ADVANCED SERIES TRUST

Transcription

1 ADVANCED SERIES TRUST STATEMENT OF ADDITIONAL INFORMATION APRIL 27, 2015 This Statement of Additional Information (SAI) of Advanced Series Trust (the Trust) is not a prospectus and should be read in conjunction with the Prospectus of the Trust dated April 27, 2015, which can be obtained, without charge, by calling (800) or by writing to the Trust at Gateway Center Three, 100 Mulberry Street, Newark, New Jersey This SAI has been incorporated by reference into the Trust s Prospectus. The Trust s audited financial statements are incorporated into this SAI by reference to the Trust s 2014 Annual Report (File No ). You may request a copy of the Annual Report at no charge by calling the telephone number or writing to the address indicated above. The portfolios of the Trust which are discussed in this SAI are noted on this front cover (each, a Portfolio, and together, the Portfolios). AST Academic Strategies Asset Allocation Portfolio AST Advanced Strategies Portfolio AST AQR Emerging Markets Equity Portfolio AST AQR Large-Cap Portfolio AST Balanced Asset Allocation Portfolio AST BlackRock Global Strategies Portfolio AST BlackRock ishares ETF Portfolio AST BlackRock/Loomis Sayles Bond Portfolio AST Bond Portfolio 2015 AST Bond Portfolio 2016 AST Bond Portfolio 2017 AST Bond Portfolio 2018 AST Bond Portfolio 2019 AST Bond Portfolio 2020 AST Bond Portfolio 2021 AST Bond Portfolio 2022 AST Bond Portfolio 2023 AST Bond Portfolio 2024 AST Bond Portfolio 2025 AST Bond Portfolio 2026 AST Boston Partners Large-Cap Value Portfolio AST Capital Growth Asset Allocation Portfolio AST ClearBridge Dividend Growth Portfolio AST Cohen & Steers Realty Portfolio AST Defensive Asset Allocation Portfolio AST FI Pyramis Asset Allocation Portfolio AST FI Pyramis Quantitative Portfolio AST Franklin Templeton Founding Funds Allocation Portfolio AST Franklin Templeton Founding Funds Plus Portfolio AST Global Real Estate Portfolio AST Goldman Sachs Large-Cap Value Portfolio AST Goldman Sachs Mid-Cap Growth Portfolio AST Goldman Sachs Multi-Asset Portfolio AST Goldman Sachs Small-Cap Value Portfolio AST Herndon Large-Cap Value Portfolio AST High Yield Portfolio AST International Growth Portfolio AST International Value Portfolio AST Investment Grade Bond Portfolio AST J.P. Morgan Global Thematic Portfolio AST J.P. Morgan International Equity Portfolio AST J.P. Morgan Strategic Opportunities Portfolio AST Jennison Large-Cap Growth Portfolio AST Large-Cap Value Portfolio AST Loomis Sayles Large-Cap Growth Portfolio AST Lord Abbett Core Fixed Income Portfolio AST MFS Global Equity Portfolio AST MFS Growth Portfolio AST MFS Large-Cap Value Portfolio AST Mid-Cap Value Portfolio AST Multi-Sector Fixed Income Portfolio AST Money Market Portfolio AST Neuberger Berman Core Bond Portfolio AST Neuberger Berman Mid-Cap Growth Portfolio AST Neuberger Berman/LSV Mid-Cap Value Portfolio AST New Discovery Asset Allocation Portfolio AST Parametric Emerging Markets Equity Portfolio AST PIMCO Limited Maturity Bond Portfolio AST Preservation Asset Allocation Portfolio AST Prudential Core Bond Portfolio AST Prudential Growth Allocation Portfolio AST QMA Emerging Markets Equity Portfolio AST QMA Large-Cap Portfolio AST QMA US Equity Alpha Portfolio AST Quantitative Modeling Portfolio AST RCM World Trends Portfolio AST Schroders Global Tactical Portfolio AST Schroders Multi-Asset World Strategies Portfolio AST Small-Cap Growth Portfolio AST Small-Cap Growth Opportunities Portfolio AST Small-Cap Value Portfolio AST T. Rowe Price Asset Allocation Portfolio AST T. Rowe Price Equity Income Portfolio AST T. Rowe Price Growth Opportunities Portfolio AST T. Rowe Price Large-Cap Growth Portfolio AST T. Rowe Price Natural Resources Portfolio AST Templeton Global Bond Portfolio AST Wellington Management Hedged Equity Portfolio AST Western Asset Core Plus Bond Portfolio AST Western Asset Emerging Markets Debt Portfolio

2 Table of Contents 3 PART I 3 INTRODUCTION 4 TRUST PORTFOLIOS, INVESTMENT POLICIES & STRATEGIES 6 FUNDAMENTAL INVESTMENT RESTRICTIONS 23 NON-FUNDAMENTAL INVESTMENT RESTRICTIONS 33 INFORMATION ABOUT TRUSTEES AND OFFICERS 40 MANAGEMENT AND ADVISORY ARRANGEMENTS 72 PORTFOLIO MANAGERS: OTHER ACCOUNTS 89 PORTFOLIO MANAGERS: COMPENSATION & CONFLICTS POLICIES 143 OTHER SERVICE PROVIDERS 148 PORTFOLIO TRANSACTIONS & BROKERAGE 157 ADDITIONAL INFORMATION 161 PRINCIPAL SHAREHOLDERS 186 FINANCIAL STATEMENTS 187 PART II 187 INVESTMENT RISKS & CONSIDERATIONS 215 NET ASSET VALUES 216 TAXATION 217 DISCLOSURE OF PORTFOLIO HOLDINGS 219 PROXY VOTING 219 CODES OF ETHICS 220 APPENDIX I: DESCRIPTION OF BOND RATINGS 222 APPENDIX II: PROXY VOTING POLICIES OF THE SUBADVISERS

3 PART I INTRODUCTION This SAI sets forth information about the Trust and the Portfolios covered by the SAI. Part I provides additional information about the Trust s Board of Trustees (the Board), certain investments restrictions that apply to the Portfolios, the advisory services provided to and the management fees paid by the Trust, and information about other fees paid by and services provided to the Trust. Part II provides additional information about certain investments and investment strategies that may be used by the Portfolios and explanations of various investments and strategies which may be used by the Portfolios and explanations of these investments and strategies, and should be read in conjunction with Part I. Before reading the SAI, you should consult the Glossary below, which defines certain of the terms used in the SAI: Glossary Term Definition ADR American Depositary Receipt ADS American Depositary Share ASTIS AST Investment Services, Inc. Board Trust s Board of Directors or Trustees Board Member A trustee or director of the Trust s Board CFTC Commodity Futures Trading Commission Code Internal Revenue Code of 1986, as amended EDR European Depositary Receipt ETF Exchange-Traded Fund Fannie Mae Federal National Mortgage Association Fitch Fitch, Inc. Freddie Mac The Federal Home Loan Mortgage Corporation Global Depositary Receipt GDR Ginnie Mae Government National Mortgage Association IPO Initial Public Offering IRS Internal Revenue Service 1933 Act Securities Act of 1933, as amended 1934 Act Securities Exchange Act of 1934, as amended 1940 Act Investment Company Act of 1940, as amended LIBOR London Interbank Offered Rate Moody s Moody s Investor Services, Inc. NASDAQ National Association of Securities Dealers Automated Quotations System NAV Net Asset Value NYSE New York Stock Exchange OTC Over the Counter PI Prudential Investments LLC PMFS Prudential Mutual Fund Services LLC REIT Real Estate Investment Trust RIC Regulated Investment Company, as the term is used in the Internal Revenue Code of 1986, as amended S&P Standard & Poor s Corporation SEC US Securities & Exchange Commission World Bank International Bank for Reconstruction and Development 3

