Invest%20Like%20the%20Professionals

1
Invest Like the ProfessionalsAsset Allocation
and Diversification Are Key
IFS-A103119 Ed. 3/2006
2
Smart Investing Begins With An Investment Plan

• One that reflects your unique needs and goals
• The time you have to achieve them
• Your attitude toward risk.
• Step One Review your current portfolio
• Step Two Determine your future needs.
• Step Three Make a plan and stick to your plan.

3
Invest Like the Professionals

• Time-tested strategies
• Asset allocation
• Diversification

4
Asset Allocation Is the Primary Determinant of
Total Portfolio Volatility
Source Brinson, Singer, and Beebower (1991)
5
Which Asset Allocation Model Is Accurate?

• A. Conservative?

B. Moderate?
C. Aggressive?
Blue Bonds Purple Stocks
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Answer They Are All Correct!

• Your personal answer is based on your
• individual risk/reward profile

Blue Bonds Purple Stocks
Standard Deviation represents the volatility or
risk of an asset. It measures how scattered
actual returns are around the average return or
mean over a period of time. The greater the
degree of dispersion, the greater the risk
associated with the asset.
7
Emotional Investing Is a Common Mistake

• Everyone wants to buy low and sell high, but
  most investors do the opposite

Source Investment Company Institue. The SP 500
Index is an unmanaged, weighted index of 500
U.S. stocks providing a broad indicator of price
movement. Investors cannot invest directly in an
index. Index performance is not representative of
the performance of a specific security. Past
performance is no guarantee of future results.
8
So How Do You Build An Asset Allocation Strategy?

• You need the right mix of stocks and bonds
• Regular Monitoring and adjusting is necessary to
  maintain your desired allocation
• Periodic Rebalancing

9
Trying to Time the Market Can Lead to
Long-Term Underperformance
Past performance is no guarantee of future
results.
10
Market Leadership Changes from Year to
YearBenefits of Asset Allocation 1996 - 2005
Its difficult to predict which style within
the stock or bond markets will lead the way in a
given year. Diversification increases the
chance of having at least a portion of your
assets in the right place at the right time.
Diversified Portfolio 15 Large Value 15 Large
Growth 10 Small Value 10 Small Growth 10
International 40 Int.Gov/Credit
Source Lipper, Inc. and Prudential Financial.
Government bonds and Treasury Bills are
guaranteed by the U.S. Government and, if held to
maturity, offer a fixed rate of return and fixed
principal value. Stocks offer growth potential,
but fluctuate more than other investments. The
prices of small company stocks are generally more
volatile than those of large company stocks.
Investing in foreign/international securities
presents certain unique risks not associated with
domestic investments, such as currency
fluctuation and political/economic changes. Past
performance is not a guarantee of future results.
Individual investor results will vary. See
Glossary of Indices for index descriptions.
Diversification seeks to balance (as in an
investment portfolio) defensively by dividing
funds among securities of different industries or
of different classes. Corporate bonds are subject
to credit risk, interest rate risk, and market
risk. An investment cannot be made directly into
an index. Past performance in not indicative of
future results.
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Market Leadership Changes Year to Year Disclosure

• Large Cap The SP 500 Stock Index is a market
  value-weighted index of 500 stocks that are
  traded on the NYSE, AMEX, and NASDAQ.
• Large Cap Growth and Large Cap Value Indexes
  that measure the performance of the growth and
  value styles of investing in large-cap U.S.
  stocks. The indexes are constructed by dividing
  the stocks in the SP 500 Index according to
  price-to-book ratios.
• Mid-Cap Measures the performance of the 800
  smallest companies in the Russell 1000 Index,
  which represent approximately 26 of the total
  market capitalization of the Russell 1000 Index.
  
