Advanced Series Trust AST Academic Strategies Asset ... - Prudential

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ADVANCED SERIES TRUST PROSPECTUS DATED MAY 1, 2010 SUPPLEMENT DATED AUGUST 19, 2010 This supplement sets forth changes to the Prospectus, dated May 1, 2010, of Advanced Series Trust (the Trust). The Portfolio of the Trust discussed in this supplement may not be available under your variable contract. For more information about the Portfolios available under your contract, please refer to your contract prospectus. The following should be read in conjunction with the Prospectus and should be retained for future reference. Defined terms used herein and not otherwise defined herein shall have the meanings given to them in the Prospectus. I. New Subadvisory Arrangements for AST High Yield Portfolio The Board of Trustees of the Trust recently approved replacing Pacific Investment Management Company LLC (PIMCO) as the subadviser for the AST High Yield Portfolio (the High Yield Portfolio) with J.P. Morgan Investment Management Inc. (J.P. Morgan) and Prudential Investment Management, Inc. (PIM). Implementation of the proposed subadvisory agreement between the Investment Managers and PIM with respect to the High Yield Portfolio (the PIM Subadvisory Agreement) was also subject to the approval of the beneficial holders of a majority of the High Yield Portfolio’s outstanding voting securities. The required shareholder approval of the PIM Subadvisory Agreement was obtained at a special shareholders’ meeting that took place on August 4, 2010. As a result, it is expected that J.P. Morgan and PIM will replace PIMCO as subadvisers to the High Yield Portfolio on or about September 13, 2010. Depending upon market, economic, and financial conditions as of September 13, 2010 and the Trust's ability to implement certain legal agreements and custody arrangements, it may take several weeks for J.P. Morgan and PIM to dispose of securities and other financial instruments held by the High Yield Portfolio that were purchased by PIMCO and to begin to implement their own respective high yield investment strategies. A. The table in the section of the Prospectus entitled ―Summary: AST High Yield Portfolio—Management of the Portfolio‖ is hereby deleted and replaced with the following in order to reflect the replacement of PIMCO with J.P. Morgan and PIM as described above. Investment Managers: Prudential Investments LLC and AST Investment Services, Inc. Subadviser: J.P. Morgan Investment Management Inc. Portfolio Managers Primary Title with J.P. Morgan High Yield Portfolio Service Date William J. Morgan Managing Director September 2010 James P. Shanahan Managing Director September 2010 James Gibson Managing Director September 2010 Subadviser: Prudential Investment Management, Inc. Portfolio Managers Primary Title with PIM High Yield Portfolio Service Date Paul Appleby, CFA Managing Director September 2010 Robert Spano, CFA, CPA Principal September 2010 Stephen Haeckel Principal September 2010 Terence Wheat, CFA Principal September 2010 Michael J. Collins, CFA Principal September 2010 B. The section of the Prospectus entitled ―More Detailed Information On How The Portfolios Invest—AST High Yield Portfolio‖ is hereby deleted and replaced with the following in order to reflect the replacement of PIMCO with J.P. Morgan and PIM as described above. AST High Yield Portfolio Investment Objective: to seek maximum total return, consistent with preservation of capital and prudent investment management. Subadvisory Arrangements: Effective on or about September 13, 2010, the assets of the High Yield Portfolio will be independently managed by J.P. Morgan Investment Management, Inc. (J.P. Morgan) and Prudential Investment Management, Inc. (each, a Subadviser and together, the Subadvisers) under a multi-manager structure. Pursuant to the multi-manager structure, the Investment Managers of the High Yield Portfolio will determine and allocate a portion of the High Yield Portfolio's assets to each of PIM and J.P. Morgan. It is initially expected that PIM will be responsible for managing approximately 60% of the High Yield Portfolio’s net assets, and that J.P. Morgan will be
