By John Praveen, Chief Investment Strategist of Prudential International Investments Advisers, LLC.*

By John Praveen, Chief Investment Strategist of Prudential International Investments Advisers, LLC.* For Market Commentary Interviews Contact: Lisa Villareal, 973-367-2503/lisa.villareal@prudential.com Financial Market Outlook & Strategy: Stocks Continue to Struggle in Near-term on Growth Concerns, Deepening Greek Debt Crisis & Continued Tightening in Emerging Markets John Praveen s Global Investment Strategy June 2011 expects global stock markets to continue to struggle in the near-term on deepening Greek debt crisis, U.S. growth concerns and uncertainty about Fed policy after QE II, and continued rate tightening by Emerging central banks. However, in the medium-term, stocks are likely to be supported by: 1) H2 GDP rebound expected in the U.S. and Japan as U.S. transitory factors and Japan earthquake impact abate; 2) The Fed likely to keep liquidity plentiful and rates low beyond the June expiration of QE II; 3) Easing of Greek debt fears; and 4) Solid earnings and cheap valuations. Bond yields are likely to be supported in the near-term by growth concerns and fears of a Greek debt restructuring. However, in the medium-term, bond yields are likely to rise with H2 GDP growth expected to rebound in Japan and U.S. and headline inflation remaining elevated. Asset Allocation: With stocks continuing to struggle in the near-term, tactically reduce stocks to neutral and tactically raise bond to neutral. Among global stock markets, we remain Modest Overweight in the Emerging Markets, the U.S. and Japan, and remain Underweight on the U.K. and Eurozone. Among global sectors, we are Modest Overweight on Industrials, Information Technology and Consumer Discretionary; Neutral on Energy, Materials, Consumer Staples and Financials; Underweight on Healthcare, Telecomm and Utilities. Among global bond markets, we remain Overweight in Emerging Markets and Japanese bonds, Upgrade U.S. Treasuries to Neutral; Downgrade Eurozone bonds to Underweight, and remain Underweight on U.K. Gilts. Market Outlook: Stocks Continue to Struggle in Near-term with U.S. Growth Concerns, Deepening Greek Debt Crisis & Continued Tightening in Emerging Markets. Safe Haven Demand & Growth Concerns Likely to Support Bonds in Near-term Despite Rich Valuations Stocks: Growth Concerns, Greek Debt Fears, & Emerging Market Rate Hikes Likely to Keep Stocks Struggling in the Near-Term Global stock markets were resilient from January to April, shrugging off several shocks, including, Middle East turmoil, Japan earthquake, S&P downgrade of U.S. debt outlook, and Greek debt fears. However, global equity markets were battered in May and early June by U.S. growth uncertainties, a sharper-than-expected Q1 GDP plunge in Japan, deepening Greek debt crisis, and continued tightening by emerging central banks. Developed Equity Markets declined -2.5% in May trimming YTD gains to 5.8%. Emerging Market stocks fell -3% taking YTD gains to 2.8%. The stock market decline accelerated in early June with the Greek debt crisis worsening. Developed Market are down -5.4% LC (as of June 16) taking YTD losses to -2.2%. Emerging markets fell -4.3% in early June taking YTD decline to -5.4%. The near-term global macro uncertainties have increased with the U.S. economy slumping, Japan s Q1 GDP plunging more than expected, inflation remaining elevated and emerging central banks continuing to raise rates with inflation stubbornly elevated. The Fed, BoJ and BoE remain on hold in Q2. The ECB paused in June, but signaled a July rate hike. The ECB is taking hard line on Greek debt rollover/restructuring putting it on a collision course with Eurozone governments. Emerging Central Banks continue to hike rates with inflation remaining stubbornly high. Despite global growth uncertainties, the earnings outlook remains solid driven by strengthening margins and revenue growth. Earnings in 2011 are expected to rise 14% in Japan, 11% in Eurozone, 17% in Emerging Markets, and 17% in U.S. Equity P/E multiples improved in May as stocks declined sharply, while Q1 earnings were strong and outlook remains solid. Equity P/E multiples remain well below long-term averages. In the near-term, stocks are likely to continue to struggle with U.S. growth concerns and uncertainty about Fed policy after QE II, deepening Greek debt crisis and continued rate tightening by Emerging central banks: 1) Growth Uncertainty: a) Recent weak U.S. data raises questions about Q2 GDP growth and expectations have been revised lower to a modest 2% from around 3.5% expected in April. While the economy is expected to rebound in Q3, given the disappointments in Q1 and Q2, there is understandable skepticism about the rebound from this soft patch; b) The Japanese economy contracted a sharper than *Prudential International Investments Advisers, LLC. (PIIA) is a business of Prudential Financial, Inc., (PFI), which is not affiliated in any manner with Prudential plc, a company headquartered in the United Kingdom. For Informational Use Only. Not Intended As Investment Advice. See Disclosures on the last page for important information. Page 1

