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

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The Subadviser may engage in active and frequent trading in pursuing the portfolio’s principal investment strategies. Other Investments: Although the Portfolio will invest primarily in equity securities, the Portfolio may purchase and sell futures contracts and related options on securities indices, foreign currencies and interest rates for hedging and non-hedging purposes. The Portfolio may also enter into forward contracts for the purchase or sale of foreign currencies for hedging and non-hedging purposes. The Portfolio may purchase and write (sell) options on securities, stock indices and foreign currencies. The Portfolio may also purchase warrants. AST MFS Growth Portfolio Investment Objective: to seek long-term growth of capital and future, rather than current, income. Principal Investment Policies: The Portfolio invests, under normal market conditions, at least 80% of its net assets in common stocks and related securities, such as preferred stocks, convertible securities and depositary receipts. The Subadviser focuses on investing the portfolio’s assets in the stocks of companies it believes to have above average earnings growth potential compared to other companies (growth companies). Growth companies tend to have stock prices that are high relative to their earnings, dividends, book value, or other financial measures. While the Subadviser may invest the Portfolio’s assets in companies of any size, the Portfolio generally focuses on companies with large capitalizations. The Subadviser uses a bottom-up investment approach in buying and selling investments for the Portfolio. Investments are selected primarily based on fundamental analysis of issuers and their potential in light of their current financial condition and industry position, and market, economic, political, and regulatory conditions. Factors considered may include analysis of earnings, cash flows, competitive position, and management ability. Quantitative models that systematically evaluate these and other factors may also be considered. The Portfolio may invest up to 35% of its net assets in foreign securities. The Subadviser may engage in active and frequent trading in pursuing the portfolio’s principal investment strategies. Other Investments: Although the Portfolio will invest primarily in common stocks and related securities, the Portfolio may also invest in variable and floating rate debt securities. The Portfolio may purchase and sell futures contracts and related options on securities indices, foreign currencies and interest rates for hedging and non-hedging purposes. The Portfolio may also enter into forward contracts for the purchase or sale of foreign currencies for hedging and non-hedging purposes. The Portfolio may purchase and write (sell) options on securities, stock indices and foreign currencies. AST Mid-Cap Value Portfolio Investment Objective: to seek capital growth by investing primarily in mid-capitalization stocks that appear to be undervalued. Principal Investment Strategies: The Portfolio has a non-fundamental policy to invest, under normal circumstances, at least 80% of the value of its net assets in midcapitalization companies. The 80% requirement applies at the time the Portfolio invests its assets. For purposes of the Portfolio, as noted earlier, mid-capitalization companies are generally those that have market capitalizations, at the time of purchase, within the range of companies included in the Russell Midcap® Value Index during the previous 12 months based on month-end data. The assets of the Portfolio are independently managed by two Subadvisers under a multi-manager structure. Pursuant to the multimanager structure, the Investment Managers of the Portfolio determine and allocate a portion of the Portfolio’s assets to each of the Subadvisers. The allocations 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 this prospectus. Although each Subadviser will follow the Portfolio’s policy of investing, under normal circumstances, at least 80% of the Portfolio’s assets in mid-capitalization companies, each Subadviser expects to utilize different investment strategies to achieve the Portfolio’s objective of capital growth. The current asset allocations and principal investment strategies for each of the Subadvisers are 248
summarized below: WEDGE normally employs a traditional value style, bottom-up investment discipline that is intended to help identify stocks that are undervalued relative to their long term normalized earnings capability. WEDGE first employs two proprietary, fundamentally based screening models, using publicly available data on all eligible companies. The Fundamental Value Model identifies those stocks with the greatest potential for profit, based on projected earnings growth, earnings quality, dividend yield, and forward price/earnings ratios. In an effort to avoid financially unsound companies, WEDGE then employs the Financial Quality Model, which focuses on earnings growth, liquidity, profitability, and leverage factors. Stocks are ranked by both models for relative attractiveness, with approximately 35% of the initial universe becoming eligible for subsequent research. Finally, WEDGE focuses on those companies that meet its value and financial quality parameters. WEDGE’s research analysts employ comprehensive qualitative, and quantitative analysis to identify stocks with unrecognized value. Areas of emphasis include independent earnings forecasts and financial statement analysis, an