4 TRUST PORTFOLIOS, INVESTMENT POLICIES & STRATEGIES The Trust is an open-end management investment company (commonly known as a mutual fund) that is intended to provide a range of investment alternatives through its separate Portfolios, each of which is, for investment purposes, in effect a separate fund. The Portfolios offered by the Trust which are discussed in this SAI are set forth below: AST Academic Strategies Asset Allocation Portfolio AST Advanced Strategies Portfolio AST AQR Emerging Markets Equity Portfolio AST AQR Large-Cap Portfolio AST Balanced Asset Allocation Portfolio AST BlackRock Global Strategies Portfolio AST BlackRock ishares ETF Portfolio AST BlackRock/Loomis Sayles Bond Portfolio (formerly, AST PIMCO Total Return Bond Portfolio) AST Bond Portfolio 2015 AST Bond Portfolio 2016 AST Bond Portfolio 2017 AST Bond Portfolio 2018 AST Bond Portfolio 2019 AST Bond Portfolio 2020 AST Bond Portfolio 2021 AST Bond Portfolio 2022 AST Bond Portfolio 2023 AST Bond Portfolio 2024 AST Bond Portfolio 2025 AST Bond Portfolio 2026 AST Boston Partners Large-Cap Value Portfolio (formerly, AST Jennison Large-Cap Value Portfolio) AST Capital Growth Asset Allocation Portfolio AST ClearBridge Dividend Growth Portfolio AST Cohen & Steers Realty Portfolio AST Defensive Asset Allocation Portfolio AST FI Pyramis Asset Allocation Portfolio AST FI Pyramis Quantitative Portfolio AST Franklin Templeton Founding Funds Allocation Portfolio AST Franklin Templeton Founding Funds Plus Portfolio AST Global Real Estate Portfolio AST Goldman Sachs Large-Cap Value Portfolio AST Goldman Sachs Mid-Cap Growth Portfolio AST Goldman Sachs Multi-Asset Portfolio AST Goldman Sachs Small-Cap Value Portfolio AST Herndon Large-Cap Value Portfolio AST High Yield Portfolio AST International Growth Portfolio AST International Value Portfolio AST Investment Grade Bond Portfolio AST J.P. Morgan Global Thematic Portfolio AST J.P. Morgan International Equity Portfolio AST J.P. Morgan Strategic Opportunities Portfolio AST Jennison Large-Cap Growth Portfolio AST Large-Cap Value Portfolio AST Loomis Sayles Large-Cap Growth Portfolio AST Lord Abbett Core Fixed Income Portfolio AST MFS Global Equity Portfolio AST MFS Growth Portfolio AST MFS Large-Cap Value Portfolio AST Mid-Cap Value Portfolio AST Multi-Sector Fixed Income Portfolio AST Money Market Portfolio AST Neuberger Berman Core Bond Portfolio 4

5 AST Neuberger Berman Mid-Cap Growth Portfolio AST Neuberger Berman/LSV Mid-Cap Value Portfolio AST New Discovery Asset Allocation Portfolio AST Parametric Emerging Markets Equity Portfolio AST PIMCO Limited Maturity Bond Portfolio AST Preservation Asset Allocation Portfolio AST Prudential Core Bond Portfolio AST Prudential Growth Allocation Portfolio AST QMA Emerging Markets Equity Portfolio AST QMA Large-Cap Portfolio AST QMA US Equity Alpha Portfolio AST Quantitative Modeling Portfolio AST RCM World Trends Portfolio AST Schroders Global Tactical Portfolio AST Schroders Multi-Asset World Strategies Portfolio AST Small-Cap Growth Portfolio AST Small-Cap Growth Opportunities Portfolio (formerly, AST Federated Aggressive Growth Portfolio) AST Small-Cap Value Portfolio AST T. Rowe Price Asset Allocation Portfolio AST T. Rowe Price Equity Income Portfolio AST T. Rowe Price Growth Opportunities Portfolio AST T. Rowe Price Large-Cap Growth Portfolio AST T. Rowe Price Natural Resources Portfolio AST Templeton Global Bond Portfolio AST Wellington Management Hedged Equity Portfolio AST Western Asset Core Plus Bond Portfolio AST Western Asset Emerging Markets Debt Portfolio In addition to the Portfolios identified above, the Trust also offers the following portfolios, which are discussed in a separate SAI. Please consult the other SAI for information about these portfolios: AST BlackRock Multi-Asset Income Portfolio AST Franklin Templeton K2 Global Absolute Return Portfolio AST FQ Absolute Return Currency Portfolio AST Goldman Sachs Global Growth Allocation Portfolio AST Goldman Sachs Strategic Income Portfolio AST Jennison Global Infrastructure Portfolio AST Legg Mason Diversified Growth Portfolio AST Managed Equity Portfolio AST Managed Fixed Income Portfolio AST Prudential Flexible Multi-Strategy Portfolio AST QMA International Core Equity Portfolio AST T. Rowe Price Diversified Real Growth Portfolio The Trust offers one class of shares in each Portfolio. Shares of each Portfolio are sold only to separate accounts of Prudential Annuities Life Assurance Corporation, The Prudential Insurance Company of America, Pruco Life Insurance Company, Pruco Life Insurance Company of New Jersey, Prudential Retirement Insurance and Annuity Company, Pramerica of Bermuda Life Assurance Company, Ltd. (collectively, Prudential), Kemper Investors Life Insurance Company, Allstate Life Insurance Company and Allstate Life Insurance Company of New York as investment options under variable life insurance and variable annuity contracts (the Contracts). (A separate account keeps the assets supporting certain insurance contracts separate from the general assets and liabilities of the insurance company.) Not every Portfolio is available under each Contract. The prospectus for each Contract lists the Portfolios currently available under that particular Contract. In order to sell shares to both Prudential and non-prudential insurance companies, the Trust has obtained an exemptive order (the Order) from the SEC. The Trust and its Portfolios are managed in compliance with the terms and conditions of that Order. 5

6 Prudential Investments LLC (PI) and AST Investment Services, Inc. (ASTIS), both wholly-owned subsidiaries of Prudential Financial, Inc. (Prudential Financial), serve as overall investment managers of the Portfolios covered by this SAI other than the AST Schroders Global Tactical Portfolio, the AST AQR Emerging Markets Equity Portfolio and the AST Bond Portfolio PI serves as the sole investment manager for the AST Schroders Global Tactical Portfolio, the AST AQR Emerging Markets Equity Portfolio and the AST Bond Portfolio When used in this SAI, the Investment Managers or Manager refers to (a) PI with respect to the AST AQR Emerging Markets Equity Portfolio, the AST Schroders Global Tactical Portfolio and the AST Bond Portfolio 2026; and (b) PI and ASTIS, collectively, with respect to all other Portfolios covered by this SAI. Each of the Portfolios has a different investment objective. For this reason, each Portfolio will have different investment results and be subject to different financial and market risks. As discussed in the Prospectus, several of the Portfolios may invest in money market instruments and comparable securities as part of assuming a temporary defensive position. The investment objects of each Portfolio are discussed in the Prospectus. Each of the Portfolios operated as funds-of-funds, as identified in the Prospectus, may engage in all of the investments and investment strategies discussed in Part II of this SAI, either by each such Portfolio s investments in an underlying fund or by investing the Portfolio s assets in the investments or strategies. FUNDAMENTAL INVESTMENT RESTRICTIONS Set forth below are certain investment restrictions applicable to the Portfolios. Fundamental restrictions may not be changed without a majority vote of shareholders as required by the 1940 Act. Non-fundamental restrictions may be changed by the Board of Trustees without shareholder approval. The investment restrictions set forth below are fundamental policies. More information regarding fundamental policies of the Portfolios and the requirements for changing such fundamental policies is set forth in this SAI under the caption Investment Objectives, Policies and Principal Risks. More information about the non-fundamental investment policies of the Portfolios is set forth in the Prospectus under the caption Investment Objectives and Policies. FUNDAMENTAL INVESTMENT RESTRICTIONS APPLICABLE ONLY TO THE FOLLOWING PORTFOLIOS: AST Cohen & Steers Realty Portfolio AST Goldman Sachs Mid-Cap Growth Portfolio AST Goldman Sachs Small-Cap Value Portfolio AST Herndon Large-Cap Value Portfolio AST J.P. Morgan International Equity Portfolio AST J.P. Morgan Strategic Opportunities Portfolio AST Loomis Sayles Large-Cap Growth Portfolio AST Lord Abbett Core Fixed Income Portfolio AST MFS Global Equity Portfolio AST MFS Growth Portfolio AST Mid-Cap Value Portfolio AST Neuberger Berman Mid-Cap Growth Portfolio AST Neuberger Berman/LSV Mid-Cap Value Portfolio AST QMA US Equity Alpha Portfolio AST Small-Cap Growth Portfolio AST Small-Cap Growth Opportunities Portfolio AST T. Rowe Price Equity Income Portfolio AST T. Rowe Price Large-Cap Growth Portfolio 1. No Portfolio may issue senior securities, except as permitted under the 1940 Act. 2. With respect to each Portfolio other than the AST QMA US Equity Alpha Portfolio, no Portfolio may borrow money, except that a Portfolio may (i) borrow money for non-leveraging, temporary or emergency purposes, and (ii) engage in reverse repurchase agreements and make other investments or engage in other transactions, which may involve a borrowing, in a manner consistent with the Portfolio s investment objective and policies; provided that the combination of (i) and (ii) shall not exceed % of the value of the Portfolio s assets (including the amount borrowed) less liabilities (other than borrowings) or such other percentage permitted by law. Any borrowings which come to exceed this amount will be reduced in accordance with applicable law. Subject to the above limitations, a Portfolio may borrow from persons to the extent permitted by applicable law, including the 1940 Act, or to the extent permitted by any exemption from the 1940 Act that may be granted by the SEC, or any SEC releases, no-action letters or similar relief or interpretive guidance. 6