• Small Cap The Russell 2000 is a market
  value-weighted index of the 2,000 smallest stocks
  in the broad-market Russell 3000 Index. These
  securities are traded on the NYSE, AMEX, and
  NASDAQ.
• Small Cap Growth and Small Cap Value - Indexes
  that measure the performance of growth and value
  styles of investing in small-cap U.S. stocks. The
  Value index contains those Russell 2000
  securities with a less-than-average growth
  orientation, while the Growth index contains
  those securities with a greater-than-average
  growth orientation.
• International A Morgan Stanley Capital
  International index that is designed to measure
  the performance of the developed country global
  stock markets of Europe, Australasia, and the Far
  East.
• Fixed Income - This Index includes U.S.
  government, corporate, mortgage-backed
  securities, and asset-backed securities.

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Benefits of DiversificationBenefits of Asset
Allocation 1996 - 2005
Its difficult to predict which style within
the stock or bond markets will lead the way in a
given year. Diversification increases the
chance of having at least a portion of your
assets in the right place at the right time.
Diversified Portfolio 15 Large Value 15 Large
Growth 10 Small Value 10 Small Growth 10
International 40 Int.Gov/Credit
Source Lipper, Inc. and Prudential Financial.
Government bonds and Treasury Bills are
guaranteed by the U.S. Government and, if held to
maturity, offer a fixed rate of return and fixed
principal value. Stocks offer growth potential,
but fluctuate more than other investments. The
prices of small company stocks are generally more
volatile than those of large company stocks.
Investing in foreign/international securities
presents certain unique risks not associated with
domestic investments, such as currency
fluctuation and political/economic changes. Past
performance is not a guarantee of future results.
Individual investor results will vary. See
Glossary of Indices for index descriptions.
Diversification seeks to balance (as in an
investment portfolio) defensively by dividing
funds among securities of different industries or
of different classes. Corporate bonds are subject
to credit risk, interest rate risk, and market
risk. An investment cannot be made directly into
an index. Past performance in not indicative of
future results.
13
Introducing JennisonDryden Asset Allocation Funds

• One step to a diversified long-term investment
  plan
• Diversified allocation strategies designed in
  consultation with Ibbotson Associates
• Covers key asset classes
• Multiple style funds
• Leading asset managers
• Day-to day management and portfolio rebalancing
  by Quantitative Management Associates

Ibbotson Associates is not a Prudential Financial
company.
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Allocation Strategies Designed by Ibbotson
Associates

Founded in 1977, Ibbotson is well known
throughout the investment industry as an
experienced and objective provider of asset
allocation products.
Source Ibbotson Associates
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Allocation Strategies Designed by Ibbotson
Associates

• Asset class modeling
• Portfolio design
• Quarterly review of fund style consistency
• Annual review of asset class modeling

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Choose a Portfolio Thats Right for You
The Efficient Frontier Strategy works by using a
mathematical formula, which takes the historical
total return of a portfolio of securities as well
as their volatility, as measured by its standard
deviation, and plots them to determine the
precise blend which would have provided the
highest level of overall return with the lowest
degree of volatility for the period measured.
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Conservative Allocation Fund
60 Fixed Income/40 Equity
Target At 12/31/2005
Underlying Fund
Equity
Dryden Large-Cap Core
5
5
Jennison 20/20 Focus
2
Jennison Equity Opportunity
8
Jennison Growth
Dryden International Equity
10
Jennison U.S. Emerging Gr
2
Jennison Value
8
Fixed Income
Dryden Ultra Short
7
Dryden Government Income
27
Dryden High Yield
6
Dryden Short-Term Corporate
20
Actual percentages may fluctuate due to market
changes. The manager may also vary the allocation
ranges for each underlying fund of a portfolio at
any time if the manager believes that doing so
will better enable the portfolio to pursue its
investment objective. Please see the prospectus
for allowable ranges.
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Moderate Allocation Fund
65 Equity/35 Fixed Income
Target At 12/31/2005
Underlying Fund
Equity
Dryden Large-Cap Core
7
Dryden Small-Cap Core
3
Jennison 20/20
8
Jennison Equity Opportunity
3
Jennison Growth
13
Dryden International Equity
17
Jennison U.S. Emerging Gr
2
Jennison Value
12
Fixed Income
Dryden Ultra Short
3
Dryden Government Income
15
Dryden High Yield
5
Dryden Short-Term Corporate
12
Actual percentages may fluctuate due to market
changes. The manager may also vary the allocation
ranges for each underlying fund of a portfolio at
any time if the manager believes that doing so
will better enable the portfolio to pursue its
investment objective. Please see the prospectus
for allowable ranges.
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Growth Allocation Fund
90 Equity /10 Fixed Income
Target At 12/31/2005
Underlying Fund
Equity
Dryden Large-Cap Core
9
Dryden Small-Cap Core
7
Jennison 20/20
10
Jennison Equity Opportunity
4
Jennison Growth
18
Dryden International Equity
25
Jennison U.S. Emerging Gr
4
13
Jennison Value
Fixed Income
Dryden Total Return Bond
10
Actual percentages may fluctuate due to market
changes. The manager may also vary the allocation
ranges for each underlying fund of a portfolio at
any time if the manager believes that doing so
will better enable the portfolio to pursue its
investment objective. Please see the prospectus
for allowable ranges.
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Fund Disclosures

