimbursement Reimbursement
Distributions End of Period Return(2) (in 000s) Rate Expenses and Waiver(4) and Waiver(4)
------------- ------------- --------- ------------- --------- --------- ------------- ----------------
$(0.80) $ 9.13 5.70% $ 16,079 18% 1.50% 1.50% 1.81%
(0.74) 9.38 1.67% 6,979 22% 1.50% 1.50% 2.90%
(0.05) 9.93 (0.23%) 2,154 11% 1.50% 1.50% 30.49%
(0.75) 9.13 5.05% 68,160 18% 2.00% 2.00% 2.31%
(0.69) 9.39 1.25% 20,495 22% 2.00% 2.00% 3.32%
(0.04) 9.93 (0.30%) 920 11% 2.00% 2.00% 30.22%
(0.75) 9.13 5.05% 13,205 18% 2.00% 2.00% 2.32%
(0.69) 9.38 1.26% 5,732 22% 2.00% 2.00% 3.41%
(0.03) 9.93 (0.36%) 206 11% 2.00% 2.00% 29.26%
(0.75) 9.13 5.06% 19,893 18% 2.00% 2.00% 2.32%
(0.69) 9.39 1.26% 12,402 22% 2.00% 2.00% 3.33%
(0.04) 9.93 (0.25%) 556 11% 2.00% 2.00% 30.95%
$ -- $13.64 30.65% $ 9,271 320% 1.80% 1.80% 2.41%
-- 10.44 4.40% 2,690 207% 1.80% 1.80% 4.29%
-- 13.55 29.91% 29,219 320% 2.30% 2.30% 2.91%
-- 10.43 4.30% 7,468 207% 2.30% 2.30% 4.77%
-- 13.51 29.90% 7,371 320% 2.30% 2.30% 2.92%
-- 10.40 4.00% 2,634 207% 2.30% 2.30% 4.67%
-- 13.51 29.78% 13,212 320% 2.30% 2.30% 2.93%
-- 10.41 4.10% 6,879 207% 2.30% 2.30% 4.77%
$(0.05) $12.33 17.72% $ 28,123 47% 1.60% 1.63% 2.21%
(0.03) 10.52 5.48% 5,572 42% 1.60% 1.60% 3.57%
(0.01) 12.32 17.05% 66,009 47% 2.10% 2.13% 2.71%
-- 10.53 5.32% 10,710 42% 2.10% 2.10% 4.06%
(0.01) 12.31 17.18% 23,210 47% 2.10% 2.13% 2.72%
-- 10.51 5.12% 5,019 42% 2.10% 2.10% 4.01%
(0.01) 12.30 16.97% 24,369 47% 2.10% 2.13% 2.72%
-- 10.52 5.22% 11,350 42% 2.10% 2.10% 3.98%
$ -- $14.06 33.18% $ 61,082 71% 2.10% 2.12% 2.47%
-- 10.55 5.50% 8,812 101% 2.10% 2.10% 4.12%
-- 13.94 32.54% 105,965 71% 2.60% 2.62% 2.97%
-- 10.51 5.10% 15,339 101% 2.60% 2.60% 4.58%
-- 13.96 32.60% 54,101 71% 2.60% 2.62% 2.97%
-- 10.52 5.20% 9,580 101% 2.60% 2.60% 4.58%
-- 13.93 32.57% 34,002 71% 2.60% 2.62% 2.98%
-- 10.50 5.00% 11,226 101% 2.60% 2.60% 4.60%
Ratio of Net Investment
Income (Loss) to
Average Net Assets(3)
-----------------------
8.26%
7.42%
4.76%
7.73%
6.90%
3.15%
7.74%
6.96%
3.55%
7.76%
6.96%
3.65%
(1.15%)
(1.12%)
(1.66%)
(1.62%)
(1.68%)
(1.62%)
(1.68%)
(1.62%)
0.39%
0.62%
(0.13%)
0.14%
(0.12%)
0.15%
(0.08%)
0.17%
(0.70%)
0.06%
(1.22%)
(0.44%)
(1.21%)
(0.45%)
(1.19%)
(0.41%)
(1) Commenced operations on July 28, 1997.
(2) Total return for Class X shares does not reflect the payment of bonus
shares.
(3) Annualized for periods less than one year.
(4) Includes commissions received by American Skandia Marketing, Incorporated
under the Funds' Supplemental Distribution Plan, as described in Note 3 to
the Financial Statements.
(5) Commenced operations on December 31, 1997.
Per share data has been calculated based on the average daily number of shares
outstanding throughout the period.
See Notes to Financial Statements.
FINANCIAL HIGHLIGHTS
--------------------------------------------------------------------------------
Per Share Data (For a Share Outstanding
throughout each period)
Increase (Decrease) from
Investment Operations
Net Asset -----------------------------------------
Year Value Net Net Realized Total from
Ended Beginning Investment & Unrealized Investment
October 31, of Period Income (Loss) Gain (Loss) Operations
----------- --------- ------------- ------------ ----------
ASAF MARSICO
CAPITAL GROWTH FUND:
--------------------------------
--------------------------------
Class A 1999 $ 10.13 $(0.09) $4.55 $4.46
1998(6) 10.00 0.01 0.12 0.13
Class B 1999 10.12 (0.16) 4.55 4.39
1998(6) 10.00 -- 0.12 0.12
Class C 1999 10.11 (0.16) 4.54 4.38
1998(6) 10.00 -- 0.11 0.11
Class X 1999 10.11 (0.15) 4.52 4.37
1998(6) 10.00 -- 0.11 0.11
ASAF NEUBERGER BERMAN
MID-CAP GROWTH FUND:
--------------------------------
--------------------------------
Class A 1999 $ 11.81 $(0.17) $4.73 $4.56
1998(6) 10.00 (0.01) 1.82 1.81
Class B 1999 11.79 (0.25) 4.73 4.48
1998(6) 10.00 (0.01) 1.80 1.79
Class C 1999 11.79 (0.24) 4.72 4.48
1998(6) 10.00 (0.01) 1.80 1.79
Class X 1999 11.79 (0.25) 4.73 4.48
1998(6) 10.00 (0.01) 1.80 1.79
ASAF NEUBERGER BERMAN
MID-CAP VALUE FUND:
--------------------------------
--------------------------------
Class A 1999 $ 10.23 $ 0.03 $1.19 $1.22
1998(6) 10.00 0.02 0.21 0.23
Class B 1999 10.22 (0.05) 1.22 1.17
1998(6) 10.00 0.01 0.21 0.22
Class C 1999 10.22 (0.05) 1.22 1.17
1998(6) 10.00 -- 0.22 0.22
Class X 1999 10.22 (0.05) 1.20 1.15
1998(6) 10.00 0.01 0.21 0.22
Less Distributions
--------------------------------------
From Net In Excess of From Net
Investment Net Investment Realized
Income Income Gains
---------- -------------- --------
ASAF MARSICO
CAPITAL GROWTH FUND:
--------------------------------
--------------------------------
Class A $-- $(0.01) $ --
-- -- --
Class B -- -- --
-- -- --
Class C -- -- --
-- -- --
Class X -- -- --
-- -- --
ASAF NEUBERGER BERMAN
MID-CAP GROWTH FUND:
--------------------------------
--------------------------------
Class A $-- $ -- $(0.15)
-- -- --
Class B -- -- (0.15)
-- -- --
Class C -- -- (0.15)
-- -- --
Class X -- -- (0.15)
-- -- --
ASAF NEUBERGER BERMAN
MID-CAP VALUE FUND:
--------------------------------
--------------------------------
Class A $-- $(0.03) $ --
-- -- --
Class B -- (0.01) --
-- -- --
Class C -- (0.01) --
-- -- --
Class X -- (0.01) --
-- -- --
AMERICAN SKANDIA ADVISOR FUNDS, INC.
--------------------------------------------------------------------------------
Ratios of Expenses
Supplemental Data to Average Net Assets(3)
------------------------------------- --------------------------------------------
Net Asset Net Assets at Portfolio Net After Expense Before Expense
Total Value Total End of Period Turnover Operating Reimbursement Reimbursement
Distributions End of Period Return(2) (in 000s) Rate Expenses and Waiver(4) and Waiver(4)
------------- ------------- --------- ------------- --------- --------- ------------- ----------------
$(0.01) $14.58 44.18% $103,196 105% 1.75% 1.76% 2.03%
-- 10.13 1.20% 7,037 67% 1.75% 1.75% 2.84%
-- 14.51 43.52% 285,342 105% 2.25% 2.26% 2.53%
-- 10.12 1.10% 17,994 67% 2.25% 2.25% 3.29%
-- 14.49 43.32% 125,796 105% 2.25% 2.26% 2.53%
-- 10.11 1.10% 11,012 67% 2.25% 2.25% 3.44%
-- 14.48 43.47% 49,980 105% 2.25% 2.26% 2.53%
-- 10.11 1.10% 5,746 67% 2.25% 2.25% 3.22%
$(0.15) $16.22 38.83% $ 10,908 106% 1.75% 1.77% 2.65%
-- 11.81 18.00% 587 122% 1.75% 1.75% 5.66%
(0.15) 16.12 38.21% 22,399 106% 2.25% 2.27% 3.14%
-- 11.79 17.80% 991 122% 2.25% 2.25% 15.98%
(0.15) 16.12 38.09% 9,674 106% 2.25% 2.27% 3.17%
-- 11.79 17.90% 903 122% 2.25% 2.25% 20.25%
(0.15) 16.12 38.09% 6,428 106% 2.25% 2.27% 3.19%
-- 11.79 17.90% 509 122% 2.25% 2.25% 10.43%
$(0.03) $11.42 12.06% $ 8,561 126% 1.75% 1.85% 2.76%
-- 10.23 2.30% 717 3% 1.75% 1.75% 9.44%
(0.01) 11.38 11.57% 21,560 126% 2.25% 2.35% 3.29%
-- 10.22 2.20% 1,886 3% 2.25% 2.25% 9.10%
(0.01) 11.38 11.57% 7,731 126% 2.25% 2.35% 3.32%
-- 10.22 2.20% 997 3% 2.25% 2.25% 13.91%
(0.01) 11.36 11.38% 4,608 126% 2.25% 2.35% 3.35%
-- 10.22 2.20% 295 3% 2.25% 2.25% 12.90%
Ratio of Net Investment
Income (Loss) to
Average Net Assets(3)
-----------------------
(0.69%)
0.72%
(1.20%)
0.25%
(1.19%)
0.24%
(1.18%)
0.20%
(1.17%)
(0.52%)
(1.68%)
(0.78%)
(1.68%)
(0.72%)
(1.69%)
(0.67%)
0.06%
0.87%
(0.44%)
0.47%
(0.45%)
0.26%
(0.46%)
0.34%
(2) Total return for Class X shares does not reflect the payment of bonus
shares.
