Variable Annuity Investment Options

Transcription

1 Variable Annuity Investment Options This material must be accompanied by an Advanced Series SM variable annuity product prospectus and the applicable variable annuity summary card. IFS-A ED. 12/2008

2 Table of Contents The Importance of Asset Allocation. 1 The Prudential Advantage. 2 Turnkey Asset Allocation Options. 3 Traditional Asset Allocation. 6 >> AST Aggressive Asset Allocation Portfolio >> AST Capital Growth Asset Allocation Portfolio >> Franklin Templeton VIP Founding Funds Allocation Fund >> AST Balanced Asset Allocation Portfolio >> AST T. Rowe Price Asset Allocation Portfolio >> AST Preservation Asset Allocation Portfolio Tactical Asset Allocation. 8 >> AST Niemann Capital Growth Asset Allocation Portfolio >> AST Horizon Growth Asset Allocation Portfolio >> AST CLS Growth Asset Allocation Portfolio >> AST Horizon Moderate Asset Allocation Portfolio >> AST CLS Moderate Asset Allocation Portfolio Quantitative Asset Allocation. 10 >> AST First Trust Capital Appreciation Target Portfolio >> AST Focus Four Plus Portfolio >> AST First Trust Balanced Target Portfolio Alternative Asset Allocation. 12 >> AST Academic Strategies Asset Allocation Portfolio >> AST Advanced Strategies Portfolio >> AST Schroders Multi-Asset World Strategies Portfolio >> AST UBS Dynamic Alpha Portfolio Individual Investment Options. 14 Asset Allocation Portfolios Questionnaire. 16 Important Information. 19

3 The Importance of Asset Allocation You ve chosen Prudential Annuities SM as part of your financial plan. Now, select the right asset allocation options to help you reach your goals. Asset allocation diversifying your investments among different asset classes is an important part of long-term investing. In fact, asset allocation has been shown to have great influence on investment performance and is one of the most essential investment decisions you can make. Historically, asset classes stocks, bonds, and cash take turns outperforming each other. By owning a mix of different-performing asset classes, you may help to lessen market volatility in your overall portfolio and may increase your return potential over time. In addition, Prudential Annuities provides you with options to diversify further with non-traditional asset classes. Non-traditional assets like commodities or TIPS (Treasury Inflation-Protected Securities) don t necessarily move in step with stocks and bonds. It s why some top university endowments and institutional investors use them to seek returns and manage risk.* While asset allocation with traditional and non-traditional assets is a sensible way to balance investment risk and reward, it does not assure a profit or protect against a loss. Investment flexibility with: A wide range of options, including traditional and non-traditional strategies, with world-class managers The opportunity to customize a portfolio to your risk/return profile Asset allocation and you How you allocate your assets depends on how you answer some basic questions, such as: How long until you need the money? How comfortable are you with risk? How much money do you ultimately need? By teaming with your financial professional to complete the Asset Allocation Portfolios Questionnaire (on page 16), you ll learn what options are most suitable for helping you achieve your personal financial goals. Two ways to help you get there There are two basic ways to invest your assets. Working with your financial professional, you can: 1. Choose one or a combination of turnkey asset allocation portfolios for built-in diversification to suit your goals, risk comfort level and investment time horizon. These portfolios also offer rebalancing to help ensure that your money remains on track with your investment plan. 2. Create your own portfolio choosing from among more than 100 individual investment options from over 30 world-class investment managers. * For Yale s Money Man, a Higher Calling, Geraldine Fabrikant, February 18,

4 The Prudential Advantage A thorough and tested process to identify investment managers and portfolios with proven potential Prudential can leverage multiple resources to find investment managers with notable experience in specific disciplines and portfolios with growth potential. With 40+ professionals with experience in the traditional and non-traditional asset management arenas, Prudential is dedicated to seeking performance through a disciplined process spanning the entire investment management landscape. Each of the investment firms responsible for managing variable annuity investment options is rigorously researched and monitored by a team of experienced analysts. A key contributor to the process is Prudential Investments LLC (PI). The PI team has over 30 years of experience conducting research and analysis on managers for institutions, foundations and endowments. Manager Evaluation: Rigorous research 40+ professionals 30+ years of experience Today, PI conducts more than 250 investment manager interviews per year and performs due diligence for 12 hedge fund-of-fund strategies for its Wealth Management Solutions business unit. The PI team consists of more than 14 analysts, with an average of more than 15 years of investment experience. The investment credentials for team members include CFA (Chartered Financial Analyst), CAIA (Chartered Alternative Investment Analysts), MBA s and CIMA (Chartered Institute of Management Accountants). MANAGER 10-ATTRIBUTE EVALUATION MODEL Process n Quality of investment process and implementation n Quality and utilization of research and judgement People n Investment team talent, experience and quality n Team stability and motivation to succeed n Team experience in working together PEOPLE PROCESS VARIABLE ANNUITY INVESTMENT OPTION PERFORMANCE Performance n Consistent performance n Proven trading skills Operations n Sound management and ownership structure n Responsive client service O PER ATIO NS CO M PLIA N CE Compliance n Demonstrated commitment to ethical practices PI uses a consistent process for investment manager evaluation. The process allows them to search for and hire tomorrow s industry-leading managers and to terminate underperformers. The process involves subcomponent criteria that roll up to a 10-Attribute Evaluation Model. The PI model utilizes quantitative and qualitative measures to screen, identify, and monitor each manager being considered for use as an Advanced Series Trust (AST) investment option in connection with a Prudential Annuities variable annuity. 2