esponsible for managing the remaining 40% of the High Yield Portfolio’s net assets. These allocations, however, will be reviewed by the Investment Managers periodically and may be altered or adjusted by the Investment Managers without prior notice. Such adjustments will be reflected in the annual update to the Prospectus. Principal Investment Policies: The High Yield Portfolio will invest, under normal circumstances, at least 80% of the High Yield Portfolio's net assets plus any borrowings for investment purposes (measured at the time of purchase) in non-investment grade high-yield fixed-income investments, which may be represented by forwards or derivatives such as options, futures contracts, or swap agreements. Non-investment grade securities are securities rated Ba or lower by Moody's Investors Services, Inc. or equivalently rated by Standard & Poor's Ratings Services or Fitch Ratings, or, if unrated, determined by the relevant Subadviser to be of comparable quality. The High Yield Portfolio may invest in all types of fixed income securities. The High Yield Portfolio will invest in non-investment grade fixed-income securities (commonly known as ''junk bonds'') that are considered predominantly speculative by traditional investment standards. Non-investment grade fixed-income securities and unrated securities of comparable credit quality are subject to the increased risk of an issuer's inability to meet principal and interest payment obligations. These securities may be subject to greater price volatility due to such factors as specific corporate or municipal developments, interest rate sensitivity, negative perceptions of the junk bond markets generally and less secondary market liquidity. The High Yield Portfolio may purchase the securities of issuers that are in default. The High Yield Portfolio may engage in short sales. The High Yield Portfolio may invest in common stocks, warrants, rights, and other equity securities. The High Yield Portfolio may invest up to 10% of its total assets in preferred stock. The High Yield Portfolio may invest up to 30% of its total assets in securities denominated in foreign currencies and may invest beyond this limit in U.S. dollar-denominated securities of foreign issuers. The High Yield Portfolio may invest up to 15% of its total assets in securities and instruments that are economically tied to emerging market countries. To the extent the High Yield Portfolio invests in sovereign debt obligations, the High Yield Portfolio will be subject to the risk that the issuer of the sovereign debt or the governmental authorities that control the repayment of the debt may be unable or unwilling to repay the principal or interest when due. There are also risks associated with the general political and social environment of a country. These factors may include among other things government instability, poor socioeconomic conditions, corruption, lack of law and order, lack of democratic accountability, poor quality of the bureaucracy, internal and external conflict, and religious and ethnic tensions. High political risk can impede the economic welfare of a country. The risks associated with the general economic environment of a country can encompass, among other things, low quality and growth rate of Gross Domestic Product ('GDP'), high inflation or deflation, high government deficits as a percentage of GDP, weak financial sector, overvalued exchange rate, and high current account deficits as a percentage of GDP. The risk factors associated with the inability of a country to pay its external debt obligations in the immediate future may include but are not limited to high foreign debt as a percentage of GDP, high foreign debt service as a percentage of exports, low foreign exchange reserves as a percentage of short-term debt or exports, and an unsustainable exchange rate structure. The Portfolio may invest in all types of fixed income securities. The following paragraphs describe some of the specific types of fixed-income investments that the High Yield Portfolio may invest in, and some of the specific investment practices that the High Yield Portfolio will engage in. Corporate Debt Securities. Corporate debt securities include corporate bonds, debentures, notes and other similar instruments, including convertible securities and preferred stock. Debt securities may be acquired with warrants attached. The rate of return or return of principal on some debt obligations may be linked or indexed to exchange rates between the U.S. dollar and a foreign currency or currencies. Derivative Instruments. The High Yield Portfolio may purchase and write call and put options on securities, securities indices and on foreign currencies. The High Yield Portfolio may invest in interest rate futures contracts, stock index futures contracts and foreign currency futures contracts and options thereon that are traded on U.S. or foreign exchanges or boards of trade. The High Yield Portfolio may also enter into swap agreements with respect to foreign currencies, interest rates and securities indices. The High Yield Portfolio may use these techniques to hedge against changes in interest rates, currency exchange rates or securities prices or as part of its overall investment strategy. The High Yield Portfolio's investments in swap agreements are described directly below.