(3) Annualized for periods less than one year.
(4) Includes commissions received by American Skandia Marketing, Incorporated
under the Funds' Supplemental Distribution Plan, as described in Note 3 to
the Financial Statements.
(6) Commenced operations on August 19, 1998.
Per share data has been calculated based on the average daily number of shares
outstanding throughout the period.
See Notes to Financial Statements.
FINANCIAL HIGHLIGHTS
--------------------------------------------------------------------------------
Per Share Data (For a Share Outstanding
throughout each period)
Increase (Decrease) from
Investment Operations
-----------------------------------------
Net Asset Net
Year Value Investment Net Realized Total from
Ended Beginning Income & Unrealized Investment
October 31, of Period (Loss) Gain (Loss) Operations
----------- --------- ------------- ------------ ----------
ASAF T. ROWE PRICE INTERNATIONAL
EQUITY FUND:
---------------------------------
---------------------------------
Class A 1999 $ 9.39 $(0.01) $ 1.68 $ 1.67
1998 8.93 (0.02) 0.48 0.46
1997(1) 9.74 0.01 (0.82) (0.81)
Class B 1999 9.59 (0.08) 1.73 1.65
1998 9.16 (0.07) 0.50 0.43
1997(1) 10.00 (0.01) (0.83) (0.84)
Class C 1999 9.57 (0.08) 1.74 1.66
1998 9.16 (0.06) 0.47 0.41
1997(1) 10.00 (0.01) (0.83) (0.84)
Class X 1999 9.61 (0.09) 1.75 1.66
1998 9.18 (0.07) 0.50 0.43
1997(1) 10.00 (0.01) (0.81) (0.82)
ASAF JANUS
CAPITAL GROWTH FUND:
---------------------------------
---------------------------------
Class A 1999 $ 14.41 $(0.10) $ 7.66 $ 7.56
1998 11.40 (0.01) 3.05 3.04
1997(1) 11.18 0.09 0.13 0.22
Class B 1999 12.87 (0.17) 6.80 6.63
1998 10.19 (0.08) 2.77 2.69
1997(1) 10.00 0.06 0.13 0.19
Class C 1999 12.85 (0.18) 6.80 6.62
1998 10.19 (0.08) 2.75 2.67
1997(1) 10.00 0.05 0.14 0.19
Class X 1999 12.88 (0.18) 6.82 6.64
1998 10.20 (0.09) 2.78 2.69
1997(1) 10.00 0.05 0.15 0.20
ASAF INVESCO
EQUITY INCOME FUND:
---------------------------------
---------------------------------
Class A 1999 $ 11.75 $ 0.22 $ 1.84 $ 2.06
1998 10.45 0.22 1.20 1.42
1997(1) 9.98 0.14 0.33 0.47
Class B 1999 11.77 0.14 1.87 2.01
1998 10.45 0.15 1.24 1.39
1997(1) 10.00 0.10 0.35 0.45
Class C 1999 11.77 0.14 1.86 2.00
1998 10.46 0.15 1.23 1.38
1997(1) 10.00 0.10 0.36 0.46
Class X 1999 11.76 0.13 1.88 2.01
1998 10.45 0.15 1.23 1.38
1997(1) 10.00 0.11 0.34 0.45
Less Distributions
----------------------------------------
In Excess
From Net of Net From Net
Investment Investment Realized
Income Income Gains
---------- ---------- --------------
ASAF T. ROWE PRICE INTERNATIONAL
EQUITY FUND:
---------------------------------
---------------------------------
Class A $ -- $(0.07) $--
-- -- --
-- -- --
Class B -- (0.02) --
-- -- --
-- -- --
Class C -- (0.02) --
-- -- --
-- -- --
Class X -- (0.02) --
-- -- --
-- -- --
ASAF JANUS
CAPITAL GROWTH FUND:
---------------------------------
---------------------------------
Class A $ -- $ -- $--
(0.02) (0.01) --
-- -- --
Class B -- -- --
(0.01) -- --
-- -- --
Class C -- -- --
(0.01) -- --
-- -- --
Class X -- -- --
(0.01) -- --
-- -- --
ASAF INVESCO
EQUITY INCOME FUND:
---------------------------------
---------------------------------
Class A $(0.15) $ -- $--
(0.12) -- --
-- -- --
Class B (0.09) -- --
(0.07) -- --
-- -- --
Class C (0.09) -- --
(0.07) -- --
-- -- --
Class X (0.09) -- --
(0.07) -- --
-- -- --
AMERICAN SKANDIA ADVISOR FUNDS, INC.
--------------------------------------------------------------------------------
Ratios of Expenses
Supplemental Data to Average Net Assets(4)
Net Asset ------------------------------------- -----------------------------------------------
Value Net Assets at Portfolio Net After Expense Before Expense
Total End Total End of Period Turnover Operating Reimbursement Reimbursement
Distributions of Period Return(2) (in 000s) Rate(3) Expenses and Waiver(5) and Waiver(5)
------------- ------------- --------- ------------- --------- --------- ---------------- ----------------
$(0.07) $10.99 17.82% $ 4,623 31% 2.10% 2.12% 3.36%
-- 9.39 5.15% 1,685 20% 2.10% 2.10% 6.06%
-- 8.93 (8.32%) 218 1% 2.10% 2.10% 51.87%
(0.02) 11.22 17.30% 9,257 31% 2.60% 2.62% 3.86%
-- 9.59 4.69% 3,318 20% 2.60% 2.60% 6.50%
-- 9.16 (8.40%) 390 1% 2.60% 2.60% 38.12%
(0.02) 11.21 17.33% 4,379 31% 2.60% 2.62% 3.90%
-- 9.57 4.48% 2,282 20% 2.60% 2.60% 6.55%
-- 9.16 (8.40%) 198 1% 2.60% 2.60% 33.95%
(0.02) 11.25 17.26% 6,727 31% 2.60% 2.62% 3.94%
-- 9.61 4.68% 5,144 20% 2.60% 2.60% 6.54%
-- 9.18 (8.20%) 756 1% 2.60% 2.60% 46.77%
$ -- $21.97 52.46% $234,575 47% 1.70% 1.71% 2.00%
(0.03) 14.41 26.77% 24,558 77% 1.70% 1.70% 2.65%
-- 11.40 1.97% 706 83% 1.70% 1.70% 26.77%
-- 19.50 51.52% 684,778 47% 2.20% 2.21% 2.51%
(0.01) 12.87 26.40% 56,582 77% 2.20% 2.20% 3.14%
-- 10.19 1.90% 1,718 83% 2.20% 2.20% 16.45%
-- 19.47 51.52% 222,230 47% 2.20% 2.21% 2.50%
(0.01) 12.85 26.20% 21,710 77% 2.20% 2.20% 3.13%
-- 10.19 1.90% 452 83% 2.20% 2.20% 15.78%
-- 19.52 51.55% 133,655 47% 2.20% 2.21% 2.48%
(0.01) 12.88 26.37% 36,575 77% 2.20% 2.20% 3.16%
-- 10.20 2.00% 1,474 83% 2.20% 2.20% 24.39%
$(0.15) $13.66 17.60% $ 31,960 66% 1.55% 1.59% 1.91%
(0.12) 11.75 13.64% 8,911 70% 1.55% 1.55% 2.86%
-- 10.45 4.71% 471 46% 1.55% 1.55% 29.14%
(0.09) 13.69 17.08% 79,962 66% 2.05% 2.09% 2.42%
(0.07) 11.77 13.30% 18,045 70% 2.05% 2.05% 3.38%
-- 10.45 4.50% 1,408 46% 2.05% 2.05% 19.54%
(0.09) 13.68 17.08% 34,157 66% 2.05% 2.09% 2.41%
(0.07) 11.77 13.19% 8,362 70% 2.05% 2.05% 3.33%
-- 10.46 4.60% 255 46% 2.05% 2.05% 20.89%
(0.09) 13.68 17.09% 33,884 66% 2.05% 2.09% 2.42%
(0.07) 11.76 13.21% 18,296 70% 2.05% 2.05% 3.35%
-- 10.45 4.50% 1,174 46% 2.05% 2.05% 36.25%
Ratio of Net Investment
Income (Loss) to
Average Net Assets(4)
-----------------------
(0.28%)
(0.16%)
0.07%
(0.80%)
(0.70%)
(0.51%)
(0.83%)
(0.58%)
(0.53%)
(0.86%)
(0.68%)
(0.28%)
(0.49%)
(0.24%)
2.72%
(0.98%)
(0.74%)
2.27%
(0.99%)
(0.75%)
1.95%
(1.02%)
(0.76%)
2.05%
1.52%
1.72%
4.81%
1.02%
1.27%
3.68%
1.02%
1.27%
3.82%
0.99%
1.27%
4.05%
(1) Calculated from July 28, 1997 (Date of initial shares sold subsequent to
effective date of the Funds' registration statement under The Securities Act
of 1933.)
(2) Total return for Class X shares does not reflect the payment of bonus
shares.
(3) Represents Portfolio Turnover Rate in corresponding Master Portfolios.
(4) Annualized for periods less than one year and represents the combined ratios
for the respective fund and its respective pro rata share of its Master
Portfolio.
(5) Includes commissions received by American Skandia Marketing, Incorporated
under the Funds' Supplemental Distribution Plan, as described in Note 3 to
the Financial Statements.
Per share data has been calculated based on the average daily number of shares
outstanding throughout the period.
See Notes to Financial Statements.
