AST BlackRock Value Portfolio - Prudential Annuities

BlackRock may use derivatives, including options, futures, indexed securities, inverse securities, swaps and forward contracts both
to seek to increase returns or to hedge (or protect) the value of the Portfolio’s assets against adverse movements in currency
exchange rates, interest rates and movements in the securities markets. BlackRock may enter into currency transactions on a
hedged or unhedged basis in order to seek total return. BlackRock may, when consistent with the Portfolio’s investment objective,
buy or sell options or futures on a security or an index of securities and may buy options on a currency or a basket of currencies,
or enter into foreign currency transactions, including swaps. BlackRock may also use forward foreign currency exchange
contracts, which are obligations to buy or sell a currency at a pre-determined rate in the future. Derivatives are financial
instruments whose value is derived from another security, a commodity (such as oil or gas), a currency or an index such as the
S&P 500 Index. The use of options, futures, indexed securities, inverse securities, swaps and forward contracts can be effective in
protecting or enhancing the value of the assets of the Portfolio.
The investment process used by the relevant BlackRock portfolio management team seeks to identify and exploit diverse sources
of inefficiency by applying a combination of stock-specific analysis, and top-down economic research, across the equity universe
and macro-economic environment. In addition to the BlackRock portfolio managers, individual stock research is conducted by
global sector, and country, specialists seeking to identify stocks with the following characteristics: (i) sustainable business model;
(ii) strong financial position; and (iii) above average dividends.
INFLATION-LINKED BONDS. Under normal circumstances, BlackRock invests at least 80% of the assets attributable to this
investment strategy in inflation-indexed bonds of varying maturities issued by the U.S. and non-U.S. governments, their agencies
or instrumentalities, and U.S. and non-U.S. corporations. The U.S. Treasury uses the Consumer Price Index for Urban Consumers
as its inflation measure. Inflation-indexed bonds issued by a foreign government are generally adjusted to reflect a comparable
inflation index, calculated by that government. Maturity is the date upon which debt securities are due to be repaid, that is, the
date when the issuer generally must pay back the face amount of the security. The value of a bond’s principal or the interest
income paid on the bond is adjusted to track changes in an official inflation measure.
This portfolio segment generally maintains an average portfolio duration that is within ±20% of the duration of the Barclays
Capital Global Real U.S. TIPS Index. Duration is a mathematical calculation of the average life of a bond (or bonds in a bond
fund) that serves as a useful measure of its price risk. Each year of duration represents an expected 1% change in the net asset
value of a bond fund for every 1% immediate change in interest rates. For example, if a bond fund has an average duration of four
years, its net asset value will fall about 4% when interest rates rise by one percentage point. Conversely, the bond fund’s net asset
value will rise about 4% when interest rates fall by one percentage point. Duration, which measures price sensitivity to interest
rate changes, is not necessarily equal to average maturity.
BlackRock may invest up to 20% of the assets attributable to this investment category in non-investment grade bonds (also referred
to as “junk bonds” or “high yield bonds”) or securities of emerging market issuers. Non-investment grade bonds acquired by this
segment of the Portfolio will generally be in the lower rating categories of the major rating agencies (BB or lower by Standard &
Poor’s Ratings Services (“S&P”) or Ba or lower by Moody’s Investors Service, Inc. (“Moody’s”)) or will be determined by the
management team to be of similar quality. Split rated bonds will be considered to have the higher credit rating. Split rated bonds
are bonds that receive different ratings from two or more rating agencies.
Up to 20% of the assets attributable to this portfolio segment may be invested in non-dollar denominated securities of
non-U.S. issuers. The BlackRock portfolio managers responsible for implementing this investment strategy may invest without limit
in U.S. dollar denominated securities of non-U.S. issuers and may concentrate the assets of this portfolio segment in a relatively
small number of issuers.
The BlackRock portfolio management team for this portfolio segment may also make investments in residential and commercial
mortgage-backed securities and other asset-backed securities. Asset-backed securities are bonds that are backed by a pool of
assets, usually loans such as installment sale contracts or credit card receivables. Mortgage-backed securities are asset-backed
securities based on a particular type of asset, a mortgage. There is a wide variety of mortgage backed securities involving
commercial or residential, fixed rate or adjustable rate mortgages and mortgages issued by banks or government agencies.
The BlackRock portfolio managers responsible for implementing this investment strategy may buy or sell options or futures, or
enter into credit default swaps and interest rate or foreign currency transactions (collectively, derivatives). In entering into a credit
default swap, one party would pay a counterparty a periodic stream of payments over the term of the contract, provided that no
event of default on a specific bond has occurred. In return, upon any event of default on such bond, the first party would receive
from the counterparty a payment equal to the par (or other agreed-upon) value of such bond. The BlackRock portfolio
management team may also seek to obtain market exposure to the securities in which this portfolio segment primarily invests by
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