Page 1 and 2: Advanced Series Trust AST Academic
Page 3 and 4: More detailed information relating
Page 5 and 6: Information About GSAM Portfolio Ma
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Page 9: IV. Secondary Performance Benchmark
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Page 19 and 20: Weighted median market capitalizati
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Page 23 and 24: Investment Company Act of 1940 (the
Page 25 and 26: PIMCO believes to be relevant. PIMC
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Page 37 and 38: SUMMARY: AST ACADEMIC STRATEGIES AS
Page 39 and 40: Liquidity and valuation risk. From
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FINANCIAL INTERMEDIARY COMPENSATION
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action based upon the relevant fact
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SUMMARY: AST BOND PORTFOLIO 2016 IN
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MANAGEMENT OF THE PORTFOLIO Investm
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government agency. While the Portfo
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Annual Total Returns 0 Best Quarter
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action based upon the relevant fact
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MANAGEMENT OF THE PORTFOLIO Investm
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government agency. While the Portfo
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SUMMARY: AST CAPITAL GROWTH ASSET A
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Past Performance. A number of facto
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Fixed income securities risk. Inves
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SUMMARY: AST CLS MODERATE ASSET ALL
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The annual returns and average annu
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Market and management risk. Markets
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SUMMARY: AST FEDERATED AGGRESSIVE G
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Expense risk. Your actual cost of i
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Strategy Broad Market Duration Stra
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Annual Total Returns 30% 20% 10% 21
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Mid-capitalization company risk. Th
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SUMMARY: AST FIRST TRUST CAPITAL AP
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The table also demonstrates how the
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Foreign investment risk. Investment
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SUMMARY: AST GOLDMAN SACHS CONCENTR
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comparable to those in the U.S, and
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SUMMARY: AST GOLDMAN SACHS SMALL-CA
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Annual Total Returns 60% 45% 33.85
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Asset-backed securities risk. Asset
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SUMMARY: AST HORIZON GROWTH ASSET A
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Derivatives risk. A derivative is a
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SUMMARY: AST HORIZON MODERATE ASSET
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Derivatives risk. A derivative is a
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SUMMARY: AST INTERNATIONAL GROWTH P
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Market and management risk. Markets
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SUMMARY: AST INVESTMENT GRADE BOND
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Past Performance. A number of facto
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epatriating investment proceeds. Ma
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SUMMARY: AST JPMORGAN STRATEGIC OPP
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loans, mortgage-backed securities a
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SUMMARY: AST LARGE-CAP VALUE PORTFO
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Average Annual Total Returns (For t
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in market interest rates and that t
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FINANCIAL INTERMEDIARY COMPENSATION
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established markets; foreign market
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SUMMARY: AST MFS GLOBAL EQUITY PORT
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established markets; foreign market
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SUMMARY: AST MID-CAP VALUE PORTFOLI
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SUMMARY: AST NEUBERGER BERMAN MID-C
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SUMMARY: AST NEUBERGER BERMAN SMALL
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usually differ from those in the U.
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SUMMARY: AST PIMCO LIMITED MATURITY
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Annual Total Returns 11% 10% 9% 8%
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credit risk and liquidity risk. Whe
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SUMMARY: AST PRESERVATION ASSET ALL
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will monitor each contract owner’
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SUMMARY: AST QMA US EQUITY ALPHA PO
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The annual returns and average annu
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which could impact the Portfolio. F
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Blended Index (reflects no deductio
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SUMMARY: AST SMALL CAP VALUE PORTFO
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Annual Total Returns 45% 30% 21.86
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High-yield risk. Investments in fix
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and related services. These payment
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SUMMARY: AST T. ROWE PRICE LARGE CA
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Portfolio 53.37% 3.95% -2.13% Index
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SUMMARY: AST VALUE PORTFOLIO INVEST
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ABOUT THE FUND ABOUT THE FUND AND I
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■ ■ ■ Liquidity and valuation
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■ There is a potential conflict o
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MORE DETAILED INFORMATION ON HOW TH
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AST Marsico Capital Growth AST T. R
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AST Global Real Estate Invests prim
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Global Macro (First Quadrant). This
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strategy. Second, QMA draws on its
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e classified as developed markets.