7 With respect only to the AST QMA US Equity Alpha Portfolio, the Portfolio may not borrow money, except that the Portfolio may borrow money from banks provided that the Portfolio maintains a ratio of assets to borrowings at all times in the manner set forth in the 1940 Act. Notwithstanding the above limitation, the Portfolio may borrow money from any person to the extent permitted by applicable law, including the 1940 Act, or to the extent permitted by any exemption from the 1940 Act that may be granted by the SEC, or any SEC releases, no-action letters or similar relief or interpretive guidance. 3. No Portfolio may underwrite securities issued by other persons, except to the extent that the Portfolio may be deemed to be an underwriter (within the meaning of the 1933 Act) in connection with the purchase and sale of portfolio securities. 4. No Portfolio may purchase or sell real estate unless acquired as a result of the ownership of securities or other instruments; provided that this restriction shall not prohibit a Portfolio from investing in securities or other instruments backed by real estate or in securities of companies engaged in the real estate business. 5. No Portfolio may purchase or sell physical commodities unless acquired as a result of the ownership of securities or instruments; provided that this restriction shall not prohibit a Portfolio from (i) engaging in permissible options and futures transactions and forward foreign currency contracts in accordance with the Portfolio s investment policies, or (ii) investing in securities of any kind. 6. No Portfolio may make loans, except that a Portfolio may (i) lend portfolio securities in accordance with the Portfolio s investment policies in amounts up to % of the total assets of the Portfolio taken at market value, (ii) purchase money market securities and enter into repurchase agreements, (iii) acquire publicly distributed or privately placed debt securities, and (iv) make loans of money to other investment companies to the extent permitted by the 1940 Act or any exemption therefrom that may be granted by the SEC or any SEC releases, no-action letters or similar relief or interpretive guidance. 7. No Portfolio other than the AST Cohen & Steers Realty Portfolio may purchase any security if, as a result, more than 25% of the value of the Portfolio s assets would be invested in the securities of issuers having their principal business activities in the same industry; provided that this restriction does not apply to investments in obligations issued or guaranteed by the US Government or any of its agencies or instrumentalities (or repurchase agreements with respect thereto). The AST Cohen & Steers Realty Portfolio will invest at least 25% of its total assets in securities of companies engaged in the real estate business. 8. No Portfolio other than the AST Cohen & Steers Realty Portfolio may, with respect to 75% of the value of its total assets, purchase the securities of any issuer (other than securities issued or guaranteed by the US Government or any of its agencies or instrumentalities) if, as a result, (i) more than 5% of the value of the Portfolio s total assets would be invested in the securities of such issuer, or (ii) more than 10% of the outstanding voting securities of such issuer would be held by the Portfolio. The AST Cohen & Steers Realty Portfolio may not, with respect to 50% of a Portfolio s total assets, invest in the securities of any one issuer (other than the US Government and its agencies and instrumentalities), if immediately after and as a result of such investment more than 5% of the total assets of the Portfolio would be invested in such issuer. If a restriction on a Portfolio s investments is adhered to at the time an investment is made, a subsequent change in the percentage of Portfolio assets invested in certain securities or other instruments, or change in average duration of the Portfolio s investment portfolio, resulting from changes in the value of the Portfolio s total assets, will not be considered a violation of the restriction; provided, however, that the asset coverage requirement applicable to borrowings shall be maintained in the manner contemplated by applicable law. With respect to investment restrictions (2) and (6), a Portfolio will not borrow or lend to any other fund unless it applies for and receives an exemptive order from the SEC, if so required, or the SEC issues rules permitting such transactions. With respect to investment restriction (6), the restriction on making loans is not considered to limit a Portfolio s investments in loan participations and assignments. With respect to investment restriction (7), the AST J.P. Morgan International Equity Portfolio and the AST J.P. Morgan Strategic Opportunities Portfolio will not consider a bank-issued guaranty or financial guaranty insurance as a separate security for purposes of determining the percentage of the Portfolios assets invested in the securities of issuers in a particular industry. FUNDAMENTAL INVESTMENT RESTRICTIONS APPLICABLE ONLY TO THE FOLLOWING PORTFOLIOS: AST BlackRock/Loomis Sayles Bond Portfolio AST Goldman Sachs Large-Cap Value Portfolio AST High Yield Portfolio AST Large Cap Value Portfolio AST Money Market Portfolio 7

8 1. A Portfolio will not underwrite securities issued by others except to the extent that the Portfolio may be deemed an underwriter when purchasing or selling securities. 2. A Portfolio will not issue senior securities. FUNDAMENTAL INVESTMENT RESTRICTIONS APPLICABLE ONLY TO THE FOLLOWING PORTFOLIOS: AST Advanced Strategies Portfolio AST FI Pyramis Asset Allocation Portfolio AST FI Pyramis Quantitative Portfolio AST Goldman Sachs Multi-Asset Portfolio AST J.P. Morgan Global Thematic Portfolio AST Neuberger Berman Mid-Cap Growth Portfolio AST Prudential Growth Allocation Portfolio AST RCM World Trends Portfolio AST Schroders Global Tactical Portfolio AST Western Asset Core Plus Bond Portfolio Under its fundamental investment restrictions, each Portfolio may not: 1. Issue senior securities, except as permitted under the 1940 Act. 2. Borrow money, except that a Portfolio may (i) borrow money for non-leveraging, temporary or emergency purposes, and (ii) engage in reverse repurchase agreements and make other investments or engage in other transactions, which may involve a borrowing, in a manner consistent with the Portfolio s investment objective and policies; provided that the combination of (i) and (ii) shall not exceed % of the value of the Portfolio s assets (including the amount borrowed) less liabilities (other than borrowings) or such other percentage permitted by law. Any borrowings that come to exceed this amount will be reduced in accordance with applicable law. Subject to the above limitations, a Portfolio may borrow from persons to the extent permitted by applicable law, including the 1940 Act, or to the extent permitted by any exemption from the 1940 Act that may be granted by the SEC, or any SEC releases, no-action letters or similar relief or interpretive guidance. 3. Underwrite securities issued by other persons, except to the extent that a Portfolio may be deemed to be an underwriter (within the meaning of the 1933 Act) in connection with the purchase and sale of portfolio securities. 4. Purchase or sell real estate unless acquired as a result of the ownership of securities or other instruments; provided that this restriction shall not prohibit a Portfolio from investing in securities or other instruments backed by real estate or in securities of companies engaged in the real estate business. 5. Purchase or sell physical commodities unless acquired as a result of the ownership of securities or instruments; provided that this restriction shall not prohibit a Portfolio from (i) engaging in permissible options and futures transactions and forward foreign currency contracts in accordance with the Portfolio s investment policies, or (ii) investing in securities of any kind. 6. Make loans, except that a Portfolio may (i) lend portfolio securities in accordance with the Portfolio s investment policies in amounts up to % of the total assets of the Portfolio taken at market value, (ii) purchase money market securities and enter into repurchase agreements, (iii) acquire publicly distributed or privately placed debt securities, and (iv) make loans of money to other investment companies to the extent permitted by the Investment Company Act or any exemption therefrom that may be granted by the SEC or any SEC releases, no-action letters or similar relief or interpretive guidance. 7. Purchase any security if, as a result, more than 25% of the value of the Portfolio s assets would be invested in the securities of issuers having their principal business activities in the same industry; provided that this restriction does not apply to investments in obligations issued or guaranteed by the US Government or any of its agencies or instrumentalities or to municipal securities (or repurchase agreements with respect thereto). For purposes of this limitation, investments in other investment companies shall not be considered an investment in any particular industry. 8. With respect to 75% of the value of its total assets, purchase the securities of any issuer (other than securities issued or guaranteed by the US Government or any of its agencies or instrumentalities) if, as a result, (i) more than 5% of the value of the Portfolio s total assets would be invested in the securities of such issuer, or (ii) more than 10% of the outstanding voting securities of such issuer would be held by the Portfolio. 8