5 Turnkey Asset Allocation Options An offering of strategies, risk-return characteristics and world-class managers you won t find anywhere else How can Prudential Annuities asset allocation options best help you attain your personal financial goals in today s ever-changing market environment? Consider the strategies employed by different options. To help manage investment risk and increase your potential for positive returns, Prudential Annuities offers 18 turnkey asset allocation portfolios spanning four investment strategies: n Traditional n Tactical n Quantitative n Alternative Descriptions of each of these four investment strategies with complete listings of the portfolios are outlined on pages 4 and 5. Understanding how these different strategies impact the management of these turnkey options is key to making educated investment option choices. investment options: 18 turnkey allocation options 4 diverse investment strategies A broad spectrum of potential risk-return characteristics Beyond differences in strategies, each turnkey portfolio has been constructed with its own set of potential investment risk and return characteristics. This presents a wide array of options for you and your financial professional to consider. You and your financial professional may determine that one or more of the turnkey portfolios may be appropriate for you. Each of the 18 portfolios has been constructed with the goal of being highly efficient. However, Prudential Annuities also allows you and your financial professional to blend your own combination of portfolios to build a customized portfolio. If appropriate for your needs, a customized portfolio can combine strategies to gain desired exposure to different asset classes and different management styles. POTENTIAL RETURN (%) AST AGGRESSIVE AST FT CAPITAL APPRECIATION TARGET AST CAPITAL GROWTH FRANKLIN TEMPLETON VIP AST FOCUS FOUR PLUS AST NIEMANN CAPITAL GROWTH AST HORIZON GROWTH AST CLS GROWTH AST Academic Strategies AST FT BALANCED TARGET AST ADVANCED STRATEGIES AST BALANCED AST T. ROWE PRICE AST HORIZON MODERATE AST CLS MODERATE AST Schroders multi-asset AST UBS DYNAMIC ALPHA AST PRESERVATION traditional strategies TACTICAL STRATEGIES QUANTITATIVE STRATEGIES ALTERNATIVE STRATEGIES POTENTIAL RISK (%) This illustration is hypothetical and is based on how we might expect these portfolios to perform over time, based on their risk and return characteristics as measured by standard deviation. Please note that past performance is not indicative of future results. 3

6 Take Advantage of Four Diverse Strategies TRADITIONAL Traditional asset allocation offers an active management style based on longer-term views of capital markets. n Multi-Manager & Single Manager n Stocks & Bonds n Domestic & International TACTICAL Tactical asset allocation offers an active management style based on shorter-term views of capital markets. n Active Asset Allocation Management n Multi-Manager n Traditional Asset Classes & Exchange- Traded Funds >> AST Aggressive Asset Allocation Portfolio* >> AST Capital Growth Asset Allocation Portfolio >> Franklin Templeton VIP Founding Funds Allocation Fund >> AST Balanced Asset Allocation Portfolio >> AST T. Rowe Price Asset Allocation Portfolio >> AST Preservation Asset Allocation Portfolio MORE AGGRESSIVE MORE CONSERVATIVE >> AST Niemann Capital Growth Asset Allocation Portfolio >> AST Horizon Growth Asset Allocation Portfolio >> AST CLS Growth Asset Allocation Portfolio >> AST Horizon Moderate Asset Allocation Portfolio >> AST CLS Moderate Asset Allocation Portfolio MORE AGGRESSIVE MORE CONSERVATIVE * Please note that you may not select the AST Aggressive Asset Allocation Portfolio with certain optional benefits. Please see the annuity prospectus for additional details. 4

7 With Prudential Annuities, you and your financial professional can choose from 18 turnkey asset allocation options spanning four investment strategies: Traditional, Tactical, Quantitative, and Alternative. This comprehensive offering provides not only different and potentially complementary investment strategies, but also a wide range of potential risk-return characteristics. QUANTITATIVE Quantitative asset allocation offers a disciplined, quantitative approach to portfolio management. n Defined Mathematical Models n Market Index-Based n Removes Human Emotion from Process ALTERNATIVE Alternative asset allocation offers concepts used by some top university endowment fund managers. n Traditional & Non-Traditional Asset Classes (Domestic/Global Real Estate, Emerging Markets Debt, TIPS, Commodities, Private Equity, Currency) n Absolute Return Focus n Long & Short Positions >> AST First Trust Capital Appreciation Target Portfolio >> AST Focus Four Plus Portfolio >> AST First Trust Balanced Target Portfolio MORE AGGRESSIVE MORE CONSERVATIVE >> AST Academic Strategies Asset Allocation Portfolio >> AST Advanced Strategies Portfolio >> AST Schroders Multi-Asset World Strategies Portfolio >> AST UBS Dynamic Alpha Portfolio MORE AGGRESSIVE MORE CONSERVATIVE 5