expected -3.5% QoQ annualized in Q1 and is expected to contract again in Q2. While a strong rebound is expected in H2 with reconstruction spending, there is uncertainty about the timing and strength of the rebound; c) Eurozone GDP grew 3.4% in Q1, driven by strong growth in core Eurozone. However, Eurozone GDP is expected to moderate in Q2 with a smaller contribution from the construction sector and government spending; d) GDP growth in the emerging economies remains solid for now, however there are growing concerns about a sharp slowdown/hardlanding due to ongoing central bank tightening; 2) Deepening Debt Crisis: The Greek debt crisis worsened with the ECB taking a hard line, rejecting any form of restructuring, putting it on a collision course with Eurozone governments. Meanwhile, Greek citizens clash with the government over austerity measures; 3) Fed Policy after QE II: While the Fed has made it clear that its reinvestment policy remains in place thereby keeping the Fed balance sheet steady and prevent a premature passive tightening of policy, markets remain concerned about liquidity and Fed Policy after QE II ends in June; 4) EM Central Banks Tighten Further: Emerging Market central banks continue to raise rates and remain hawkish with inflation stubbornly high, suggesting that rates have not yet peaked. In the medium-term, stocks remain supported by several positive fundamentals: 1) U.S. and Japan are expected to rebound in H2 as the U.S. transitory factors and Japan earthquake impact abate; 2) Beyond the June expiration of QE II, the Fed is likely to keep liquidity plentiful and rates low market fears seem exaggerated. ECB rate tightening likely to be modest with renewed Greek debt crisis worsening; 3) Q1 earnings surprise on the upside. Earnings outlook remains solid with strong revenue growth from healthy nominal GDP growth and still good margins. Low expectations for 2011 give scope for positive earnings surprises; 4) Valuations not very expensive. Equity P/E multiples declined from January 2011 levels and remain well below long-term averages with solid earnings growth and recent decline in prices. While the positive fundamentals are likely to help stocks rebound in H2 2011, in the near-term, stocks are likely to continue to struggle with growth uncertainties, Greek debt fears and interest rate concerns. Hence, caution is warranted in the near-term. Bonds: Safe Haven Demand & Growth Concerns Likely to Support Bonds in Near-term Despite Rich Valuations Global bond yields declined during May, initially as falling oil prices lowered inflation expectation and later when disappointing U.S. economic data raised doubts about the Q2 GDP rebound. The J.P. Morgan Global Bond Index was up 1% LC in May, -0.6% in US$. In the near-term, growth concerns and fears of a Greek debt restructuring are likely to support bonds. However, in the medium-term, bond yields are likely to rise with H2 GDP growth expected to rebound in Japan and U.S. and headline inflation remaining elevated. The outlook for JGBs is relatively favorable. GDP growth is expected to also contract in Q2, after a sharp decline in Q1, before reconstruction spending leads to a rebound in H2. Further, the BoJ has retained its additional monetary stimulus and is unlikely to raise rates until well into 2012. However, the massive expenditure on earthquake reconstruction is likely to further increase Japan s government debt, possibly putting some modest upward pressure on JGB yields. In the near-term, U.S. Treasuries are likely to be supported by weak data and Q2 growth disappointment and a pullback in headline inflation. However, in the medium-term, U.S. GDP growth is expected to rebound in H2 and inflation is expected to rise, putting upward pressure on both yields and inflation expectations. Nominal yields are very low and real yields are negative and have little