FINANCIAL HIGHLIGHTS
--------------------------------------------------------------------------------
Per Share Data (For a Share Outstanding
throughout each period)
Increase (Decrease) from
Investment Operations
Net Asset -----------------------------------------
Year Value Net Net Realized Total from
Ended Beginning Investment & Unrealized Investment
October 31, of Period Income (Loss) Gain (Loss) Operations
----------- --------- ------------- ------------ ----------
ASAF TOTAL
RETURN BOND FUND:
------------------------------
------------------------------
Class A 1999 $ 10.79 $ 0.60 $(0.61) $(0.01)
1998 10.28 0.35 0.54 0.89
1997(1) 10.07 0.15 0.09 0.24
Class B 1999 10.68 0.54 (0.60) (0.06)
1998 10.16 0.31 0.53 0.84
1997(1) 10.00 0.10 0.09 0.19
Class C 1999 10.67 0.54 (0.59) (0.05)
1998 10.16 0.31 0.52 0.83
1997(1) 10.00 0.10 0.09 0.19
Class X 1999 10.69 0.54 (0.60) (0.06)
1998 10.17 0.34 0.50 0.84
1997(1) 10.00 0.09 0.10 0.19
ASAF JPM
MONEY MARKET FUND:
------------------------------
------------------------------
Class A 1999 $ 1.00 $0.035 $ -- $0.035
1998 1.00 0.039 -- 0.039
1997(1) 1.00 0.009 -- 0.009
Class B 1999 1.00 0.030 -- 0.030
1998 1.00 0.033 -- 0.033
1997(1) 1.00 0.007 -- 0.007
Class C 1999 1.00 0.030 -- 0.030
1998 1.00 0.034 -- 0.034
1997(1) 1.00 0.007 -- 0.007
Class X 1999 1.00 0.030 -- 0.030
1998 1.00 0.034 -- 0.034
1997(1) 1.00 0.008 -- 0.008
Less Distributions
--------------------------------------
From Net In Excess of From Net
Investment Net Investment Realized
Income Income Gains
---------- -------------- --------
ASAF TOTAL
RETURN BOND FUND:
------------------------------
------------------------------
Class A $ (0.60) $-- $(0.07)
(0.38) -- --
(0.03) -- --
Class B (0.54) -- (0.07)
(0.32) -- --
(0.03) -- --
Class C (0.54) -- (0.07)
(0.32) -- --
(0.03) -- --
Class X (0.54) -- (0.07)
(0.32) -- --
(0.02) -- --
ASAF JPM
MONEY MARKET FUND:
------------------------------
------------------------------
Class A $(0.035) $-- $ --
(0.039) -- --
(0.009) -- --
Class B (0.030) -- --
(0.033) -- --
(0.007) -- --
Class C (0.030) -- --
(0.034) -- --
(0.007) -- --
Class X (0.030) -- --
(0.034) -- --
(0.008) -- --
78
82
AMERICAN SKANDIA ADVISOR FUNDS, INC.
--------------------------------------------------------------------------------
Ratios of Expenses
Supplemental Data to Average Net Assets(5)
------------------------------------- --------------------------------------------
Net Asset Net Assets at Portfolio Net After Expense Before Expense
Total Value Total End of Period Turnover Operating Reimbursement Reimbursement
Distributions End of Period Return(2) (In 000s) Rate(3) Expenses and Waiver(4) and Waiver(4)
------------- ------------- --------- ------------- --------- --------- ------------- ----------------
$ (0.67) $10.11 (0.55%) $23,140 145% 1.40% 1.40% 1.73%
(0.38) 10.79 8.79% 6,034 418% 1.40% 1.40% 2.93%
(0.03) 10.28 2.39% 61 93% 1.40% 1.40% 66.92%
(0.61) 10.01 (1.02%) 83,936 145% 1.90% 1.90% 2.23%
(0.32) 10.68 8.36% 17,821 418% 1.90% 1.90% 3.58%
(0.03) 10.16 1.90% 547 93% 1.90% 1.90% 39.35%
(0.61) 10.01 (0.92%) 26,112 145% 1.90% 1.90% 2.24%
(0.32) 10.67 8.26% 8,743 418% 1.90% 1.90% 3.52%
(0.03) 10.16 1.93% 165 93% 1.90% 1.90% 33.68%
(0.61) 10.02 (1.00%) 19,574 145% 1.90% 1.90% 2.25%
(0.32) 10.69 8.36% 11,698 418% 1.90% 1.90% 3.68%
(0.02) 10.17 1.94% 410 93% 1.90% 1.90% 67.46%
$(0.035) $ 1.00 3.57% $43,004 N/A 1.50% 1.50% 1.63%
(0.039) 1.00 3.94% 7,372 N/A 1.50% 1.50% 2.42%
(0.009) 1.00 0.92% 307 N/A 1.50% 1.50% 31.53%
(0.030) 1.00 3.05% 79,202 N/A 2.00% 2.00% 2.12%
(0.033) 1.00 3.39% 16,554 N/A 2.00% 2.00% 2.89%
(0.007) 1.00 0.75% 354 N/A 2.00% 2.00% 37.83%
(0.030) 1.00 3.06% 28,923 N/A 2.00% 2.00% 2.13%
(0.034) 1.00 3.42% 6,895 N/A 2.00% 2.00% 3.07%
(0.007) 1.00 0.71% 332 N/A 2.00% 2.00% 24.34%
(0.030) 1.00 3.06% 28,385 N/A 2.00% 2.00% 2.13%
(0.034) 1.00 3.42% 12,533 N/A 2.00% 2.00% 3.18%
(0.008) 1.00 0.77% 566 N/A 2.00% 2.00% 39.71%
Ratio of Net Investment
Income (Loss) to
Average Net Assets(5)
------------------------
5.33%
4.76%
4.42%
4.82%
4.23%
4.13%
4.84%
4.27%
4.32%
4.86%
4.25%
3.94%
3.56%
3.90%
3.34%
3.04%
3.30%
2.98%
3.07%
3.40%
2.85%
3.06%
3.42%
2.97%
(1) Calculated from July 28, 1997 (Date of initial shares sold subsequent to the
effective date of the Funds' registration statement under The Securities Act
of 1933.
(2) Total return for Class X shares does not reflect the payment of bonus
shares.
(3) Represents Portfolio Turnover Rate in corresponding Master Portfolios.
(4) Includes commissions received by American Skandia Marketing, Incorporated
under the Funds' Supplemental Distribution Plan, as described in Note 3 to
the Financial Statements.
(5) Annualized for periods less than one year and represents the combined ratios
for the respective fund and its respective pro rata share of its Master
Portfolio.
Per share data has been calculated based on the average daily number of shares
outstanding throughout the period.
See Notes to Financial Statements.
OCTOBER 31, 1999
NOTES TO FINANCIAL STATEMENTS
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 October 31, 1999,
consisted of 16 diversified investment portfolios (each a "Fund" and
collectively the "Funds"). Five of the Funds -- ASAF T. Rowe Price International
Equity Fund ("International Equity"), ASAF Janus Capital Growth Fund ("Janus
Capital Growth"), ASAF INVESCO Equity Income Fund ("Equity Income"), ASAF Total
Return Bond Fund ("Total Return Bond"), and ASAF JPM Money Market Fund ("Money
Market") (each a "Feeder Fund" and collectively the "Feeder Funds") -- invest
all of their investable assets in a corresponding portfolio of American Skandia
Master Trust (each a "Portfolio" and collectively the "Portfolios"), an open-end
management investment company comprised of five diversified investment
portfolios. The value of each Feeder Fund's investment in each Portfolio,
included in the accompanying Statements of Assets and Liabilities, reflects each
Feeder Fund's beneficial interest in the net assets of that Portfolio. At
October 31, 1999, the Feeder Funds held the following percentage interests in
their corresponding Portfolios.
ASMT T. Rowe Price International Equity Portfolio 68.3%
ASMT Janus Capital Growth Portfolio 96.4%
ASMT INVESCO Equity Income Portfolio 84.9%
ASMT PIMCO Total Return Bond Portfolio 87.2%
ASMT JPM Money Market Portfolio 94.0%
The financial statements of each Portfolio, including the Schedules of
Investments, are included elsewhere within this report and should be read in
conjunction with each Feeder Fund's financial statements.
The remaining 11 Funds of the Company -- ASAF Founders International Small
Capitalization Fund ("International Small Cap"), ASAF Janus Small-Cap Growth
Fund ("Small-Cap Growth") (formerly, ASAF Founders Small Capitalization Fund),
ASAF T. Rowe Price Small Company Value Fund ("Small Company Value"), ASAF
American Century Strategic Balanced Fund ("Strategic Balanced"), ASAF Federated
High Yield Bond Fund ("High Yield Bond"), ASAF Oppenheimer Large-Cap Growth Fund
("Large-Cap Growth") (formerly, ASAF Robertson Stephens Value + Growth Fund),
ASAF Lord Abbett Growth and Income Fund ("Growth and Income"), ASAF Janus
Overseas Growth Fund ("Overseas Growth"), ASAF Marsico Capital Growth Fund
("Marsico Capital Growth"), ASAF Neuberger Berman Mid-Cap Growth Fund ("Mid-Cap
Growth"), and ASAF Neuberger Berman Mid-Cap Value Fund ("Mid-Cap Value") (each a
"Non-Feeder Fund" and collectively the "Non-Feeder Funds") -- directly invest
and manage their own portfolio of securities.
2. SIGNIFICANT ACCOUNTING POLICIES
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
The following is a summary of significant accounting policies followed by
the Funds, in conformity with generally accepted accounting principles, 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.
AMERICAN SKANDIA ADVISOR FUNDS, INC.
SECURITY VALUATION
FEEDER FUNDS -- The value of each Feeder Fund's beneficial interest in the
Portfolio in which it invests is determined by the Feeder Fund's percentage
interest in the Portfolio, multiplied by the Portfolio's net assets. Valuation
of securities held by the Portfolios is discussed in Note 2 to the financial
statements of American Skandia Master Trust.
NON-FEEDER FUNDS -- 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 last reported sales 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 which mature in 60 days or less are valued at cost (or market value
60 days prior to maturity), adjusted for amortization to maturity of any premium
or discount.
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. As of October 31, 1999, there were no securities valued in
accordance with such procedures.
FOREIGN CURRENCY TRANSLATION
NON-FEEDER FUNDS -- 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 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
NON-FEEDER FUNDS -- 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
NON-FEEDER FUNDS -- 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 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 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
NON-FEEDER FUNDS -- 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 bear a risk of loss in the event that the seller
defaults on its obligation to repurchase the securities. In such case, the Fund
may be delayed or prevented from exercising its right to dispose of the
securities.
SECURITIES LOANS
NON-FEEDER FUNDS -- 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.
AMERICAN SKANDIA ADVISOR FUNDS, INC.
At October 31, 1999, securities lending activities are summarized as
follows:
MARKET
VALUE OF
SECURITIES MARKET VALUE INCOME FROM
PORTFOLIO ON LOAN OF COLLATERAL LENDING*
--------- ------------ ------------- -----------
Small-Cap Growth $ 43,283,597 $ 56,763,136 $22,345
Small Company Value 306,000 306,000 636
Strategic Balanced 5,780,557 5,569,999 163
High Yield Bond 3,306,625 3,617,250 811
Large-Cap Growth 9,924,024 9,831,788 468
Growth and Income 17,942,972 17,938,097 534
Marsico Capital Growth 147,253,452 142,103,987 12,133
Mid-Cap Growth 18,212,356 17,874,935 3,536
Mid-Cap Value 3,148,144 3,132,300 177
* Income earned, for the period, is included in interest income on the
Statements of Operations.