9 If a restriction on a Portfolio s investments is adhered to at the time an investment is made, a subsequent change in the percentage of the Portfolio assets invested in certain securities or other instruments, or change in average duration of the Portfolio s investment portfolio, resulting from changes in the value of the Portfolio s total assets, will not be considered a violation of the restriction; provided, however, that the asset coverage requirement applicable to borrowings shall be maintained in the manner contemplated by applicable law. With respect to investment restriction (6), the restriction on making loans is not considered to limit Portfolio s investments in loan participations and assignments. With respect to investment restriction (7), a Portfolio will not consider a bank-issued guaranty or financial guaranty insurance as a separate security for purposes of determining the percentage of the Portfolio s assets invested in the securities of issuers in a particular industry. With respect to investment restrictions (2) and (6), a Portfolio will not borrow or lend to any other fund unless it applies for and receives an exemptive order from the SEC, if so required, or the SEC issues rules permitting such transactions. FUNDAMENTAL INVESTMENT RESTRICTIONS APPLICABLE ONLY TO THE FOLLOWING PORTFOLIOS: AST Academic Strategies Asset Allocation Portfolio AST Balanced Asset Allocation Portfolio AST Capital Growth Asset Allocation Portfolio AST Preservation Asset Allocation Portfolio AST Wellington Management Hedged Equity Portfolio Under its fundamental investment restrictions, each Portfolio may not: 1. Issue senior securities, except as permitted under the 1940 Act. 2. The Portfolios may not borrow money, except to the extent permitted by applicable law from time to time. Note: The 1940 Act currently permits an open-end investment company to borrow money from a bank so long as the ratio which the value of the total assets of the investment company (including the amount of any such borrowing), less the amount of all liabilities and indebtedness (other than such borrowing) of the investment company, bears to the amount of such borrowing is at least 300%. An open-end investment company may also borrow money from other lenders in accordance with applicable law and positions of the SEC and its staff. The Portfolio may engage in reverse repurchase arrangements without limit, subject to applicable requirements related to segregation of assets. 3. Underwrite securities issued by other persons, except to the extent that a Portfolio may be deemed to be an underwriter (within the meaning of the 1933 Act) in connection with the purchase and sale of portfolio securities. 4. Purchase or sell real estate unless acquired as a result of the ownership of securities or other instruments; provided that this restriction shall not prohibit a Portfolio from investing in securities or other instruments backed by real estate or in securities of companies engaged in the real estate business. 5. Purchase or sell physical commodities unless acquired as a result of the ownership of securities or instruments; provided that this restriction shall not prohibit a Portfolio from (i) engaging in permissible options and futures transactions and forward foreign currency contracts in accordance with the Asset Allocation Portfolio s investment policies, or (ii) investing in securities of any kind. 6. Make loans, except that a Portfolio may (i) lend portfolio securities in accordance with the Portfolio s investment policies in amounts up to % of the total assets of the Portfolio taken at market value, (ii) purchase money market securities and enter into repurchase agreements, (iii) acquire publicly distributed or privately placed debt securities, and (iv) make loans of money to other investment companies to the extent permitted by the 1940 Act or any exemption therefrom that may be granted by the SEC or any SEC releases, no-action letters or similar relief or interpretive guidance. 7. Purchase any security if, as a result, more than 25% of the value of the Portfolio s assets would be invested in the securities of issuers having their principal business activities in the same industry; provided that this restriction does not apply to investments in obligations issued or guaranteed by the US Government or any of its agencies or instrumentalities or to municipal securities (or repurchase agreements with respect thereto). For purposes of this limitation, investments in other investment companies shall not be considered an investment in any particular industry. 9

10 If a restriction on a Portfolio s investments is adhered to at the time an investment is made, a subsequent change in the percentage of the Portfolio s assets invested in certain securities or other instruments, or change in average duration of the Portfolio s investment portfolio, resulting from changes in the value of the Portfolio s total assets, will not be considered a violation of the restriction; provided, however, that the asset coverage requirement applicable to borrowings shall be maintained in the manner contemplated by applicable law. With respect to investment restrictions (2) and (6), a Portfolio will not borrow or lend to any other fund unless it applies for and receives an exemptive order from the SEC, if so required, or the SEC issues rules permitting such transactions. With respect to investment restriction (6), the restriction on making loans is not considered to limit an Asset Allocation Portfolio s investments in loan participations and assignments. With respect to investment restriction (7), each Portfolio will not consider a bank-issued guaranty or financial guaranty insurance as a separate security for purposes of determining the percentage of the Asset Allocation Portfolio s assets invested in the securities of issuers in a particular industry. FUNDAMENTAL INVESTMENT RESTRICTIONS APPLICABLE ONLY TO AST INTERNATIONAL GROWTH PORTFOLIO: 1. The Portfolio may borrow money for temporary or emergency purposes (not for leveraging or investment) in an amount not exceeding % of the value of its total assets (including the amount borrowed) less liabilities (other than borrowings). If borrowings exceed % of the value of the Portfolio s total assets by reason of a decline in net assets, the Portfolio will reduce its borrowings within three business days to the extent necessary to comply with the % limitation. This policy shall not prohibit reverse repurchase agreements, deposits of assets to margin or guarantee positions in futures, options, swaps or forward contracts, or the segregation of assets in connection with such contracts. Subject to the above limitations, the Portfolio may borrow from persons to the extent permitted by applicable law, including the 1940 Act, or to the extent permitted by any exemption from the 1940 Act that may be granted by the SEC, or any SEC releases, no-action letters or similar relief or interpretive guidance. 2. The Portfolio will not, as to 75% of the value of its total assets, own more than 10% of the outstanding voting securities of any one issuer, or purchase the securities of any one issuer (except cash items and government securities as defined under the 1940 Act), if immediately after and as a result of such purchase, the value of the holdings of the Portfolio in the securities of such issuer exceeds 5% of the value of its total assets. 3. The Portfolio will not invest more than 25% of the value of its assets in any particular industry (other than US government securities). 4. The Portfolio will not invest directly in real estate or interests in real estate; however, the Portfolio may own debt or equity securities issued by companies engaged in those businesses. 5. The Portfolio will not purchase or sell physical commodities other than foreign currencies unless acquired as a result of ownership of securities (but this limitation shall not prevent the Portfolio from purchasing or selling options, futures, swaps and forward contracts or from investing in securities or other instruments backed by physical commodities). 6. The Portfolio may not make loans, except that the Portfolio may (i) lend portfolio securities in accordance with the Portfolio s investment policies in amounts up to % of the total assets of the Portfolio taken at market value; (ii) purchase money market securities and enter into repurchase agreements; (iii) acquire publicly distributed or privately placed debt securities; and (iv) make loans of money to other investment companies to the extent permitted by the 1940 Act or any exemption therefrom that may be granted by the SEC or any SEC releases, no-action letters or similar relief or interpretive guidance. 7. The Portfolio will not act as an underwriter of securities issued by others, except to the extent that the Portfolio may be deemed an underwriter in connection with the disposition of its securities. 8. The Portfolio will not issue senior securities except in compliance with the 1940 Act. FUNDAMENTAL INVESTMENT RESTRICTIONS APPLICABLE ONLY TO AST SMALL-CAP VALUE PORTFOLIO: The following fundamental policies should be read in connection with the notes set forth below. The notes are not fundamental policies. As a matter of fundamental policy, the Portfolio may not: 1. Borrow money except that the Portfolio may (i) borrow for non-leveraging, temporary or emergency purposes and (ii) engage in reverse repurchase agreements and make other investments or engage in other transactions, which may involve a borrowing, in a manner consistent with the Portfolio s investment objective and program, provided that the combination of (i) and (ii) shall not exceed 10

11 33 1 3% of the value of the Portfolio s total assets (including the amount borrowed) less liabilities (other than borrowings) or such other percentage permitted by law. Any borrowings which come to exceed this amount will be reduced in accordance with applicable law. The Portfolio may borrow from persons to the extent permitted by applicable law including the 1940 Act, or to the extent permitted by any exemption from the 1940 Act that may be granted by the SEC, or any SEC releases, no-action letters or similar relief or interpretive guidance; 2. Purchase or sell physical commodities; except that it may enter into futures contracts and options thereon; 3. Purchase the securities of any issuer if, as a result, more than 25% of the value of the Portfolio s total assets would be invested in the securities of issuers having their principal business activities in the same industry; 4. Make loans, although the Portfolio may (i) lend portfolio securities and participate in an interfund lending program to the extent permitted by applicable law, provided that no such loan may be made if, as a result, the aggregate of such loans would exceed % of the value of the Portfolio s total assets; (ii) purchase money market securities and enter into repurchase agreements; (iii) acquire publicly-distributed or privately-placed debt securities and purchase debt; and (iv) make loans of money to other investment companies to the extent permitted by the 1940 Act or any exemption therefrom that may be granted by the SEC or any SEC releases, no-action letters or similar relief or interpretive guidance; 5. Purchase a security if, as a result, with respect to 75% of the value of its total assets, more than 5% of the value of the Portfolio s total assets would be invested in the securities of a single issuer, except securities issued or guaranteed by the US Government or any of its agencies or instrumentalities; 6. Purchase a security if, as a result, with respect to 75% of the value of the Portfolio s total assets, more than 10% of the outstanding voting securities of any issuer would be held by the Portfolio (other than obligations issued or guaranteed by the US Government, its agencies or instrumentalities); 7. Purchase or sell real estate unless acquired as a result of ownership of securities or other instruments (but this shall not prevent the Portfolio from investing in securities or other instruments backed by real estate or in securities of companies engaged in the real estate business); 8. Issue senior securities except in compliance with the 1940 Act; or 9. Underwrite securities issued by other persons, except to the extent that the Portfolio may be deemed to be an underwriter within the meaning of the 1933 Act in connection with the purchase and sale of its portfolio securities in the ordinary course of pursuing its investment program. Notes: The following notes should be read in connection with the above-described fundamental policies. The notes are not fundamental policies. With respect to investment restrictions (1) and (4), the Portfolio will not borrow from or lend to any other fund unless it applies for and receives an exemptive order from the SEC, if so required, or the SEC issues rules permitting such transactions. With respect to investment restriction (2), the Portfolio does not consider currency contracts or hybrid investments to be commodities. For purposes of investment restriction (3), US, state or local governments, or related agencies or instrumentalities, are not considered an industry. For purposes of investment restriction (4), the Portfolio will consider the acquisition of a debt security to include the execution of a note or other evidence of an extension of credit with a term of more than nine months. FUNDAMENTAL INVESTMENT RESTRICTIONS APPLICABLE ONLY TO AST INTERNATIONAL VALUE PORTFOLIO: As a matter of fundamental policy, the Portfolio will not: 1. Make loans of money or securities other than (a) through the purchase of securities in accordance with the Portfolio s investment objective, (b) through repurchase agreements, (c) by lending portfolio securities in an amount not to exceed % of the Portfolio s total assets and (d) loans of money to other investment companies to the extent permitted by the 1940 Act or any exemptions therefrom that may be granted by the SEC or any SEC releases, no-action letters or similar relief or interpretive guidance; 2. Underwrite securities issued by others except to the extent that the Portfolio may be deemed an underwriter when purchasing or selling securities; 11