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Mortgage-Related and Other Asset-Ba
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Principal Investment Policies: The
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AST Bond Portfolio 2016 AST Bond Po
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amortizing mortgage securities offe
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■ ■ ■ ■ common stocks (incl
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AST Preservation Asset Allocation P
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4. International Value Strategy. Th
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To select the stocks for this strat
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“Dow Jones Corporate Bond Index,
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AST Global Real Estate Portfolio In
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Futures, Options and Other Derivati
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Futures, Options and Other Derivati
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not receive any payments (including
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William Blair. William Blair genera
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approach. The objective of the stra
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Growth Portfolio, the Subadviser al
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countries outside of the United Sta
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Hotchkis and Wiley normally focuses
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Special Situations. The Portfolio m
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summarized below: WEDGE normally em
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Asset-Backed Securities. The Portfo
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Other Investments: Although equity
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or profits from, emerging market co
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in value. When a Portfolio makes a
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to 10% of its total assets in fixed
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in return for a premium, one party
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Potential Conflicts: Side-by-Side M
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companies. Absolute Return. The Por
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and high return on invested capital
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ecause their currency markets are n
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The Portfolio may sell securities f
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Implementation of Target Asset Allo
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fixed-income security. For example,
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e subject to liquidity risk. Foreig
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a Portfolio may try to reduce risk
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INVESTMENT MANAGEMENT FEES Set fort
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without prior notice. ***Includes f
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First Quadrant L.P. (First Quadrant
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vehicles advised by affiliated and
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Devang Gambhirwala is a Principal a
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T. Rowe Price Segment. T. Rowe Pric
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1991 through 1996. Before joining B
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candidate for the CFA. QMA Ted Lock
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investments in private equity trans
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Andrew Jessop is an Executive Vice
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Portfolio Manager, joined Hotchkis
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AST Neuberger Berman Small-Cap Grow
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MBA from the University of Pennsylv
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Mr. Brennan joined T. Rowe Price in
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Fund and its transfer agent also re
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Short-term debt securities with rem
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PAYMENTS TO AFFILIATES PI and AST a
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AST Academic Strategies Asset Alloc
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AST Aggressive Asset Allocation Por
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AST AllianceBernstein Growth & Inco
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AST Balanced Asset Allocation Portf
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AST Bond Portfolio 2018 January 28,
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AST Capital Growth Asset Allocation
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AST CLS Moderate Asset Allocation P
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AST Federated Aggressive Growth Por
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AST First Trust Balanced Target Por
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AST Global Real Estate Portfolio Ma
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AST Goldman Sachs Small-Cap Value P
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AST Horizon Growth Asset Allocation
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AST International Growth Portfolio
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AST Investment Grade Bond Portfolio
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AST JPMorgan Strategic Opportunitie
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AST Lord Abbett Bond-Debenture Port
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AST MFS Growth Portfolio Year Ended
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AST Neuberger Berman Mid-Cap Growth
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AST PIMCO Limited Maturity Bond Por
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AST Preservation Asset Allocation P
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AST Schroders Multi-Asset World Str
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AST T. Rowe Price Asset Allocation
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AST T. Rowe Price Natural Resources
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AST Western Asset Core Plus Bond Po
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APPENDIX I ASSET ALLOCATIONS FOR GR
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APPENDIX III UNDERLYING PORTFOLIO W
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AST Horizon Growth Asset Allocation
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369
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SP-2: Satisfactory capacity to pay
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GLOSSARY PORTFOLIO INDEXES BofA Mer
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Russell 2000 Growth Index. The Russ
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AST First Trust Capital Appreciatio
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Notes 379
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Notes 381
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INVESTOR INFORMATION SERVICES: Shar
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