DEFERRED ORGANIZATION COSTS
ALL FUNDS -- 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.
INVESTMENT TRANSACTIONS AND INVESTMENT INCOME
FEEDER FUNDS -- The Feeder Funds record their proportionate share of investment
operations, including net investment income and realized and unrealized gains
and losses, from the corresponding Portfolios in which they invest.
NON-FEEDER FUNDS -- 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 Funds' sources. Interest income is
recorded on the accrual basis and includes the accretion of discount and
amortization of premium.
MULTIPLE CLASSES OF SHARES
ALL FUNDS -- 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, 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.
DISTRIBUTIONS TO SHAREHOLDERS
ALL FUNDS -- Dividends, if any, from net investment income are declared and paid
at least annually by the International Small Cap, Small-Cap Growth, Small
Company Value, Large-Cap Growth, Overseas Growth, Marsico Capital Growth,
Mid-Cap Growth, Mid-Cap Value, International Equity, and Janus Capital Growth
Funds, semiannually by the Strategic Balanced, Growth and Income, and Equity
Income Funds, declared daily and paid quarterly by the Total Return Bond Fund,
and declared daily and paid monthly by the High Yield Bond and Money Market
Funds. Net realized gains from
investment transactions, if any, are distributed at least annually.
Distributions to shareholders are recorded on the ex-dividend date.
3. AGREEMENTS AND OTHER TRANSACTIONS WITH AFFILIATES
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The Non-Feeder Funds have entered into investment management agreements
with American Skandia Investment Services, Inc. ("Investment Manager") which
provide that the Investment Manager will furnish each Fund with investment
advice and investment management and administrative services. The Investment
Manager has engaged the following firms as Sub-advisors for their respective
Funds: Founders Asset Management, Inc. for International Small Cap; T. Rowe
Price Associates, Inc. for Small Company Value; American Century Investment
Management, Inc. for Strategic Balanced; Federated Investment Counseling for
High Yield Bond; OppenheimerFunds, Inc. for Large-Cap Growth; Lord Abbett & Co.
for Growth and Income; Janus Capital Corporation for Small-Cap Growth and
Overseas Growth; Marsico Capital Management, LLC for Marsico Capital Growth; and
Neuberger Berman Management Inc. for Mid-Cap Growth and Mid-Cap Value.
ADVISORY FEES
NON-FEEDER FUNDS -- The Investment Manager receives a fee, computed daily and
paid monthly, based on an annual rate of 1.10%, .90% 1.00%, .90%, .70%, .90%,
1.00%, 1.10%, 1.00%, .90%, and .90% of the average daily net assets of the
International Small Cap, Small-Cap Growth, Small Company Value, Strategic
Balanced, High Yield Bond, Large-Cap Growth, Growth and Income, Overseas Growth,
Marisco Capital Growth, Mid-Cap Growth, and Mid-Cap Value Funds, respectively.
The fee for International Small Cap is reduced to 1.00% of the average daily net
assets in excess of $100 million. The fee for Large-Cap Growth is reduced to
.85% of the average daily net assets in excess of $1 billion. The Investment
Manager is currently waiving a portion of its fee equal to .20% and .10% of the
average daily net assets of the Growth and Income and Overseas Growth Funds,
respectively.
SUB-ADVISORY FEES
NON-FEEDER FUNDS -- The Investment Manager pays each Sub-advisor a fee, computed
daily and paid monthly, based on an annual rate of .60%, .50%, .60%, .50%, .25%,
.35%, .50%, .60%, .45%, .40%, and .40% of the average daily net assets of the
International Small Cap, Small-Cap Growth, Small Company Value, Strategic
Balanced, High Yield Bond, Large-Cap Growth, Growth and Income, Overseas Growth,
Marsico Capital Growth, Mid-Cap Growth, and Mid-Cap Value Funds, respectively.
The Sub-advisors for Growth and Income and Overseas Growth are currently waiving
a portion of their fee payable by the Investment Manager. The annual rates of
the fees payable to the Sub-advisors for International Small Cap, Small-Cap
Growth, Strategic Balanced, High Yield Bond, Large-Cap Growth, Growth and
Income, and Overseas Growth are reduced for Fund net assets in excess of
specified levels.
NEW ADVISORY AND SUB-ADVISORY AGREEMENTS
NON-FEEDER FUNDS -- On December 16, 1998, the Board of Directors of the Company
approved changes in Sub-advisor for ASAF Robertson Stephens Value + Growth Fund
("Value + Growth") and ASAF Founders Small Capitalization Fund ("Small Cap"),
effective December 31, 1998 and January 1, 1999, respectively. On February 25,
1999, the shareholders of Value + Growth and Small Cap further approved new
Sub-advisory Agreements, effective March 1, 1999.
OppenheimerFunds, Inc. became Sub-advisor to Value + Growth and the name of
the Fund was changed to ASAF Oppenheimer Large-Cap Growth Fund. Prior to
December 31, 1998, Robertson
AMERICAN SKANDIA ADVISOR FUNDS, INC.
Stephens & Company Investment Management, L.P. served as Sub-advisor to the
Fund. Prior to March 1, 1999, the Investment Manager received a fee, computed
daily and paid monthly, based on an annual rate of 1.10% of the average daily
net assets of the Fund. The Investment Manager voluntarily waived a portion of
its fee equal to .10% of average daily net assets. The Investment Manager paid
the Sub-advisor a fee, computed daily and paid monthly, based on an annual rate
of .60% of the average daily net assets of the Fund. The Sub-advisor voluntarily
waived a portion of its fee equal to .10% of average daily net assets. The
annual rate of the fees paid by the Investment Manager to the Sub-advisor was
reduced for Fund net assets in excess of specified levels.
Janus Capital Corporation became Sub-advisor to Small Cap and the name of
the Fund was changed to ASAF Janus Small-Cap Growth Fund. Prior to January 1,
1999, Founders Asset Management, Inc. served as Sub-advisor to the Fund. Prior
to March 1, 1999, the Investment Manager paid the Fund's Sub-advisor a fee,
computed daily and paid monthly, based on an annual rate of .50% of the average
daily net assets of the Fund. The annual rate of the fees paid by the Investment
Manager to the Sub-advisor was reduced for Fund net assets in excess of
specified levels.
EXPENSE LIMITATION
ALL FUNDS -- The Investment Manager has voluntarily agreed to limit the
operating expenses of each Fund (exclusive of distribution fees) to an annual
rate of 1.60%, 1.20%, 1.25%, 1.10%, 1.00%, 1.30%, 1.10%, 1.60%, 1.25%, 1.25%,
1.25%, 1.60%, 1.20%, 1.05%, .90%, and 1.00% of the average daily net assets of
the International Small Cap, Small-Cap Growth, Small Company Value, Strategic
Balanced, High Yield Bond, Large-Cap Growth, Growth and Income, Overseas Growth,
Marsico Capital Growth, Mid-Cap Growth, Mid-Cap Value, International Equity,
Janus Capital Growth, Equity Income, Total Return Bond, and Money Market Funds,
respectively. All amounts paid or payable to the Funds by the Investment
Manager, under the agreement, are reflected in the Statements of Operations.
MANAGEMENT OF THE COMPANY
NON-FEEDER FUNDS -- Certain officers and Directors of the Funds are officers or
directors of the Investment Manager. The Funds pay no compensation directly to
their officers or interested Directors.
DISTRIBUTOR
ALL FUNDS -- American Skandia Marketing, Incorporated ("ASMI") serves as the
principal underwriter and distributor for each Fund. The Company has adopted a
separate Distribution and Service plan (each a "Plan" and collectively the
"Plans") for Class A, B, C, and X shares of each Fund in accordance with the
requirements of Rule 12b-1 of the Investment Company Act of 1940.
Under the Class A Plan, the Funds pay ASMI a distribution and service fee
of .50% of the average daily net assets attributable to Class A shares, half of
which is intended as a fee for services provided to existing shareholders. ASMI
uses distribution and service fees received under the Plan to compensate
qualified dealers, brokers, banks, and other financial institutions ("Dealers")
for services provided in connection with the sale of Class A shares and the
maintenance of shareholder accounts. Such compensation is paid by ASMI quarterly
at an annual rate not to exceed .50% of the Funds' average daily net assets
attributable to Class A shares.
A portion of the sales charge on sales of Class A shares may be retained by
ASMI or allocated to Dealers attributable to the sale of those shares. For the
year ended October 31, 1999, ASMI retained no portion of the sales charge on
sales of Class A shares of the Funds.
Under the Class B Plan, the Funds pay ASMI a distribution and service fee
of 1.00% of the average daily net assets attributable to Class B shares that are
outstanding for eight years or less, a quarter of which is intended as a fee for
services provided to existing shareholders. ASMI uses distribution and service
fees received under the Plan to compensate Dealers for services provided in
connection with the sale of Class B shares and the maintenance of shareholder
accounts. Such compensation is paid by ASMI quarterly at an annual rate not to
exceed .50% of the Funds' average daily net assets attributable to Class B
shares held for over seven years.
Under the Class C Plan, the Funds pay ASMI a distribution and service fee
of 1.00% of the average daily net assets attributable to Class C shares, a
quarter of which is intended as a fee for services provided to existing
shareholders. ASMI uses distribution and service fees received under the Plan to
compensate Dealers for services provided in connection with the sale of Class C
shares and the maintenance of shareholder accounts. ASMI currently pays a 1.00%
fee to Dealers, in advance, upon sale of Class C shares and retains the fee paid
by the Funds in the first year. After the shares have been held for a year, ASMI
pays such compensation on a quarterly basis.
Under the Class X Plan, the Funds pay ASMI a distribution and service fee
of 1.00% of the average daily net assets attributable to Class X shares that are
outstanding for ten years or less, a quarter of which is intended as a fee for
services provided to existing shareholders. ASMI uses distribution and service
fees received under the Plan to compensate Dealers for services provided in
connection with the sale of Class X shares and the maintenance of shareholder
accounts. Compensation to Dealers is paid by ASMI quarterly at an annual rate
not to exceed .50% of the Funds' average daily net assets attributable to Class
X shares held for over seven years. ASMI also uses distribution and service fees
as reimbursement for its purchase of Bonus Shares. Bonus shares are paid to
shareholders at the time of the initial purchase and each subsequent purchase of
Class X shares in an amount equal to 2.5% of the purchase.
