AST BlackRock Value Portfolio - Prudential Annuities

The approximate allocations above do not take into account the potential investment of up to 5% of each First Trust Portfolio’s
assets in the “liquidity” investment sleeve.
INVESTMENT STRATEGIES FOR THE PORTFOLIOS
Dow Jones Income.
In selecting securities for this strategy, First Trust follows an investment strategy that invests in securities identified by applying
certain screens to the Dow Jones Corporate Bond Index. This strategy emphasizes high credit quality, liquidity, diversification,
issuer fundamentals, and duration management.
Step 1: Begin with the universe of bonds that comprise the Dow Jones Corporate Bond Index on or about the applicable
security selection date. The Dow Jones Corporate Bond Index identifies bonds with an investment-grade credit rating of no
less than Baa3 as rated by Moody’s Investors Service (or rated of similar quality by another rating agency).
Step 2: For liquidity, eliminate each bond that does not have at least $350 million principal amount in outstanding issuance.
Step 3: Eliminate bonds based on proprietary factors including issuer fundamentals and diversification.
Step 4: Bonds satisfying the above 3 steps are weighted across multiple sectors and maturity bands of the Dow Jones
Corporate Bond Index.
Step 5: Bonds are then selected from the Dow Jones Corporate Bond Index based on availability and relative value compared
to similar quality bonds within the investment grade universe. However, due to poor liquidity or lack of availability, “like”
bonds may be selected from the investment grade universe that are not components of the Dow Jones Corporate Bond Index.
“Like” bonds will have similar characteristics to bonds from the Dow Jones Corporate Bond Index identified by steps 1-4.
Accordingly, “like” bonds will have a similar duration, the same or better credit rating, and be from the same issuer or from a
different issuer within the same industry as the bonds from the Dow Jones Corporate Bond Index identified by steps 1-4.
In the event a bond identified by the process described above is exempted from the Dow Jones Corporate Bond Index, First Trust
may continue its investment in such bond or may identify an alternative bond from the Dow Jones Corporate Bond Index.
Each holding is monitored and evaluated for potential credit downgrades/upgrades and issue-specific business fundamentals, and
the portfolio is monitored for interest rate sensitivity through optimal duration management.
Duration may be managed through the fixed income investment process or by hedging against changes in the market value of
fixed income securities through the use of interest rate futures contracts.
NYSE ® International Target 25. The NYSE ® International Target 25 Strategy gives investors exposure to large foreign value stocks.
The equally weighted portfolio selects the 25 stocks with the best overall ranking on certain value factors (price/book and
price/cash flow). They are selected from the NYSE International 100 Index ® , which is comprised of the largest non-US stocks
traded on the New York Stock Exchange.
The NYSE ® International Target 25 Strategy stocks are selected by First Trust as follows:
Step 1: Begin with the stocks that comprise the NYSE International 100 Index ® on or about the applicable security selection
date. The NYSE International 100 Index ® consists of the 100 largest non-U.S. stocks trading on the New York Stock Exchange.
Step 2: Screen for liquidity by eliminating companies with average daily trading volume below $300,000 for the prior
three months.
Step 3: Rank each remaining stock on two equally weighted factors:
— Price to book
— Price to cash flow. Lower, but positive, price to book and price to cash flow ratios are generally used as an indication
of value.
Step 4: Construct an equally-weighted portfolio of the 25 stocks with the best overall ranking on the two factors. In the event
of a tie, the stock with the better price to book ratio is selected.
Global Dividend Target 15.
In selecting stocks for this strategy, First Trust uses a disciplined investment strategy that invests primarily in the common stocks of
the companies that are components of the Dow Jones Industrial Average SM (DJIA SM ), the Financial Times Industrial Ordinary Share
Index (“FT Index”) and the Hang Seng Index SM . The DJIA SM consists of stocks chosen by the editors of The Wall Street Journal as
representative of the broad market and of American industry. The FT Index is comprised of 30 stocks chosen by the editors of The
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