8 Traditional Asset Allocation Within the traditional asset allocation strategy, Prudential Annuities offers your clients portfolios that are multi-managed Dynamic Asset Allocation Portfolios, and those that are managed by a single manager Franklin Templeton VIP Founding Funds Allocation Fund and AST T. Rowe Price Asset Allocation Portfolio. Multi-Manager Portfolios The investment objective of each Dynamic Asset Allocation Portfolio is to obtain the highest potential total return consistent with its specified level of risk tolerance. The Aggressive Portfolio has the highest risk tolerance while the Preservation Portfolio has the lowest risk tolerance. Each Dynamic Asset Allocation Portfolio is a fund of funds, which means that it invests primarily in one or more investment options on the Prudential Annuities investment platform. The investment in other investment options provides exposure to hundreds of securities across the equity and debt asset classes. Quantitative Management Associates LLC is primarily responsible for the strategic asset allocation and day-to-day management for these Portfolios. Prudential Investments LLC is primarily responsible for selecting weighted combinations of investment options. Single Manager Portfolios Franklin Templeton VIP Founding Funds Allocation Fund is managed by Franklin Templeton Investments, which is a global investment management organization AST Aggressive Asset Allocation Portfolio* 99.50% Equities 0.50% Fixed Income Multi-Manager Large-Cap Growth / 39.90% AST Marsico Capital Growth/23.80% AST T. Rowe Price Large-Cap Growth/15.80% AST MFS Growth/0.30% Large-Cap Value / 29.50% AST Large-Cap Value/14.40% AST AllianceBernstein Growth & Income/14.90% AST DeAm Large-Cap Value/0.20% Mid-Cap Growth / 1.20% AST Neuberger Berman Mid-Cap Growth Mid-Cap Value / 1.00% AST Mid-Cap Value Small-Cap Growth / 2.00% AST Federated Aggressive Growth Small-Cap Value / 1.70% AST Small-Cap Value Specialty / 5.70% AST T. Rowe Price Natural Resources/4.10% AST Global Real Estate/1.60% International Growth / 9.30% AST International Growth International Value / 7.40% AST International Value International Emerging Markets / 1.80% AST Parametric Emerging Markets Equity Cash / 0.50% * Please note that you may not select the AST Aggressive Asset Allocation Portfolio with certain optional benefits. Please see the annuity prospectus for additional details. AST Capital Growth Asset Allocation Portfolio 77.10% Equities 22.90% Fixed Income Multi-Manager Large-Cap Growth / 30.50% AST Marsico Capital Growth / 17.80% AST T. Rowe Price Large-Cap Growth / 12.00% AST MFS Growth / 0.70% Large-Cap Value / 23.00% AST Large-Cap Value / 11.10% AST AllianceBernstein Growth & Income / 11.40% AST DeAm Large-Cap Value / 0.50% Mid-Cap Growth / 1.00% AST Neuberger Berman Mid-Cap Growth Mid-Cap Value / 0.80% AST Mid-Cap Value Small-Cap Growth / 1.60% AST Federated Aggressive Growth Small-Cap Value / 1.00% AST Small-Cap Value Specialty / 4.90% AST T. Rowe Price Natural Resources / 3.70% AST Global Real Estate / 1.20% International Growth / 7.20% AST International Growth International Value / 5.70% AST International Value International Emerging Markets / 1.40% AST Parametric Emerging Markets Equity Core Bonds / 18.30% AST PIMCO Total Return Bond / 17.80% AST Western Asset Core Plus Bond / 0.50% High Yield Bonds / 0.50% AST High Yield Cash / 4.10% Franklin Templeton VIP Founding Funds Allocation Fund 76.37% Equities 23.63% Fixed Income Single Manager Franklin Income Securities Fund / 33.33% Focuses on undervalued dividend-paying stocks and bonds across a variety of industries. Templeton Growth Securities Fund / 33.33% Seeks to invest primarily in undervalued stocks and, to a lesser extent, distressed securities and merger arbitrage. Mutual Shares Securities Fund / 33.33% Searches worldwide for stocks selling at low prices relative to managers appraisal of value. 6

9 comprised of world-class investment management groups Franklin, Templeton and Mutual Series each operating autonomously and offering their investment perspectives. This fund combines three portfolios each run independently by the three management groups to create a portfolio offering diversification across multiple asset classes and the potential for attractive, long-term results. The allocation is monitored and automatically rebalanced to adapt to market movements to help maintain equal exposure to the distinct investment strategies in any market environment. AST T. Rowe Price Asset Allocation Portfolio provides a diversified investment within one portfolio by using a risk-controlled asset allocation process with a long-term approach as its foundation. Each underlying investment style in the portfolio offers strict adherence to its respective style throughout market cycles with the objective of offering solid performance relative to its benchmark and peers. The underlying baskets of securities are actively managed in each asset class. The asset allocation decisions are based on a long-term investment time horizon with strategic and measured re-allocations at 6- to 18-month intervals to allow themes to materialize. The composition of the four Dynamic Asset Allocation Portfolios, the Franklin Templeton VIP Founding Funds Allocation Fund and the T. Rowe Price Asset Allocation Portfolio is as of June 30, Portfolio composition can change without notice at any time in response to market conditions. AST Balanced Asset Allocation Portfolio 56.70% Equities 43.30% Fixed Income Multi-Manager Effective July 21, 2008, the name and asset allocation mix of the portfolio have changed. Prior to July 21, 2008, the portfolio was known as the AST Conservative Asset Allocation Portfolio. Large-Cap Growth / 22.40% AST Marsico Capital Growth/12.90% AST T. Rowe Price Large-Cap Growth/8.50% AST MFS Growth/1.00% Large-Cap Value / 17.00% AST Large-Cap Value/7.90% AST AllianceBernstein Growth & Income/8.00% AST DeAm Large-Cap Value/1.10% Mid-Cap Growth / 0.70% AST Neuberger Berman Mid-Cap Growth Mid-Cap Value / 0.60% AST Mid-Cap Value Small-Cap Growth / 1.10% AST Federated Aggressive Growth Small-Cap Value / 0.90% AST Small-Cap Value Specialty / 3.50% AST T. Rowe Price Natural Resources/2.60% AST Global Real Estate/0.90% International Growth / 5.30% AST International Growth International Value / 4.20% AST International Value International Emerging Markets / 1.00% AST Parametric Emerging Markets Equity Core Bonds / 41.00% AST PIMCO Total Return Bond/32.70% AST Western Asset Core Plus Bond /8.30% Global Bonds / 1.10% AST T. Rowe Price Global Bond High Yield Bonds / 0.60% AST High Yield Cash / 0.60% AST T. Rowe Price Asset Allocation Portfolio 64.30% Equities 35.70% Fixed Income Single Manager U.S. Large-Cap Equities / 48.60% U.S. Small-Cap Equities / 3.00% International Equities / 12.70% Investment Grade Fixed Income / 33.20% High Yield Fixed Income / 2.40% Cash / 0.10% AST Preservation Asset Allocation Portfolio 36.70% Equities 63.30% Fixed Income Multi-Manager Large-Cap Growth / 14.50% AST Marsico Capital Growth/8.10% AST T. Rowe Price Large-Cap Growth/5.40% AST MFS Growth/1.00% Large-Cap Value / 10.90% AST Large-Cap Value/4.90% AST AllianceBernstein Growth & Income/5.10% AST DeAm Large-Cap Value/0.90% Mid-Cap Growth / 0.60% AST Neuberger Berman Mid-Cap Growth Mid-Cap Value / 0.40% AST Mid-Cap Value Small-Cap Growth / 0.70% AST Federated Aggressive Growth Small-Cap Value / 0.60% AST Small-Cap Value Specialty / 2.30% AST T. Rowe Price Natural Resources/1.70% AST Global Real Estate/0.60% International Growth / 3.40% AST International Growth International Value / 2.70% AST International Value International Emerging Markets / 0.60% AST Parametric Emerging Markets Equity Core Bonds / 60.00% AST PIMCO Total Return Bond/48.00% AST Western Asset Core Plus Bond/12.00% Global Bonds / 1.70% AST T. Rowe Price Global Bond High Yield Bonds / 0.80% AST High Yield Cash / 0.80% 7

