Advanced Series Trust AST Academic Strategies Asset ... - Prudential
Advanced Series Trust AST Academic Strategies Asset ... - Prudential
Advanced Series Trust AST Academic Strategies Asset ... - Prudential
Create successful ePaper yourself
Turn your PDF publications into a flip-book with our unique Google optimized e-Paper software.
portion of the Portfolio also may include convertible securities, preferred stocks and warrants.<br />
Fixed Income Securities. Bond investments are primarily investment grade (top four credit ratings) and are chosen from across the<br />
entire government and corporate bond markets. Up to 30% of the Portfolio’s fixed income portion may be invested in high yield<br />
bonds. A significant portion of the Portfolio’s fixed income investments may be in mortgage-related (including mortgage dollar rolls<br />
and derivatives such as collateralized mortgage obligations and stripped mortgage-backed securities) and asset-backed securities.<br />
Bank debt and loan participations and assignments may also be purchased. Maturities and duration of the fixed income portion of the<br />
portfolio will reflect the sub-advisor’s outlook for interest rates. The cash reserves component will consist of high quality domestic<br />
and foreign money market instruments, including money market funds managed by the Subadviser.<br />
Other Investments:<br />
Swap Agreements. The Portfolio may enter into interest rate, index, total return, credit default and currency exchange rate swap<br />
agreements for the purposes of attempting to obtain a desired return at a lower cost than if the Portfolio had invested directly in an<br />
instrument that yielded the desired return or for the purpose of hedging a portfolio position.<br />
The Portfolio may enter into stock index, interest rate or currency futures contracts (or options thereon) for hedging purposes or to<br />
provide an efficient means of adjusting the Portfolio’s exposure to the equity markets. The Portfolio may write covered call options<br />
and purchase put and call options on foreign currencies, securities, and financial indices. The Portfolio may invest up to 10% of its<br />
total assets in hybrid instruments, which combine the characteristics of futures, options and securities. To the extent the Portfolio uses<br />
these investments, it will be exposed to additional volatility and potential losses. The Portfolio may enter into forward foreign<br />
currency exchange contracts in connection with its foreign investments.<br />
<strong>AST</strong> T. Rowe Price Global Bond Portfolio<br />
Investment Objective: to provide high current income and capital growth by investing in high-quality, foreign and U.S. dollardenominated<br />
bonds.<br />
Prinicpal Investment Policies:<br />
The Portfolio will have a non-fundamental policy to invest, under normal circumstances, at least 80% of the value of its assets in<br />
fixed income securities. The 80% investment requirement applies at the time the Portfolio invests its assets. To achieve its objectives,<br />
the Portfolio intends to invest primarily in all types of bonds including those issued or guaranteed by the U.S. or foreign governments<br />
or their agencies and by foreign authorities, provinces and municipalities as well as investment grade corporate bonds and mortgagerelated<br />
and asset-backed securities and high yield bonds of U.S. and foreign issuers.<br />
The Portfolio may also invest in convertible securities and corporate commercial paper; inflation-indexed bonds issued by both<br />
governments and corporations; structured notes, including hybrid or “indexed” securities, event-linked bonds and bank debt and<br />
loan participations; delayed portfolio loans and revolving credit securities; bank certificates of deposit, fixed time deposits and<br />
bankers’ acceptances; repurchase agreements and reverse repurchase agreements; debt securities issued by federal, state or local<br />
governments and their agencies and government-sponsored enterprises; obligations of foreign governments or their subdivisions,<br />
agencies and government-sponsored enterprises; and obligations of international agencies or supranational entities.<br />
The Portfolio seeks to moderate price fluctuation by actively managing its maturity structure and currency exposure. The Subadviser<br />
bases its investment decisions on fundamental market factors, currency trends, and credit quality. The Portfolio generally invests in<br />
countries where the combination of fixed-income returns and currency exchange rates appears attractive, or, if the currency trend is<br />
unfavorable, where the Subadviser believes that the currency risk can be minimized through hedging. The Portfolio’s high-quality<br />
bonds must, at the time of purchase, have received an investment-grade rating from at least one rating agency (or if unrated, must<br />
have a Subadviser equivalent rating) but could be rated below investment-grade by other agencies. Such bonds are called “splitrated”).<br />
Although the Portfolio expects to maintain an intermediate-to-long weighted average maturity, there are no maturity<br />
restrictions on the overall portfolio or on individual securities. The Portfolio may and frequently does engage in foreign currency<br />
transactions such as forward foreign currency exchange contracts, hedging its foreign currency exposure back to the dollar or against<br />
other foreign currencies (“cross-hedging”). The Subadviser also attempts to reduce currency risks through diversification among<br />
foreign securities and active management of currency exposures. The Subadviser may use foreign forward currency contracts<br />
(“forwards”) to hedge the risk to the Portfolio when foreign currency exchange rate movements are expected to be unfavorable to<br />
U.S. investors. The Subadviser may use forwards in an effort to benefit from a currency believed to be appreciating in value versus<br />
other currencies. The Subadviser may also invest in currencies or forwards in cases where the Portfolio does not hold bonds<br />
denominated in that currency, for example, in situations where the Subadviser wants currency exposure to a particular market but<br />
believes that the bonds are unattractive. Under certain circumstances, the Subadviser may commit a substantial portion of the<br />
Portfolio to currencies and forwards If the Subadviser’s forecast of currency movements proves wrong, this investment activity may<br />
cause a loss. Also, for emerging markets, it is often not possible to hedge the currency risk associated with emerging market bonds<br />
268