room to decline further. In addition, the Fed is likely to keep rates low and is unlikely to remove monetary stimulus before the end of the year, underpinning Treasury yields. The outlook for Eurozone bonds is negative. Inflation remains elevated and GDP growth is expected to remain healthy, especially in core Eurozone, though easing from the robust 3.4% pace in Q1. In addition, the ECB is expected to raise rates and yields remain depressed on both a real and nominal basis. However, sovereign credit spreads remain elevated, providing some safe haven appeal of core Eurozone bonds. The outlook for U.K. Gilts remains negative with inflation remaining as one of the biggest negatives and solid H1 GDP growth. Further, while the BoE was on hold in June (as expected), inflationary pressures suggest that the BoE will raise rates before the U.S. and Japan. Real interest rates are also elevated relative to history. There is a near-term risk that the correction in oil prices will put downward pressure on inflation, delaying BoE hikes and support Gilt yields. The outlook for Emerging Market bonds is negative in the near-term with continued rate hikes and elevated inflation. The elevated inflation has prompted EM central banks to tighten monetary policy, possibly resulting in slower growth as rate hikes affect the real economy. However, the outlook for EM bonds is expected to improve later in the year as EM central banks finish hiking rates and risk aversion eases with developed market growth expected to improve, narrowing the spread between EM and DM bonds. Page 2

Investment Strategy: Tactical Shift - Reduce Stocks to Neutral as Growth Concerns, Greek Debt Fears, & Emerging Market Rate Hikes Likely to Keep Stocks Struggling in the Near-term Asset Allocation: Tactically reduce Stocks to Neutral; Tactically raise Bonds to Neutral; Global Equities: Modest Overweight: U.S., Emerging Markets, Japan; Underweight: U.K. and Eurozone Global Bonds Overweight Japan; Neutral: U.S.; Underweight U.K., Eurozone Global Sectors Modest Overweight: Industrials, Consumer Discretionary, Info Tech; Neutral: Energy, Materials, Consumer Staples, Financials; Underweight: Healthcare, Telecomms, Utilities Currencies Overweight: EM Currencies; Neutral: Yen & U.S. Dollar; Underweight: Euro & Sterling ASSET ALLOCATION: Stocks vs. Bonds Stocks - Tactically Reduce to Neutral: Stocks are likely to continue to struggle in the near term with U.S. growth concerns, uncertainty about Fed policy after QE II, and worsening Greek debt crisis. However, stocks are supported in the medium term by GDP rebound in U.S. and Japan in H2, U.S. Fed keeping liquidity plentiful and rates low, solid earnings outlook supported by strong revenue growth, and inexpensive valuations. Given the near-term risks, we have tactically shifted stocks to Neutral. Bonds - Tactically Raise to Neutral: Despite expensive valuation, in the near-term, bonds are likely to be supported by safe haven demand with increased risks of a Greek debt default and U.S. growth concerns. Hence, tactically raise bonds to Neutral. In the medium-term, bond yields are likely to rise with H2 GDP rebound in Japan and U.S. and headline inflation remaining elevated. CURRENCIES Overweight: EM Currencies; Neutral: Yen & U.S. Dollar; Underweight: Euro & Sterling The U.S. Dollar is expected to strengthen against the euro and pound but trade range bound against the yen. The worsening Greek debt crisis with growing risk of default and the ECB on a collision course with Eurozone governments is a big negative for the euro. Elevated inflation is a negative for the sterling. The yen is likely to remain range bound against the dollar with weaker H1 GDP growth offset by expectations of a H2 GDP rebound. Further gains are expected for EM currencies due to stronger growth and central bank hikes. Commodity currencies are likely to post gains as solid global GDP growth leads to continued commodity demand. Global Equity Strategy Emerging Markets (EM): GDP growth in the emerging economies remains solid currently but is expected to slow as central banks continue to raise rates to combat inflation. For full year 2011, EM is expected to post around 6.4% GDP growth with around 7.8% growth in EM Asia, 4% in EM Europe and 4.6% in LatAm. Inflation remains elevated in China, India & Brazil and other emerging economies, keeping EM central banks on track to hike rates further. However, further rate hikes are likely to be modest as rates are near the peak. The earnings outlook remains strong, supported