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

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classes; the ability of the Portfolio to achieve its investment objective depends on the ability of the selected Underlying Portfolios to achieve their investment objectives; and the performance of the Portfolio may be affected by large purchases and redemptions of Underlying Portfolio shares. Asset Transfer Program Risk. The Portfolio is used in connection with certain benefit programs under Prudential variable annuity contracts, including, certain “guaranteed minimum accumulation benefit” programs and certain “guaranteed minimum withdrawal benefit” programs. In order for Prudential to manage the guarantees offered in connection with these benefit programs, Prudential will monitor each contract owner’s account value from time to time and will systematically transfer amounts between the Portfolio and certain bond funds (or, for one guaranteed minimum withdrawal benefit program, the insurer’s general account) as required by certain non-discretionary mathematical formulas. Such pre-determined mathematical formulas may, however, result in large-scale asset flows into and out of the Portfolio and subject the Portfolio to certain risks. Such pre-determined mathematical formulas could adversely affect a Portfolio’s investment performance by requiring the subadviser to purchase and sell securities at inopportune times and by otherwise limiting the subadviser’s ability to fully implement the Portfolio’s investment strategies. In addition, these predetermined mathematical formulas may result in relatively small asset bases and relatively high operating expense ratios for the Portfolios compared to other similar funds. Equity securities risk. There is the risk that the value or price of a particular stock or other equity or equity-related security owned by a Portfolio could go down and you could lose money. In addition to an individual stock losing value, the value of the equity markets or a sector of those markets in which a Portfolio invests could go down. Fixed income securities risk. Investment in fixed income securities involves a variety of risks, including the risk that an issuer or guarantor of a security will be unable to pay some or all of the principal and interest when due (credit risk); the risk that the Portfolio may not be able to sell some or all of the securities its holds, either at the price it values the security or at any price (liquidity risk); and the risk that the rates of interest income generated by the fixed income investments of a Portfolio may decline due to a decrease in market interest rates and that the market prices of the fixed income investments of a Portfolio may decline due to an increase in market interest rates (interest rate risk). High-yield risk. Investments in fixed-income securities rated below investment grade and unrated securities of similar credit quality (commonly known as “junk bonds”) may be subject to greater levels of credit and liquidity risk than investments in investment grade securities. High-yield securities are considered predominantly speculative with respect to the issuer’s continuing ability to make principal and interest payments. Asset-backed securities risk. Asset-backed securities are fixed income securities that represent an interest in an underlying pool of assets, such as credit card receivables. Like traditional fixed income securities, asset-backed securities are subject to interest rate risk, credit risk and liquidity risk. When the underlying pools of assets consist of debt obligations, there is a risk that those obligations will be repaid sooner than expected (prepayment risk) or later than expected (extension risk), both of which may result in lower than expected returns. Mortgage-backed securities risk. A mortgage-backed security is a specific type of asset-backed security - one backed by mortgage loans on residential and/or commercial real estate. Therefore, they have many of the risk characteristics of asset-backed securities, including prepayment and extension risks, as well as interest rate, credit and liquidity risk. Because they are backed by mortgage loans, mortgage-backed securities also have risks related to real estate, including significant sensitivity to changes in real estate prices and interest rates and, in the case of commercial mortgages, office and factory occupancy rates. Market and management risk. Markets in which the Portfolio invests may experience volatility and go down in value, and possibly sharply and unpredictably. All decisions by an adviser require judgment and are based on imperfect information. Additionally, the investment techniques, risk analysis and investment strategies used by an adviser in making investment decisions for the Portfolio may not produce the desired results. Foreign investment risk. Investment in foreign securities generally involve more risk than investing in securities of U.S. issuers. Foreign investment risk includes: Changes in currency exchange rates may affect the value of foreign securities held by a Portfolio; securities of issuers located in emerging markets tend to have volatile prices and may be less liquid than investments in more established markets; foreign markets generally are more volatile than U.S. markets, are not subject to regulatory requirements comparable to those in the U.S, and are subject to differing custody and settlement practices; foreign financial reporting standards usually differ from those in the U.S.; foreign exchanges are smaller and less liquid than the U.S. market; political developments may adversely affect the value of a Portfolio’s foreign securities; and foreign holdings may be subject to special taxation and limitations on repatriating investment proceeds. Expense risk. Your actual cost of investing in a Portfolio may be higher than the expenses shown in “Annual Portfolio Operating Expenses,” above for a variety of reasons, including, for example, if a Portfolio’s average net assets decreases significantly, such as significant redemptions by another Portfolio that may invest in your Portfolio. 50
Past Performance. A number of factors, including risk, can affect how the Portfolio performs. The bar chart and table provides some indication of the risks of investing in the Portfolio by showing changes in the Portfolio’s performace from year to year and by showing how the Portfolio’s average annual returns for 1 year and since inception of the Portfolio compare with those of a broad measure of market performance. Past performance does not mean that the Portfolio will achieve similar results in the future. The annual returns and average annual returns shown in the chart and table are after deduction of expenses and do not include Contract charges. If Contract charges were included, the returns shown would have been lower than those shown. Consult your Contract prospectus for information about Contract charges. The table also demonstrates how the Portfolio’s average annual returns compare to the returns of a custom blended stock index which includes the stock of companies with similar investment objectives. The Portfolio’s primary custom blended stock index consists of the Russell 3000 Index (60%), the MSCI EAFE Index (GD) (15%) and the Barclays Capital Aggregate Bond Index (25%). The Portfolio’s secondary custom blended stock index consists of the Standard & Poor’s 500 Index (75%) and the Barclays Capital Aggregate Bond Index (25%). The manager determined the weight of each index comprising the blended indexes. Annual Total Returns 40% 30% 20% 13.67 10% 9.73 25.33 Best Quarter: 2nd Quarter of 2009 14.82% 0 -10% -20% -30% -40% 2006 2007 -34.94 2008 2009 Worst Quarter: 4th Quarter of 2008 -18.12% Average Annual Total Returns (For the periods ended December 31, 2009) 1 year Since Inception (12/5/05) Portfolio 25.33% .47% Index Standard & Poor's 500 Index (reflects no deduction for fees, expenses or taxes) 26.47 -.65 