• Investors should keep in mind that the Funds will
  not be diversified for the purposes of the
  Investment Company Act of 1940. Investment in a
  nondiversified fund involves greater risks than a
  diversified investment because a loss resulting
  from a particular security will have a greater
  impact on the funds overall return. The Funds
  may not be appropriate for all investors, nor
  should they be considered a complete investment
  program. There is no assurance that the Funds
  investment objectives will be achieved. They may
  invest in small- and mid-cap stocks, which may
  have limited marketability and may be subject to
  more abrupt or erratic movements than
  larger-capitalization stocks. The Funds may
  engage in the following nonprincipal strategies.
  The Funds may invest in foreign securities, which
  are subject to the risk of currency fluctuation
  and the impact of political, social, and economic
  change. Noninvestment-grade debt securities,
  commonly referred to as high yield or junk
  bonds, may be subject to greater market
  fluctuations and risk of loss of income and
  principal than securities in higher-rating
  categories. The Funds also may trade their
  portfolio securities actively and frequently,
  resulting in an annual portfolio turnover rate of
  up to approximately 100. High portfolio turnover
  can result in higher costs, which may affect Fund
  performance. The Funds also may invest in
  derivative securities, which have their own
  risks. These risks may result in greater share
  price volatility.

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Three Leading Asset Managers
JennisonDryden, from Prudential Financial, brings
institutional asset management capabilities to
retail investors.

•  
• Our products feature three respected asset
  managers
• Jennison Associates
• Quantitative Management Associates
• Prudential Fixed Income
• Our success is a result of
• In-depth proprietary research
• Disciplined, time-tested investment approach
• Extensive industry and sector expertise
• We offer a broad spectrum of investment products
• Core building blocks in key asset classes and
  styles
• Strong specialty product line
• Asset allocation funds that simplify the
  investment decision