12 3. Issue senior securities; 4. Invest directly in physical commodities (other than foreign currencies), real estate or interests in real estate; provided, that the Portfolio may invest in securities of issuers which invest in physical commodities, real estate or interests in real estate; and, provided further, that this restriction shall not prevent the Portfolio from purchasing or selling options, futures, swaps and forward contracts, or from investing in securities or other instruments backed by physical commodities, real estate or interests in real estate; 5. Make any investment which would concentrate 25% or more of the Portfolio s total assets in the securities of issuers having their principal business activities in the same industry, provided that this limitation does not apply to obligations issued or guaranteed by the US government, its agencies or instrumentalities; 6. Borrow money except from persons to the extent permitted by applicable law, including the 1940 Act, or to the extent permitted by any exemption from the 1940 Act that may be granted by the SEC, or any SEC releases, no-action letters or similar relief or interpretive guidance, and then in amounts up to % of the Portfolio s total assets; 7. As to 75% of the value of its total assets, invest more than 5% of its total assets, at market value, in the securities of any one issuer (except securities issued or guaranteed by the US Government, its agencies or instrumentalities); or 8. As to 75% of the value of its total assets, purchase more than 10% of any class of securities of any single issuer or purchase more than 10% of the voting securities of any single issuer. In applying the above restriction regarding investments in a single industry, the Portfolio uses industry classifications based, where applicable, on Baseline, Bridge Information Systems, Reuters, the S&P Stock Guide published by Standard & Poor s, information obtained from Bloomberg L.P. and Moody s International, and/or the prospectus of the issuing company. Selection of an appropriate industry classification resource will be made by the subadviser in the exercise of its reasonable discretion. (This note is not a fundamental policy.) FUNDAMENTAL INVESTMENT RESTRICTIONS APPLICABLE ONLY TO AST T. ROWE PRICE NATURAL RESOURCES PORTFOLIO: The following fundamental policies should be read in connection with the notes set forth below. The notes are not fundamental policies. As a matter of fundamental policy, the Portfolio may not: 1. Borrow money except that the Portfolio may (i) borrow for non-leveraging, temporary or emergency purposes and (ii) engage in reverse repurchase agreements and make other investments or engage in other transactions, which may involve a borrowing, in a manner consistent with the Portfolio s investment objective and program, provided that the combination of (i) and (ii) shall not exceed % of the value of the Portfolio s total assets (including the amount borrowed) less liabilities (other than borrowings) or such other percentage permitted by law. Any borrowings which come to exceed this amount will be reduced in accordance with applicable law. The Portfolio may borrow from persons to the extent permitted by applicable law, including the 1940 Act, or to the extent permitted by any exemption from the 1940 Act that may be granted by the SEC, or any SEC releases, no-action letters or similar relief or interpretive guidance; 2. Purchase or sell physical commodities; except that it may enter into futures contracts and options thereon; 3. Purchase the securities of any issuer if, as a result, more than 25% of the value of the Portfolio s total assets would be invested in the securities of issuers having their principal business activities in the same industry; 4. Make loans, although the Portfolio may (i) lend portfolio securities provided that no such loan may be made if, as a result, the aggregate of such loans would exceed % of the value of the Portfolio s total assets; (ii) make loans of money to other investment companies to the extent permitted by the 1940 Act or any exemption therefrom that may be granted by the SEC, or any SEC releases, no-action letters or similar relief or interpretive guidance; (iii) purchase money market securities and enter into repurchase agreements; and (iv) acquire publicly-distributed or privately-placed debt securities and purchase debt; 5. Purchase a security if, as a result, with respect to 75% of the value of its total assets, more than 5% of the value of the Portfolio s total assets would be invested in the securities of a single issuer, except securities issued or guaranteed by the US Government or any of its agencies or instrumentalities; 6. Purchase a security if, as a result, with respect to 75% of the value of the Portfolio s total assets, more than 10% of the outstanding voting securities of any issuer would be held by the Portfolio (other than obligations issued or guaranteed by the US Government, its agencies or instrumentalities); 12

13 7. Purchase or sell real estate unless acquired as a result of ownership of securities or other instruments (but this shall not prevent the Portfolio from investing in securities or other instruments backed by real estate or in securities of companies engaged in the real estate business); 8. Issue senior securities except in compliance with the 1940 Act; or 9. Underwrite securities issued by other persons, except to the extent that the Portfolio may be deemed to be an underwriter within the meaning of the 1933 Act in connection with the purchase and sale of its portfolio securities in the ordinary course of pursuing its investment program. Notes: The following notes should be read in connection with the above-described fundamental policies. The notes are not fundamental policies. With respect to investment restriction (2), the Portfolio does not consider currency contracts or hybrid investments to be commodities. For purposes of investment restriction (3), US, state or local governments, or related agencies or instrumentalities, are not considered an industry. Industries are determined by reference to the classifications of industries set forth in the Portfolio s semi-annual and annual reports. For purposes of investment restriction (4), the Portfolio will consider the acquisition of a debt security to include the execution of a note or other evidence of an extension of credit with a term of more than nine months. FUNDAMENTAL INVESTMENT RESTRICTIONS APPLICABLE ONLY TO AST GOLDMAN SACHS LARGE-CAP VALUE PORTFOLIO: 1. As to 75% of the value of its total assets, the Portfolio will not purchase a security of any issuer (other than securities issued or guaranteed by the US Government or any of its agencies or instrumentalities, or securities of other investment companies) if as a result, (a) more than 5% of the Portfolio s total assets would be invested in the securities of that issuer, or (b) the Portfolio would hold more than 10% of the outstanding voting securities of that issuer. 2. The Portfolio may not make loans, except that the Portfolio may (i) lend portfolio securities in accordance with the Portfolio s investment policies in amounts up to % of the total assets of the Portfolio taken at market value; (ii) purchase money market securities and enter into repurchase agreements; (iii) acquire publicly distributed or privately placed debt securities; and (iv) make loans of money to other investment companies to the extent permitted by the 1940 Act or any exemption there from that may be granted by the SEC or any SEC releases, no-action letters or similar relief or interpretive guidance. 3. The Portfolio will not concentrate its investments in any one industry (the Portfolio s investment policy of keeping its assets in those securities which are selling at the most reasonable prices in relation to value normally results in diversification among many industries consistent with this, the Portfolio does not intend to invest more than 25% of its assets in any one industry classification used by the Subadviser for investment purposes, although such concentration could, under unusual economic and market conditions, amount to 30% or conceivably somewhat more). 4. The Portfolio will not borrow money except from persons to the extent permitted by applicable law including the 1940 Act, or to the extent permitted by any exemption from the 1940 Act that may be granted by the SEC, or any SEC releases, no-action letters or similar relief or interpretive guidance, and then in amounts not in excess of % of its total assets. The Portfolio may borrow at prevailing interest rates and invest the Portfolios in additional securities. The Portfolio s borrowings are limited so that immediately after such borrowing the value of the Portfolio s assets (including borrowings) less its liabilities (not including borrowings) is at least three times the amount of the borrowings. Should the Portfolio, for any reason, have borrowings that do not meet the above test then, within three business days, the Portfolio must reduce such borrowings so as to meet the necessary test. Under such a circumstance, the Portfolio may have to liquidate securities at a time when it is disadvantageous to do so. 5. The Portfolio will not purchase or sell real estate (although it may purchase securities secured by real estate interests or interests therein, or issued by companies or investment trusts which invest in real estate or interests therein). 6. The Portfolio will not invest directly in oil, gas, or other mineral exploration or development programs; however, the Portfolio may purchase securities of issuers whose principal business activities fall within such areas. FUNDAMENTAL INVESTMENT RESTRICTIONS APPLICABLE ONLY TO AST LARGE-CAP VALUE PORTFOLIO: As a matter of fundamental policy, the Portfolio may not: 13