10 Tactical Asset Allocation Tactical asset allocation portfolios employ active management styles and provide asset allocation based on shorter-term views of capital markets. They look to capture potential performance everywhere in the markets by investing in traditional asset classes and ETFs to overweight or gain exposure to specific investment themes. Prudential Annuities has three experienced boutique management firms to provide strategic asset allocation and select ETFs for its tactical allocation portfolios. Niemann Capital Management (Niemann) Niemann seeks to identify the best risk/reward relationships currently at work within the market. They increase or decrease their exposures in positions based on the analysis of current market conditions with capital preservation as the cornerstone of their methodology. Niemann s daily analytical process may allow them to take advantage of thematic opportunities in the markets when they present themselves, and uncover positive trending themes. AST Niemann Capital Growth Asset Allocation Portfolio 69.40% Equities 30.60% Fixed Income AST Horizon Growth Asset Allocation Portfolio 71.30% Equities 28.70% Fixed Income Large-Cap Growth / 36.60% Large-Cap Value / 14.50% Mid-Cap Growth / 1.30% Mid-Cap Value / 0.50% Small-Cap Growth / 6.50% Small-Cap Value / 0.40% International Growth / 1.90% Core Bonds / 10.10% Cash / 20.50% ETFs / 7.70% Large-Cap Growth / 24.10% Large-Cap Value / 14.50% Mid-Cap Growth / 0.80% Mid-Cap Value / 0.50% Small-Cap Growth / 3.30% Small-Cap Value / 3.00% International Growth / 8.70% International Value / 7.30% Core Bonds / 22.80% Cash / 5.90% ETFs / 9.10% AST Marsico Capital Growth/16.80% AST T. Rowe Price Large-Cap Growth/11.60% AST MFS Growth/8.20% AST Large-Cap Value/6.40% AST AllianceBernstein Growth & Income/6.50% AST DeAm Large-Cap Value/1.60% AST Neuberger Berman Mid-Cap Growth AST Mid-Cap Value AST Federated Aggressive Growth AST Small-Cap Value AST International Growth AST PIMCO Total Return/8.10% AST Western Asset Core Plus Bond/2.00% AST Money Market ipath DJ AIG Commodity Index/1.00% ishares DowJones US Basic Materials/2.10% ishares MSCI Brazil/2.10% Oil Services/1.50% SPDR S&P Metals & Mining/1.00% AST Marsico Capital Growth/11.60% AST T. Rowe Price Large-Cap Growth/8.00% AST MFS Growth/4.50% AST Large-Cap Value/6.30% AST AllianceBernstein Growth & Income/6.40% AST DeAm Large-Cap Value/1.80% AST Neuberger Berman Mid-Cap Growth AST Mid-Cap Value AST Federated Aggressive Growth AST Small-Cap Value AST International Growth AST International Value AST PIMCO Total Return/18.20% AST Western Asset Core Plus Bond/4.60% AST Money Market ishares MSCI Emerging Markets/2.70% ishares S&P MidCap 400/3.40% Powershares QQQ/1.80% Powershares CleanTech/1.20% AST CLS Growth Asset Allocation Portfolio 79.50% Equities 20.50% Fixed Income 8 Large-Cap Growth / 22.50% AST Marsico Capital Growth/10.70% AST T. Rowe Price Large-Cap Growth/7.40% AST MFS Growth/4.40% Large-Cap Value / 22.80% AST Large-Cap Value/8.60% AST AllianceBernstein Growth & Income/8.70% AST DeAm Large-Cap Value/5.50% Mid-Cap Growth / 0.80% AST Neuberger Berman Mid-Cap Growth Mid-Cap Value / 0.80% AST Mid-Cap Value Small-Cap Growth / 3.00% AST Federated Aggressive Growth International Growth / 12.10% AST International Growth International Value / 7.80% AST International Value Core Bonds / 10.40% AST PIMCO Total Return/8.30% AST Western Asset Core Plus Bond/2.10% Cash / 10.10% AST Money Market ETFs / 9.70% ishares MSCI Emerging Markets/3.00% ipath DJ AIG Commodity Index/1.30% ishares S&P Global Technology/3.40% ishares S&P Latin America 40/2.00%

