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

To select the stocks for this strategy, First Trust follows a disciplined investment strategy that invests primarily in the common stocks of
25 companies selected from a subset of the stocks that receive Value Line’s ® #1 ranking for Timeliness as of the close of business on
or about the applicable security selection date. Value Line’s ranking for Timeliness measures Value Line’s view of probable price
performance during the next 6 to 12 months based upon long-term trend of earnings, prices, recent earnings, price momentum, and
earnings surprise. First Trust expects to select 25 common stocks each year through the following multi-step process from a subset of
the stocks that receive Value Line’s ® #1 ranking for Timeliness as of the close of business on or about the applicable security selection
date:
■ Step 1: Start with the 100 stocks that Value Line ® on or about the security selection date gives its #1 ranking for Timeliness,
and remove the stocks of companies considered to be financial companies and the stocks of companies whose shares are not
listed on a U.S. securities exchange. Rank each remaining stock from the best (1) to worst (100) on the following factors:
- 12 month price appreciation
- 6 month price appreciation
- Return on assets
- Price to cash flow
■ Step 2: Select a market-cap weighted portfolio of the 25 stocks with the best overall ranking on the above four factors.
Securities selected by this strategy will be weighted by market capitalization subject to the restriction that no stock will comprise less
than 1% or more than 7.5% of the portfolio on or about the security selection date.
Target Small-Cap
The Target Small-Cap stocks are stocks with small market capitalizations that have recently exhibited certain positive financial
attributes. First Trust selects stocks for this strategy as follows:
■ Step 1: Select the stocks of all U.S. corporations that trade on the New York Stock Exchange (NYSE), the NYSE Amex, or The
Nasdaq Stock Market (Nasdaq) (excluding limited partnerships, American Depositary Receipts and mineral and oil royalty trusts)
as of the close of business on or about the applicable security selection date.
■ Step 2: Select companies that have a market capitalization of between $150 million and $1 billion and whose stock has an
average daily dollar trading volume of at least $500,000.
■ Step 3: Select stocks with positive three-year sales growth.
■ Step 4: From there, select those stocks whose most recent annual earnings are positive.
■ Step 5: Eliminate any stock whose price has appreciated by more than 75% in the last 12 months.
■ Step 6: Select the 40 stocks with the greatest price appreciation in the last 12 months.
Market capitalization and average trading volume are based on 1996 dollars which are periodically adjusted for inflation. Securities
selected by this strategy will be weighted by market capitalization.
The Dow ® Target Dividend (AST First Trust Balanced Target Portfolio only). The Dow ® Target Dividend Strategy contains some of the
most widely traded of the market’s highest-yielding stocks. This strategy selects stocks with good value (low price/book) and signs of
growth (change in return on assets (ROA)) from the Dow Jones U.S. Select Dividend Index SM , which consists of 100 of the highest
dividend-yielding securities (excluding real estate investment trusts) in the Dow Jones U.S. Total Market Index, an index
representative of the total market for United States equity securities. These factors allow the strategy to select an equally weighted
portfolio of high dividend paying value companies that have future growth potential.
This investment strategy looks for common stocks issued by companies that are expected to provide income and have the potential
for capital appreciation. First Trust follows a disciplined investment strategy that invests primarily in the 20 common stocks from the
Dow Jones U.S. Select Dividend Index SM with the best overall ranking on both the change in return on assets over the last 12 months
and price to book ratio. Specifically, this investment strategy consists of the following steps:
■ Step 1: Rank all 100 stocks contained in the Dow Jones U.S. Select Dividend Index SM on or about the applicable security
selection date (best [1] to worst [100]) by:
- Change in return on assets over the last 12 months. An increase in return on assets generally indicates improving business
fundamentals.
- Price to book. A lower, but positive, price to book ratio is generally used as an indication of value.
■ Step 2: Select an approximately equally-weighted portfolio of the 20 stocks with the best overall ranking on the two factors.
NASDAQ ® Target 15 (AST First Trust Capital Appreciation Target Portfolio only)
This investment strategy looks for common stocks issued by companies that are expected to have the potential for capital
appreciation. To select the stocks for this investment strategy, First Trust follows a disciplined investment strategy that invests primarily
in the common stocks of 15 companies selected from a subset of the stocks included in the NASDAQ-100 Index as of the close of
business on or about the applicable security selection date.
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