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

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comparable to those in the U.S, and are subject to differing custody and settlement practices; foreign financial reporting standards usually differ from those in the U.S.; foreign exchanges are smaller and less liquid than the U.S. market; political developments may adversely affect the value of a Portfolio’s foreign securities; and foreign holdings may be subject to special taxation and limitations on repatriating investment proceeds. Market and management risk. Markets in which the Portfolio invests may experience volatility and go down in value, and possibly sharply and unpredictably. All decisions by an adviser require judgment and are based on imperfect information. Additionally, the investment techniques, risk analysis and investment strategies used by an adviser in making investment decisions for the Portfolio may not produce the desired results. Derivatives risk. A derivative is a financial contract, the value of which depends upon, or is derived from, the value of an underlying asset, reference rate, or index. The use of derivatives involves a variety of risks, including: the risk that the counterparty (the party on the other side of the transaction) on a derivative transaction will be unable to honor its financial obligation to the Portfolio; certain derivatives and related trading strategies create debt obligations similar to borrowings, and therefore create, leverage, which can result in losses to a Portfolio that exceed the amount the Portfolio originally invested; certain exchange-traded derivatives may be difficult or impossible to buy or sell at the time that the seller would like, or at the price that the seller believes the derivative is currently worth, and privately negotiated derivatives may be difficult to terminate or otherwise offset; derivatives used for hedging may reduce losses but also reduce or eliminate gains or cause losses if the market moves in a manner different from that anticipated by the Portfolio; and commodity-linked derivative instruments may be more volatile than the prices of investments in traditional equity and debt securities. Asset Transfer Program Risk. The Portfolio is used in connection with certain benefit programs under Prudential variable annuity contracts, including, certain “guaranteed minimum accumulation benefit” programs and certain “guaranteed minimum withdrawal benefit” programs. In order for Prudential to manage the guarantees offered in connection with these benefit programs, Prudential will monitor each contract owner’s account value from time to time and will systematically transfer amounts between the Portfolio and certain bond funds (or, for one guaranteed minimum withdrawal benefit program, the insurer’s general account) as required by certain non-discretionary mathematical formulas. Such pre-determined mathematical formulas may, however, result in large-scale asset flows into and out of the Portfolio and subject the Portfolio to certain risks. Such pre-determined mathematical formulas could adversely affect a Portfolio’s investment performance by requiring the subadviser to purchase and sell securities at inopportune times and by otherwise limiting the subadviser’s ability to fully implement the Portfolio’s investment strategies. In addition, these predetermined mathematical formulas may result in relatively small asset bases and relatively high operating expense ratios for the Portfolios compared to other similar funds. Expense risk. Your actual cost of investing in a Portfolio may be higher than the expenses shown in “Annual Portfolio Operating Expenses,” above for a variety of reasons, including, for example, if a Portfolio’s average net assets decreases significantly, such as significant redemptions by another Portfolio that may invest in your Portfolio. Past Performance. A number of factors, including risk, can affect how the Portfolio performs. The bar chart and table provide some indication of the risks of investing in the Portfolio by showing changes in the Portfolio’s performance from year to year and by showing how the Portfolio’s average annual returns for 1, 5, and 10 years compare with those of a broad measure of market performance. Past performance does not mean that the Portfolio will achieve similar results in the future. The annual returns and average annual returns shown in the chart and table are after deduction of expenses and do not include Contract charges. If Contract charges were included, the returns shown would have been lower than those shown. Consult your Contract prospectus for information about Contract charges. 98
Annual Total Returns 60% 45% 30% 15% 39.95 16.15 16.56 20.97 19.05 35.29 Best Quarter: 2nd Quarter of 2009 23.46% 0 -15% -30% -45% -60% -24.62 2000 -23.55 2001 -25.67 2002 2003 2004 2005 2006 2007 -50.23 2008 2009 Worst Quarter: 3rd Quarter of 2008 -25.19% Average Annual Total Returns (For the periods ended December 31, 2009) 1 year 5 years 10 years Portfolio 35.29% 2.48% -2.36% Index Morgan Stanley Capital International (MSCI) EAFE Index (GD) (reflects no deduction for fees, expenses or taxes) 32.46 4.02 1.58 MANAGEMENT OF THE PORTFOLIO Investment Managers Subadviser Portfolio Managers Title Service Date Prudential Investments LLC William Blair & Company LLC W. George Greig Principal and Portfolio Manager November 2002 AST Investment Services, Inc. David Merjan, CFA Co-Portfolio Manager November 2008 Marsico Capital Management, LLC James G. Gendelman Portfolio Manager November 2006 TAX INFORMATION Contract owners should consult their Contract prospectus for information on the federal tax consequences to them. In addition, Contract owners may wish to consult with their own tax advisors as to the tax consequences of investments in the Contracts and the Portfolio, including the application of state and local taxes. The Portfolio currently intends to be treated as a partnership for federal income tax purposes. As a result, the Portfolio’s income, gains, losses, deductions, and credits are “passed through” pro rata directly to the participating insurance companies and retain the same character for federal income tax purposes. FINANCIAL INTERMEDIARY COMPENSATION If you purchase your Contract through a broker-dealer or other financial intermediary (such as a bank), the issuing insurance company, the Portfolio or their related companies may pay the intermediary for the sale of the Contract, the selection of the Portfolio and related services. These payments may create a conflict of interest by influencing the broker-dealer or other intermediary and your salesperson to recommend the Contract over another investment or insurance product, or to recommend the Portfolio over another investment option under the Contract. Ask your salesperson or visit your financial intermediary’s website for more information. 99