14 1. Borrow money except from persons to the extent permitted by applicable law including the Investment Company Act of 1940, or to the extent permitted by any exemption from the 1940 Act that may be granted by the SEC, or any SEC releases, no-action letters or similar relief or interpretive guidance, in excess of % of the value of its total net assets, and when borrowing, it is for temporary or emergency purposes; 2. Buy or sell real estate, commodities, commodity contracts (however, the Portfolio may purchase securities of companies investing in real estate); 3. Purchase securities if the purchase would cause the Portfolio, at the time, with respect to 75% of its total assets, to have more than 5% of its total assets invested in the securities of any one company or to own more than 10% of the voting securities of any one company (except obligations issued or guaranteed by the US Government or any of its agencies or instrumentalities, or securities of other investment companies); 4. Make loans, except that the Portfolio may (i) lend portfolio securities in accordance with the Portfolio s investment policies in amounts up to % of the total assets of the Portfolio taken at market value; (ii) purchase money market securities and enter into repurchase agreements; (iii) acquire publicly distributed or privately placed debt securities; and (iv) make loans of money to other investment companies to the extent permitted by the 1940 Act or any exemption therefrom that may be granted by the SEC or any SEC releases, no-action letters or similar relief or interpretive guidance; or 5. Invest more than 25% of the value of the Portfolio s assets in one particular industry. FUNDAMENTAL INVESTMENT RESTRICTIONS APPLICABLE ONLY TO AST SCHRODERS MULTI-ASSET WORLD STRATEGIES PORTFOLIO: As a matter of fundamental policy, the Portfolio will not: 1. Make loans, except that the Portfolio may (i) lend portfolio securities in accordance with the Portfolio s investment policies in amounts up to % of the total assets of the Portfolio taken at market value; (ii) purchase money market securities and enter into repurchase agreements; (iii) acquire publicly distributed or privately placed debt securities; and (iv) make loans of money to other investment companies to the extent permitted by the 1940 Act or any exemption therefrom that may be granted by the SEC or any SEC releases, no-action letters or similar relief or interpretive guidance; 2. With respect to 75% of the value of its total assets, purchase the security of any one issuer if such purchase would cause more than 5% of the Portfolio s assets at market to be invested in the securities of such issuer, except United States government securities, or if the purchase would cause more than 10% of the outstanding voting securities of any one issuer to be held in the Portfolio; 3. Invest more than 25% of the assets of the Portfolio, exclusive of cash and US government securities, in securities of any one industry; 4. Issue any senior security except in compliance with the 1940 Act; 5. Underwrite any securities except to the extent that the Portfolio may be deemed an underwriter when purchasing or selling securities; 6. Purchase or sell real estate. (In the opinion of the Subadviser, this restriction will not preclude the Portfolio from investing in securities of corporations that deal in real estate.); 7. Purchase or sell physical commodities unless acquired as a result of the ownership of securities or instruments; provided that this restriction shall not prohibit a Portfolio from (i) engaging in permissible options and futures transactions and forward foreign currency contracts in accordance with the Portfolio s investment policies or (ii) investing in securities of any kind; or 8. The Portfolio may not borrow money, except to the extent permitted by applicable law from time to time. Note: The 1940 Act currently permits an open-end investment company to borrow money from a bank so long as the ratio which the value of the total assets of the investment company (including the amount of any such borrowing), less the amount of all liabilities and indebtedness (other than such borrowing) of the investment company, bears to the amount of such borrowing is at least 300%. An open-end investment company may also borrow money from other lenders in accordance with applicable law and positions of the SEC and its staff. The Portfolio may engage in reverse repurchase arrangements without limit, subject to applicable requirements related to segregation of assets. 14

15 FUNDAMENTAL INVESTMENT RESTRICTIONS APPLICABLE ONLY TO AST T. ROWE PRICE ASSET ALLOCATION PORTFOLIO: The following fundamental policies should be read in connection with the notes set forth below. The notes are not fundamental policies. As a matter of fundamental policy, the Portfolio may not: 1. Borrow money except that the Portfolio may (i) borrow for non-leveraging, temporary or emergency purposes and (ii) engage in reverse repurchase agreements and make other investments or engage in other transactions, which may or may be deemed to involve a borrowing, in a manner consistent with the Portfolio s investment objective and policies, provided that the combination of (i) and (ii) shall not exceed % of the value of the Portfolio s total assets (including the amount borrowed) less liabilities (other than borrowings) or such other percentage permitted by law. Any borrowings which come to exceed this amount will be reduced in accordance with applicable law. The Portfolio may borrow from persons to the extent permitted by applicable law, including the 1940 Act, or to the extent permitted by any exemption from the 1940 Act that may be granted by the SEC, or any SEC releases, no-action letters or similar relief or interpretive guidance; 2. Purchase or sell physical commodities; except that it may enter into futures contracts and options thereon; 3. Purchase the securities of any issuer if, as a result, more than 25% of the value of the Portfolio s total assets would be invested in the securities of issuers having their principal business activities in the same industry; 4. Make loans, although the Portfolio may (i) purchase money market securities and enter into repurchase agreements; (ii) acquire publicly-distributed or privately placed debt securities and purchase debt; (iii) lend portfolio securities provided that no such loan may be made if, as a result, the aggregate of such loans would exceed % of the value of the Portfolio s total assets; and (iv) make loans of money to other investment companies to the extent permitted by the 1940 Act or any exemption there from that may be granted by the SEC or any SEC releases, no-action letters or similar relief or interpretive guidance; 5. Purchase a security if, as a result, with respect to 75% of the value of its total assets, more than 5% of the value of the Portfolio s total assets would be invested in the securities of a single issuer, except securities issued or guaranteed by the US government, or any of its agencies or instrumentalities; 6. Purchase a security if, as a result, with respect to 75% of the value of the Portfolio s total assets, more than 10% of the outstanding voting securities of any issuer would be held by the Portfolio (other than obligations issued or guaranteed by the US government, its agencies or instrumentalities); 7. Purchase or sell real estate unless acquired as a result of ownership of securities or other instruments (but this shall not prevent the Portfolio from investing in securities or other instruments backed by real estate or securities of companies engaged in the real estate business); 8. Issue senior securities except in compliance with the 1940 Act; or 9. Underwrite securities issued by other persons, except to the extent that the Portfolio may be deemed to be an underwriter within the meaning of the 1933 Act in connection with the purchase and sale of its portfolio securities in the ordinary course of pursuing its investment program. Notes: The following notes should be read in connection with the above described fundamental policies. The notes are not fundamental policies. With respect to investment restrictions (1) and (4), the Portfolio will not borrow or lend to any other fund unless it applies for and receives an exemptive order from the SEC, if so required, or the SEC issues rules permitting such transactions. With respect to investment restriction (2), the Portfolio does not consider currency contracts on hybrid investments to be commodities. For the purposes of investment restriction (3), United States federal, state or local governments, or related agencies and instrumentalities, are not considered an industry. Foreign governments are considered an industry. For purposes of investment restriction (4), the Portfolio will consider the acquisition of a debt security to include the execution of a note or other evidence of an extension of credit with a term of more than nine months. FUNDAMENTAL INVESTMENT RESTRICTIONS APPLICABLE ONLY TO AST TEMPLETON GLOBAL BOND PORTFOLIO: As a matter of fundamental policy, the Portfolio may not: 15

16 1. Borrow money, except for temporary, extraordinary or emergency purposes or except in connection with reverse repurchase agreements provided that the Portfolio maintains asset coverage of 300% for all borrowings. Subject to the above limitations, the Portfolio may borrow from persons to the extent permitted by applicable law including the 1940 Act, or to the extent permitted by any exemption from the 1940 Act that may be granted by the SEC, or any SEC releases, no-action letters or similar relief or interpretive guidance; 2. Purchase or sell real estate (except that the Portfolio may invest in (i) securities of companies which deal in real estate or mortgages, and (ii) securities secured by real estate or interests therein, and that the Portfolio reserves freedom of action to hold and to sell real estate acquired as a result of the Portfolio s ownership of securities) or purchase or sell physical commodities or contracts relating to physical commodities; 3. Act as underwriter of securities issued by others, except to the extent that it may be deemed an underwriter in connection with the disposition of portfolio securities of the Portfolio; 4. Make loans to other persons, except (a) loans of portfolio securities, (b) to the extent the entry into repurchase agreements and the purchase of debt securities in accordance with its investment objectives and investment policies may be deemed to be loans, and (c) loans of money to other investment companies to the extent permitted by the 1940 Act or any exemption therefrom that may be granted by the SEC or any SEC releases, no-action letters or similar relief or interpretive guidance; 5. Issue senior securities except in compliance with the 1940 Act; or 6. Purchase any securities which would cause more than 25% of the market value of its total assets at the time of such purchase to be invested in the securities of one or more issuers having their principal business activities in the same industry, provided that there is no limitation with respect to investments in obligations issued or guaranteed by the US Government, its agencies or instrumentalities (for the purposes of this restriction, telephone companies are considered to be in a separate industry from gas and electric public utilities, and wholly-owned finance companies are considered to be in the industry of their parents if their activities are primarily related to financing the activities of their parents). Notes: The following notes should be read in connection with the above described fundamental policies. The notes are not fundamental policies. For purposes of investment restriction (4), the Portfolio will consider the acquisition of a debt security to include the execution of a note or other evidence of an extension of credit with a term of more than nine months. For purposes of investment restriction (6), US, state or local governments, or related agencies or instrumentalities, are not considered an industry. It is the position of the Staff of the SEC that foreign governments are industries for purposes of this restriction. For as long as this staff position is in effect, the Portfolio will not invest more than 25% of its total assets in the securities of any single governmental issuer. For purposes of this restriction, governmental entities are considered separate issuers. FUNDAMENTAL INVESTMENT RESTRICTIONS APPLICABLE ONLY TO AST HIGH YIELD PORTFOLIO: 1. The Portfolio will not borrow money except for temporary, extraordinary or emergency purposes and then only from persons to the extent permitted by applicable law including the 1940 Act, or to the extent permitted by any exemption from the 1940 Act that may be granted by the SEC, or any SEC releases, no-action letters or similar relief or interpretive guidance, and only in amounts not in excess of % of the value of its net assets, taken at the lower of cost or market. In addition, to meet redemption requests without immediately selling portfolio securities, the Portfolio may borrow up to one-third of the value of its total assets (including the amount borrowed) less its liabilities (not including borrowings, but including the current fair market value of any securities carried in open short positions). This practice is not for investment leverage but solely to facilitate management of the portfolio by enabling the Portfolio to meet redemption requests when the liquidation of portfolio securities is deemed to be inconvenient or disadvantageous. If, due to market fluctuations or other reasons, the value of the Portfolio s assets falls below 300% of its borrowings, it will reduce its borrowings within three business days. 2. The Portfolio will not invest more than 5% of its total assets in the securities of any one issuer (except cash and cash instruments, securities issued or guaranteed by the US government, its agencies, or instrumentalities, or instruments secured by these money market instruments, such as repurchase agreements). 3. The Portfolio will not purchase or sell real estate, although it may invest in marketable securities secured by real estate or interests in real estate, and it may invest in the marketable securities of companies investing or dealing in real estate. 16