11 Horizon Investments, LLC (Horizon) Horizon uses academic research and forecasting models from leading U.S. universities when constructing portfolios. They shift the asset mix of a portfolio in response to changing market conditions by overweighting, underweighting, or avoiding trends in the global capital markets. They attempt to invest in market leadership while avoiding market laggards, and seek to anticipate market movements by watching and measuring the market fundamentals. Horizon s risk monitoring approach organizes the investing periods in short increments and provides the framework for forecasting on market dynamics, event risk, and return objectives. CLS Investment Firm, LLC (CLS) CLS believes risk budgeting is critical in creating portfolios because it can help to manage the overall level of risk within the portfolio. Rather than viewing risk in a traditional way with stocks being more risky than bonds, CLS views risk on a continuum, allowing them the opportunity to capitalize on areas of growth while maintaining a consistent level of risk. As market conditions change and the risk associated with the holdings in the portfolio vary, CLS will adjust the allocations to help keep the risk level constant while seeking opportunities to outperform the market. The composition of the portfolios is as of June 30, Their composition can change without notice at any time in response to market conditions. AST Horizon Moderate Asset Allocation Portfolio 56.40% Equities 43.60% Fixed Income Large-Cap Growth / 18.90% Large-Cap Value / 10.80% Mid-Cap Growth / 0.60% Mid-Cap Value / 0.40% Small-Cap Growth / 2.60% Small-Cap Value / 2.60% International Growth / 6.20% International Value / 5.30% Core Bonds / 36.30% Cash / 7.30% ETFs / 9.00% AST Marsico Capital Growth/8.90% AST T. Rowe Price Large-Cap Growth/6.20% AST MFS Growth/3.80% AST Large-Cap Value/4.90% AST AllianceBernstein Growth & Income/5.00% AST DeAm Large-Cap Value/0.90% AST Neuberger Berman Mid-Cap Growth AST Mid-Cap Value AST Federated Aggressive Growth AST Small-Cap Value AST International Growth AST International Value AST PIMCO Total Return/29.00% AST Western Asset Core Plus Bond/7.30% AST Money Market ishares MSCI Emerging Markets/2.30% ishares S&P MidCap 400/3.20% Powershares QQQ/1.80% Powershares CleanTech/1.70% AST CLS Moderate Asset Allocation Portfolio 59.40% Equities 40.60% Fixed Income Large-Cap Growth / 17.20% Large-Cap Value / 14.40% Mid-Cap Growth / 0.60% Mid-Cap Value / 0.50% Small-Cap Growth / 3.00% International Growth / 9.00% International Value / 5.00% Core Bonds / 20.80% Cash / 19.80% ETFs / 9.70% AST Marsico Capital Growth/8.00% AST T. Rowe Price Large-Cap Growth/5.50% AST MFS Growth/3.70% AST Large-Cap Value/5.40% AST AllianceBernstein Growth & Income/5.50% AST DeAm Large-Cap Value/3.50% AST Neuberger Berman Mid-Cap Growth AST Mid-Cap Value AST Federated Aggressive Growth AST International Growth AST International Value AST PIMCO Total Return/16.60% AST Western Asset Core Plus Bond/4.20% AST Money Market ishares MSCI Emerging Markets/3.00% ipath DJ AIG Commodity Index/1.30% ishares S&P Global Technology/3.40% ishares S&P Latin America 40/2.00% 9

12 Quantitative Asset Allocation With the AST First Trust Target Portfolios and the AST Focus Four Plus Portfolio, your clients have the comfort of knowing that investments are made through defined, mathematical models that annually screen for what are believed to be superior-performing securities. The portfolios are managed objectively on the basis of fundamentals, valuation and management quality. First Trust s quantitative approach to investing identifies securities with characteristics that have outperformed the markets over long periods of time and seeks to select investments based upon those characteristics. Unique strategies for quantitative turnkey options Dow Jones Target Income Invests in a diversified portfolio of investment-grade corporate fixed income securities from the Dow Jones Corporate Bond Index (available in the Target portfolios only). NYSE International Target 25 Invests in 25 stocks of foreign companies selected from the NYSE International 100 Index that are expected to provide capital appreciation. Global Dividend Target 15 Invests in 15 common stocks issued by companies that are components of the DJIA, the Financial Times Industrial Ordinary Share Index and the Hang Seng Index that are expected to provide total return through income and capital appreciation (available in the Target portfolios only). Value Line Target 25 Invests in 25 of the 100 common stocks that Value Line gives a #1 ranking for Timeliness, which have recently exhibited certain positive financial attributes and whose objective is growth of capital. Target Small Cap Invests in 40 common stocks issued by U.S. companies that are profitable and growing with market capitalization between $150 million and $1 billion (available in the Target portfolios only). The Dow Target Dividend Invests in 20 common stocks issued by companies from the Dow Jones Select Dividend Index that are expected to provide income and have the potential for capital appreciation (available in the Balanced Target and Focus Four Plus portfolios only). NASDAQ Target 15 Invests in 15 common stocks issued by companies from a subset of the stocks included in the NASDAQ 100 Index that are expected to have the potential for capital appreciation (available in the Capital Appreciation Target portfolio only). S&P Target SMid 60 Invests in 30 stocks from the S&P MidCap 400 Index and 30 stocks from the S&P SmallCap 600 Index, giving the mid-cap stocks approximately twice the weight of the small-cap stocks, that are expected to have the potential for capital appreciation (available in the Focus Four Plus portfolio only). Western Asset Core Plus Bond Portfolio Invests primarily in U.S. fixed income securities and other debt instruments of domestic and foreign entities, including corporate bonds, securities issued or guaranteed by the U.S. government, mortgaged-backed securities and money market instruments (available in the Focus Four Plus portfolio only). 10

13 These asset allocation portfolios incorporate the independent research of Value Line and are based upon broader market indices of Dow Jones, The New York Stock Exchange, NASDAQ and Standard & Poor s. The composition of the Target portfolios is as of June 30, The composition of the Focus Four Plus portfolio reflects its targeted allocations at its July 21, 2008 inception. Portfolio composition can change without notice at any time in response to market conditions. AST First Trust Capital Appreciation Target Portfolio 79.70% Equities 20.30% Fixed Income Dow Jones Target Income / 19.50% NYSE International Target 25 / 9.05% Global Dividend Target 15 / 17.60% Value Line Target 25 / 21.00% Target Small Cap / 15.50% NASDAQ Target 15 / 16.55% Cash / 0.80% AST Focus Four Plus Portfolio 75.00% Equities 25.00% Fixed Income NYSE International Target 25 / 7.50% Dow Target Dividend / 22.50% Value Line Target 25 / 22.50% S&P Target SMid 60 / 22.50% Western Asset Core Plus Bond / 25.00% AST First Trust Balanced Target Portfolio 61.73% Equities 38.27% Fixed Income Dow Jones Target Income / 37.56% NYSE International Target 25 / 9.40% Global Dividend Target 15 / 13.77% Value Line Target 25 / 16.42% Dow Target Dividend / 16.75% Target Small Cap / 5.39% Cash / 0.71% 11

