AST BlackRock Value Portfolio - Prudential Annuities

Generally, this Portfolio segment will invest primarily in common stocks of established companies listed on foreign securities
exchanges, but it may also invest in securities traded over-the-counter. Although this investment strategy will emphasize larger,
more seasoned or established companies, TS&W may invest in companies of varying size as measured by assets, sales, or market
capitalization. This segment of the Portfolio will invest primarily in securities of companies domiciled in developed countries, but
may also invest in emerging markets. Up to 10% of the assets attributable to this investment strategy may be invested in securities
of companies in developing countries. It is currently expected that investments will be diversified throughout the world and within
markets in an effort to minimize specific country and currency risks.
TS&W employs a relative value process utilizing a combination of quantitative and qualitative methods based on a four-factor
valuation screen designed to outperform the Morgan Stanley Capital International EAFE Index. The initial universe consists of
approximately 3,000 actively traded non-U.S. stocks. Parts one and two of the screen attempt to assess a company’s attractiveness
based on cash flows relative to other international stocks and as compared to their industry or sector peers. The third factor
considers the relative earnings prospects of the company. The fourth factor involves looking at the company’s recent price action.
From the model, approximately 600 stocks are identified for further research. These are the stocks that rank the highest on the
basis of these four factors combined. TS&W generally limits its investment universe to those companies with a minimum of three
years of operating history.
TS&W’s analysts also perform rigorous fundamental analysis, exploring numerous factors that may affect the outlook for a
company. They evaluate publicly available information, including sell-side research, company filings, and trade periodicals. TS&W
analysts also may speak with company management to hear their perspectives and outlook on pertinent business issues. Under
normal circumstances, this Portfolio segment will hold approximately 80-100 stocks as a result of this process.
Established positions within this segment of the Portfolio are ranked bi-weekly and are reviewed regularly in the same manner to
re-examine their fundamental and valuation characteristics. The product team meets periodically to discuss each stock’s place in
relation to this segment’s other portfolio holdings. TS&W employs a consistent sell discipline which includes a significant negative
earnings revision, a stock being sold when the catalyst is no longer valid, or another stock presents a more attractive opportunity.
Core Plus Fixed-Income (Bradford & Marzec). The Bradford & Marzec portfolio management team will primarily employ a
combination of top-down sector rotation, bottom-up fundamental and technical analysis for issuer and security selection, and
yield curve duration management in an attempt to outperform the Barclays Capital US Aggregate Bond Index (the “Barclays
Aggregate Bond Index”). The Barclays Aggregate Bond Index includes the majority investment grade asset classes within the US
fixed income market. Exposure to additional sectors such as international and high yield bonds will be added opportunistically by
Bradford & Marzec when it believes that the market environment favors these sectors.
Overall, the assets attributable to this investment strategy will be invested primarily in fixed-income securities, with between
approximately 150-250 holdings. In particular, this Portfolio segment may invest up to 20% of its assets in debt securities that are
rated, at the time of purchase, below investment grade, but at least B-/B3, or if unrated, are determined by Bradford & Marzec to
be of comparable quality. In addition, up to 20% of the total assets attributable to this investment strategy may be invested in the
securities of non-U.S. issuers and/or in non-U.S. dollar-denominated securities.
Core Fixed-Income (C.S. McKee). The C.S. McKee portfolio management team will employ a primarily bottom-up, value-driven
philosophy in an attempt to outperform the Barclays Aggregate Bond Index. This actively managed process will focus on high
quality and highly liquid securities, in an attempt to add value through superior security selection and sector allocation. Portfolio
duration (i.e., interest rate risk) will typically be held below market levels.
Liquidity Strategy (PI). The Portfolio will normally invest approximately 2% to 3% of its assets in the Prudential Core Taxable
Money Market Fund (the Prudential Core Fund) in order to provide liquidity and to satisfy redemptions. The Prudential Core Fund
is managed in compliance with regulations applicable to money market mutual funds, specifically, Rule 2a-7 under the
Investment Company Act of 1940, as amended. The investment objective of the Prudential Core Fund is current income consistent
with the preservation of capital and the maintenance of liquidity. The Prudential Core Fund invests in a diversified portfolio of
short-term debt obligations issued by the U.S. Government, its agencies and instrumentalities, as well as commercial paper,
asset-backed securities, funding agreements, variable rate demand notes, bills, notes and other obligations issued by banks,
corporations and other companies (including trust structures), obligations issued by foreign banks, companies or foreign
governments, and municipal bonds and notes. The Prudential Core Fund invests in high-quality money market obligations to try to
provide investors with current income while maintaining a stable NAV of $1 per share.
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