Purchases of $1 million or more or purchases by certain retirement plans,
with respect to Class A shares, are subject to a contingent deferred sales
charge ("CDSC") if shares are redeemed within 12 months of their purchase. A
CDSC is imposed on Class B and Class X shares redeemed within seven and eight
years, respectively, after their purchase. A CDSC is imposed on Class C shares
redeemed within 12 months of their purchase. The maximum CDSC imposed is equal
to 1%, 6%, 1%, and 6% of the amount subject to the charge for Class A, B, C, and
X, respectively.
In addition, the Company has adopted a Supplemental Distribution Plan
("Supplemental Plan") under Rule 12b-1. The Supplemental Plan permits ASMI to
receive brokerage commissions in connection with purchases and sales of
securities by the Funds, and to use these commissions to promote the sale of
shares of the Company. Under the Supplemental Plan, securities transactions for
a Fund may be directed to certain brokers for execution ("clearing brokers") who
have agreed to pay part of the brokerage commissions received on these
transactions to ASMI for "introducing" transactions to the clearing broker. In
turn, ASMI uses the brokerage commissions received as an introducing broker to
pay various distribution-related expenses, such as advertising, printing of
sales materials, and payments to dealers.
Commissions received by ASMI under the Supplemental Plan are reflected in
the cost of securities purchased and the proceeds from the sale of securities.
These commissions are shown in the Statements of Operations as "Supplemental
Distribution Fees" and a corresponding reduction "Fees Paid Indirectly". Net
expenses of the Funds are unaffected by these commissions. From July 27, 1999 to
October 31, 1999, commissions received by ASMI totaled $217,539, of which
$101,137 and $116,402 were received from the Non-Feeder Funds and the Portfolios
of American Skandia Master Trust, respectively.
AMERICAN SKANDIA ADVISOR FUNDS, INC.
4. SHARES OF CAPITAL STOCK
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ALL FUNDS -- The authorized capital stock of the Funds is 5.5 billion shares,
with a par value of $.001 per share. Transactions in shares of capital stock,
during the year ended October 31, 1999, were as follows:
CLASS A CLASS B CLASS C CLASS X
---------------------------- -------------------------- -------------------------- -----------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES
------------ ------------- ----------- ------------ ----------- ------------ -----------
INTERNATIONAL SMALL
CAP:
Sold 131,573 $ 1,625,013 519,007 $ 6,481,186 191,446 $ 2,192,239 159,967
Redeemed (42,759) (499,629) (80,020) (954,057) (87,643) (936,217) (74,837)
------------ ------------- ----------- ------------ ----------- ------------ -----------
Net Increase 88,814 $ 1,125,384 438,987 $ 5,527,129 103,803 $ 1,256,022 85,130
============ ============= =========== ============ =========== ============ ===========
SMALL-CAP GROWTH:
Sold 4,521,498 $ 62,279,844 6,131,106 $ 82,109,946 2,453,044 $ 32,502,450 1,388,410
Redeemed (1,555,645) (21,272,349) (589,414) (7,913,337) (415,557) (5,293,724) (400,722)
------------ ------------- ----------- ------------ ----------- ------------ -----------
Net Increase 2,965,853 $ 41,007,495 5,541,692 $ 74,196,609 2,037,487 $ 27,208,726 987,688
============ ============= =========== ============ =========== ============ ===========
SMALL COMPANY VALUE:
Sold 2,152,263 $ 19,728,209 2,202,266 $ 19,780,241 1,278,728 $ 11,579,459 899,829
Reinvested 2,950 27,202 -- -- -- -- --
Redeemed (1,740,590) (16,175,699) (998,544) (8,851,216) (731,195) (6,613,615) (727,801)
------------ ------------- ----------- ------------ ----------- ------------ -----------
Net Increase 414,623 $ 3,579,712 1,203,722 $ 10,929,025 547,533 $ 4,965,844 172,028
============ ============= =========== ============ =========== ============ ===========
STRATEGIC BALANCED:
Sold 1,815,075 $ 22,578,144 4,889,067 $ 60,790,616 1,513,809 $ 18,669,567 1,064,235
Reinvested 8,478 106,949 10,128 127,960 4,003 50,510 4,619
Redeemed (229,284) (2,869,225) (512,249) (6,347,305) (189,856) (2,369,264) (224,538)
------------ ------------- ----------- ------------ ----------- ------------ -----------
Net Increase 1,594,269 $ 19,815,868 4,386,946 $ 54,571,271 1,327,956 $ 16,350,813 844,316
============ ============= =========== ============ =========== ============ ===========
HIGH YIELD BOND:
Sold 3,357,420 $ 32,790,500 7,275,129 $ 70,565,721 1,847,050 $ 17,923,216 1,855,501
Reinvested 87,677 841,629 232,789 2,227,094 79,920 767,588 122,941
Redeemed (2,428,133) (23,736,985) (2,228,915) (21,481,204) (1,091,741) (10,529,290) (1,121,235)
------------ ------------- ----------- ------------ ----------- ------------ -----------
Net Increase 1,016,964 $ 9,895,144 5,279,003 $ 51,311,611 835,229 $ 8,161,514 857,207
============ ============= =========== ============ =========== ============ ===========
LARGE-CAP GROWTH:
Sold 638,225 $ 8,103,545 1,851,812 $ 23,314,526 418,749 $ 5,236,468 637,307
Redeemed (215,891) (2,716,616) (410,694) (5,186,475) (126,506) (1,592,157) (320,143)
------------ ------------- ----------- ------------ ----------- ------------ -----------
Net Increase 422,334 $ 5,386,929 1,441,118 $ 18,128,051 292,243 $ 3,644,311 317,164
============ ============= =========== ============ =========== ============ ===========
GROWTH AND INCOME:
Sold 2,372,960 $ 28,578,838 4,969,282 $ 60,277,008 1,774,560 $ 21,393,909 1,298,681
Reinvested 3,892 47,183 633 7,193 299 3,391 571
Redeemed (625,028) (7,479,489) (629,845) (7,571,053) (366,786) (4,442,443) (397,677)
------------ ------------- ----------- ------------ ----------- ------------ -----------
Net Increase 1,751,824 $ 21,146,532 4,340,070 $ 52,713,148 1,408,073 $ 16,954,857 901,575
============ ============= =========== ============ =========== ============ ===========
CLASS X
------------
AMOUNT
------------
INTERNATIONAL SMALL
CAP:
Sold $ 2,003,516
Redeemed (1,007,684)
------------
Net Increase $ 995,832
============
SMALL-CAP GROWTH:
Sold $ 17,986,369
Redeemed (5,025,846)
------------
Net Increase $ 12,960,523
============
SMALL COMPANY VALUE:
Sold $ 8,082,697
Reinvested --
Redeemed (6,480,805)
------------
Net Increase $ 1,601,892
============
STRATEGIC BALANCED:
Sold $ 13,076,631
Reinvested 57,949
Redeemed (2,768,534)
------------
Net Increase $ 10,366,046
============
HIGH YIELD BOND:
Sold $ 18,027,252
Reinvested 1,182,704
Redeemed (10,858,678)
------------
Net Increase $ 8,351,278
============
LARGE-CAP GROWTH:
Sold $ 7,894,652
Redeemed (3,950,285)
------------
Net Increase $ 3,944,367
============
GROWTH AND INCOME:
Sold $ 15,523,163
Reinvested 6,430
Redeemed (4,736,458)
------------
Net Increase $ 10,793,135
============
CLASS A CLASS B CLASS C CLASS X
---------------------------- -------------------------- -------------------------- -----------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES
============ ============= =========== ============ =========== ============ ===========
OVERSEAS GROWTH:
Sold 5,875,239 $ 72,910,399 6,847,241 $ 83,827,854 3,845,340 $ 46,929,956 1,792,053
Redeemed (2,366,221) (29,831,109) (703,924) (8,772,633) (879,415) (10,959,877) (419,635)
------------ ------------- ----------- ------------ ----------- ------------ -----------
Net Increase 3,509,018 $ 43,079,290 6,143,317 $ 75,055,221 2,965,925 $ 35,970,079 1,372,418
============ ============= =========== ============ =========== ============ ===========
MARSICO CAPITAL
GROWTH:
Sold 7,854,783 $ 101,851,952 19,502,450 $253,703,042 8,427,772 $108,624,094 3,463,385
Reinvested 1,125 13,337 -- -- -- -- --
Redeemed (1,472,317) (19,722,964) (1,617,686) (21,694,601) (835,906) (11,098,692) (581,156)
------------ ------------- ----------- ------------ ----------- ------------ -----------
Net Increase 6,383,591 $ 82,142,325 17,884,764 $232,008,441 7,591,866 $ 97,525,402 2,882,229
============ ============= =========== ============ =========== ============ ===========
MID-CAP GROWTH:
Sold 876,248 $ 12,737,534 1,648,044 $ 23,798,375 681,405 $ 9,773,936 455,953
Reinvested 1,117 16,244 2,164 31,032 1,571 22,824 1,145
Redeemed (254,503) (3,676,648) (344,773) (5,076,953) (159,471) (2,340,370) (101,469)
------------ ------------- ----------- ------------ ----------- ------------ -----------
Net Increase 622,862 $ 9,077,130 1,305,435 $ 18,752,454 523,505 $ 7,456,390 355,629
============ ============= =========== ============ =========== ============ ===========
MID-CAP VALUE:
Sold 893,170 $ 10,487,415 1,971,205 $ 23,270,387 719,632 $ 8,511,354 457,970
Reinvested 311 3,371 385 4,172 171 1,858 99
Redeemed (214,164) (2,487,388) (262,235) (3,044,027) (138,303) (1,625,892) (81,385)
------------ ------------- ----------- ------------ ----------- ------------ -----------
Net Increase 679,317 $ 8,003,398 1,709,355 $ 20,230,532 581,500 $ 6,887,320 376,684
============ ============= =========== ============ =========== ============ ===========
INTERNATIONAL EQUITY:
Sold 580,067 $ 5,981,540 664,660 $ 6,995,897 534,152 $ 5,615,638 302,217
Reinvested 1,335 13,416 617 6,351 424 4,358 957
Redeemed (340,252) (3,535,835) (186,621) (1,979,171) (382,168) (4,024,965) (240,600)
------------ ------------- ----------- ------------ ----------- ------------ -----------
Net Increase 241,150 $ 2,459,121 478,656 $ 5,023,077 152,408 $ 1,595,031 62,574
============ ============= =========== ============ =========== ============ ===========
JANUS
CAPITAL GROWTH:
Sold 11,152,498 $ 222,428,056 34,148,101 $606,063,473 11,402,214 $201,850,746 5,298,045
