Supplement to Prospectus Dated May 1, 1998
Supplement dated December 31, 1998
This Supplement should be retained with the current Prospectus for your variable
annuity contract issued by American Skandia Life Assurance Corporation
("American Skandia"). If you do not have a current prospectus, please contact
American Skandia at 1-800-SKANDIA.
A. CHANGES TO VARIABLE INVESTMENT OPTIONS
1. Effective January 1, 1999 Janus Capital Corporation will be the new
portfolio sub-advisor for the Founders Capital Appreciation portfolio. In
connection with this change the portfolio's name is changed to "AST Janus
Small-Cap Growth."
The following information is added to the table entitled "Underlying Mutual Fund
Portfolio Annual Expenses (as a percentage of average net assets)":
<TABLE>
<CAPTION>
Management Management Other Other Total Annual Total Annual
Fee Fee Expenses Expenses Expenses Expenses
after any without any after any without any after any without any
applicable applicable applicable applicable applicable applicable
reimbursement reimbursement reimbursement reimbursement reimbursement reimbursement
- ------------------------------------------------------------------------------------------------------------------------------------
American Skandia Trust
<S> <C> <C> <C> <C> <C> <C>
AST Janus Small-Cap Growth1 N/A 0.90% N/A 0.23% N/A 1.13%
</TABLE>
(1) Prior to January 1, 1999, the Investment Manager had engaged Founders Asset
Management, LLC as Sub-advisor for the Portfolio (formerly the Founders Capital
Appreciation portfolios).
GAL3 (12/98)
The Expense Examples for the new AST Janus Small-Cap Growth 3 sub-account are
the same as the expense examples for the Founders Capital Appreciation 3
sub-account within the Prospectus dated May 1, 1998.
The following is added to the section entitled "INVESTMENT OPTIONS - Underlying
Mutual Fund: American Skandia Trust":
Sub-account Underlying Mutual Fund Portfolio
AST Janus Small-Cap Growth 3 AST Janus Small-Cap Growth
2. Effective December 31, 1998, each portfolio of AST will have the prefix
"AST" added to the portfolio name. The AST prefix will appear on the
effected portfolio(s) on all statements and reports for periods beginning
on or after January 4, 1999. The names of the respective sub-accounts are
changed accordingly.
Effective December 31, 1998, the name of the Neuberger&Berman Mid-Cap Value
portfolio of AST is changed to AST Neuberger Berman Mid-Cap Value
portfolio. The name of the sub-account is changed accordingly. The new
portfolio and sub-account name will appear on all statements and reports
for periods beginning on or after January 4, 1999.
B. SHORT DESCRIPTIONS - APPENDIX B
The following short description of the AST Janus Small-Cap Growth Portfolio is
to be added:
AST Janus Small-Cap Growth Portfolio:
The investment objective of the Portfolio is capital appreciation. The Portfolio
pursues its objective by normally investing at least 65% of its total assets in
securities issued by small-sized companies. Small-sized companies are those that
have market capitalizations of less than $1.5 billion or annual gross revenues
of less than $500 million. Companies whose capitalization or revenues fall
outside these ranges after the Portfolio's initial purchase continue to be
considered small-sized for the purposes of this policy. The Portfolio may also
invest in stocks of larger companies with potential for capital appreciation.
The Portfolio will invest substantially all of its assets in common stocks to
the extent the Sub-advisor believes that the relevant market environment favors
profitable investing in those securities. The Sub-advisor generally takes a
"bottom up" approach to building the Portfolio. In other words, it seeks to
identify individual companies with earnings growth potential that may not be
recognized by the market at large. Although themes may emerge in the Portfolio,
securities are generally selected without regard to any defined industry sector
or other similarly defined selection procedure. Realization of income is not a
significant investment consideration.
Because the Portfolio invests primarily in common stocks, the fundamental risk
of investing in the Portfolio is that the value of the stocks it holds might
decrease. Smaller or newer issuers, such as those in which the Portfolio
invests, are more likely to realize more substantial growth as well as suffer
more significant losses than larger or more established issuers. Investments in
such companies can be both more volatile and more speculative. The Portfolio is
designed for long-term investors who seek capital appreciation and who can
tolerate the greater risks associated with investments in foreign and domestic
common stocks. The Portfolio is not designed as a short-term trading vehicle and
should not be relied upon for short-term financial needs. The Sub-advisor tries
to reduce the risk of the Portfolio through diversification of the Portfolio's
assets, so that the effect of any single holding on its overall portfolio value
is reduced. In addition, the Portfolio will not invest 25% or more of its total
assets in any particular industry (excluding U.S. government securities).