evaluation of free cash flow generation and return on invested capital, absolute and relative valuations, industry analysis and competitive positioning along with an in-depth assessment of company management. All potential additions to the portfolio are reviewed and approved by the firm’s Investment Policy Committee. The Subadviser’s decision to sell a stock is as highly disciplined as the decision to buy. Stocks are sold when fair valuation is reached, the original investment thesis has materially deteriorated, an upgrade opportunity develops or, with limited flexibility when warranted, the stock’s Fundamental Value Model ranking falls to a predetermined level. EARNEST expects to focus primarily on companies with a market capitalization between $1 billion and $20 billion at time of purchase. This Subadviser normally employs a fundamental, bottom-up investment process. The first step in EARNEST’s investment process is to screen the relevant universe to identify stocks that it believes are likely to outperform based on their financial characteristics and the current environment. Using an approach called Return Pattern Recognition, the Subadviser seeks to identify the financial and market characteristics that have been in place when an individual company has produced outstanding performance. These characteristics include valuation measures, market trends, operating trends, growth measures, profitability measures, and macroeconomics. The Subadviser screens thousands of companies and selects for an in-depth fundamental review those exhibiting the set of characteristics that it believes indicate outperformance. The screening process allows the Subadviser to review the relative universe of companies and focus on those it considers the best prospects. Next, the approximately 150 best companies identified in the screening process are put through a second more rigorous review. In this step, EARNEST develops and tests an investment thesis for each company. The test generally includes conversations with the company’s management team and industry specialists, review of the company’s financial reports, analysis of industry and companyspecific studies, and independent field research. The Subadviser eliminates from consideration any company that does not pass its fundamental analysis. The final step in EARNEST’s investment process is to construct a portfolio that includes those stocks it expects to have the best performance and that effectively manages the expected risk of meaningfully underperforming the assigned benchmark. The Subadviser uses a statistical approach called downside deviation to measure and then seeks to constrain the likelihood of significantly underperforming the benchmark. Using this information, the Subadviser seeks to select investments that blend together to manage downside risk. The result is a client portfolio of approximately 60 stocks. This Subadviser expects to focus on purchasing companies that have a market capitalization at the time of purchase between $1 and $20 billion, and expects to typically sell holdings whose market capitalizations have grown to more than twice the upper limit for purchase (i.e., whose market capitalization have grown to $40 billion). As with all stock funds, the Portfolio’s share price can fall because of weakness in the securities market as a whole, in particular industries or in specific holdings. Investing in mid-cap companies involves greater risk of loss than is customarily associated with more established companies. Stocks of mid-cap companies may be subject to more abrupt or erratic price movements than larger company stocks. Mid-cap companies often have limited product lines, markets, or financial resources, and their management may lack depth and experience. While a value approach to investing is generally considered to involve less risk than a growth approach, investing in value stocks carries the risks that the market will not recognize the stock’s intrinsic value for a long time, or that a stock judged to be undervalued may actually be appropriately priced. Other Investments: Although the Portfolio will invest primarily in common stocks of U.S. mid-capitalization companies, the Portfolio may invest up to 25% of its total assets in securities of non-U.S. issuers. While the Portfolio does not intend to do so to a significant degree, the Portfolio may enter into futures contracts and related options, and may purchase and sell call and put options on securities and securities indices. The Portfolio may also invest in warrants to purchase securities, and may engage in short sales “against the box”. As of January 31, 2010, WEDGE was responsible for managing approximately 51% of the Portfolio’s assets and EARNEST was 249
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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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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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Page 299 and 300: companies. Absolute Return. The Por
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Page 315 and 316: INVESTMENT MANAGEMENT FEES Set fort
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Page 321 and 322: vehicles advised by affiliated and
Page 323 and 324: Devang Gambhirwala is a Principal a
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Page 327 and 328: 1991 through 1996. Before joining B
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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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