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Advanced Series Trust AST Academic
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More detailed information relating
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Information About GSAM Portfolio Ma
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Advanced Series Trust Supplement da
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IV. Secondary Performance Benchmark
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esponsible for managing the remaini
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For both CBOs and CLOs, the cashflo
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The High Yield Portfolio may also m
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ADVANCED SERIES TRUST PROSPECTUS DA
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Weighted median market capitalizati
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ADVANCED SERIES TRUST PROSPECTUS DA
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Investment Company Act of 1940 (the
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PIMCO believes to be relevant. PIMC
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companies located throughout the wo
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until the deal closes. • While mo
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Private Equity. Private equity fund
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II. AST High Yield Portfolio The Bo
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Advanced Series Trust Line 2 Line 3
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SUMMARY: AST ACADEMIC STRATEGIES AS
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Liquidity and valuation risk. From
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SUMMARY: AST ADVANCED STRATEGIES PO
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Short sale risk. The Portfolio’s
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SUMMARY: AST AGGRESSIVE ASSET ALLOC
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and certain bond funds (or, for one
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SUMMARY: AST ALLIANCEBERNSTEIN CORE
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Average Annual Total Returns (For t
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may not produce the desired results
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SUMMARY: AST AMERICAN CENTURY INCOM
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Average Annual Total Returns (For t
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classes; the ability of the Portfol
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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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Page 83 and 84: SUMMARY: AST CAPITAL GROWTH ASSET A
Page 85 and 86: Past Performance. A number of facto
Page 87 and 88: Fixed income securities risk. Inves
Page 89 and 90: SUMMARY: AST CLS MODERATE ASSET ALL
Page 91 and 92: The annual returns and average annu
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Page 95 and 96: SUMMARY: AST FEDERATED AGGRESSIVE G
Page 97 and 98: Expense risk. Your actual cost of i
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Page 101 and 102: Annual Total Returns 30% 20% 10% 21
Page 103 and 104: Mid-capitalization company risk. Th
Page 105 and 106: SUMMARY: AST FIRST TRUST CAPITAL AP
Page 107 and 108: The table also demonstrates how the
Page 109 and 110: Foreign investment risk. Investment
Page 111 and 112: SUMMARY: AST GOLDMAN SACHS CONCENTR
Page 115 and 116: comparable to those in the U.S, and
Page 117 and 118: SUMMARY: AST GOLDMAN SACHS SMALL-CA
Page 119 and 120: Annual Total Returns 60% 45% 33.85
Page 121 and 122: Asset-backed securities risk. Asset
Page 123 and 124: SUMMARY: AST HORIZON GROWTH ASSET A
Page 125 and 126: Derivatives risk. A derivative is a
Page 127 and 128: SUMMARY: AST HORIZON MODERATE ASSET
Page 129 and 130: Derivatives risk. A derivative is a
Page 131: SUMMARY: AST INTERNATIONAL GROWTH P
Page 135 and 136: Market and management risk. Markets
Page 137 and 138: SUMMARY: AST INVESTMENT GRADE BOND
Page 139 and 140: Past Performance. A number of facto
Page 145 and 146: epatriating investment proceeds. Ma
Page 147 and 148: SUMMARY: AST JPMORGAN STRATEGIC OPP
Page 149 and 150: loans, mortgage-backed securities a
Page 151 and 152: SUMMARY: AST LARGE-CAP VALUE PORTFO
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Page 155 and 156: in market interest rates and that t
Page 157 and 158: FINANCIAL INTERMEDIARY COMPENSATION
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Page 161 and 162: SUMMARY: AST MFS GLOBAL EQUITY PORT
Page 165 and 166: established markets; foreign market
Page 167 and 168: SUMMARY: AST MID-CAP VALUE PORTFOLI
Page 171 and 172: Asset-backed securities risk. Asset
Page 173 and 174: SUMMARY: AST NEUBERGER BERMAN MID-C
Page 179 and 180: 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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Foreign investment risk. Investment
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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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Asset-backed securities risk. Asset
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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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Annual Total Returns 45% 30% 15% 0
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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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