Primary Blended Index (reflects no deduction for fees, expenses or taxes) 23.48 1.87 Secondary Blended Index (reflects no deduction for fees, expenses or taxes) 24.64 1.55 MANAGEMENT OF THE PORTFOLIO Investment Managers Subadviser Portfolio Managers Title Service Date Prudential Investments LLC Brian Ahrens Senior VP, Strategic Investment Reserach Group April 2005 AST Investment Services, Inc. Quantitative Management Associates LLC (QMA) Marcus Perl Portfolio Manager, VP of QMA July 2006 Edward L. Campbell Portfolio Manager, VP of QMA July 2006 TAX INFORMATION Contract owners should consult their Contract prospectus for information on the federal tax consequences to them. In addition, Contract owners may wish to consult with their own tax advisors as to the tax consequences of investments in the Contracts and the Portfolio, including the application of state and local taxes. The Portfolio currently intends to be treated as a partnership for federal income tax purposes. As a result, the Portfolio’s income, gains, losses, deductions, and credits are “passed through” pro rata directly to the participating insurance companies and retain the same character for federal income tax purposes. FINANCIAL INTERMEDIARY COMPENSATION If you purchase your Contract through a broker-dealer or other financial intermediary (such as a bank), the issuing insurance company, the Portfolio or their related companies may pay the intermediary for the sale of the Contract, the selection of the Portfolio and related services. These payments may create a conflict of interest by influencing the broker-dealer or other intermediary and your salesperson to recommend the Contract over another investment or insurance product, or to recommend the Portfolio over another investment option under the Contract. Ask your salesperson or visit your financial intermediary’s website for more information. 51
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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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Page 37 and 38: SUMMARY: AST ACADEMIC STRATEGIES AS
Page 39 and 40: Liquidity and valuation risk. From
Page 41 and 42: SUMMARY: AST ADVANCED STRATEGIES PO
Page 43 and 44: Short sale risk. The Portfolio’s
Page 45 and 46: SUMMARY: AST AGGRESSIVE ASSET ALLOC
Page 47 and 48: and certain bond funds (or, for one
Page 49 and 50: SUMMARY: AST ALLIANCEBERNSTEIN CORE
Page 51 and 52: Average Annual Total Returns (For t
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Page 55 and 56: SUMMARY: AST AMERICAN CENTURY INCOM
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Page 63 and 64: action based upon the relevant fact
Page 65 and 66: SUMMARY: AST BOND PORTFOLIO 2016 IN
Page 67 and 68: MANAGEMENT OF THE PORTFOLIO Investm
Page 69 and 70: government agency. While the Portfo
Page 73 and 74: Annual Total Returns 0 Best Quarter
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Page 81 and 82: government agency. While the Portfo
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Page 91 and 92: The annual returns and average annu
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Page 101 and 102: Annual Total Returns 30% 20% 10% 21
Page 103 and 104: Mid-capitalization company risk. Th
Page 105 and 106: SUMMARY: AST FIRST TRUST CAPITAL AP
Page 107 and 108: The table also demonstrates how the
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Page 111 and 112: SUMMARY: AST GOLDMAN SACHS CONCENTR
Page 115 and 116: comparable to those in the U.S, and
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Page 119 and 120: Annual Total Returns 60% 45% 33.85
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Page 123 and 124: SUMMARY: AST HORIZON GROWTH ASSET A
Page 125 and 126: Derivatives risk. A derivative is a
Page 127 and 128: SUMMARY: AST HORIZON MODERATE ASSET
Page 129 and 130: Derivatives risk. A derivative is a
Page 131 and 132: 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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Foreign investment risk. Investment
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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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Average Annual Total Returns (For t
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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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Annual Total Returns 45% 30% 15% 27
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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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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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Asset-backed securities risk. Asset
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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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■ There is a potential conflict o
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MORE DETAILED INFORMATION ON HOW TH
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AST Marsico Capital Growth AST T. R
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AST Global Real Estate Invests prim
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Global Macro (First Quadrant). This
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strategy. Second, QMA draws on its
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e classified as developed markets.
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Mortgage-Related and Other Asset-Ba
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Principal Investment Policies: The
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AST Bond Portfolio 2016 AST Bond Po
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amortizing mortgage securities offe
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■ ■ ■ ■ common stocks (incl
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AST Preservation Asset Allocation P
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4. International Value Strategy. Th
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To select the stocks for this strat
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“Dow Jones Corporate Bond Index,
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AST Global Real Estate Portfolio In
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Futures, Options and Other Derivati
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Futures, Options and Other Derivati
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not receive any payments (including
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William Blair. William Blair genera
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approach. The objective of the stra
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Growth Portfolio, the Subadviser al
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countries outside of the United Sta
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Hotchkis and Wiley normally focuses
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Special Situations. The Portfolio m
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summarized below: WEDGE normally em
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Asset-Backed Securities. The Portfo
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Other Investments: Although equity
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or profits from, emerging market co
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in value. When a Portfolio makes a
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to 10% of its total assets in fixed
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in return for a premium, one party
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Potential Conflicts: Side-by-Side M
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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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