Redeemed (2,178,199) (43,528,627) (3,428,551) (61,160,249) (1,675,387) (29,604,961) (1,291,629)
------------ ------------- ----------- ------------ ----------- ------------ -----------
Net Increase 8,974,299 $ 178,899,429 30,719,550 $544,903,224 9,726,827 $172,245,785 4,006,416
============ ============= =========== ============ =========== ============ ===========
EQUITY INCOME:
Sold 2,536,827 $ 33,506,551 5,068,587 $ 66,599,293 2,104,000 $ 27,723,451 1,345,013
Reinvested 15,267 203,306 18,552 248,016 8,801 117,852 12,841
Redeemed (970,970) (12,988,032) (779,404) (10,139,354) (327,011) (4,264,826) (435,651)
------------ ------------- ----------- ------------ ----------- ------------ -----------
Net Increase 1,581,124 $ 20,721,825 4,307,735 $ 56,707,955 1,785,790 $ 23,576,477 922,203
============ ============= =========== ============ =========== ============ ===========
TOTAL RETURN BOND:
Sold 2,801,868 $ 29,031,058 9,085,766 $ 93,370,295 2,715,698 $ 27,941,412 1,476,934
Reinvested 62,591 645,265 190,650 1,946,935 75,148 768,265 79,406
Redeemed (1,135,022) (11,679,664) (2,559,842) (26,261,168) (1,000,668) (10,260,166) (696,973)
------------ ------------- ----------- ------------ ----------- ------------ -----------
Net Increase 1,729,437 $ 17,996,659 6,716,574 $ 69,056,062 1,790,178 $ 18,449,511 859,367
============ ============= =========== ============ =========== ============ ===========
CLASS X
------------
AMOUNT
============
OVERSEAS GROWTH:
Sold $ 21,928,837
Redeemed (5,530,598)
------------
Net Increase $ 16,398,239
============
MARSICO CAPITAL
GROWTH:
Sold $ 44,011,902
Reinvested --
Redeemed (7,591,419)
------------
Net Increase $ 36,420,483
============
MID-CAP GROWTH:
Sold $ 6,580,126
Reinvested 16,499
Redeemed (1,521,388)
------------
Net Increase $ 5,075,237
============
MID-CAP VALUE:
Sold $ 5,399,847
Reinvested 1,070
Redeemed (1,009,095)
------------
Net Increase $ 4,391,822
============
INTERNATIONAL EQUITY:
Sold $ 3,142,322
Reinvested 9,894
Redeemed (2,530,886)
------------
Net Increase $ 621,330
============
JANUS
CAPITAL GROWTH:
Sold $ 92,328,700
Redeemed (22,876,970)
------------
Net Increase $ 69,451,730
============
EQUITY INCOME:
Sold $ 17,492,175
Reinvested 169,817
Redeemed (5,669,805)
------------
Net Increase $ 11,992,187
============
TOTAL RETURN BOND:
Sold $ 15,232,870
Reinvested 816,063
Redeemed (7,125,361)
------------
Net Increase $ 8,923,572
============
AMERICAN SKANDIA ADVISOR FUNDS, INC.
CLASS A CLASS B CLASS C CLASS X
---------------------------- -------------------------- -------------------------- -----------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES
============ ============= =========== ============ =========== ============ ===========
MONEY MARKET:
Sold 165,732,217 $ 165,732,220 160,855,656 $160,855,657 91,366,940 $ 91,366,940 72,496,475
Reinvested 729,338 729,338 1,043,507 1,043,507 448,412 448,412 507,926
Redeemed (130,829,982) (130,829,982) (99,250,785) (99,250,785) (69,788,348) (69,788,348) (57,154,179)
------------ ------------- ----------- ------------ ----------- ------------ -----------
Net Increase 35,631,573 $ 35,631,576 62,648,378 $ 62,648,379 22,027,004 $ 22,027,004 15,850,222
============ ============= =========== ============ =========== ============ ===========
CLASS X
------------
AMOUNT
============
MONEY MARKET:
Sold $ 72,496,475
Reinvested 507,926
Redeemed (57,154,179)
------------
Net Increase $ 15,850,222
============
Transactions in shares of capital stock, during the year ended October 31,
1998, were as follows:
CLASS A CLASS B CLASS C CLASS X
-------------------------- ------------------------ -------------------------- -----------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES
=========== ============ ========== =========== =========== ============ ===========
INTERNATIONAL SMALL
CAP:
Sold 86,775 $ 948,154 167,918 $ 1,851,350 84,357 $ 908,498 243,435
Reinvested 53 523 14 145 7 67 21
Redeemed (11,337) (122,246) (55,655) (653,576) (7,014) (75,984) (29,011)
----------- ------------ ---------- ----------- ----------- ------------ -----------
Net Increase 75,491 $ 826,431 112,277 $ 1,197,919 77,350 $ 832,581 214,445
=========== ============ ========== =========== =========== ============ ===========
SMALL-CAP GROWTH:
Sold 225,167 $ 2,208,610 379,743 $ 3,708,430 254,630 $ 2,401,811 479,057
Redeemed (46,693) (433,840) (118,369) (1,132,903) (31,346) (297,337) (55,354)
----------- ------------ ---------- ----------- ----------- ------------ -----------
Net Increase 178,474 $ 1,774,770 261,374 $ 2,575,527 223,284 $ 2,104,474 423,703
=========== ============ ========== =========== =========== ============ ===========
SMALL COMPANY VALUE:
Sold 1,021,252 $ 10,026,934 1,688,655 $16,836,032 1,025,988 $ 10,042,683 1,630,431
Reinvested 417 4,374 256 2,684 78 822 212
Redeemed (249,839) (2,272,268) (301,641) (2,949,022) (115,761) (1,085,977) (286,276)
----------- ------------ ---------- ----------- ----------- ------------ -----------
Net Increase 771,830 $ 7,759,040 1,387,270 $13,889,694 910,305 $ 8,957,528 1,344,367
=========== ============ ========== =========== =========== ============ ===========
STRATEGIC BALANCED:
Sold 344,894 $ 3,739,190 771,215 $ 8,328,502 294,906 $ 3,164,423 683,423
Reinvested 1,034 11,486 840 9,409 403 4,523 857
Redeemed (63,105) (702,418) (48,880) (556,672) (22,222) (238,433) (64,172)
----------- ------------ ---------- ----------- ----------- ------------ -----------
Net Increase 282,823 $ 3,048,258 723,175 $ 7,781,239 273,087 $ 2,930,513 620,108
=========== ============ ========== =========== =========== ============ ===========
HIGH YIELD BOND:
Sold 914,002 $ 9,050,780 2,473,078 $24,716,187 805,820 $ 8,047,625 1,823,826
Reinvested 20,089 198,480 45,479 449,899 18,558 183,686 36,017
Redeemed (407,297) (4,038,423) (427,818) (4,267,818) (234,296) (2,331,581) (594,353)
----------- ------------ ---------- ----------- ----------- ------------ -----------
Net Increase 526,794 $ 5,210,837 2,090,739 $20,898,268 590,082 $ 5,899,730 1,265,490
=========== ============ ========== =========== =========== ============ ===========
LARGE-CAP GROWTH:
Sold 283,213 $ 3,109,515 898,838 $ 9,815,889 265,927 $ 2,904,473 823,445
Redeemed (25,645) (269,220) (182,926) (2,004,334) (12,530) (132,150) (162,643)
----------- ------------ ---------- ----------- ----------- ------------ -----------
Net Increase 257,568 $ 2,840,295 715,912 $ 7,811,555 253,397 $ 2,772,323 660,802
=========== ============ ========== =========== =========== ============ ===========
GROWTH AND INCOME:
Sold 619,339 $ 6,426,893 1,157,925 $12,217,205 509,140 $ 5,365,379 1,184,756
Reinvested 620 6,849 105 1,167 44 487 127
Redeemed (90,220) (909,199) (140,792) (1,455,882) (31,713) (320,384) (105,837)
----------- ------------ ---------- ----------- ----------- ------------ -----------
Net Increase 529,739 $ 5,524,543 1,017,238 $10,762,490 477,471 $ 5,045,482 1,079,046
=========== ============ ========== =========== =========== ============ ===========
CLASS X
------------
AMOUNT
============
INTERNATIONAL SMALL
CAP:
Sold $ 2,658,777
Reinvested 209
Redeemed (307,049)
------------
Net Increase $ 2,351,937
============
SMALL-CAP GROWTH:
Sold $ 4,680,015
Redeemed (495,331)
------------
Net Increase $ 4,184,684
============
SMALL COMPANY VALUE:
Sold $ 16,569,662
Reinvested 2,228
Redeemed (2,755,864)
------------
Net Increase $ 13,816,026
============
STRATEGIC BALANCED:
Sold $ 7,377,704
Reinvested 9,648
Redeemed (678,893)
------------
Net Increase $ 6,708,459
============
HIGH YIELD BOND:
Sold $ 18,256,129
Reinvested 356,164
Redeemed (5,875,943)
------------
Net Increase $ 12,736,350
============
LARGE-CAP GROWTH:
Sold $ 9,020,684
Redeemed (1,754,404)
------------
Net Increase $ 7,266,280
============
GROWTH AND INCOME:
Sold $ 12,627,277
Reinvested 1,410
Redeemed (1,075,167)
------------
Net Increase $ 11,553,520
============
CLASS A CLASS B CLASS C CLASS X
-------------------------- ------------------------ -------------------------- -----------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES
=========== ============ ========== =========== =========== ============ ===========
OVERSEAS GROWTH:
Sold 1,057,414 $ 11,269,484 1,534,948 $16,642,383 994,577 $ 10,851,929 1,166,231
Redeemed (222,317) (2,310,095) (75,158) (782,812) (83,923) (905,162) (97,225)
----------- ------------ ---------- ----------- ----------- ------------ -----------
Net Increase 835,097 $ 8,959,389 1,459,790 $15,859,571 910,654 $ 9,946,767 1,069,006
=========== ============ ========== =========== =========== ============ ===========
MARSICO CAPITAL
GROWTH:
Sold 726,246 $ 7,070,185 1,803,833 $17,639,782 1,148,327 $ 11,278,785 698,173
Redeemed (31,271) (288,616) (25,199) (243,593) (59,297) (582,417) (129,808)
----------- ------------ ---------- ----------- ----------- ------------ -----------
Net Increase 694,975 $ 6,781,569 1,778,634 $17,396,189 1,089,030 $ 10,696,368 568,365
=========== ============ ========== =========== =========== ============ ===========
MID-CAP GROWTH:
Sold 49,762 $ 538,535 84,911 $ 893,803 76,609 $ 797,506 43,682
Redeemed -- (4) (805) (8,603) -- -- (549)
----------- ------------ ---------- ----------- ----------- ------------ -----------
Net Increase 49,762 $ 538,531 84,106 $ 885,200 76,609 $ 797,506 43,133
=========== ============ ========== =========== =========== ============ ===========
MID-CAP VALUE:
Sold 70,308 $ 703,884 184,421 $ 1,845,182 101,900 $ 1,019,193 28,876
Redeemed (285) (2,856) -- -- (4,309) (43,051) --
----------- ------------ ---------- ----------- ----------- ------------ -----------