by strong domestic demand and solid exports. EM equity valuations are modestly attractive. Increased risk aversion due to global GDP growth concerns and European debt crisis, and currency appreciation are negatives. Modest Overweight. U.S.: The U.S. economy hit another soft patch in early Q2 which threatens the Q2 GDP rebound. Q2 GDP expectations revised down to a mere 2% from around 3.5% expected in April. However, GDP expected to rebound in H2. The Fed remains on track to end QE II, as scheduled, in June and an extension of asset purchases or QE III is unlikely. However, the end of QE II unlikely to have a negative impact on stocks as the Fed has indicated that it will keep its balance sheet steady and maintain rates at record low. Q1 earnings growth stronger than expected coming in at 18.8% YoY. Despite the slowdown in U.S. GDP growth, revenue growth was 8%, driven by solid global demand. Corporate earnings are expected to post another solid growth in Q2, around 14% YoY. Modest Overweight. Japan: The Japanese economy contracted a sharper than expected -3.5% QoQ annualized in Q1 and is expected to contract again by around -3.5% in Q2. While current expectations are for GDP to rebound around 4.5% in Q3 and around 5.5% in Q4, the strength of the recovery is dependent on the duration of power shortages and the scale and efficiency of the supplementary budget. Japanese companies, especially exporters and Industrials, are likely to benefit from the post earthquake reconstruction spending in H2 and the continued solid demand from EM. Valuations are mixed with current valuations still expensive on some measures with respect to other markets. The BoJ continues to keep rates low and has Page 3

maintained the scale of its asset purchase program in May. Japanese earnings expectations for 2011 are currently around 14%, but are likely to be revised lower. Remain Modest Overweight. Eurozone: The Greek debt crisis took a turn for the worse with the ECB taking a hard line, rejecting any form of rollover or restructuring, putting it on a collision course with Eurozone governments. Eurozone GDP growth surprised on the upside in Q1, driven by domestic demand with strong contribution from investment spending, but expected to moderate in Q2 to around 2.5% with a smaller contribution from the construction sector and government spending. The ECB held rates at 1.25% at their June meeting but has signaled a July rate hike. Eurozone Q1 earnings season ended on a mixed note. While there were more number of companies beating expectations, overall earnings actually came in slightly below expectations due to larger negative surprises from companies which disappointed. Remain Underweight. U.K.: U.K. growth is expected to rise 2% QoQ annualized in Q2. Consumer spending appears to be off to a slow start in Q2, while business confidence has weakened recently. U.K. headline inflation held at 4.5% YoY in May. The Bank of England left rates unchanged at 0.5% at the June meeting and the stock of asset purchases fixed at 200bn. The relative earnings outlook for U.K. stocks is negative while valuations are a modest positive. Remain Underweight. Global Bond Strategy Emerging Markets: The elevated inflation has prompted EM central banks to tighten monetary policy, possibly resulting in slower growth as rate hikes affect the real economy. However, the outlook for EM bonds is expected to improve later in the year as EM central banks finish hiking rates and risk aversion eases with developed market growth expected to improve, narrowing the spread between EM and DM bonds. Remain Overweight. Japan: The outlook for JGBs remains relatively favorable. The earthquake led to a sharper than expected decline in Q1 GDP (-3.5%). Further, Q2 GDP is also expected to contract (-3.5%) before reconstruction spending leads to a rebound in H2. However, the strength of the recovery is also dependent on the duration of power shortages and the scale and efficiency of the supplementary budget. In addition, the BoJ had added additional monetary stimulus and is unlikely to raise rates until well into 2012. However, the massive expenditure on earthquake reconstruction is likely to further increase Japan s government debt, possibly putting some modest upward pressure on JGB yields. Japanese core inflation rose in April for the first time in 28 months due to the expiration of the high school tuition elimination program and due to higher commodity prices. However, inflation still remains low and likely to remain low for an extended