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

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In seeking to achieve its objective, the Portfolio invests primarily in the equity securities of U.S. companies that the Subadviser believes are undervalued. The Subadviser believes that, over time, stock prices (of companies in which the Portfolio invests) will come to reflect the companies’ intrinsic economic values. The Subadviser uses a disciplined investment process to evaluate the companies in its extensive research universe. Through this process, the Subadviser seeks to identify the stocks of companies that offer the best combination of value and potential for price appreciation. The Subadviser employs a multifactor valuation model which to seeks to discern the relative attractiveness of individual investment opportunities derived from a universe of substantially large, seasoned, U.S. domiciled companies. The Subadviser utilizes this model to systematically identify equity securities whose current market prices do not reflect what it considers to be their relative intrinsic economic values. In determining a company’s relative investment attractiveness, the Subadviser takes into account many fundamental factors it believes bear on the ability of the company to perform in the future, including prospective earnings and cash flow growth, the competitive position of the company, forecast balance sheet strength, and the capital usage decisions of management. The Subadviser then ranks each of the companies in order of their relative attractiveness with companies demonstrating the largest positive disparities deemed to be the most undervalued. In conjunction with AllianceBernstein’s fundamental research teams, the U.S. Relative Value team will select from a candidate list of attractively valued stocks (based on our multifactor valuation model) to populate the portfolio with attractively valued securities. Other Investments: The Portfolio, in addition to investing in common stocks and convertible securities, may write covered call options listed on domestic securities exchanges with respect to securities in the Portfolio. It is not intended for the Portfolio to write covered call options with respect to securities with an aggregate market value of more than 10% of the Portfolio’s net assets at the time an option is written. The Portfolio also may purchase and sell forward and futures contracts and related options for hedging purposes. The Portfolio may also invest up to 15% of its net assets (at the time of investment) in foreign securities, and invest in straight bonds and other debt securities. AST American Century Income & Growth Portfolio Investment Objective: to seek capital growth and, secondarily, current income. Principal Investment Policies: The Portfolio invests primarily in large capitalization, publicly traded U.S. companies. The Portfolio considers large capitalization companies to be those with a market capitalization greater than $2 billion. To select stocks for purchase, the Subadviser utilizes quantitative management techniques in a two-step process. In the first step, the Subadviser ranks stocks from most attractive to least attractive. This is determined by using a quantitative model that combines measures of at stock’s value as well as measures of its growth potential. To measure value, the Subadviser uses ratios of stock price to book value and stock price to cash flow, among others. To measure growth, the Subadviser uses the rate of growth in a company’s earnings and changes in its earnings estimates, as well as other factors. In the second step, the Subadviser uses a technique called portfolio optimization. In portfolio optimization, the Subadviser uses a computer to build a portfolio of stocks from the ranking described above that it believes will provide the optimal balance between risk and expected return. The goal is to create a portfolio that provides better returns than its benchmark without taking on significant additional risk. In building the Portfolio, the Subadviser also attempts to create a dividend yield that will be greater than that of the S&P 500 Index. The Subadviser generally sells stocks from the Portfolio when it believes: ■ a stock becomes less attractive relative to other stock opportunities, ■ a stock’s risk parameters outweigh its return opportunity, and/or ■ specific events alter a stock’s prospects. The Subadviser does not attempt to time the market. Instead, under normal market conditions, it intends to keep the Portfolio essentially fully invested in stocks regardless of the movement of stock prices generally. Other Investments: When the Subadviser believes that it is prudent, the Portfolio may invest a portion of their assets in foreign securities, debt securities, preferred stock and equity-equivalent securities, such as convertible securities, stock futures contracts or stock index futures contracts. The Portfolio limits its purchase of debt securities to investment grade obligations. Futures contracts, a type of derivative security, can help the Portfolio’s cash assets remain liquid while performing more like stocks. The Subadviser has a policy governing futures contracts and similar derivative securities to help manage the risk of these types of investments. For example, the Subadviser cannot invest in a derivative security if it would be possible for the Portfolio to lose more money than the notional value of the investment. AST Target Maturity Portfolios: AST Bond Portfolio 2015 214