14 Alternative Asset Allocation Prudential Annuities features four alternative asset allocation options that apply concepts used by institutional and endowment fund managers to offer exposure to traditional and non-traditional asset classes with a lower level of correlation to the overall market. These include REITS (Real Estate Investment Trusts), TIPS (Treasury Inflation-Protected Securities), ETFs (Exchange-Traded Funds), and Commodities. In addition, these portfolios also provide exposure to alternative strategies such as holding both long and short positions and focusing on absolute returns. AST Academic Strategies Asset Allocation Portfolio will use the latest academic research and strategies used by leading endowment fund managers to provide exposure to traditional and non-traditional asset classes and investment strategies. The portfolio offers an innovative asset allocation option consisting of approximately 60% traditional asset classes and 40% alternative asset classes. We believe that the traditional asset classes and strategies will provide investors with exposure to a globally diversified pool of equity and fixed-income securities. At the same time, we hope that the non-traditional asset classes and strategies will complement the performance of the traditional asset classes and help reduce volatility due to their low market correlation. The overall asset allocation strategy for the Academic Strategies Asset Allocation Portfolio will be determined by Quantitative Management Associates LLC (QMA) and Prudential Investments LLC (PI) in consultation with Advanced Quantitative Consulting, LLC (AQC). AQC was founded by Dr. Christopher C. Geczy and Dr. Jeffrey F. Jaffe. In addition to their work at AQC, Dr. Geczy is an Adjunct Associate Professor of Finance at the Wharton School and Dr. Jaffe is an Associate Professor of Finance at The Wharton School. QMA and PI are also Prudential Financial companies. AQC does not serve as an investment adviser or subadviser. The extent to which AQC s recommendations are adopted and implemented is determined by the investment managers and relevant subadvisers. AQC s participation as a consultant should not be construed as an endorsement of the portfolio s investment managers or subadvisers, the variable insurance products, or the issuers or distributors of the variable insurance products. AST Advanced Strategies Portfolio offers a multi-tiered approach that allows investors to benefit from: n The use of traditional and non-traditional asset classes n Investment managers with experience and deep knowledge in their asset class n Active management of the asset class/subadvisor mix QMA manages the allocation of assets among asset classes and relevant investment managers based upon its research and examination of markets. Once they create the asset allocation composition, the relevant investment managers are responsible for buying and selling the securities within their asset class. The portfolio invests in traditional asset classes such as the equity and debt securities of domestic and international issuers. The portfolio also provides exposure to REITS, TIPS and commodities in an attempt to provide a hedge against inflation. Likewise, most of the international bonds in the portfolio are hedged to reduce the risk that the relevant currency will decline in value relative to the U.S. dollar. AST Schroders Multi-Asset World Strategies Portfolio offers an innovative asset allocation option consisting of approximately 80% traditional asset classes and 20% alternative asset classes. Schroders, a London-based firm with an established global perspective on world markets, is the portfolio s subadvisor. The Schroder family, who continues to play a major role today, founded Schroders over 200 years ago. The firm employs over 2,900 personnel in 28 countries, including over 320 portfolio managers and analysts. The portfolio provides a broad diversification platform through the utilization of equity and debt securities, domestic and international equity futures, exchangetraded funds, exchange-traded notes, and retail funds. AST UBS Dynamic Alpha Portfolio provides active asset allocation across a wide range of global markets and asset classes in pursuit of an absolute return goal of earning positive, more consistent returns whether the overall market is up or down. One of the largest global institutional asset managers, UBS Global Asset Management (Americas) Inc., is the portfolio s subadvisor. Because the portfolio is not managed to a securities benchmark, it has the flexibility to adjust exposures to markets, securities and currencies, if they appear overvalued, by taking short positions. This flexibility may result in lower volatility and risk to the portfolio which can lead to more consistent returns. The potential to benefit in both up and down markets may better position the portfolio to generate positive returns, and in turn may help you to be in a better position to fund your personal retirement objectives. 12

15 The composition of the AST Advanced Strategies Portfolio is as of June 30, The composition of the AST Academic Strategies Asset Allocation Portfolio and the AST Schroders Multi-Asset World Strategies Portfolio reflects targeted allocations at their July 21, 2008 inception. Portfolio composition can change without notice at any time in response to market conditions. AST Academic Strategies Asset Allocation Portfolio Domestic Equity / 20.00% Domestic Large-Cap / 15.00% Domestic Mid-Cap / 3.00% Domestic Small-Cap / 2.00% International Equity / 20.00% Developed Markets / 15.00% Emerging Markets / 5.00% Traditional Fixed Income / 20.00% Domestic Investment Grade / 10.00% High-Yield Debt / 5.00% International Fixed-Income (Un-Hedged) / 3.50% Emerging Markets Fixed-Income / 1.50% Real Estate / 10.00% Domestic Real Estate / 8.00% International Real Estate / 2.00% Real Return / 15.00% Commodities / 7.00% Inflation-Indexed Securities / 5.00% Global Infrastructure / 3.00% Alternative / 15.00% Long/Short Market-Neutral / 4.00% Global Tactical Asset Allocation / 4.00% Absolute Return Volatility Income Strategy / 4.00% Overlay / 3.00% AST Advanced Strategies Portfolio U.S. Large-Cap Growth / 20.40% U.S. Large-Cap Value / 15.40% International Growth / 9.00% International Value / 8.90% U.S. Bonds / 13.50% Hedged International Bond: Developed Markets / 10.27% Hedged International Bond: Emerging Markets / 3.42% Commodities / 3.00% REITS / 3.00% TIPS / 3.00% ETF / 9.11% Cash / 1.00% Marsico T. Rowe Price William Blair LSV PIMCO PIMCO PIMCO PIMCO PIMCO PIMCO ishares MSCI EAFE/0.09% ishares MSCI Emerging Markets/0.48% ishares MSCI Brazil/0.39% ishares MSCI Hong Kong/0.19% ishares Japan/0.38% ishares S&P Global 100/1.11% ishares Russell 1000 Growth/2.00% ishares S&P 500 Growth/0.89% ishares S&P Global Energy Sector/0.45% Energy Select Sector SPDR/0.44% ishares S&P Nat'l Municipal bond/0.86% ishares Lehman Aggregate Bond/1.53% Powershares DB Agriculture/0.29% AST Schroders Multi-Asset World Strategies Portfolio Equity Investments / 50.00% Investment Grade Fixed-Income Investments / 20.00% Alternative Investments / 20.00% Cash and Other Short-Term Investments / 10.00% AST UBS Dynamic Alpha Portfolio Due to the short positions held by AST UBS Dynamic Alpha Portfolio, we are not including the portfolio weighting and composition in a pie chart. This portfolio puts emphasis on active asset allocation across global markets in pursuit of an absolute return goal that is unconstrained by a benchmark index. It has the flexibility to invest wherever opportunities are believed to exist across a wide range of global markets and asset classes, including U.S. and international stocks, bonds, cash and currencies. 13

