American Skandia Advisor Funds, Incorporated
Supplement dated June 16, 1999 to the Prospectus dated March 1, 1999
The Supplemental Distribution Plans
Shareholders of the Funds of American Skandia Advisor Funds, Inc. (the
"Company") have approved the adoption of a Supplemental Distribution Plan under
Rule 12b-1 under the Investment Company Act of 1940 and shareholders of the
Portfolios of American Skandia Master Trust (the "Trust") have approved the
adoption of a Distribution Plan under Rule 12b-1 (together, the "Supplemental
Plans"). The Supplemental Plans permit the Company's Distributor, American
Skandia Marketing, Inc. ("ASM") to receive brokerage commissions in connection
with purchases and sales of securities held by the Funds and Portfolios, and to
use these commissions to promote the sale of shares of the Company. Under the
Supplemental Plans, transactions for the purchase and sale of securities for a
Fund or 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 ASM for "introducing" transactions to the clearing broker.
In turn, ASM will use 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.
The brokerage commission rates and amounts paid by the various Funds
and Portfolios are not expected to increase as a result of the implementation of
the Supplemental Plans. Nor are the total returns of the Funds expected to be
affected adversely. However, the staff of the Securities and Exchange Commission
recently has taken the position that amounts received by ASM as an introducing
broker under the Supplemental Plans should be reflected in the expenses of the
Funds. The table below estimates how each Fund's expenses (as a percentage of
Fund assets on an annual basis) will be deemed to increase as a result of the
implementation of the Supplemental Plans.
<TABLE>
<CAPTION>
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FUND Increase in Expenses
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<S> <C>
ASAF Founders International Small Capitalization Fund 0%
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ASAF T. Rowe Price International Equity Fund 0%
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ASAF Janus Overseas Growth Fund less than 0.01%
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ASAF Janus Small-Cap Growth Fund 0.03%
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ASAF T. Rowe Price Small Company Value Fund 0%
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ASAF Neuberger Berman Mid-Cap Growth Fund 0.21%
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ASAF Neuberger Berman Mid-Cap Value Fund 0.41%
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ASAF Oppenheimer Large-Cap Growth Fund 0.08%
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ASAF Marsico Capital Growth Fund 0.12%
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ASAF Janus Capital Growth Fund 0.02%
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ASAF Lord Abbett Growth and Income Fund 0%
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ASAF INVESCO Equity Income Fund 0.08%
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ASAF American Century Strategic Balanced Fund 0%
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ASAF Federated High Yield Bond Fund 0%
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ASAF Total Return Bond Fund 0%
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ASAF JPM Money Market Fund 0%
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</TABLE>
The estimates are derived from data regarding each Fund's and
Portfolio's securities transactions, and the proportion of such transactions
directed under the Company's and Trust's existing policy of considering the sale
of Fund shares in selecting broker-dealers to execute transactions, for the
twelve months ended March 31, 1999. However, it is not possible to determine
with accuracy actual amounts that will be received by ASM from the Supplemental
Plans. Such amounts will vary based upon the level of a Fund's brokerage
activity, the proportion of such activity directed under the Supplemental Plans,
and other factors. As the Funds grow, it may become feasible to direct a larger
proportion of their brokerage transactions to ASM.
Additional information on Fund expenses is included in the Company's
Prospectus.
<PAGE>
Sub-advisory Changes
The Prospectus is amended by inserting the following new paragraph at
the end of the section of the Prospectus entitled "Management of the Funds - The
Investment Manager" (on page 59):
The Company, the Trust, and American Skandia Investment Services,
Incorporated ("ASISI") have filed an application with the Securities
and Exchange Commission for an order to permit ASISI to change
sub-advisors for a Fund or Portfolio in the future, and to permit ASISI
to enter into new sub-advisory agreements, without obtaining
shareholder approval of the changes. Any such Sub-advisor change would
continue to be subject to approval by the Board of Directors of the
Company or the Board of Trustees of the Trust, as appropriate. This
order (which likely will be similar in its conditions to orders
previously granted to other investment companies that are operated in a
similar manner as the Company and the Trust) is intended to facilitate
the efficient supervision and management of the Sub-advisors by ASISI
and the Directors of the Company and the Trustees of the Trust.