AST Bond Portfolio 2016 AST Bond Portfolio 2017 AST Bond Portfolio 2018 AST Bond Portfolio 2019 AST Bond Portfolio 2020 AST Bond Portfolio 2021 Investment Objectives: To seek the highest total return for a specific period of time, consistent with the preservation of capital and liquidity needs. Total return is comprised of current income and capital appreciation. AST Investment Grade Bond Portfolio Investment Objective: To seek to maximize total return, consistent with the preservation of capital and liquidity needs. As set forth above, total return is comprised of current income and capital appreciation. Principal Investment Policies and Risks of the Target Maturity Portfolios. Under normal market conditions, each Target Maturity Portfolio will invest at least 80% of its investable assets in bonds. For purposes of this 80% policy, bonds include: (i) all debt securities and all fixed-income securities, excluding preferred stock, issued by both government and non-government issuers, and (ii) all derivatives and synthetic instruments that have economic characteristics that are similar to such debt securities and such fixed-income securities. The above-described 80% policy is a non-fundamental investment policy of each Target Maturity Portfolio and may be changed by the Board without shareholder approval. Each Target Maturity Portfolio, however, will provide 60 days’ prior written notice to shareholders of any change in its 80% policy as described above. As used in this Prospectus, the term “investable assets” refers to a Portfolio’s net assets plus any borrowings for investment purposes. A Portfolio’s investable assets will be less than its total assets to the extent that it has borrowed money for non-investment purposes, such as to meet anticipated redemptions. Each Target Maturity Portfolio will be managed to mature in the year identified in its name in order to match the related liability under certain living benefit programs. As a result, each Target Maturity Portfolio’s duration and weighted average maturity will be different. For example, the AST Bond Portfolio 2021 will have a longer duration and a longer weighted average maturity than the AST Bond Portfolio 2015, the AST Bond Portfolio 2016, the AST Bond Portfolio 2018, the AST Bond Portfolio 2019, and the AST Bond Portfolio 2020. In addition, each Target Maturity Portfolio’s duration and weighted average maturity will decline over time as the relevant maturity date approaches. To that end, the subadviser expects to maintain the duration of each Target Maturity Portfolio within +/– 0.50 years of the secondary benchmark index for that Target Maturity Portfolio. On or about a Target Maturity Portfolio’s maturity date, all of the securities held by that Target Maturity Portfolio will be sold and all of the outstanding shares of beneficial interest of that Target Maturity Portfolio will be redeemed. Proceeds from that redemption will be reallocated in accordance with the procedures applicable to the contact owner’s variable contract. The subadviser currently intends to maintain an overall weighted average credit quality rating of A- or better for each Target Maturity Portfolio. This target overall credit quality for each Target Maturity Portfolio will be based on ratings as of the date of purchase. In the event a Target Maturity Portfolio’s overall credit quality drops below A- due to downgrades of individual portfolio securities, the Subadviser will take appropriate action based upon the relevant facts and circumstances. Investment Policies of the Investment Grade Bond Portfolio Under normal market conditions, the Investment Grade Bond Portfolio will invest at least 80% of its investable assets in investment grade bonds. For purposes of this 80% policy, investment grade bonds include: (i) all debt securities and all fixed-income securities, excluding preferred stock, that are issued by both government and non-government issuers and rated BBB or higher by S&P, Baa or higher by Moody’s, BBB or higher by Fitch or, if unrated, are determined by the subadviser to be of comparable quality, and (ii) all derivatives and synthetic instruments that have economic characteristics that are similar to debt securities and fixed-income securities with such ratings. All references in this Prospectus to the ratings categories used for determining what constitutes an investment grade bond are without regard to gradations within those categories. PIM currently intends to maintain an overall weighted average credit quality rating of A- or better for the Investment Grade Bond Portfolio. This target overall credit quality for the Investment Grade Bond Portfolio will be based on ratings as of the date of purchase. In the event the Investment Grade Bond Portfolio’s overall credit quality drops below A- due to downgrades of individual portfolio securities, the subadviser will take appropriate action based upon the relevant facts and circumstances. Principal Investments of the Portfolios General. The subadviser has a team of fixed-income professionals, including credit analysts and traders, with experience in many sectors of the U.S. and foreign fixed-income securities markets. The Subadviser will use equalitative and quantitative analysis to evaluate each bond issue considered for a Portfolio. In selecting portfolio securities for a Portfolio, the subadviser will consider 215
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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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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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Asset-backed securities risk. Asset
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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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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
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Page 227 and 228: ABOUT THE FUND ABOUT THE FUND AND I
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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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