Net Increase 70,023 $ 701,028 184,421 $ 1,845,182 97,591 $ 976,142 28,876
=========== ============ ========== =========== =========== ============ ===========
INTERNATIONAL EQUITY:
Sold 221,414 $ 2,090,387 408,621 $ 3,972,257 250,513 $ 2,401,533 555,056
Redeemed (66,338) (626,464) (105,111) (1,010,455) (33,718) (319,274) (101,971)
----------- ------------ ---------- ----------- ----------- ------------ -----------
Net Increase 155,076 $ 1,463,923 303,510 $ 2,961,802 216,795 $ 2,082,259 453,085
=========== ============ ========== =========== =========== ============ ===========
JANUS CAPITAL GROWTH:
Sold 1,818,238 $ 24,548,459 4,750,569 $58,188,656 1,826,515 $ 22,153,339 3,110,722
Reinvested 533 5,971 312 3,136 97 973 310
Redeemed (176,653) (2,408,469) (523,973) (6,534,310) (181,890) (2,229,981) (416,083)
----------- ------------ ---------- ----------- ----------- ------------ -----------
Net Increase 1,642,118 $ 22,145,961 4,226,908 $51,657,482 1,644,722 $ 19,924,331 2,694,949
=========== ============ ========== =========== =========== ============ ===========
EQUITY INCOME:
Sold 800,093 $ 9,119,192 1,649,485 $18,887,565 755,077 $ 8,644,258 1,605,054
Reinvested 3,175 37,119 3,849 45,208 1,661 19,588 4,516
Redeemed (90,254) (1,022,287) (254,863) (2,923,405) (70,668) (805,945) (166,501)
----------- ------------ ---------- ----------- ----------- ------------ -----------
Net Increase 713,014 $ 8,134,024 1,398,471 $16,009,368 686,070 $ 7,857,901 1,443,069
=========== ============ ========== =========== =========== ============ ===========
TOTAL RETURN BOND:
Sold 677,765 $ 7,232,109 1,914,506 $20,252,322 1,053,270 $ 11,077,340 1,202,518
Reinvested 4,808 51,616 13,158 139,382 10,237 108,524 12,977
Redeemed (129,332) (1,388,733) (312,304) (3,287,557) (260,589) (2,760,543) (161,117)
----------- ------------ ---------- ----------- ----------- ------------ -----------
Net Increase 553,241 $ 5,894,992 1,615,360 $17,104,147 802,918 $ 8,425,321 1,054,378
=========== ============ ========== =========== =========== ============ ===========
MONEY MARKET:
Sold 20,520,931 $ 20,520,931 25,761,335 $25,761,335 17,068,008 $ 17,068,008 30,862,241
Reinvested 95,268 95,268 126,073 126,073 76,596 76,596 187,254
Redeemed (13,551,379) (13,551,379) (9,687,147) (9,687,147) (10,580,610) (10,580,610) (19,082,355)
----------- ------------ ---------- ----------- ----------- ------------ -----------
Net Increase 7,064,820 $ 7,064,820 16,200,261 $16,200,261 6,563,994 $ 6,563,994 11,967,140
=========== ============ ========== =========== =========== ============ ===========
CLASS X
------------
AMOUNT
============
OVERSEAS GROWTH:
Sold $ 12,776,135
Redeemed (1,042,766)
------------
Net Increase $ 11,733,369
============
MARSICO CAPITAL
GROWTH:
Sold $ 6,818,287
Redeemed (1,153,944)
------------
Net Increase $ 5,664,343
============
MID-CAP GROWTH:
Sold $ 454,990
Redeemed (5,509)
------------
Net Increase $ 449,481
============
MID-CAP VALUE:
Sold $ 288,688
Redeemed --
------------
Net Increase $ 288,688
============
INTERNATIONAL EQUITY:
Sold $ 5,419,289
Redeemed (973,754)
------------
Net Increase $ 4,445,535
============
JANUS CAPITAL GROWTH:
Sold $ 37,412,759
Reinvested 3,128
Redeemed (5,073,683)
------------
Net Increase $ 32,342,204
============
EQUITY INCOME:
Sold $ 18,427,772
Reinvested 53,161
Redeemed (1,882,627)
------------
Net Increase $ 16,598,306
============
TOTAL RETURN BOND:
Sold $ 12,653,752
Reinvested 137,290
Redeemed (1,706,939)
------------
Net Increase $ 11,084,103
============
MONEY MARKET:
Sold $ 30,862,241
Reinvested 187,254
Redeemed (19,082,355)
------------
Net Increase $ 11,967,140
============
AMERICAN SKANDIA ADVISOR FUNDS, INC.
5. TAX MATTERS
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
ALL FUNDS -- Each Fund intends to qualify as a regulated investment company
under the Internal Revenue Code and to distribute all of its taxable income,
including any net realized gains on investments, to shareholders. Accordingly,
no provision for federal income or excise tax has been made.
Income and capital gains of the Funds are determined in accordance with
both tax regulations and generally accepted accounting principles. Such may
result in temporary and permanent differences between tax basis earnings and
earnings reported for financial statement purposes. Temporary differences that
result in over-distributions for financial statement purposes are classified as
distributions in excess of net investment income or accumulated net realized
gains. Permanent differences in the recognition of earnings are reclassified to
additional paid-in capital. Distributions in excess of tax-basis earnings are
recorded as a return of capital.
CAPITAL LOSS CARRYFORWARDS -- At October 31, 1999, the following Funds had, for
federal income tax purposes, capital loss carryforwards available to offset
future net realized capital gains.
EXPIRING IN
------------------------------------
2005 2006 2007
======= ========== ===========
High Yield Bond $ 4,183 $ 17,619 $ 327,379
Growth and Income -- 1,122,945 1,772,304
Overseas Growth -- 2,242,636 3,428,829
Marsico Capital Growth -- 682,762 7,950,369
Mid-Cap Growth -- -- 1,874,798
International Equity -- 73,332 49,869
Janus Capital Growth 38,807 4,789,881 52,015,103
Total Return Bond -- -- 1,499,612
6. PORTFOLIO SECURITIES
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
NON-FEEDER FUNDS -- Purchases and sales of securities, other than U.S.
government securities and short-term obligations, during the year ended October
31, 1999, were as follows:
PURCHASES SALES
============ ============
International Small Cap $ 29,939,539 $ 21,376,647
Small-Cap Growth 168,638,754 41,509,488
Small Company Value 39,757,090 18,366,302
Strategic Balanced 128,351,046 55,500,791
High Yield Bond 89,195,486 15,357,347
Large-Cap Growth 134,132,396 114,218,960
Growth and Income 134,445,365 35,954,271
Overseas Growth 231,282,231 80,299,614
Marsico Capital Growth 685,996,090 267,024,550
Mid-Cap Growth 62,551,030 24,483,643
Mid-Cap Value 59,731,672 23,911,469
Purchases and sales of U.S. government securities, during the year ended
October 31, 1999, were as follows:
PURCHASES SALES
=========== ===========
Strategic Balanced $32,569,998 $12,048,962
At October 31, 1999, the cost and unrealized appreciation or depreciation
in value of the investments owned by the Non-Feeder Funds, for federal income
tax purposes, were as follows:
NET
GROSS GROSS UNREALIZED
AGGREGATE UNREALIZED UNREALIZED APPRECIATION
COST APPRECIATION DEPRECIATION (DEPRECIATION)
============ ============ ============ ==============
International Small
Cap $ 16,207,546 $ 1,542,356 $ 563,237 $ 979,119
Small-Cap Growth 169,196,638 52,762,621 6,633,267 46,129,354
Small Company Value 70,986,163 2,643,592 10,389,565 (7,745,973)
Strategic Balanced 123,003,473 8,522,144 2,826,201 5,695,943
High Yield Bond 123,782,886 832,530 9,476,302 (8,643,772)
Large-Cap Growth 49,123,265 7,147,199 1,528,151 5,619,048
Growth and Income 135,050,750 18,023,780 5,844,339 10,179,441
Overseas Growth 211,181,909 49,143,232 2,208,056 46,935,176
Marsico Capital
Growth 493,793,058 93,832,258 6,370,958 87,461,300
Mid-Cap Growth 40,826,818 9,763,330 1,113,313 8,650,017
Mid-Cap Value 43,169,912 1,873,059 3,611,535 (1,738,476)
7. WRITTEN OPTIONS TRANSACTIONS
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Written options transactions, during the year ended October 31, 1999, were
as follows:
MARSICO CAPITAL GROWTH
-----------------------
NUMBER OF
CONTRACTS PREMIUM
========= ==========
Balance at beginning of period -- $ --
Written 408 579,700
Expired -- --
Exercised -- --
Closed (408) (579,700)
---- ----------
Balance at end of period -- $ --
==== ==========
92
96
AMERICAN SKANDIA ADVISOR FUNDS, INC.
REPORT OF INDEPENDENT ACCOUNTANTS
--------------------------------------------------------------------------------
To the Shareholders and Board of Directors
of American Skandia Advisor Funds, Inc.:
In our opinion, the accompanying statements of assets and liabilities, including
the schedules of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of ASAF Founders International Small
Capitalization Fund, ASAF Janus Small-Cap Growth Fund, ASAF T. Rowe Price Small
Company Value Fund, ASAF American Century Strategic Balanced Fund, ASAF
Federated High Yield Bond Fund, ASAF Oppenheimer Large-Cap Growth Fund, ASAF
Lord Abbett Growth and Income Fund, ASAF Janus Overseas Growth Fund, ASAF
Marsico Capital Growth Fund, ASAF Neuberger Berman Mid-Cap Growth Fund, ASAF
Neuberger Berman Mid-Cap Value Fund, ASAF T. Rowe Price International Equity
Fund, ASAF Janus Capital Growth Fund, ASAF INVESCO Equity Income Fund, ASAF
Total Return Bond Fund and ASAF JPM Money Market Fund of American Skandia
Advisor Funds, Inc. (the "Company"), at October 31, 1999, the results of their
operations for the year then ended, the changes in their net assets for each of
the two years (or periods) in the period then ended and the financial highlights
for each of the periods presented, in conformity with accounting principles
generally accepted in the United States. These financial statements and
financial highlights (hereafter referred to as "financial statements") are the
responsibility of the Company's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with auditing standards
generally accepted in the United States, which require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audits, which included confirmation of securities owned at
October 31, 1999 by correspondence with the custodians and brokers, provide a
reasonable basis for the opinion expressed above.