Prudential Fixed Income is a division of
Prudential Investment Management, Inc. (PIM).
Jennison Associates, Quantitative Management
Associates, and PIM are registered investment
advisers and Prudential Financial companies.
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Investment Teams
1Prudential Investment Management, Inc. or one of
its predecessor organizations has been managing
proprietary fixed income portfolios since 1875
and portfolios for institutional clients since
1928. 2Credit analysts only.
23
The Need for Rebalancing
Asset Mix Drift 12/31/1985 Through 12/31/2005
What happens over time to a portfolio that starts
off 50 equity and 50 fixed income? If no
rebalancing takes place, market fluctuations may
have a significant impact on portfolio holdings.
After 20 years the portfolio is two-thirds equity
and one-third fixed income.
Source Thompson Financial, as of 12/31/05.
Equity returns reflect performance of the SP 500
Index The SP 500 Index is an unmanaged,
weighted index of 500 U.S. stocks, providing a
broad indicator of price movement in stocks.
Fixed Income returns reflect performance of
Lehman Brothers Aggregate Bond Index. The Lehman
Brothers Aggregate Bond Index is an unmanaged
index composed of securities from the Lehman
Brothers Government/Corporate Bond Index,
Mortgage-Backed Securities Index, and the
Asset-Backed Securities Index. Total return
comprises price appreciation/depreciation and
income as a percentage of the original
investment. Indexes are rebalanced monthly by
market capitalization. Index performance is not
representative of the performance of a specific
security. Investors cannot invest directly in an
index. Past performance is not indicative of
future results.
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Why Diversification and Rebalancing Are Important
Consider the following two long-term strategies
for investing 200,000 over a 20-year period
(19842005)
Source Prudential Investments, using
Wisenberger. For the purpose of this
illustration, the following indexes were used
SP/BARRA 500 Value, Russell 2000 Growth, Russell
2000 Value, MSCI EAFE, and Lehman Brothers
Aggregate Bond. Investors cannot buy or invest
directly into any of these indexes, and the
indexes do not represent the performance of the
JennisonDryden Asset Allocation Funds. The six
asset classes used here are Large Cap Growth,
Large Cap Value, Small Cap Growth, Small Cap
Value, International, and Fixed Income. Past
performance is no guarantee of future results.
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Keeping Your Asset Allocation on Track

• JennisonDryden Asset Allocation Funds
• Automatic Rebalancing- we do the work for you.
• Quantitative Management Associates periodically
  rebalances the three asset class portfolios to
  bring them back to their original allocations

26
Performance
 
Past performance does not guarantee future
results and current performance may be lower or
higher than the past performance data quoted.
The investment return and principal value will
fluctuate and shares when sold may be worth more
or less than the original cost. For the most
recent month-end performance go to
www.jennisondryden.com Maximum sales charge is
5.5
 
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What JennisonDryden Asset Allocation Funds Offer
You

• Immediate and consistent diversification
• Asset management expertise of the JennisonDryden
  fund family
• Three funds for differing risk profiles
• Automatic portfolio rebalancing
• Simplicityone investment, one NAV, one 1099
• Accessibilityinvestment minimums
• as low as 1,000

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You Have Needs

• Secure retirement
• College education for children or grandchildren
• New home
• Growing/protecting your nest egg
• We can help
• JennisonDryden Asset Allocation Funds

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How Do You Get Started

• Complete an Asset Allocation Questionnaire
• Based on your answers, a Financial Professional
  can help identify an asset allocation model that
  is appropriate for your investment objectives,
  risk tolerance, and time horizon

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Disclosures

• For more information about the JennisonDryden
  Asset Allocation Funds, call your financial
  professional for a free prospectus. Consider the
  Funds investment objectives, risks, charges, and
  expenses carefully before investing. The
  prospectus contains this and other information
  about the Fund. Please read the prospectus
  carefully before investing.
• Shares of the JennisonDryden Asset Allocation
  Funds are distributed by Prudential Investment
  Management Services LLC (PIMS), member SIPC.
  Jennison Associates and PIMS are Prudential
  Financial companies. Indirectly through
  subsidiaries, Prudential Financial, Inc. owns 38
  and Wachovia Corporation owns 62 of Wachovia
  Securities LLC. JennisonDryden is a registered
  trademark of The Prudential Insurance Company of
  America.
• Mutual Funds
• ARE NOT INSURED BY THE FDIC OR ANY FEDERAL
  GOVERNMENT AGENCY, MAY LOSE VALUE, AND ARE NOT A
  DEPOSIT OF OR GUARANTEED BY ANY BANK OR ANY BANK
  AFFILIATE.

JennisonDryden is a registered trademark of The
Prudential Insurance Company of America.