16 A Full Spectrum of Individual Investment Options Portfolio Category Placement (All portfolios are placed according to the investment objectives contained in the current prospectus.) Large-Cap Value AST AllianceBernstein Core Value AST AllianceBernstein Growth & Income AST American Century Income & Growth AST DeAM Large-Cap Value AST Large-Cap Value ProFund VP Large-Cap Value* Wells Fargo Advantage Equity Income Large-Cap blend AST QMA US Equity Alpha Large-Cap growth AST Goldman Sachs Concentrated Growth AST Marsico Capital Growth AST MFS Growth AST T. Rowe Price Large-Cap Growth ProFund VP Large-Cap Growth* MID-Cap Value AST Mid-Cap Value AST Neuberger Berman / LSV Mid-Cap Value ProFund VP Mid-Cap Value* MID-Cap blend MID-Cap growth AST Goldman Sachs Mid-Cap Growth AST Neuberger Berman Mid-Cap Growth AIM V.I. Dynamics ProFund VP Mid-Cap Growth* small-cap Value AST Goldman Sachs Small-Cap Value AST Small-Cap Value ProFund VP Small-Cap Value* small-cap blend small-cap growth AST Neuberger Berman Small-Cap Growth AST Federated Aggressive Growth AST Small-Cap Growth Evergreen VA Growth ProFund VP Small-Cap Growth* There is no assurance the portfolio objectives will be achieved. Large Cap = Companies within market capitalization range of the Russell 1000 Index Mid Cap = Companies within market capitalization range of the Russell Midcap Index Small Cap = Companies within market capitalization range of the Russell 2000 Index A manager with a value style seeks securities that are undervalued in price and have the potential to appreciate. A manager with a growth style seeks securities with the potential to grow faster than the rest of the market. A manager with a blend style invests in both value and growth securities. * Only available on APEX SM II and Advisors Choice Advisors Choice 2000 may not be available in all firms. Please note that with certain optional benefits, guidelines for building your own portfolio must be followed. All subaccounts may not be available at all broker/dealers. These portfolios may contain different investments than similarly named mutual funds. 14

17 Working alongside your financial professional, you can create a well-balanced portfolio from our breadth of investment offerings that include more than 100 subaccounts covering major investing styles from over 30 world-class managers. fixed income AST High Yield AST Lord Abbett Bond-Debenture AST Money Market AST PIMCO Limited Maturity Bond AST PIMCO Total Return AST T. Rowe Price Global Bond AST Western Asset Core Plus Bond ProFund Rising Rates Opportunity* ProFund U.S. Government Plus* AST International Growth AST International Value AST JPMorgan International Equity international equity AST MFS Global Equity AST Parametric Emerging Markets Equity Evergreen VA International Equity Gartmore NVIT Developing Markets ProFund VP Europe 30* AST Cohen & Steers Realty AST Global Real Estate AST T. Rowe Price Natural Resources AIM V.I. Financial Services AIM V.I. Global Health Care specialty AIM V.I. Technology Evergreen VA Omega First Trust Target Focus Four The Dow DART 10 The Dow Target Dividend Global Dividend Target 15 NASDAQ Target 15 S&P Target 24 Target Managed VIP Value Line Target 25 Access VP High Yield* ProFund VP Asia 30* ProFund VP Banks* ProFund VP Basic Materials* ProFund VP Bear* ProFund VP Bull* ProFund VP Biotechnology* ProFund VP Consumer Goods* ProFund VP Consumer Services* ProFund VP Financials* Specialty PROFUNDS ProFund VP Health Care* ProFund VP Industrials* ProFund VP Internet* ProFund VP Japan 30* ProFund VP NASDAQ-100* ProFund VP Oil & Gas* ProFund VP Pharmaceuticals* ProFund VP Precious Metals* ProFund VP Real Estate* ProFund VP Semiconductor* ProFund VP Short Mid-Cap* ProFund VP Short Small-Cap* ProFund VP Short NASDAQ-100* ProFund VP Technology* ProFund VP Telecommunications* ProFund VP UltraBull* ProFund VP UltraMid-Cap* ProFund VP UltraSmall-Cap* ProFund VP UltraNASDAQ-100* ProFund VP Utilities* AST Academic Strategies Asset Allocation AST Advanced Strategies AST Aggressive Asset Allocation AST Balanced Asset Allocation AST Capital Growth Asset Allocation AST CLS Growth Asset Allocation AST CLS Moderate Asset Allocation turnkey asset allocation AST First Trust Balanced Target AST First Trust Capital Appreciation Target AST Focus Four Plus AST Horizon Growth Asset Allocation AST Horizon Moderate Asset Allocation AST Niemann Capital Growth Asset Allocation AST Preservation Asset Allocation AST Schroders Multi-Asset World Strategies AST T. Rowe Price Asset Allocation AST UBS Dynamic Alpha Franklin Templeton VIP Founding Funds Allocation 15