17 4. The Portfolio will not purchase or sell commodities or commodity contracts or oil, gas, or other mineral exploration or development programs. However, it may invest in the marketable securities of companies investing in or sponsoring such programs. 5. The Portfolio may not make loans, except that the Portfolio may (i) lend portfolio securities in accordance with the Portfolio s investment policies in amounts up to % of the total assets of the Portfolio taken at market value; (ii) purchase money market securities and enter into repurchase agreements; (iii) acquire publicly distributed or privately placed debt securities; and (iv) make loans of money to other investment companies to the extent permitted by the 1940 Act or any exemption there from that may be granted by the SEC or any SEC releases, no-action letters or similar relief or interpretive guidance. 6. The Portfolio will not invest more than 25% of the value of its total assets in one industry. However, for temporary defensive purposes, the Portfolio may at times invest more than that percentage in: cash and cash items; securities issued or guaranteed by the US government, its agencies, or instrumentalities; or instruments secured by these money market instruments, such as repurchase agreements. FUNDAMENTAL INVESTMENT RESTRICTIONS APPLICABLE ONLY TO AST BLACKROCK/LOOMIS SAYLES BOND PORTFOLIO: 1. The Portfolio will not invest in a security if, as a result of such investment, more than 25% of its total assets (taken at market value at the time of investment) would be invested in securities of issuers of a particular industry, except that this restriction does not apply to securities issued or guaranteed by the US government or its agencies or instrumentalities (or repurchase agreements with respect thereto); 2. The Portfolio will not, with respect to 75% of its total assets, invest in a security if, as a result of such investment, more than 5% of its total assets (taken at market value at the time of investment) would be invested in the securities of any one issuer, except that this restriction does not apply to securities issued or guaranteed by the US government or its agencies or instrumentalities (or repurchase agreements with respect thereto); 3. The Portfolio will not, with respect to 75% of its assets, invest in a security if, as a result of such investment, it would hold more than 10% (taken at the time of investment) of the outstanding voting securities of any one issuer; 4. The Portfolio will not purchase or sell real estate (although it may purchase securities secured by real estate or interests therein, or securities issued by companies which invest in real estate, or interests therein); 5. The Portfolio will not purchase or sell commodities contracts or oil, gas or mineral programs. This restriction shall not prohibit the Portfolio, subject to restrictions stated in the Trust s Prospectus and elsewhere in this Statement, from purchasing, selling or entering into futures contracts, options on futures contracts, foreign currency forward contracts, foreign currency options, or any interest rate, securities related or foreign currency-related hedging instrument, including swap agreements and other derivative instruments, subject to compliance with any applicable provisions of the federal securities laws or commodities laws; 6. The Portfolio will not borrow money, issue senior securities, pledge, mortgage, hypothecate its assets, except that the Portfolio may (i) borrow from persons to the extent permitted by applicable law including the 1940 Act, or to the extent permitted by any exemption from the 1940 Act that may be granted by the SEC, or any SEC releases, no-action letters or similar relief or interpretive guidance, or enter into reverse repurchase agreements, or employ similar investment techniques, and pledge its assets in connection therewith, but only if immediately after each borrowing there is an asset coverage of 300% and (ii) enter into transactions in options, futures and options on futures and other derivative instruments as described in the Trust s Prospectus and this Statement (the deposit of assets in escrow in connection with the writing of covered put and call options and the purchase of securities on a when-issued or delayed delivery basis, collateral arrangements with respect to initial or variation margin deposits for future contracts and commitments entered into under swap agreements or other derivative instruments, will not be deemed to be pledges of the Portfolio s assets); 7. The Portfolio will not lend funds or other assets, except that the Portfolio may, consistent with its investment objective and policies: (a) invest in debt obligations, including bonds, debentures or other debt securities, bankers acceptances and commercial paper, even though the purchase of such obligations may be deemed to be the making of a loan, (b) enter into repurchase agreements, (c) lend its Portfolio securities in an amount not to exceed one-third the value of its total assets, provided such loans are and in accordance with applicable guidelines established by the SEC; and (d) make loans of money to other investment companies to the extent permitted by the 1940 Act or any exemption there from that may be granted by the SEC or any SEC releases, no-action letters or similar relief or interpretive guidance. FUNDAMENTAL INVESTMENT RESTRICTIONS APPLICABLE ONLY TO AST PIMCO LIMITED MATURITY BOND PORTFOLIO: As a matter of fundamental policy, the Portfolio may not: 17

18 1. Invest in a security if, as a result of such investment, more than 25% of its total assets (taken at market value at the time of such investment) would be invested in the securities of issuers in any particular industry, except that this restriction does not apply to securities issued or guaranteed by the US Government or its agencies or instrumentalities (or repurchase agreements with respect thereto); 2. With respect to 75% of its assets, invest in a security if, as a result of such investment, more than 5% of its total assets (taken at market value at the time of such investment) would be invested in securities of any one issuer, except that this restriction does not apply to securities issued or guaranteed by the US Government or its agencies or instrumentalities; 3. With respect to 75% of its assets, invest in a security if, as a result of such investment, it would hold more than 10% (taken at the time of such investment) of the outstanding voting securities of any one issuer; 4. Purchase or sell real estate (although it may purchase securities secured by real estate or interests therein, or securities issued by companies which invest in real estate, or interests therein); 5. Purchase or sell commodities or commodities contracts or oil, gas or mineral programs. This restriction shall not prohibit the Portfolio, subject to restrictions described in the Prospectus and elsewhere in this Statement, from purchasing, selling or entering into futures contracts, options, or any interest rate, securities-related or foreign currency-related hedging instrument, including swap agreements and other derivative instruments, subject to compliance with any applicable provisions of the federal securities or commodities laws; 6. Borrow money, issue senior securities, or pledge, mortgage or hypothecate its assets, except that the Portfolio may (i) borrow from persons to the extent permitted by applicable law including the 1940 Act, or to the extent permitted by any exemption from the 1940 Act that may be granted by the SEC, or any SEC releases, no-action letters or similar relief or interpretive guidance, or enter into reverse repurchase agreements, or employ similar investment techniques, and pledge its assets in connection therewith, but only if immediately after each borrowing there is asset coverage of 300% and (ii) enter into transactions in options, futures and options on futures and other derivative instruments as described in the Prospectus and in this Statement (the deposit of assets in escrow in connection with the writing of covered put and call options and the purchase of securities on a when-issued or delayed delivery basis, collateral arrangements with respect to initial or variation margin deposits for futures contracts and commitments entered into under swap agreements or other derivative instruments, will not be deemed to be pledges of the Portfolio assets); 7. Lend any funds or other assets, except that a Portfolio may, consistent with its investment objective and policies: (a) invest in debt obligations, including bonds, debentures or other debt securities, banker acceptance and commercial paper, even though the purchase of such obligations may be deemed to be the making of loans, (b) enter into repurchase agreements, (c) lend its portfolio securities in an amount not to exceed one-third of the value of its total assets, provided such loans are made in accordance with applicable guidelines established by the SEC; and (d) make loans of money to other investment companies to the extent permitted by the 1940 Act or any exemption therefrom that may be granted by the SEC or any SEC releases, no-action letters or similar relief or interpretive guidance. FUNDAMENTAL INVESTMENT RESTRICTIONS APPLICABLE ONLY TO AST MONEY MARKET PORTFOLIO: 1. The Portfolio will not purchase a security if as a result, the Portfolio would own more than 10% of the outstanding voting securities of any issuer. 2. As to 75% of the value of its total assets, the Portfolio will not invest more than 5% of its total assets, at market value, in the securities of any one issuer (except securities issued or guaranteed by the US Government, its agencies or instrumentalities). 3. The Portfolio will not purchase a security if as a result, more than 25% of its total assets, at market value, would be invested in the securities of issuers principally engaged in the same industry (except securities issued or guaranteed by the US Government, its agencies or instrumentalities, negotiable certificates of deposit, time deposits, and bankers acceptances of United States branches of United States banks). 4. The Portfolio will not enter into reverse repurchase agreements exceeding in the aggregate one-third of the market value of the Portfolio s total assets, less liabilities other than obligations created by reverse repurchase agreements. 5. The Portfolio will not borrow money, except from persons to the extent permitted by applicable law including the Investment Company Act of 1940, or to the extent permitted by any exemption from the 1940 Act that may be granted by the SEC, or any SEC releases, no-action letters or similar relief or interpretive guidance, for temporary, extraordinary or emergency purposes and then only in amounts not to exceed % of the value of the Portfolio s total assets, taken at cost, at the time of such borrowing. The Portfolio may not mortgage, pledge or hypothecate any assets except in connection with any such borrowing. The Portfolio will not purchase 18