PricewaterhouseCoopers LLP
Philadelphia, Pennsylvania
December 15, 1999
[This page intentionally left blank]
AMERICAN SKANDIA MASTER TRUST
SCHEDULES OF INVESTMENTS
OCTOBER 31, 1999
ASMT T. ROWE PRICE INTERNATIONAL EQUITY PORTFOLIO
ASMT JANUS CAPITAL GROWTH PORTFOLIO
ASMT INVESCO EQUITY INCOME PORTFOLIO
ASMT PIMCO TOTAL RETURN BOND PORTFOLIO
ASMT JPM MONEY MARKET PORTFOLIO
ASMT T. ROWE PRICE
INTERNATIONAL EQUITY PORTFOLIO
---------------------------------------------------
SHARES VALUE
---------------------------------------------------
FOREIGN STOCK -- 93.8%
ARGENTINA -- 0.2%
Banco de Galicia y
Buenos Aires SA de CV
[ADR] 1,223 $ 25,836
Banco Frances SA [ADR] 360 7,875
Telefonica de Argentina
SA Cl-B [ADR] 1,840 47,150
-----------
80,861
-----------
AUSTRALIA -- 2.2%
Brambles Industries Ltd. 3,000 84,307
Broken Hill Proprietary
Co. Ltd. 4,062 41,952
Colonial Ltd. 20,237 74,409
Commonwealth Bank of
Australia 7,111 116,458
Lend Lease Corp. Ltd. 3,000 34,493
News Corp. Ltd. 10,012 72,350
News Corp. Ltd. Pfd. 8,026 54,301
Publishing &
Broadcasting Ltd. 13,000 77,043
TABCORP Holdings Ltd. 7,000 44,339
Telstra Corp.* 5,000 16,027
Telstra Corp. Ltd. 21,000 106,749
Westpac Banking Corp.
Ltd. 14,173 90,876
-----------
813,304
-----------
BELGIUM -- 1.2%
Dexia Belgium (Credit
Communal) 270 39,531
Fortis Cl-B 4,860 163,970
KBC Bancassurance
Holdings NV 3,680 189,525
Societe Europeene des
Satellites [FDR]* 199 24,838
UCB SA 510 19,002
-----------
436,866
-----------
BRAZIL -- 1.3%
Companhia Brasileira de
Distribuicoa Grupo Pao
de Acucar [GDR] 2,272 49,700
Companhia Energetica de
Minas Geras [ADR] 1,223 17,480
Telecomunicacoes
Brasileiras SA [ADR] 2,749 86
Telecomunicacoes
Brasileiras SA Pfd.
[ADR] 4,956 385,948
Uniao de Bancos
Brasileiros SA [GDR] 1,000 23,125
-----------
476,339
-----------
CANADA -- 0.3%
Alcan Aluminium Ltd. 1,220 40,020
Nortel Networks Corp.* 640 39,399
Royal Bank of Canada 570 24,588
-----------
104,007
-----------
CHILE -- 0.0%
Chilectra SA [ADR] 144A 464 8,251
-----------
---------------------------------------------------
SHARES VALUE
---------------------------------------------------
CHINA -- 0.1%
Huaneng Power
International, Inc.
[ADR]* 3,000 $ 36,375
-----------
DENMARK -- 0.3%
Den Danske Bank 410 46,670
Tele Danmark AS 840 51,203
Unidanmark AS Cl-A 260 20,221
-----------
118,094
-----------
FINLAND -- 1.6%
Nokia AB Oyj 5,080 580,973
-----------
FRANCE -- 11.3%
Alcatel 1,150 179,493
AXA SA 2,180 307,262
Banco Frances SA [ADR] 620 13,563
Banque National de
Paris* 2,210 193,955
Cap Gemini SA* 700 105,946
Carrefour Supermarche SA 2,330 431,014
Compagnie de Saint-
Gobain 690 119,662
Credit Commercial de
France 350 40,281
Groupe Danone 90 22,939
Hermes International
Designs* 710 77,609
L'Oreal 110 73,358
Lafarge SA 460 44,239
Legrand SA 570 136,295
Pinault-Printemps
Redoute SA 710 135,294
Sanofi SA* 5,650 249,117
Schneider SA 3,030 208,597
Societe Generale 650 141,419
Societe Television
Francaise 770 241,174
Sodexho Alliance SA 1,348 221,023
STMicroelectronics NV* 2,680 235,204
Total Fina SA Cl-B 3,931 530,888
Vivendi 5,420 410,446
-----------
4,118,778
-----------
GERMANY -- 6.2%
Allianz AG 560 170,690
Bayer AG 2,910 118,978
Bayerische Hypo-Und
Vereinsbank AG 4,390 286,075
Celanese AG* 89 1,389
Deutsche Bank AG 2,868 204,287
Deutsche Telekom AG 3,300 152,092
Dresdner Bank AG 3,560 182,597
Fielmann AG Pfd. 250 9,617
Fresenius AG Pfd. 110 18,036
Gehe AG 4,440 157,266
Hoechst AG 890 38,961
Mannesmann AG 2,680 413,226
Rhoen-Klinikum AG 1,380 53,667
SAP AG 390 141,419
AMERICAN SKANDIA MASTER TRUST
---------------------------------------------------
SHARES VALUE
---------------------------------------------------
SAP AG Pfd. 230 $ 99,162
Siemens AG 860 76,832
Veba AG 2,750 149,953
-----------
2,274,247
-----------
HONG KONG -- 2.7%
Cheung Kong Holdings
Ltd. 10,000 90,739
China Light & Power Co.
Ltd. 16,000 73,312
China Telecom Ltd.* 68,000 232,808
Dao Heng Bank Group Ltd. 6,000 27,569
Hederson Land
Development Co. Ltd. 13,000 59,231
Hong Kong
Telecommunications
Ltd. 28,800 65,796
HSBC Holdings PLC 10,400 124,821
Hutchison Whampoa Ltd. 22,000 220,863
Pacific Century
Cyberworks Ltd.* 40,000 30,118
Sun Hung Kai Properties
Ltd. 7,000 56,535
-----------
981,792
-----------
INDIA -- 0.2%
ICICI Ltd.* 4,469 49,159
Mahanagar Telephone
Nigam Ltd. [GDR] 2,000 16,500
-----------
65,659
-----------
IRELAND -- 0.1%
CBT Group PLC [ADR]* 2,031 41,889
-----------
ITALY -- 4.2%
Assicurazioni Generali 4,160 133,357
Banca di Roma 13,000 17,489
Banca Popolare di
Brescia 4,000 169,219
Ente Nazionale
Idrocarburi SPA 33,000 192,847
Instituto Nazionale
delle Assicurazioni 31,000 94,001
Italgas SPA 5,000 20,653
Mediolanum SPA 10,000 81,246
San Paolo-IMI SPA 9,225 119,454
Tecnost SPA* 17,600 33,852
Telecom Italia Mobile
SPA 54,000 337,135
Telecom Italia SPA 24,000 207,099
Unicredito Italiano SPA 24,000 112,252
-----------
1,518,604
-----------
JAPAN -- 21.3%
Bridgestone Corp.* 2,000 55,002
Canon, Inc. 12,000 339,210
Citizen Watch Co. Ltd. 3,000 21,186
Daiichi Pharmaceutical
Co. Ltd. 2,000 28,651
Daiwa House Industry Co.
Ltd. 7,000 63,990
DDI Corp. 16 174,780
SHARES VALUE
---------------------------------------------------
---------------------------------------------------
Denso Corp. 10,000 $ 213,683
East Japan Railway Co.
Ltd. 17 104,092
Fanuc Co. 1,400 108,662
Fujitsu Ltd. 8,000 240,705
Hitachi Ltd. 12,000 129,590
Honda Motor Co. Ltd. 1,000 42,162
Ito-Yokado Co. Ltd. 2,000 159,831
Kao Corp. 7,000 213,300
Kokuyo Co. Ltd. 4,000 72,557
Komori Corp. 3,000 65,111
Kuraray Co. Ltd. 9,000 120,736
Kyocera Corp. 3,000 287,466
Makita Corp. 4,000 38,367
Matsushita Electric
Industrial Co. 14,000 294,461
Mauri Co. Ltd. 10,000 188,770
Mitsubishi Corp. 7,000 50,307
Mitsubishi Heavy
Industries Ltd. 39,000 152,846
Mitsui Fudosan Co. Ltd. 19,000 141,826
Murata Manufacturing Co.
Ltd. 4,000 511,690
NEC Corp. 22,000 444,806
Nippon Telegraph &
Telephone Corp. 30 459,946
Nomura Securities Co.
Ltd. 15,000 247,365
NTT Mobile Communication
Network, Inc. 10 265,427
Sankyo Co. Ltd. 10,000 284,592
Sekisui Chemical Co.
Ltd. 10,000 49,157
Sekisui House Ltd. 7,000 75,728
Seven-Eleven Japan Co.
Ltd. 2,000 183,020
Shin-Etsu Chemical Co.
Ltd. 3,000 123,611
Shiseido Co. Ltd. 4,000 60,943
Sony Corp. 3,300 514,161
Sumitomo Bank Ltd.* 9,000 144,711
Sumitomo Corp. 14,000 102,223
Sumitomo Electric
Industries 15,000 201,370
TDK Corp. 3,000 293,503
Tokio Marine & Fire
Insurance Co. Ltd. 3,000 39,239
Tokyo Electron Ltd. 1,000 82,982
Toppan Printing Co. Ltd. 6,000 73,534
Toshiba Corp.* 23,000 144,576
UNY Co. Ltd. 4,000 51,744
Yamanouchi
Pharmaceutical Co.
Ltd.* 3,000 135,972
-----------
7,797,591
-----------
KOREA -- 0.4%
Korea Telecom Corp.
[ADR]* 2,000 70,500
Samsung Electronics Co. 500 83,368
-----------
153,868
-----------