period. Remain Overweight JGBs. U.S.: The outlook for U.S. Treasuries is mixed. In the near-term, U.S. Treasuries are likely to be supported by weak data and Q2 growth disappointment and a pullback in headline inflation. However, in the medium-term, U.S. GDP growth is expected to rebound in H2 and inflation is expected to rise, putting upward pressure on both yields and inflation expectations. Further, nominal yields are very low and real yields are negative and have little room to decline further. Hence, if yields were to fall further, the biggest risk is from a re-appraisal of inflation expectations. Nevertheless, the Fed is expected to leave rates low and does not appear to be likely to remove monetary stimulus before the end of the year. This is likely to underpin Treasury yields. Upgrade U.S. Treasuries to Neutral. Eurozone: The Eurozone bond outlook is weak. Inflation is elevated and growth is expected to remain healthy, especially in core Eurozone. Eurozone Q1 GDP surprised on the upside, rising 3.4% QoQ annualized after a more modest 1.1% in Q4, but expected to moderate in Q2 to around 2.5% pace with a smaller contribution from the construction sector and government spending. The solid GDP growth in Core Eurozone is a negative for bonds. Eurozone headline HICP inflation edged down to 2.7% YoY in May from 2.8% YoY in April and 2.7% in March. Eurozone core inflation eased to 1.5% in May after jumping to 1.6% YoY in April from 1% in February. In addition, the ECB is expected to raise rates and yields remain depressed on both a real and nominal basis. However, sovereign credit spreads remain elevated, providing some safe haven support to German bunds and other core Eurozone bonds. Downgrade Eurozone Bonds to Underweight. U.K.: The outlook for U.K. Gilts remains negative. Inflation remains one of the biggest negatives for U.K. gilts, with the highest inflation rate among the major economies. U.K. headline inflation was steady at 4.5% YoY in May from 4% in March and 4.4% in February. Solid H1 growth is a negative for U.K. bonds, but the outlook for H2 is relatively neutral. Further, while the BoE was on hold in June, inflationary pressures suggest that the BoE may be forced to raise rates well before the U.S. and Japan. Real interest rates are also low relative to history. Remain Underweight U.K. Gilts. Global Sector Strategy Our global sector model ranks sectors on a comparative basis using macro factors, valuation, earnings and risk measures. Industrials - Industrial activity in the developed markets has been slowing in the past 2 months. However, a H2 rebound in U.S. and reconstruction spending in Japan are positives. Industrial activity remains strong in the emerging economies. Sector valuations are attractive. Earnings outlook is also better than other sectors. Modest Overweight. Consumer Discretionary - Consumer confidence in developed economies is mixed. However, EM consumption spending remains solid driven by strong employment and government spending. Sector earnings growth and valuations are attractive. Autos are likely to underperform the overall sector given the hit to their supply chains from the Japan earthquake. Modest Overweight. Page 4

Information Technology Demand remains solid for Info Tech products. Demand for wireless devices has been trending up with shipments from Korea and Taiwan on the rise. IT Services continue to be a strong performer and is likely to persist in the near term. Earnings expected to rise 16% in 2011. Modest Overweight. Energy Oil prices are expected to remain under downward pressure in the near term due to global growth concerns and possibility of increased supply. However, demand from emerging economies remains solid. Energy earnings are expected to grow 30% in 2011. European Energy sector valuations are cheaper relative to that of U.S. Valuations are expensive. Neutral. Materials - Commodity prices are likely to remain pressured lower in the near term due to global growth concerns. However, continued solid demand from emerging economies remains supportive of the sector. EM rate hikes are a negative for the sector. Sector earnings are expected to post strong growth of around 41% in 2011. Neutral. Financials - The Greek debt crisis remains a major drag on European Financials while U.S. Financials are dragged by uncertainty about new capital requirements and weak housing market data. However, the outlook for EM Financials remains strong with loan growth continuing at a solid pace and attractive valuations. Sector earnings