AST BlackRock Value Portfolio - Prudential Annuities

Under normal circumstances, PIMCO invests at least 80% of the net assets attributable to this investment category in fixed-income
instruments of issuers located outside the United States, representing at least three foreign countries, which may be represented by
forwards or derivatives such as options, futures contracts, or swap agreements. Foreign currency exposure (from
non-U.S. dollar-denominated securities or currencies) normally will be limited to 20% of the Portfolio’s total assets directly
managed by PIMCO in an effort to reduce the risk of loss due to fluctuations in currency exchange rates.
PIMCO selects the foreign country and currency compositions for each sub-category based upon its evaluation of various factors,
including, but not limited to, relative interest rates, exchange rates, monetary and fiscal policies, trade and current account
balances. The average portfolio duration for securities held in this investment category normally is expected to vary within a zeroto
eight-year time frame. PIMCO may invest all of the assets attributable to this investment category in non-investment grade
fixed-income securities, subject to a limit of investing no more than 15% of such total assets in securities rated below B by
Moody’s or by S&P, or Fitch, or, if unrated, determined by PIMCO to be of comparable quality. Up to 10% of the total assets
attributable to this investment category may be invested in preferred stock.
Description of Non-Traditional Investment Categories and Sub-categories. The investment categories and sub-categories for
which the PIMCO and PI pursues non-traditional investment strategies include the following:
Advanced Strategies
Commodities Real Return sub-category
Real Return sub-category
Real Estate Real Return sub-category
Advanced Strategies II
Brief descriptions of the investment strategies used by PIMCO and PI are set forth below:
Advanced Strategies I: The Advanced Strategies I investment category contains a Commodities Real Return sub-category, a Real
Return sub-category, and a Real Estate Real Return sub-category. PI directs PIMCO how to allocate assets among the Commodities
Real Return sub-category, the Real Return sub-category, and the Real Estate Real Return sub-category based upon PI’s own
forward-looking assessment of macroeconomic, market, financial, security valuation, and other factors.
The average portfolio duration for securities held in this investment category normally varies within three years (plus or minus) of
the real duration of the Barclays Capital U.S. TIPS Index. For these purposes, in calculating the average portfolio duration for this
investment category, PIMCO includes the real duration of inflation-indexed portfolio securities and the nominal duration of
non-inflation-indexed portfolio securities. The assets attributable to this investment category may be invested in a limited number
of issuers. Up to 10% of the total assets attributable to this investment category may be invested in preferred stock.
Advanced Strategies I: Commodities Real Return Sub-category (PIMCO). Rather than invest directly in physical commodities,
PIMCO employs an “enhanced-index” strategy for this sub-category. Specifically, PIMCO uses commodity-index-linked derivative
instruments, such as commodity swap agreements, with a goal of gaining 100% exposure to the investment return of the Dow
Jones AIG Commodity Total Return Index, a widely followed measure of commodity prices. Assets not invested in
commodity-linked derivative instruments may be invested in inflation-indexed securities and other fixed-income instruments,
including derivative fixed-income instruments. Inflation-indexed bonds offer a return that is linked to changes in the rate of
inflation. The Portfolio’s investments in commodity-linked derivative instruments may subject the Portfolio to greater volatility than
investments in traditional securities. The value of commodity-linked derivative instruments may be affected by changes in overall
market movements, commodity index volatility, changes in interest rates, or factors affecting a particular industry or commodity,
such as drought, floods, weather, acts of terrorism, livestock disease, embargoes, tariffs, and international economic, political and
regulatory developments.
Advanced Strategies I: Real Return Sub-category (PIMCO). This sub-category focuses primarily on investments in U.S. Treasury
Inflation Protected Securities. The top-down investment process used by PIMCO for this sub-category begins with its annual
secular forum where PIMCO develops a 3-5 year outlook for the global economy and interest rates. This analysis helps set the
basic sub-category parameters, including duration, yield-curve positioning, sector weightings, credit quality breakdown, and
individual security selection. PIMCO focuses on duration management to manage yield curve exposure based on the firm’s
general investment outlook.
Advanced Strategies I: Real Estate Real Return Sub-category (PIMCO). Similar to the investment strategy for the Commodities Real
Return sub-category, PIMCO employs an enhanced-index strategy for the Real Estate Real Return sub-category rather than invest
directly in REITs. Specifically, PIMCO uses REIT-index-linked derivative instruments, such as REIT swap agreements, with a goal of
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