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

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securities of issuers located in emerging markets tend to have volatile prices and may be less liquid than investments in more established markets; foreign markets generally are more volatile than U.S. markets, are not subject to regulatory requirements 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. Liquidity and valuation risk. From time to time, the Portfolio may hold one or more securities for which there are no or few buyers and sellers or which are subject to limitations on transfer. A Portfolio also may have difficulty disposing of those securities at the values determined by the Portfolio for the purpose of determining the Portfolio’s net asset value, especially during periods of significant net redemptions of Portfolio shares. 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. The table also demonstrates how the Portfolio’s average annual returns compare to the returns of a secondary index which includes the stocks of companies with similar investment objectives. 172
Annual Total Returns 45% 30% 21.86 15% 6.98 35.78 16.44 6.64 20.04 27.00 Best Quarter: 3rd Quarter of 2009 21.99% 0 -15% -30% -9.38 -5.61 -29.72 Worst Quarter: 4th Quarter of 2008 -23.68% -45% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Average Annual Total Returns (For the periods ended December 31, 2009) 1 year 5 years 10 years Portfolio 27.00% 1.53% 7.26% Index Russell 2000 Index (reflects no deduction for fees, expenses or taxes) 27.17 .51 3.51 Russell 2000 Value Index (reflects no deduction for fees, expenses or taxes) 20.58 -.01 8.27 MANAGEMENT OF THE PORTFOLIO Investment Managers Subadvisers Portfolio Managers Title Service Date Prudential Investments LLC J.P. Morgan Investment Management, Inc. Christopher T. Blum Managing Director December 2004 AST Investment Services, Inc. Dennis S. Ruhl Vice President December 2004 Lee Munder Capital Group, LLC (LMCG) R. Todd Vingers, CFA Portfolio Manager December 2004 ClearBridge Advisors, LLC Peter Hable Managing Director December 2005 Mark Bourguignon Director February 2009 Mark Feasey, CFA, Director February 2009 Marina Chinn, CFA Director February 2009 Michael Kang Director February 2009 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. 173
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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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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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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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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 163 and 164: Annual Total Returns 45% 30% 15% 27
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 177 and 178: Foreign investment risk. Investment
Page 179 and 180: SUMMARY: AST NEUBERGER BERMAN SMALL
Page 183 and 184: usually differ from those in the U.
Page 185 and 186: SUMMARY: AST PIMCO LIMITED MATURITY
Page 187 and 188: Annual Total Returns 11% 10% 9% 8%
Page 189 and 190: credit risk and liquidity risk. Whe
Page 191 and 192: SUMMARY: AST PRESERVATION ASSET ALL
Page 193 and 194: will monitor each contract owner’
Page 195 and 196: SUMMARY: AST QMA US EQUITY ALPHA PO
Page 197 and 198: The annual returns and average annu
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Page 205: SUMMARY: AST SMALL CAP VALUE PORTFO
Page 209 and 210: High-yield risk. Investments in fix
Page 211 and 212: and related services. These payment
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Page 215 and 216: SUMMARY: AST T. ROWE PRICE LARGE CA
Page 217 and 218: Portfolio 53.37% 3.95% -2.13% Index
Page 221 and 222: SUMMARY: AST VALUE PORTFOLIO INVEST
Page 227 and 228: ABOUT THE FUND ABOUT THE FUND AND I
Page 229 and 230: ■ ■ ■ Liquidity and valuation
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Page 233 and 234: MORE DETAILED INFORMATION ON HOW TH
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Page 237 and 238: AST Global Real Estate Invests prim
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Page 241 and 242: strategy. Second, QMA draws on its
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Page 247 and 248: Principal Investment Policies: The
Page 249 and 250: AST Bond Portfolio 2016 AST Bond Po
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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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