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

and high return on invested capital. ClearBridge also uses quantitative methods to identify catalysts and trends that might influence
the Portfolio’s industry or sector focus, or the Subadviser’s individual security selection.
Other Investments:
Although the Portfolio will invest primarily in U.S. common stocks, it may also purchase other types of securities, for example,
preferred stocks, convertible securities, warrants and bonds when considered consistent with the Portfolio’s investment objective and
policies. The Portfolio may purchase preferred stock for capital appreciation where the issuer has omitted, or is in danger of omitting,
payment of the dividend on the stock. Debt securities would be purchased in companies that meet the investment criteria for the
Portfolio.
The Portfolio may invest up to 20% of its total assets in foreign securities, including American Depositary Receipts and securities of
companies in developing countries, and may enter into forward foreign currency exchange contracts (the Portfolio may invest in
foreign cash items in excess of this 20% limit). The Portfolio may enter into stock index or currency futures contracts (or options
thereon) for hedging purposes or to provide an efficient means of regulating the Portfolio’s exposure to the equity markets. The
Portfolio may also write (sell) call and put options and purchase put and call options on securities, financial indices, and currencies.
The Portfolio may invest up to 10% of its total assets in hybrid instruments, which combine the characteristics of futures, options and
securities.
As of January 31, 2010, J.P. Morgan was responsible for managing approximately 42% of the Portfolio’s assets, LMCG was
responsible for managing approximately 28% of the Portfolio’s assets, and Clearbridge was responsible for managing approximately
30% of the Portfolio’s assets.
AST T. Rowe Price Asset Allocation Portfolio
Investment Objective: to seek a high level of total return by investing primarily in a diversified portfolio of equity and fixed-income
securities.
Principal Investment Policies:
The Portfolio will invest, under normal circumstances, approximately 60% of its total assets in equity securities and 40% in fixed
income securities. This mix may vary over shorter time periods; the equity portion may range between 50-70% and the fixed income
portion between 30-50%.
The Subadviser concentrates common stock investments in larger, more established companies, but the Portfolio may include small
and medium-sized companies with good growth prospects. The Portfolio’s exposure to smaller companies is not expected to be
substantial, and will not constitute more than 30% of the equity portion of the Portfolio. Up to 35% of the equity portion may be
invested in foreign (non-U.S. dollar denominated) equity securities. The fixed income portion of the Portfolio will be allocated among
investment grade securities (50-100% of the fixed income portion); high yield or “junk” bonds (up to 30% of the fixed-income
portion); foreign (non-U.S. dollar denominated) high quality debt securities and emerging market securities (up to 30% of the fixedincome
portion); and cash reserves (up to 40% of the fixed-income portion). Cash reserves may consist of U.S.-dollar and non U.S.-
dollar currencies.
The precise mix of equity and fixed income investments will depend on the Subadviser’s outlook for the markets. When deciding
upon asset allocations, the Subadviser may favor fixed income securities if the economy is expected to slow sufficiently to hurt
corporate profit growth. The opposite may be true when strong economic growth is expected. The Portfolio’s investments in foreign
equity and debt securities are intended to provide additional diversification, and the Subadviser will normally have at least three
different countries represented in both the foreign equity and foreign debt portions of the Portfolio.
Securities may be sold for a variety of reasons, such as to effect a change in asset allocation, to secure gains or limit losses, or to redeploy
assets into more promising opportunities.
As a fund that invests both in equity and fixed income securities, the Portfolio risk of loss and share price fluctuation (and potential
for gain) will tend to be less than funds investing primarily in equity securities and more than funds investing primarily in fixed
income securities. Of course, both equity and fixed income securities may decline in value.
Equity Securities. When selecting particular stocks to purchase, the Subadviser will examine relative values and prospects among
growth and value-oriented stocks, domestic and international stocks, and small-to large-cap stocks. Domestic stocks are drawn from
the overall U.S. market while international equities are selected primarily from large companies in developed countries. Investments
in non-U.S. dollar denominated stocks may be made solely for capital appreciation or solely for income or any combination of both
for the purpose of achieving a higher overall return. Stocks of companies in developing countries may also be included. The equity
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