expected to rise 14% in 2011. Neutral. Consumer Staples - The recent increase in risk aversion is a positive for this defensive sector. There is also interest in this sector from investors who are seeking higher dividend yields. However, despite the recent correction in energy price, margin pressures remain due to elevated food and commodity prices. Staples earnings are expected to rise 8% in 2011. Neutral. Healthcare - Healthcare stocks have benefited from the increased market uncertainty in the past two months. However, earnings are expected to rise just 5% in 2011 as sales growth remains weak. Further, headline Pharma risks still remain a negative. Biotech stocks are likely to benefit from the increase in M&A activity. Underweight. Telecomm Services - Increased near-term market volatility is a positive for this defensive sector. While demand for Telecomm services is increasing due to increased use of smart phones, pricing remains weak. Telecomms earnings are expected to rise just 3% in 2011. Telecomms have a high dividend yield and the low Price/Cash Earnings multiple. Underweight. Utilities - The sector has recovered from the steep declines after the Japanese earthquake. However, the sector is unlikely to outperform as risk aversion eases. Earnings growth has been revised up to 7% for 2011. The sector has a very high dividend yield and low forward P/E multiple. Underweight. Strategy Summary: Asset Allocation: Tactically reduce Stocks to Neutral; Tactically raise Bonds to Neutral; Global Equities: Modest Overweight: U.S., Emerging Markets, Japan; Underweight: U.K. and Eurozone Global Bonds Overweight Japan; Neutral: U.S.; Underweight U.K., Eurozone Global Sectors Modest Overweight: Industrials, Consumer Discretionary, Info Tech; Neutral: Energy, Materials, Consumer Staples, Financials; Underweight: Healthcare, Telecomms, Utilities Currencies Overweight: EM Currencies; Neutral: Yen & U.S. Dollar; Underweight: Euro & Sterling Disclosures: Prudential International Investments Advisers, LLC. (PIIA), a Prudential Financial, Inc. (PFI) company, is an investment adviser registered with the Securities and Exchange Commission of the United States. Pramerica is a trade name used by PFI and its affiliated companies in select countries outside of the United States. PFI, a company incorporated and with its principal place of business in the United States of America is not affiliated in any manner with Prudential plc, a company headquartered in the United Kingdom. The commentary presented is for informational purposes only, and is not intended as investment advice. This material has been prepared by PIIA on the basis of publicly available information, internally developed data and other third party sources believed to be reliable. However, no assurances are provided regarding the reliability of such information. All opinions and views constitute judgments of PIIA as of the date of this writing, and are subject to change at any time without notice. There can be no assurance that any forecast made herein will be realized. Distribution of this information to any person other than the person to whom it was originally delivered and to such person s advisers is unauthorized and no part of this material may be reproduced or distributed further without the written approval of PIIA. These materials are not intended for distribution to, or use by, any person in any jurisdiction where such distribution would be contrary to local law or regulation. The companies, securities, sectors and/or markets referenced herein are included solely for illustrative purposes to highlight the economic trends, conditions, and the investment process, but may or may not be held by accounts actually managed by PIIA. The strategies and asset allocations discussed do not refer to any service or product offered by PIIA or by its affiliates The global asset and strategy allocation models presented are hypothetical allocation models shown for illustrative purposes only, and do not necessarily reflect the management of any actual account. Following the allocation recommendations presented will not necessarily result in profitable investments. Past performance is not an assurance of future results. Nothing herein should be viewed as investment advice to adopt any investment strategy, nor should it be considered an offer to provide investment advisory or other allocation services. The Rock symbol is a service mark of PFI and its related entities, registered in many jurisdictions worldwide. Copyright 2011 Page 5