18 Asset Allocation Portfolios Questionnaire Determining your investment goals, risk tolerance and investment time horizon investor name Date This questionnaire is a tool that can be used by you and your financial professional to evaluate your investment time horizon, investment goals and expectations, and risk tolerance. It should not be considered a tool for providing investment guidance to investors or as a tool to evaluate the suitability of an investment in a variable annuity contract or any Asset Allocation Portfolio. After completing this questionnaire and providing your financial professional with other relevant information, including a description of your other assets and investments, you and your financial professional may determine that one or more of the Asset Allocation Portfolios is appropriate for you based on your individual circumstances. Please check the most appropriate response to each of the eight questions below. Section 1 - Investment Time Horizon The first two questions concern your investment time horizon for this investment. 1. My current age is: o Less than 45 years o years....4 o years....3 o years....2 o Over 75 years score 2. I expect to start drawing income from this investment: o Not for at least 20 years...5 o In 10 to 20 years...4 o In 5 to 10 years...3 o Not now, but within 5 years o Immediately....1 score 16

19 Section 2 - Long-Term Goals and Expectations The next three questions ask about your long-term goals and expectations for this investment. Please be realistic. 3. For this investment, my goal is: o To grow aggressively...5 o To grow with caution...3 o To avoid losing money Assuming normal market conditions, what would you expect from this investment over time? o To generally keep pace with the stock market o To trail the stock market, but make a decent profit..3 o To have a high degree of stability, but only modest profits score score 5. Suppose the stock market performs unusually poorly over the next decade. Then what would you expect from this investment? o I will be OK if I lose money...5 o To make a small gain o To be little affected by what happens in the stock market...1 score Section 3 - Short-Term Risk Attitudes The next two questions concern your thoughts about shorter-term results. Again, answer as honestly as possible. 6. Which of these statements would best describe your attitude about the next three years performance of this investment? o I will be OK if I lose money o I want to at least break even...3 o I need at least a small profit score 7. Which of these statements would best describe your attitude about the next three months performance of this investment? o Who cares? One calendar quarter means absolutely nothing o If I suffered a loss of greater than 10%, I d get concerned...3 o I can tolerate only small short-term losses score Section 4 - Alternative Asset Allocation Exposure Attitudes 8. Alternative asset allocation portfolios may provide you with exposure to asset classes other than traditional stocks and bonds (e.g. commodities, etc) or alternative investment strategies (e.g. long/short investing.) The performance of alternative asset classes typically has a low correlation to traditional asset class performance. o I d like to talk about expanding my asset allocation solution to include asset allocation portfolios that invest in alternative asset classes or utilize alternative investment strategies...a o I am currently not interested in alternative asset classes..b Option While asset allocation may be a sensible way to balance investment risk and reward, it does not guarantee a profit or protect against a loss. No assurance can be given that any of the Asset Allocation Portfolios will achieve their respective investment objectives. Alternative asset classes may underperform traditional asset classes during rising markets. Although designed to reduce investment risk, alternative investment strategies may increase the potential for loss under certain circumstances. 17

20 Score Sheet This Score Sheet should be used as a guide to help you and your financial professional select an Asset Allocation Portfolio that is appropriate based on your individual circumstances. Consistency Check Before tallying the scores, check the questionnaire for internal consistency to ensure that there is a realistic set of expectations and attitudes based upon individual circumstances and all other relevant information. Using the space provided, mark the number of questions where the investor scored 1 point, 2 points, and so on. # of questions with 1 point: # of questions with 2 points: # of questions with 3 points: # of questions with 4 points: # of questions with 5 points: Tally up the point total for sections 1 through 3 and then combine the three subtotals for a grand total. Consider the point totals for each section, the grand total, and all other relevant information when trying to select an appropriate Asset Allocation Portfolio. Time Horizon Questions 1 and 2 Long-Term Goals and Expectations Questions 3, 4 and 5 Short-Term Risk Attitudes Questions 6 and 7 Grand Total Please follow the instructions below for each section. score total Alternative Asset Allocation Exposure Question 8 If you selected A for question 8, you might consider choosing from the Alternative box below. If an investor has at least one 1-point answer and at least one 5-point answer, consider stopping and evaluating the responses. Goals and expectations may be unrealistic. Consider investigating these inconsistencies and helping to adjust expectations, attitudes or investment time horizon to be more realistic. OPTION Evaluation After tallying, evaluate the results based on the investor s individual circumstances. Double-check again for internal inconsistencies. If different sections or other relevant information suggests a different outcome, evaluate the reasons and determine whether any goals or expectations need to be adjusted, you and your client may determine that one or more of the Asset Allocation Portfolios is appropriate for your client based on the client s individual circumstances. Grand Total Traditional tactical quantitative alternative AST Aggressive* AST Capital Growth Franklin Templeton VIP Founding Funds AST T. Rowe Price AST Balanced AST CLS Growth AST Niemann Capital Growth AST Horizon Growth AST Horizon Moderate AST CLS Moderate AST First Trust Capital Appreciation Target AST Focus Four Plus AST First Trust Balanced Target AST Academic Strategies AST Advanced Strategies AST Schroders Multi-Asset World Strategies AST UBS Dynamic Alpha 7-17 AST Preservation Traditional Strategies generally provide asset allocation based on long-term views of capital markets Quantitative Strategies provide a disciplined, quantitative approach to asset management Tactical Strategies generally provide asset allocation based on shorter-term views of capital markets Alternative Strategies generally provide exposure to non-traditional asset classes to help increase diversification *Please note that with certain optional benefits you may not select the AST Aggressive Asset Allocation Portfolio. 18