19 securities while borrowings exceed 5% of the Portfolio s total assets. This borrowing provision is included to facilitate the orderly sale of securities, for example, in the event of abnormally heavy redemption requests, and is not for investment purposes and shall not apply to reverse repurchase agreements. 6. The Portfolio will not make loans, except through purchasing or holding debt obligations, or entering into repurchase agreements, or loans of Portfolio securities in accordance with the Portfolio s investment objectives and policies, or making loans of money to other investment companies to the extent permitted by the 1940 Act or any exemption there from that may be granted by the SEC or any SEC releases, no-action letters or similar relief or interpretive guidance. 7. The Portfolio will not purchase or sell puts, calls, straddles, spreads, or any combination thereof; real estate; commodities; or commodity contracts or interests in oil, gas or mineral exploration or development programs. However, the Portfolio may purchase bonds or commercial paper issued by companies which invest in real estate or interests therein including real estate investment trusts. FUNDAMENTAL INVESTMENT RESTRICTIONS APPLICABLE ONLY TO THE FOLLOWING PORTFOLIOS: AST AQR Emerging Markets Equity Portfolio AST AQR Large-Cap Portfolio AST BlackRock ishares ETF Portfolio AST Bond Portfolio 2015 AST Bond Portfolio 2016 AST Bond Portfolio 2017 AST Bond Portfolio 2018 AST Bond Portfolio 2019 AST Bond Portfolio 2020 AST Bond Portfolio 2021 AST Bond Portfolio 2022 AST Bond Portfolio 2023 AST Bond Portfolio 2024 AST Bond Portfolio 2025 AST Bond Portfolio 2026 AST Boston Partners Large-Cap Value Portfolio AST ClearBridge Dividend Growth Portfolio AST Defensive Asset Allocation Portfolio AST Franklin Templeton Founding Funds Allocation Portfolio AST Franklin Templeton Founding Funds Plus Portfolio AST Global Real Estate Portfolio AST Investment Grade Bond Portfolio AST Jennison Large-Cap Growth Portfolio AST MFS Large-Cap Value Portfolio AST Multi-Sector Fixed Income Portfolio AST Neuberger Berman Core Bond Portfolio AST New Discovery Asset Allocation Portfolio AST Parametric Emerging Markets Equity Portfolio AST QMA Emerging Markets Equity Portfolio AST QMA Large-Cap Portfolio AST T. Rowe Price Growth Opportunities Portfolio AST Western Asset Emerging Markets Debt Portfolio Under its fundamental investment restrictions, each Portfolio may not: 1. Issue senior securities or borrow money or pledge its assets, except as permitted by the 1940 Act and rules thereunder, exemptive order, SEC release, no-action letter or similar relief or interpretations. For purposes of this restriction, the purchase or sale of securities on a when-issued or delayed delivery basis, reverse repurchase agreements, dollar rolls, short sales, derivative and hedging transactions such as interest rate swap transactions, and collateral arrangements with respect thereto, and transactions similar to any of the foregoing and collateral arrangements with respect thereto, and obligations of a Portfolio to Trustees pursuant to any deferred compensation arrangements are not deemed to be a pledge of assets or the issuance of a senior security. 2. Underwrite securities issued by other persons, except to the extent that a Portfolio may be deemed to be an underwriter (within the meaning of the 1933 Act) in connection with the purchase and sale of portfolio securities. 19

20 3. Purchase or sell real estate unless acquired as a result of the ownership of securities or other instruments; provided that this restriction shall not prohibit a Portfolio from investing in securities or other instruments backed by real estate or in securities of companies engaged in the real estate business. 4. Purchase or sell physical commodities unless acquired as a result of the ownership of securities or instruments; provided that this restriction shall not prohibit a Portfolio from (i) engaging in permissible options and futures transactions and forward foreign currency contracts in accordance with the Portfolio s investment policies, or (ii) investing in securities of any kind. 5. Make loans, except that a Portfolio may (i) lend portfolio securities in accordance with the Portfolio s investment policies in amounts up to % of the total assets of the Portfolio taken at market value, (ii) purchase money market securities and enter into repurchase agreements, (iii) acquire publicly distributed or privately placed debt securities, and (iv) make loans of money to other investment companies to the extent permitted by the 1940 Act or any exemption there from that may be granted by the SEC or any SEC releases, no-action letters or similar relief or interpretive guidance. 6. Purchase any security if, as a result, more than 25% of the value of the Portfolio s assets would be invested in the securities of issuers having their principal business activities in the same industry; provided that this restriction does not apply to investments in obligations issued or guaranteed by the US Government or any of its agencies or instrumentalities or to municipal securities (or repurchase agreements with respect thereto). For purposes of this limitation, investments in other investment companies shall not be considered an investment in any particular industry. 7. Except for AST MFS Large-Cap Value Portfolio, with respect to 75% of the value of its total assets, purchase the securities of any issuer (other than securities issued or guaranteed by the US Government or any of its agencies or instrumentalities) if, as a result, (i) more than 5% of the value of the Portfolio s total assets would be invested in the securities of such issuer, or (ii) more than 10% of the outstanding voting securities of such issuer would be held by the Portfolio. If a restriction on a Portfolio s investments is adhered to at the time an investment is made, a subsequent change in the percentage of the Portfolio assets invested in certain securities or other instruments, or, except for AST Jennison Large-Cap Growth Portfolio and AST Boston Partners Large-Cap Value Portfolio, change in average duration of the Portfolio s investment portfolio, resulting from changes in the value of the Portfolio s total assets, will not be considered a violation of the restriction; provided, however, that the asset coverage requirement applicable to borrowings shall be maintained in the manner contemplated by applicable law. With respect to investment restriction (5), the restriction on making loans is not considered to limit Portfolio s investments in loan participations and assignments. With respect to investment restriction (6), a Portfolio will not consider a bank-issued guaranty or financial guaranty insurance as a separate security for purposes of determining the percentage of the Portfolio s assets invested in the securities of issuers in a particular industry. With respect to investment restrictions (1) and (5), a Portfolio will not borrow or lend to any other fund unless it applies for and receives an exemptive order from the SEC, if so required, or the SEC issues rules permitting such transactions. FUNDAMENTAL INVESTMENT RESTRICTIONS APPLICABLE ONLY TO THE FOLLOWING PORTFOLIOS: AST Global Real Estate Portfolio AST Parametric Emerging Markets Equity Portfolio 1. Neither Portfolio may issue senior securities or borrow money or pledge its assets, except as permitted by the 1940 Act and rules thereunder, exemptive order, SEC release, no-action letter or similar relief or interpretations. For purposes of this restriction, the purchase or sale of securities on a when-issued or delayed delivery basis, reverse repurchase agreements, dollar rolls, short sales, derivative and hedging transactions such as interest rate swap transactions, and collateral arrangements with respect thereto, and transactions similar to any of the foregoing and collateral arrangements with respect thereto, and obligations of a Portfolio to Trustees pursuant to any deferred compensation arrangements are not deemed to be a pledge of assets or the issuance of a senior security. 2. Neither Portfolio may underwrite securities issued by other persons, except to the extent that a Portfolio may be deemed to be an underwriter (within the meaning of the 1933 Act) in connection with the purchase and sale of portfolio securities. 3. Neither Portfolio may purchase or sell real estate, unless acquired as a result of ownership of securities or other instruments; provided, however, that this restriction shall not prohibit either Portfolio from investing in securities or other instruments backed by real estate or in securities of companies engaged in the real estate business. 20